What Is Freight Forwarding? (Key Stages, Types, and More)

Freight forwarding companies typically offer several services related to organizing your shipment, including:

• Shipment Tracking: Keeping track of shipments and ensuring the products arrive on time.
  
  
• Customs Broker: Managing and submitting all the documentation required for import and export processes according to respective customs compliance. This includes the bill of lading (a legal document with details of the goods), customs clearance, and commercial invoices. They also handle document transfer fees.
  
  
• Warehousing: Providing storage units for warehousing through company-owned units or ones operated by a locale affiliate.
  
  
• Negotiation: Negotiating prices and arranging the best mode of transport to get the shipment delivered on time.
  
  
• Cargo Space Scheduling: Coordinating and managing cargo logistics, like shipment transits and container load arrangements.
  
  
• Supplying Cargo Insurance: Providing and selling cargo insurance policies that cover financial loss caused by stolen or damaged goods.
  
  
• Consolidating Freight: Consolidating multiple LCL (Less than Container Load) consignments (batches of goods for shipping) to provide a cost-friendly shipping option. Also helps to maximize cargo space.

Now, let’s look at what the freight forwarding process involves.

1. Export Haulage

The first step in forwarding is export haulage — which is receiving the product from the client. 

An affiliate carrier transports the products from the client to the freight forwarder’s warehouse. Modes of transportation may vary depending on the product type and distance to the warehouse.

2. Export Customs Clearance

The next stage is ensuring the cargo is cleared to leave the country of origin.

What papers do you need for export customs clearance?

Don’t worry. The freight forwarding company takes care of it. They’ll provide all the necessary paperwork to the customs agent. The agent then checks the legality of the items and whether it aligns with the information in the shipping documents.

3. Items Checkpoint

Also known as origin handling, this step is carried out once the items are ready for transport. 

The shipping company must ensure the products are in good condition. They’ll also confirm whether the items match the booking description and whether they’re accepted in the target location. 

But wait, weren’t the products already cleared for shipment?

Yes, but for an international shipment, the cargo needs to comply with the restrictions placed by the country of origin and its destination. 

For example, flammable liquids, drugs, alcohol, and sharp objects have strict regulations due to potential safety hazards.

4. Import Customs clearance

Once the consignment arrives at the target location, the local authorities will go through the paperwork given by the freight broker. 

They’ll confirm if the items match the description and meet the legal requirements to enter the country. Sometimes, the immigration officer might impose fees that the freight forwarding company will cover.

5. Destination Arrival and Handling

After the shipment has been cleared, another transportation team assigned by the freight forwarder will prepare the products for import warehousing. 

They’ll keep the products at a designated storage location under customs supervision.

The local forwarding team will inspect the items and provide the customs documentation needed, including the air waybill, invoices, export packing list, certificate of origin, etc.

6. Import Haulage

The final stage is complete when a local carrier ships the consignment from the import warehouse to the receiver. 
‍
But here’s the deal:

Shipping can take between a few hours to days after leaving the warehouse. It depends on the type of item, mileage, and mode of inland transportation.

Let’s look into what forms of transport these freight forwarding services typically use (and how fast they are).

An international freight forwarder relies on different modes of transportation to ship goods worldwide. 

The four common types of freight transportation include: 

• Air Freight: Transports cargo by air shipment — this is the fastest form of overseas transport.
  
  
• Ocean Freight (or Sea Freight): Transport cargo by sea. It can carry large loads, but it takes longer than air freight.
  
  
• Rail Freight: Carries large or oversized shipping items via train or railway. It’s cheaper than air and ocean freight but can’t carry shipments overseas.
  
  
• Road Freight: Transports items by modes of inland transportation. It’s great for short-distance international trade routes (between ports or neighbouring countries).

Sometimes, a freight forwarder may require multimodal transport — which involves using more than one mode of transport to convey goods. It helps reduce transit time and costs.

Now, let’s look at some popular international freight forwarders and what they offer.

