AS 69: Who’s the best freight forwarder? Shipping, Logistics, and Strategy with Max
01 Nov 2016
Today I’ve got Max Lock on the show. Max started importing products from Asia when he was 16 years old, where he went on to realize how painful international shipping is. He is now the founder of Fleet a logistics marketplace simplifying international shipping for fellow importers.
In this show you’ll learn:
- How to save money with freight forwarders
- Which freight forwarder is the best?
- Best freight saving tips
- Ways to optimize your shipping logistics
- Max Lock’s story and how he created his company Fleet
- How much money did Fleet raise?
- What is Fleet?
- Air freight vs Ocean freight and when to use them, why use them.
- Ocean freight differences
- Customs, X-rays during ocean freight
- Where should I store my ocean freight goods
- Where should I store excess inventory
- How to operate more efficiently
And lots more!
Contact Max Lock
David Aladdin: Great to have you on the show Max.
Max Lock: Yeah thank you so much for having me.
David Aladdin: So can you tell us a little bit about yourself, where your story began?
Max Lock: Sure. So my story began really, a little over five ago. I was in high school at the time and I really loved technology. So I started applying for jobs and I got this job as an IT administrator at a chain of restaurants up and down the East Coast. So you know I was feeding my passion for technology and programming and from there I was in one of their stores one day, they were opening up a new concept, an organic concept store and I was trying this ice cream they were planning on serving.
I tasted it. I thought it tasted absolutely horrible so my other passion outside of work is cooking. So I went home and for the next six weeks try to figure out what is the best way to manufacture ice cream. I brought it back to them; they liked it so, much they started selling it. I figured I have nothing to lose, took it to Whole Foods, took it to other supermarket chains, they started selling it and from there my volume quickly grew.
So it no longer made sense for me to purchase the packaging here in the United States. So I started to look over seas and figure out how I could manufacture it for cheaper and to get them costume printed.
At the time frozen yogurt stores were becoming super popular as well and a friend of mine was actually opening up a frozen yogurt store. So I decided to start, he asked me if I could manufacture cups for him while I was manufacturing cups for my own ice cream brand. So I started importing some cups and soon other frozen yogurt stores started reaching out.
So about three years ago, my cups way out sold my ice cream and I, over the two to three year time period that I did, I manufactured over 35 million paper cups, spoons, lids other things of that nature in China and distributed them to stores all across united states. And what I realized was as a small business owner I, about 80% of my time was just worrying about the logistics like, ok manufacturing it takes some energy to get that set up. But then you find a factory that you are comfortable and you work with, but the logistics changes for every single transaction.
So I started thinking you know, its super easy to book a hotel online or a flight online why is it so complicated to move my good from China to the States and that led me to start Fleet back in 2014 and got us to where we are today.
David Aladdin: Awesome. I got so many questions just from your intro. Alright so you started off with ice cream, that was 2012-2013?
Max Lock: Correct, so yeah back 2012-2013 time period.
David Aladdin: And then that was selling good, and then you started importing the actually materials that surrounds the ice cream like cups and paper and spoons and forks and that started take off and then. The logistics just became a nightmare which let you to create the www.tryfleet.com brand, is that kind of like how it went?
Max Lock: Exactly! So when I was manufacturing goods in China we would manufacture four, five hundred thousand paper cups for example at a time. And that order would be split up, so each cup had a costume print for that brand on it and so there might be four, five customer orders in one container and then we would bring that into the United States and then we have to segregate that container and ship it out to the five or six customers in the States.
So it was pretty logistically intensive. There was everything from international shipping to trucking here in the United States, to even some small parcel things and costumes clearance. So I really got a huge amount of exposure. I got to see a lot of a thing that were broken with the process and that’s what led me to solve that with Fleet.
David Aladdin: Just to jump into that, this way. You said, were you like breaking down each part of the logistics chain when you were doing the shipping?
Max Lock: So personally I wasn’t doing the actual breaking down, I only had to do that once, once the container arrived on my front drive way but mostly we would bring them into a warehouse in Los Angeles that we would contract with and then they would split up the container, palletize it and then get it ready to be shipped out.
David Aladdin: So you actually got the ocean ship freight and then it was sent to this warehouse. They would break it down and that would ship out into all the different retail locations and wherever you wanted to ship it out to, right?
Max Lock: Correct.
David Aladdin: Very cool.
Max Lock: Yeah.
David Aladdin: I noticed you pivoted actually. You have been pivoted in a lot. You were before tryfleet, you were actually hipster?
