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Important Terms in Freight Forwarding
Freight forwarding is an essential part of the logistics involved with contemporary international trade, but it's not an area the average citizen knows much about. If you're attempting to employ a freight forwarding service, many companies offer free rate quotes on their websites, but first you should familiarize yourself with the terms and concepts used in the industry. What follows is a list of the most commonly used terms that might trip up the casual reader.
Freight Forwarder - An individual or company responsible for arranging shipments of containers from one party to another, domestically or internationally. A forwarder handles all logistics issues and ensures compliance with the law. They may or may not also act as a carrier.
Carrier - A company responsible for dispatching vehicles to transport cargo from one location to the other. This can be accomplished by sea, land, air, or any combination of these.
Customs Broker - An agent in the U.S., licensed by the Department of Treasury experienced in all aspects of customs clearance issues, including import and export licenses.
Customs Bond - Required by the U.S. Customs Service to ensure payment from importers. Also called surety bonds, these come in two types, single entry and continuous. The relatively cheap single entry bond covers a single transaction; the quite costly continuous bond covers all transactions by an importer at all U.S. ports during a one-year period.
Customs Entry - A form required for all containers entering the U.S., describing all incoming goods and all fees associated with it.
Cartage - The act of hauling goods from one location to another. This can encompass every method from trucking cargo on land to transporting via airplane.
Liner - A type of ship employed to transport large amounts of cargo across the ocean.
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Freight forwarders do not actually move freight. Rather, they act as an agent and intermediary, assisting companies in finding the right shipping service for their needs.
Using a freight forwarder simplifies logistics. The company will handle arrangements with all of the required transport companies for any trip. They have arrangements with trucking companies and air cargo businesses alike. Freight forwarders may also help with import and export regulations and clearing customs.
They may also offer advice on logistics and help determine the best route and whether goods should be moved by air or sea. They are often particularly important when it comes to ocean shipping. Although their services are not cheap, they ensure that the client gets a good deal from all of the carriers and does not have to worry about the costs associated with handling their own shipping. Costs such as vehicle maintenance and container rentals can all be handled by the forwarding company and the carriers it works with.
Freight forwarders may have standard rates, but often offer services on a competitive quote basis. They often develop long term relationships with specific carriers and airlines. These relationships can allow them to get cheaper service, although they do take their own markup.
Using a freight forwarder to handle cargo shipping, however, is worth it for many companies in terms of the time saved. They also often deal with insurance, warehousing and risk assessment. They are particularly useful when a business lacks the in-house resources to understand the varying regulations that affect long distance and international freight.