Introduction to Freight Forwarding
What is a freight forwarder and does my company need one?
When a business decides to export or import their products they soon realize that they have to deal with the numerous barriers that have to be overcome to ship the product to the end customer.
In many cases, a business will look to a specialist, called a freight forwarder, who can manage these obstacles.
What a Freight Forwarder Can Offer
The services of a freight forwarder can vary between different companies but the main function of the freight forwarder is to act as an intermediary between the client who is hiring them and various transportation services that are involved in getting the product overseas to the customer, including carriers, customs and handlers.
Depending on the final destination and the nature of the items shipped, there may be many transportation companies involved in the movement of the items from the supplier to the customer.
The freight forwarder may have to deal with many export and import issues that could be involved in the movement of the goods.
The freight forwarder is hired:
- to get the product to the customer by a specific date
- in an undamaged state
The freight forwarder will provide the client insurance services to make sure that if the items do arrive damaged, they will be reimbursed and not liable for the damages.
A freight forwarder should provide assistance to the customer on how to package their products for export. Packaging that would normally be used for shipping within the US may not be sufficient for extended transportation where the items may be either loaded in a container or loaded and unloaded several times along the route.
The item may be allowed to be stored in environments where extreme temperatures or weather may be experienced. If an item is be shipped via air, then the freight forwarder may suggest packaging that is lighter than normal to keep shipping costs to a minimum.
Freight forwarders will assist their customers in providing the correct labeling they require for their items.
The correct label will be required to show:
- the precise items in the shipping container
- any hazardous items
- country of origin
- correct weight in pounds and kilograms
- port of entry details
- any details that are required in the language of the destination country
Documentation is important for the shipment of an item overseas. There are a number of documents that the freight forwarder needs to prepare for the shipment that requires specialist knowledge.
- Bill of Lading (BOL) – The BOL is a contract between the owner of the goods and the carrier. There are two types of BOL; firstly a straight bill of lading which is nonnegotiable and secondly, a negotiable or shipper's order bill of lading. The negotiable BOL can be bought, sold, or traded while the goods are in transit. The customer will usually need an original as proof of ownership to take possession of the goods.
- Commercial Invoice – The invoice is the bill for the goods from the seller to the buyer. It can be used to determine the true value of goods when assessing the amount of customs duty.
- Certificate of Origin (COO) – The COO is a signed statement which identifies the origin of the export item.
- Inspection Certificate – This document may be required by the customer to certify the goods have been inspected or tested and the quality of the goods is 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) – The SED is used for export statistics. It is prepared via the US Postal Service (USPS) when the shipment is greater than $500.
- Export Packing List – This is a detailed packing list that itemizes each item in the shipment, what type of packaging container was used, gross weight, and package measurements.
Companies looking to export items can use freight forwarders to not only save time and effort but to ensure that the goods arrive at the customer’s site on time and without incident.
A freight forwarder can provide the exporter with all the necessary documentation as well as liaise with the transportation companies required to get the items to the customer.