Freight Forwarders: A Complete Guide For 2024

Finding a good freight forwarder is crucial to the success of your business.

Whether you’re looking for information about choosing a freight forwarder or are simply trying to find out exactly what they do, Freightos.com has you covered. Let’s get started:

What is freight forwarding?

Freight forwarding is the service most importers and exporters use to arrange freight shipments. Forwarders are licensed experts who understand how the end-to-end shipping process works and can get it done on your behalf. Think of them as travel agents for freight – and like travel agents they come in many shapes and sizes.

Some are essentially trucking companies or trucking brokers and are not involved in international shipping. Some specialize as ocean or as air forwarders. Smaller forwarders typically limit their reach to a few popular countries where they have a working relationship with local logistics providers. At the other end of the scale, larger forwarders offer global shipping services.

Freight forwarding services

Here’s a shortlist of the services that freight forwarders provide so you can book your next shipment with confidence:

• Prepare all the paperwork, make the bookings, and arrange payments required for each sector of the shipment that they are responsible for.
• Act on your behalf with numerous other parties involved in the shipment, air cargo carriers, any other logistics providers involved in the shipment, and trucking companies.
• Provide a customs brokerage service – that is they are both a clearing and forwarding agent and may act on your behalf with customs agents.
• Troubleshooting if any issues arrive with the shipment.

When it comes to hiring a forwarder, here’s what you should expect:

• When you first make a booking, they will explain what you need to know, for instance on key freight documents and on how the shipment will progress. They are the experts and should be able to help you with anything else that you’d like to know about freight.
• Where required, discuss a range of freight shipping options and give advice.
• As the shipment progresses, you should be kept informed, especially if at any point the shipment faces a risk of delay.

Do I need a freight forwarder?

There are different scenarios for booking a shipment. Whether or not you will need specific services largely depends on your business needs. Here are some options:

1. Going it alone

Much fewer people use travel agents these days, so why not skip the middleman and arrange the shipment yourself, or with just the help of a customs broker?

This is where the analogy with travel agents breaks down. For most shipments, it simply isn’t possible to arrange international freight online with ocean or sea carriers.

And even if it was possible to do without a forwarder, it is a risky game for non-specialists to play. A lot of things can go wrong in freight, and they often do. You need to cover your bases with freight insurance.

2. Your supplier arranges the entire shipment

Your supplier may be an expert in manufacturing or trading, but they will not be freight experts.

If they have an arrangement with a local freight forwarder who can manage an entire shipment, it is unlikely to be that much better a deal than you can arrange. When it comes down to it, the supplier will be looking to recoup their costs.

• If they on-cost the freight charges, they have little incentive to secure a good rate. That means you will probably be paying inflated freight charges.
• If they offer a sale/freight package, they are likely to inflate that price.

3. Your supplier arranges the shipment as far as the US

This is a classic trap that sees inexperienced importers falling into all the time. Many suppliers offer to arrange the shipment as far as the port in the US. If you only add on local trucking costs, it seems like a great deal. But there are other costs involved.

This shipping arrangement usually uses one of the “C” incoterms, especially the CIF incoterm. These incoterms have several flaws for an importer including a common scenario where the importer is held hostage to inflated costs.

4. You engage a freight forwarder to arrange the shipment from either the factory or foreign port

If the idea of wading through four different options seems like too much information, that’s precisely why you should be letting a professional manage the shipment.

Requesting a freight quote

Have your goods and ready to ship? Time to get a freight quote.

Following this quick list to make sure you’re taking a good look at all your options with the right information:

Contact Details

• Make sure that you have the full addresses for pickup if the shipment is door to door, including postcode (go back to Alibaba if necessary for this), and full destination address. Zip codes are sometimes enough but the more information, the better.
• You may need to provide the name of the port of origin. All airports and seaports have an international code (e.g USLAX for United States, Los Angeles airport if it is port to port or port to door (surprisingly, one of the largest forwarders asks for this for door to door too).
• If someone other than your company is receiving the shipment, have their contact details ready too.

