For eCommerce professionals wanting to scale up, it’s imperative to find ways to build out your business to reach new customers and expand into new territories. One of the most important considerations when moving beyond your current geographical area is finding a partner to support your logistics to ensure your goods make it to other areas.
This is where freight forwarding comes in.
What is freight forwarding?
Freight forwarding is the coordination and shipment of goods from one location to another via one or more carriers. It can include air, ship, rail, or highway carrier options. Freight forwarders essentially act as an intermediary between the company that makes or sells goods and their customers, shipping items to their final destination.
If you’ve previously not heard the term “freight forwarder,” you might wonder if it’s a shipping company, a distribution manager, or an import/export partner. A freight forwarder is none of these, but takes on many of their responsibilities.
Freight forwarders can support you in a number of ways, including:
- Warehousing or storage
- Getting your goods ready for shipment (by sea, air, road, or rail)
- Preparing any required documentation
- Purchasing cargo insurance as needed
- Booking transportation and making sure the transporter has all the necessary information and documents (such as bills of lading)
- Negotiating prices, routes, and schedules on your behalf to find the right balance between speed, cost, and reliability
- Tracking the shipment from dock to door
- Upon arrival at a warehouse or storage facility, breaking down the shipment into smaller shipments for delivery to various destinations in the market such as fulfillment centers
- Filing claims on the cargo insurance on your behalf should anything wrong
- And much more
Freight forwarding is an important part of the global trade economy, enabling goods to flow in a timely and systematic manner across borders and overseas. This is especially important for growing eCommerce businesses seeking to expand their target audiences on a global scale.
The principles of freight forwarding are based on the efficient and cost-effective transfer of goods, maintained in proper condition throughout their travels. To accomplish this, freight forwarders become experts in managing the logistics required to move goods to their destination on time.
Freight forwarders also negotiate tariffs and customs regulations, and are fluent in the requirements for shipping by land, sea, rail, and air. With this knowledge, they can manage the risks and benefits of shipping both nationally and internationally using the latest advances in information technology.
When to use freight forwarding
A freight forwarder isn’t necessarily required for importing or exporting goods, but it’s not a bad idea to partner with one if you participate in these activities. Why? Freight forwarding partners are experts in handling the mountain of documentation and regulations, which differ from county to country.
Could you simply use another logistics partner? Of course. But there are many advantages to using a freight forwarding company, especially if you don’t have in-house sources who are well-versed in international shipping procedures.
A freight forwarder handles ancillary services that are part of the international shipping business like insurance and customers documentation and declaration. They also provide support with:
- Non-vessel Operating Common Carrier documentation
- Bills of lading
- Risk assessment and management
- Methods of international payment
According to Export.gov, “whether a firm is large or small, the weight of the cargo light or heavy, the freight forwarder will take care of cargo from ‘dock to door’ if requested to do so.”
For small to medium-sized businesses, a freight forwarder reduces the burden of managing export and import logistics details, which is especially beneficial for lean teams. And, since freight forwarders often charge modest rates for their services and have access to shipping discounts, freight forwarding can produce a great return on investment in addition to delivering your goods to their destinations. Plus, there are lots of ways to further drive down those costs.
How to choose a reliable freight forwarding provider
Choosing a freight forwarder to support your business is a serious undertaking. This is a partnership that could potentially make or break your business, particularly as you seek to expand beyond borders. Think of a freight forwarder as a key business partner. You’ll need to be transparent with them, explaining your strengths and weaknesses so they can best support you. Remember, you need to trust this partner to oversee your money and care about your customers the way you do.
Research and compile all your options
Before you determine the right freight forwarder for your business, examine your business needs carefully. You have to know your transportation needs, the services your business will require, and the volume of goods you intend to ship. The right forwarder will help you grow your business while maintaining a personal level of contact with your end-users. By stating your unique needs to potential partners, you’ll quickly gauge who is the best fit for you.
A great partner will ensure you get the exact support you need and avoid paying for the services you don’t.
Consider industry experience
Does the freight forwarder you’re investigating have experience (or better yet, expertise) in your industry? All freight forwarders are able to move cargo, but they might not have specific expertise in your market or with your category of goods. Partner with a provider that has experts in your field so they can best serve your needs.
Measure their reach
It’s all well and good to find a partner who operates in your local area, but if they can’t access the regions you want to expand into, they’re of no help to you.
Your partner also needs to be located close to suppliers and customers, as well as be able to grow alongside your business.
The freight forwarder you choose should have global reach should you decide to scale your business, even if you don’t have an immediate need for international support.
Look for a variety of services
Put simply, you don’t want a one-trick pony. Discuss all aspects of your supply chain with potential freight forwarders to ensure they’re able to provide support on all the services you require.
