International, Air, Ocean & More
What Is A Freight Forwarder?
A freight forwarder is a service provider that arranges shipments. Think of them as travel agents for freight. Freight forwarders are the experts who understand how the end to end shipment process works.
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 limited their reach to a few popular countries where they have a working relationship with a local freight forwarder. At the far end of the scale, the larger freight forwarders are essentially global freight forwarders.
Services That Freight Forwarders Provide
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 can inform you on anything else that you’d like to know, about freight.
- Where required, they will discuss options and give advice.
- As the shipment progresses, freight forwarders should keep you informed, especially if at any point, the shipment faces a significant risk of delay.
Why Do You Need A Freight Forwarder?
The extent to which you can get by with or without a freight forwarder can be broken down into the four following scenarios.
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.
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.