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 with The Ultimate Guide to Choosing a Freight Forwarder.
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What is Freight Forwarding?
Freight forwarding is the service most importers and exporters use to arrange freight shipments. Freight 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.
Freight forwarders come in many shapes and sizes.
Some of the smaller forwarders are essentially trucking companies or trucking brokers and are not involved in international freight forwarding. Some specialize as ocean freight forwarders or as air freight forwarders. Small freight 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 freight forwarders are essentially global freight forwarders.
Freight Forwarding Services
What do freight forwarding companies do? What freight services do international forwarders offer? When it comes to the shipment, here’s a shortlist of the service that freight forwarders provide:
- Freight forwarders prepare all the paperwork, make the bookings, and arrange payments required for each sector of the shipment that they are responsible for.
- They act on your behalf with numerous other parties involved in the shipment, air cargo carriers, any other freight forwarders involved in the shipment, and trucking companies.
- Most freight forwarders provide a customs brokerage service, that is they are both a clearing and forwarding agent and may act on your behalf with customs agents.
- If something goes wrong or is at risk of going wrong, freight forwarders step in and troubleshoot.
When it comes to working with you, the freight forwarder customer, here’s the service you should expect:
- When you first make a booking with a freight forwarder, 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 freight forwarders will discuss a range of freight shipping options and give advice.
- As the shipment progresses, freight forwarders should keep you 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 with or without a freight forwarder. Whether or not you will need these services largely depends on your business needs and considering these, you’ll likely choose one of the following options:
1. Going It Alone Without A Freight Forwarder
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 freight 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’s Freight Forwarder 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 international freight 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’s Freight Forwarder 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 freight forwarder manage the shipment. You need a partner to take care of it for you. That partner is your international freight forwarder.
International Freight Forwarding
Requesting A 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.
Depending on your forwarder you email or speak to, they may not remember to ask for all the data upfront. Which slows down their turnaround to give you a quote. Beat them to the punch by coming to the table with the following information:
- 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.
ACTUAL WEIGHT VS DIMENSIONAL WEIGHT
This isn’t something extra that you should prepare before requesting a quote, but it’s better to find about this now than when you call to query why you have been quoted for the “wrong” weight.
Shipments that are comparatively light for their volume are often uneconomical for carriers to ship. The freight industry came up with a formula to charge light shipments at a profitable weight based on the shipment’s volume. This deemed weight is called the dimensional or volumetric weight. Use this chargeable weight calculator to see what wish weight your shipment will be quoted at.
- 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.
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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 freight forwarding 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 forwarders 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 freight forwarding 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 the larger forwarders have to make choices. Their larger customers bring in more business, and it’s only natural 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 First And Foremost 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 The Freight Forwarding Company’s 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, and ultimately reliable freight forwarding. The tradeoff, of course, is likely to be on price.
But service isn’t just about breadth it’s also about quality. Freight forwarding 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 freight forwarders should not have hidden charges or include unfair terms and conditions that get the forwarder off the hook.
A great partnership requires each partner knowing what is required of the other. Soon after selecting a new forwarder, meet up with them to discuss what you both expect in the way of communication and. Your forwarder needs you to quickly be on top of any documentation they send your way. You’ll probably want to know more about the process, the key documents required, at what points along the shipment you will get updates. You’ll want to agree on what point you wish to be notified of potential problems. This way, you can ensure you get better freight service.
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 Both – Great Service And 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 freight 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 freight forwarding company. 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.
What do freight forwarders do?
When you hire a reputable freight forwarders, they will perform a number of tasks to get your goods shipped efficiently and delivered on time. Freight forwarders represent importers and exporters moving good internationally and coordinate with various stakeholders along the supply chain. This will include various air or ocean carriers, trucking companies, 3PLs, and often customs. Some freight forwarders also offer customs brokerage as an additional service.
What can I expect from a freight forwarder?
When you book a shipment with freight forwarder, you can expect that they will go over the main requirements and key freight documents that you’ll need to get your goods on board. Once the shipment is deployed, your freight forwarder should keep you up to date on the shipment’s progress and let you know if there are any changes or delays along the way.
What Are Some Examples of Freight Forwarders?
There are hundreds, if not thousands, of logistics providers and freight forwarders operating globally. This can make it tricky to find the right one for your specific business needs. Freightos.com network of freight forwarders are vetted for reliability, communication, and cost so you know that you are getting a reputable provider. Plus, our Customer Success team is always available to ensure your shipping experience is a smooth as possible.
How Can I Book a Freight Forwarder?
It used to be a long and complicated process to find the right freight forwarder for a shipment. But with digitization, you can search and compare different providers quickly and efficiently. With online reviews, it is also easier than ever to find a reputable freight forwarder. Freightos.com is the world’s largest online marketplace for freight booking, giving you the ability to compare freight forwarders‘ based on your specific requirements and also read about what other importers and exporters thought about their shipping experience.