We had a vigorous discussion over lunch the other day, AEO (Authorised Economic Operator system) was part of it, our Logistics manager and the Sales guy got into a head to head on the subject of, would you believe, Incoterms!! Our Logistics guy was saying that when we receive AEO accreditation we will need to change our policy regarding how we quote overseas clients, all our quotes should use an Incoterm that gives us the responsibility for the choice of forwarder and carrier eg the C Group and D Group, the reason being, he said, that we cannot be sure of supply chain security if we are constantly handing goods out to unknown forwarders or carriers under Group E and F. Our Sales guy went ballistic at this: Are you telling me that we notify the overseas customer base that we have cultivated over the years that they cannot use their own choice of forwarder or carrier? That is like saying that our service providers are superior to theirs, it’s a good way to drive them into the arms of our competitors who are happy to legally deliver when handing out the goods on their own doorstep so to speak. Is there a right and wrong here?

We understand the positions of the speakers - they are both sincere, no doubt. The debate could go on and on but what about this for an idea: by allowing you customers to choose the service providers you dilute your spending power on freight and freight forwarding, why not have a “tendering exercise” in which you total up your potential spend on these services calculated as if you were trading totally on DDU (Delivered Duty Unpaid – now DAP) terms, get competitive quotes from a short list of forwarders and carriers and then potentially find you can offer a price to you overseas clients that will reinforce your market position and reduce unit costs all round. Your Logistics manager and the Sales manager would both be satisfied. Worth a try? Otherwise just rate the forwarder and if they are OK then allow them to keep the business.

 

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