What is freight forwarding ? Freight forwarders organise the shipment of goods from one country to another. The goods may consist of packages, crates and containers, or a mixture of all three. They work for companies and individuals that import and export goods.
The client decides how much involvement the forwarder has in the goods’ journey. For example, it might be taking a container load from a factory in one country to another (for onward assembly), or it might contain finished goods that go from the producer directly to a shop’s warehousing facility. The freight forwarding company can use a mixture of shipping modes (not just ships!) but sea, aeroplanes, trucks and rail.
Freight forwarding is a crucial part of the global supply chain and logistics industry. It involves the coordination and management of the transportation and shipment of goods from one location to another on behalf of shippers, typically businesses or individuals who need to move cargo internationally or domestically. Freight forwarders act as intermediaries between shippers and various transportation services to ensure that goods are transported efficiently and effectively.
Understanding Freight Forwarding
What is freight forwarding? At its core, freight forwarding is a service-oriented industry that specializes in the planning, organization, and management of the transportation and shipment of goods from one location to another. It is a multifaceted field that encompasses a wide range of tasks, all aimed at facilitating the movement of cargo. Freight forwarders, also known as forwarding agents or simply forwarders, act as intermediaries between shippers (often businesses or individuals) and transportation services.
Key Functions of Freight Forwarders
Cargo Booking and Consolidation: One of the primary roles of a freight forwarder is to secure cargo space with various transportation providers, such as shipping lines, airlines, trucking companies, and rail operators. They often combine shipments from different customers into a single container or shipment to optimize space and reduce costs.
Documentation: Freight forwarders handle the extensive paperwork and documentation required for international shipments. This includes bills of lading, customs declarations, export/import permits, and other regulatory documents.
Customs Clearance: Navigating complex customs regulations is a crucial function of freight forwarders. They ensure that shipments comply with all legal requirements for export or import, classify goods, calculate duties and taxes, and manage customs documentation.
Transportation Coordination: Freight forwarders are responsible for arranging the transportation of goods using various modes, such as sea freight, airfreight, road transport, or rail. They select the best routes and carriers to optimize cost and transit time.
Cargo Insurance: Freight forwarders assist in securing cargo insurance to protect against loss or damage during transit, helping customers understand their insurance options and requirements.
Warehousing and Distribution: Some freight forwarders offer warehousing and distribution services. They store and distribute goods on behalf of their customers, including inventory management and order fulfillment.
Supply Chain Management: Beyond logistics, freight forwarders provide supply chain solutions, including inventory optimization, order tracking, and supply chain visibility, helping customers streamline their operations.
Risk Management: Freight forwarders help customers mitigate risks associated with transportation, such as delays, disruptions, or damage to cargo.
Tracking and Reporting: They offer real-time tracking and reporting services, allowing customers to monitor the status and location of their shipments throughout the transportation process.
Consultation: Freight forwarders provide advice and consultation on various aspects of international trade and logistics, helping customers make informed decisions about their supply chain operations.
How freight forwarding works
Freight forwarding companies are intermediaries that utilise their ‘black book’ of trusted contacts to negotiate the best routes, and best rates, for companies that use their services. As well as being responsible for the movement of cargo, they also take responsibility for documentation and customs clearance.
The importer and the supplier agree on terms of trade – known in the trade as International Commercial Terms (or ‘Incoterms.’) The Incoterms are a set of internationally recognised rules which define what each side is responsible for.
Stage two: origin handling and export clearance
Depending on the INCO terms agreed, the freight forwarding company can arrange to move the goods from the supplier’s location to the next part of the chain – whether that’s to a seaport, or an airport. The company will also arrange for the cargo to be satisfactorily inspected by the customs department of the origin country if required.
Stage three: export customs clearance
The freight forwarding company can be responsible for coordinating the relevant paperwork between the supplier and recipient of the goods to ensure that all laws and carrier requirements are met. In short, a passport for the shipment.
Stage four: import customs clearance
Once the cargo has arrived in its destination country, the paperwork must be checked once again to confirm that it meets the required custom and quarantine requirements. A good freight forwarding company will request and prepare this information in advance to reduce holdups in the process.
