This article is centered around startups operating within the UK and EU zones. This is more of a general guide on how to start exporting goods on behalf of customers to African countries.
OVERVIEW
Most African countries are serious importers of goods from the Western countries, be it personal or commercial in nature and this needs to be recognized by anyone thinking about being a freight forwarder and specialising in African freight. This means that you would need to put up a very good business structure to handle the customers and beat the competition. It is worth noting that some of the export routes are already saturated with freight forwarders that are highly experienced and professional. Take Nigeria, Kenya and South Africa for instance , these routes are well established export routes and heavily operated by loads of experienced forwarders. That said it is also a viable export route for any forwarder to come into taking consideration of the volume of shipping jobs happening on these routes. Meanwhile countries like Zimbabwe , Tanzania, and Cameroun may have the export demand from UK and Europe but not enough forwarders serving them. This is why it is important to do research on this and make the necessary contacts to put your business in the right position.
It is true that the larger the economy the more business opportunities available but the job of a professional forwarder is to explore where the best profit can be made . I will strongly advice that you start with the routes you know best or where you have a reliable contact.
THE BASICS NEEDED
Company Registration: Is your company registered in the country you want to start the business from? Have you fulfilled all the requirements needed to start a freight forwarding business? Have you chosen the best name for your brand? If you haven’t done the aforementioned items then you are not ready yet.
Location: Is your business located in the right place and within where your potential customers are located? Even if it is how accessible is your business to customers? For example can they park comfortably in your business premises? How near is it to a public transport system for those that don’t drive ?
Warehouse or Storage: I think most startups with small capital would prefer to work out of storages or share warehouses, there are storage units like Storage King in the UK(no foods items allowed please) and large container storages called yards used for trading but mostly for export and import businesses. Is the warehouse big enough and can it accommodate goods without relocation in the case of rapid business growth occurs?
Vehicle : Are you offering door collection or drop off? Every freight forwarder needs a standby van either company owned or through a sub contractor. A business needs to do serious calculation on what will work best, customers love door collection and door delivery, this will win you customers any day.Your business can also liaise with established courier companies like DHL, UPS etc to help with collection of customers goods from their door to your storage or warehouse.
Training : Though experience is the best teacher and some countries do not require any professional training or certificate to start a forwarding business, we do encourage startups to have some basic idea of freight forwarding fundamentals and some calculations in Air and Sea freight like volumetric weight for Air freight and cubic meter for sea freight. Please see a previous article on this here.
Tools: You need at least a basic accurate cargo weighing scale (Not bathroom scale please). You need a weighing scale that has a separation between the base and the meter that displays how much weight a good weighs. For start ups, Abcon Pro ship can be picked up for less than £120. This weighing scale or it’s similar scales are fantastic mobile cargo weighing scales that can be moved about and can take the weight of goods in front of a customer’s door for transparency. A tape measure is needed if you want a volumetric or cubic meter measurement . Most of all you will need a wrapping film either black or clear film to be able to handle the goods perfectly well. Please see attached images below. A pallet and strap is a necessity to secure your goods and ready for a long journey. You want to keep the goods intact before and after it gets to destination. See basic goods handling tools and packaging types here or below.
IT Systems: These days IT has become a major part of a business infrastructure and if not the only one sometimes, to be a successful freight agent you must be professional and to be professional means you will have an IT system that will cater for billing and tracking and these being the minimum. A business can use any system it deems fit but we will recommend Book Track Deliver for a simple freight management system . This is a free freight management software with video tutorial and standby support.
Connect To The Right People: Have you spoken to the right airline that will help you move the goods? If you are not a full member of IATA and not able to meet up a minimum threshold of cargo volume, you will not be able to book airline or access the rates directly but don’t worry this takes time for a startup, Freight forwarding has levels, there will be bigger upper level forwarders with IATA memberships that offer cheap cargo rates and customs documentation services that will be suitable for you. Usually these forwarders will have limits and minimum amount of weights you can bring in, in the UK one of such companies with a high reputation is Nexus cargo handling .
You may also reach a price deal and partner with other startups like you to move goods together to bring up your volumes but you still need to use the upper level forwarders as mentioned above. Usually most people start this way by becoming a sub-agent and consolidating to other forwarders with bigger volumes then move on to being bigger and offer sub-agent opportunities to others.
