Competitive rates
In part III, we took care of the issue of shippers not having all the information needed to make a booking on some of the popular quotation tools out there. Now that we made it easy for shippers to find forwarders and built in many conveniences, forwarders need to be able to provide rates that make shippers want to book them instantly!
Adding margins to carrier rates is an existing practice that is also carried over to the digital realm. Configuring quotations online does not take into consideration various uncertainties that forwarders are faced with. They can clarify a bunch of queries before generating a quote in the offline world – cargo specifications, pick up or delivery requirements, customs and various other queries that need clarifications for a forwarder to be able to generate a reasonable quote. In the absence of this, quotations are configured to factor in all possible scenarios and hefty margins are added to cover any unforeseen costs. These issues make most freight rate quotations issued on digital platforms very uncompetitive. We find shippers going back to the phone or emails - even after forwarders have spent tremendous amounts of money and (perhaps more importantly) time in building or buying a quotation software.
Now, the base freight rate as quoted by carriers to forwarders are just that – quotes – that serve as a starting point. As forwarders consolidate cargo from different customers, the net achieved rate changes and ideally reduces. So as their actual buy rates reduce, forwarders should ideally be reducing their sell rates accordingly. This will make online quotations more competitive, as will the ability to communicate with customers before providing a full-fledged quotation. This is especially true of Air and LCL shipping. So, the ability to communicate with customers and working off net achieved buy rates will make online quotations more competitive. We see it all the time - same route, same day, and even same carrier but different forwarders sell at different rates. That is because when a forwarder focuses on their consols more than “margins” they produce higher profitability
This is exactly what Terminal2 does! We help forwarders visualize their consol, view the impact of each booking on their consol, move bookings between consols - basically everything to improve consols. And once that happens, the net achieved rate improves and that improves their sell rates considerably.
We also have an “in-context” communication tool that forwarders and shippers use to stay super connected. All messages, documents, files are stored and viewed in their respective bookings. So, shippers and forwarders need not sift through thousands of emails and messages to understand the situation with each booking. So forwarders can talk to shippers and easily ask any questions they need.
In the next and final part of the series, we address the need for a schedule with each quote. A quote without a schedule can be misleading, as rates will change based on the day of departure or arrival, consol optimization and various other factors. Visit www.terminal2online.com to know more or sign up for a demo here.