Top 10 tips for outsourcing your shipping department
We know that an in-house shipping department is often the last place anyone looks for modernisation or up to date technology, let alone staffing or career progression. However this oversight has been to the detriment of many companies – the staff that loyally produced the correct paperwork and understood the business are being replaced, at best, with a computer system. So it is with these considerations in mind that the Institute of Export have developed a service to enable companies to outsource this highly regulated and compliance-riddled necessity.
Using the proven skills and wealth of experience at our disposal, this service has been designed to help companies large and small to focus on their main business – instead of being subsumed by the increasingly complex world of international logistics compliance.
If you’re not sure what to expect from an outsourced shipping department, here are our top 10 tips to ensure your relationship will run smoothly:
- Check that the shipping office has all the relevant knowledge about your product or service. This will mean investing time and resource at the beginning of the project to ensure that the outsourced department is familiar with your products. This includes finding the appropriate Harmonised Codes for your products as this will tell customs what tariff rates to use. It is your responsibility to give this information to the outsourced department as it is yours to tell the freight forwarder if you continue to do this internally. You cannot rely on anyone else to do this for you as the final responsibility for customs declarations lies with your company – not an agent or forwarder. It’s easy to get this right as you know your products better than anyone else. Please note that you may occasionally be asked by some customers to change or simplify your code as it will make duties lower in their market – however this is not legal and must be ignored.
- Set a clear Service Level Agreement and agree terms that you think fair and you know you can work with. As this is an agreement, both parties need to agree to the terms.
- Decide if the outsourced shipping department will book and manage the shipment of the goods as well as the paperwork.
- Does the ecological nature of the delivery impact on your cargos? If yes, you will need to ensure that the brief includes freight issues and which type of transport is best for you.
- If you have any goods that might possibly be considered dual use you will need to consider how you can help the shipping department to create the correct filing and use the relevant export control software. You may also have issues around sanctions that have been imposed on your market or a market you think might be lucrative. It is important to have support and up to date information on how this might impact on your business. Although you will normally know if you manufacture goods or develop software that is subject to export controls, a good shipping department will help with this when setting up the agreement.
- Calculate how much you spend currently on this activity in-house and therefore how much would represent a good price if outsourced. This should include pay, NI, holidays, training, office space etc. It soon mounts up and it is not just the shipping department but also the finance department that gets involved collecting payment and needing documents to be correct.
- It could also be useful to outsource the packing of your goods. International orders and packing is a specialist activity and it may be sensible to look at liaising and developing a good understanding with your shipping department to ensure that they are happy to advise when necessary on these issues of packing and marking goods. A good packing list will also help your goods to travel across borders more easily.
- Order tracking is now part of most freight companies’ software but it should be clear what sort of access you or your customer would need to support them and ensure a sustainable business relationship.
- Communication between the two organisations is important and it may even make sense for a ‘white labelled’ shipping department telephone line or email to be set up to ensure your customer receives updates or can ask questions with quick responses. Know how problems will be solved and make sure you’re aware for your CRM or client facing staff’s sake.
- Finally, there are many issues that surround insurance and these need to be understood and agreed. You will need cargo insurance, (in-transit or marine) and product liability and even professional indemnity and cyber insurances may be needed, so check that you know what would happen if you lost or damaged your data or goods.
This is not a definitive list but it will help you to think through the issues of outsourcing your shipping department and whether or not it makes sense for your business.
Remember the impact of global security concerns is also being felt by the world of trade and compliance is not red tape but for everyone’s safety.
If you would like more details on using the Institute of Export’s shipping office please call +44 (0) 1733 404 400.