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How Freight Forwarders improve supply chain Logistics

Growing your business over international lines is a great achievement. You’ve used your resources to reach customers in places you never thought possible. Unfortunately, importing and exporting is at best fickle and complicated. Instead of attending to the client’s needs, you might find yourself tackling paperwork and fighting red tape. Fortunately, there are professionals trained specifically for the minefield of import/export problems: freight forwarders.

Before you dive into hiring or contracting a freight forwarder, it’s important to understand what they do and don’t do. At Onsite Global Logistics, we’re not just devoted to meeting your supply chain logistics needs — we’re here to help you understand them. Let us help you get the most out of your freight forwarder.

What Is a Freight Forwarder?

A freight forwarder is a firm that arranges cargo transportation on your behalf as the shipper. They rely on their relationships with other supply chain specialists to move your cargo. They might use established commercial trade routes or charter specific services tailored to your shipment and its destination.

Through this, freight forwarders alleviate the stress of micromanaging every step of shipping. They handle:

  • The arrangement of air, sea or land transportation
  • Inland transportation
  • Warehousing and storage
  • Preparation of documents needed for importing and exporting
  • Cargo insurance
  • Customs compliance
  • Banking documentation

In short, freight forwarders are intermediaries between you and various shipping services. They cover virtually every aspect of shipment.

What Doesn’t a Freight Forwarder Do?

Generally, a freight forwarder handles all aspects of international transport. They do not, however, actually move your cargo in most instances. Few freight forwarders own their own shipping equipment like ships, planes, and trucks, but many do not. To move your cargo, they take bids or contracts from shipping services based on cost, availability, and efficiency. While they can act independently for you, they will take your requests into consideration and keep you updated on transport costs and timelines.

Freight Forwarders vs. Freight Brokers

Even if you haven’t shipped freight internationally yet, you may have heard of freight brokers. But what’s the difference between a freight broker and a freight forwarder? They’re both intermediaries, so what’s the difference?

There is one large difference between freight forwarders and freight brokers: responsibility.

While a freight broker will take care of many of the same responsibilities as a freight forwarder, they do not cover specific terms of your shipment or insurance. That would fall to the business owner, creating another layer of micromanagement.

Bills of Lading, Air Waybills, and CMR Consignment Notes

A bill of lading covers the terms of sea shipments, air waybills cover air freight and CMR consignment notes cover truck freight. Though they have their own uses, they each generally serve three purposes:

  • It is a receipt recognizing the transfer of cargo from one place to another.
  • It is a contract for carriage, which is an agreement that a carrier is moving shipments on behalf of someone else (your business via the freight forwarder).
  • It establishes ownership. Bills of lading marked “negotiable” means the cargo can be transferred from one carrier to another, often to traverse different modes of transportation or trade routes. A “non-negotiable bill of lading” means only that carrier can carry the cargo.

Freight forwarders have their own bills and paperwork to cover all three aspects. By shipping under their own bills, freight forwarders can customize shipping terms to protect your cargo and utilize the best available options.

Insurance

The insurance component is quite simple. Freight forwarders carry liability insurance, meaning they take responsibility for damages or losses suffered by your shipment. While freight brokers carry insurance to cover themselves, they can’t buy insurance to cover you or your cargo. Without this coverage, they will not generally store your freight for you, while freight forwarders will.

Getting Your Shipment Through Customs

While freight forwarders are experts in customs clearance and tariffs, after your shipment gets to another country, they rely on destination agents. These are freight forwarders in other countries.

Destination agents will deconsolidate your shipment, arrange for its final delivery, and collect payment. Like with shipping, freight forwarders rely on established relationships to get your shipment to its ultimate destination. Your own domestic freight forwarder handles those aspects for imports from your suppliers.

The Advantages of Using a Freight Forwarder

After reading the above information, you may already have an idea of why using a freight forwarder is better than going it alone. If you’re still on the fence, here are some of the cost- and time-saving benefits of using a freight forwarding firm.

freight forwarder

Freight Forwarders Keep Up With Tax, Customs, and Tariff Laws

One of the biggest barriers to growing your company through importing and exporting is the regulations. While the World Trade Organization requires that all members maintain informational resources, there are currently 164 countries in this international trade agreement.

Without a  freight forwarder, business owners might find themselves lost in the tangle of trade agreements and laws. The US alone has 14 trade agreements with various countries, each with their own benefits and regulations. Administrative penalties for import/export mistakes can cost your business up to $300,000 or up to twice the value of a single transaction.

Many freight forwarders are Authorized Export Operators. This means that they have exclusive access to simplified customs clearance and can defer payment on import costs that would otherwise have to be paid before your shipment is released.

Knowledge About Specific Trade Routes

Whether dealing with air freight, ocean freight, truck freight or rail freight, forwarders have a better idea of what your best options are. Especially if you’re exporting to another country, you may not know exactly how long it takes cargo to reach its destination. Different climates, political conditions and physical landscapes can be barriers to timely shipments.

Fortunately, freight forwarders handle shipments year in and year out. They’ve seen where potential obstacles arise. Being aware of every challenge can save your business’s finances, calendar and reputation by avoiding extended storage costs and late deliveries.

Domestic Services

Freight forwarders are known for tackling international shipping with expertise, but they can also help your business grow domestically. Large countries including the US and Canada have terrain and shipping services as diverse as any international trade route. States and provinces often have different regulations and costs for moving freight.

Once again, the biggest disadvantage of not using a freight forwarder is not being familiar with areas closer to your shipment’s destination. Freight forwarders open you up to a network of reliable, efficient carriers and warehouses that you may not be aware of.

B2B Service

Business-to-business shipping can be a lot more complicated than shipping to consumers through commercial services. To successfully complete a business shipment, you may need specialized equipment to ship and store time-sensitive or fragile products. Often, B2B shipping requires you to adhere to a stricter schedule.

A freight forwarder will know your best course of action. They will analyze the location of your client and determine if last-mile delivery is best suited for truck, rail or other freight options. By utilizing local carriers experienced with delivering to the business, your shipment can reach your client without any last-minute hiccups.

Costs

Because freight forwarders partner with a variety of carriers and other shipping services, they have a lot of options. While keeping the security of your cargo a priority, a freight forwarder can help your business stay within budget by taking bids from a range of carriers. With a strict timetable, you’ll likely save money on storage, as well.

Insight Into Supply Chain Logistics

The value of hiring a freight forwarder is most prevalent in supply chain optimization. As they use the most cost- and time-effective carriers and routes to move your shipment, they have their eyes on the details. They can guide you through saving more money, moving freight quicker and minimizing losses and damages.

Going it alone, many business owners find themselves focused on just getting their shipments delivered. Without a freight forwarder, you may miss important insights into your supply chain’s metrics.

Freight Forwarding: Invested in Your Shipment

No matter the industry you’re in, a freight forwarder can streamline your supply chain. Because shipping is their specialty, they’re invested in and highly capable of connecting your business with the best shipping services. Don’t get bogged down in stacks of international paperwork. Let a freight forwarder handle it for you.

At Onsite Global Logistics, we’re committed to trust, excellence and respect for you and your freight. Your shipments are our business. To explore our third-party logistics and supply chain procurement services, contact us today. With decades of freight forwarding experience, you can trust us to provide services and logistical insights that will improve your supply chain.

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Onsite Global Logistics is a third party logistics provider 3PL helping companies with innovative global logistics and supply chain solutions

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