A freight forwarder is an important link in the chain of international trade. In this guide, we have explained his role in logistics of an Export Business, and how an exporter can choose a freight forwarder who is suitable for his needs.
Freight Forwarder - Meaning
In simple terms, a freight forwarder is an agent responsible for the movement of goods on behalf of the cargo owner. This responsibility can start from the time the goods are picked up from the seller until they are delivered at the buyer’s specified location.
The duties and responsibilities of a freight forwarder are often carried out by a clearing and forwarding (C&F) agent. In other instances, exporters may hire a separate clearing agent for meeting regulatory requirements or prefer freight forwarding companies. The roles and responsibilities of a freight forwarding agent can be quite versatile and crucial to international trade. That said, even the freight forwarding activity involves several important functions.
What is freight forwarding?
An exporter may need a freight forwarder to make some vital decisions during the movement of the goods. Here are some inputs to help you in understanding the role of the freight forwarder.
A Freight forwarder can offer expert advice to the exporter on various logistics-related expenses (such as freight expenses, port expenses, consular fees, documentation costs, insurance fees, cost of merchandise, custom clearance and charges) incurred during the process of exports.
They consider the perishable nature of the goods, transit cost, time, and safety of the goods to suggest the best possible route for the shipment to the exporter.
They arrange the booking of cargo space on ship, plane, train, or truck.
They coordinate the insurance of the goods and do the necessary follow-up in case of an accident.
They oversee the transportation of the cargo and its packing and loading into the carrier.
The freight forwarder can act as a common carrier and prepare documents such as the bill of lading, airway bill, etc. They can liaise with overseas customs agents to ensure that the goods and documents comply with local customs regulations. They can also track the real-time transit of the goods and troubleshoot if required.
Using their international network, freight forwarders can also advise exporters on legislation affecting international trade, political situation and unrest, and other factors that may affect the movement of goods. Given this suite of services, having the right freight forwarder can give a big boost to your export trade.
Main functions of a Freight Forwarder
Here are some important points for an exporter to keep in mind while choosing his freight forwarder. Evaluating a freight forwarding process on these aspects will make the process of choosing your agent much simpler and effective.
- Network in the Market
- Tie Ups with recognized international associations
- Services Offered
- Area of Expertise
- Requirements of your Business
- Market Reputation & References from Customers
There’s no substitute for experience. A freight forwarder that’s been in the business for years would have seen it all. They would be familiar with port lockouts, dockworkers’ strikes, emergency reroutes, calamities, overseas customs issues. They would have exposure to all types of troubleshooting scenarios. This experience will help you to improve your delivery quality and timeliness.
Network in the Market
An international freight forwarding company will have contacts across its operational regions. Your freight forwarder must have worked with largest freight forwarding companies and could have a strong network of agents, affiliations, and should have partners in the region you are trading and be in full capacity to provide you with great global freight solutions. A stronger network helps in efficient crisis management and ensures a smoother movement of goods, because that’s how the freight forwarding process works.
Tie Ups with recognized international associations
Affiliation with recognized international associations like WCA or FIATA (or, closer home, FFFAI) gives legitimacy to the freight forwarder. It takes enough financial strength, reputation, track record, and robust internal controls for a freight forwarder to qualify for membership in these organizations. By choosing a well-affiliated freight forwarder, you are likely to get better quality service when it comes to the handling and movement of your goods.
A freight forwarder may offer great services according to others, but he/she should specialize in the service that matters to you. For instance, a freight forwarder may be internationally recognized for its top-quality air or sea movements but may have outsourced the surface freight in your country to a below-par sub-contractor.
Area of Expertise
You also must confirm the area of expertise of the freight forwarder. They could be an expert at transporting oil, a specialist in handling hazardous goods, or adept at shipping perishable goods. If you plan to ship frozen foods, look for a freight forwarder known for expertise in shipping frozen food.
Requirements of your business
The freight forwarding services provided by the freight forwarder should meet your requirements. For example, you may need one who also provides efficient handling of your fragile products from factory to port and real-time tracking of the movement. This is a very specific requirement, and it is better to confirm beforehand that the freight forwarder can provide the same.
Market reputation & references from customers
Customer support, good references, and market reputation are the finer aspects that make a freight forwarder preferable over its competitors. You can also ask for feedback from past customers. Prompt and efficient customer service and query resolution are signs of a good freight forwarder.
A price-based comparison of freight forwarders will help you find out not only the best but also the most economical option. Logistics form a significant part of the cost of export, so finding an agent at the right price is very important. You must also understand the pricing mechanism of the freight forwarder, which can be based on percentage, volume, value, or hybrid methods.
Remember when you opt for a major freight forwarder, you are choosing an agency that you can trust, and who can be a partner in your success. Therefore, selecting the right freight forwarder can help you optimize your supply chain, cost efficiency, delivery, and timeliness.