A freight forwarder is an international logistics company which you would use to ship cargo overseas. Usually, you might not consider well before choosing a freight forwarder as the company you deal with might be a major freight forwarder.
There are a lot of freight forwarders in the world. However, if you do not choose the most effective company, you may be charged high costs for shipping cargo. The company may tell you that they are unable to ship, even though it is possible to send. And the cargo may be held at customs every time due to lack of their experience.
Therefore, it is very important to choose the most effective freight forwarder. Choosing the right freight forwarder might be a hard task as there are a lot of players in the market. The reason why there are many forwarders in the market is because of:
- Not much initial investment to start up the business.
- A freight forwarder does not require assets such as vessels or airplanes. They are able to start their business without holding any assets.
- There are less fixed fee.
- It requires less people to operate.
- There are so many different type of logistics. Transporting goods sounds easy but is actually complex. Different logistics arrangement need to be made based on the content of the cargo, delivery location, and customer requests.
Therefore, although there are many different companies offering logistics services, you will be able to get certain jobs done. You may think that it is possible to arrange logistics arrangements directly with shipping lines, and a truck transportation company without using a freight forwarder. Actually, it is possible to make transportation arrangements by yourself. However, it is not very efficient.
If you are not shipping high volume like a large company, costs will increase. If your company needs to send a container but only have volume of 1-2 containers per month, the charge for ocean freight cost from the shipping line will be incredibly high. A major freight forwarder will transport hundreds and thousands of containers each month. A freight forwarder works as an agency for shipping lines, and they receive a discounted price. Therefore, it is cheaper to use a freight forwarder than booking a carrier directly.
There are different methods of cargo transportation, and arrangements that need to be made for logistics. For example:
- Booking a shipping line and an airline.
- Trailer arrangement with a transport company.
- Customs clearance arrangement with a customs broker.
- Making arrangement with a packaging company, if packing is required.
- Contacting a heavy load company, if the cargo is heavy.
- If there’s less cargo, arrange consolidated service.
- Contacting a specific transportation company, if the cargo will cross international borders.
- Contacting a refrigerated warehouse company, if you need to store frozen cargo.
However, if you ask a freight forwarder to make the logistical arrangements, they will deal with all of the specific requirements. A good freight forwarder with experience will choose the most cost effective method to ship your cargo. Therefore, professional freight forwarders who have experience of shipping cargo overseas are required.
By now, you are able to understand the necessity of a freight forwarder. Now, if you are going to use a freight forwarder, which company should you choose? We will go through the content of a freight forwarder role, and explain the key points to look at when choosing one.
1. The Strength and Weakness of Forwarder
The first point is to understand the strengths and the weakness of a freight forwarder. Not all freight forwarders can arrange all logistical arrangements smoothly.
For example, if you want to send Dangerous Goods (DG) cargo and use a freight forwarder who does not specialize in DG cargo, the cost will increase. Also, they will be unable to deal with problem as they occur. If you intend to ship DG cargo, you need to use a company which specializes in DG cargo.
2. Securing Transportation Space
The second point is to understand, that the transport space of ocean freight vessels and air plane are limited.
You are unable to ship whenever you like. Especially prior to extended vacations such as New Years and National Day holidays since space will be very limited as companies will ship before the holiday period.
You may be required to ship urgent cargo on behalf of a customer. A freight forwarder who is able to secure space during high seasons, is a strong player.
Once cargo can be transported safely and on time, the next thing to look at is cost. The product unit price will increase if the cost of logistics is high.
If the cargo can be transported safely and on time, reduced cost transport will be preferred. Companies who can provide a competitive price are strong forwarders.
Competitive prices normally depends on volume of cargo the freight forwarder deals with, and the sales person in charge. If they are dealing with high volume, the shipping line will provide them with a special rate. If the sales team sells at a higher price, then the cost will be naturally high. There’s also a possibility of the sales representative sells at cheaper price to obtain additional work, but the quality of their service may decrease. So, it is important to maintain a balance.
4. Various Choice of Schedules and Routes
A freight forwarder does not own vessels or airplanes, however, they deal with different shipping lines and airlines. Therefore, they can provide different options on price, schedule and free time to their customers.
Customer are happy to have many choices. There are freight forwarders who only deal with a specific shipping line or airline. However, a customer will gain additional benefits from dealing with a freight forwarder who can provide more choices.
5. Smooth Custom Clearance
Customs clearance is a hurdle for international transport. You are unable to ship whatever you want in cross border transportation. You may be required to have a permit or register items.
It is important for a freight forwarder to be able to communicate this information to their customer in advance. Good freight forwarder will be able to ship cargo smoothly, without the cargo being held at customs clearance and employs an experienced customs specialist who can deal with problems quickly and efficiently.
This is how companies should operate. An exporting freight forwarder and an importing forwarder located in two different countries co-operate with each other to ship international cargo. A large company has many branches overseas and there are freight forwarders who have a network of agency contracts.
6. Overseas Agent Network
If two countries do not communicate effectively, it may cause delays with customs clearance which will affect the delivery schedule.
Important factors are to check such as whether the importing country has a branch or agent. Also, check if they have good communication skills where they communicate regularly.
A freight forwarder is a service business. If a forwarder is able to provide good service and work with good attitude, the customers will be easy to work with, and will have a positive feedback toward them.
It is important to have a quick response and flexibility toward complicated requests when choosing a freight forwarder.
7. Work As A Team
To provide a good service, it is important to maintain high level of cooperation within a company. Roles and responsibilities differ between each company.
However, it is important for sales representatives, customer services, and customs specialists to work and cooperate effectively. If effective communication is not maintained within the team, the customer will be unable to forward issues, and concerns to the appropriate person.
Customer will not be able to proceed the jobs when they cannot contact the person in charge. Also, if a sales representative leaves a company, the customer will necessarily need to know who they need to contact.