What is freight forwarding?
Many shippers often find themselves with large cargo to haul, but find the logistics process of delivering to customers causes a strain on their cash flow. They may also want to keep down transportation costs, but are unsure whether freight forwarding or another model is the right way to do so.
Freight forwarding is when a company acts on behalf of shippers to organise, arrange and monitor the transportation process for goods across air, sea and land. While not technically involved in the actual shipping of goods, the freight forwarder serves as a middleman.
Otherwise known as ‘freight providers’, forwarders use a network of contacts with carriers and partners from transport companies to bridge the divide between the shipper—who owns the goods— and the carrier moving them to their destination.
What do freight forwarders do?
Freight forwarders facilitate the smooth transportation of freight cargo as part of a freight forwarding service. It is their responsibility to analyse the requirements of each shipment, for example the type of goods, weight, volume and shipping timeline. From this they identify the best possible route and type of transport needed, for example air, sea, rail or road.
The purpose of freight forwarding is to ensure the most cost-efficient transportation of goods. It is their responsibility to ensure safety and compliance of cargo load, saving the client time by ensuring each shipment is fast and efficient. To do this, they leverage extensive contacts and their knowledge of the sector.
The services provided by freight forwarders within freight forwarding includes:
- Advising shippers on rules and regulations
- Arranging various modes of transport for a shipment
- Negotiating freight rates
- Booking cargo space
- Consolidating and packing goods for haulage
- Tracking and monitoring
How does freight forwarding work?
Freight forwarding involves several key steps and the role of different stakeholders:
The stages
1. Contract
To make sure all parties are aware of their responsibilities, before any items are loaded into a vehicle the shipper and freight forwarder must establish a contract. This outlines the price and terms of payment of the services provided, including fees and surcharges, along with pick-up and delivery locations and any tracking or warehousing involved.
2. Document preparation
Paperwork must then be completed to make sure shipment is legally compliant so as to avoid delays. Examples of documentation include customs papers for international shipments, CMR consignment notes, invoices, bills of lading (for sea freight), packing lists, certificates of origin and other transport documents.
3. Pickup
A third-party carrier at this point then picks up the goods from the shipper and transports them to the freight forwarder. This is a collaborative process between the forwarder and carrier.
4. Transport
At this point, the freight forwarder identifies the most cost-efficient carrier for the freight, whether that is by road, rail, air or sea. The forwarder works with the carrier to make sure the shipment meets international standards and there are no delays.
5. Clearance
For international shipments, customs clearance must be then obtained on all goods to ensure it can legally cross a border. Before the last step of the freight journey can take place, the value and types of goods must be declared. This is carried out by either the forwarder or licensed customs broker.
6. Delivery
Finally, the cargo is transported to its end destination. The freight forwarder facilitates the last phase through arranging pickup from clearance through another carrier.
Freight forwarding vs. brokers
The difference between freight forwarding and freight brokerage comes down to ownership. Brokers do not own vehicles, deal with customs paperwork or provide warehousing. Instead, they serve as the point of contact between shippers and freight carriers, sometimes multiple shipment providers.
Freight forwarding vs. logistics providers
Businesses often ask about ‘freight forwarder logistics companies’, combining two different services together by mistake. The difference between freight forwarding and logistics providers is that forwarders specialise in the movement of goods between locations. The third-party logistics provider (3PL) instead manages broader logistics needs, helping the shipper to prepare goods and facilities for fulfilment before the customer has actually placed the order.
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Freight forwarding is a service where a specialist company organises and monitors the movement of goods on behalf of shippers, using different carriers and modes of transport so that cargo moves smoothly from origin to destination.
A business should consider using freight forwarding when it ships goods through multiple countries or modes of transport and needs help coordinating carriers, documents and compliance so international or long distance moves are easier to manage.
The main difference between freight forwarding and freight brokerage is that a freight forwarder usually manages a shipment across multiple stages, including documentation and consolidation, while a broker focuses on matching shippers with carriers for individual moves.
Freight forwarding typically includes helping shippers prepare the documents needed for customs clearance, and either the forwarder or a licensed customs broker then works with authorities so goods can cross borders legally.
Typical documents for freight forwarding include commercial invoices, packing lists, bills of lading for sea freight, consignment notes, customs declarations and certificates of origin, although the exact paperwork depends on the route and type of goods.
Freight forwarding focuses on arranging the movement of goods between locations and may involve short term storage while cargo is in transit, but longer term warehousing is usually managed through broader logistics or third party logistics services.
Amazon Freight operates as a freight broker that connects shippers with carriers using Amazon’s network, and this article is designed to explain how freight forwarding works alongside brokerage and wider logistics models.
When choosing a freight forwarding partner you should look for sector experience, a strong carrier network, clear communication on documentation and responsibilities, and the ability to coordinate multi leg shipments in line with your service and compliance needs.
