Grip on Transport – Your own logistics Control Tower

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Transinnovate offers solutions for a logistics control tower, both the necessary software system and the service. Because it is a buzzword, we explain on this page why a control tower is useful, what is needed, and how Transinnovate can help shippers with this. If you want to discuss with us what a control tower can bring you, please feel free to contact us.

Why a Control Tower?

If your company trades or produces physical goods, transport is essential for your business operations. It directly affects your commercial margin and has a direct impact on your customer satisfaction. After all, if there are late deliveries, delays, or transport damage, your customer calls you, not your carrier.

Companies often focus on their primary process when looking for improvements, and transport is an overlooked aspect. “It’s running, and we have other projects now” is a common answer. A lack of overview and current data is often the cause of this lack of action. If there is no data to steer on, then steering becomes very difficult.

Experience shows that a control tower can result in a 10 to 15% cost savings on transport. You can also address quality problems with transport in a more structured and proactive way, instead of relying on gut feelings. Current data from your transport operation can also signal problems elsewhere in your process. An increase in the number of urgent shipments, for example, may be a sign of production problems. Companies can benefit greatly from a control tower.

What is a Control Tower and What is Needed?

The term control tower is derived from air traffic control in a ‘control tower’ that efficiently (and safely) handles air traffic with a central overview. It revolves around 1) having information and data, 2) the ability to steer directly, and 3) tight processes and clear responsibilities.

Information: It is clear that in the management of aircraft, having up-to-date and correct information is essential to life. Although there is usually no literal life or death situation in transportation, having up-to-date, complete, and correct data is a must if you want to manage carriers effectively. However, many shippers accept that information is not up-to-date (monthly reports and carrier invoices are issued afterwards) and not integrated. It is often spread across their own ERP system (customer orders) and transport orders in email or the portal of one or more carriers. A good control tower ensures that there is up-to-date and complete data on customer orders, transport orders, costs, and quality in one central location. A Transport Management System (TMS) can help shippers with this. A TMS provides much better data than a (often rigid and limited) transportation module in an ERP system, which often only focuses on sending out a transport order. This can be detailed data or monthly reports that combine information from multiple carriers in one clear dashboard or report.

Management: Once the data is available, you can start managing. However, you need to have the tools to do so. You need buttons to turn and knobs to adjust. How do you record what is going well and what is not? What can you do differently if things are not going according to plan? It starts with smart transportation procurement (transport tendering), where our advice is to choose the right mix of carriers (more than one) to ensure a cost-effective but also robust operation. Good organization beforehand makes good management much easier.

Again, a good TMS ensures that the tools for management are available in the same place as the data. For each shipment, there is immediate insight into cost and delivery time options, insight into which orders require urgent action, and the ability to record quality problems immediately.

Clear processes and responsibilities: With a TMS, information is available, and there is the ability to manage. This often reveals the most challenging aspect, namely the knowledge and discipline to actually take control. Good tools are half the job, but the other half is discipline and craftsmanship. Air traffic controllers do not receive thorough training for nothing and work according to strict processes and clear responsibilities. This is often underestimated in transport management. Both internal and external stakeholders need to know what their tasks and responsibilities are and how they should work. Someone needs to take charge of this. Analysis of key performance indicators should lead to the right actions and the management of the internal operation and logistics service providers.

Outsource or do it yourself?

Especially because of the last aspect, a control tower is sometimes outsourced. This has advantages and disadvantages. The advantage is, of course, that shippers do not have to invest in a TMS themselves, and that the hired specialist makes capacity available. A disadvantage is the independence of the external specialist and the transparency. 3PL and 4PL parties often have agreements with carriers that do not necessarily use the best carriers in the market. It can also be that own trucks are used for the wrong reasons. Depending on the business model, service providers do not necessarily make the best choices for their customers (conflict of interest), and there is often no complete transparency. The margin that a 3PL/4PL asks for also leads to cost increases compared to doing it yourself and must be weighed against the investment in a TMS and time.

Doing it yourself means investing in people and resources, but it is always the most transparent, leads to the most direct control of the transportation operation, and gives the most flexibility to switch carriers if it is better due to quality, cost, or market developments.

