Freight forwarder costs directly affect the business of wholesalers and retailers. The cost of delivery, the manner of travel, the transportation unit, and other shipping costs determine the price at which wholesalers buy products and, in turn, will influence the price that retailers will set for their customers. To have a better appreciation of this segment of the business, you need to ask these questions – what is freight forwarder? What are the types of freight forwarder services to take note of?
What is Freight Forwarding?
Freight forwarding is a business model that is concerned with the import and export of goods. In its simplest sense, freight forwarding means taking all the processes to transfer a type of good or product from one country to another.
The freight forwarding business is very profitable. It may have a huge overhead but it does give a quick return on investment. This business model, in its simplest sense, means to deliver a unit of product from one area to another. But freight forwarding becomes overly complicated when local and international laws are set in.
What is Freight Forwarder?
So, what is freight forwarder A freight forwarder is a person or company that provides all the necessary logistical support to move a product from its point of origin to its point of destination. The freight forwarder services will usually start with the collection of the products from the supplier. The products will be gathered at a central location and will be loaded onto a mode of transportation that is bound for the destination country. The forwarder will also take care of all the documentation involved in the process.
When the products arrive at the destination country, the freight forwarder will again take charge of delivering the products to its final destination. The forwarder will also take care of all the necessary customs clearance and other legalities involved in the process.
Types of Freight Forwarder Services
A freight forwarder sets up the shipping of goods. A company may have two or more supply chain services that it offers to its clients. These types include:
Preparation of documentation
A country where the goods originate from has a different set of government laws with regard to shipping. The country where the goods will be delivered will also have a separate set of rules to follow.
The freight forwarder needs to comply with both sets of regulations in order to deliver the products to its clients. Not following these laws will entail business repercussions like loss of opportunity, penalties, additional taxes, and loss of customers.
Ocean or air freight scheduling
Huge cargos need to be transferred via airplane or boat. Freight forwarders make the necessary schedules needed to accommodate the shipment. Air or ocean transportation are usually third-party contractors. They need to schedule the shipment with a lot of lead time in order to make sure that goods are transferred according to plan.
Items that are received whether on-shore or at the airport still need to be delivered to inventory warehouses or company shops. The freight forwarder also takes the task of ensuring that the truck that receives the shipment is on time to receive the cargo from the boat or airplane.
Consolidation and deconsolidation
The freight forwarder is the point person concerning the communication with local authorities. He will have to consolidate all the documents upon leaving the origin of the product and deconsolidate them upon arrival at its destination. The freight forwarder should be well-versed with local laws so that they are prepared to deal with international authorities.
Most of the time, companies overlook the importance of the various aspects of the industry which do not directly concern them. This becomes the main question -what is freight forwarder? It is the inquiry that wholesalers ask more than retailers and manufacturers. But it is still good to know the background of these business models to have a better understanding of the processes that items have to go through in order to be shipped from one country to another.