What is a Freight Forwarder and Do You Need One?
As an importer working with manufacturers in Asia, you have to think about logistics.
How will your product move from a factory across the ocean all the way to its final destination?
There are quite a few steps in the process. It involves various shipping companies and modes of transport. These can include ships, airplanes, trucks, and railroads.
Putting all the moving pieces together requires the work of an expert. Enter, the freight forwarder.
What is a Freight Forwarder?
A freight forwarder is a company that arranges for the storage and shipping of your products.
A forwarder does not move your products themselves. Rather, they hire different companies to work together. They are experts at finding the best pricing and timing to move freight.
What do they handle? According to BusinessDictionary, the services they tend to offer include:
- Tracking inland transportation
- Preparation of shipping and export documents
- Booking cargo space
- Negotiating freight charges
- Freight consolidation
- Cargo insurance
- Filing insurance claims
Handling all of this yourself would be a daunting task. That’s why it makes sense to enlist the help of a firm that specializes in this area.
If you don’t already have a relationship with a freight forwarder, you can leverage your supplier’s relationship.
Should You Use Your Factory’s Freight Forwarder?
Your factory likely has their own relationship with a forwarding agent.
When importers first start their businesses, they often decide to go this route as it greatly simplifies things. However, if you do this, you’re likely paying a premium for their services.
Oftentimes, suppliers are not transparent about the costs involved. They may be getting volume discounts and not passing those discounts on to you.
Another problem is that if you’re working with more than one factory, the situation becomes complicated.
Another option can be to enlist the help of your inspection services partner.
Should You Use Your Inspection Service Provider’s Freight Forwarder?
Perhaps you’re doing pre-shipment inspections and working with an inspection services company.
If so, you may find that they have a relationship with a forwarding agent.
At Insight Quality, we have such a relationship. Because we work with so many different customers, we’re able to get volume discounts.
Our goal is to pass those discounts on to our customers.
Other quality inspection companies may operate in a similar fashion. So, it can be a good idea to look into your inspection partner’s services.
This is ideal for importers who aren’t doing high volumes or aren’t ready to establish a relationship on their own.
Establishing Your Own Relationship With a Freight Forwarder
As your volumes and experience grow, you may want to reach out to freight forwarders yourself.
What should you look for in a forwarder?
When reaching out to different companies, you should note how responsive they are. If they are responsive to your inquiries they will likely be better to work with.
Also, you may want to consider their experience with your industry or with light goods. There are forwarding agents that specialize in different areas, such as chemicals, agriculture, and perishable goods.
If you’re shipping low volumes, you may be able to work with a company that specializes in LCL (less than container loads).
With some time and effort, you can find the appropriate partner for your company.
Freight Forwarders Play an Important Role in International Trade
Remember that, as an importer, you have to think about how your goods will move from overseas to the country of importation.
Freight forwarders manage the complexities that come with this.
At the start, you can leverage your factory’s forwarding agent. This allows you to keep things simple.
You may also be able to use your inspection service provider’s forwarder if they have one. This can allow you to take advantage of their volume discounts.
As you grow, it may be appropriate to establish your own relationship with a freight forwarder. Look for one that is responsive, specializes in your product, and handles customers of your size.
If you need any assistance with freight forwarding services, reach out to us.
Recommended Reading – The Sourcing Process: Step by Step
The entire sourcing process – from sourcing agent to shipping – aims at finding, evaluating, and engaging suppliers of products.
Download this free guide to get a clear picture of sourcing and how all of the pieces fit together to ensure the delivery of quality products to the end user.