Max Lock: Yeah. So we that was our previous name, we changed the name for a few different reasons. The first one was there were some other brands out there that had a similar sounding names. So it was just kind of general brand confusion and then the second is a lot of our service providers and costumers, some of them are locate in China and there’s not a really great Chinese translation to it, so and the whole idea of a hipster shipping didn’t really make sense to them. So pretty early in our life cycle, I mean the idea and the concept and that our platform all stayed the same but we decided to seek out a better name that was more meaningful.
David Aladdin: You guys were featured on TechCrunch by the way, you are in Disrupt 2014 San Francisco Battle field, and you are a finalist. How did that go?
Max Lock: Yeah, so it was kind of an interesting story, when I started Fleet. I had this idea, I was really fed up and frustrated with international shipping. But I was planning to go to college, it was my senior year in high school at the time and I was helping my friend with an application to TechCrunch Disrupt and if you are not familiar with TechCrunch Disrupt it’s one of the, the largest startup competitions. It’s kind of the beginning story line of Silicon Valley if you have seen that TV show.
David Aladdin: Yeap.
Max Lock: So the. I was helping him with his application and then with a couple of hours. I think it was around nine, ten o’clock at night and the deadline was at midnight. I said “You know what; I’ve helped him with his application. I’m just going to put together an application” and at the time I had absolutely nothing, it was basically just an idea I’ve written down some notes and sketches of what I wanted it to look like. I submitted the application, a couple of months went by and I got this email that said “Hey, we got your application. But I’m a little bit concerned with how far your product actually is. We have seen some screen shots but we can’t really tell if it’s real or not”
So I had this choice either I can tell them the truth which is, we don’t really have anything now or I can figure out a way to build it. So unfortunately I didn’t have to lie to them, I didn’t, before I could even get back to them. A couple of hours later they got back to me and said “Hey you are accepted” So I ended up avoiding that question. Now that I was accepted, we had 30 days until we went, until I went on stage at TechCrunch Disrupt.
So I was in school at the time, so I ended up hiring two of the computer science instructors and I rented out an office right below the school and then after classes we would go down there and within these 30 days we built the demo MVP version of our platform. I was literally right hot off the press right before I went on stage, presented on stage and was fortuned enough to get some investor interest and find some amazing team members that kind of shared the same vision and have been growing the company ever since.
David Aladdin: How much investment did you guys take in?
Max Lock: So today we have raised four and half million dollars.
David Aladdin: That’s epic, wow! How much have you guys spent so far?
Max Lock: So we are definitely, I mean we are kind of in the middle of part of our road map so far. The beginning portion of our time was really spent building up the platform and building out this very extensive network of service providers and now we have got a really compelling product and we’ve had a ton of success stories of businesses and FBA sellers and e-commerce sellers using the platform. So now for this kind of second half of our road map is really focused on getting it out there and getting more people to use the platform.
David Aladdin: I, for the people that are tuning in through the audio. I have it pulled up on the visual side of it so if you are watching on YouTube and UI is actually very clean, it’s awesome and I actually like the look of it very much.
Max Lock: Yeah so we actually, how we started. When I was importing, I got ripped off by a bunch of people and it wasn’t a very pleasurable experience.
David Aladdin: Let’s talk about that.
Max Lock Sure. So I mean I had shipments get damaged, to get lost. People holding my freight hostage and I just felt kind of so frustrated because you don’t know who you can trust and who you can’t trust and often times you are buying, decisions are on price instead of who’s actually going to move the goods reliably. So when we first started, we launched rating and review platform, so it’s similar to like what YELP is for restaurants but for freight forwarders. So we have had thousands and thousands of visitors come to our platform, they contribute reviews on freight forwarders.
So now you can actually make an educated decision, you can see what other businesses, what experiences they’ve had with those freight forwarders. So we started there that built a lot of trust in the community and then from there we built on top of that, we launched our coding platform where now you can compare quotes across multiple providers and then after that we released our booking and payment platform. So now the entire transaction can be done on Fleet. So from finding a reliable provider to comparing all the quotes and finding the cheapest price and then to actually booking and paying for that shipment and managing all the documents.
So that was kind of our approach first trying to solve the initial problem, build trust within that community and then build on top of that for the additional features that people wanted.
David Aladdin: Can we go deeper into the part where you said “You had shipment that was taken hostage and shipment that was damaged”. Can you describe those situations?
Max Lock: Sure so, when I started importing no one really explains the logistics process and there isn’t as much information out there about it. So when I had a shipment, I would either ask the factory or ask, or start calling freight forwarders on the internet and just try to compare pricing and see who could move the shipment. So you would talk to these people, you don’t really have references, you have got the factory that is pressuring you to get the shipment out the door.
