We recently surveyed 100 random people to find out which common international shipping terms aren’t as common as we think. We were surprised to learn that a whopping 85% of respondents said they had never heard of freight forwarding. You may have many questions about freight forwarders, but you at least knew enough to make it to this article! Alas, no matter where you currently fall on the totem pole of freight forwarder knowledge, our goal is to answer all your questions – including the ones you didn’t know you had.
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What is a freight forwarder?
There are some pretty complicated definitions out there, but in the most basic sense, these firms are responsible for helping you arrange your imports and exports – dealing with the logistics of preparing documentation, tracking cargo, or filing insurance claims, for example.
Some freight forwarding firms offer more options than others, and many will let you pick and choose the services that make sense for your organization. At the most extreme end, if a shipper with a consistently high volume of cargo ordered “the works” from a freight forwarder, that firm would provide 24/7 tracking on all shipments; document preparation on all imports and exports; warehouse booking and surveillance; document delivery; insurance services; and assistance with freight consolidation/deconsolidation, collection, and negotiation.
What does a freight forwarder do?
Freight forwarders do not physically move your goods – they’re not carriers. Instead, these firms act as an intermediary between shippers and carriers, tackling all the frustrating administrative aspects of logistics so you don’t have to worry or bother with the details. You might be thinking, “Hmmm, so a freight forwarder is just a middleman? An expensive messenger who doesn’t actually provide anything tangible?” While it’s true that middlemen sometimes get a bad name, freight forwarders are incredibly useful in the right circumstances. For example, a big aspect of these organizations’ job is to cultivate close relationships with carriers and officials at key ports around the world. By spending their time networking – and building up your name in the process – freight forwarders negotiate better deals that save you money.
International forwarders are also handy with advice and can offer shippers tips and tricks for dealing with banks, regulations, document requirements, and the like. This is an especially important consideration for large, international shippers; it would difficult for you to research and remember every logistical detail in every country throughout your supply chain. And while these codes of conduct may seem trivial when compared to your bottom line, noncompliance can quickly bring even the most formidable shipping giants to their knees.
So now you know what a freight forwarder actually does, but the important question is: do you need one? In order to determine the answer, you’ll have to reflect on the needs of your business, examine your personal interests, and carefully consider the consequences and conveniences of taking the plunge into the freight forwarding pool.
Freight forwarders for businesses
Freight forwarders offer unique benefits to businesses that seek a high level of organization, transparency, and flexibility. Forwarders make a living off of excellent customer service and interpersonal skills, and the bonds formed with their global agents are often stronger than the relationships carriers maintain with their own coworkers! Much of this has to do with the competitiveness of the marketplace; agents around the world are highly motivated to impress freight forwarders so they can earn more business, and freight forwarders in turn have plenty of incentive to keep their own customers happy. Service, speed, and efficiency are top priorities.
Benefits for businesses working with a freight forwarder
Manageability and Organization
Manageability and organization are incredibly important for businesses which need a sense of control over their supply chain and can recover quickly in the event of a loss. Many third party logistics companies may be too bulky to offer the transparency and personal touch that international shippers need. If a shipment is lost it could take multiple departments, phone calls, and repeated questions to get the answers you need. On the other hand, freight forwarders utilize their nimble networks to quickly trace the problem directly to its source, enacting immediate solutions.
Freight forwarders offer unique versatility which can come in handy for meeting tight deadlines or when dealing with unforeseen obstacles. A seasoned forwarder has the resources to handle unfortunate circumstances like rerouted shipments or delays at sea. Imagine you’re shipping goods to Panama from China, Europe, and the United States, and one of your shipments is diverted to another port due to stormy seas. How prepared are you to react and handle that smoothly? To a freight forwarder, situations like this are just another day at the office.
Freight forwarders are able to negotiate lower terms with carriers due to the high volume of containers. But it’s also important to consider long-term financial benefits from superior customer service, knowledgeable advice, and a forwarders incentive to grow your business. At first glance, something like storing goods at an additional warehouse may seem unreasonable if you can transport them longer distances for less money. But what if utilizing the extra distribution center gave you more control over your cargo by putting you in an ideal position to offer faster shipping, thus making you more competitive with consumers?
Freedom from Contracts
In our natural quest for reliability, we often insist on contracts and binding documentation that guarantees a certain level or quantity of service. But the shipping industry is full of moving parts (both literally and figuratively) and it could actually hurt your business to stay tied to one carrier for a year or more. Freight forwarders give you a lot more freedom to do what is best for your business, and the awareness that you could switch firms at any time drives them to keep you constantly satisfied.
