Freight Forwarder: Definition, Roles, Main Processes & Benefits
If you own or manage a business, chances are you’ve heard the phrase freight forwarder thrown around but may not be entirely sure what it means.
This term might sound like something out of an old-timey movie, but in reality, it’s a vital and helpful member of any modern logistics team. But what does a freight forwarder actually do?
Let’s explore that question and uncover some great reasons why your company should consider using a qualified, experienced freight shipping company.
Understanding The Meaning Of A Freight Forwarder
A freight forwarder refers to an entity or firm specializing in the arrangement of international transportation of goods on behalf of shippers. This may include arranging for shipping, custom clearance, and transportation.
A freight forwarder handles international logistics services as an agent or carrier to arrange shipments of goods from one international destination to another.
They can also be third-party logistics partner that provides multiple different services. They can offer customers a range of services such as warehousing, shipping, trucking, and air freight.
Also known as a forwarding agent, this person coordinates the end to end process to get the goods delivered on time.
Types of Freight (Transportation Mode)
There are four major types of freight transportation for shippers. It is crucial to know multiple carriers to compare and pick the best choice.
Ground (Road) Freight
This is the most common form of transportation used for shipping goods, rampant in trucking companies. It’s cost-effective, reliable, and offers flexibility in terms of routes and delivery times.
Air freight is a speedy way to get your shipments across the globe. It is often more expensive than other methods but can be worth the cost for time-sensitive shipments.
This is a great option for large and bulky cargo, as it can accommodate larger loads than other forms of transportation. It’s also an efficient way to move goods across long distances without relying on road networks.
Ocean freight forwarder offers the most economical solution when shipping over long distances. It is slower than air and rail but helps to keep the cost of shipping down.
The Role Of A Freight Forwarder
Freight forwarder is in charge of tracking the location of any shipment at all times. This is done by receiving regular updates from their network of carriers and logistics partners, using GPS tracking and other technologies to ensure that shipments are delivered on time and in good condition.
Documentation Completion & Verification
A freight forwarder will also help complete documents required for shipping and managing freight. This includes customs declarations, bills of lading, and other paperwork that must be completed in the freight forwarding process.
The freight forwarder will also verify that all information is accurate before submitting these documents to ensure that the shipment is transported safely and efficiently.
Coordination & Freight Consolidation
Freight forwarders are responsible for coordinating between different parties during shipment. This includes coordinating with manufacturing facilities, warehouses, ports, and other logistics partners to ensure that goods are shipped on time and as efficiently as possible.
They are responsible for consolidating shipments from different locations into one single shipment to reduce costs and streamline the process.
Negotiation & Pricing
Freight forwarders are in charge of negotiating with carriers for the best possible rate and terms on shipments. Say, for instance, ensuring that the pricing is accurate and fair, as well as that all necessary insurance policies are in place to protect against any damages to the cargo during transit.
Every forwarder also works to ensure that customers receive the best value when shipping their freight.
Freight forwarders are responsible for providing all necessary documents and information to customs authorities, as well as ensuring that all regulations are followed when shipping goods across borders.
Even more on customs brokerage, any issues or delays that may arise with custom clearance is also upon them. Of course, this may require the freight forwarder to work with customs agents in resolving customs issues.
Distribution freight forwarders are responsible for warehousing and distributing goods at their final destination.
This includes ensuring that packaging is in accordance with regulations, as well as providing efficient distribution services to ensure orders are delivered on time. At their own will, they can also provide additional services such as labeling and other value-added services.
The Main Processes Of Freight Forwarding
Step 1: Export Haulage
Export haulage involves collecting the goods from the shipper and delivering them to the port or airport of departure, ready for shipment.
Depending on the type of goods being shipped, this can involve arranging specialized packing, palletizing, and wrapping services, as well as loading and unloading equipment.
Step 2: Export Custom Clearance
Next is to complete export customs clearance. The customs brokers prepare the required documents, obtain any necessary permits and certificates (if applicable), and complete all of the paperwork required for exporting goods from one country to another.
Step 3: Items Checkpoint
Once all of the necessary documentation has been completed, the freight forwarder will then arrange for the goods to be inspected and checked at the appropriate checkpoint. This step is necessary in order to ensure that all of the required safety, health, and environmental regulations are met.
Step 4: Import Customs Clearance
During import customs clearance, all of the necessary paperwork, obtaining any applicable permits and certificates, and completing all of the documentation required for importing goods into the destination country are done.
Step 5: Destination Arrival And Handling
The freight forwarder will then arrange for the delivery of the goods from their primary point under their own bills of loading.
