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Why are freight forwarders not interested in small shipments?

Perhaps, you have been in the situation where you are requesting rates to ship a 50-100kg package, and you find out that small parcel companies –such as FedEx, UPS and DHL- are providing you with some of the highest rates for transporting your products. Freight forwarders,  sometimes offer you lower transport rates. Do you know why freight forwarders in general are not interested in small shipments?

First of all, let’s make sure we understand the difference between the two vendors we are talking about.

These small parcel transport companies are, most of the time, cargo airlines that have assets dedicated to specific missions. These missions can be: pick up parcel, load all the cargo in their dedicated planes, transport it, and deliver it. Their expertise is to move boxes from point A to point B, including the pickup at origin and the delivery at destination, with a just-in-time promise.

Freight forwarders also provide the transportation service from point A to point B. But they are also an intermediary between the shipper and other logistics services. They are interested in offering multiple solutions for any shipper’s needs, which includes customs clearance, document handling, trucking, and others. They do not have assets, but they have an interesting network of logistics providers that enable the forwarders to create customized solutions.

But you have to know which one makes the difference for a very small shipment.

Small parcel transport companies may offer you higher transport rates, but your products will always be a priority for them because they are based on just-in-time services. Meanwhile, freight forwarders can offer lower transport rates, although they buy the transport service from carriers who have the assets, but they always want to sell you Value Added Services (VAS) or add some extra destination fees. Those “additionals” are the key for forwarders to make profit. Those are the services they are more interested in selling you. Therefore, when you choose a freight forwarder for a small parcel, in the end you will probably pay more. Furthermore, if you do not buy the optional VAS, you may become unattractive to them, which means that there may be delays in the communications and services.

Freight forwarders are not interested in small shipments, simply because they do not generate too much profit for forwarders, since forwarders' profit is a markup over the DHL / Fedex / UPS discounted rates they get.  This means when they get rate requests and bookings for bigger volumes, their unconscious (or conscious) reaction is to give priority to the big boxes from shippers who ship more frequently (10 shipments / month or more). Then, you get late replies to your emails, and perhaps even your shipment is also delayed because a “bigger” shipment occupied the  spaces available. It is more likely so during peak seasons.

There are exceptions out there in the logistics market, but the above mentioned situations are very likely to happen. In the end, it is freight business. Every type of business has its own ways to make money; freight forwarders are not interested in small shipments because they don't make as much money as they do with bigger shipments. But don't be discouraged, good quotes for your shipments are out there, the Internet offers  you many tools to get quotes conveniently online.  Chances are you will find them, you just need to get familiar with the new technologies, actively get quotes from multiple sources  to have a good benchmark and pick the best one for you. 

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