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.
The Freight Forwarder definition can be given in different ways, but we will define it as:
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?
A 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 (if several types of transportation are needed) to move the goods from origin to destination.
What the freight forwarder does is not move the goods, but act as an intermediary in a freight transport operation.
The freight forwarder is considered as a logistic expert, so the companies contract it trusting in the experience and knowledge that it has, so they can be advised on how to make their freight transport a more efficient process.
Although “What is a freight forwarder” is painfully described as the intermediary between an importer and an exporter, what it does is very similar to the way of acting of a transport agency.
3. Freight Forwarder Shipping Modes:
Many people tend to think that a freight forwarder only manages maritime transport operations, however, they can mediate for any means of transport:
- Maritime Transport
- Inland Waterway Transport
- Air Transport
- Rail Transport
- Road Transport
- Multimodal Transport
Multimodal transport is becoming more and 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. Freight Forwarder vs Customs Broker: What’s the difference?
Just as we tend to think that a freight forwarder only manages maritime transport operations, it is also common to think that it fulfils the same role as a Customs Broker, although there are great differences between the two agents.
We have already said what a freight forwarder is, but before entering into the differences between the two, it would be convenient to explain what a Customs Broker is, in order to avoid confusion:
What is a Customs Broker?
The customs broker definition can be given in different ways, although one of the most accepted is that provided by the US Department of Homeland Security, which is the following:
“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 last 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 (Customs and Border Protection) 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, Distribution & Express and Road Transport. Of course, it 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 of freight forwarder, customs broker and 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 also a logistics company with a track record of more than 40 years of activity, which started in Denmark and is now present in more than 90 countries.
Its strategy to position itself as a pioneer in the logistics sector (and as a freight forwarder) has been based on a series of mergers that have boosted its rapid growth, as well as the outstanding acquisition of Panalpina Welttransport, one of the keys to positioning itself right now 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, which is giving rise to multiple technological solutions and the use of emerging technologies (as is the case of blockchain technology).
This phenomenon is spoken of as a threat, however, all the new initiatives of this technological revolution will 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.
And all this is because the logistics industry is still a traditional sector with very inefficient processes, as we can see in the post: 8 Main Problems in Freight Transport.
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, since, with the use of its platform, a freight forwarder that previously managed 8 weekly exports, becomes capable of managing 18.
On the other hand, not only have complementary solutions emerged to these freight forwarders, but also new ways of carrying out this freight forwarding activity have been created, as well as iContainers, a disruptive web platform with which importers and exporters compare rates in real time and manage their sea shipments in an agile and simple way from beginning to end.
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.
How useful was this post?
Click on a star to rate it!
Average rating / 5. Vote count:
No votes so far! Be the first to rate this post.