Step five: onward to the final destination
Once the goods are approved for release into the destination country, the freight forwarding company will organise its onward transit. This could be direct to the customer’s warehousing facility, retail store, or, if a 3PL is required, to a warehouse managed by the freight forwarder.
What are the advantages of freight forwarding
Freight forwarding offers several advantages for businesses and individuals involved in international or domestic shipping and logistics. These advantages contribute to the efficiency, cost-effectiveness, and reliability of transporting goods from one location to another. Here are some of the key advantages of using freight forwarding services:
Expertise and Knowledge: Freight forwarders have extensive knowledge of international and domestic shipping regulations, customs procedures, documentation requirements, and logistics. Their expertise helps ensure that shipments comply with all legal and regulatory standards.
Cost Savings: Freight forwarders can leverage their relationships with carriers to negotiate competitive shipping rates, helping shippers save on transportation costs. They can also optimize routes and shipping methods to minimize expenses.
Time Efficiency: Freight forwarders streamline the shipping process, saving valuable time for businesses. They handle documentation, customs clearance, and other logistical tasks, allowing companies to focus on their core operations.
Customs Clearance: Handling customs procedures can be complex and time-consuming. Freight forwarders are well-versed in customs regulations and facilitate the smooth clearance of goods through customs, reducing the risk of delays or fines.
Global Network: Freight forwarders have established networks of carriers, agents, and partners worldwide. This global reach enables them to provide comprehensive logistics solutions for shipments to virtually any destination.
Cargo Insurance: Freight forwarders can assist in securing cargo insurance to protect against loss or damage during transit. This provides peace of mind for shippers and helps mitigate financial risks.
Risk Management: Freight forwarders have the expertise to assess and mitigate risks associated with shipping, such as adverse weather conditions, supply chain disruptions, or transportation delays.
Consolidation: Freight forwarders often consolidate multiple shipments into a single container, reducing shipping costs for individual shippers. This is particularly beneficial for smaller businesses with lower shipping volumes.
Specialized Services: Some freight forwarders offer specialized services for specific industries or types of cargo, such as handling hazardous materials, perishable goods, or oversized shipments.
Warehousing and Distribution: Many freight forwarders provide warehousing and distribution services, allowing customers to store and distribute their goods efficiently. This can be especially useful for managing inventory and fulfilling orders.
Supply Chain Optimization: Freight forwarders can assist in optimizing supply chains, improving inventory management, and enhancing overall operational efficiency.
Real-Time Tracking: Most freight forwarders offer real-time tracking and reporting services, providing visibility into the status and location of shipments throughout the transportation process. This information helps shippers make informed decisions and meet customer expectations.
Flexibility: Freight forwarders offer flexible solutions tailored to the specific needs of their customers. Whether it’s a one-time shipment or ongoing logistics support, they can adapt to various requirements.
Reduced Administrative Burden: By handling documentation, paperwork, and compliance matters, freight forwarders alleviate the administrative burden on shippers, allowing them to focus on their core business activities.
Freight forwarders strive to mitigate as much risk as possible for their clients. By using IT software, freight forwarders are better able to fulfill customer needs. Inaccurate or missing paperwork can result in lost merchandise and fines. Sometimes tariffs need to be negotiated and customs regulations must be handled. By managing the logistics process, freight forwarding companies often avoid those mishaps. Forwarding companies understand the risks of shipping via land, sea, air, and rail and make it their business to manage those risks and be of benefit to their client.
Types of freight forwarding
Freight forwarding is a diverse field, and there are several types of freight forwarding services that cater to different shipping needs and industries. Here are some common types of freight forwarding:
International Freight Forwarding:
This is the most common type of freight forwarding and involves the transportation of goods between countries. International freight forwarders handle shipments that cross international borders and deal with customs clearance, documentation, and compliance with international trade regulations.
Domestic Freight Forwarding:
Domestic freight forwarders focus on shipments within a single country. They manage the transportation of goods from one city or region to another, using various modes of transport such as trucks, trains, or planes.
