With an ever-expanding global economy, the import and export of goods and services is becoming a central part of modern business. However, navigating the ins and outs of this ever-changing market can be a challenge for companies looking to expand into the global venue. That is where a freight forwarder comes in.
What is a freight forwarder?
Freight forwarders are specialists who play a vital role in the logistics chain. They are experts in navigating the legal and logistical complexities of the global market. Simply put, a freight forwarder is a company that arranges the storage and shipping of goods for import and export.
They can vary in size and their services can vary greatly depending on the company and the needs of their clients.
Some companies serve as a liaison, connecting client businesses with companies that offer the transportation services needed to move that company’s cargo as well as assisting with the paperwork and legalities of the process. Others are large firms with extensive services and world-wide operations that enable them to completely manage the process from beginning to end for their clients.
There are freight forwarding companies that specialize in certain cargo, transportation methods or geographic regions, to better serve a certain clientele. Some companies are equipped to offer storage and transport services to clients themselves.
Other services include:
- advising or planning and arranging of packaging and labeling of goods
- planning and arranging storage/warehousing and booking cargo space
- negotiating contracts, transport and handling costs between businesses, customs and other legal entities, including necessary documentation
- planning, arranging and tracking of transportation, including special arrangements for delicate cargos, hand-carry or courier services
- arranging or offering cargo insurance, including assistance with the filing of claims for mishandled or damaged goods
Freight forwarding companies will build and maintain relationships with shipping carriers in air, sea, trucking, rail, etc., to enable them to negotiate and make deals for the most economical way to move their clients’ goods from one place to another.
Beyond the physical logistics of moving cargo from one place to another, there are many regulations that govern the movement of goods internationally, and they can vary between countries and regions. Licensing, taxation, fees, inspections, restrictions, political and geographical climates, and other factors affect how quickly, easily and costly it is to transport goods.
A freight forwarder is knowledgeable in the processes and documentation required to navigate that terrain legally and cost-effectively. Examples of required methods and documents are:
- customs documentation
- bill of lading (BOL)
- certificate of origin (COO)
- methods of international payment
- electronic data interchange (EDI)
- export license
Mistakes in the legal or logistical process of transport can be costly and damaging for businesses. Utilizing a freight forwarder to manage the transport of goods can be a wise investment for many companies hoping to branch into the international market.
Do you need a freight forwarder for your business?
Now that you know what they do, how do you determine if a freight forwarder is right for your business? If you’re interested in expanding your business to utilize foreign markets, here are some questions to consider:
- Are you ready to expand into international markets? What are you hoping to gain with your expansion? What relationships do you have that will assist in this process?
- Do you have a firm knowledge of the legal and fiscal responsibilities and regulations involved in shipping internationally? Do you have the resources within your company to learn and manage this responsibility on your own?
- What level of services might you need from a forwarder? Do you prefer to manage the process yourself, completely outsource the shipping process to a company, or something in between?
When it comes to choosing a freight forwarder, is isn’t the size of the company that is most important but whether they are best equipped to serve your specific needs and goals. Here are some key points to consider as you research and interview freight forwarding companies:
- Do your research to understand the industry.
- Understand your specific shipping needs. Do you need door to door services, port to port services, etc.?
- What shipping mode and volume will you require? Can they handle multiple shipment types and are they experienced with your cargo? Do they have the international connections to ensure your shipments?
- What are the sizes/dimensions of your cargo and how will it need to be transported?
- Are your goods considered hazardous, restricted, require special handling and transport, etc.?
- Put together a checklist of your shipping requirements, such as delivery schedules and volumes, special packaging, etc. that you can present and discuss with them.
- Can they grow with you or do your goals surpass their offerings and capabilities?
- Are they a member of any trade associations or networks?