So I ended up selecting a freight forwarder and what started happening was they would quote one price and then they would quote, once the shipment would be in the United States and they had your freight they would quote another higher price. And it got to the point where, they, there was one time it was like $10,000 higher which is just crazy for international shipping and they were holding my shipment hostage until I paid this outrages amount. So fortunately there are laws in the United States to protect that and I was fortunate not to have a really good warehouse at the time that walked me through those things.
But unfortunately there are freight forwarders out there that take advantage of peoples inexperience and they do this kind of bathing switch, where like “Hey we quoted one price and then later we add all these hidden fees and extra charges” Just so they can pad their margins.
David Aladdin: Is you’re, the business that was selling all the ice cream and the accessories, is that still a business? Are you running two businesses right now?
Max Lock: So I don’t run them anymore, for kind of a variety of different reasons and… So the main thing I did it while I was in school at the time, now I’m focusing completely on Fleet. I think Fleet is a much larger opportunity and it’s something that I am much more excited about than just manufacturing paper cups.
David Aladdin: Specifically me, if I try to do the logistics of my business, it’s like a headache.
Max Lock: Yeah.
David Aladdin: I find it very ambitious to handle many people’s logistics chains. Like, what pushed you to want to get into this problem?
Max Lock: Sure. So it’s. . . some people have called it “The unsexiest part of the business”.
David Aladdin: Yeah.
Max Lock: Personally I think it’s really interesting but the 90% of the goods in the world touch an ocean container at some point in time. So like the chair you are sitting on, the desk that you are using, and your furniture, everything your computer. It has to touch a container at some point of time and it seemed mind boggling to me that our world is so dependent on trade and the movement of all these goods. Yet, the, from the ports to the steam ship lines have such a big influence and controlling stake in that process.
So that was really appealing to me, it’s also a massive problem and there hasn’t really been much innovation in the past 50 years or so. The last main innovation was actually the invention of the shipping container. So I figured you know, it’s kind of a once in a life time opportunity that you have such a big market that’s right for disruption, where you can have such a large impact.
So that’s what got me into it and also I was in the shoes of many of the people that are listening to this podcast right now. I know that the pain that you guys go through and that’s the reason that I’m doing this, I don’t want anyone to have to go through the pain that I went through and you know, it really, it shouldn’t be that difficult, our motto here at fleet is really to make shipping easier and we definitely want to share that with other businesses that are out there.
David Aladdin: I think the secret sauce to launching a company like Tryfleet is, you have to be like when you are in high school you have to be shipping pallets of goods to take on this kind of goal afterwards, because I could never see myself starting like something as ambitious as this. Ok, so now that you are managing the freight of many companies. How is like small businesses like us like, what are ways we can save more money on shipping?
Max Lock: Sure. So first I would just want to touch on the managing portion of it. Like when I was in high school I didn’t have time like in between classes I would be calling freight forwarders. I was trying to track down all my freight, figure out where, when the container is going to be delivered or unloading, or unloaded. So one of the core things about Fleet is that to make this easier we built this kind of self-service platform, where we eliminate a lot of the phone calls, the emails, the faxes all that crazy stuff you have to do and manage and put it all in one place so that it’s so much easier for you.
So the platform does a lot to make it a lot easier and gives us the capability for thousands of businesses out there to use it and to manage their shipments. The second thing about how you can actually save money and one common mistake that I see a lot of shippers out there doing is, trying to approach a problem piecemeal. So it all starts when you negotiate with your factory, what kind of terms you are getting on your order. So are you ordering FOB are you ordering Ex Works, those are the two most common terms and I highly recommend that you stick to those terms.
Sometimes I hear people asking for CIF prices, which stands for Cost, Insurance and Freight and that gives the factory an opportunity to kind of pad their pricing as well, but also it shifts the logistics headache from you to the factory. I don’t recommend doing that, what I recommend doing is really sticking with the FOB or Ex Works terms and what that means, if you do FOB the factory is responsible for getting it to the port, if its Ex Works you are responsible for picking it up at their door.
So the first step is stating with that term knowing what your encode term is. The second step is trying not to piecemeal it, so when I started, I started with the freight forwarder I think it was a brand name one like FedEx or UPS and they were just really expensive. So then my automatic reaction was moving to, okay I just want to deal with the steam ship directly, then I want to deal with the trucker directly, then I want to deal with the warehouse directly and try kind of act as my own freight forwarder.