Weights And Measures

• Provide the total weight of the shipment. You can probably still get by in pounds, but suppliers and increasingly forwarders think in kilograms. You can get this information from the packing list.
• If your shipment includes a mix of boxes, pallets, etc, you will need to itemize how many of each type.
• You will have to provide total cubic volume, also called “CBM”. Use this simple cubic meter calculator. If there is a Total Volume field on a wizard type form, you will probably need to round to the nearest whole number.

Product Description

• International freight works with HS Codes – basically a global index of product types. The official product name and code should be on the commercial invoice but it’s best to check anyway using an HS Code lookup tool. It’s worth double checking this because an uncorrected error could lead to delays in customs clearance later on.
• Businesses exporting shipments need to know the Schedule B code, although the same large forwarder that asks for port of origin for door to door shipment also asks for the Schedule B code for imports to the US as well.

Learn more about calculating Freight Forwarder Costs & Fees.

What is a customs broker?

A customs broker handles the customs clearance process with customs officials.

Customs brokers ensure that a shipment meets import and export standards and customs regulations. They also act as a link between the shipper and the port’s customs department.

Freight Forwarder vs Customs Broker

Freight forwarders handle numerous pieces of the shipping process, including transportation, documentation, negotiating freight rates, consolidation, insurance, warehousing, freight tracking, and last-mile delivery.

They work for importers and exporters to book space on carrier vessels. They also specialize in managing, storing, and delivering commodities to the recipient.

Customs brokers handle customs only and don’t help with any other shipping procedures.

They are experts in port entry procedures, specifications for freight admission, freight classification according to HS code, freight evaluation, customs documentation, tariffs, and other customs-related details.

Some freight forwarders offer customs brokerage, but customs brokers don’t offer freight forwarding.

The difference between a freight forwarder and a customs broker

Do I need a freight forwarder or a customs broker?

Freight forwarders and customs brokers provide different services (although some freight forwarders provide both). If you are an international shipper, you will likely need both a freight forwarder and a customs broker – the forwarder to manage your logistics and move your goods, and a customs broker to make sure your goods clear customs.

International freight forwarding companies

Maybe you know everything about your business, the best tools, even the latest in consumer shopping habits. But chances are, freight is still a bit murky. You need a trusted ally in the freight industry, an agent working on your behalf.

There are probably over 100,000 freight forwarding companies worldwide. That seems like being spoiled for choice. However, in an industry often described as being opaque, customers get little visibility into pricing and service levels.

Here’s how to choose a good company:

• First, consider whether your shipments have special requirements.
• Determine how much your shipping might narrow down forwarder selection.
• Know what to look out for if you are driven by price.
• Know what to look out for if service is more important to you than price.
• And finally, look for a platform that enables you to search for both great service and a good price.

Consider whether your shipments need specialized support

There are some commodities which many forwarders don’t deal with, such as vehicles, household removals, and bulk commodities like wheat. Not all deal with oversized shipments either, so you’ll definitely need a large or specialized forwarder if you want to ship a full subway train. A more common group of exceptions that many smaller forwarders won’t deal with is hazardous cargo. Don’t be fooled by the name. This category includes some seemingly tame products, like toys with batteries.

Another important consideration is geographic coverage. Not all forwarders ship to all parts of the world. Smaller companies often have a quite limited network of agents for local delivery or pickup and customs clearance. They’ll likely cover your country’s most common trading partners, but if you import, say, from Bhutan as well as China, you should clear this first with a prospective new forwarder.

Considerations for working with global freight forwarding companies

Working with name-brand global forwarders has its advantages. They have the muscle to secure good rates and preferential treatment from the big air and ocean carriers. But being popular means that in busy periods, larger customers will get preferential treatment to the detriment of smaller customers. In fact, only 35% of large forwarders responded to a small business’s quote request in a recent mystery shopping survey.

