Introduction to Freight Forwarding

What is a freight forwarder and does my company need one?

workers standing next to freight in boxes
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Introduction

Businesses that export products often must contend with numerous challenges in shipping their goods to end customers. In many cases, such businesses hire specialists known as "freight forwarders" to help them overcome these obstacles.

What a Freight Forwarder Can Offer

Freight forwarders typically function as intermediaries between the businesses that hire them, and the various transportation services responsible for getting their products to overseas customers, including carriers, handlers and customs officials.

The number of operatives involved in bringing items from suppliers to customers, largely depends on the final destination of the shipments and the nature of the products sold. But the overall objective is always the same: to ensure the delivery of undamaged products, by specified dates. And in the event a product breaks during shipping, freight forwarders can furnish clients with insurance services, that can reimburse them for losses.

Packaging

Freight forwarders routinely help businesses package and prepare products for export. This task has varying degrees of complexity, based in on a product's final destination. Case in point: packaging for shipping within the US may be simpler than packaging products for extended transportation, where items may be shipped in large cargo containers, and may be loaded and unloaded multiple times along route. Items may also be stored in environments of extreme high and low temperatures, and they can experience volatile weather that can jostle the freight ships.

Furthermore, air-shipped items often require lighter-weight packaging, to keep costs down.

Labeling

Freight forwarders help businesses correctly label packages, to make sure they contain the following information:

  • An itemized list of products in the shipping container
  • Any hazardous items
  • Country of origin
  • Correct weight, reflected in pounds and kilograms
  • Port of entry details
  • Any details required in the language of the destination country

Documentation

Shipping items overseas often requires a great deal of complex documentation requiring specialist knowledge, that may include the following:

  • Bill of Lading (BOL) – This is a contract between the owner of the goods and the carrier. There are two types of BOLs; a nonnegotiable "straight" BOL, and a negotiable "shipper's" BOL. The latter BOL can be bought, sold, or traded while the goods are in transit. The customer usually needs an original document as proof of ownership, to take possession of the goods.
  • Commercial Invoice – The invoice is the bill for the goods, presented from the seller to the buyer, often used to determine the true value of goods when assessing the amount of customs duty.
  • Certificate of Origin (COO) – This signed statement identifies the origin of the export item.
  • Inspection Certificate – This document may be required by the customer to certify that the goods have been inspected and/or tested and the quality of the goods is deemed acceptable.
  • Export License – This license is a government document that authorizes the export of goods in specific quantities to a specific destination.
  • Shipper's Export Declaration (SED) – This document contains export statistics, and is prepared via the US Postal Service (USPS) for shipments greater than $500 in value.
  • Export Packing List – This detailed packing list itemizes each item in the shipment, the type of packaging container used, as well as gross weight and package measurements.

Summary

Companies that export items can use freight forwarders to streamline shipping operations and make sure customer receive their items in a timely manner, without incident. Freight forwarders can help provide exporters with all the necessary documentation and liaise with the entire chain of transportation companies involved.