What is Freight Forwarding?
Freight forwarding is a service used by companies that deal in international or multi-national import and export. While the freight forwarder doesn't actually move the freight itself, it acts as an intermediary between the client and various transportation services. Sending products from one international destination to another can involve a multitude of carriers, requirements and legalities. A freight forwarding service handles the considerable logistics of this task for the client, relieving what would otherwise be a formidable burden.
Freight forwarding services guarantee that products will get to the proper destination by an agreed upon date, and in good condition. The freight forwarding service utilizes established relationships with carriers of all kinds, from air freighters and trucking companies, to rail freighters and ocean liners. Freight forwarding services negotiate the best possible price to move the product along the most economical route by working out various bids and choosing the one that best balances speed, cost and reliability.
A freight forwarding service generally provides one or more estimates to the client along with advisement, when necessary. Considerations that effect price will range from origin and destination to special requirements, such as refrigeration or, for example, transport of potentially hazardous materials. Assuming the client accepts the forwarder's bid, the freight is readied for shipping. The freight forwarding service then undertakes the responsibility of arranging the transport from point of origin to destination.
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A typical day for a freight forwarder would primarily consist of talking with clients and warehouses around the world, taking this information and passing it along to the appropriate party, whether that be an SSL (Steamship Line), Customs or the customer themselves. Along with making sure that the freight the client is importing or exporting gains entry into the country, a freight forwarder must (most of the time) arrange for said freight to be picked up and delivered to the final consignee's place of business. This requires contacting trucking companies, rail lines and even sometimes exporting the goods to a different country for final delivery. A lot of this is now done over the Internet and phones. A typical freight forwarder will spend most of the day at a desk in front of a computer.
Excerpt from Freight Forwarding Services Report
The US freight forwarding services industry includes about 20,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $50 billion. Major companies include CH Robinson Worldwide, Expeditors International of Washington, FedEx Trade Networks, UPS Supply Chain Solutions, and UTi Worldwide. The US industry is fragmented: the top 50 companies account for about a third of revenue.
Competitive Landscape
Demand is driven by domestic manufacturing output and levels of international trade. The profitability of individual companies depends on efficient operations, extensive relationships in shipper and carrier networks, and industry expertise. Large companies have advantages in account relationships and access to advanced logistics technologies. Small operations can compete effectively by serving a local market, specializing in cargo transfer with specific countries, and facilitating the transport of unusual goods.
Products, Operations & Technology
Major services are freight forwarding and customs brokering. Unlike fully integrated carriers that own truck, rail, air, or ocean assets and transport cargo, freight forwarders arrange the transportation of goods without owning any transportation equipment or handling ("fingerprinting") the cargo. Customs brokers add another layer of expertise by facilitating the clearing of goods through international customs barriers. Most companies specialize in either freight forwarding or customs brokering, though companies and individuals can provide both.