Expanding your enterprise or penetrating a new market necessitates the right logistics ally.
You might have come across the term freight forwarders but unsure whether it’s the correct solution for you – Don’t worry, we’re here to guide you. In this article, we’ll demystify what a freight forwarder is, its workings, and how to identify the perfect one for your enterprise.
A sneak peek into the topic
- Understanding Freight Forwarding and Its Functioning
- Is a Freight Forwarder Essential for You?
- Selecting the Ideal Freight Forwarder for Your Enterprise
Understanding Freight Forwarding and Its Functioning
Freight forwarding is the mechanism of importing and exporting goods across the supply chain. A freight forwarder ensures the smooth transition of your goods from the point of origin to the destination. Typically, freight forwarders don’t physically transport the cargo, but they leverage their network to negotiate and secure the most affordable prices for shipping the cargo.
The process is efficient, adopts effective routes, and is hence swift, cost-friendly, and reliable.
Freight forwarder offers the following services:
- Air, sea, rail, and road freight services
- Transportation within the country from the origin and/or to the destination
- Documentation
- Warehousing and storage services
- Cargo insurance
- Customs Compliance
As a business or an individual, you can determine the level of involvement you prefer from the freight forwarder.
Let’s illustrate the entire process with an example.
Assume you are a private label seller on Amazon, and your products are manufactured in a Chinese factory. You can depend on a freight forwarder to transport your products from the factory warehouse to the nearest port via road freight (or a truck).
Here, the freight forwarder organizes ocean freight (or air freight). This includes reserving cargo space, handling documentation such as the bill of lading, and ensuring your shipment is moved in accordance with international shipping regulations.
Upon reaching the US port (destination), the freight forwarder takes care of customs clearance processes. They assist in submitting the necessary documentation, paying duties and taxes, and ensuring the goods meet all regulatory requirements.
They also oversee the inland transportation of the products from the port to your warehouse or the Amazon FBA warehouse. This ensures a flawless transit by coordinating with the trucking companies.
The freight forwarder might also manage warehousing, distribution, and risk mitigation services based on your needs.
Throughout the process, they tackle the complexities of international shipping, enabling you to concentrate on your core operations.
Is a Freight Forwarder Essential for You?
Transporting your products without a freight forwarder isn’t impossible. Moreover, there are multiple ways to manage your shipping and logistics needs.
For instance, if you’re seeking an outsourcing partner to manage end-to-end logistics needs, including picking, packing, storing, and fulfilling your orders, you can opt for a 3PL provider like LinkTrans. Over the years, LinkTrans has established strong relations with shipping carriers, technology partners, and all the key players in the industry and continues to be the best 3pl for Amazon FBA. So we can secure you the best prices to save your time and money.
Alternatively, you can recruit an in-house team to handle your shipments directly or collaborate with your suppliers and buyers to coordinate and streamline your shipments.
Before you ponder whether you need a freight forwarder for your Amazon FBA or other business, consider the following facets of your business.
Volume of Goods
Can you secure the best prices based on the volume?
If the answer is no, you should consider a freight forwarder. They will negotiate the best deals with the carriers as they deal with high-volume goods.
In general, shipping companies are reluctant to negotiate if you don’t ship in large volumes multiple times a year. If you ship in large volumes, you’d be able to secure reduced rates.
But that’s just part of the story.
Assume you are shipping overseas. You’ll also need to manage inland transportation once your goods reach the other location. You need to identify and hire a customs broker and negotiate the price. You can opt for a freight forwarder and get all your tasks executed by the expert.
Risk Profile
You can always anticipate and be prepared for all the logistics challenges. The truck might break down, or an issue might occur with a new route. You need the right people in the right place to address these issues. You should estimate whether you can afford a lost shipment or handle the consequences.
Also, let’s face it. The likelihood of your products moving from one point to another without a hiccup is slim.
Freight forwarders are usually ready and equipped to face these problems as they’ve dealt with them before. They will have the bandwidth and network to do just that. You don’t have to worry about the goods.
In-house Vs. A Partner
Depending on your company size and structure, you can handle shipments yourself or hire in-house employees that you can train to manage your logistics.
However, it doesn’t end there.