Now I do see a lot of other small businesses trying to do that, they think it’s a way to save money but it also adds a huge burden and time commitment and after being in the industry for a while there are ways to get the same competitive pricing without having to deal with that headache. So what I recommend doing is don’t piecemeal it, buy on regular standard terms to not make it complicated from the suppliers perspective and then compare multiple freight forwarders so using a tool like Fleet were you can compare five different forwarders quotes at once in that shipment making sure that they are always competitive and making sure that whatever pricing you get back from the forwarder includes all of the charges.
So with Fleet we have kind of a slogan that the prices you see is the price you buy, but if you are dealing with forwarder outside of Fleet make sure to ask for charges like the terminal handling charge or the ISF filing fee or any document processing fees, fees that often times they don’t quote you up front because they just want to attract with a super low price, but they will hit you with those fees in the end.
So make sure to ask about those upfront or use a tool like Fleet that has those already included so you actually know how much it’s going to cost.
David Aladdin: Actually hit with a fee, actually two fees. In my previous shipment I got hit with a fee because the shipment was actually heavier then what I had initially asked for the quote and so the quote was actually a lot more when I actually got it. That’s one thing that could happen, the other fee I had was it got processed for x-rays and does that happen a lot?
Max Lock: So it’s definitely more common for newer importers who don’t have a history with customs. So we got to ask a lot about how they should handle costumes and you kind of have two choices. You can either get a single entry bond which allows for just the costumes clearance of that one shipment or you can go for an annual bond and that annual bond will cover all of your shipments for that year, it’s obviously more expensive but if you are doing more than five shipments it tends to pay off.
So what happens with those x-rays normally for a first time importer or someone relatively new, they are probably going, there’s a good likely that they will get pulled for customs inspection and that has additional costs that are associated with it. It’s practically impossible to avoid, eventually someone, eventually it will get hit that is just a numbers gain. But I recommend if you plan on importing multiple things, get an annual bond that will definitely set up more an established history with the US costumes and with your costumes broker to try and eliminate a lot of those exams or x-rays or additional things that might pop up.
David Aladdin: It’s interesting because you know costumes come in and they are not sure what I’m transporting right?
Max Lock: Yeah.
David Aladdin: And so they are like “You got to pay for this x-ray exam and you got to cover the extra storage fees that are related to the duration of this x-ray, because there might be a line for the x-ray machine”, and so I was pretty bummed when I heard that like, I have to pay extra for you guys to slow my shipment down and have to pay for all of this. It kind of sucked. Ok, so let’s say I’m shipping all these goods and then it’s so much that I can no longer fit it in my garage. What kind of solutions do you know of that would be able to take this inventory and hold it maybe for a long duration?
Max Lock: Sure. So you have a couple of different options. So first for people who might not even have the goods in their garage yet. Sometimes although you don’t pay for storage the extra trucking to get it to you garage because they need a special residential truck, a truck with a lift gate because you don’t have a loading dock at your garage. Sometimes those are upfront costs that you might not realize so it’s actually going to be more expensive for them to drop it off at your garage then it is to go to a warehouse. But let’s say you already got them in your garage, you have more orders coming. What I would recommend doing is finding a warehouse most likely near one of the major ports, which would be like Los Angeles if you are on the West coast or New York, New Jersey on the East coast or possibly even a Miami or Oakland.
So there are tons, hundreds of warehouses that are around these ports. Generally the price to store a pallet on a monthly is really not that expensive, they charge a monthly fee per palate. You can compare, call a couple different warehouses or feel free to reach if you are looking for some recommendations and they charge a flat fee, they charge some sort of in and out fee so if you need to ship a box or a couple of boxes out to bring them to your garage or to send them to a costumer there will be some small fee associated with this and that’s the way I would recommend going.
There’s also some other startups that have kind of more online technology oriented warehouses and often times I found that they tend to be more expensive but for the same service. So if you are not and the one to that would be if you need to do some sort of drop shipping or pick and pack shipping, those kind of services are great because they often have API’s or things that you can integrate with, your shop advice store or Amazon store for them to send it to you.
But if you are purely just looking for storage where you need to store some pallets or a container or a large quantity of goods and you are not sending them out one by one, I’d recommend finding a more local warehouse by the port.
David Aladdin: That is, that is an awesome golden nugget. You actually had two golden nuggets there. One was, there’s actually a lot of upfront costs to deliver in residential and I didn’t actually realize that. The other thing was and that’s due to the lift gate and having a special truck going into residential and that makes perfect sense. The other golden nugget that you mentioned was getting a warehouse near the Los Angeles ports or wherever. Ports that would, there would be warehouses around the ports which would typically like if it’s Los Angeles would be near and FBA warehouse. So you get double bonus by being near everything, so that is awesome. What are, like some of your day to day struggles?
