Freight forwarding services are an essential part of global supply chains. They help businesses move, store, and distribute their inventory in different regions. Freight forwarders serve both the domestic and international shipping needs of various businesses.
In 2023, the global freight forwarding market stands at a valuation of $199.09 billion. It is expected to grow at a CAGR of 3.1% to reach $224.78 billion by 2027. The industry has received a significant boost owing to the global rise of eCommerce and multinational businesses.
In this article, we will understand the purpose, services, and benefits of freight forwarding. We will also give you guidelines on how you can choose the right freight forwarder for your business.
What is Freight Forwarding?
Freight Forwarding is the practice of sending a courier through multiple carriers. The shipment may also travel with several modes of transport. The journey may include road freight, sea freight, and air freight. You can use freight forwarding services for both domestic and international couriers.
Freight forwarders are also responsible for strategising the shipment. They need to plan and execute the logistics to provide the fastest and most cost-effective solution.
Freight forwarders play a crucial role in global supply chains. International shipments need to cross international borders. Different carriers may cater to different regions. The carriers may also have limitations with regions.Â
Furthermore, shipments may pass through multiple countries in international transportation. This means that the carriers need to comply with the regulations of all these regions. Also, different carriers may specialise in different compliances.
Let’s say you want to send a parcel from Australia to the UK. You will need to comply with the export laws of Australia. Then you will need to follow regulations of international trade and transport. Finally, you will also have to comply with import regulations in the UK.
The carriers may also specialise in different modes of shipping. A road freight company may need more resources to send couriers by air. Similarly, an international shipper may not have adequate resources for road transport in other countries.
For instance, some freight forwarders in Australia may not have the resources to ship beyond Oceania. So if you want to ship to the USA. You will need an international freight forwarder. But, you also need the courier service in Australia to send the courier to an international port.
International freight forwarding services can help you overcome such limitations of individual carriers. They mediate the entire shipping process. A freight forwarder can provide a range of services to ensure effective transportation across different regions.
Freight Forwarding Services
Freight forwarders can provide a wide range of services for your business. They can help you with several aspects of logistics and distribution. Here are some of the services that fall under freight forwarding:
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Logistics Management
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Documentation
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Export & Import Shipping
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Export & Import Customs Clearance
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International Air Freight
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International Sea Freight
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Shipment ConsolidationÂ
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Domestic & International Rail Freight
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Domestic & International Road Freight
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Multimodal Shipping (Air, Sea, Road, & Rail)
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Shipping Insurance
The services offered by freight forwarding depend on their logistics network. An international freight forwarder has a presence in several countries. This allows them to manage imports and exports in different nations. International freight forwarding services also include handling and storage of goods as per shipping regulations.
Let’s say you want to ship goods from Australia to the UK. You can approach a freight forwarder in Australia to facilitate this transport. The freight forwarding service will carry out the following steps:
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Identify the best routes, modes of transport, and carriers.
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Analyse the cost, shipping time, and efficiency of each option.
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Choose the most beneficial option for each stage of transport.
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Identify the compliance requirements for shipping the goods.
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Define terms and conditions for the carriers.
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Negotiate the price and terms of shipping with the carriers.
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Negotiate the price and terms for shipping insurance.
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Communicate the pick-up schedule with the carrier in Australia.
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Manage export customs clearance in Australia.
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Track the shipment during transit.
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Manage import customs clearance in the UK.
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Communicate delivery schedule.
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Collect proof of delivery from the carrier in the UK.
The scope of domestic or international freight forwarding services may vary depending on several factors. These factors range from the size of shipment to government regulations. Alongside the scope of freight forwarding services, these factors also affect the shipping costs.Â
For instance, dangerous goods require special packaging, handling, and storage. Furthermore, customs clearance and shipping compliance requirements for hazmat goods are also different.Â
If your shipment includes such substances, you will need additional services from the freight forwarder. This will increase the scope of services and the cost of shipping. However, a freight forwarder can help you curb the cost by negotiating better deals with carriers and customs agents.
5 Benefits of Using Freight Forwarding Services
While you can negotiate with several carriers to execute international shipping, you might get the same benefits as a freight forwarder. You get many advantages from utilising the vast network and industry experience of a freight forwarder.Â
Let’s understand the key benefits of using freight forwarding services:
1. Cost Control
Freight forwarding can help you control the cost of shipping. Freight forwarders deal with several carriers and customers. They manage logistics in bulk. Hence they can get better deals from the carriers. A freight forwarding company can club your goods with other shipments to get better rates per unit.
