Before moving on to the main topic of this blog post, let’s understand what Freight Forwarding is.
Freight forwarding is the planning and coordinating of the movement of commodities across international borders, on behalf of shippers. Other tasks involved include, but are not limited to: warehouse planning, supplying cargo insurance, and customs brokerage.
Freight forwarding consists of strategic logistics planning and execution for the international movement of goods, on behalf of shippers. Specifically, a freight forwarder will carry out freight rate negotiations, container tracking, customs documentation and freight consolidation, among other tasks.
Importing and exporting creates lucrative opportunities for businesses with the wherewithal to execute strategic logistics plans. But the logistics of international shipping is complicated, to say the least.
- Expert knowledge of customs standards and protocols, which vary country to country and even port to port
- Agile problem-solving, for when the weather, technology or human nature fail to cater to timely travels, as they are all wont to do
- An instinct for network building, because in many ways, a supply chain is only as strong as the parties propelling it.
And you also need a license to do it. Depending on the type of transportation means they work with (sea, air or road), freight forwarders need to get different licenses. Although the terms and costs of these licenses vary from country to country, you must obtain a license from the relevant institution.
Freight forwarder carries a license requirement for the correct implementation of legislation and procedures. At the same time, the freight forwarder is responsible for the freight. For this reason, certain conditions are imposed on those who want to do this job.
What is the Role of Freight Forwarder
- Shipment Tracking – Forwarders use a Transportation Management System (TMS) to maintain transparent visibility throughout each stage of a shipment’s voyage.
- Customs Brokerage – This critical piece of forwarding requires special licensure—a customs brokerage license. Licensed brokers are the only people qualified to manage and submit the extensive documentation necessary to complete importing/exporting processes.
- Warehousing – Some forwarders may have their own warehouses available to harbor shippers’ commodities (or parts of commodities), but for the most part, the service your forwarder will offer is to arrange storage at a warehouse owned and operated by a conveniently located affiliate.
- Negotiating – Bargaining with carriers for cost-efficient shipping rates is no easy task. The art of this deal entails appealing to carriers’ interests by balancing the pros and cons of your cargo type, time flexibility, credit status, space/tonnage requirements, and more.
- Cargo Space Scheduling – Savvy coordination and scheduling of cargo space are the more tangible parts of a forwarder’s skill set. If you hire a freight forwarder to manage logistics, this is where they’ll have the opportunity to display their chops. It takes a thoughtful planner to determine whether it is profitable to consolidate a shipment, to secure timely sailings, and to weigh the feasibility of intermodal shipping options. Cargo scheduling is the logistics of “Logistics.”
- Consolidating Freight – Forwarders may have several customers who all need to transport shipments that do not necessitate the use of an entire container. Freight consolidation for less than container load (LCL) shipping is a service forwarders provide wherein multiple smaller consignments are all booked aboard the same container. In these instances, the shipping cost is spread amongst all participating customers based on the cargo’s space requirements.
- Supplying Cargo Insurance – Forwarders can provide you with a cargo insurance policy, also known as freight insurance. Cargo insurance is intended to reimburse the loss payee in the event that goods are damaged or stolen in transit.
Now let’s move on to the foremost companies that are leading the Freight Forwarders List.
Top 10 Global Freight Forwarders
|Rank||Provider||Gross Revenue (US$ Millions)||Ocean (TEUs)||Air (Metric Tons)|
|1||DHL Supply Chain & Global Forwarding||27,302||3,207,000||2,051,000|
|1||Kuehne + Nagel||25,875||4,861,000||1,643,000|
|8||UPS Supply Chain Solutions||9,302||620,000||965,700|
*Revenues and volumes are company reported or Armstrong & Associates, Inc. estimates. Revenues have been converted to US$ using the average annual exchange rate in order to make non-currency related growth comparisons. Freight forwarders are ranked using a combined overall average based on their individual rankings for gross revenue, ocean TEUs and air metric tons.
(updated July 23, 2020)