The process of importing or exporting goods can be quite a challenge irrespective of the items that are being transported. Also, this challenge is further increased if you have no idea of the practices of port you are shipping from or shipping to.
The different steps involved in this process such as cargo vessel booking, pickup, customs clearing, getting shipment insurance, etc. can be very overwhelming for someone new in the business. At Packair Airfreight, Inc. you can learn more about the steps involved in good importation and exportation.
Therefore, to ensure that you aren’t confused with all the processes involved in freight forwarding, we have written this article to inform you of the important things you need to know. As we continue, you will learn what freight forwarding is, who freight forwarders are, the freight industry complexity, and many more.
There’s simply a lot to share, so let’s get started…
What Freight Forwarding Is
Freight forwarding refers to the commercial undertakings carried out by people or organizations that move goods from their original location to the final location through different means over sea, land, and air.
The rise of this industry came to be as a result of shippers who couldn’t manage the logistics that deal with shipments. When the 3PL needs of the shippers are outsourced to freight forwarders, it prevents the owners of the goods from missing out on certain minute but important detail.
Who are Freight Forwarders?
Having defined what freight forwarding is; it is important we also shed more light on the individuals or firms that carry out this process.
Freight forwarders are similar to travel agents but their focus is on the organization of shipments as well as the 3PL services involved in moving cargo goods.
Freight Forwarders and NVOCC – Is There Any Difference?
Another set of people that are often thought to be forwarders are NVOCCs (Von-Vessel Owning Common Carrier) due to their activities being so similar. Their activities also overlap a great deal which makes it difficult to distinguish between both bodies. Nevertheless, as far as the United States of America is concerned, thanks to the Federal Maritime Commission (FMC), these bodies are unique. Visit https://www.fmc.gov/ to learn more about the FMC and what they do.
According to the FMC’s categorization, a Freight Forwarder is an individual or firm based in the U.S. that does the following:
- Arranges international cargo movement
- Organizes shipments that come from the United States via a corporate carrier as well as booking the shippers’ cargo space.
iii. Handles the management and preparation of necessary documentation
- Offers shippers the 3PL services.
It is noteworthy to mention that these individuals do not have a hand when it comes to shipment delays.
NVOCCs, on the other hand, are corporate carriers that are not involved with the shipping vessel responsible for moving the cargo. However, they are involved with:
- Negotiation of space from carriers to outsource to shippers and freight forwarders.
- Keeping possession of the Master Bill of Lading.
The differences between these two bodies do not exist in most countries outside the US. The simple reason is that most forwarding agents also perform the jobs of NVOCCs and vice versa. However, the distinction set by law in the U.S does not permit such. Hence, a clear difference between both bodies exists.
3PL Services Provided by Freight Forwarders
So far we have mentioned 3PL services, but what are they? 3PL stands for Third-Party Logistics which deals with outsourcing to a third-party firm the processes involved in eCommerce logistics which includes management of inventory, warehousing, and finally fulfillment.
Hence, you can see how this is important when you consider the freight industry. Irrespective of whether your shipment is coming by land, air, or sea, the logistics involved can be quite overwhelming.
So, when you hire a forwarding agent, you can rest assured that the inventory will be well managed, the goods will be stored well in the warehouse, and that the said cargo will get to you safely and intact. All these require expert knowledge for the whole process to be handled efficiently.
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Understanding the Freight Industry’s Intricacies
As we just mentioned, this industry requires a lot of expertise to navigate its intricacies. A prominent issue that shippers will have to deal with is international custom laws. Given that these custom laws vary from country to country, a shipper who lacks proper understanding might end up on the wrong side of the law. The fact that you operated in a certain manner while importing cargo from a certain country might not apply to that of another country.
Another thing you have to deal with is getting the right shipping routes. Without knowledge of the routes that will ensure that your goods get delivered on time, you might end up placing your cargo on a ship that will take longer than you desire for the goods to be delivered. Click here to check out a visualization of the shipping routes in the world.
Furthermore, some certificates and documentation must be acquired for you to legally conduct your business. In most cases, a shipper might not have the ability to get such certificates and documentations.
As a result of these intricacies and limitations, forwarding agents have become very important to the industry. Their ability to act as middlemen between the sellers and buyers as a result of their logistics expertise is of immense help to the industry.
The level and type of services provided by a forwarding agent will vary depending on their expertise and size. Also, the kind of relationships they have with carriers, as well as 3PL providers (that is if they don’t provide such services), will determine how effective they are in getting the best space and rates.
When you use small forwarders, you can get a better-customized service as well as support. However, you might lose out on lower rates which larger forwarders can easily provide due to their wider reach and network.
Why you should use a Freight Forwarder?
At this point, you should have been convinced of the nigh-indispensability of forwarders when it comes to getting your shipment in one piece. But if you are yet to be fully convinced, let’s clear those doubts in your mind.
First of all, except your company is large enough, you may not be able to afford an in-house department that will handle the intricacies associated with this industry. Besides, trying to handle the process yourself will cost you time and even more money as you might be running in circles just to get things sorted. The risk of making the wrong decision is equally prominent.
However, with a forwarding agent, all your shipping logistics, as well as necessary documentation, can be easily managed. Let’s discuss these two major solutions a bit further.
1. Shipping Logistics
Your forwarder will help you deal with the following logistic issues:
- Transport negations with NVOCCs, truckers, carriers, and railways.
- Giving import and export quotations.
iii. Providing consolidation services via sear, road, and air.
- Locating the best shipment routes.
- Securing insurance.
- Goods’ arrangement, packing, and loading.
vii. Goods’ delivery and warehousing.
viii. Offering support to clients when a claim occurs.
- Charges payment arrangement in the stead of their client.
- Tracking the shipment while in transit.
2. Document Management
This solution involves:
- Invoices notarization.
- Correcting mistakes of the shipper in the documents.
iii. Getting certificates which include inspection and insurance certificates.
- Managing certificates of origin. This involves receipt preparation such as local charge, chassis usage, warehouse receipts, document fees, and terminal handling.
- Custom clearance.
- Handling charges for ocean freight.
vii. Settling trucking charges.
viii. Invoice preparation.
- Sending documentation to brokers and shippers
- Preparation and review of documents.
The process involved in freight forwarding can be very overwhelming if you lack the necessary knowledge. Hence, the safest bet is to employ the services of a freight forwarder.