What Is Freight Forwarding?
Freight forwarding consists of strategic logistics planning and execution for the international movement of goods, on behalf of shippers. Specifically, a freight forwarder will carry out freight rate negotiations, container tracking, customs documentation and freight consolidation, among other tasks.
Importing and exporting creates lucrative opportunities for businesses with the wherewithal to execute strategic logistics plans. But the logistics of international shipping is complicated, to say the least.
- Expert knowledge of customs standards and protocols, which vary country to country and even port to port
- Agile problem-solving, for when the weather, technology or human nature fail to cater to timely travels, as they are all wont to do
- An instinct for network building, because in many ways, a supply chain is only as strong as the parties propelling it.
And you also need a license to do it.
International supply chains are an inevitability of the globalized marketplace. In fact, they define it. Wherever customs brokerage, warehouse planning, cargo scheduling, and cargo insurance are needed is where freight forwarders can be found. That is to say, they’re everywhere.
Defining the Role of Freight Forwarder
The following is a brief breakdown of a day in the life of a forwarder:
Forwarders use a Transportation Management System (TMS) to maintain transparent visibility throughout each stage of a shipment’s voyage.
This critical piece of forwarding requires special licensure—a customs brokerage license. Licensed brokers are the only people qualified to manage and submit the extensive documentation necessary to complete importing/exporting processes.
Some forwarders may have their own warehouses available to harbor shippers’ commodities (or parts of commodities), but for the most part, the service your forwarder will offer is to arrange storage at a warehouse owned and operated by a conveniently located affiliate.
Bargaining with carriers for cost-efficient shipping rates is no easy task. The art of this deal entails appealing to carriers’ interests by balancing the pros and cons of your cargo type, time flexibility, credit status, space/tonnage requirements, and more.
Cargo Space Scheduling
Savvy coordination and scheduling of cargo space are the more tangible parts of a forwarder’s skill set. If you hire a freight forwarder to manage logistics, this is where they’ll have the opportunity to display their chops. It takes a thoughtful planner to determine whether it is profitable to consolidate a shipment, to secure timely sailings, and to weigh the feasibility of intermodal shipping options. Cargo scheduling is the logistics of “Logistics.”
Forwarders may have several customers who all need to transport shipments that do not necessitate the use of an entire container. Freight consolidation for less than container load (LCL) shipping is a service forwarders provide wherein multiple smaller consignments are all booked aboard the same container. In these instances, the shipping cost is spread amongst all participating customers based on the cargo’s space requirements.
Supplying Cargo Insurance
Forwarders can provide you with a cargo insurance policy, also known as freight insurance. Cargo insurance is intended to reimburse the loss payee in the event that goods are damaged or stolen in transit.
Note: Cargo insurance does NOT cover any tangential loss related to the inciting incident. For example, if a container falls off a truck thus damaging a structure nearby, cargo insurance will cover the financial loss of the damage done to the contents of the container, but not the financial burden of the structural damage nearby.