Import and export of goods are critical for many large and small businesses. While there are many more opportunities in international shipping, the process can be complex and intimidating. This is where freight forwarders enter the picture.
What is a freight forwarder?
A freight forwarder is a company that specializes in arranging the transportation of cargo from point A to point B. Freight forwarders typically offer a wide range of supply chain services such as ocean/air/inland transportation, document filing, warehousing, consolidation, cargo insurance, and customs compliance.
The majority of freight forwarders will arrange cargoes using their own bills of lading or waybills. Then, at point B, overseas agents (freight forwarders) will step in. These agents will assist in the delivery of documents and will handle all operations required to receive the shipment and deliver it to point B.
What does a freight forwarder do and not do?
When it comes to freight forwarders, there is one unbreakable rule. In most cases, freight forwarders are not the ones who transport the cargo. Freight forwarders act as middlemen between shippers and carriers.
Freight forwarders use pre-existing networks of overseas agents and carriers to negotiate the best possible rate for shipment transportation. The ultimate goal is to devise a strategy that strikes a balance between cost, speed, and dependability.
Freight Forwarders vs Freight Brokers
Despite their similar names, freight forwarders and freight brokers serve distinct functions.
A freight broker acts as a go-between for carriers and shippers but does not take responsibility for or possession of the cargo that must be shipped. This means that freight brokers are not liable for any claims if the cargo is damaged or if problems arise. Freight brokers primarily handle domestic origin and destination shipments.
A freight forwarder, on the other hand, will actually store the customer’s cargo. Freight forwarders, like freight brokers, ship cargoes under their own bill of lading and arrange the movement of freight from one country to another, forwarding shipments in accordance with the legal requirements of each location.
Advantages of Freight Forwarders
- Importing and exporting goods can be a time-consuming and complicated process that involves customs clearance, documentation, bank paperwork, tariffs, and taxes. Freight forwarders can handle everything for you and have up-to-date knowledge of the country’s customs regulations.
- Freight forwarders may be able to offer more competitive pricing based on the needs of the shipper. Furthermore, freight transportation costs can be reduced by combining shipments from multiple shippers.
- Most freight forwarders have a well-established network and specialize in a specific mode of freight transportation or market. Shippers will be provided with the most appropriate and cost-effective shipping plan based on their expertise.
Potential Disadvantages of Freight Forwarders
- Because freight forwarders do not transport cargoes, their influence on what happens on the mode of transportation (for example, ship, rail, truck, or airplane) is minimal.
- If you decide to handle all of the documentation and the forwarding yourself, your costs may be more manageable. However, if you decide to use freight forwarding services, you have no way of knowing how much money the freight forwarders charge for their service markup.
- There is a risk of loss when relying on a freight forwarder to handle your shipments because you lose control of your supply chain. Things should be fine if the freight forwarder you work with is detail-oriented. However, working with freight forwarders who are inefficient and unprofessional can cause your shipment to be delayed, incurring additional shipping costs.
Are you considering freight forwarding services?
Working with the right freight forwarder can help you optimize your entire supply chain, resulting in increased cost efficiency and faster business growth. With well-trained professionals, advanced technologies for operations and management, and as an MSC-designed top-tier booking agent, we are confident in meeting all of your shipping needs. Please contact us for a free quote and to learn more about how we can specifically assist you.
