Procuring and sourcing for transport
Procuring for transport
Organisations often do not have the means to fulfil transportation requirements internally. The appropriate fleet might not be available, or the right skills may be difficult to source; knowledge of the local market, infrastructure or legal framework may also be scarce.
When transport requirements cannot be fulfilled with internal resources, they must be outsourced to professional companies. Transport service providers must be selected carefully, as they will be handling goods and materials owned by the organisation and, in most cases, distributing them to beneficiaries.
Be aware that in the context of crises or an increased humanitarian response, it might be difficult to source those services as competition for them increases. In those situations, it is recommended that organisations share the available resources by liaising with other Red Cross Movement partners to identify efficiency gains through sharing fleet.
Where operational, the Logistics Cluster can organise shared transport services on standard routes. Local/national authority coordination resources (such as the National Disaster Management Office) may also support resource-sharing where the Logistics Cluster is not mobilised.
Sourcing transport services
The supply chain strategy for a programme may include the procurement of vehicles to transport people and goods. Where this is not included, renting/leasing vehicles (and possibly drivers) will need to be considered.
In some contexts, a single service provider will be able to provide transport services for both goods and people, but in most cases two separate suppliers will have to be identified.
Selecting a transport service provider for the movement of people
For selecting a transport service provider for the movement of people, refer to the Procuring fleet: process, selection criteria, delivery section of the Fleet chapter.
Selecting a transport service provider for the movement of goods
Below are a set of criteria that should be considered when sourcing a transporter. Note that these criteria are particularly relevant in long-term agreements and less so where transport services are sourced ad hoc.
- Owns or has access to a bonded warehouse to protect and control shipments in transit.
- Is licensed by the government to conduct customs clearance formalities and is up to date on changes in customs regulations.
- Offers a variety of services (freight booking, re-packaging, clearance, etc.).
- Has influence in the transport market, with port authorities, etc..
- Has an established reputation; has been in business for a number of years.
- Has a proven record of reliability, accuracy, timeliness, as verified by customer references.
- Has experience working with humanitarian actors.
- Owns fleet for inland transport and has access to specialised vehicles when needed.
- Has trained, competent, experienced and trustworthy staff.
Transport needs assessment
Before going to market to source transport providers, it is recommended that you complete a needs assessment and to capture its result in the issued sourcing document (RFQ, tender or EOI – see the Sourcing for procurement section for details on the sourcing process). The needs assessment should detail the below requirements at minimum.
- nature of the goods to be moved
- any specific constraints relating to the type of goods
- expected delivery timeline and frequency
- expected delivery points
- cost coverage (fuel, maintenance, insurance, tolls, loading, driver per diem, etc.)
- compliance with Red Cross code of conduct
- cross-border requirements if applicable
- weight and volume of goods to be transported.
Assessing the local transport services’ market may include pre-qualification of service providers available. This will involve identifying as many potential suppliers as possible and asking them a series of questions to assess their suitability.
Depending on the expected volume of expenditure, and following applicable procurement procedures, an RFQ or RFP can then be sent to these pre-qualified suppliers with the details of the services needed.
The sourcing document should clearly reflect the findings of the needs assessments and set out the selection criteria. For details on the recommended procurement processes, refer to the Procurement processes in the British Red Cross and Sourcing for procurement sections of the Manual.
Prior to the award of the contract, it is recommended to have face-to-face interviews with the successful supplier to review contractual terms such as:
- expected turnaround times (and any seasonal variations on this)
- cost per trip per load (if the routes are unlikely to change)
- contact focal points
- validity of quoted rates
- contract length
- payment terms
- penalties when agreed service standard is not reached.
Remember to select the right costing options for your needs – you can request a quotation per day, per type of vehicle, per ton or per route.
A template transport contract is available here and at the end of the section.
|Contract type||Details||Use when|
|Quote based on set quantities, set schedule,|
set origin, set destination, limited timeframe
|Needs are specific and limited in time
There is a pre-defined budget for the
There is a single expression of needs
|Open contract||Quote per vehicle type and per period|
(day, week, month) or per route
|Long term projects with regular routes
Transport services market is stable and
services can be scaled up and down
There are multiple requestors for
Available to download here.
Transport service provider evaluation and performance management
It is important to agree evaluation criteria for the service provider’s performance monitoring, so the service provider has an opportunity to improve their performance across the duration of the contract.
It is good practice to hold quarterly meetings with regular service providers to review performance against set key performance indicators (KPIs). This requires careful recording of performance data on all shipments carried out by the service provider, a task that must be appropriately resourced internally.
Appropriate points of analysis and performance to evaluate transport service providers may include the below data points.
- total volume transported (weight, volume, value)
- per cent of shipments received on time in full (OTIF) per contractual schedules and damage definition
- number of claims raised, total value of claimed damages
- per cent of properly documented services (returned signed waybills etc)
- variations from contractual rates
- total spend to date against total value of contract (“burn-rate”)
- options to extend the value or duration of the contract
- actual availability of resources against contractually agreed availability (drivers, loaders, vehicles…).
