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What Is Freight Forwarding? Everything You Need to Know

Have you heard of freight forwarding? It’s simply moving imports and exports through the supply chain. Freight forwarding businesses work with shipping companies, airlines, haulers, and customs authorities to move items from where they start to where they need to go.

Understanding Freight Forwarding

Freight forwarders help organize the shipment of goods from one country to another. The goods can be packages, crates, containers, or a mix of all three. They work for companies and individuals involved in importing and exporting goods.

The client decides how much the forwarder gets involved in the journey of the goods. For example, they may take a container load from a factory in one country to another for further assembly. Or they may transport finished goods directly from the producer to a shop’s warehouse. The freight forwarding company can use different modes of transportation, not just ships, including sea, airplanes, trucks, and rail.

Example Of Freight Forwarding:

Let’s say a factory in China makes children’s toys. The freight forwarding company could arrange to transport the toys from the factory to the Chinese airport using a truck. Then they would fly the toys to Texas and transport them from the airport to the customer’s warehouse or store in the US.

Is Freight Forwarding the Same as A 3PL?

A 3PL (Third Party Logistics) provider can handle various parts of your supply chain operations. On the other hand, a freight forwarding company typically focuses only on moving goods. A 3PL can offer additional services like warehousing, container storage, kitting, assembly, returns management, and handling the movement of goods.

How Freight Forwarding Works?

Freight forwarding companies act as intermediaries, using their contacts to find the best routes and rates for their companies. They are responsible for cargo movement and handling documentation, and customs clearance.

Here’s a simple breakdown of the process:

Stage One: Trade Terms Agreement

The importer and the supplier agree on the terms of trade using International Commercial Terms (Incoterms). Incoterms are internationally recognized rules that define each side’s responsibilities.

Stage Two: Origin Handling and Export Clearance

Based on the agreed Incoterms, the freight forwarding company arranges to move the goods from the supplier’s location to the next part of the chain, such as a seaport or an airport. They also ensure that customs inspect the cargo if necessary.

Stage Three: Export Customs Clearance

The freight forwarding company coordinates the necessary paperwork between the supplier and the recipient to meet legal and carrier requirements. This paperwork acts as a passport for the shipment.

Stage Four: Import Customs Clearance

When the cargo reaches the destination country, the paperwork is rechecked to ensure compliance with customs and quarantine regulations. A good freight forwarding company prepares this information in advance to avoid delays.

Step Five: Final Destination

Once the goods are approved for release in the destination country, the freight forwarding company organizes their onward transit. This can be taken direct to the customer’s warehouse, retail store, or, if a 3PL is involved, to a warehouse managed by the freight forwarder.

Types of Freight Forwarding

Freight forwarding companies may work with single or multiple carriers to ensure safe and compliant transportation from point A to point B. Carriers can use various modes of transportation, such as road haulage, air freight, and ocean freight.

Types of Road Haulage:

The freight forwarding company selects the most suitable haulage vehicle for transporting goods. The standard options include articulated lorries, container trucks, flatbeds, box trucks, car transporters, tankers, HIABs, and side loaders.

Types of Air Freight Transportation:

Direct services are used for smaller parcels that can fit in an aircraft’s hold during a scheduled flight. Consolidation involves combining different shipments in one flight to reduce costs. Chartering an entire aircraft is the most expensive option and is done to meet specific cargo requirements.

Types of Sea Freight:

Freight forwarding companies choose the relevant vessel type for ocean transportation. Container ships are standard and carry cargo packed in containers. Tankers transport liquids and hazardous substances, while breakbulk carriers are suitable for single commodities. Roll-on/roll-off (ro-ro) vessels are used for wheeled vehicles like trucks and cars.

What Does a Freight Forwarder Do?

A freight forwarding company works on behalf of its customers to ensure a smooth journey for their goods. Three main parties are involved: the manufacturer, the freight forwarder (intermediary), and the customer.

The freight forwarding company has essential responsibilities:

  • Safety and Compliance – It is the responsibility of either the shipper or the freight forwarder to properly pack and secure the cargo for its journey. This is agreed upon beforehand.
  • Speed and Efficiency – The freight forwarder ensures the goods arrive within the customer’s specified timelines.
  • Convenience – The freight forwarder saves the client time by handling the logistics coordination, removing it from their to-do lists.

Take control of your logistics operations and elevate your business to new heights. Contact MasterMind of the Highway Transport now to learn more about our freight forwarding services and unleash the full potential of your supply chain.

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