How does Transinnovate help shippers?

We can support shippers in all steps of the process regarding a control tower. This starts with good organization and smart procurement, so that there is something to choose and steer. In addition, we provide modular and accessible TMS solutions that make transport management software now also accessible to small businesses and SMEs. This gives you up-to-date and complete information that is easily accessible, and the ability to intervene directly. We can help you define processes and responsibilities clearly, and train your personnel to manage them effectively. Finally, we can also provide complete outsourcing services by offering to manage your Control Tower. Our knowledge, experience and independent position (no agreements with carriers and no own transport equipment) ensure that we can transparently and effectively help you achieve your goals. This way, we help you maintain a healthy margin and satisfied customers (optimal freight costs with good quality).

If you would like to learn more about how we can help you reduce your transport costs, please feel free to contact us.

50 tips on how to save 30% on transportation costs immediately.

Looking to gain more knowledge in optimizing or managing transportation? In our transport guide, we provide you with:

Tips for immediately saving costs on your current transportation.
A wireframe to help you gain control and insight into your current transportation data per shipment.
Insights into knowledge and developments within the transportation industry.

Smarter transport decisions start here.

Manage all your carriers from one place.
Track costs, choose the right carrier, and optimize your transport operations with Transinnovate’s TMS.

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What is FAS Incoterm®?

FAS (Free Alongside Ship) is one of the official Incoterms®2020 rules published by the International Chamber of Commerce (ICC). It applies exclusively to maritime transport and means that the seller is responsible for delivering the goods alongside the vessel at a named port of shipment. At this point, risk and cost transfer from the seller to the buyer.

Incoterms® are globally standardized trade terms that define who is responsible for transportation, costs, and risk during international shipping. The latest version, Incoterms® 2020, came into effect on January 1st, 2020.

An overview of all incoterms is available here.

The Free Alongside Ship (FAS) Incoterm is an international trade agreement that is used for transport by water. In an FAS arrangement, the seller is responsible for delivering the goods to a named port, placing them alongside the vessel. The transfer of risk and cost occurs when the goods are alongside the ship and ready for export.

Advantages FAS Incoterm®

Clear Transfer of Risk

FAS provides a clearly defined point where responsibility transfers from seller to buyer: when the goods are placed alongside the vessel. This reduces the risk of misunderstandings or disputes.

Buyer Controls the Main Transport

Once goods are alongside the ship, the buyer takes over transport arrangements, which allows them to choose their preferred carrier, shipping schedule, and potentially negotiate lower freight rates.

Widely Applicable in Maritime Trade

FAS is particularly suitable for bulk cargo and large-volume shipments where the buyer has experience managing ocean freight or prefers to control logistics beyond the port of departure.

Drawbacks FAS Incoterm®

Limited Seller Responsibility

The seller’s responsibility ends before the goods are loaded onto the ship. If damage occurs during loading or the main transport, the buyer bears the risk and must handle insurance or claims.

Early Risk Transfer

Risk transfers to the buyer at the port, not after loading or departure. If the goods are damaged after being placed alongside the ship but before loading, the buyer is still responsible.

Risk of Disputes

Disagreements may arise if the loading process is unclear or if issues occur during shipping. It’s crucial to define in the contract who handles loading, inspections, and documentation.

Example of FAS in Practice

A wine producer in France sells bulk wine to a distributor in the United States. The agreed Incoterm is FAS – Port of Marseille.
The seller delivers the wine in barrels to the Marseille port and places them alongside the vessel. From that moment, the buyer handles the loading, sea freight to New York, and customs clearance.

Summary Free alongside Ship

Transport Mode: Maritime (sea or inland waterway only)
Seller Obligation: Deliver goods alongside the ship at named port
Buyer Obligation: Handle loading, main carriage, insurance, import
Risk Transfers: When goods are placed alongside the ship
Best For: Buyers who want control over ocean freight and logistics

In summary, FAS provides a clear transfer of risk and is suitable for buyers seeking control over transportation logistics. However, sellers have limited responsibility after the goods are placed alongside the ship. Careful communication and a well-drafted contract are essential to ensure a smooth FAS transaction and avoid potential disputes.

