We have heard many times about some Freight Forwarder, but in several occasions, people confuse it with other agents, they think that it only applies for a certain type of transport and nowadays, it is rumored that it is an actor that can disappear.
To clear all these doubts and clarify these thoughts, along the post we will tell you:
1. What is a Freight Forwarder?
Freight Forwarder Definition.
A Freight Forwarder is an agent in the supply chain whose objective is to organise a freight transport or shipment, acting as an intermediary between the exporter or importer and transport companies. Thus making this process safer, more efficient and profitable.
2. What does a Freight Forwarder Do?
The Freight Forwarder is responsible for organizing the shipment or freight transport for a company (or natural person), so that the goods they transport arrive correctly at the final point or to the importer.
Thus, what a freight forwarder does is hire one or more carriers to move the goods from origin to destination.
What they do is not move the goods, but act as an intermediary in a freight transport operation.
They are considered as a logistic experts, so they are hired because of their confidence in their experience and knowledge. So companies can be advised on how to make their freight transport a more efficient process.
Although “What is a freight forwarder” is described as the intermediary between an importer and an exporter, their way of acting is very similar to a transport agency’s.
3. Shipping Modes:
Many people think that a freight forwarder only manages maritime transport operations, however, they can mediate for:
- Maritime Transport
- Inland Waterway Transport
- Air Transport
- Rail Transport
- Road Transport
- Multimodal Transport
Multimodal transport is becoming more common, as there are many cases in which several means of transport are needed in the same operation.
So that the freight forwarder can make for example that some goods are moved by road transport to the port, follow the course by ship, and finish with another means of land transport to reach the point of destination.
4. Difference between Freight Forwarder and Customs Broker
It is also common to think that they fulfil the same role as a Customs Broker, but there are great differences between them.
We have already said what it is, but before entering into the differences between the two, it would be convenient to explain what a Customs Broker is:
What is a Customs Broker?
The customs broker definition can be given in different ways, but one of the most accepted is that provided by the US Department of Homeland Security:
“Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports.
Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.
Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates.“
Difference between Freight Forwarder and Customs Broker:
Like the Freight Forwarder, the customs broker is also a logistics expert, however, the first one is the intermediary between an importer and an exporter, who is in charge of organizing a transport of goods.
The second one is in charge of supervising that shipping operations comply with the rules relating to import and export.
And in order to perform the function of a customs broker, it is necessary to have the CBP license.
Thus, the customs broker has the power to decide that, if a good does not meet the requirements to be transported, the shipment will not take place.
The level of complexity that both jobs, of the freight forwarder and customer broker, is so great that the operation mandates the separation of both actors, thus creating the need for a freight forwarder and customs broker.
Even so, there are a few companies that try to fulfil both roles where possible.
5. Freight Forwarding Companies
We already know what a freight forwarder does and what means of transport it uses. But it is certainly easier to understand if we look at some examples of freight forwarding companies.
Examples of Freight Forwarders:
Geodis is undoubtedly a benchmark in terms of experience. It is a century-old company founded in France and with a great trajectory in its five lines of business:
- Supply Chain Optimization
- Freight Forwarding
- Contract Logistics
- Express and Road Transport.
Of course, Geodis is among the world’s leading freight forwarders.
Tiba is the main Spanish multinational in the freight forwarding sector in Spain, and the profiles that define its activity fulfil the function:
- Freight forwarder
- Customs broker
- Logistics operator.
It is a company with more than 40 years of activity and with results and growth that make it increasingly consolidated as a reliable freight forwarder not only in Spain, but worldwide.
DSV Panalpina is a logistics company with a track record of more than 40 years of activity. They started in Denmark and is now present in more than 90 countries.
Its strategy to position itself as a pioneer in the logistics sector has been based on a series of mergers that have boosted its rapid growth.
The best example is the outstanding acquisition of Panalpina Welttransport. That is one of the keys to positioning itself in the TOP 5 of the world’s freight transport companies.
6. The Future of Freight Forwarding
The rumour that the freight forwarder actor as we know is disappearing is almost common. Clearly the reason for these thoughts is the great digital transformation that the industry is undergoing.
This event is giving rise to multiple technological solutions and the use of emerging technologies (as is the case of blockchain technology).
Nonetheless it’s spoken as a threat. But, all the new initiatives can provide a competitive advantage for all freight forwarders who know how to take advantage of them to differentiate from the competition.
Many of the large companies (similar to those mentioned above) are already taking action, adopting new software solutions that allow them to join the digital transformation of the logistics industry.
So that’s why the logistics industry is still a traditional sector with very inefficient processes. We can see more in detail in the post: 8 Main Problems in Freight Transportation.
New Freight Forwarding solutions
One example is ChainGO Tech. A collaborative platform where supply chain agents can share and manage their documentation and information to make more agile the freight transport process.
It is a solution that not only facilitates faster logistics processes. But also, with the use of blockchain technology, provides immutability, security and transparency throughout the entire supply chain.
The efficiency that ChainGO provides to its customers is demonstrated in its results:
- BEFORE ChainGO: Exports managed/week by a freight forwarder: 8.
- USING ChainGO: Exports managed/week by a freight forwarder: 18.
On the other hand, there are also new ways of carrying out this freight forwarding activity.
A good example is iContainers, a disruptive platform where importers and exporters compare rates in real time and manage their sea shipments, in an agile and simple way.
The future of shipping is bright and understanding the complete role of each actor and how they can best capitalise on the changing technological landscape is paramount on the continued success and grow inside of international trade.
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