Freight forwarders (formerly called shipping or forwarding agents) are professionals hired for their expertise in transporting goods from one country to another. They are usually concerned with:
1. advising as to the most suitable service available (train, ferry, road transport, air freight, containers or combination of all),
2. making arrangements to expedite goods,
3. co-ordinating the various transport modes,
4. booking space in the available means,
5. preparing, obtaining or advising on required documentation (Bills of Lading, Airway Bills, Customs papers, Insurance certificates),
6. arranging customs clearances (trouble-free transit),
7. arranging (or advising on) all technical aspects of international forwarding such as: packing, marking and labeling of goods (to comply with the requirements of carriers and of the customs authorities),
8. planning routes and means of conveyance,
9. advising on insurance and obtaining cover.
Goods are under the freight forwarder's supervision from inland in the exporting country through the various international frontiers to an inland point in the importing country.
The scope of their activities is so wide that they are usually co-operating with:
1. Shipbrokers (to reserve freight space in a ship),
2. Exporters,
3. Banks (payments, accounting),
4. Credit Organizations, Finance Houses (when an export is financed),
5. Insurance Companies (to insure the goods),
6. Customs (for clearances, VAT, tariffs),
7. Embassies (for information about any trade restrictions),
8. Agents,
9. Shipping Companies, Air Carriers (for the actual transport stage),
10. Inland Carriers: Road, Rail,
11. Port Authorities (reserving freight space when required and arranging procedures or documentation).
Arranging an international transport is so complex that a freight forwarder must consider all the following factors and advise the (potential) client in detail on:
1. Terms of Shipment (by air, sea, road, rail),
2. Charter Parties,
3. Consignment Terms, Conditions, Warranties,
4. Insurance Premiums,
5. Customs Procedures,
6. Precautions against Dangerous-Classified Goods,
7. Methods of Payment,
8. Financial Terms (International Finance),
9. Local Legislation (Statutes, Maritime regs),
10. Other National and International Legislation,
11. Terminals (handling equipment, spaces available),
12. Methods of Unitisation, Containerization (container types, dimensions),
13. Pricing and Costs (for the different stages/procedures of the transportation),
14. Schedule and Transit Times of the various forms of transport.
Freight forwarding includes all the modes of transport and hence a professional freight forwarder has got to be familiar with:
1. International Road Movements (trailer sizes and types, C.M.R. Regulations),
2. International Air Freight (I.A.T.A and I.C.A.O. Regulations),
3. International Rail Movements (Rail Ferries, TOPS, C.I.M. Regulations),
4. Ship Cargoes (Ship types in relation to commodities, contracts, handling equipment),
5. Containerization Groupage through Transport and T.D.A.
Freight forwarding companies usually specialize in a particular trade route. This occurs because they are usually too small in size to afford large number of employees to provide worldwide cover. In addition they tend to specialize in one particular mode of transport in order to offer high quality services (higher expertise).
A good knowledge of commerce, the finance of international trade, forwarding practice, commercial geography, cargo insurance, the Law of Carriage and commercial law is necessary for a successful freight forwarder.
The occupation of a freight forwarder is itself a modern field and requires the use of:
1. Telecommunications (for national and international trade),
2. Computers (to access and cope with the enormous amount of information required for transport procedures, and monitoring of the goods).
A forwarding office may include some or all of the following departments according to its size and the kind of trade it is involved in:
1. Import department,
2. Export,
3. Transport,
4. Accounts,
5. Documentation,
6. Customs,
7. Customer Service,
8. Marketing - Public Relations.
Freight forwarding is a highly competitive service industry as it served by a large number of persons or companies such as:
1. importers/exporters,
2. brokers,
3. shipping, airline, rail and road hauliers companies operating their own offices,
4. export and confirming houses.
Freight forwarding is neither a static nor a stable market. In order to provide efficient, economical (for the clients) and profitable services a freight forwarder must consider:
1. the market status (because traffic often shifts directions and changes have to be foreseen and exploited by adopting services to demand),
2. the technological evolution (since fast and quality services are the primary attraction for a client).
Recently, freight forwarders have extended their activities by providing packing, and warehousing facilities for goods instead of merely advising on these matters.
Additionally they are tending to merge to raise capital (for ISO containers and TIR units) for use in international services, offering regular consolidated (or groupage) shipments (several consignors' goods into a single load which the forwarder sends on his own name), by air, container or trailer.
These activities form an important and sizable part of their business.
Forwarders through their overseas connections often assist exporters by introducing overseas buyers and obtaining local market information.
Their source of income is:
1. from groupage and transport services,
2. insurance, warehousing facilities,
3. exporters, importers,
4. carriers (cargo liner companies).
Their training can take a variety of forms such as:
1. Institute's professional examinations,
2. Managerial expertise,
3. In-company courses,
4. University studies,
5. On-the-job.
Freight forwarding is supported, represented and promoted by national organizations which are set up in order to customize the services provided by forwarders, provide information for their activities and promote their interests.
In the U.K. the corresponding body is "The Institute of Freight Forwarders".
A freight forwarder may be either an agent or a principal or a combination of both. His liability for goods entrusted to him is determined (U.K.) by the standard contractual form drawn up by the Institute.
It is important to acknowledge the role of freight forwarders in developing traffic for liner cargo services, serving individual clients, contributing to a country's balance of payments and foster international trade by providing fast and reliable quality services in transporting goods from one county to another and thus enhancing international transactions and prosperity.