Additionally, freight forwarders deal with multiple carriers. They can scan through the available options to find the most suitable carrier to transport your goods based on your budget. A freight forwarder can also plan the logistics to give you the most cost-effective way to ship your goods.
2. Convenience
Without a freight forwarder, you would have to deal with multiple carriers for shipping goods. You will have to negotiate prices, schedules, conditions, and more with each carrier. Furthermore, you will need to streamline the handover of goods between different carriers.
On the other hand, freight forwarding services can serve as a single-point contact for all shipping requirements. They can negotiate with several carriers on your behalf. They can also fulfil documentation and compliance requirements for international shipments.Â
An international freight forwarder can also compile information from various carriers to give you accurate tracking. You only have to deal with one organisation for all services and requirements.
3. Widespread Network
You can benefit from the widespread network of a freight forwarding company. International freight forwarders work with carriers from several countries. They may also collaborate with different carriers in each country for specific requirements. A freight forwarder can help you manage your operations at different levels in multiple regions.
For example, an international freight forwarder will use road, air, and ocean freight at different stages to ship your goods. They would use road freight forwarding to carry goods from your warehouse to the port. They may use sea freight forwarding to transport your shipment internationally. If you are looking for faster shipping, they would use air freight forwarding. Finally, they would again use road freight to move your goods from the port to your destination.
This network of regional and international carriers allows the freight forwarder to use various combinations to ship your goods. Freight forwarding services also give you the collective benefit of the niche expertise of different carriers.
4. Flexibility
Freight forwarders can offer great flexibility for your logistics needs. They can use the network of carriers to map the most efficient ways to ship your goods. They can also provide you with various alternatives based on your budget and requirements.
Owing to the international network, they can give you flexibility with the distribution of goods in several regions. You can work with an air freight forwarder to ship goods faster to one region and sea freight forwarder for cost-effective shipping to another region.
A freight forwarder can collect the goods from one location. They can then sort the cargo for different regions. The freight forwarder will negotiate different terms with each carrier. These will be based on your requirements for each shipment.
Furthermore, a freight forwarder can also shift responsibility between carriers under critical circumstances. If a sudden demand surge necessitates early delivery. The freight forwarder can move your shipment from sea freight to air freight to expedite delivery.
5. Experience & Expertise
International shipping is a complex process that depends on several factors. These include international compliances, customs regulations, documentation, shipment tracking, multimodal transportation, warehousing, and more. A cargo moves between several carriers and regulatory authorities.
A freight forwarder can use their experience, expertise, and influence to help you ship your goods efficiently. A freight forwarder can help you navigate the complex web of regulations and compliances. This helps you avoid legal instances that can hinder your shipments.Â
Additionally, a freight forwarder also brings the expertise of its network of carriers. These carriers deal with specific regions or modes of transportation. A freight forwarding service gives you the benefit of their collective knowledge.
5 Tips to Choose a Freight Forwarder
The choice of freight forwarder depends on your requirements. You will find forwarders that deal with all sorts of goods in various regions. There are also several freight forwarding services that only serve a specific niche. This can be based on a region, shipping route, type of goods, mode of transport, shipment size etc.
Here are a few tips to help choose the right freight forwarder for your requirements:
1. Find the Best Price, Not the Lowest Rates
When it comes to freight forwarding, the price depends on numerous factors. These factors depend on the scope and quality of services. Some freight forwarders may offer you the lowest rates, but it may be at the expense of certain services.Â
Low rates might exclude services such as customs clearance, warehousing, compliance management, etc. These missing services can become a hassle for you. If you ship goods regularly, you would need a full scope of services. Otherwise, you will have to engage additional resources to tackle logistical challenges.
You need to analyse the cost in the context of the convenience offered. Then you can choose the services you might need from the freight forwarder. You can negotiate a deal based on your specific requirements.
2. Understand the Scope of Services
Freight forwarding includes a variety of services. You need the necessary services for shipping your goods. To do so, you first need to define your logistics requirements. Here are a few factors you should consider to understand the scope of freight forwarding services:
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Size of the Shipment
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Type of Goods
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Shipping Distance
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Modes of Transportation
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Stages of Transportation
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Storage and Handling Requirements
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Compliance Requirements of Government and Regulatory Organisations
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Regulations of the Exporting and Importing Country
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International Shipping Regulations
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Availability of Carriers
These criteria can help you narrow down the services required from an international freight forwarder. For example, if you want to ship in bulk and distribute inventory to several locations in the destination country. You will need an international freight forwarder with a network of road freight carriers in the destination country.
