FREIGHT FORWARDERS CAN BOOST PROFITS FOR SMALL BUSINESSES

FREIGHT FORWARDERS CAN BOOST PROFITS FOR SMALL BUSINESSES

Jerry Murphy tells a story about a Pacific Northwest manufacturer who for years had been building $1 million canal diggers and turning them over to customers at a factory in Washington state.

The manufacturer made 10 percent or so and couldn't see much point in delivering diggers to the Middle East when customers were willing to pick them up at his back door.But Mr. Murphy finally convinced him to offer a delivered price matching the $1.5 million Arabian buyers said it would cost to buy the machine and move it to their canal project.

A 25-year veteran of Geo. S. Bush & Co., the region's largest freight forwarder, Mr. Murphy was able to deliver the digger for less than $400,000. The manufacturer's profit doubled.

That's how a small business can profit by working with a freight forwarder on the shipping end of a sale, Mr. Murphy told several groups from the 1,000 exporters in Seattle for the U.S. Small Business Administration's first national export conference.

''Savings like that are key for the exporter," Mr. Murphy said. "But even more important, by handling the shipping, the exporter is telegraphing a message that he knows what he's doing."

The forwarder told exporters from small and medium-sized firms that they need to be involved in the shipping business for their own protection.

He recounted the case of an apple grower who had also let Taiwanese fruit buyers find their own low-cost transportation for his fruit.

''The apples were arriving in Taiwan as applesauce," Mr. Murphy said. ''Do you think the people in Taiwan blamed the carrier they'd booked? All they remembered was that they were getting damaged fruit from this guy."

Any sophisticated producer has to be adept in moving his finished product out, and his supplies in, if he hopes to get a firm grip on quality and cost, he said.

Exporters must know the basics of transportation, he said, including the fact that most U.S. export cargo doesn't move on steamships with fixed port calls and schedules.

''By volume, the majority of cargo that goes out of the United States is not on liner ships - it's charter business," he said.

For example, specialized refrigerated tramp ships may call in Puget Sound only when apples are in season and spend other parts of the year moving fruit in Chile, New Zealand or other regions with different seasons, he said.

Small exporters often start out using liners, as they may need to do when volumes are relatively small, but fail to recognize potential savings of charter shipments when annual volumes pass 5,000 tons, he said.

Specialized exporters without expertise in auditing also may lose money

because they go ahead and pay trucking or rail bills that have been miscomputed, he said.

Mr. Murphy noted that most forwarders are now tied into electronic systems that allow them to check on cargo status relatively simply, but said that various segments of the transportation industry are still examining whether proposal for electronic data interchange are the sure money-savers they are supposed to be.

Railroads and other carriers have discovered substantial savings in EDI, but Mr. Murphy said it's not always clear that the expense of electronic movement of data in standard formats is superior to a cheaper facsimile transmission, particularly when volume is small and the transaction simple.