An Introduction to Freight Forwarding
Freight forwarding entails the logistical arrangement of intermodal transport of commodities across international borders, on behalf of shippers. Duties include freight rate negotiating, container tracking, strategizing, and much more.
What is Freight Forwarding?
In a globalized market, freight forwarding entails the logistical arrangement, organization and monitoring of transported goods from a supplier and/or manufacturer to intended recipients, internationally. This includes:
- Tracking Shipments
- Filing Documents for Customs Clearance
- Negotiating Freight Rates
- Scheduling Cargo Space
- Consolidating Freight
- Supplying Cargo Insurance
What Do Freight Forwarders Do?
Forwarders perform all duties necessary for the intermodal transport of commodities across international borders, on behalf of shippers.
Shippers often outsource supply chain coordination to freight forwarders.
In short, freight forwarders arrange the importing and exporting of goods, but do not actually move the goods themselves.
Freight Forwarders are…
Architects of transport
The freight forwarding industry is represented by the International Federation of Freight Forwarders Associations (FIATA), a non-governmental organization serving approximately 40,000 freight forwarding and logistics firms that collectively employ 8 to 10 million people within 150 countries. FIATA endearingly (and accurately) refers to its member forwarding and logistics firms as “architects of transport.”
Customs brokerage experts
Seamless importing and exporting of goods across international borders requires refined industry know-how. International forwarders possess the necessary expertise to prepare and process customs documents. Forwarders typically are tasked with reviewing the following:
- Commercial Invoices
- Shipper’s Export Declarations
- Bills of Lading
- All Other Documents Required by the Carrier or Exporting/Importing Countries.
International trade almost always mandates more than one mode of transportation to move a given parcel from its originating country to its final destination. This may comprise a combination of road, rail, sea, and/or air, all within a single supply chain. Forwarders book cargo space for shipments through each stretch of the journey, and coordinate all intermodal requirements on behalf of the shipper.
Forwarders know the value of a good carrier, and work hard to nurture mutually beneficial relationships with preferred steamship lines. With or without healthy working carrier relationships, savvy forwarders will still open their business to bids from various carriers, to ensure competitive freight rates for their shipments.
Roles & Responsibilities
notification of any production or travel delays
any labor issues at ports involved with transportation
for extreme weather that could result in delays
warehousing, at home and abroad
shipments from multiple suppliers
any changes in delivery requirements
damaged equipment is inspected at the point of loading
estimated delivery times at each stage of intermodal transport
steamship line notices for disruptions
holidays and government actions in origin country
pertinent information regarding hazardous materials
Freight Forwarding Processes
A 12 STEP PROGRAM
- The Purchase
- Find a suitable international supplier.
- Negotiate transaction/payment terms (Letter of Credit or others).
- Buyer and seller agree upon terms of sale.
- Order Awarded & Initiated
Buyer issues a purchase order to the supplier.
- Determine & Agree Upon an Anticipated Date of Completion
- Goods Are Manufactured
Supplier drafts a packing list.
- Shipment Is Prepared for Export
Supplier creates commercial invoice and prepares export documents required by origin country, including:
- Export Declaration
- Commercial Invoice
- Certificate of Insurance (COI)
- Vendor Contacts the Buyer Or Freight Forwarder
- Freight Forwarder Arranges Cargo Transportation with the Carrier(s)
- Cargo Is Loaded Onto Vessel or Aircraft & Begins Its Journey to Importing Country
Carrier Transportation Waybill
- Customs Broker Submits All Necessary Customs Documents
- Commercial Invoice
- Customs Invoice
- Copy of Carrier Waybill
- Certificate of Origin
- Customs Broker Is Notified When the Shipment Arrives at Its Destination Port
- Shipment Is Tendered for Final Delivery
- Receiving Report
- Inventory Report
- Payment Issued
- Entered in the General Ledger
- Customs Compliance Check Conducted
- Shipment Is Cleared for Import Duties & Taxes Paid