This could include air freight, sea freight, road transport, and other logistics solutions like warehousing.
If a potential partner is exclusively local, they may also limit your customer range. If they have a narrow scope of services, they might not be flexible enough when it’s time for you to grow or expand your business.
Look for communication and customer service
Logistics can be a convoluted and tricky business, which means communication is key. Your provider should offer online tracking, timely notifications, and an account manager you can contact when you have questions or concerns or if anything goes off the rails (no pun intended).
You need to know, too, that your provider is prepared to make things right and work with you on solutions in the event things don’t go smoothly.
Don’t take any risks with risk management
Worldwide transportation can be unpredictable; many forces can impact your success, from natural phenomena to man-made situations. As such, you’ll need a freight forwarder that can mitigate risks and has the knowledge and contingency plans required to handle issues should they occur. Look for a partner who is proactive and will offer solutions in a timely manner.
One risk mitigation strategy is cargo insurance. Exposing your company to standard carrier liability could be a costly mistake, so ask what kinds of cargo insurance a freight forwarder offers.
Ask for references
It’s perfectly reasonable to ask for references from current or past customers. In a world where word-of-mouth still beats most other forms of marketing, obtaining references and gathering social proof on your shortlisted freight forwarders can help you find the best fit.
You’ll hear first-hand from other business owners exactly what works well and what doesn’t, and thus identify potential gaps to address before the paperwork is signed.
Check licenses, certifications, and permits
Freight forwarders require specific permits and documentation to handle your cargo, as well as special licenses for carrying sensitive and/or dangerous products. Make sure your potential provider has the appropriate licenses for you and that they’re up to date and posted publicly.
Permits and licenses mean a freight forwarding partner is legally authorized to move cargo and that the organization and its employees have met their through training, regulation, and more.
Licenses to look for
- Trucking and road freight forwarders must get their license through the Federal Motor Carrier Safety Administration (FMCSA).
- Ocean freight forwarders must get their license from the Federal Maritime Commission (FMC).
- Air freight forwarders aren’t subject to a federal license in the U.S., but will need training and a membership number from the International Air Transport Association (IATA). Air freight forwarders must also follow the rules of the Transportation Security Administration (TSA).
- Intermodal freight forwarders use two or more modes of transportation to carry goods. They require multiple licenses depending on where they operate, for example, licenses from the FMCSA and the FMC for operations on land and on water.
And here are a few certifications and other requirements we’ve heard more often:
FIATA is the International Federation of Freight Forwarders Association and offers two certification programs: one for freight forwarding and another for supply chain management.
If you work with a freight forwarding company to move your FDA-approved items, it’s imperative you ensure your partner can support you throughout the entire process with FDA-certified warehousing for your goods.
An FDA-certified warehouse is a storage location, food facility, or fulfillment center that’s registered with the FDA to store food, dietary supplements, drugs (prescription/medication), and other goods regulated by the FDA.
Worldwide Environmental Regulatory Compliance Solutions (WERCS)
WERCS serves as the bridge between manufacturers, regulators, and retailers. It collects the information you submit and tracks and matches it to various regulatory needs and other critical parameters. WERCS is required for handling consumable products (foods, vitamins, supplements, etc.).
Making sure your freight forwarding partners are up to date on all necessary insurance is just good business. Because freight forwarders are subject to the Carmack Amendment, they’re required to have special insurance permits to operate.
Good to know: The Carmack Amendment was first enacted in 1906 as an amendment to the Interstate Commerce Act and governs the liability of truckers and other carriers that transport interstate shipments and shipments between the U.S. and a foreign country. Carmack also supersedes any state law respecting carriers’ liability.
Don’t be afraid to ask for specifics about what your potential freight forwarder is insured for, and understand where their responsibilities end and yours begin to keep you and your cargo safe.
Top global freight forwarders
Countless freight forwarding companies are out there, which can make it challenging to narrow down a list. Nevertheless, we’ve gathered some of the top freight forwarders in the market today to help get you started.
Self-proclaimed supply chain experts, Agility Logistics has it all, with subsidiary companies offering airport services, eCommerce enablement, customs digitization, remote infrastructure services, fuel logistics, and even commercial real estate options to support customers in more than 40 countries worldwide.
Apex taps into breakthrough technologies and powerful trade lanes to enable you to focus on your customers instead of trying to navigate the logistics process. This full-service freight forwarder can support any and all of your cargo needs on your behalf, moving your cargo via air, sea, and road, and providing supply chain management and warehousing/distribution services nationally and internationally.
