Without international freight forwarders, shippers would be forced to absorb the overwhelming logistical burden of supply chain management. If that were to happen, it would drastically reduce the wherewithal of shippers to perform their key role in the global marketplace, selling commodities. In this post, we'll cover what it is exactly that makes freight forwarders so critically indispensable to shippers, and to the whole of global trade as we know it.
The world of international trade begins each day with the plot for an action-packed blockbuster starring Jason Statham. There are billions of dollars at stake and the welfare of global economies literally hanging in the balance, political implications galore, and if bureaucracy bores you, its relentless and arduous voyages characteristically entail very real risks of physical danger.
Without a doubt, international trade is exciting stuff.
Then there’s freight forwarding—perhaps the most highly specialized niche in logistics and supply chain management, and also the most unseen. That’s alright, though. For the most part, freight forwarders are happy to stay behind the scenes, acting as the invisible hand of international shipping. But unlike economist Adam Smith’s "invisible hand," freight forwarding is not an automatic force—it is manual, requiring administrative know-how, customs expertise, and strategic, hard-wrought networks of shipping partnerships.
Defining Freight Forwarding
Freight forwarders are sometimes loosely referred to within the industry as "travel agents for cargo," or “architects of transport.” For pocket-sized phrases, these are pretty accurate descriptions. Like a travel agent, a forwarder schedules and coordinates trips for cargo, and draws up all necessary documentation to ensure the trip proceeds smoothly. As architects, they are tasked with plotting and constructing connections between points on their 'blueprints,' which for freight forwarders, are maps of product and information flows within complex supply chains. In short, freight forwarding entails the scheduling, coordination, and documentation of intermodal transportation for cargo on behalf of shippers.
Let’s take a look at some of the ways freight forwarders keep the wheels of international trade turning:
Customs brokerage is highly nuanced. Producing documentation that’s up to snuff with customs regulations requires meticulous attention to detail and a wealth of knowledge about international laws. Plus, you need a license to do it. These days, many forwarders are also customs brokers, making them your one-stop shop for all your logistical needs. A forwarder will also provide strategic consultation to exporters regarding compliance standards, marking and packaging, potential obstacles facing their shipment, and more.
Flights and ocean voyages are not the only connections freight forwarders proffer. They also build and maintain relationships between carriers, shippers, port officials, and other forwarders. Good relationships facilitate expeditious shipments, and also lend themselves to the improved likelihood of favorable shipping rates. So, not only do forwarder relationships limit overall friction between the stages of a supply chain, but they can also add bottom-line value to it. Without healthy partnerships, it would be nearly impossible to compete in the market with shipping giants such as UPS and FedEx, which makes networking one of the most valuable activities that forwarders engage in.
It could even be argued that a forwarder is only as valuable as its network of preferred partners.
Freight rate negotiating can be a bit like walking a tightrope. The most-effective forwarders are those who can find a balance between appeasing trusted partnerships and practicing savvy deal-making, even if the latter means keeping their business open to bids from other carriers. Next to securing cargo space, ensuring competitive rates for shipments is top priority, after all, which brings us to our next point...
Forwarders are tasked with booking cargo space for shipments, usually using more than one mode of transportation. This demands careful coordination between all entities involved in a supply chain, including suppliers, manufacturers, carriers, warehousing providers, and more.
Getting commodities to market is time-sensitive, and travel plans are prone to delays, so efficient planning is essential for minimizing risk. The task is made more difficult still by carriers, whose limited cargo space often results in increased freight rates. Not to mention holidays and peak seasonality, which all come with their own sets of added scheduling obstacles.
Warehousing and warehouse management comprise significant pieces of supply chain management. At a minimum, warehousing services entail the arrangement, maintenance, and storage of inventory, but the role may also be more involved to include business support in other areas of supply chain management, such as purchasing and production. Some forwarders offer these services in-house, but many outsource these duties to other warehouse management professionals.
The administrative burden taken on by freight forwarders on behalf of their clients is substantial. At various points within the flow of a supply chain, forwarders are entrusted with stacks upon stacks of important documents, including, but not limited to: letters of credit, bills of lading, receiving reports, inventory reports, and all customs documents (commercial invoices, customs invoices, carrier waybills, certificates of origin, permits, etc.).
Experienced international freight forwarders are, without question, essential to the continuation of global trade as we know it, and CAF Worldwide is a veteran of the industry. After nearly 30 years spent sharpening the skills needed for successful customs brokerage and freight forwarding, CAF's industry know-how is unmatched.
To learn more about becoming part of CAF Worldwide's network of shipping professionals, contact us today.
Topics: Freight Forwarding, Logistics and supply chain management