You must prepare for constant logistics challenges and troubleshoot steps to resolve them periodically.
It can cost you a fortune.
So, find a freight forwarder who stays on top of ever-changing rules and regulations. It’s a smart move for your business. You can avoid all the storage fees and additional costs and get the job done hassle-free.
Global Expansion
If your business wants to expand overseas, you might want to consider a freight forwarder to avoid unnecessary hassle. These forwarders simplify global shipping and easily establish connections in other countries. They leverage people who speak local languages and understand their traditions so you can succeed in expanding your business globally. They can make the job quick and cost-efficient for you.
Industry Experience
A partner who knows the shipping operations in your industry is incredibly helpful. With years of experience, the freight forwarder knows the ropes and gives you better solutions. They help you deal with any issues and are well-versed with compliance and regulations across various industries and countries.
How to Choose the Right Freight Forwarder for Your Business
Before selecting the right freight forwarder that fits your requirements, here are some parameters you should consider.
Know Your Needs
There are different types of freight forwarders out there. You should find the right freight forwarder that aligns with your objectives.
Here are a few ways to shortlist them:
Industry-specific needs
These forwarders specialize in certain industries like hazardous goods, bulk materials, fresh produce, etc. If your goods require specialized handling or other transportation needs, we suggest you seek out specialized freight forwarding companies.
Type of services
You can begin by understanding the transportation mode you want to choose. Depending on your business needs, you need to filter specific services that you want from your freight forwarder. These include air freight, ocean freight, or other transportation methods.
Comprehensive Services
Find a freight forwarding company that offers a range of services – whether it’s FCL (Full Container Load), LCL (Less than Container Load), or other specialized services. Along with these services, opt for forwarders who can help you with the paperwork and necessary documentation for international shipping. They should also coordinate with customs to ensure a smooth transportation process. In addition, you should get all the details and updates of your shipment from them.
Accreditation
An accredited freight forwarder complies with and adheres to the industry standards and regulations. This ensures effective communication, appropriate documentation, and timely deliveries of goods.
Global Strategic Network
Networking is one of the crucial aspects of an efficient freight forwarder. These companies strategically place their businesses in the industry and create a collaborative environment that fosters profitable relationships.
When you’re a part of such a network, you can access their partners, who offer you lucrative rates. Moreover, you can seamlessly expand your operational reach without any hiccups.
Customs Clearance
Undoubtedly, customs clearance is a significant benefit of working with a freight forwarder. With their support, you don’t have to stress about classifications, duties, or taxes because they know the ins and outs of international trade rules. So they will communicate with customs on your behalf.
Negotiation
Each business is unique. Your freight forwarder should be flexible enough to negotiate prices based on your unique business requirements.
Digitization
Much has been said about the digital era that we live in. Similarly, freight forwarders must adapt to the changing technology and enhance efficiency and visibility. Real-time tracking and data analytics optimize logistics, enabling precise shipment monitoring.
Besides, communication platforms help in seamless collaboration among stakeholders, enabling instant access and transparency to shipment details. So ensure your freight forwarder leverages analytics and technology to expedite the traditionally complex freight forwarding tasks and provide you with more streamlined and reliable services.
Competitive Rates
This goes without saying. The best freight forwarders in the market generally give you the most competitive shipping prices. You also need a reliable partner who can deliver your shipments without issues. This way, you can minimize your shipping expenses, which, in turn, boosts your company’s profits.
Familiarity with Amazon FBA
If you are an e-commerce brand, chances are high that you’re already selling on Amazon or planning to do so. Selling on Amazon with the FBA model is profitable, but it’s no easy feat. So it’s better if your freight forwarder knows the nitty-gritty of Amazon FBA (Fulfillment by Amazon).
The reason, you ask?
Firstly, Amazon has specific and stringent policies for shipments entering their fulfillment centers. This includes labeling, packaging, documentation, etc. A knowledgeable freight forwarder can comply with Amazon’s standards and avoid delays or issues during the process.
On the other hand, your freight forwarder should know optimized shipping strategies for Amazon FBA. They should factor in inventory placement options and cost-effectiveness and efficiently deliver goods to Amazon warehouses.
30 May, 2024