Let’s face it, you need to rely on contacting your freight forwarder when necessary. If your primary point of contact is going to be a 1-800 number, that’s an indication of how easy it will be to communicate.

Of course, the reverse is also true. Although local forwarders can usually give their small customers more bandwidth and are faster to respond, they may not be as competitive on price. This is something to consider should your strategy be to go for the cheapest price.

Are you looking for a great price?

Most forwarders will claim to provide superior service, but they are all aware that winning a new customer generally comes down to price.

However, making a decision on price alone can be deceiving. For instance, some forwarders discount the first shipment to win the sale but make up for it with on subsequent shipments. Also, some forwarders hide charges in the terms and conditions to make their quote price look more attractive than those from more honest competitors.

There are of course forwarders who lead on price. That almost certainly means a reduction in service. Depending on the services they cut out – for instance, some forwarders specialize in only one trade lane or only in air freight – that may not affect your business. Be aware of forwarders that scrimp on customer service. Many things can and do go wrong in international shipments. That cheap price may come back to bite you if you can’t get a hold of your service provider.

Or is service more important?

Your shipment is worth more than the shipment value – it’s needed to grow your business. That’s why you’ll need a reliable freight forwarder you can trust to handle your valued goods.

The stories you’ve heard about the number of containers lost at sea are urban myths. In fact, only a very small percentage of containers go missing each year. Much more commonly, shipments do get lost, stolen, damaged and delayed. If this seems to happen frequently with your shipments, it’s time to start looking for a more reliable forwarder.

Many larger forwarders are also 3PLs (third party logistics providers) who specialize in providing broader support (contract logistics) for their customers. They can provide useful services for importers, like superior shipment tracking and warehousing. The tradeoff, of course, is likely to be on price.

But service isn’t just about breadth it’s also about quality. Shipping goods internationally takes a lot of coordinating. Airlines, ocean carriers and especially customs agents aren’t forgiving of incorrect, incomplete or late paperwork. If your forwarder isn’t on top of your shipment, it risks being delayed and incurring unnecessary additional charges.

As a logistics service provider, your forwarder should communicate regularly and transparently with you. If you wait a week to get a freight quote before shipping, that might be a good indication that you could be waiting to get status updates on delayed cargo. A reliable forwarder will provide status updates, quickly alert you of any problem, and just as quickly work to resolve them, for instance, if a glitch occurs at customs or the warehouse, or when a shipment is behind schedule. If this isn’t happening, then it’s time to start looking for a new freight forwarder.

Good communication is important with freight charges as well. Freight quotes shouldn’t require deciphering. Reliable service providers should not have hidden charges or include unfair terms and conditions that get the forwarder off the hook.

Digital forwarders are also worth considering. They compete for smaller importers by providing a better service. They can do this because process automation enables them to run a leaner business, it reduces errors and speeds up internal processes. The integrated customer interfaces deliver a superior user experience. There are few of them around and they are growing in capability.

Freight forwarders near me

Can you get great service and a good price?

Until now, freight forwarding has largely been offline.

Getting prices from forwarders generally takes days. You’re not going to get a schedule of rates, only a response to a specific quote request. It can be difficult working out just how competitive your forwarder is on service. Often, the only way to find out is by personal experience because there hasn’t been anything in the way of online forwarder ratings. With importers having little visibility into pricing or service, it’s not surprising that many of them are paying through the nose for an inferior service.

But this is changing. Freightos.com supplies instant online quoting from a wide range of forwarder and also provides price and service comparison. This means that it is now possible to sort and select quotes by price, transit time, or service rating.

This is what it boils down to when looking for the right forwarder for your business:

First, consider whether you have any unusual shipping needs. That will weed out some of the smaller forwarders.

Second, consider how important your business may be to the forwarder. What you consider next depends whether you are driven most by price or service.

Finally, there is now an option that lets you go for both service and price.