What Is A Freight Forwarder?
Simply put? A freight forwarder is an individual or company that facilitates the movement of freight for a shipper (their ‘client’ or ‘customer’). At lojistechs, llc we specialize in international freight forwarding for e-commerce and consumer product goods importers and exporters, and domestic freight in support of their operations. All forwarders based in the United States must be licensed by the Federal Maritime Commission (FMC), a U.S. Government agency, and bonded in order to keep their licensing.
Freight forwarding requires varied regulatory knowledge, industry connections, and the ability to tie that all together while problem solving issues the customer never even sees. Below we’ll give a simple breakdown of what a forwarder does and what value they bring to you and your business.
What Does a Freight Forwarder Do?
There’s a lot we do. You may not need all of our services all of the time, and not all forwarders offer all of the same services, but here are some of the common things a forwarder does and the services they provide:
Cargo Movement and Facilitation
Your forwarder will plan and execute the movement of your cargo from Point A to Point B (or anywhere in between if needed) and delivery if requested, based on the type of cargo, packaging, places involved (different countries have different regulations), the amount and size of cargo, and more. Customers sometimes have a preferred method of transport based on their businesses needs and will provide the forwarder with input, but often your forwarder will provide you with the most cost and time efficient options to choose from.
Freight Rate Negotiation
Your forwarder has relationships with carriers and expertise in negotiating rates with them, and can provide you with rates that will be difficult to get on your own until you’ve accumulated enough purchasing power as a BCO (Beneficial Cargo Owner-more on that later), and even then can/will negotiate on your behalf for the best rates possible.
Import and Export Documentation, Paperwork, and Regulations
The paperwork and regulations involved in moving cargo internationally can be complex, and don’t forgive mistakes. While there are international standard documents (Bills of Lading for example), every country has different rules and different procedures for import and export in and out of their country. One country may mandate spraying of pallets with certain chemicals to prevent the spread of certain bugs etc, and another country may mandate that every import or export shipment include a certain document stamped by a certain agency in order to clear the goods, etc. (you get the idea). Your forwarder and their network know these rules and know what documentation is needed and will process it for you in order to avoid mistakes that can cost you money, time, and sometimes the loss of your cargo.
Often your forwarder will have a customs agent on staff or work with an agency/individual to provide customs clearance for your shipment if needed.
Not all forwarders provide cargo insurance, but should you decide that it’s needed for your shipment your forwarder can either provide it to you, or guide you to a company that will.
Supply Chain Planning
This is a topic that deserves its own post (we’re working on one and will post soon), but for now we’ll keep it brief. Smart supply chain planning not only saves your business time and money, but has farther reaching effects that helps sales and improves operations and processes for your entire business. A good forwarding partner helps their clients maintain an efficient and stable supply chain. This can be done as basically as making suggestions to the shipper on how best to move freight, or can involve more complex supply chain consulting which includes written processes.
Do I Need a Freight Forwarder?
Need? No. Want? YES. Technically, nothing is stopping you from trying to move your own freight. But there’s a reason why large companies with their own supply chain teams still work with forwarders. So what value does a freight forwarder provide you?
Savings – freight forwarders buy in bulk or as licensed OTIs, buy from carriers at rates that you can not unless you are a BCO that the carriers feel is worth providing those same rates to (and that’s a larger threshold).
Knowledge – forwarders study and carry knowledge of applicable regulations and nuanced procedures and operations that are critical to the smooth flow of freight movement and problem-solving of issues that arise in the process. Mistakes made in the process of freight movement can cost you, the shipper, a lot of money, time, and even result in your goods never being delivered to you after purchase.
Time – notice that we mentioned time up there ^? When you’re growing a business the last thing you can afford is time away from growth. There’s a lot that goes on behind the scenes of international freight movement, and a lot of new, and even very experienced shippers, find themselves mired in the process of trying to get their freight from Point A to Point B while also dealing with the rest of the business operations necessary to run their company. Freight forwarders also have agents and networks all over the world already in place who understand how to move freight as easily as possible, and work with them to problem-solve and troubleshoot on their behalf if/when is necessary, which is invaluable.
Freight forwarding is a profession that can be traced back to the great traders of Phoenicia and has a rich history on the famed Silk Road, and as long as there is trade and freight movement, there will be freight forwarders. The industry is changing and embracing new technologies (for an example of this check out our free rate search and booking platform), but the premise will always remain the same: acting as agents for shippers and assisting in the movement of cargo and goods from one place to another. We hope this article helps you understand what we do, and if there’s anything you’d like to see added to this, or there’s a topic you’d like us to write about in the future, feel free to contact us here and let us know.