Managing Your Supply Chain With Freight Forwarding
If you bought something, a truck brought it – such is the significance of freight forwarding not just to movement of consumer goods, but to the whole economic system in general. Freight forwarding is the circulatory system of the economy, the tie that binds and connects disparate points of manufacture, storage, distribution, and consumption.
Freight forwarding companies are agents that hold out services so that its clients (shipper or consignee) can easily plan and execute the transport of goods across states or across international borders. This allows the shipper to save time and effort and concentrate on its core business, versus the amount of logistics which would be needed if it were to ship the goods by its own means.
Modes of transport
Forwarding freight very often covers vast distances, bringing goods from afar to a local supply chain. Freight forwarding sometimes involves crossing international borders, requiring freight to be moved via different modes of transportation – by airplanes, ships, trucks, and trains.
The dynamics of freight forwarding involve the transportation of goods from the manufacturer or producer (the shipper) to the final point of distribution (to a consignee) through a carrier. The freight forwarder may not necessarily be a carrier – the forwarding agent is an expert in supply chain management, while the carrier is a transportation company licensed to move such goods.
Freight or cargo can be shipped over a single mode of transportation or in a combination of different modes (often called intermodal transport). For example, freight forwarding between two points in continental US may be over the road by a trucking service or by cargo trains, while shipping from the US to a point in Asia may need goods to be carried over the road, rail, air, or ocean lanes.
Domestic and international freight forwarding
Domestic freight forwarders in the US are required to register with the Department of Transportation’s Federal Motor Carrier Safety Administration. Carriers need to comply with DOT rules regarding the handling and transportation of goods within US jurisdictions. Among other requirements, forwarders may need to get special licenses, business certifications, and various other compliance requirements of the government.
International freight forwarding to or from the US via ocean transport need licensing from the Federal Maritime Commission. Such forwarders must be licensed by the agency as Ocean Transportation Intermediary. On the other hand, freight forwarders that handle international air freight are regulated by the International Air Transport Association, and must obtain an Indirect Air Carrier certification from the US Department of Homeland Security.
Responsibilities of freight forwarding companies
In exchange for shipping fees, freight forwarding services transports products to its destination point at a predetermined time, in a safe and secure condition. These companies are typically third-party providers, bridging the supplier and consumer. They either operate their own carrier fleet, or contract transportation to a duly-licensed cargo forwarding company. Freight forwarders may also operate an extensive network of warehouses and stations for its services.
The forwarder is responsible for all logistical requirements involved in the transfer from shipper to consignee. The forwarding company takes care of the paperwork, bills of lading, customs paperwork for international shipments, export declarations, security certifications, and other documentation required by government authorities.
International shipping can prove to be a logistical nightmare to a small company, so it may be a cost-effective solution to contract a forwarding company knowledgeable in this process.
Your company needs freight forwarding services when…
• The logistics involved in moving goods by your own means (e.g. company vehicles) disrupts your core business
• Moving products results in too much paperwork and micromanagement by your company
• You have no specialized equipment to transport your own freight
• You are not familiar with government regulations and international treaties on freight forwarding