Freight Forwarding: Definition, Responsibilities and Functions

Freight forwarding is the shipment of goods from one destination to another through a single or several carriers via rail, ship, air or highway. It acts as an intermediary that provides logistics services to transport cargo and handles the relevant shipping process via a network that includes third parties.

What does a freight forwarder do?

The freight forwarder ensures the flow of desired goods in an efficient and timely manner throughout the global arena.  They develop a reliable network that includes carriers, customs agents, insurers and advisors to deal with both the expected and unexpected turn of events during the transportation procedure.

The freight forwarders can be hired for procurement purposes also so that they can purchase on behalf of their client. Some of the significant responsibilities of a freight forwarder are as follows-

Offering advice and recommendation to the exporter about the following

• About the responsibilities of the exporter as decided by the law
• Offers information about their supposed tasks and makes it clear about what the exporter expects from them
• Offers information about the ports in the destination country and suitability about the one that he finds perfect for their goods
• Offers an estimate about the export
• Choosing the best option for freight shipping so that it does not cost much
• Offers information in advance about the supposed problems that can occur during freight shipping
• Reviews the records about the environmental condition of the cargo destination
• Recommend shipping solutions to reduce the cost related to environmental impacts
• Making sure that the exporter gets the best shipping rates in the inland for the cargo
• Helping the exporter to choose the best way for shipment of goods
• Offering information related to the packaging of goods
• Proving recommendation for marking
• Offering the exporter information related to port functionality
• Offers the exporter advice about the various ways of receiving the payment for the goods that are being exported
• Keeps a check on the import license
• Understands the importance of Letters of Credit and organizes them for the exporter if needed
• The freight forwarder uses his connections so that the exporter can get in touch with trade experts like government export, marine insurance, international banking, financing, and foreign marketing officials.

 Performing freight shipping by

• Speeding up the delivery process
• Verifying proper packaging and labeling norms have been followed for the goods that are to be exported
• Arrange storage of goods at cargo destinations
• Making sure that the goods are safe and secure on the way
• Keeping an eye on freight shipping
• Arranging a special mode of transport of cargoes that are sensitive, for instance, medical supplies, food items or perishable goods and livestock
• Making sure the right container is chosen for packaging and shipment and later returned in good condition
• It is the job of the freight forwarder to determine the itinerary and select viable routes for shipment based on security needs, transit times and goods shipped
• Choosing the right transporter and the correct mode of operation
• Determining the most cost-efficient method of moving goods from one location to another
• Being responsible for booking and shipping of the shipment.
• Making sure that special considerations if needed are at hand for instance number of packages, the port of export, type of packages, ETA destination, type of container, the port of destination and size of the container
• Providing NVOCC consolidation facility to the exporter for LCL and FCL modes

Keeping the shipper in the loop by notifying him

• The freight forwarder keeps everyone notified by sending notices to the shipper, consignee’s broker, and consignee
• Consolidate loads with a destination that is common to minimize costs to individual shippers
• Notifies the exporter for payment, contract, L/C and insurance
• Helps to track the shipment
• Helps the shipper to fill the claim papers and learn from earlier mistakes

Providing documentation in international freight shipping

• The freight forwarder notarises as well as certifies the invoice for the exporter
• He is responsible for getting hold of a certificate of origin, customs invoice, inspection certificate, and insurance certificate
• The roles and responsibilities of a freight forwarder include preparing several documents for instance AID document, warehouse receipt, lading bill, and dock receipts
• As part of their additional duties, some freight forwarder helps in making a draft, consular invoices, drawback forms, export license, packing list, commercial invoice and shipper’s export declaration on behalf of the exporter
• Keeps viable records of goods received as well as goods dispatched
• Maintaining proper knowledge of relevant information about the political situation, legislation or another factor that can have an impact on freight shipping

Sending the necessary documents for collection

• The freight forwarder sends documents to the bank, the broker or the consignee and the shipper’s international sales representative.
• It also informs clients about several factors like transfers, timelines, shipping options and regulations that might have a direct or indirect impact on the shipment

Functions of a freight forwarder | Freight Forwarding

The objective of a freight forwarder is to bring the cargo successfully from the supplier to the customer by the given date and that too undamaged. The primary function of a freight forwarder is as follows-

1. Packaging

One of the most common tasks of the freight forwarder is preparing goods for export by effectually packaging them. The job is not as easy as it sounds because numerous countries are stringent in packaging and have specific rules that they must adhere to.

The packaging depends on the final destination, and hence the freight forwarder has to comply with the regulations set up by that country. Sometimes it is important to take extreme care as the cargo is loaded and unloaded several times and there is a risk of damage.

It is the function of a freight forwarder to know about the environmental condition of the final destination of the goods because they might be transported from one extreme condition to another for instance from a hot place to a colder region.

The packaging is crucial in such circumstances so that it remains in perfect condition.  The freight forwarder must also remember that light-weight packaging is required for air-shipped items to keep its weight and ultimately costs down.

2. Labeling | Freight Forwarding

Labeling is as important as packaging because until and unless you label an item, it will not reach its correct destination. The chance of errors increases where the goods are not appropriately labeled. It is the freight forwarder whose function is to label the cargo with the following correct information-

• Details about the port of entry
• Country of origin
• Whether the item is hazardous
• Weight in kilograms and pounds
• List of products
• Details in the language of the destination country

3. Documentation

The most important function of a freight forwarder is in overseeing the documentation details because it is a complex process where you have to pay detailed attention to every specific. The documentation requires specialist knowledge that may include the following information

• Bill of landing –Bill of Landing or BOL is a contract that is written between the owner and the carrier of the goods because an original document is needed by the customer as proof of ownership so that he can take possession of the goods.
• COO or Certificate of Origin – It is a signed document stating the origin of the item to be exported
• Commercial invoice- The commercial invoice is a bill for the goods and is given by the seller to the buyer and is used in determining its actual value for customs duty
• Inspection certificate – It is an important document that states whether the goods have been inspected or not and the quality is considered acceptable
• Export license – It is a government document authorizing the export of the goods to a particular destination having specific quantities and weight.
• Shipper’s Export Declaration or SED – The document includes export statistics and is prepared by the US Postal Service for goods of more than 500 dollars in value
• Export Packing List – It is the packing list with details about each item along with the type of packaging container, its measurements, and gross weight.

Some known freight forwarding companies | Freight Forwarding

Numerous freight forwarding companies have made a name for themselves in the global arena.  Some are popular because of their high rankings in terms of cargo volume whereas some have climbed to the top of the list because of impressive revenue figures.

It is operational efficiencies, paperless operations, and digitalization that have helped most of the companies to reach the top positions in this sector. Some of the top freight forwarders of the year 2019 are-

• Roland Berger
• DHL Global Forwarding
• Brink’s Global Services
• Forward Air
• Inchcape Shipping Services
• CMA-CGM Adelaide
• Crown Relocations
• TNT Express
• Alaska Air Forwarding
• FedEx Office Print & Ship Center
• Pak Mail Centers of America, Inc
• World Courier
• DHL Express
• Navis Pack & Ship
• Craters & Freighters National
• Acme Truck Line
• Universal Logistics Holdings
• Royal Freight, L.P.
• Broomfield AIM Mail Center
• Qube Ports & Bulk