Freight Forwarders: A Comprehensive Guide
The import and export of goods is a pivotal piece of many businesses large and small. While shipping internationally provides strong business opportunities, it can be very daunting. If you’re unaware of the term “freight forwarders”, it may seem confusing. Is this a manager of distribution? Maybe another term for a freight shipping company? Is it a partner in import and export services?
Truthfully, freight forwarders are none of these things. However, they do take on responsibility for all of them and more. Read on for a comprehensive look on freight forwarders, unraveling the complicated logistics of logistics.
What is a Freight Forwarder?
A freight forwarder is a firm that specializes in the arrangement of cargo shipments on behalf of shippers.
Typically, freight forwarders will provide a variety of supply chain services, including but not limited to:
- Ocean or air freight transportation
- Inland transportation from origin and/or to destination
- Preparation of documentation
- Warehousing and storage services
- Consolidation and deconsolidation
- Cargo insurance and customs compliance
Most freight forwarders will ship through their own bills of lading or waybill. Then, destination agents (freight forwarders overseas) will provide delivery of documents, deconsolidation, and collection or delivery.
In layman’s terms, a freight forwarder is an entity who arranges the import and export of cargo.
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What Does a Freight Forwarder Do?
A ton of things go into the logistics of international cargo shipping. While freight forwarders handle shipment details, it’s crucial to know what things a freight forwarder does not do. This can backtrack into what it is that they do.
Most importantly, in most cases, freight forwarders are not the parties physically moving your cargo.
Instead, freight forwarders represent intermediaries positioned between shipping customers and the transportation services that physically move cargo. This goes for ocean freight, land transportation, air freight, rail services and more.
Freight forwarding services utilize existing carrier relationships to negotiate the lowest possible price for the movement of goods. This is performed along the most economical routes possible through the bidding and contract process. In the end, the goal is finding a carrier that provides the best balance of cost, speed, and overall reliability.
They also handle the logistics required for shipping goods internationally. This is a complex burden of a task for most clients.
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Top Freight Forwarders
There are hundreds of freight forwarders in the shipping and logistics industry. These service providers move hundreds of millions of TEUs (twenty-foot equivalent units) annually. But when it comes to the best freight forwarders, there are many more factors at play than volume.
Integrated logistics solutions, speed to market advantages, quality of service, supply chain offerings and more play major roles in decision making. Here is our list, in no specific order, of the top five freight forwarders.
While Crowley Maritime, based in Jacksonville, Florida is not technically a freight forwarder themselves, they have several points to their name. First, Crowley is a shipper who also performs full end-to-end supply chain and logistics solutions. They perform all tasks expected of freight forwarders and do so while owning their ships. This is a massive advantage, as it removes some of the uncertainty with the logistics process.
Kuehne + Nagel
Over Kuehne + Nagel’s 125-plus year history, they have transitioned from a standard international freight forwarding service into a global provider of integrated and innovative supply chain solutions. As a result, they remain focused on four facets: sea freight, air freight, contract and integrated logistics, and land transportation.
DHL Global Forwarding
DHL Global Forwarding, formerly known as DHL Danzas Air & Ocean, is the freight forwarding division of Deutsche Post DHL. They provide air and ocean freight forwarding services, while also planning and undertaking major logistics projects. Together with DHL Freight, they form the largest freight forwarder in the world.
Expeditors, also known as Expeditors International of Washington, is a worldwide logistics and freight forwarding company based in Seattle. As a massive freight forwarder, their focuses are on four core services: supply chain solutions, transportation, customs compliance, and warehousing and distribution. Air freight makes up over 40% of their moves.
UPS Supply Chain Solutions
As a large global freight forwarder, UPS Supply Chain Solutions has a strong portfolio of service offerings to develop innovative solutions for the supply chains of many industries. They are a single source provider, and draw from the global UPS network, service offerings, and advanced technologies to assist in freight management.
Pros and Cons of Freight Forwarding
As with any logistics services, there are plenty of factors that play into the overall process. While freight forwarding may seem like a win-win situation for customers, there are also some caveats that should be known before diving in. Below are a few of the advantages and disadvantages of freight forwarding.
Advantages of Freight Forwarders
- Freight forwarder services offer competitive pricing based on service levels needed from a customer. They can also lower prices through the arrangement of consolidation with cargo from other customers. This allows for a single full container load for transport (FCL) and will drastically reduce overall freight charges for LCL (less than container load) shipments.
- Freight forwarders will typically specialize in a specific service area, mode of transportation or market. This allows the company to choose the services the forwarder should handle. In turn, this gives the company greater control over the handling of their shipment.
- Knowledge and expertise are crucial in the import and export of products through customs clearance Freight forwarders have the most up-to-date information regarding customs regulations, and can handle documentation, pay tariffs and handle taxes.
- One of the main advantages of a freight forwarder is their ability to offer services relating to a trade. Some service offerings consist of documentation handling, bills of lading, bank paperwork, cargo insurance and inventory management.
Potential Disadvantages of Freight Forwarders
- In many cases, freight forwarding services are not the owners or operators of the transportation that cargo is being moved on. For this reason, their influence in the happenings on board the ship, rail car, truck or airplane are minimal, and their participation in the transportation steps is hands off at best.
- If you perform all documentation and forwarding, your costs are controllable. However, with a freight forwarder there is no way to really know what kind of a service markup the forwarder is adding. A company might charge $2,500 for land transportation to a destination. However, a freight forwarder can easily state the price as $5,500 and skim the markup off the top.
- Product loss is a hard reality of some shipping processes. Putting trust in a freight forwarder to handle all shipping and packing leads to loss of control for the packaging process. If the freight forwarder is detail oriented, there will be no problems. But ineptitude can wreak havoc on shipments and lead to losses.
Do You Need Freight Forwarding?
Freight forwarding is an easy way to take your business and cargo to the next level. However, there are times when it is more advantageous to ship directly with the shipping company. Especially when that company provides the same end-to-end supply chain services as forwarders, without the markup.
Click here to get in touch with Crowley Maritime and see how freight forwarding can elevate your business.