One of the top 10 transport and logistics companies in Africa, Bolloré provides transport, global supply chain, eCommerce, trade compliance, contract logistics, and even industrial project support in over 100 countries across five continents. The organization also prides itself on customer care and technological innovation through its proprietary LINK platform and integrated information systems.
Analyst firm Gartner called CEVA Logistics one of the most prestigious leaders in the logistics field. The firm provides air, ocean, and ground freight in addition to project logistics, customers brokerage, and more. Their specialized services are tailored to fit a variety of unique needs, including marine logistics with strategically located hubs worldwide, and the ability to move pharmaceutical and other products with stringent carrying requirements.
DACHSER’s 387 global locations mean their logistics capabilities are integrated along the full supply chain in efficient, intelligent ways. The company offers worldwide transport and warehousing networks so you can establish a strong presence in the most important procurement and sales markets in the world.
The logistics division of the German rail operator Deutsche Bahn AG, DB Schenker provides a variety of logistical and supply chain consulting services. These include eCommerce solutions, fulfillment and logistics, lead logistics services, and intermodal transport.
DHL offers a variety of services across the Asian Pacific, Europe, and North America to track cargo and provide customer service for its clients. You can rely on them for everything from eCommerce solutions and parcel shipment to global forwarding, freight, and supply chain solutions.
Denmark-based DSV provides worldwide warehousing and transportation solutions for North American and European companies seeking global supply chain solutions. Services include full or less-than truckloads, warehousing, order fulfillment, intermodal, air, sea, and train shipments, and supply chain innovation. DSV and Panalpina have joined forces to ensure greater efficiency for their customers.
Expeditors is a U.S.-based logistics company providing highly optimized and customized supply chain solutions. With a global network of more than 350 locations across 100+ countries on six continents, there’s nowhere you can’t reach with them.
GEODIS offers a variety of freight solutions for all types of national and international shipments, from air and ocean to overland freight carrying. The company has over 100 years of experience in cross-border trucking, short-distance solutions, barge and sea containers, and innovative flow management/control tower solutions.
One of the largest international logistics providers, Hellmann offers airfreight, sea freight, road, and rail as well as contract logistics solutions. Founded in 1871, the organization prides itself on having the best-fitting solutions, relying on future-oriented digital services that enable transparency and increase supply chain efficiency.
Japan-based Hitachi Transport System provides a comprehensive solution to its customers, with the ability to accommodate every type of cargo and merchandise. For more than 25 years, Hitachi has offered international freight forwarding, international ocean consolidation, domestic transport, customers house brokerage, warehousing, and much more.
Based in Japan, Kintetsu World Express (KWE) specializes in freight forwarding — air, sea, and other types — customers brokerage, logistics, and related business. In 1978, KWE was the first company in the Japanese logistics industry to implement IT-based export operations. Their self-developed, technology-powered solutions enable them to transport cargo seamlessly around the world and to provide data analysis and ongoing process revision to move freight as efficiently as possible.
Kuehn+Nagel provides transportation and fulfillment, supply chain management, and digital support in the aerospace, automotive, consumer, high tech, industrial, perishables, and pharma/healthcare industries. Their global network of more than 800 locations ensures your goods will make it anywhere in the world you send them.
With a heavily digitized offering, Maersk fits right into the eCommerce world with a suite of digital solutions including the Maersk Logistics Hub, a customized app, Maersk Flow (a supply chain optimization platform), and more. The company has developed solutions that meet customer needs from one end of the supply chain to the other. Their shipping services reach more than 300 ports around the world to connect businesses globally.
Nippon Express offers full supply chain solutions, freight forwarding, warehousing, and logistics support for customers around the world. Their one-stop business solutions integrate a variety of modes of transportation globally so clients can grow their businesses across borders.
Sinotrans is the second-tier subsidiary and single logistics platform for China Merchants Group. It aims to build a world-class business platform with intelligent logistics services. Sinotrans offers transportation solutions from warehousing to delivery.
Your neighborhood United Postal Service provides a full-service model, offering everything from day-to-day management of freight and logistics to unique solutions and critical insights that enable you to make more informed business decisions. With the ability to deliver nationally, internationally, and leverage multimodal transportation, UPS Supply Chain Solutions can meet virtually any business need.
Wrapping up — Find the right partner to oversee your freight forwarding
A freight forwarding partner can help you expand your business by providing cross-border servicing, warehousing support, cargo tracking, and so much more. Freight forwarding companies have extensive knowledge of and experience in moving a variety of cargo types around the nation and world so you can focus on your expertise: building your business.
Want help choosing the right freight forwarder for your business? MyFBAPrep are experts in eCommerce logistics, having built up eCommerce businesses ourselves. Get in touch today to see how we can help.