Ocean Freight Forwarding:
Ocean freight forwarders specialize in the transportation of goods by sea. They arrange shipments on container vessels, bulk carriers, or other types of ships. Ocean freight forwarding is commonly used for international trade, especially for transporting large volumes of goods.
Air Freight Forwarding:
Air freight forwarders concentrate on the transportation of cargo by air. This mode of transportation is known for its speed and is often used for time-sensitive or high-value shipments. Air freight forwarders coordinate with airlines to book cargo space and ensure timely delivery.
Land Freight Forwarding:
Land freight forwarders handle shipments that move overland, primarily by road or rail. They are responsible for organizing trucking and rail transport and may manage both domestic and international land shipments.
Multimodal Freight Forwarding:
Multimodal or intermodal freight forwarding involves the use of multiple modes of transportation for a single shipment. Freight forwarders coordinate the movement of goods across different transport modes, optimizing routes and reducing transit times.
Project Cargo Forwarding:
Project cargo forwarders specialize in handling oversized or exceptionally heavy shipments, often for construction projects or industrial equipment. They have expertise in the unique logistics challenges associated with large and unconventional cargo.
Temperature-Controlled Freight Forwarding:
This type of freight forwarding is essential for industries like pharmaceuticals, food, and chemicals that require precise temperature control during transportation. Temperature-controlled freight forwarders ensure that goods remain within specified temperature ranges throughout the journey.
Hazardous Materials (Hazmat) Forwarding:
Freight forwarders that specialize in hazardous materials are trained and certified to handle the safe transportation of dangerous or environmentally sensitive goods. They comply with strict regulations and ensure proper packaging and labeling.
Perishable Goods Forwarding:
Perishable goods forwarders deal with time-sensitive shipments like fresh produce, flowers, and pharmaceuticals. They manage the logistics of maintaining product freshness and meeting delivery deadlines.
E-commerce Fulfillment Services:
Some freight forwarders specialize in e-commerce fulfillment, helping online retailers store, pick, pack, and ship orders to customers worldwide. They play a crucial role in the global e-commerce supply chain.
Trade Show and Exhibition Forwarding:
These forwarders assist exhibitors in transporting materials, booths, and displays to trade shows and exhibitions. They handle the logistics of getting all the necessary items to the event venue on time.
Reverse logistics forwarders manage the return of goods from customers to the manufacturer or retailer. This can involve refurbishing, recycling, or disposing of products.
Each type of freight forwarding service caters to specific logistics needs and industries, making it essential for businesses to choose a freight forwarder that aligns with their shipping requirements.
Six Reasons to Use Basenton International Freight Forwarding for Logistics
1. Grow your business: Basenton International Freight Forwarding takes all the hassle out of managing logistics so clients can focus on growing their business. With a single point of contact and consistent service levels throughout the supply chain, customers can spend more time and money on sales, manufacturing, product development and other value-added activities.
2. Better Rates: Basenton Freight Forwarding is able to handle large volumes of shipments, bundling customers’ shipments to take advantage of economies of scale. For example, a company looking to import goods from China may not have enough goods to fill a full container, but by utilizing LCL shipping (less than a container load), customers can meet their business requirements without incurring excessive costs.
3. Easier customs clearance: The best freight forwarder is Basenton. This means they are qualified to manage the various customs requirements that are required when transporting goods between different locations. We can also defer payment of import duties.
4. Stay Ahead of Regulations: Basenton Freight Forwarding Partners stay abreast of trends and regulations impacting the industry and ensure clients are kept up-to-date.
5. Expertise: Basenton Freight Forwarding has built its reputation by handling all the intricacies of the logistics network. The best companies understand and share details with their customers and partners to provide the best service, such as: when ships leave, import regulations and their country differences, and tariff rates for specific products.
6. Out of scope shipments: Basenton Freight Forwarders provide information and advice on routing, origin and how to handle special/unusual requests including hazmat and hazmat.
If you are still wondering “What is freight forwarding” or what are its benefits, Basenton Shipping can help you. With over 8 years of experience in the shipping industry and over 100 shipping professionals with regional expertise, Basenton can provide comprehensive, reliable freight forwarding services.