Arranging a solid customs clearing agent is one of the first things you should do, most clearing agents will normally have the facility to hold your goods after clearance, then can also help you do the local delivery, the whole process of clearing and delivery can be sub contracted to the agent. Another option which is usually the cheaper and best option is to create a business presence and facility in the country to hold and deliver the goods yourself. This will give you the freedom to offer a better service and have control of the whole process at destination. Afodel.com has a large database of verified African forwarding and clearing agents.
Terms and conditions: Customers need to know the way you operate. Payment, insurance, delivery times, restricted and prohibited items are all part of what your customer should know before they take your service, you can attach a link to this terms in your email, whatsapp, invoice etc. It is important that the customer see and agree to it before using your services, this is the major reason disputes occur in freight forwarding.
PROVIDE SERVICE OPTIONS
Air freight: Study your customers and see if they prefer more air freight to sea freight, you can also mix both. Sometimes there may be more hassles sending or clearing air freight at the destination. You may also experience volume issues with the airlines that may not be favourable for you. Generally Air freight is quick and can generate a daily or weekly income for a business and Air freight is priced per kilo.
Sea Freight : Study if your customers prefer sea freight to air freight, businesses see sea freight as a very cost effective way of moving large quantity of purchases for a cheaper price , it may not necessarily be more profitable than air freight for a customer , as a forwarder your business is to advice the customer on the pricing, delivery time range and safety of goods, it is left for the customer to make a decision. The perfect pricing method for sea freight is by kilo or Cubic Meter (CBM) with the latter being professionally preferred.
Road Freight: Road freight is also a vital but not a common form of freight to Africa, if you do your research you may find there is a lot of exportation going on by road within Africa, to and from Africa. Usually continents or countries that have land connection will definitely do intercontinental road freight though this is not so common, or a short part of the freight will be trans modal (may be a short part by ferry and majority by road).
Rail Freight: You will be surprised that there is a huge amount of freight by train happening between continents and countries, for example there a rail freight transport happening between China and mainland Europe as i write now using the old silk route, you can explore if that happens in Africa and how to tap into it.
MARKETING
Audience: Trust me you don’t want to be a freight forwarder that ships to Nigeria and then shares your flyers only to Zimbabweans( Don’t get me wrong, a Zimbabwean may mention your services to some Nigerian friends and that may win you customers). Consider how well your business will do if you share that same flyers to a group of Nigerians and then keep linking up to Nigerians and sharing your flyers to them.
In freight forwarding 3 things comes first and that is PRICING, SPEED OF DELIVERY AND SAFETY OF GOODS. Get these 3 things fully incorporated in your marketing always and practice what you preach.
Digital Marketing: Explore all forms of advertising online to reach your target audience , hire experts don’t do it yourself always. you wont have the time to run your business operations and still have time for marketing . A robust website will help you very well to make the statement that you are a viable company and customers can access your information without having to call you on the phone. For experts at building freight and logistics focused websites please contact mds.business
Directory and Maketplaces: Join your fellow forwarders wherever they are seen, be with the big boys in the industry, list your business in the local and international directories, One free one that incorporates directory and marketplace is Afodel.com.
Spare No Funds: Let me call a spade a spade, there is no free food in marketing, gone are the days marketing is free if there was ever when , if you don’t spend money to market your services then Good luck.
OPERATIONS
This refers to the continuos engine running the business, i will talk about Air and Sea freight only, assuming you have done your home work on the basics mentioned above, please pay attention there are some slight differences;
Air freight:
It is better to set a shipping date for Air and sea freight, this gives your customers the idea on when to bring their goods or order for collection of their goods. Most forwarders prefer Fridays which gives time to collect, handle goods and drop off at the airline depot.
1. You have set up all your basics and done marketing.
2. You have started getting calls to ask about prices and your procedure.
3. You have won a job that is either door to door collection and delivery or customer is dropping off at your warehouse. Door to door, you will make sure the customer packs the items very well and securely , boxes are the best, then drive up there or send a courier to collect. Make sure the price of these are built into your cost or you can separate them from the actual export cost. This needs to be made clear to the customer , if you are doing the collection yourself or using a driver make sure you have a weighing scale in your van to confirm the weight of the goods in front of the customer, then ask for payment upfront. To be successful as a startup i will advice that you offer no credit, freight profit margins can be from 5% to 10% usually and you need the full funds to provide the services. I repeat, collect full payment always or you will be in debt. The same applies for dropped off goods. Please make sure you have offered an easy means of payment including taking card payment on site. The most important thing is to inform customers before hand how you operate in terms of collection, drop off and payment.
