What Is Freight Forwarding?

February 21, 2024
14 min read

The ability to efficiently move goods across borders is paramount for businesses aiming to tap into global markets. This is where freight forwarding comes into play, serving as a vital component in the machinery of international trade. 

For small and medium-sized enterprises (SMEs) looking to understand and leverage the complexities of shipping and logistics, grasping the essence of freight forwarding is the first step towards unlocking opportunities for growth. 

This article aims to demystify 'what is freight forwarding' by outlining its role, services, and benefits and explaining how it simplifies the complexities of global trade networks. This understanding is crucial for empowering eCommerce businesses to expand and scale new heights in the international market.

What Is Freight Forwarding? Definition and Role in the Supply Chain

Freight forwarding refers to the specialised service that acts as an intermediary between businesses wishing to ship goods and the transportation services that carry out the physical movement of cargo. 

This service encompasses various tasks, including but not limited to:

  • Negotiating with carriers
  • Preparing shipping and export documents
  • Booking cargo space
  • Negotiating charges
  • Freight consolidation
  • Cargo insurance
  • Customs clearance

The main job of a freight forwarder is to optimise the logistics of shipping goods from one point to another, ensuring efficiency, cost-effectiveness, and compliance with international shipping laws and regulations. They leverage their expertise and network to select the best routes and transportation modes based on the unique needs of their clients.

Historical Context and Evolution of Freight Forwarding

The concept of freight forwarding has been around for centuries, evolving from the days of camel caravans and maritime trade routes to today's complex, technology-driven logistics networks. Initially, the role was to arrange for the transportation of merchandise by contracting with various carriers on behalf of merchants. This was a crucial service, especially for long-distance trade, where multiple modes of conveyance and routes were involved.

With the advent of the Industrial Revolution and the expansion of global trade, the demand for these services grew exponentially. The introduction of railroads, steamships, and later, air and truck transport, expanded the reach and speed of cargo movement, necessitating more sophisticated logistics and coordination.

In the 20th century, the globalisation of trade and the advent of containerisation transformed freight forwarding into a highly specialised and technology-driven industry. These elements revolutionised cargo shipping, allowing for more secure, swift, and easier-to-manage transportation of goods. This enabled the expansion of international trade routes and the emergence of global firms.

Today, freight forwarders leverage sophisticated technologies such as artificial intelligence (AI), Internet of Things (IoT), and blockchain to enhance supply chain visibility, improve efficiency, and reduce costs. These advancements enable real-time tracking of shipments, automated document processing, and predictive analytics for route and transportation mode optimisation.

The Freight Forwarding Process

This step-by-step guide illuminates the journey goods undergo from the moment they leave the manufacturer to their final destination, highlighting the pivotal role of freight forwarders in ensuring a smooth transit.

1. Export Haulage

The first step involves moving the items from the seller's premises to the forwarder's warehouse, typically by truck or rail. The duration of this phase can range from a few hours to several days, depending on the distance between the origin and the forwarder's facility.

2. Export Customs Clearance

Before goods can leave the country of origin, they must be cleared by customs. This stage requires the preparation and submission of documentation that proves the exportation is compliant with regulations. Freight forwarders often handle this process, leveraging their expertise to ensure all paperwork is accurate and submitted timely.

For a deeper dive into the topic, explore our detailed discussion on types of export documentation.

3. Origin Handling

Origin handling encompasses several activities, including unloading, inspecting, and validating the cargo against its booking documents. This phase is managed by the freight forwarder or their agents, ensuring that the items are correctly prepared for shipment, consolidated with other consignments (if applicable), and loaded onto the chosen mode of transport.

4. Import Customs Clearance

This process takes place upon arrival in the destination country. It involves the submission of documents to prove that the imported goods comply with the receiving country's regulations. Freight forwarders or their local agents facilitate this process, ensuring that all duties, taxes, and fees are accurately calculated and paid.

5. Destination Handling

Destination handling involves the receipt of shipment documents, unloading of cargo from the transport vessel, and its transfer to the warehouse. During this stage, the freight forwarder coordinates the inspection, customs clearance, and delivery preparations, ensuring the goods are ready for the final leg of their journey.

6. Import Haulage

In this final step, the cargo is delivered from the destination warehouse to the buyer's premises. This can be completed by road, rail, or a combination of transport modes, depending on the final destination's location relative to the port of entry.

Explanation of Incoterms

Integral to the entire process are the International Commercial Terms, or Incoterms, which outline the responsibilities of sellers and buyers in delivering goods under sales contracts. More specifically, these determine who bears the responsibility for financing and overseeing the shipment, insurance, documentation, customs clearance, and other logistical tasks. By selecting the appropriate Incoterm, enterprises can significantly influence the cost-effectiveness and efficiency of their shipping operations.