Step 6: Import Haulage
The last step is to arrange for the import haulage. This entail collecting the goods from the port or airport of arrival ready for final delivery to the customer. Once again, depending on the type of goods being shipped, there is arrangement into specialized packing, palletizing, and wrapping services.
Factors To Consider When Choosing Freight Forwarding Services
It is crucial to look for experience when choosing a freight forwarder. The more experience the forwarding company has, the easier it is to trust them with your goods.
Ask for references from previous clients, and do some research on customer reviews of the forwarder’s services, as well as any awards or recognitions received. (Find a freight forwarder on the International Federation of Freight Forwarders Associations directory)
You must also consider how cost-effective are the services. Request a quote of freight charges and compare it to other shipping companies. Plus, it is important to consider if the freight forwarder’s competitive rates are in line with their quality of service.
Reliability is also essential during the selection of a freight forwarder. You need to look at on-time delivery of goods, accurate tracking of shipments, and responsive customer service.
If you have ever sought freight forwarding services, yet these did not happen, start looking for a new freight forwarder.
It is important to make sure that the freight forwarder you choose is compliant with safety standards. Find more regarding the safety measures and know if the forwarder has any certifications or accreditations to back up the claims.
On the bare minimum, the freight company should be in collaboration with tracking companies to help in following the shipment’s progress.
Cargo Insurance Coverage
The freight forwarder should be able to provide you with adequate cargo insurance coverage for your shipment in the event of theft or damage. Go through the policies in the freight forwarders associations and make sure that you are adequately covered, as this will give you peace of mind when shipping your goods.
Network In The Market
You need to assess the network in the market that a freight forwarder has unless it’s a new forwarder. Check their relationships with carriers and other service providers, as well as possible connections with customs brokers.
Having a solid network ensures smoother operations and quicker delivery of goods.
Requirements Of Your Business
When looking for a freight forwarder, make sure that they understand the requirements of your business and industry. Having someone knowledgeable about the specifics of your business will make the process smoother and more efficient.
You can do some research on the company to get an idea of the forwarders specialize to meet your business requirement. Know if they are a non vessel operating common carrier or full container load provider; the two common carriers that publicly serve to carry out ocean transportation services
If the answer is non vessel operating common carrier dig deeper and know what regions of the world does it ship from and to, yet if they are full container load provider, know what do they specialize in.
Market Reputation & References From Customers
Hear from other customers about the freight forwarder’s services. Mostly, follow up on references from previous customers and find out if other businesses had comfortable experiences with them.
Ensure you look at customer reviews online to land on a reputable forwarder.
Know the trade lane that the freight forwarder will be using. This is important because some forwarder routes are more expensive and difficult than others, depending on the port or country of origin and destination.
It is also important to consider the number of stops along the way, which can add extra cost and time for delivery.
Benefits Of Using A Freight Forwarder
Ideal for International shipping
Using a freight forwarder is essential for any business dealing with international shipping. With the freight forwarding service, you can access a range of advantages that will make your shipping process smoother and more efficient.
The expert knowledge of freight forwarders ensures that you select transportation options that are the most efficient and cost-effective for your specific shipment.
If you have the right freight forwarder, you will take advantage of discounted freight charges from bulk shipping or utilizing alternative routes that can reduce expenses associated with fuel, port fees, and other costs.
Freight forwarders also offer greater flexibility when it comes to timing. By working with carriers in various countries, they can arrange shipments that will arrive at the destination quickly and safely.
This allows companies to have greater control over the delivery of their goods, enabling them to meet customer expectations better and keep up with demand.
Freight forwarders also provide additional benefits such as custom clearance and documentation services, warehousing options, cargo insurance, and tracking/monitoring capabilities. They can also provide advice and assistance on shipping requirements, helping companies make sure they are in compliance with both national and international regulations.
Besides, they can also offer door-to-door services, enabling shipments to be delivered directly from the supplier’s warehouse to the customer’s location. This eliminates the need for companies to arrange transportation themselves and ensures a smooth shipping process.
Freight forwarders help companies save time and effort as they handle all the logistics associated with international shipping. This allows businesses to focus on other aspects of their operations, giving them more time to grow and expand.
Disadvantages of Freight Forwarders
Variation in Cost
While freight forwarders may offer effective costs, they have a lot of variations. This is particularly dependent on the type of carrier you select.
This could be especially problematic for businesses that are trying to keep their shipping costs within the budget and minimum changes.
