When you have goods or products you need to get from your factory or storage facility to an end user, you will likely call on the services of a freight forwarder. They are the people who organize the transportation of goods globally, although they do not operate any type of vehicles or vessels themselves (and are often known as NVOCCs; non-vessel operating common carriers).
They are an essential component of the shipping process. They usually organize multiple steps in the logistics chain, especially when it comes to international freight where more than one transport mode is in play.
Benefits of Using a Freight Forwarder
There can be several advantages to using a national, regional, or international freight forwarder, especially for new businesses with minimal experience in shipping. Here are some of the most critical.
High levels of flexibility
Transportation, especially on a global scale, can be fast-moving. With so many factors affecting the industry, having the flexibility to receive and act on new information can make a significant difference to time frames, margins, and productivity.
For new companies, the experience of a freight forwarder can help identify an ideal, low-risk way of choosing modes and routes.
The transportation process is susceptible to problems, whether the weather affects ocean freight and air freight or traffic problems affecting road routes. Experienced freight forwarders know how to resolve issues when they arise, which can be critical when deadlines are involved.
Because freight forwarders deal with so many businesses and modes and routes, they can save you money on shipping costs. Many of their projects involve bulk shipping, and they have long-established relationships with multiple carriers, so they are in the best position to negotiate favorable terms with those carriers.
Customs brokerage and compliance expertise
One of the most complex areas of import and export is dealing with customs documentation, such as permits, bills of lading, commercial invoice, and packing lists.
A professional freight forwarder can also serve as a custom broker, bringing additional expertise to the table to help you take care of time-consuming tasks. This includes meeting all customs requirements at the country of export and the country of destination.
They can help you complete and submit any required documents covering your cargo’s origin, destination, and any transit or transfer points in the journey.
How to Choose a Good Freight Forwarder
There are multiple options for freight forwarders and logistics companies like in any business sector. Some offer general logistics services, whereas others provide specialized freight forwarding services.
Some freight forwarders operate globally and handle international shipments, whereas others only work at a national or regional level.
Knowing which one best suits your business needs is crucial for your supply chain.
Identify your needs
Before working with a freight forwarder company, identify and establish your essential logistical needs. Here are a few questions to ask yourself:
- What type of cargo are you shipping?
- What is the point of origin and final destination? Do you need international shipments or only national?
- Do you have any specialized requirements? (e.g., does your cargo need a cold chain and competent cold chain management?)
- Are you working to a tight timeframe and deadlines?
Research forwarding companies
Compare their services, options, and pricing, and read through reviews and testimonials to get an idea of the company’s reputation and customer satisfaction ratings. You can also contact the company and ask them to provide references, helping you better understand their commercial position in their respective markets.
Choose a financially stable partner
A legitimate and financially sound freight forwarder should hold a freight broker’s bond, which acts as insurance for the consumer. A company with a freight broker’s bond has an agreement that the company will complete the delivery even if something happens to the company during transit.
Ask them questions
Reputable companies know that your business is important; they should be able to answer some of the most common questions you may have and provide you with the peace of mind you need.
Examples of questions to ask:
- How extensive is their logistics network? Do they have the resources and distribution solutions needed for intermodal transportation?
- Do they have contacts worldwide to ensure fast and safe international transportation of your goods? Do they have experience shipping to specific regions? (e.g., foreign freight forwarders in
- Asia may have better knowledge and compliance expertise with importation laws in Asian countries)
- What modes of transportation does their network have access to? (e.g., can they contact a road freight company to complete your cargo’s the journey)
- How many containers does the company move per year on average?
- Do they have experience transporting your type of cargo? (e.g., hazardous materials, perishable goods, etc.) Are there additional transportation costs for handling special products?
- Do they provide freight tracking technology or real-time freight information while in transit? Can they give you updates on the status of your freight before it arrives at its destination?
Find the company’s trade association memberships
Knowing which professional trade associations the forwarder belongs to can help you determine which standards and conventions the company follows.
For example, an American forwarder may be a member of the National Customs Brokers & Forwarders Association of America (NCBFAA). whereas foreign freight forwarders may belong to equivalent associations based in their respective home countries.
Reputable international logistics companies should also possess an International Federation of Freight Forwarders’ Associations (FIATA) membership.
Six Key Stages of Freight Forwarding
Once you have selected a supply chain partner to work with, here’s what you should expect from typical freight shipments, regardless of the mode of transport used.
Your goods are shipped from your warehouse or facility to the freight forwarder’s warehouse. If your facility and freight forwarder operate in the same country, goods are typically transported by road or rail via a domestic carrier.
As soon as your supply chain partner receives your goods at their origin warehouse, they inspect all your packages to ensure they are ready for shipment.
Also known as clearance at discharge port. Once your freight forwarder approves the shipment, they can begin clearing export customs requirements and have the goods validated by the local customs authority before shipping.
Also known as clearance at delivery port or destination city. Once approved for export, the forwarder repeats the process with the customs authorities at the country of destination to get the goods approved for importation.
At this stage, the freight forwarder handles all remaining documentation before shipment, such as carrier bills, bills of lading, commercial invoices, and more.
After all paperwork, documentation, and licensing have been cleared, the company begins the haulage process and transports the goods from the country of origin to the destination country.
Depending on their network and resources, they may only handle one leg of the trip (ocean freight forwarders may only transport goods by sea from port to port) or all of them (freight forwarders with access to sea, air, and road transportation resources).
What Affects Sea Freight Costs?
There are several factors regularly affecting global freight. For sea freight, which carries the largest freight around the world, the most common are as follows:
Destination and origin points
When trusting freight for transport by sea to a forwarder, it is critical to check the costs associated with the specific ports and cities you need to transport your goods to.
If your shipment follows major trade routes, overall costs will be lower, and capacity will be higher, as they can handle more containers per day. The smaller the ports of origin and destination, the higher the potential costs and delay.
Any stops at ports between the origin and destination may also create additional service charges. The longer the journey, the more expensive the trip.
Fuel costs constantly fluctuate, sometimes multiple times during a single shipment. Any changes in fuel prices typically have surcharges. Each company calculates fuel surcharges differently, so make sure you ask about it.
Shipping seasonal effects
Ocean freight charges may fluctuate depending on the time of the year and current weather conditions. For example, the period before Christmas typically causes a surge in demand across all sectors of international logistics.
Weather conditions affecting ocean freight charges manifest themselves in two forms: temperatures and visibility. For instance, hot and very hot conditions may increase cold-chain freight charges, whereas severe thunderstorms and other harsh and inclement conditions may restrict smaller vessels from traveling.
Although the standard currency for most international transactions is the U.S. dollar (USD), currency valuation fluctuates multiple times a day. These changes can potentially affect the total value of your freight charges, even when working with a domestic carrier.
Most sea freight is charged according to weight or measure. If you are not shipping a full container (Less than container load or LCL), you will likely still be charged for a full one. It is always worth trying to share a container or fill one.
Contact Asiana USA for Your Freight Forwarding and Inventory Management Needs
Deciding which freight forwarding company best suits your needs may be challenging and take a lot of groundwork and research. But the initial period of checking if a company can meet your needs can pay off dividends in the long-term.
Finding a competent freight forwarder to work with can not only ensure your goods are safely delivered; it can also reduce a major part of your workload.
At Asiana USA, we offer the very highest customer service standards, and we always keep up-to-date on any changes in regulations. We also have an established strong network of fellow logistics companies and carriers to ensure your freight forwarding experience is worry-free. Call us today at (855) 500-1808 to find out more about our services or to request a free quote.