For instance, EXW (Ex Works) places the maximum obligation on the buyer, making it a favourable option for sellers, whereas DDP (Delivered Duty Paid) represents the opposite, with the seller assuming most of the responsibility and risk. 

Types of Freight Forwarding Services

By understanding the different types of freight forwarding services, eCommerce businesses can make informed decisions that align with their shipping requirements, budgets, and timelines. Here’s an overview of the primary options available:

Type Description
Sea/Ocean FreightA prevalent method for international shipping due to its cost-effectiveness and capacity to handle large volumes of goods.Ideal for non-urgent shipments. Includes Full Container Load (FCL) for single shippers and Less than Container Load (LCL) for shared container space.
Air FreightThe quickest method of transportation, perfect for urgent shipments, high-value items, or goods requiring strict temperature control.  More expensive but offers quick delivery and high security. Commonly used for electronics, pharmaceuticals, and fashion goods.
Road FreightVersatile and flexible for short to medium distances. Suitable for door-to-door deliveries, accommodating a wide range of goods. Options include Full Truck Load (FTL) for single shipments and Less than Truck Load (LTL) for cost-sharing among multiple cargoes.
Rail FreightEfficient and eco-friendly for large volumes over long distances. Often used in combination with other modes. Ideal for bulk commodities like agricultural products, minerals, and automotive parts.
Multimodal SolutionsCombination of two or more transportation types for flexibility, cost savings, and potentially reduced transit times. Requires careful coordination. Examples include sea to port, rail to the distribution centre, and road to final destination. Excellent for freight forwarders managing logistics transitions.

Key Benefits of Freight Forwarding for eCommerce Businesses

Freight forwarding offers a plethora of advantages for businesses. Importantly, these benefits not only streamline logistics operations but also contribute to the overall growth and scalability of eCommerce ventures. 

Cost-efficiency and Economies of Scale

Freight forwarders negotiate lower rates with carriers due to the volume of shipments they handle, passing on the cost savings to their clients. This allows even SMEs to benefit from competitive shipping rates that would otherwise be unavailable to them. Additionally, by consolidating shipments, they can achieve economies of scale, further reducing transportation costs and making overseas shipping more accessible and affordable.

Flexibility and Scalability

The dynamic nature of eCommerce necessitates a strategy that can adapt to changing company needs and market demands. To this end, freight forwarders provide the flexibility to scale operations up or down based on seasonal fluctuations, market trends, or business growth. This adaptability ensures that enterprises can respond swiftly to market opportunities without being constrained by fixed logistics capacities.

Expertise in Logistics and Customs Procedures

Navigating the complexities of international shipping regulations, customs clearance, and documentation can be daunting. Freight forwarders bring a wealth of knowledge and experience in dealing with these challenges, ensuring compliance with international laws and regulations. This expertise minimises the risk of delays or penalties at customs, facilitating a smoother flow of goods across borders.

Risk Management and Insurance

Shipping goods globally involves various risks, including damage, loss, or delays. By assessing the risks associated with different shipping routes and modes of transport, freight forwarders can advise on the best strategies to mitigate potential problems. Furthermore, comprehensive insurance coverage provides financial protection, ensuring peace of mind for businesses and their customers.

Integration With eCommerce Platforms and Fulfilment Services

In today’s digital age, the integration of freight forwarding with eCommerce platforms and fulfilment services is a significant advantage. Real-time tracking, automated updates, and efficient order processing are just a few examples of how it can provide a cohesive fulfilment process. This enables seamless logistics operations, from order placement to delivery. 

Choosing the Right Freight Forwarder

The right partner can enhance operational efficiency, reduce costs, and improve customer satisfaction. Here are some critical factors to consider when choosing a freight forwarder:

Accreditation and Certifications

Accreditations and certifications are indicators of their commitment to industry standards, regulatory compliance, and professional excellence. Look for a company with recognitions such as Authorised Economic Operator (AEO) status, which signifies secure and efficient customs procedures. Other important certifications may include ISO standards for quality management systems and environmental management, indicating their adherence to best practices in operations and sustainability.

Network and Global Reach

The extent of their network directly impacts their ability to manage shipments efficiently across global trade routes. One with a broad network of agents and partnerships worldwide can offer more route options, competitive rates, and local expertise in customs and logistics. This global reach is crucial for timely deliveries and for navigating the regulatory landscapes of different countries.