Lack of Control
Once a shipment is given to the freight forwarder, businesses have little influence over how it’s handled and the cargo is transported, which could lead to delays or other issues.
Delay with Customer Care
Customer service can be an issue when working with a freight forwarding company. These companies are often large and complex, so it can be difficult to get timely responses or help with any issues that arise.
. This can cause frustration for businesses and their customers alike.
Differentiating Freight Forwarders vs. Freight Brokers
A Freight forwarder and a freight broker are both essential players in the transportation industry, but there are major differences between the two roles.
Freight forwarders provide door-to-door logistics services, taking responsibility for managing all aspects of a shipment’s journey from start to finish.
On the other hand, freight brokers act as a liaison between a shipper and transportation service provider, matching their freight needs with the best carrier for their shipment.
Freight forwarders take control of the entire shipping process from pick-up to delivery. They are responsible for consolidating shipments, managing custom clearance, tracking cargo during transit, overseeing transshipment, and reporting on any discrepancies.
They can also take care of the transportation documentation and arrange for insurance coverage. This allows them to provide a single point of contact throughout the entire shipment process, allowing shippers to focus on their core business activities.
Freight brokers are typically used when a shipper is unable to fulfill their freight needs on their own. The broker acts as an intermediary between shippers and carriers, negotiating the best freight quotes for a shipment and managing all aspects of the product shipping. They are knowledgeable about the transportation industry, including pricing, safety regulations, and transit times. They can also provide valuable insights to help shippers make informed decisions.
Examples of Industries that Use Freight Forwarders
Most industries involved in international shipping and shopping use freight forwarders. They are:
Manufacturing & Automotive
Manufacturing and automotive companies that produce large goods need to get their products quickly and safely from one place to another. Freight forwarders can help these industries coordinate the transport of goods all over the world.
Agriculture & Seafood
The agriculture and seafood industry relies on freight forwarders for timely delivery of perishable and frozen goods. Freight forwarders come in handy in transporting their items across long distances, ensuring that the products remain safe and in good condition throughout the journey.
Retail & E-commerce
Retail stores, as well as e-commerce businesses, require swift and reliable delivery of products to their customers. A freight forwarder is often involved to ensure that goods are delivered on time and with minimal damage, which can help reduce costs for the business.
Pharmaceuticals and Medical Supplies
The pharmaceutical and medical industries rely on the safe and timely delivery of medications and other medical supplies.
The forwarders are helpful in transportation so that these items are delivered in a timely manner and with minimal damage.
Construction & Engineering
Construction and engineering companies transport large, bulky items from one place to another. Freight forwarders manage the transportation of their goods and ensure that they arrive safely at their destination.
Global Freight Forwarders
Global freight forwarders typically handle international shipments and are experts in preparing and processing customs documentation and performing activities
Canada International Freight Forwarders
Freight forwarding in Canada is a multi-faceted process that involves managing different aspects of the shipping process, from clearance and regulation to packing and loading cargo onto vessels.
International freight forwarding in Canada requires experienced professionals to ensure that all paperwork and documentation associated with each shipment are accurate and up to date to ensure that goods are shipped efficiently and securely.
Freight Forwarding in Canada has its own federal department responsible for these services.
Even more, global freight forwarding companies in Canada are well-versed in navigating various government regulations, providing clients with the assurance that their goods are shipped without delays.
United Kingdom International Freight Forwarders
International freight forwarder in the UK provides a range of services, from custom clearance and paperwork preparation to advice on insurance coverage and the best mode of transport for a particular shipment.
UK-registered companies engaged in the international movement of freight by all modes of transport, air, road, rail, and sea.
Notably, the British International Freight Association (BIFA) serves as a major trade association for UK registered shippers, including forwarders.
As with forwarding in Canada, global freight forwarding companies in the UK are well-versed in navigating different government regulations, providing clients with the assurance that their goods will be shipped efficiently and securely.
United States International Freight Forwarders
International ocean freight forwarders arranging for shipments to and from the US must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries.
Global freight forwarding companies in the US also offer additional services such as warehousing and storage to minimize overall costs and ensure timely delivery of cargo.
Final Words: Choosing the Right Freight Forwarder
There are a lot of factors to consider when finding the right forwarder for your business. The most important things to look for are reliability, expert tips, and flexibility, let alone having knowledge of customs regulations.
So, doing your research and taking the time to find a good freight forwarder will pay off in the long run and help ensure the success of your business.
Seek expert support and service you need to comply with shipping regulations, optimize your supply chain depending on your cargo type, and more.