How does a freight forwarding company work?

Written by laura reynolds
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How does a freight forwarding company work?
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When you had to get a product from one place to another, it used to be that you'd call a shipper who would send a truck over, pick it up and take it to wherever it was supposed to go. Today, though, international trade, fuel prices and economic considerations have conspired to make that trip for one pallet of widgets increasingly more expensive. Container shipping has solved the problem of distance, allowing one or more companies to combine shipping to a single destination. The people who coordinate the movement of goods from place to place and put together a series of carriers to get it there used to be called "brokers." Today they're called "freight forwarding companies," since they are responsible for delivery of goods as well as coordinating their movement.

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A New Twist On An Old Business

When you had to get a product from one place to another, it used to be that you'd call a shipper who would send a truck over, pick it up and take it to wherever it was supposed to go. Today, though, international trade, fuel prices and economic considerations have conspired to make that trip for one pallet of widgets increasingly more expensive. Container shipping has solved the problem of distance, allowing one or more companies to combine shipping to a single destination. The people who coordinate the movement of goods from place to place and put together a series of carriers to get it there used to be called "brokers." Today they're called "freight forwarding companies," since they are responsible for delivery of goods as well as coordinating their movement.

How does a freight forwarding company work?

From the Customer's Viewpoint

Freight forwarding companies may have begun as direct shippers, but they all act as brokers, too. Your products may be picked up on pallets at your warehouse by a truck with the name of the freight forwarding company on it, but between your warehouse and your "load's" destination, it may switch carriers from truck to aeroplane to train or ship and back to truck again. The logistics of this is up to the freight forwarder. He's responsible for keeping track of the shipment as well as arranging for a network of carriers that provide the fastest or least expensive alternative--whatever you the shipper wants. Most freight forwarders have a computerised reporting system to locate a shipment that customers can check to find out where their property is at any time.

How does a freight forwarding company work?

Not Just Four Guys With a Truck

Freight carriers have only their own licensing, accounting and legal compliances with which to concern themselves. Freight forwarders must be licensed as carriers in all states where they operate, and forwarders who operate internationally must have the appropriate import and export licenses in each country in which they work. In addition, forwarders, acting as prime contractors, must check to make sure that each carrier they employ has proper licensing for the assignment, including maritime and aviation licenses. A freight forwarder must develop a unique system, known as logistics, to track each shipment, confirm carrier changes and follow up on deliveries as goods move along. The broker must package shipments properly, order containers and deliver them in place for carriers that require them. Forwarders also frequently employ customs specialists to manage international shipments, including export and import declarations. Since freight forwarders act as authorised agents with power of attorney for clients, most have accounting and legal staff to ensure compliance with interstate and international regulations. The forwarding company collects and consolidates all carrier and supplier billing, bills the customer and distributes payments to individual carriers and suppliers. Modern freight forwarders are much more than just shipping brokers or freight carriers. They are managers responsible for the efficient movement of billions of dollars worth of goods over dozens of countries every day.

How does a freight forwarding company work?

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