The goods import and export industry is vast as there are several players involved in the transportation of goods. Freight forwarders are one such logistics services provider that specialises in shipping goods internationally or across the country.
Many retail and goods trading businesses rely on freight forwarders to move their cargo from one place to another. Thanks to the rise in the global economy, there’s a significant boost in the eCommerce, retail, and wholesale market. This has, in turn, increased the shipment of goods for both international and domestic markets in Australia.
According to a recent report, freight forwarding in Australia has experienced a growth of 4.2% to reach $10 billion in 2022. But what is freight forwarding and how can it help your business? Let’s get to it:
What is Freight Forwarding and Why Is It Required?
Freight forwarding is a process of moving freight/goods from one place to another within the country or internationally with the help of intermediaries. Companies offering such services usually take care of storage, packaging, customs, paperwork, and other managerial tasks.
Often confused with shipping providers or import and export companies, freight forwarding firms are middlemen between you and your shipping providers. They help your imported or exported goods to move from one place to another seamlessly.
Handling the transporting on your own or relying on shipping providers can quickly turn costly and often become time-consuming. Freight forwarders, on the other hand, are more suitable for bulk transport of goods at cost-efficient rates.
Moreover, they aid in increasing operational efficiency even though they don’t handle the movement of goods themselves. Since they are experts in the industry, they have an established network and relationship with several freight carriers.
This established network helps them plan each step of the goods movement on the client’s behalf and forward freight by road, rail, water or air. Often small-scale traders and eCommerce retail owners don’t have access to this vast network, making it difficult to transport goods to intended destinations. Due to this inability, retailers and wholesalers often rely on freight forwarding companies.
6 Important Things to Know Before You Go for Freight Forwarding
Now that we know what freight forwarding is and why it’s required, here are some important points to keep in mind before using freight forwarding services:
1. The Process of Freight Forwarding
Freight forwarders often take the important role of being a middleman who facilitates the shipping element of your business. As mentioned, they do not handle the shipping of goods themselves, but they have an established international freight network specialised in safely moving goods without causing any hindrance.
The freight forwarding process begins when a shipper reaches out to them or the supplier forms an agreement with the importer. Based on the chosen terms, freight forwarders will begin the process of handling, inspection, packaging, and documentation for goods to move from origin to the final destination.
They’ll negotiate the freight charges on your behalf and book cargo space in desired transport mode e.g. road, rail, air, or ocean. Also, they’ll arrange cargo insurance, labour, inland haulage of goods from warehouse to shipping yard, temporary storage, consolidation, and preparation.
Freight forwarders need to be on top of the rules, regulations, and restrictions of receiving end of the goods and may require dealing with different government bodies. Good communication and understanding with government agencies are key here for freight forwarders to take good care of both exporting and importing.
Once everything checks out, freight forwarders will manage the safe transportation of goods, especially when moving to international destinations. They take away all your headache of moving goods through international customs and deliver them safely.
2. Important Stages Involved in Freight Forwarding
Here are a few key stages involved in freight forwarding:
i) Export Haulage
Export haulage is where freight forwarders transport the goods from a manufacturing unit or shipping warehouse to their own storage facility. Trucks or other necessary means of transport are deployed to take care of this stage. Depending on the material and distance to cover, it can take a few hours to days.
ii) Item Checkpoint
In this stage, received items are inspected for any damages and confirmed that the goods meet the booking documents. Freight forwarders also do a necessary check to see if the items meet the destination regulations and are not on the list of restricted goods.
iii) Export/Import Customs Clearance
Once the freight forwarders do a thorough inspection, goods are then taken to the customs department for clearance. Often the freight forwarders hire customs brokers to take care of this aspect of the freight forwarding process.Â
They’ll prepare and submit the necessary paperwork and get the clearance for departure and arrival at origin and destination respectively. Authorities at the destination will inspect and check the legality of products before they can enter the country and may sometimes levy customs fees.
Customs clearance is only subject to sending international shipments, not domestic ones.
iv) Handling on Arrival
After goods are cleared by customs, shipment providers prepare the consignment to ship it to the designated address provided by freight forwarders. Their team then will take custody of the goods along with the necessary documents.
v) Import Haulage
This is the final stage where freight forwarders send arrived goods to the final destination directly from the seaport or airport or from their temporary warehouse. Just like export haulage, here freight forwarders will choose suitable means to transport the goods which may take several hours to days.
3. More than Just Goods Transportation
Freight forwarding companies are not just goods transport arrangement companies as many of them do offer additional services. These include:
- Inbound transport management
- Temporary storage at origin and destination
- Customs clearance and brokerage
- Cargo booking and tracking
- Shipment insurance
- Freight consolidation & documentation
- Carrier rate negotiations
- Handling and packaging
- Filing insurance claims on your behalf
4. Necessary Documents Required for Freight Forwarding
Freight forwarding involves a lot of documentation and paperwork, which makes it hard for you to keep track of everything. It becomes even more complex when freight is required to move overseas. It’ll require customs in addition to shipping documents to ensure the goods reach your destination seamlessly and safely.
