Import and export are critical components of any forwarding business. The international business represents excellent business opportunities but comes with a particular risk and a tremendous amount of work. The whole process, paperwork, and regulations dealing with international trade can seem daunting. A freight forwarder, also known as a "transport architect", plays a significant role in this industry.
Freight forwarding is an economic activity that deals with the shipping organization, transportation and delivery of goods through other countries, as well as other activities that are essential for this field of work. There's a full range of services that freight forwarding companies provide: from domestic transport monitoring, preparation of shipping and other documentation, warehousing to cargo space reservation, cargo cost negotiation, cargo consolidation, cargo insurance and insurance claims.
Freight forwarding includes the method of transport and handling of goods. The different modes of transport are maritime transport, rail and road transport, air transport and transport of goods by inland waters (rivers, lakes and canals).
Freight forwarding vs international freight forwarding
International freight forwarding refers to a set of specific functions, jobs, operations and rules that effectively enable the shipment, delivery and transport of goods in foreign trade. In addition to transport operations, other logistics services within the activities of international freight forwarding are warehousing, document processing and customs clearance.
It originated from a national freight forwarding, where the activities of organizing the import and export of goods perform exclusively by domestic means of transport within the borders of one country. On the other hand, international freight forwarding organizes the process of shipping goods from their own to foreign countries and the delivery of goods from foreign to its own country. International freight forwarding can perform the activities of national freight forwarding, which is not possible with national freight forwarding. Although both national and international freight forwarding has all the characteristics of complex and dynamic economic systems, international is still the most complex part of freight forwarding.
In every export and import business, the critical person who coordinates the transport of goods from the end producer to the end-user is the freight forwarder. The international freight forwarding system is impossible without the freight forwarder. The freight forwarder allows you to overcome mileage barriers, choose the right and economical means of transport, insurance and takes care of the goods until they reach their destination.
The main task of an international freight forwarder is to relieve the client’s worries about the shipment, delivery and transit of goods in international traffic.
The role of the international freight forwarder is to organize intermodal transport and customs clearance of goods on behalf of the shipper. Without freight forwarders, suppliers would face a sizeable logistical burden. It could harm the overall productivity of the global market. In performing its tasks, the international freight forwarder encounters many complex activities that enable modern foreign trade and transport systems to function optimally.
Types of international freight forwarding according to the essential characteristics of business companies:
Maritime (port) freight forwarding - A type of freight forwarding that mainly deals with the dispatch and delivery of goods by sea.
Land (continental) freight forwarding - Organizes transporting goods by land transport (rail transport, road transport and inland navigation).
Border forwarding - This type of freight forwarding is located at border crossings open to international traffic of goods. The central part of the business is related to customs and other formalities of goods entering the national customs area.
In this blog, we bring you some of the ways freight forwarders drive the wheels of international trade and make international freight forwarding work.
Who is a freight forwarder?
The term freight forwarder refers to a company that deals with customs clearance, i.e., activities that include the shipment, delivery and transport of goods by the carrier. The word forwarder is of Latin origin and comes from the word expedīre, which in translation means to loosen, to arrange, while in practical application, it is translated to send, to ship.
A freight forwarder is a natural or legal person who will help you organize all incoming and outgoing shipments. It can help increase your overall productivity and efficiency. The goal of every freight forwarder is to expand the business and increase profits.
What does a freight forwarder do?
There are many diverse and complex activities covered by international freight forwarding, so it is essential to know what role the freight forwarder has. Freight forwarders deal with the logistics of shipping goods, they advise and help customers to find the most efficient way of transporting goods from one destination to another. Their knowledge of documentation requirements, regulations, transportation costs, and banking practices greatly facilitate the export process of many companies.
The freight forwarder must have a perfect knowledge of the legal regulations of his country and the country to which the goods are shipped. He also has to know clauses, to have good relations with transport companies, insurance companies, banks, customs offices and other participants in the export-import business.
The freight forwarder organizes the transport of goods, receives and issues orders and takes care of the goods. Supervises the proper distribution of consignments, gives instructions and harmonizes the work of customs declarants, takes care of the adequate consignment security and implement the customs procedure following regulations. Also, the freight forwarder liquidates and confirms the supplier's invoices, cooperates with the customer and ensures that the transport organization performs thoroughly.
The main responsibilities and duties of freight forwarders
The job of a freight forwarder involves scheduling, coordinating and documenting intermodal freight on behalf of the shipper.
Freight forwarders must have a perfect knowledge of conditions and tariffs, transport insurance, traffic, customs and foreign trade regulations, as well as the technology of traffic of all transport branches. Since the goods are subject to various types of risks, it is essential to involve freight forwarders on time. Their engagement will reduce transportation costs, potential risks, and enable safe delivery when shipping and delivering goods.
