05 Nov Why do i need a freight forwarder ?
A freight forwarder is a multi-function agent / operator who assumes the role of coordinating the movement of goods from point A to point B on behalf of the BCO (Beneficial Cargo Owner).
Freight forwarders are a vital part of the entire supply chain and are common to all modes of transport–sea, air, road and rail.
Why a freight forwarder Global trade is the backbone of many economies around the world, accounting for around US$ 16.0 trillion as per the WTO.
Seaborne trade accounts for about 90 per cent of global trade and, according to UNCTAD, 1687 million tonnes (2015 estimates) were transported in about 177.6 million containers (2015 estimates) covering 998 billion tonnes of miles (2016 estimates). Isn’t that amazing?
Now imagine that shippers in the world should carry out all activities related to shipping, such as organising trade and finance documents, negotiating freight agreements, tracking the flow of freight, transport, customs clearance, port inspections and all other activities on their own.
Dancing, huh?!! This is where the Freight Forwarder comes in.
Activities The basic requirement of the freight forwarder is to ensure that the cargo collected from the shipper is delivered to the consignee at the appropriate place, at the right price and on the same condition that it is collected from source using the best possible means and route.
A freight forwarder may be asked to provide services below and to have sufficient capabilities (either operated or outsourced) experienced in all modes of transport–road, rail, air and sea–that are capable of providing cost-effective and efficient freight forwarding solutions based on the customer’s need to be able to arrange freight processing. Normally all major forwarders have their own warehouses, but a few outsourcers are capable of maximising resource usage in order to arrange for the delivery or forwarding of the cargo, as directed by their client, to negotiate freight rates with the shipping line that can be booked with the shipping line as per the customer’s requirement or under their own contract process.
For example, the USA requires a freight forwarder to be licenced as an OTI (Ocean Transport Intermediate) prior to starting forwarding operations. A freight forwarder can operate in China only if it has a Class A, B, C or D carrier licence.
It is common to mix a freight forwarder with a customs broker or NVOCC, but there is a clear difference between a freight forwarder and a customs broker and between a freight forwarder and NVOCC.
The forwarder is also required to register with the local city / revenue authorities, tax authorities, etc. in compliance with local regulations for the purpose of issuing invoices and performing the forwarding business legally.
A forwarder may also need to be registered with local customs and port authorities in order to file his own manifest, release his orders of delivery or issue his own bills of lading.
The word freight forwarder, however, is being used very loosely nowadays, and many of the companies entering the logistic sector the term themselves as a freight forwarder for want of a better name to call themselves.
Types of freight forwarders There are, however, several types of freight forwarders in the industry.
Global forwarders with their own infrastructure and facilities worldwide to handle the functions of freight forwarders (Example: DHL Global Forwarding, Shippers).
Such forwarders usually work on international contract customers and have global ocean freight agreements with numerous global and regional carriers.
Local or global 3PL and 4PL service providers who do not have their own infrastructure and facilities and outsource most of their activities. We carry out all or most of the tasks alluded to above on a subcontracted basis.
There is also a new generation of freight forwarders who base their services on IoT, link customers, drive technology forwarding, social media and big data.
A freight forwarder is someone with whom you, as an exporter or importer, must entrust your valuable cargo.
It needs to be a company with confidence, honesty, expertise capable not only of providing you with the best service at the most competitive rates, but also of providing you with solutions when things don’t work out the way they should.
It is therefore of course in your best interest (especially if you are importing for the first time or exporting for the first time) to exercise due diligence when appointing a freight forwarder and to take the necessary precautions and safeguards.