The shipping industry is no longer like it was before. It slowly changed over the years. International borders got stricter which made the regulations more complicated. Even documentation got too intricate. This change led to the rise of the need for freight forwarders.
If you’re new to the shipping industry, you might be wondering what roles do freight forwarders play in importing and exporting goods around the world. In this post, we’ve listed the 5 core roles of forwarders from China to Indonesia, Australia, and the US.
Core Roles of a Freight Forwarder
If you’re planning to partner with a freight forwarding company, this post will help you understand more how they can help boost your supply chain.
Offer Advice to the Shipper
This is one of the main reasons why exporters hire forwarders – to be their logistics partner. The shipping industry is a tough market. Not all business owners are familiar with the complexities of this trade. For that matter, they hire forwarders to deal with things they don’t know.
Some things clients need help with are documentation, customs laws of different countries, and possible problems with freight transportation. Since forwarders are trained to handle these challenges, they can help ease the shipment process of any company.
Book Cargo Space on Chosen Freight
One of the vital roles of freight forwarding companies is to make sure that their clients’ cargo is booked on their preferred freight service. Depending on the size and type of goods, clients can either choose to ship via air carriers, trucks, trains, or ships.
Airfreight is commonly used for international shipping or for perishable goods since they offer the fastest service. For bulk cargo, business owners opt for ocean freight. This service is also ideal for non-perishable goods. Land freight uses trains or trucks to send packages to short-distance locations.
Freight forwarders are also known for their large network. They use these connections to find the best carrier to provide a reliable service for a reasonable price. So, make sure to consider this when choosing a forwarder.
Pack, Distribute, and Store Shipment
Why is this service important? Well, not all your ordered goods will come from the same supplier. If you order from different factories, their delivery times will vary. Instead of shipping every time an order from a specific store comes, you would rather put them all in one container and ship them altogether. That’s what freight forwarders offer.
If you’re running a business, you will want to save as much as you can. This part here is where you can save up. Since forwarders have warehouses around the world, they can store your parcels until all your orders are completed. Only then will they ship your cargo.
Provide Cargo Insurance
Lost cargos are every business owner’s worst nightmare. If your package vanished overseas, it’s a gone case. But if you have cargo insurance, you will at least get compensated for it.
Do all freight forwarders offer cargo insurance? No. In some countries, it’s illegal for forwarders to sell insurance. For example, EU Insurance Mediation Directive (IMD) declares that all insurance sellers must be registered with Financial Services Authority (FSA). Because of this law, UK forward agents can’t sell cargo insurance.
So, before you partner with any freight forwarder, make sure to ask if they offer cargo insurance. You’ll never know what will happen at the sea.
Submit Precise Documentation
Regulations from one country to another varies. It’s hard to learn them all on top of managing your own business. For this reason, many business owners hire freight forwarders to handle the shipping documents.
Forwarders are also well-versed with different customs rules in different countries. This is the part that most shippers are wary of because custom agents tend to be meticulous. And for good reasons.
So having an experienced forwarder handle those matters lift a great amount of weight from shippers’ shoulders. Now, what documents do forwarders prepare?
- Purchase Order
- Commercial Invoice
- Bill of Lading
- Export Packing List
- Letter of Credit
- Dock/Warehouse Receipt
- Certificate of Origin
- Insurance Certificate
- Export License
Conclusion
Hiring a freight forwarder may not be a requirement when you export or import goods, but they sure are an asset to any company they work with. Not all business owners have the expertise and network that forwarders have. Their skills are especially helpful for businesses that deal with international shipping.
With the escalating complexities of freight services, the need for freight forwarders is also growing. They are no longer just an option, but a crucial part of the shipping industry. So make sure to partner with a trusted freight forwarding company if you plan to expand your import and export business.
