Aug 3, 2007 - Posted by Kevin Hsu
Before I send out my quotes to my customers, I bring them to the sales manager and he reviews them. The majority of the time he finds a better rate in the service contracts or he finds some sly way to offer the customer a much lower price.
(*Prices need to be calculated they aren't stated in the contract explicitly because there are charges and exceptions; there are ways to manipulate prices)
Lets say I am looking for the best rate from Shanghai to the customer's door in Ontario, CA for the commodity: furniture.
1) First of all, you have to find a way to narrow some twenty different service contracts down to a manageable amount. It would take far too much time to read through or even scan 20+ contracts. You can do this by finding out if your customer is looking for fast transit time/ service or lowest price. There are three tiers of carriers ranked by service/ transit time.
2)Lets say you have narrowed down the carriers to six. Then you look to see if there are commodity specific bullet rates in all six contracts. Special bullet rates are for specific commodities and are almost always much cheaper than FAK (Freight-of-all-kind) rates. You sift through the contracts and compare which one has the cheapest rates after all the charges are added on. Most of the time the search ends here and you find the best rate. This sounds simple, but keep in mind every contract is organized differently and have different terms. (e.g. some are in excel sheets some are in word format. Some are ordered commodity specific by groups some are ordered by origins.)
3) You look to see if there are any rates you might be able to "manipulate". We have a rate for furniture from Shanghai, China to Chino, CA at $2000 for a 40 foot container, but we want a rate to Ontario, CA from Shanghai, China. (*The 40' container has to go from Shanghai, China to Los Angeles Port via Ocean then its trucked from LA Port to Chino, CA) Our trucking contract shows that the trucking rate is $300 from the LA Port to Chino and our Ontario rate is 250 then we know that in theory we can use the Chino rate because it covers our Ontario rate. However, we need to make sure that the steamship line is able to do this and it is allowable.
In the water transportation industry it can get complicated....Just something to think about.
OFF to the weekend!