By the same token, forwarders can offer you simplicity in an industry that does have so much variety and volatility. Rather than deal with all these “moving parts” yourself, hiring an experienced firm takes many of the aggravating administrative decisions out of your hands. While you’ll still have full control over your shipments, you won’t have to bother with the time-consuming task of vetting carriers, comparing prices, and negotiating services. You’ll have one vendor, one point of contact, and unlimited flexibility.
Does your business need a freight forwarder?
Any size business that ships freight internationally can benefit from a freight forwarder’s services. If you’re a medium or large business active in several locations around the world and you’re shipping a significant volume of goods, your benefits will be even greater. Freight forwarders are experts at problem solving. They know global trade so well that cost-cutting solutions and supply chain efficiency improvements are second nature.
There are many instances in which a freight forwarder can be useful for business shippers of any size, such as blind shipments and credit terms.
Blind shipments: A blind shipment means one or more parties involved in the transportation process are unaware of the other’s identity, namely the shipper and/or receiver. Distributors may request a blind shipment if they want their supplier to ship directly to the customer without revealing either one to each other. In order to maintain this anonymity, freight forwarders are your best bet. They are adept at navigating the complexities of blind shipments and will ensure all necessary parties remain comfortably in the dark.
Credit terms: If you use an international transportation carrier it is expected that, as the shipper, you pay all freight costs collect. For many businesses, especially small businesses, that’s easier said than done. After establishing trust with your freight forwarder, they can offer credit terms that give you breathing room to purchase more inventory by freeing up some cash flow.
Freight forwarders for personal shipments
Although up until now we have stressed the benefits of using forwarders for business purposes, that doesn’t mean that their services would be useless in all personal matters. Admittedly, the average individual only has to deal with shipping birthday presents to relatives and care packages to their kids who have finally left for college. But there are important exceptions to this rule that can make freight forwarders look like heroes sent to save you from fatal frustration. First, let’s take a look at some of the other benefits that forwarding firms grant their customers.
Door to Door Service
What is the most important part of a shipment’s journey? If you are sending your packages clear across the world, you might say that the longest leg of the journey – for example, the trip across the Atlantic Ocean – deserves the most attention. But what happens once a carrier delivers your goods to the port? You’re on your own, most likely, unless you’ve hired a freight forwarder to ensure safe delivery right to the door of your destination. In cases such as these, those last few miles could make or break the success of your shipment.
Value added services
A lot of the “value added services” that forwarding firms provide are geared toward larger organizations, but there is plenty for the individual to take advantage of, too. This includes purchase order tracking, which enables you to check-in on your cargo at any point in its journey; on-demand reporting, which could include access to your order history and shipping documentation; and door-to-door cargo insurance, which would be particularly important for expensive freight (just in case you are sending truckloads of gold bars to your relatives this holiday season).
Perhaps most important, freight forwarders can provide a huge service to individuals who are shipping internationally. Understanding customs in one place is hard enough, but dealing with the various regulations, paperwork, and tariffs required in another country can be a nightmare. What’s more, customs agents can often be unforgiving when it comes to even minor paperwork mistakes. You know what they say: “Ignorance of the law is no excuse!” Partnering with a forwarding expert can take the anxiety out of organizing an international delivery.
Do you need a freight forwarder for your personal shipment?
A freight forwarder isn’t going to be your best option if you’re shipping anything smaller than a pallet. If that’s you, we recommend shipping with someone like FedEx or USPS – they can provide better pricing on very small shipments. However, if you’re shipping anything the size of a pallet or larger, chances are a freight forwarder will save you time and money.
If you’re relocating your entire life to another country or continent, you may be taking a good deal of furniture and household items with you. You might even want to bring your vehicle. The good news is many freight forwarders handle these types of personal shipments on a regular basis.
Benefits of utilizing a freight forwarder when moving overseas
- Assistance in choosing the right size shipping container(s)
- How to package and consolidate your items
- Alternate routes offering the best available shipping rates
- How to comply with your destination country’s import restrictions
At the end of the day, international forwarders offer numerous benefits to businesses and individuals alike. And although they’re not for everyone nor every shipment, a close comparison of your needs against their services should shed light on whether or not a freight forwarder is the right fit for your shipment(s).