Max Lock: One of the things that we, it’s a struggle but it’s also an opportunity is from our business we are doing something very different from what has been seen in the industry before. We’re taking more of a market place approach and we are really bringing a level of transparency and shifting the power back to the consumer which has not happened in the past. So one of our main things is, communicating this value to shippers and getting them to kind of change their mindset and view the international shipping process differently. Because a lot of people they’ve had really bad experiences and they have just kind of come to, to take that defeat and their just “Ok, well even if the process sucks. I have to keep working with my freight forwarder”.
So it’s really about getting this message out there that there is a much easier way to do and that’s kind of what I send most of my time doing now talking to businesses like you and talking to costumers directly trying to figure out how we can help them make it easier. Because at the end of the day we’re not a freight forwarder, we are not the ones that actually move your goods, we are here to make the experience better, and we created the technology that interfaces with all these providers. So that you don’t have to go through those struggles because believe it or not there are some good providers out there.
David Aladdin: As of today how many freight forwarders do you guys have on board?
Max Lock: So we have over 400 freight forwarders that are engaged on our platform, from our quoting perspective. And then we also have our reading and review side where we have, I believe over seven or eight thousand forwarders that have profiles on our website and that people can come and write and read reviews.
David Aladdin: That’s awesome. I feel like it would be very tough to get some of these like, old legacy freight forwarder companies on board. How did you do that?
Max Lock: So we have kind of a very wide spectrum of freight forwarders using our platform. We have large top ten freight forwarders from like the UPS’s and DB Schenker of the world, all the way down to smaller more mom and pap forwarders and the thing is each one, excuse me. Each one specializes in different trade lanes, have different pros and cons associated with them. Some might be really competitive from a certain city in China; others might prefer air freight over ocean freight.
So when we went out, when we started this we were actually worried that freight forwarders is such an old world industry that they wouldn’t want to participate on the platform and actually it was quite the opposite. Freight forwards were pretty receptive of the idea, they realized that technology is going to change this industry and they rather be ahead of it than be behind it. So just going to them explaining . . . So the value proposition for them is it reduces their costs of sales and services you know, no longer do they have to send a sales person to your door to try and sign you up and recruit you it’s much easier for them also to manage the transaction on Fleet’s platform and to win business as well.
David Aladdin: If I was. . . let’s say I requested a quote from China to the US what is the typical number of freight forwarders that respond to that kind of proposal?
Max Lock: Sure, so China to Us is our largest trade links so that’s where we have the most active freight forwarders. With Fleet you get up to five quotes within 24-48 hours. On China it tends to be a little bit on the faster side and for most China shipments you do tend to get five quotes back. So what this does is it provides some pressure to the freight forwarders to get quotes back quickly. Because if we let all 400 quote it wouldn’t be that exciting for them because they only have one in 400% chance of actually getting a shipment and there’s no time pressure. So now we tell them “Hey only the first five quotes will be presented to the costumer”. So that’s puts some pressure on them to get quotes back quickly and to give you the most options.
David Aladdin: I feel like you had a big conversation about that specific part you know. How do we, how do we get these freight forwarders to enjoy this experience as well as the person posting it, so that way you know, they don’t just get lost in the number of freight forwarders on your website.
Max Lock: Exactly.
David Aladdin: It’s very cool.
Max Lock: Sometimes having so many options is, can be negative. So we really went out and spoke to shippers and we’re like “Ok, what do you want to see?” And we figured ok the data that they want to see. They want to see variety, they want to see variation and service or time or price and then how many quotes do we need to get back to actually deliver on that.
David Aladdin: And you mentioned a golden nugget, you may have not realized but, you know. You guys collected feedback on what the costumer wanted and from what I’ve seen with my businesses and what you have just seen, you get really good results from that kind of experience. And just like compare it to www.freelancer.com , I mean I always select the first. When I post a proposal sometimes I make it like 40 responses but I’ll pick the first one that is kind of like the cheapest but it won’t be after like a few days. I want this worked on you know, pretty soon. So getting five quotes is good enough for me you know, as long if it’s very fast and I get that response pretty you know, within a reasonable amount of time.
Max Lock: Yeah.
David Aladdin: Ok, so I want to dive deeper into how we can save more into our logistic supply chains. How are bigger businesses doing this? And how can we like replicate what they are doing to save more money?
