What Is Freight Forwarding?

Editor’s Note: This is a guest blog post from David Madden. David Madden is an efficiency expert, as well as being the Founder and President of Container Exchanger and ExchangerHub.  These companies help manufacturing and distribution companies buy and sell used industrial packing such as plastic and metal bulk containers, gaylord boxes, bulk bags, pallets, and ibc totes and industrial racks such as pallet racking, flow racks, and drive-in racks.  These companies have served thousands of buyers and sellers through USA, Canada, and Mexico.

Freight forwarding is a segment of the service industry that centers around moving and shipping goods around the world on behalf of importers and exporters. Many companies find the processing, the regulations, and the seemingly endless amount of paperwork intimidating and time-consuming, but the benefits may outweigh the negatives. From finding the appropriate shipping containers to simplifying documentation, freight forwarders can take some of the burden out of logistics.

What Do Freight Forwarders Do?

A freight forwarder will not move your freight but will instead arrange and handle the details of international shipping. Freight forwarders specialize in organizing transportation and storage, usually in merchandising, on behalf of its shippers.

Some of the services freight forwarders offer include shipping preparation, exporting documents, warehousing merchandise, negotiating charges, booking cargo space, and arranging cargo insurance. Freight forwarders often ship under their own bills of lading and their agents at the destination provide the document delivery and collection.

In summary, freight forwarders act as coordinators between the shippers and the transporters, whether it’s cargo, air freight or rail shipment.

Why Freight Forwarding?

Freight forwarding services are advantageous because they have established relationships with carriers from all lines of shipment and cargo services. This association allows them to negotiate the best possible rates and the most economical shipping routes. Forwarders know the best balance speeds, most cost-effective options, and the most reliable services.

Many exporters employ freight forwarders to act as their shipping agent. These forwarders can assist the company or client on how to move goods most efficiently and help them comply with export documentation and shipping requirements. Their extensive knowledge of documentation, regulation, banking costs and other elements are vital to the process.

Why Should You Use Freight Forwarding?

A good freight forwarding company or service will save your company time and worry regarding potential problems that can arise during shipment. They know the industry and know-how to get results for you and your company. They are especially vital when the in-house resources are inexperienced or lack knowledge in international shipping procedures.

Whether the company is large or small, heavy or light cargo, freight forwarders can manage all the logistics and make sure the shipment goes smoothly from dock-to-door. Small or medium-sized exporters don’t need to get involved in any of the logistics if they don’t want to. Freight forwarders usually have a modest charge rate for their services, making it an excellent investment.

Freight forwarders have a unique set of skills and experienced employees, which are valuable when there are tight deadlines or when dealing with unforeseen circumstances. An experienced freight forwarder has the resources and knowledge to handle any unforeseen incidents, like re-routing or delays. Freight forwarders are accustomed to dealing with stressful situations like lost goods, diversions, weather problems, and political situations.

How to Choose the Right Freight Forwarders

The size of your company should never determine the size of the freight forwarder you use. Many large companies choose to partner with smaller freight forwarders and vice versa. Understand your internal requirements and discover what you specifically need before you select a forwarder. Determine the mode of transport, the volume of the shipment and the specific service before you contact the forwarder.

Assess if you will need multiple types of shipments so you can select a service that has international partners and the right experience. There are so many different forms of transport and destinations, and not all forwarders can handle every combination.

Inquire if the freight forwarders are members of any trade associations or networks. Joining associations such as WCA requires financial strength, operation efficiency, and integrity. Also, check if the forwarder has a network of agents in your destination country. This can be vital if your overseas customer has any unforeseen problems or delays. Also, make sure the freight forwarder has cargo insurance.

Documentation

Documentation is vital for the shipment of overseas items, but can quickly become a headache. A big part of freight forwarding services is document preparation. Some of the documents required include:

  • A Bill of Lading (BOL) — A BOL is a contract between the good’s owners and the carrier. There are two types of BOLs: a non-negotiable straight bill of lading and a negotiable shipper’s bill. Negotiable BOLs can be bought or sold while the goods are still in transit, but the customer will need an original as a proof of ownership.
  • A Commercial Invoice — The commercial invoice is a bill for the goods the seller sends the buyers. This is used to determine the honest value of goods when assessing custom duty charges.
  • A Certificate of Origin — A certificate of origin is also vital, as it identifies the source of the export item. An inspection certificate may also be required by the customer to certify the goods have been tested and are of acceptable quality.
  • Export Licenses — These licenses authorize the export of goods in the specific quantity to that particular location, and the export packing list is needed to itemize what items are contained within the shipment and what packaging was used so the gross weight and measurements can be categorized.

Responsibilities

All activities and responsibilities depend on the industry, location, and timeframe, but some of the freight forwarder’s responsibilities include:

  • Investigating and planning shipment routes, taking into account whether the goods are perishable and calculating the cost, the time frame and the level of security needed.
  • Arranging the most appropriate packaging. They must consider the climate, weight, pricing and the type of warehouse the merchandise will be stored in once the cargo has arrived at its destination.
  • Obtaining the correct documentation to meet the customs and insurance requirements and to be in compliance with other countries’ regulations.
  • Negotiating contracts, transportation and handling costs.
  • Arranging insurance and assisting in the event of an insurance claim.
  • Offering consolidation services and ensuring the most cost-effective and secure solutions to small shippers who don’t have enough cargo for their own dedicated units.
  • Utilizing internet technology and satellite systems to track goods.
  • Arranging air transport for urgent and high-value freights and knowing when to recognize high-value
  • Brokering services during custom negotiations.
  • Understanding and providing special arrangements for delicate cargo, like medical supplies, livestock, and
  • Arranging any courier or hand carry services.
  • Maintaining communication through the shipment, including reports and statistics.
  • A strong knowledge of current legislation, political situations, and any other factors that could affect the freight movement.

Companies looking to import or export items use freight forwarders to help overcome shipping obstacles and to meet all shipping regulations. Forwarders provide an array of services to help businesses obtain the best value and most efficient service for transportation of their products.

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