Categories: Business

What Is Freight Forwarding?

If you’re thinking about entering the international shipping business, you need to be familiar with the term “freight forwarding”. This is because freight forwarding companies will become an integral part of your supply chain as your goods are shipped from the manufacturer to their final destination. Freight forwarding can be a bit complex, but these intermediaries are critical for shippers because they ensure your goods arrive safely at your customers’ doors. This guide to freight forwarding will help you better understand its importance.

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An Intermediary That Works For You

Freight forwarders act as intermediaries between the company that initiates the shipments (often the manufacturer) and the final destination for the shipments. These companies are not shippers themselves, but instead, have a network of freight transportation options that they use to ensure the shipper gets the most optimized shipping route at the best price. Their network may include sea or ocean freight transportation, rail freight transportation, air freight transportation, and road freight transportation.

A freight forwarding company may use established commercial routes to ship your goods or they may use charter transportation options that can fully optimize your route. The freight forwarder analyzes various data points to determine which transportation option offers you the best value in terms of cost, shipment time, and reliability. A freight forwarding company is almost mandatory for international shipments because of the complexities involved with customs and other regulatory requirements.

A Wide Range of Services To Suit Your Needs

A freight forwarding company will usually handle large volumes of shipments, which provides them certain benefits. For instance, most freight forwarders are Authorized Economic Authorizers (AEO), which means they receive simplified customers clearance status, which among other advantages, allows them to defer payment on import duties and other charges that normally have to be paid before the cargo can be released. Using an AEO means your products won’t get held up in customs and delay your deliveries.

Other services you’ll get from a freight forwarder include advice on how to optimize your shipment costs (customs clearance expenses, freight charges, special documentation costs, etc.), discounted comprehensive cargo insurance, advice on proper packaging and labeling, advice on loading and stowing of products, reports that give you data on various aspects of your business, advice on how to optimize your supply chain, and customs advice, among others.

Some liquid and gas hazmat calls for specialized packaging like composite overwrapped pressure vessels. Although it is unlikely your transportation company will ever need COPV tanks as such hazmat is mainly used in industries like aerospace, it is essential to get familiar with all transportation safety requirements. Freight forwarders can help brief you.

Freight Forwarders Don’t Handle Your Shipments

It’s important to understand that freight forwarders never actually handle your shipments. In many cases, they aren’t even in the same location as your products when they arrive at their port of entry. The freight forwarder’s job is to facilitate the shipment, especially through customs, and make sure you pay a reasonable cost to get your products from point A to point B by engaging their contacts in the freight industry. So, while they are a vital part of the shipping process, they don’t ever come into contact with the freight they’re working with.

Conclusion

Entering the international shipping business can be daunting, as there are so many regulations at every port of entry around the world that it could take you forever to learn the best ways to get your products where they need to go. Enlisting the services of a freight forwarder will enable you to master the learning curve quickly and make your business grow.