Max Lock: Sure, so larger businesses they have the benefit of scale so they can go to freight forwarders or other shipping companies and say “Hey look I’ve got 10 containers this month that are going. Can you give me the best possible price on that?”Unfortunately smaller businesses who are just getting out don’t have that, they don’t have the volume yet so that was another consideration in Fleet and not to push Fleet so much but, we so with all the small businesses we aggregate them.
So like the volume that you are getting, you are getting some volume pricing from the freight forwarders but outside of that it’s really freight forwarders are also in it to make money. So something’s to keep in mind of why freight forwarders give better pricing to larger costumers as oppose to smaller costumers is a lot, goes back to the time that it takes. So a couple of tips to get better prices from forwarders, first would be only engage freight forwarders really once you have shipment that is ready to go or if you are looking for an estimate on price let the freight forwarder know that because their, it’s much easier for them to give you an estimate than it is to give a quote that they can actually lock in and move the shipment on.
So the feedback that we get from freight forwarders all the time is, people they end up asking the forwarders to create a lot of quotes which cost the forwarders time and money to do. And then the forwarders try to factor this in to their pricing so they are like “Hey I had to spent three hours to try and reach out to all my agent overseas to calculate the pricing and to get it back to you and then if you keep asking me to do this over and over again you don’t actually book something they factor that into the pricing.
Whereas the larger costumers when they approach the freight forwarders they often times they already have that order in hand and are just like “Ok, I need the price back”. The forwarder can sense that this is a real order and will give the most competitive pricing. So that would be the first tip that I have and then the second tip is, from a freight forwarders perspective its best to know what you are looking up front.
So again this goes back kind of into the piecemeal strategy. We see some people that are, that see “Ok I just want port to port, I want you to pick up from the port in China and deliver to the port in the United States and then I will deal with the rest”. And then when the boat gets close to Los Angeles they end up saying “I need trucking or I need warehousing or I need all these additional services” and adding them on at the end, ends up being a lot more costly compared to a larger business that knows from the beginning, they plan ahead and they say “Ok I need it picked up from the factory but I also need order A going to Amazons warehouse in LA then going to the one in Dallas and going to my warehouse here”.
So if you plan that all up front like a larger costumer the forwarders will really appreciate that and you will know what the prices ahead of time, no hidden surprises and they, you’ll probably get better pricing for it.
David Aladdin: Awesome! Solid response! I’m, going back into the warehouse that you just mentioned. Do you think I should keep my units in a local warehouse? Or do you think I should do the third party warehouse? What did you do?
Max Lock: Sure. So my business was a little bit unique in that, like I would say like 90, 99% of my sales were larger orders that weren’t e-commerce orders, but for the goods that you have are you shipping them out one at a time? Or are they generally larger, like you need to ship it to your garage? Or you need to ship it to a fulfillment center?
David Aladdin: It would be to Amazon FBA eventually, when the demand went up let’s say.
Max Lock: Got you. So I would recommend keeping it. So the third party fulfillment centers they’re out there trying to compete with FBA’s and what they really sell out is this pick and pack, order comes through online they take one box of the warehouse shelves, they send it UPS, FedEx whatever you choose out to the costumer. If you decide to take that you know, a pallet or multiple pallets and stick it in one of those warehouses it’s going to be more expensive because they are charging a premium really for that pick and pack which are not utilizing.
So what I recommend doing is, again finding amore local warehouse and there are tons of them out there. If you do a Google search you will see that there are literally hundreds in the LA area and keeping it there because when you need to ship it to FBA you can ship out one pallet or multiple pallets at a time and it will be much more economical than paying a fee for like a pick and pack warehouse.
David Aladdin: Very cool. Yeah, because I have been debating like whether I can get a few storage units here in Naples, Florida and then just do it myself. So it’s been a kind of ongoing debate in my head. Ok. Lately I’ve had this issue. Go ahead.
Max Lock: You broke a little bit David.
David Aladdin: Ok, can you hear me?
Max Lock: Yeah I can hear you now.
David Aladdin: Ok, yeah. Lately I have this issue where the freight forwarders quoted me on a 40 foot container and a 20 foot container all in the same shipment and I was like “Maybe I’ll just keep some units in China and then just get the 40 foot container in” and then they also offered this other alternative, get a 40 foot high container which allowed more units in. What are the differences in cost when you go with the 40 foot high?
Max Lock: Sure. So and this is really going to be in reference to shipping from each of United States. There’s the three main container sizes you have like you mentioned 20 foot, 40 foot and what’s called a 40 foot high cube. As far as pricing goes generally 20 foot containers tend to be a couple hundred dollars cheaper than 40 foot containers but keep in mind it’s also half the amount of space. 40 foot and 40 foot high cube containers generally tend to be the same price across all the ports and most of 40 foot high cube might me 50$ more expensive, but again you are getting a little bit extra high so you can fit in some more units.