You should choose a freight forwarder who can provide all the required services. Additionally, you should also consider the future needs of your organisation. Let’s say you are planning to expand your operations. You should check if the freight forwarding services can address your future shipping needs. Do not compromise long-term associations for one-time discounts.
3. Choose a Freight Forwarder with Experience
A long-term partnership with an experienced freight forwarder can help you consistently and cost-effectively manage your supply chain. You should analyse the experience and capabilities of the freight forwarder before making a decision.
It is necessary to check the number of years in business, industry standing, international presence, and so on. You also need to gauge their experience in dealing with your niche. This is especially necessary if you are shipping regulated goods such as cosmetics, chemicals, healthcare products, medicines, etc.
Niche experience is also an important factor when picking a freight forwarder for delicate and valuable items like antiques, artworks, electronics, etc. Such items require special packing and handling. They also fall under several compliance regulations. You should check whether the freight forwarder can ensure safe transportation for such goods.
4. Analyse the Domestic and International Network
Freight forwarders with a larger network can offer more flexibility. You should check if your required destinations are a part of their network. You also need to check the domestic network of carriers in the destination countries.
An international network is necessary to get better deals and shipping options. While the domestic network is important for distribution after import. In addition to the width, you also need to check the depth of the network.Â
You should see the variation of logistics options you can get with a freight forwarder. This factor decides the level of flexibility you can get for shipping. If the freight forwarding service is dependent on just one carrier for a category. Then you too face the same limitations.
You need to find a freight forwarder that can offer you a variety of shipping options for all destinations. Their network should have multiple carriers for each region and mode of transportation. This will ensure that you get maximum flexibility for your shipping needs.
5. Check Reviews to Gauge Customer Service
Finally, you need to see how the freight forwarder treats the customers. International shipping may involve several complications. You need a freight forwarder to help you overcome the hindrances. They also need to show transparency and support when dealing with customers.
The best way to gauge the customer service of a freight forwarder is to check their reviews, ratings, and awards. These indicators can help you understand the level of customer service you can expect.
Why PACK & SEND is a Top Freight Forwarder in Australia
Freight forwarding services can offer several benefits for domestic and international shipping. With the right freight forwarder, you can enjoy cost-effective shipping and efficient logistics management.
International shipping with PACK & SEND opens routes to more than 80,000 destinations worldwide. Our widespread network of domestic and international carriers can address all kinds of logistics and distribution needs for businesses.
PACK & SEND’s consistently outstanding services have won several awards and recognitions. Our diligent service standards have also earned outstanding reviews from customers. You can talk to us about your domestic or international shipping needs and we can delight you with the most suitable options to transport your goods.
Frequently Asked Questions (FAQs)
Who is a freight forwarder?
A freight forwarder is a company that liaisons with different carriers to organise shipments on your behalf. Freight forwarding services include both domestic and international shipping. The role of a freight forwarder includes all aspects of logistics management for the shipment. They carry out negotiations with carriers, documentation, customs clearance, transport schedules, and more. A freight forwarder manages the entire cycle of transportation of a shipment, from pick-up to delivery.
How does freight forwarding work?
Freight forwarding is a straightforward process. You can hire a freight forwarding service to ship your goods domestically or internationally. The freight forwarder plans the route and analyses the available logistics options for the task. Then they identify the carriers for the task. A freight forwarder may use different carriers for different stages of shipping.
The freight forwarding service negotiates a deal with the carriers on your behalf. They then serve as single-point communication for the entire task. They will manage the pick-up, dispatch, storage, shipping, export, import, customs clearance, receiving, and delivery of goods.Â
How do freight forwarders charge?
Freight forwarders charge for shipments based on several factors. These include cargo type, volumetric weight, shipping distance, carrier costs, documentation fees, compliance requirements, packing requirements, insurance charges, and so on.
Freight forwarders may charge an upfront fee for their services or define the rates based on the services you require. The pricing framework may differ between different companies. So you need to check the overall cost of shipping and the services that are covered.
How to choose a freight forwarder?
You should choose a freight forwarder that can address your specific shipping requirements. Assess their price structure, services, network, experience, and customer service. You can evaluate the suitability of the freight forwarder for your business based on these factors.