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The Role of Freight Forwarders in International Export Business

12 Feb 2013

Who is a freight forwarder?

A freight forwarder can be a person or a company, that dispatches the shipment or arrange carriers as well as space for it for a third party; a third-party here can be a person, a small size business or well-established commercial firm. Freight forwarders organize transportation for the goods, within country, outside the country or both.

Here are the top 5 typical functions performed by a freight forwarding company or a forwarder:

1. Give recommendations to the exporter

  • The Freight forwarder advice the exporters about their responsibilities and responsibilities as per law
  • They help the exporter in choosing the most affordable means of freight shipping; they also bargain for the best cargo shipping rates inland
  • They make the exporter choose the best way to ship their goods
  • Give marking and packaging recommendations
  • Give explanations of port functionality
  • Makes clear what tasks they would perform and what the exporter would require to perform during the shipping process
  • Check import license, when needed
  • Give advice on ways of receiving payment of exported goods
  • Inform in advance about the possible problems of freight shipping
  • Provide a complete estimate of export
  • Understand and organize Letters of Credit
  • They may help exporters get in touch with the experts of trades like international marketing, financing, international banking, marine insurance and government export
  • The majority of forwarders uses a library to learn about various ports in the respective country

2. Perform freight shipping operation

  • Make sure that the freight shipping is under control and the goods are safe while in transit
  • Speed up production and delivery
  • Channelizing the process of empty container to be sent/returned after filled in with the goods
  • Picking the right mode of transportation, and transporter
  • Determining the itinerary
  • Deal with booking and shipping of the shipment, which need special considerations like port of destination, ETA destination required, port of export, size and type of container, and the type / number of packages
  • Offer NVOCC consolidation facility to exporters for FCL and LCL modes

3. Documentation in International Freight Shipping

  • Notarizes and certifies the invoices on behalf of the exporter
  • A forwarder is also responsible for getting insurance certificate, inspection certificate, special customs invoices, and certificate of origin
  • Forwarders prepare dock receipts, lading bill, warehouse receipt, and AID documents
  • Some also assist or prepare commercial invoice, packing list, export license, drawback forms, consular invoices, draft and shipper’s export declaration for the exporters

4. Keep the Shipper Notified

  • Notices are usually sent to consignee, consignee’s broker, and shipper
  • Notify the exporter for insurance, L/C, contract, and payment
  • Track the shipment when need, and help the shipper fill claim and learn from the errors made earlier

5. Send documents for collection

  • Send documents to shipper’s international sales representative, consignee or their broker, and to bank

Before few years, there was a lack of awareness about the role of freight forwarding companies in the global freight shipping industry. Today, this gap has been filled and freight forwarders are considered a key person or entity in import and export business. With the growing difficulties in the intermodal transportation system, the role of freight forwarder becomes more crucial in the industry.