What we have seen in the past few months is that the 40 foot and the 40 foot high cube have actually been priced the same. So for the same price if you can get a few more units’ people tend to go for that.
The other thing with 40 feet high cube is that they tend to be in a little more demand, so if they are in shortage or in higher demand there, the price might change because of that. But like I said if you are shipping from China to the United States there tends to be a ton of them on that trade route and you should see pretty similar prices.
What the main difference is if you can order a 40 foot container full quantity wise or a 40 foot high cube, your shipping cost per unit is going to be much lower because the price to ship a 20 foot container is not half you really are just saving a hundred, a couple hundred bucks but you are getting half the amount of goods.
David Aladdin: Interesting yeah and then. So, I actually I’m in that situation right now and then it actually turned out that my manufacture said there’s more volume than what they initially quoted so I don’t even know what’s going to happen, it’s going to increase the quotes as.
Max Lock: So when you are requesting a quote, there are. . . So if you are shipping a full container load like a 40 foot or a 40 foot high cube or even a 20 foot, there’s a certain number of CBM or cubic meters that fit inside that container and containers also have like a legal or maximum weight so it’s a lot of weight that you can fit in that container. So even if you put even some extra boxes in that container and you have requested the quote as a full container load, even if the weight is a little bit higher and again it is a full container load the price shouldn’t change.
David Aladdin: I want to keep picking your mind on just ways we can save more money in our logistics chain. Where do you see like weak spots that sellers are not doing enough of?
Max Lock: So there are a couple of things. One not seeing whets out there in the market, people end up, sure they build relationships with their freight forwarders but freight forwarders aren’t stupid over time they see that you are comfortable working with them and then they gradually increase their price shipment by shipment. So always keep your freight forwarder in line by seeing who else is out there on the market and you can do that by calling more freight forwarders or using a tool like Fleet to see what else is out there, that’s one way. Because that way you have kind of a forcing function to be like “Hey this is what is out there on the market”.
The second thing would be labeling, I know there is a lot of labeling requirements and packaging requirements to get into Amazon distribution centers. I would recommend trying to build a strong relationship with your factory to get that labeling done over seas because if they can do it at the factory you’re eliminating a portion of supply chain which is going to be more expensive and a greater opportunity for things to go wrong. Because once it gets to the States they got to unpackage it may be re-package it, put the correct labeling on it and if you can do that overseas and obviously double check it with an inspector or with photographs or even with the freight forwarder that you choose, having them do some checking that will cut out costs for the entire shipment.
The other thing that is to keep in mind, we get a lot of costumers that are unsure whether they want to ship air freight or ocean freight and air freight in general is going to be a large multiple more expensive, so our recent shipment I was looking at it yesterday air freight was eight times more expensive then ocean freight. So a lot of times people are like “I want to see the price both for air and ocean”.
But one thing I recommend is air is always going to be more expensive, there’s just less capacity they charge based on the dimensional weight or the actual weight of the shipment. But for that extra price you are getting it there in a couple of days instead of a couple weeks. So try to plan out ahead of time your orders and figure out a way that you can ship via ocean freight because it’s going to be a small fraction of the price of the air freight.
David Aladdin: Yeah, great. I literally just scheduled an air freight shipment knowing how painful it will be, it came. The air freight cost to be specific it was 21000 and I’m sure it’s going to go a little bit up.
Max Lock: Wow!
David Aladdin: Yeah it’s a very big shipment, but I’m trying to get it in before fourth quarter and black Friday and Christmas just to stay in stock.
Max Lock: Got you.
David Aladdin: Just hurts saying that.
Max Lock: Yeah, well we can, we can probably show you what else is there in the market. Right now there’s also because people are trying to ship for black Friday and for the holiday time the demand has increased for air freight and that’s the airlines are taking advantage of that and trying to increase the prices.
David Aladdin: I want to talk a little bit more about Fleet. When a freight forwarder actually decides they are going to work with you, do they try to onboard you into their own dashboard or how does this work?
Max Lock: So are you talking about when a freight forwarder signs up for Fleet or when they begin working with the costumer?
David Aladdin: Begin working with the costumers.
Max Lock: Sure. So everything is done on the Fleet platform they don’t . . . so what will happen is you get the multiple quotes back, you can compare them you know whether price is important or liability is important or transit time you compare all that. You can read reviews of the provider and when you go to book it the next step would be to finalize those details. So maybe the weight has changed slightly maybe the pickup address has changed or delivery address.