Below, you’ll find a list of some of the top freight forwarding companies and their freight shipping services:

DHL Supply Chain & Global Forwarding:

• Offers a mobile app to track freight shipments.
• Takes care of customs compliance with the help of their customs broker.
• Provides cargo insurance that covers the full value of goods.

‍Hitachi Transport System:

• Ships products worldwide and has an online tracking system.
• Offers solutions for dangerous and hazardous cargo logistics, from ensuring legal compliance to proper packaging and storage.
• Provides multimodal transport services for cross-country shipping with global freight partners.

‍CEVA Logistics:

• Provides freight forwarding services based on different sectors like automobile, sales and retail, healthcare, etc.
• Offers expert customs brokerage services (prepares customs documentation, has customs brokers, etc.) across tariffs and customs laws with up-to-date information.
• Offers a contract logistics service for a long-term forwarding partnership.

‍Kerry Logistics:

• Has extensive ground support and local expertise across the globe, including China, Southeast Asia, India, the Middle East, and Latin America.
• Helps manage records like media tapes, deeds, and documents.
• Offers industrial project logistics services like expediting, on-site surveys, and pre-shipment inspections.

‍UPS Supply Chain Solutions:

• Offers end-to-end logistics solutions with the help of a supply chain and tracking platform — UPS Forwarding Hub.
• Provides warehousing options across all their branches worldwide.
• Has a freight consolidation option for effortless customs clearance.

As you can see, there are plenty of reliable shipping companies in the global freight forwarding market. 

However, you must first weigh the pros and cons of working with one before choosing a freight shipping company.

Like any logistic service, freight forwarding has its benefits and drawbacks. You can find a list of the biggest pros and cons below.

Pros:

• Freight forwarders offer competitive pricing based on services needed by the client, especially when compared to handling it yourself.
• They usually specialize in a specific service, mode of transportation, or market and know all the ins and outs associated with international trade.
• They have the most up-to-date information on customs regulations.

‍Cons:

• You have no control over the supply chain or what happens during transport.
• You can expect an added service markup.
• Items occasionally get lost or damaged during transport. (Though, this may happen regardless of using freight forwarders.)
  ‍

Now, let’s look at some FAQs related to the freight forwarding industry.

Here are answers to some questions you may have about freight forwarding:

1. What Industries Use a Freight Forwarder?

Freight forwarding services are used by most industries across the globe, especially those involved with international shipping and distribution. 

Examples of industries that use a freight forwarder are:

• Automotive industry
• Pharmaceutical industry
• Construction industry
• Medical or healthcare industry
• E commerce industry

Sometimes, even small businesses use a freight forwarder to handle their international shipment.

‍

2. What Are Document Transfer Fees?

A document transfer fee or document handover fee is a part of ocean freight charges. It’s charged to international freight forwarders, Non-Vessel-Operating Common Carriers (NVOCCs), and customs brokers for the transfer of documents.

It's paid by the importers at the immigration port of dispatch in the International Commercial Term (incoterm) and by the exporter at the port of origin’s Incoterms.

‍

3. How Does a Freight Forwarder Manage Their Operations?

With so many stages involved in forwarding freight, keeping track of operations is important. Companies can do that with the help of freight forwarding software like Shipthis.

Freight forwarding software helps logistics companies streamline operations and manage the entire shipping process. It allows a shipping company to track cargo locations, create automated shipping documents and invoices, and oversee global trade projects.

With Shipthis, freight forwarders can:

• Manage multimodal freight operations with ease
• Generate invoices and documents
• Optimize workflow productivity with detailed graphics and analytics

‍

Should You Employ a Freight Forwarder?

Freight forwarding could be your company’s solution to logistics issues. It handles the shipping process, deals with customs regulations, and ensures your items reach their destination on time.

Just make sure your freight forwarding service provider manages their operations with a powerful tool like Shipthis.

Shipthis is an AI-driven freight forwarding software that helps with operations management and lets you gain complete visibility of your projects.

If you’re a freight forwarder, discover how Shipthis can help streamline your business by booking a free demo today.