Franco

There are many misused terms in logistics that have lost their original meaning over time. One such word is Franco. This term is very often confused with the term Loco with exactly opposite characteristics. Franco describes the delivery of goods at the seller's expense, which includes both the shipping of goods by carrier and many other processes. This includes packing, securing, loading, and often also unloading at the destination, which means that the entire delivery process is completed within the Franco term. As a rule, Franco transport is chosen by the majority of entrepreneurs because of the great price savings, often only virtual, as some suppliers increase the price of the single product by a certain value to reduce their financial obligations.

Basic characteristics of the term Franco

Franco delivery is the process to deliver the goods to the destination chosen by the buyer/contractor, along with any other side processes involved in making the delivery. The term Franco includes the time from the purchase of the goods by the contractor until their release at the destination, e.g. in a warehouse or hall. It is always advisable to include this term in the contract with the seller, as its absence can cause many logistical problems, including loss of time due to searching for one's transport and money.

The advantages of Franco transport for the seller

Many sellers encourage their buyers to choose Franco transport for several reasons. The first one is the possibility to use their own means of transport. The largest companies and factories, which have a fleet dedicated exclusively to interstate and domestic deliveries, prefer to use their logistics vehicles because of the savings, as usually the use of external forwarding companies also means higher delivery costs. Another advantage for the seller with Franco shipments is the satisfaction of the buyer, who is relieved from all matters and requirements related to the agreement of delivery terms with a third party. Another advantage of Franco shipments is that the seller knows the characteristics of the products in question, so he has full knowledge of how to handle them during the delivery to avoid unnecessary damage. The disadvantages include the seller's liability in terms of risk and variable freight costs. If the goods are damaged on the way to the destination, the company that carries out the process (in the case of Franco transport, the manufacturer) is fully responsible.

Loko transport - advantages for the seller

The opposite of Franco is Loco transport, which is very often misused by forwarding companies. The essence of the Loco transport is to transfer the costs of delivery of the goods to the buyer who has to organize his own transport using either third-party services or his own company's fleet. The great advantage of this form of delivery for the seller is that the seller is not responsible for the entire process from the moment the goods are released at the place of storage. Lack of risk of freight price volatility causes that many manufacturing plants lean towards this solution, mainly due to time and money savings, because for proper realization of Franco transport it is necessary to have an appropriate financial background and fleet by the company or a profitable contract with an external forwarder.

Abbreviations that every forwarding company knows

Loco transport and Franco transport are described in forwarding companies usually by a standardized notation that facilitates the proper realization of transport and its selection and unification in the contract.

Loco construction - within this term, the seller makes his goods available directly at the construction site, e.g. at the place of production of construction materials, from which it will be picked up by the buyer, who uses his own means of transport or the services of third parties for this purpose. The most common variants are e.g. "loco warehouse", meaning that the goods are released at the seller's warehouse, or "loco store", where the buyer can pick up the goods at the company's store.

Franco construction - this term is used when the seller delivers his goods with his own transport or using a third party for this purpose, up to the place of collection, which in this case is a construction site. In this way, the buyer will receive it without committing his own resources and avoiding any responsibility in the delivery process. Common expressions describing this delivery variant are e.g. "Franco store", in which the seller undertakes to deliver the goods to the buyer's store, or "Franco warehouse". In this case, the seller should deliver the goods in his own scope to the storage hall chosen by the buyer.

Franco transport advantages for the buyer

Franco freight is perfectly appreciated by buyers for several reasons. The first is the relatively high saving of money. As a rule, companies (sellers) that have Franco freight in their services have their own fleet and permanently employed drivers and warehousemen, thus providing by far the lowest possible delivery price. This means for the buyer a lower total price and a lower price per unit of goods, which is especially important for the largest orders over long distances. Another advantage of Franco freight is the lack of liability, also known as transferring risk to the seller. The buyer does not have to worry about damage to the goods during the delivery process, nor does he have to make his own selection of a responsible shipping company or worry about improper storage of the goods during delivery. What is more, all road costs and shipping fees, e.g. port charges, are also included in the risk of the entity executing the delivery, in this case, the seller, which completely releases the buyer from most of the road risk. However, the seller's responsibility ends with the proper delivery of the goods, e.g. with their unloading, when the responsibility is transferred to the buyer.

Advantages of Loko transport

However, some buyers opt for Loko transport, which has completely different characteristics from Franco transport. Some of the advantages of Loco delivery include the ability to use your own fleet or use existing contracts with other shipping companies. Many companies have a large exclusive fleet, the use of which does not involve additional costs and investments. What's more, many buyers also opt for this form of delivery because of its convenience, as they can change their destination at any time or make partial deliveries at several points along the way. Along with these advantages come disadvantages, however, including full responsibility for the goods from the moment they arrive at the seller's warehouse. Fluctuating freight costs, poorly planned delivery routes, and traffic incidents can all result in damaged or destroyed goods, often even lost due to theft.

Is it worth deciding on Franco transport?

Everything depends on the characteristics of cooperating companies, so the answer to this question always varies and is supported by many financial analyses. Before making the right decision it is worth presenting to the management all pros and cons and decide on the solution that will be the least risky and most profitable at the same time. However, we always encourage you to draw up a contract (transport gesture) as precisely as possible, in which it is worth including all the information about Franko or Loko transport, as their absence may cause several unpleasant consequences already at the moment of collecting the goods.