Technology and Tracking Capabilities

A company that leverages advanced technology for shipment tracking, inventory management, and automated documentation can offer greater transparency and control over the shipping process. Real-time tracking capabilities allow eCommerce businesses to monitor their shipments closely, providing valuable information for customer service and operational planning.

Customisation and Customer Service

Every eCommerce business has unique logistics needs based on its products, markets, and business model. A partner that offers customised solutions and demonstrates flexibility in accommodating specific requirements will be valuable. Exceptional customer service, including proactive communication, responsiveness to inquiries, and problem-solving capabilities, is also essential for managing the inevitable challenges of overseas shipping.

Case Studies or Testimonials

Evidence of their success in handling logistics challenges can be found in case studies and testimonials from current or past clients. These insights can provide a realistic view of the company's capabilities, reliability, and customer service approach. Look for examples that are relevant to your industry or logistics needs, as this can indicate their experience in addressing similar challenges.

Freight Forwarding Challenges and Solutions

While offering substantial benefits, freight forwarding is not without its challenges. Understanding these obstacles – and the solutions forwarders employ to overcome them – is pivotal for eCommerce businesses aiming to streamline their logistics operations.

Challenge DescriptionSolution
Managing Logistics in a Pandemic-Affected WorldThe COVID-19 pandemic has underscored the vulnerabilities in global supply chains, from disruptions in manufacturing to delays in transportation and increased shipping costs. These challenges have highlighted the need for flexibility and resilience in operations.They have responded by diversifying their transportation routes and modes, leveraging technology for better visibility and control over shipments, and developing contingency plans to address disruptions. This adaptability ensures that eCommerce businesses can maintain operations even in the face of unforeseen global events.
Sustainability in Freight ForwardingThe environmental impact of logistics and transportation is a growing concern, with businesses and consumers increasingly demanding sustainable practices. Reducing carbon emissions and minimising waste in the supply chain are now critical objectives for companies worldwide.Forwarders are adopting green practices, such as optimising shipment routes to reduce fuel consumption, utilising eco-friendly packaging materials, and investing in carbon offset programs. Additionally, the shift towards electric and alternative fuel vehicles in transportation fleets is contributing to a more sustainable freight industry.
Technological Advancements and Digital TransformationThe rapid pace of technological change presents both opportunities and challenges for freight forwarding. Adopting new technologies is essential for improving efficiency and meeting the evolving expectations of businesses and their customers.Freight forwarders now implement advanced technologies such as blockchain for secure and transparent transactions, AI and machine learning for predictive analytics and route optimisation, and IoT devices for real-time tracking of shipments. These advancements enable them to offer more reliable, efficient, and customer-focused services.

Elevate Your eCommerce Logistics With Bezos

Bezos stands at the forefront of revolutionising how SMEs manage their logistics, offering a bridge to the vast opportunities of international trade. Simply, all the complexities of freight forwarding become a streamlined, efficient process, empowering your business to expand its horizons without the logistical headaches.

Why Choose Us for Your Freight Forwarding Needs?

  • Expertise at Your Fingertips: Leverage our deep understanding of global logistics to ensure your products reach their destination efficiently and reliably. Our network spans 63 fulfilment centres across 16 countries, including key markets in the UK, Europe, Australia, New Zealand, the US, and Canada, providing unparalleled access to global trade routes.
  • Cost-Effective Solutions: Save £1 to £2 per order and up to 80% on international shipping costs. Our AI-driven technology identifies and resolves issues automatically, ensuring a smooth and cost-effective delivery process.
  • Unmatched Customer Support: Experience five-star customer support with a dedicated account manager. We're committed to transparency and excellence, responding to tickets within two hours because we value your time and business.
  • Real-Time Visibility: Track your order fulfilment end-to-end with full transparency. Our intuitive platform offers powerful reporting functionality, real-time inventory tracking, and easy management of returns, giving you complete control over your operations.
  • Flexibility and Scalability: With no long-term contracts, hidden fees, or minimum order volumes, Bezos offers the flexibility to grow your business at your pace. Our infrastructure is designed to scale with you, providing multiple delivery options to increase sales by 10-50%.

So, what are you waiting for? Take the first step towards transforming your eCommerce logistics by getting your free quote today. 

Conclusion – What Is Freight Forwarding? 

Freight forwarding stands as a critical component in global eCommerce, offering businesses a pathway to navigate the complexities of international logistics with ease and efficiency. From understanding the multifaceted process to selecting the right service provider, this guide has equipped businesses with the knowledge to make informed decisions that align with their needs and growth ambitions.

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