4. Goods are now at your warehouse or storage, you will need to handle these goods perfectly to prevent loss or damage. The common handling tools in this instance is black or clear wrapper and sellotape, use the wrappers to wrap the goods tightly to prevent water or anything getting in, the plastic wraps are water resistant anyway. The sellotapes should be used after the plastic wrappers to tighten the wrapped goods and keep the plastic wrappers in check.
You can arrange these goods on a pallet to keep all of them in one place and easy to be identified. It is not as if you cannot put them in big boxes to ship as single boxes only but the safer practice is to consolidate the goods on a pallet. Your clearing agent will love you for putting them on a pallet trust me on this. Depending on the arrangement you have made for transporting the goods to the upper level forwarder as mentioned under the Basics Needed above, the goods will need to be dropped off at the airline or forwarder’s depot anyway.
5. You have dropped your goods at the depot as mentioned above, the forwarder or airline will weigh your goods, issue you an invoice and an Air Waybill (AWB) for the journey, depending on the type of goods, the upper level forwarder may decide use a passenger airline or cargo airline for your goods. As a first time or new forwarder, you will need to make payment upfront before you can establish a credit relationship if there are any available. I will advice that you collect all your payments upfront and pay for your shipment upfront then keep this as a ritual.
This Air Waybill (AWB) should be sent to your clearing agent at destination who will issue invoice for clearing and any other services being offered to you like storage and delivery of goods as mentioned in the Basics Needed above.
Sea Freight:
The processes on Numbers 1 -3 on Air freight above are the same but the following will apply from number 4 on sea freight.
4. Once the goods are at the depot, the handling is very much the same as in Air freight the only difference is not all goods will go on a pallet , it is not mandatory that all goods will go on a pallet since they are going into an enclosed container. In this instance i would like to state that you contact shipping line through their agent to order a container if you have enough goods but as a startup you can find an upper level forwarder and reach a price deal then consolidate your goods in his or her container for movement to destination. You must work hand in hand with your partner on loading date, sailing date and arrival date. This information must be available to your customers at all times, make a good deal to shield your customers from the upper level forwarder so they don’t turn round and use him or her next time. Being a startup you cannot beat the upper level forwarder’s price power.
One thing to learn in shipping also is trust, the relationship between you and your customer is like that of bank and their customers, it is based on trust. As long as you deal with your customers transparently and your prices and services are good, you will have a high tendency to retain most of your customers (70% and above of returning customers is encouraging).
In the case that you have enough goods to go it alone, seek advice from other forwarders shipping to your destination on how they manage the process and most importantly let your clearing agent advice you on what to do. Make sure you are in line with your clearing agent.
5. In the case where you have dropped your goods with a fellow forwarder as mentioned above, you will just be issued with an invoice and copy of the house Bill Of Lading (BOL) while the forwarder will retain the Master. In the case where you are shipping a container directly, then the shipping line will issue you an invoice and a Bill Of Lading in your name going to your contact at the destination. It is called Consignor(You) and Consignee(the receiver). I will reiterate here that it is very important you work with your clearing agent at destination to avoid mistakes which can be dead costly and no forwarder no matter your experience is immune to sudden additional cost in clearance. This may come from sudden increment before your goods comes into the port or wrong declaration on your AWB or BOL.
DESTINATION OPERATIONS
The 3 most important things you need at destination are these;
1. A strong and experienced clearing agent, i will recommend anyone with 5 years experience and above and with a proven track record, look into their reviews and see how they have done. Make sure it is a proper registered business and not an individual. Check if they have the capacity to offload, store , handle and do delivery of your goods efficiently.
2. A secured storage and manpower to provide customer service, handling and delivery of goods , if your agent do not provide this, you must provide one at the destination yourself or you will be telling stories to customers which can easily put you out of business before you start.
3. A trusted customer service team to provide details for customers at destination if your agent cannot provide this, this team will make sure enquiries are handled, customers are informed of the status of their goods and collection and delivery of goods will be better coordinated.
Conclusively, setting up a freight forwarding business can be a hard task but also an easy one if you do the right research, we hope this article will help new startups and even already running businesses to understand the basics just in case they missed it.
Freight forwarding is a lucrative business when better managed, my advice is for startups old and new forwarders to sort out a good IT infrastructure to make it absolutely easier to manage their businesses.
Michael Nwokeji is a freight forwarder and web entrepreneur that blogs mainly on freight related matters that are vital to forwarders and customers. For further consultation on this article please use this link to purchase my 1 hr business consultation package .
