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July 19, 2023
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 of 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. It is their responsibility to analyse the requirements of each shipment, e.g. the type of goods, weight, volume and shipping timeline. From this they identify the best possible route and type of transport needed — e.g. 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 includes:

1. Advising shippers on rules and regulations
2. Arranging various modes of transport for a shipment
3. Negotiating freight rates
4. Booking cargo space
5. Consolidating and packing goods for haulage
6. 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.
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.
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.
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 forwarders vs. brokers
The difference between freight forwarders and freight brokers 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 forwarder vs. logistics providers
Businesses often ask about ‘freight forwarder logistics companies’, combining two different services together by mistake. The difference between freight forwarders 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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