A freight forwarder is a person or company that deals in the transportation of goods from one destination to another on behalf of a shipper (or consignor).
They are responsible for the processes surrounding the storage, packing and shipment of cargo, such as:
- Preparing documents needed for export
- Managing customs clearance
- Tracking inland shipments
- Cargo insurance
- Booking cargo routes
Forwarders typically have a network of contacts within the logistics industry, allowing them to negotiate the best routes and prices for local and international freight.
They are also well equipped to handle most, if not all legal documentation pertaining to local and international shipping. They often operate under their own Bill of Lading (BoL).
Types of Freight Forwarding Services
Ocean or sea freight refers to the bulk transportation of goods from one port to another via a sea vessel. It is the most common form of freight transport, capable of carrying heavy, bulky cargo in large quantities. Cargo is typically stored in shipping containers which are then loaded onto a ship.
Air freight is the shipment of goods from one destination to another via an aircraft. This is one of the most time-efficient modes of transport, typically used for lightweight or high-value goods that need to be shipped quickly.
Trucking refers to the transportation of cargo from one point to another using motor vehicles. This method is commonly used to safely deliver a variety of cargo, such as perishable, dangerous or flammable goods. It is often used alongside air or sea freight to achieve the cheapest, most efficient route for consignors.
Warehousing is the storage of physical goods prior to being sold or distributed. Freight forwarders often provide warehousing services that are responsible for inventory management, picking and packing, and returns processing. These services are good for manufacturers that produce merchandise in bulk prior to being sold.
Benefits of Engaging a Freight Forwarder
Supply chain optimization
Freight forwarders often help businesses make their supply chains more time and cost efficient.
With their dedicated expertise and large network of contacts, they are able to arrange for the best routes and prices for freight shipments. This also gives forwarders access to a wide range of transportation options (e.g. RoRo ships for exporting cars).
Their experience with customs documentation also speeds up the shipment preparation and customs clearance processes for their clients.
Experts at navigating shipping issues
Forwarders are able to navigate the many variables that may affect the transportation of goods. This may include shipping issues such as cargo rerouting, port shutdowns and natural disasters. This saves time and resources for companies that may not be able to efficiently overcome such issues in-house.
Able to provide customs advice
Companies will not have to sieve through the many legal formalities required to ship cargo on their own. Forwarders are able to provide advice for customs clearance and prepare the necessary documents required for a smooth transaction.
Freight Forwarder vs Freight Broker
Freight forwarders are more actively involved in the process of transporting freight than brokers. They are fully in charge of the entire shipment process on behalf of their clients. This includes coordinating the storage and packing of goods.
On the other hand, freight brokers are licensed entities that connect consignors with carrier services. They coordinate a segment of the shipment process, as opposed to handling the entire process. They are not responsible for the storage and packing of freight.
However, both entities are typically able to provide cargo insurance for shipped goods.