Transport service providers can also be contracted for single operations, whether they involve a single transportation or multiple pick-ups and deliveries. In that case, the right selection and procurement processes must be followed for the estimated cost of the operation and the contract terms will slightly differ, as the costs and services will be pre-agreed. Penalties should still be agreed, but where the services required are to be completed over a short period of time (less than three months), the supplier performance review is limited.
Sourcing clearing agents
Clearing agents can offer similar services to freight forwarders – they occasionally offer transport services from the point of entry into the destination country to the final delivery place. However, their “core” service offer is the clearance of goods through the destination country’s customs.
Clearing agents can be a valuable source of information in helping to anticipate issues that may arise during the customs clearance process.
In some countries, the government will impose a mandatory clearing agent; some shippers (senders/sellers) will offer services from a partner clearing agent in their quote, and some consignees (receivers) may recommend a partner clearing agent. Where clearing agents are recommended, it is usually good practice to use them rather than sourcing alternative agents. Where there are no suggested clearing agents, these must be sourced through a procurement process.
Selecting a clearing agent
The process and selection criteria are like those used when selecting a freight forwarder, with some more specific criteria to consider (that should have been identified in the transport needs assessment).
Below are some key requirements that should be included in the RFQ/EOI/tender document.
- is licensed by the government
- can handle road, air, sea shipments
- can provide details of procedures to follow for all types of goods ahead of shipment
- has offices located close to the entry points (port, airport, etc.)
- has access to a network of (bonded) warehouse
- can guarantee delivery to final destination
- has experience working with the humanitarian sector
- works with a network of licensed agents
- can share details of customers to provide references
- can share details of their client portfolio – contracting a clearing agent who will prioritise more important customers could be a critical risk to the delivery of supplies.
Sourcing a clearing agent
The sourcing document should also specify the criteria that will be used to evaluate the offer, some of which should be based on the list in the Selecting a clearing agent section above. As a result of responses to the above requirements, you may want to contract multiple clearing agents (one for air shipments and one for sea shipments, for example). You can also choose not to have contracts in place but a list of pre-qualified, pre-vetted agents, who would provide you with quotes on a shipment-by-shipment basis.
Note that the clearing agent’s fees structure is typically quite complex, and includes the following:
Remember to ask your clearing agent to provide the breakdown of the costs they forward to you in their invoices. Demurrage costs in particular should be clearly explained ahead of the clearing process.
Clearing agent evaluation and performance management
It is important to agree evaluation criteria for the clearing agent’s performance monitoring in the contract (or as an annex to the contract if they are linked to penalty fees). That way, the clearing agent will have a clear understanding of their client’s expectations and they are given an opportunity to improve their performance through the duration of the contract.
It is good practice to hold quarterly meetings, with regular reviews of performance against the KPIs that have been set. This requires a careful recording of performance data on all shipments carried out by the service provider, a task that must be appropriately resourced internally.
Appropriate key performance indicators to review clearing agents’ performance may include:
- average time taken to clear goods through customs (per mode of shipment), compared to contractually agreed time
- invoiced costs compared to quoted costs
- number of claims raised for losses or damages in transport and total value of claimed damage
- a review of cases where the process that was initially suggested had to be revised due to a lack of understanding of the specifics of the cargo
- demurrage costs incurred.
Note: demurrage costs are charged by port or airport authorities when shipments stay on their premises beyond an agreed number of days. They can add up very quickly as they are usually formulated per container or per pallet and incurred daily. They can be avoided through pre-defined agreements or preferential arrangements between clearing agents and port or airport authorities. They should be paid by the party responsible for the delay, but they are extremely difficult to waive once incurred.
Working with clearing agents
To process a shipment through customs, the sender or receiver of the goods (depending on the incoterm in place) will generally have to submit the shipping documents to the clearing agent in advance of the arrival of the cargo.
The type of documents understood by “shipping documents” will vary from shipment to shipment but will almost always include:
|Commercial or pro-forma|
|Declare total value of goods to be|
|Packing list||Provide physical details of consignment|
and detailed contents
|Shipper if sold EXW
Seller if sold on any other incoterm
|Donation or gift certificate|
|Declare 0-value of goods to be cleared|
and allocate ownership of goods
|Certificate of origin||Declare origin of goods||Manufacturer/seller
|Certificate of analysis||Provide quality assurance certificate||Manufacturer/seller
|Good Manufacturing Practices|
|Provide quality assurance certificate||Manufacturer/seller
|Draft and final shipping title||Provide quality assurance certificate||Shipper if sold EXW
Seller if sold on any other incoterm
Available to download here.
Note: a gift certificate template is available in the resources for this section.
Read the next section on Sourcing inspection services here.
Download the full section here.
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