When you get something delivered to your front door, do you ever wonder how it got there? Was the product made internationally? Did the manufacturer ship it on one of those FedEx planes you see at the airport? Or was it in one of those giant shipping containers on a ship you can see from the beach?
You might not think about how your packages get delivered, but it’s somebody’s job. For those involved in the manufacturing or shipping industries, the people who hold those jobs are invaluable. That job belongs to people called “freight forwarders.”
The Job Description
In the simplest terms, a freight forwarder is a company or a specialist that helps businesses deal with all the ins and outs of shipping their products from the moment a product leaves the manufacturing facility to the moment it arrives at its final destination. In many cases, this shipment journey includes international travel.
When a company exports a product, there are many challenges when it comes to figuring out shipping, customs, rates, and other details. All of these things together constitute the logistics of moving commodities.
It is the job of an international freight forwarder to understand these logistics and help companies use them to their advantage.
What Are Some Duties of a Freight Forwarder?
If you start to think about all of the steps required to take a product from a warehouse overseas and get it to the doorstep of someone’s home on the other side of the world, you can easily see that there are a ton of details to manage.
For example, consider if you ordered a pack of T-shirts made in China for delivery to a fashion boutique in Los Angeles. Here are just some of the duties involved in freight forwarding:
Organizing Cargo Movement
The first step will be figuring out what kind of transportation is required. The T-shirts need transportation from the manufacturing factory to the shipment facility, whether that is the airport or seaport. Most likely, this leg of the journey will be by truck or rail. Once at the facility, you have to figure out who will handle the product loading onto an airplane or ship.
When the ship or plane lands in Los Angeles, the T-shirts would need to ship to a warehouse or direct delivery to the customer.
The forwarder would research all the possibilities for all aspects of this international cargo movement. They can communicate with contacts on the ground and overseas to find the best one for your situation.
Negotiating Rates and Contracts
Next, the forwarder may be responsible for negotiating contracts and price rates with all of the shipping companies involved.
For example, there may be one company that operates all of the transportation, or it could be that a different company handles each mode of transportation. The forwarder would work out all the possibilities and find the one with the best rates.
This bidding process could include negotiations between multiple choices to talk down the price. The forwarder will draw up contracts to ensure prompt delivery of the T-shirts and protect them from damage.
Once the transportation routes, prices, and contracts are good to go, the forwarder will need to finish all the necessary paperwork. This process would include shipping documents such as:
- Bill of Lading
- Certificate of Origin
- Customs Declaration Forms
- Insurance forms
- And more
Providing Customer Support
Now all the paperwork is in place. The parties involved have finalized the prices and contracts. Your forward is managing the logistics of getting the T-shirts from a factory in China to a Los Angeles boutique. But the job of a freight forwarder is still not done. They will also provide customer support if any problems arise along the way, as well as product tracking, to know when to expect delivery.
These are just some of the details for which a freight forwarder is responsible. All of the specifics depend on the countries involved, the kind of transportation used, the size and type of cargo, and more. But overall, the duties of the job are all about keeping the process moving “forward” from beginning to end.
Is a Freight Forwarder the Same as an NVOCC?
As you might imagine, from all of the job duties for which an international freight forwarder is responsible, a lot of people have a hard time describing their role within a supply chain. One of the most common mistakes people make is saying that a freight forwarder is the same as an NVOCC. But, there are crucial differences between a freight forwarder and an NVOCC.
NVOCC stands for “Non-Vessel Operating Common Carrier.” The first four words essentially mean that an NVOCC is not the owner of a ship. Instead, they own and manage some shipping containers on a vessel and lease them out for companies to use. When they sell or lease these shipping container slots, they act as a carrier for shippers
On the other hand, a freight forwarder is not a carrier but instead acts as an agent for shippers. They do not own or operate shipping containers but rather use the ones of a different company, like a shipping line.
Both act as intermediaries to help ship products from point A to point B in the freight forwarding process. The difference being that NVOCCs operate as a carrier for shippers and freight forwarders act as agents for shippers.
Does My Company Need a Freight Forwarder?
If you compare the world’s top shipping companies, they have two things in common: They are big, and they are international. With a global supply chain, these successful companies all require the job of freight forwarders to stay successful and maximize profit.
If your company ships a lot of goods, especially internationally, then it is vital to hire a freight forwarder. They can help with all the paperwork and logistics, and they can find the best rates to protect your bottom line. However, if you’re moving personal effects overseas then you will want to want to use an international moving company rather than a freight forwarder.
Freight forwarding is an essential part of making sure the logistics of shipping run smoothly. For many international businesses, there is a constant flow of shipping, importing, and exporting. To keep these processes running as smoothly as possible, there needs to be someone specializing in all the details. It is from this need that the job of a freight forwarder emerged and became an essential role in today’s world of international commerce.
Matt is a veteran of the moving industry, a recognized moving expert and is the founder of MoverFocus. Matt holds a Bachelor of Commerce (BCom) majoring in Finance and Marketing and Bachelor of Arts (BA) majoring in Economics and History. He also has completed the EiM (Essentials in International Moving) course from the FIDI Academy. His advice has been featured in Reader’s Digest, Yahoo Finance, MSN Money, Business News Daily and The SpareFoot Blog Go. Read more.