What Is Freight Forwarding

Posted On 25th March 2024

The import and export of goods are crucial components for companies seeking growth. However, the intricacies of international shipping and ocean freight can hinder your success.

Partnering with a freight forwarding agent eliminates the stress of international freight. With forwarders to handle shipments, you can create new opportunities and save time.

Today, we'll delve into the freight forwarder definition and how they work. Further in the article, we'll discuss how much freight forwarders charge. Let's jump right in!

Freight Forwarding in Shipping

How Does Freight Forwarding Work?

Before we explore the intricacies of this topic, let's discuss 'What is freight forwarding?' It involves transporting goods from one area to another via road rail, or air freight.

During freight forwarding, the forwarders issue the Bills of Lading. Thus, this temporarily transfers the possession of the freight to these licensed experts.

These experts have deep air or ship freight knowledge and will handle customs clearing. In addition, they negotiate tariffs and deliver goods to your warehouse.

Moreover, your freight forwarding company will manage the logistics of the freight industry. That way, they ensure your goods arrive on time while assuming the legal liabilities of a carrier. As a result, freight forwarders handle a business's import and export processes.

Typically, manufacturers with poor in-house resources or freight knowledge hire forwarders.

  • They Help Negotiate Rates-With expert freight forwarding companies, you can re-export goods. The best part is that you can import goods into the U.S. while avoiding Trump tariffs or regular duties. They achieve this through Duty Drawbacks or keeping your shipment "In Bond."

  • They Ease Shipment Returns- Your freight forwarding agent can handle return and delivery documentation. Additionally, they track, sort, and more during a return shipment to the U.S. or Europe for repairs. With their professional help, you can enjoy a duty-free and potentially tax-exempt transaction.

  • They Handle Exhibition Good Returns- Top freight forwarders will ensure a tax-exempt return of exhibition goods. They also discuss and manage the steps involved in negotiating duties and taxes.

Besides international freight forwarders, there are domestic ones. These include domestic trucking companies with their Bills of Lading carriers. Most folks use consolidation freight, so your forwarder may combine shipments.

Thus, your domestic freight forwarder will contact a local freight carrier to transport goods. After this, they'll partner with a second carrier to perform the line haul and local delivery. As a result, these companies offer fast transit times with less sorting and tariff costs.

Furthermore, you can hire non-direct air carriers to streamline shipment. These freight forwarders pick up by your delivery truck and handle the line haul. Or, they may mileage via airplane and then arrange domestic or international delivery.

Freight Forwarder Meaning- What Does a Freight Forwarder Do?

The next question is, 'What is a freight forwarder?' Understanding freight forwarding meaning involves knowing their provided services.

These licensed experts arrange the shipping and storage of goods. The freight forwarder acts as an intermediary and ships by sea or air. They also partner with third-party associates to provide comprehensive freight shipping services.

Thus, businesses that select a freight forwarder can enjoy the following services:

  • Tracking onshore or offshore transport

  • Managing the supply chain logistics

  • Arranging appropriate cargo insurance

  • Preparing international or domestic shipping documents

  • Handling customs clearance and tariffs

  • Providing compliance advice on motor carrier safety administration (and other) regulations.

While initially an international service, freight forwarders now offer domestic and global services. So, most forwarders offer various transport modes like sea, rail, and air freight. They can also handle different-sized cargo and specialized services.

Freight Broker vs. Freight Forwarder- What's the Difference?

Now that we've learned what are freight forwarders, let's dig deeper. The short answer to the difference between freight forwarder brokers is that forwarders have more liability.

A freight broker acts as a person liable for arranging the transport. But, these individuals have little control over the truck driver or shipper. In contrast, forwarders put freight goods on their trucks or take legal responsibility. Thus, businesses can trust their freight forwarding company to assume carrier liability.

Moreover, freight forwarders tend to have better cargo insurance. Although this may vary from company to company, it's generally true. Another factor is that forwarders may need a similar bond to brokers to ensure security.

Likewise, freight brokers may handle the shipping process and control the freight logistics. Besides, the Congress deregulated this industry in the 1970s. Thus, the freight forwarder vs. broker distinctions are low in the modern landscape.

You'll want to know the different legal terms besides the freight broker vs. forwarder debate. In the U.S., forwarders are flexible individuals who focus on handling paperwork. They streamline the in-person and electronic documentation and are less market-focused.

In contrast, freight brokers are agile individuals who handle transportation. But they're less knowledgeable about the nuances of documentation and paperwork. Remember, these differences may be less apparent depending on who you work with.

What is a Freight Forwarding Company?

Before partnering, you'll want to define a freight forwarder company. Most freight forwarding businesses offer international drayage services via air, rail, sea, or road.

Your freight forwarder will prepare your shipment with their carrier or third-party agents. Once forwarders export goods to Europe, their importer delivers them to a warehouse. As they assume a shipper's responsibility, they follow laws similar to those of the freight broker act.

If you're seeking domestic forwarding services, forwarders act as consolidators. They will pick up LTL and combine it into an FTL by booking a shipment with a carrier. Thus, forwarders oversee the line haul logistics to ensure goods reach the warehouse.

Moreover, the forwarding company may hire a 3rd-party carrier or perform an LTR. You'll receive the shipment on time, no matter which option the forwarder picks.

How Does a Freight Forwarding Company Work?

If you're wondering what do freight forwarders do during this, allow us to answer. Typically, these individuals market themselves as the Export or Import department.

Their duties and services may vary depending on whether they export or import goods. Most forwarders offer international and domestic shipments via air, rail, road, and sea. Since they handle the logistics, they'll charge shipping and document fees.

As a result, you can relax while the experts take care of the sorting and delivery process. Besides, you can trust forwarders who comply with the Federal Motor Carrier Safety Administration (FMCSA).

How Much Do Freight Forwarders Charge?

When considering how to choose a freight forwarder, you'll want to know the cost. Most forwarding companies charge more than brokers to cover overhead expenses.

These include the costs of in-house customs agents, documentation, and carriers. Besides, forwarders take legal responsibility for your shipment, thus the high fees.

Who Should I Hire- A Freight Forwarder or a Broker?

There's no one-size-fits-all answer to this. We've answered what a freight forwarder and broker are, so you know the differences aren't massive.

Thus, it's best to consider your unique shipping needs and bottom line. Once you write these down, you can spot a freight company that matches those requirements.

Moreover, if you have a customs broker, analyze who can best partner with them. We recommend giving authority over to the forwarder or broker to handle transactions. As a result, you can minimize the stress of domestic and international shipments.

So, don't worry about picking one; partner with someone with skills and knowledge. This way, you'll enjoy a hassle-free freight forwarding process!

The Bottom Line

Hopefully, you've learned what is a forwarder in shipping by now. Additionally, we've answered what is freight forwarding service and the associated costs.

So, now you know everything about forwarders to increase your productivity. Happy freight forwarding!