You can adjust that information and then the freight forwarder comes back and confirms that information. After that point if there are no changes then you can go on and finalize the charges if there are changes like the weight is more or the size is more or you, what you said you were shipping to California and now you are shipping to Michigan, they can adjust those pricing and adjust the pricing you still have to finalize and agree to it.
At that point you can also share the document so the freight forwarder will share the bill of lading with you, you can upload your packing list and commercial invoice so that they have your suppliers contact details and all the details on that shipment. So all that back and forward is handled on the Fled platform, you get email notifications it all happens rather quickly so you don’t have to worry about sending a bunch of emails or phone calls.
So that’s one portion of it, the second portion is all of the messaging and status updates is also done on Fleet so if you have a question about when is it being picked up or how you fill out a certain paper work or who’s going to file the costumes clearance, that communication also happens on Fleet so again no more searching through email threads or trying to hunt them down on the phone. So after all those details are finalized you can pay with the shipment with a credit card which is very rare in the industry or through your bank account and you will be able to track the status of the shipment as it goes along.
So this whole process is done on the Fleet platform the freight forwarders are actively doing it on the Fleet platform so you don’t have to hop around between a bunch of different sites or emails or phone calls.
David Aladdin: Yeah I like the idea of being able to review a freight forwarder. I have it pulled up right now while you were talking and I was looking at some of the reviews, what if someone leaves like a negative review or let’s say what if a customer has a bad experience with a freight forwarder. Do you guys intervene at some or? How does that work?
Max Lock: Exactly so the other benefit of booking through Fleet is that we kind of provide this umbrella of customer service on top of the experience. So with Fleet you can switch between providers for every single shipment. If UPS is cheaper on one and a smaller forwarder is cheaper on another one you have the flexibility to switch between instead of working with one forwarder all the time.
So because of that Fled provides a service for whatever provider you select on the platform, you get that contact information for the freight forwarder but Fleet is also here to answer any questions, if you want to know where you shipment is, we are happy to take those calls and that’s what we are here for. Because ultimately at the end of the day we need to make sure that you have the best possible experience shipping those goods.
So we try to really be pro active about following up with freight forwarders making sure the goods are moving, things are on time, prices are accurate so that way it doesn’t cause any of those kind of customer services nightmares or big melt downs once the shipment already started moving.
David Aladdin: We have got about 10 minutes left. What have I missed in this interview?
Max Lock: So though, one other area that I see that comes up frequently with. People are just kind of getting started with Amazon or their own e-commerce sites is they tend to have smaller orders to start off and a lot of people want to jump straight to the freight forwarder because a freight forwarder is cheaper than a UPS or FedEx or a DHL. But the thing that I think I important to understand is any shipment that is under 100 kilos is not going to get a freight forward excited, because unfortunately they are going to have to add other fees like paper work processing or costumes clearance that is often times included in the fees that FedEx or UPS are small parcel carrier would charge.
So I definitely recommend if you do have a smaller order you are going to end up spinning your wheels and you are not really going to find a great deal if you are shipping under 100 kilos. What I would recommend doing is FedEx actually has a phone number listed on their website, it’s called the FedEx Great Rate hotline and if you call up that number, you can’t do it online. But if you call them they have this special team of people who look for excess capacity in their aircrafts and they will all the time is give you quite a large discount for calling them, giving them the information and they try to find where they have holes in their aircraft where they can kind of fit your shipment in and you can end up saving 50, 60, 70% by just calling that number instead of going online and finding the quote.
David Aladdin: What airline or what company does that?
Max Lock: FedEx.
David Aladdin: Right, very cool. By the way us, the AmzSecrets community, we don’t ship less than 100 kilograms, we go big.
Max Lock: Ok, Yes, well I mean sometimes you might have samples of product, so yeah I don’t believe UPS has a similar program but FedEx. Just Google FedEx Great Rates, it’s a great service for some of those smaller shipments.
David Aladdin: I find it. . . Fleet . . . you guys have built a really awesome concept and you know, you’ve executed it pretty well on it. I haven’t used a service that I’m not affiliated to you guys just for everybody listening but I love the concept where you have freight forwarders all applying to work with you and you can use different ones every single time, so that was a very. I don’t know anybody else doing this kind like I know of one company that is actually the freight forwarder who has a online dashboard but not managing lots of different freight forwarders so that’s really cool.
It was awesome to have you on the show Max; it was great talking to you and all the golden nuggets that you shared today.
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