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When you’re shipping goods internationally, the necessary tasks never seem to end. It can be especially hard to meet these needs if your firm is new to international shipping. That’s why many international consigners, novice and experienced alike, choose to use a freight forwarder. But what, exactly, does a freight forwarder do?
What Does a Freight Forwarder Do?
Let’s get a quick definition of the term:
- A freight forwarder is a company contracted by consigners to organize carriers, storage and documentation for international freight shipping.
- Most freight forwarders do not own any of their own shipping vessels such as trucks or planes. This is why they’re sometimes referred to as Non-Vessel Owning Common Carriers (NVOCCs.)
- Forwarders typically ship under their own bills of lading, called a house bill of lading.
Some forwarders provide other services, but these are the baseline characteristics of a freight forwarding service. A reputable freight forwarding service can be an excellent investment for an international shipper. They can save you considerable time, effort, and even money due to their ability to negotiate carrier rates.
Now, the bad news: Because a freight forwarder doesn’t need to make the massive capital investments necessary to purchase cargo ships, semi-trucks, or airplanes, the industry has a relatively low barrier to entry.
That makes it essential to thoroughly vet your freight forwarder. You don’t want to end up with a fly-by-night operator without the experience to get your goods to their destination. And yes, they’re out there.
What Are the Standard Best Practices for Choosing a Forwarder?
Fortunately, there are some standard best practices to follow when selecting a new forwarder. These five key tips will help you establish a productive and profitable relationship with a reputable forwarder.
A Freight Forwarder’s Networking Correlates Directly with Their Performance
A huge part of the reason to hire a freight forwarder in the first place is to take advantage of their logistics network. The size and scope of a forwarder’s carrier network directly affects how well they’ll navigate unforeseen circumstances such as delays, strikes, customs trouble, and more. It also affects their ability to negotiate rates, which is another big advantage of using a freight forwarder.
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How Should You Vet a Freight Forwarder?
When vetting a forwarder, make sure you get detailed answers to these questions:
- How long has the forwarder been in business?
- What professional associations and regulatory agencies have certified the forwarder? The IATA’s Cargo Agent certification program and the list of FMC-licensed freight forwarders are great resources to look into.
- Which carriers does the freight forwarder work with in the countries you need them to ship to? They should have several options at the ready, as unexpected hiccups are common in the shipping world.
- Which types of cargo do they ship most frequently?
Reputation and references are everything in the world of freight forwarders. Many smaller businesses find that it’s easiest to work with a large and well-known freight forwarder that has a guaranteed international network. If that’s the way you want to go, take a look at one of the many lists of top freight forwarders available from logistics authorities.
Be Clear About What You Need
Look for forwarders with capabilities that match your specific needs.
It’s important to note that even the most reputable forwarders can’t be everything to everyone. A forwarder with great connections in Europe might be lacking a strong network in East Asia, and vice versa. Make sure your forwarder meets your needs in the following areas:
- Experience in working with the type of goods you’re shipping, particularly if those goods are hazardous
- A robust network in every country you’re shipping to or through
- The ability to procure temperature-controlled shipping and storage if your cargo requires it
- Delivery services that match your customers’ needs (Many forwarders, for example, don’t offer white glove delivery.)
- Last-mile services (Some forwarders only cover the air or sea portion of shipping and leave last-mile ground transit up to the shipper.)
Look for Involved Customer Service and Up-to-Date Technology
First impressions will serve you well here. A forwarder who doesn’t answer the phone—or at the very least, promptly return your calls during business hours—is not one you can trust. You’ll need to maintain contact with your forwarder at many points throughout the shipping process. So make sure that you can trust them to provide responsive customer service when it counts the most.
Likewise, be wary of forwarders who don’t seem to have their act together technologically. It’s not a good sign if their website looks like it hasn’t been updated since 2003, they don’t have a website at all, or their emails aren’t coming from a corporate network. Many freight providers interact extensively in the digital space with shippers and carriers, and out-of-date tech is a sign that a forwarder isn’t keeping up.
Image by Panuwat Phimpha
Get Your Documentation Squared Away
We’ve discussed several things you should expect of a forwarder, but this is one that a forwarder will expect from you.
A forwarder can only work with the information you give them, so make sure your documentation is airtight before contracting them. You’ll need to be especially careful about hazmat documentation. Also ensure that your cargo follows all relevant safety rules such as the IATA’s Dangerous Goods Regulations and the IMO’s International Maritime Dangerous Goods standards. Hazmat cargo will also need UN-certified hazardous materials packaging.
Freight forwarders hold shippers responsible for completing these important tasks. If your documentation is incomplete or your packaging isn’t up to standards, expect additional fees or even returned cargo from your forwarder.
Insurance Is a Must
All freight forwarders should carry insurance on any cargo they accept. Policies and coverages will vary, so make sure you get a detailed statement of exactly what the terms are before you turn your cargo over.
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Use These Tips to Choose the Right Freight Forwarder for Your Business
The number of freight forwarders competing for your business can make the market seem like the Wild West. However, the tips we’ve discussed can help weed out the pretenders so you can confidently put your trust in a reputable forwarder. Building a relationship with an experienced and reliable freight forwarder will provide the expertise you need to ship your goods all over the world.
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