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Making use of 3PL Service Providers

Sometimes there is no one better than you yourself to make sure that you get exactly what you want. Other times, you should choose to or have to use someone else to really get the best. When you’re working with China from a distance, Third Party QC (3QC), price negotiations, testing and Third Party Logistic providers (3PL) are just a few of the options that are better than what you could do yourself.

International logistics is one of the processes that you both must deal with and absolutely do not want to have to deal with yourself. Depending on where your products are coming from and going to, there maybe more than 15 different government offices and private companies that you’d have to deal with—in multiple languages. It’s just not worth it to do it yourself. Leave it to the pros.

Enter the 3PL or freight forwarder.

What is a freight forwarder? The best way I’ve heard it explained is “a travel agent for cargo.”
Like an agent that plans your entire vacation from door to door, freight forwarders can take care of every detail of getting your goods from the factory to your warehouse.

More than any other single reason, you want to avail yourself of their services because they will coordinate all the logistics for you for less time and money than you could ever possible do yourself.

Just make sure that in choosing one you find someone that fits with you specific needs.

The first consideration in choosing a 3PL is determining exactly what services you’ll need. In my case, because we combined orders and products from multiple factories and locations across China, I typically need more help getting product out of China than I do into the US or Europe. To help me here I’ve chosen a freight forwarder that is also a customs broker with a large presence here in China. You may be buying from a single factory that can deliver your goods to the port in China so you’ll need more help clearing customs in the US.

Another significant consideration is where is the service rep that you’ll be working with? You should find a 3PL with offices in China (your export port city) and your home town or at least your time zone and also the port where your good will be entering through. Unless you live in Timbuktu, this isn’t as daunting a requirement as it may sound. Most, if not all, of the international 3PL’s will have office in major ports in China and western countries. The trick is finding someone close to you that you can talk with during your business hours.

Once you find someone you like you’ll want to negotiate rates based on real quantities for next 3-6 months. Rates for shipping change with demand and unless you have a rather large consistent qtty (10 plus containers per month) then you’ll not likely not be getting a quote for longer than that.

As I mentioned above, you need to shop around, compare bids and make the 3PL compete for your business. Even if you’re small, you can get the best possible rate by shopping your freight around and seeing what options you have. Choice and information are never bad things. So don’t leave this to the last minute. Before you start production starting looking for and talking with potential 3PL’s.

Also, busy seasons for shipping don’t necessarily coordinate with any other typical seasons of the year. High season for shipping from China, for example is typically the month before Chinese New Year and the Third Quarter of each year; July through September when all the retail stores are shipping for Back to School, Halloween and Christmas. You need to plan accordingly as there is a finite number of containers and boats available.

Once you do find someone you like and get the rate that you feel comfortable with you should stick with that provider as their service will tend to get better as they become accustom to what your specific needs are. So, until you have some issues, find a 3PL and stick with them.

Sticking with someone that knows your business really is important—we’ve been using the same 3PL for more than 7 years now. They know what we want. They call us with updates. They give us special attention when we ask for help and anticipate issues before they happen. Though we have had a couple of problems over the years, in general they have become an invaluable part of our operation. They can’t always do everything we need, but they know how to find other to help—and that’s just as good.

The first time most people ship goods from China they often have the –slap-to-the-forehead moment when they see the bill. What most 3PL’s will give you is exactly what you ask for—a price for shipping freight. But what’s not included in the bid can be anywhere from 2 to 200% of the cost of your goods. The fees associated with shipping and the taxes and duties on your product are almost never included in a bid—why? Because unless you know that HTS code (Harmonized Tariff Schedule) your products fits into and exactly how larger your shipment (in CBM—Cubic Meters) is. If you can’t tell your 3PL they likely won’t know this either and thus can’t bid on it.

Also, remember that taxes and duties may be required at BOTH export and import countries—and that they’ll be different for each and every product. If you are buying product EXW (Ex-Works, meaning you take possession at the factory) then you’ll be responsible for paying the taxes dues at both ports.

Your freight forwarder may or may not also be your shipping line, customs broker, customs bond issuer and freight insurance provider. Regardless if it is one company or four, you need all of these services. A quality freight forwarder can set you up and take care of all your needs whether you are a first timer or a seasoned professional.



David Dayton

Owner and manager of SRI. David has nearly twenty years experience working in and with Asia and he leads SRI from our Shenzhen, China office. Besides Shenzhen, David has lived, worked and/or studied in Thailand, Taiwan, and China.


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