The operational tasks that the freight forwarder performs in the shipment and delivery of goods consist of a series of activities related to the shipment and delivery and task performance related to customs clearance of goods.
Expert advice and information
The freight forwarder should be an expert in traffic, customs, foreign trade regulations, an excellent connoisseur and practitioner of traffic technology in all branches of traffic. He has an insight into the current conditions of transport of goods in international traffic and the supply and demand in the transport market. A freight forwarder is an indispensable consultant in determining the optimal transport solution, setting up a foreign trade business in the domain of customs regulations and making foreign trade calculations. With their knowledge and experience, freight forwarders enable a fast and uninterrupted flow of goods from production to the point of end-use of the product. Advances in technology and the application of new IT solutions have enabled freight forwarders to communicate more advance with all participants in the entire supply chain, including correspondents and associates.
Many freight forwarders today are also customs brokers, which makes them one center for all your logistics needs. Customs brokerage is very detailed, requires a license and a lot of knowledge of international law. The freight forwarder will also provide strategic advice to exporters on compliance standards, labeling and packaging, potential barriers faced by their shipment, as well as other significant activities of the shipment process. An essential part of the work is the control of documents, calculation of the carrier, customs and extra fees and costs.
In addition to organizing transportation, freight forwarders build and keep up relationships between carriers, shippers, port officials, and other freight forwarders. Good relationships facilitate expeditious shipments and give greater chances for a more favorable shipping cost. Without a quality partnership, it would be almost impossible to compete in the market with sea giants like FedEx. That makes networking one of the most valuable activities of the shipping business. If you are involved in services such as warehousing, road transport or customs brokerage, you need to make sure that you can count on the right partners to do the work for you.
Business negotiation skills
The most efficient are freight forwarders who can find a balance between an attractive partnership and practicing a smart deal while being open to business offers from other carriers. In addition to cargo insurance, the priority is to ensure competitive shipping costs. A freight forwarder is worth as much as the network of his preferred partners who do quality transportation.
The freight forwarder’s task is to reserve cargo space for shipments, which often involves more than one mode of transportation. It requires careful coordination between all entities involved in the supply chain, including suppliers, manufacturers, carriers, warehouse suppliers and others. Because freight services are often prone to delays, effective planning is necessary to lower risk. Carriers, whose limited cargo space often results in higher tariffs (especially during the holidays), make these tasks more complicated.
If you think the logistics behind your shipments are complicated, wait until you see the documentation required for the import/export process. The administrative burden that carriers take on behalf of their clients is a major responsibility. Within the supply chain flow, freight forwarders deal with a bunch of essential documents including bills of lading, letters of credit, receipt of reports, inventory reports, as well as all customs documents (commercial invoices, customs invoices, carrier bills, certificates of origin, permits, etc.). A transport contract and other necessary documentation is a prerequisite for the dispatch and delivery of goods.
Hubbig digital platform allows you to submit orders via the app, which automatically simplifies administration. First, you enter the details of the shipment and its departure and destination place in the application. Then you choose the ideal transport option that best suits your criteria depending on the price, transit time and logistics review.
By signing an intermodal transport contract, the freight forwarder takes on the roles of organizer, coordinator and entrepreneur of the entire range of services. He also should insure things, which is an essential part of the freight forwarding field. The freight forwarder assumes all responsibility for the transport of the goods.
Every freight forwarder is an intermediary whose goal is to get the "best price" for the work done, and that is the “art” of good freight forwarding business.
The freight forwarder is a very demanding and dynamic occupation. Much like architects, freight forwarders have the task of drawing, joining and building connections between points on their ‘blueprints’. These are their maps of the information flow and products within complex supply chains.
Without logistics services today, it is impossible to imagine any economic activities. Business globalization has led to the development of the freight forwarding business and the provision of international freight forwarding services. To stay competitive in the market, freight forwarders must adapt to this process. Freight forwarding can be explained as a complex activity with a set of specific jobs, functions, operations, rules and skills that work together to enable the successful implementation of the client's order.
The freight forwarding service uses the established relations with carriers to get the best possible price for the transport of goods through the most economical routes and fast, favorable and reliable offers.
Under the influence of digital innovations and other technological trends, the industry is continually changing. Creating quality partnerships and accomplishing all steps of the import or export process are things that will help your business succeed.
To meet the requirements of the customer who finances the entire supply chain and minimize the costs of shipping and delivery of goods, freight forwarding has to give rapid transformation of goods and information.
In today's market, the leading role has those who manage to adapt to all the requirements of modern times and demand. Only those flexible enough to adapt to the markets will succeed, as well as those that offer all-inclusive service in the logistics process, which is undoubtedly the Hubbig digital platform.