Do you frequently require goods to be transported in short sea of ocean freight, either as seller or as buyer? If you would like to discuss which Incoterms® and transport solution fit best to your case,

Need Help Choosing the Right Incoterm®?

Do you frequently import or export goods via sea freight?
Are you unsure which Incoterm best suits your business?

Contact our logistics experts for personalized advice on Incoterms® and optimal transport solutions.

What does FAS stand for? FAS stands for Free Alongside Ship – meaning the seller delivers goods…

CIF Incoterm® (Cost, Insurance and Freight)

The CIF Incoterms® is one of the standardized international delivery terms agreed upon between buyer and seller. These are rules that establish worldwide agreements on transport, costs, and any potential damage during transportation. Every ten years, the International Chamber of Commerce (ICC) updates the Incoterms®. The most recent version, the ICC Incoterms® 2020, came into effect on January 1st, 2020. An overview of all incoterms is available here.

What is CIF Incoterm®?

The Cost, Insurance and Freight (CIF) Incoterm® is a widely recognized international trade agreement specifically designed for the transportation of goods over sea or inland waterways. Under a CIF arrangement, the seller assumes a significant portion of the responsibility and cost associated with delivering the goods. This includes not only transporting the goods to the agreed-upon port of destination but also paying for the freight charges as well as procuring and maintaining adequate insurance coverage to protect the shipment during transit. The seller is required to provide the buyer with the necessary documentation, such as the bill of lading and insurance policy, to enable the buyer to claim the goods upon arrival. It is important to note that, despite the seller’s extensive obligations regarding cost and insurance, the transfer of risk from the seller to the buyer occurs as soon as the goods pass the ship’s rail at the port of shipment. This distinction between cost responsibility and risk transfer is a defining characteristic of the CIF Incoterm and plays a crucial role in international maritime trade, as it clearly delineates the obligations, rights, and liabilities of both parties involved in the transaction.

Advantages CIF Incoterm®

- Comprehensive Service for Buyers: CIF Incoterm provides a comprehensive service for buyers as the seller is responsible for the cost of transportation to the named port, freight charges, and insurance. This minimizes the burden on the buyer and simplifies the purchasing process.
- Reduced Buyer Risk: With insurance included, CIF mitigates risks associated with transportation, such as damage, loss, or theft. Buyers benefit from added security, knowing that the goods are insured during transit.
- Clear Cost Structure: CIF offers transparency in costs as the seller covers transportation costs, freight charges, and insurance. Buyers have a clear understanding of the total financial commitment involved in the transaction.

Drawbacks CIF Incoterm®

Limited Seller Responsibility: Sellers have limited responsibility after the goods are loaded onto the vessel. If issues such as damage or delays occur during the ocean freight, the buyer bears the responsibility and cost of addressing these problems.Risk Transfer at Ship’s Rail: The risk transfer point is when the goods pass the ship’s rail. If damage or loss occurs before this point, the seller is responsible. However, the risk transfers to the buyer relatively early in the transportation process.
Risk Transfer at Ship’s Rail: The risk transfer point is when the goods pass the ship’s rail. If damage or loss occurs before this point, the seller is responsible. However, the risk transfers to the buyer relatively early in the transportation process.
Potential for Disputes: Disputes may arise if there are disagreements about the loading process or if issues occur during the ocean freight. Clear communication and detailed agreements on loading procedures and responsibilities are crucial to mitigate these risks.

Summary Cost, Insurance and Freight

In summary, CIF Incoterm offers a comprehensive solution for buyers, with the seller covering transportation costs, freight charges, and insurance. While it provides a clear cost structure and risk mitigation, buyers need to be aware of the limited seller responsibility after the goods are loaded onto the vessel. Careful communication and a well-drafted contract are essential to ensure a smooth CIF transaction and avoid potential disputes. Do you frequently require goods to be transported in short sea of ocean freight, either as seller or as buyer?

If you would like to discuss which Incoterms® and transport solution fit best to your case, please contact us.

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