Here’s a complete list of documents one must prepare and acquire when using freight forwarding:
- Commercial invoices
- Inspection certificates
- Shipping quotes
- Safety data sheets
- Bill of landing/Airway bill certificate
- Export packaging list, declaration certificate, or licence
- Certificate of origin
- Shipper’s declaration documents
5. Get to Know the Freight Restrictions
Moving goods from one country to another or within the same country is sometimes prohibited without proper authorisation or licence. Thus, it’s always a good idea to check for such restrictions before sending freight to avoid getting on the crosshairs of legal authorities.
Here are a few types of goods generally restricted to transport without proper authorisation:
- Flammable liquids or toxic gases
- Recreational drugs without prescriptions
- Weapons and sharp objects
- Batteries or perishable items
- Alcoholic drinks and even certain types of perfumes
- Other items included in the prohibited list of the destination country
6. Selecting Modes of Transport
Selecting the mode of transport is essential for successfully delivering and distributing goods. There are majorly four different modes of transport to move freight from one place to the next: rail, road, air, and sea.
Let’s glance over each and find which one would best suit your needs:
Roadways
In this mode of transport, freight is moved using heavy loading trucks as they are easy to reach across destinations. They are divided into full truckload (FTL), less than truckload, (LTL), and intermodal (ITML).
Depending on the required cargo space for freight forwarding, you can select one of the trucking methods for domestic freight movement. For instance, freight in huge quantities or large dimensions may require FTL and can reach the destination quickly.
Similarly, other trucking methods are used when there’s no requirement of full cargo space or shipment requires multiple modes of transport.
Railways
Freight movement through railways is crucial for faster transportation of goods and keeping the supply chain intact. It’s one of the efficient and convenient ways for goods transportation and is more environmentally friendly than trucking.
Since it’s one of the low-cost methods, you can use it primarily for shipping containers of retail goods, fossil fuels, chemicals, fertilisers, and other substances.
Sea route
The Sea route is the most utilised freight transportation method and transports almost 90% of the traded goods. It’s the backbone of the international trade and freight forwarding industry.
Companies that mostly deal with sending and receiving international parcels should primarily use the sea route for freight forwarding.
Airways
Air freight forwarding services are the fastest way to send freight to an international destination. Industries such as Automotive, Aerospace, Electronics, Pharmaceuticals, and Healthcare value and rely on this method of freight transport.
Companies that need expedited shipping or want to send high-value freight cargo should choose this mode of transport.
Advantages & Disadvantages of Freight Forwarding
Though several factors make freight forwarding a win-win situation for businesses, it does have some caveats. Let’s explore what they are:
Advantages of Using Freight Forwarding Services
The biggest benefit of freight forwarding is making it easy for companies to send parcels within the country or overseas in bulk. Freight forwarders offer temporary storage and warehousing, obtain freight insurance, and take care of all the bottlenecks for seamless forwarding.
They negotiate on your behalf with shippers for competitive prices to make it cost-efficient to transport goods. The costs can go down further when one customer’s LTL cargo is consolidated with another’s LTL freight for a full truck/container load.
Freight forwarders specialise in several specific services and enable you to choose the desired service you require them to handle. This gives you greater flexibility and control over the freight handling process.
Since freight forwarders are experts in the field and have the most up-to-date knowledge, they become a crucial part of your business when importing and exporting products. They help you with customs & documentation, handle taxes, and file insurance claims in case of damage or theft.
Potential Disadvantages of Freight Forwarding
Freight forwarders are typically the middleman, and aren’t actively involved in the transport operations. They don’t have control over what happens to the cargo onboard the ship, truck, container, or aeroplane.
Though the process sometimes is cost-efficient, however, some freight forwarding companies add high markup or commission fees. Thus, there’s no way to know the actual cost of shipment other than handling all the forwarding and documentation on your own.
Incompetency and ineptitude in freight forwarding can lead to shipping and product losses. Trusting the freight forwarding companies to handle everything sometimes can result in supply chain disruptions.
Is Freight Forwarding Right For You?
Freight forwarding offers an effortless way to meet your cargo shipping requirements and take your business to the next level. Be it international or domestic shipments, freight forwarders adorned with a vast network of shipping partners offer end-to-end solutions.
However, you need to find the right freight forwarding partners that understand your requirements to carry out the goods transport efficiently. PACK & SEND is a freight forwarding company in Australia you can rely on for all your overseas goods transportation needs.
We offer intermodal transport via road, sea, and air to ensure your consignment is delivered timely. Regardless of the size of the cargo to ship, PACK & SEND is equipped with the infrastructure to support and fulfil any size & volume of imports.