- Allen Czermak
What Is a Freight Forwarder?
While shippers anticipate a busy holiday shopping season it’s important for us to understand how everyday products get from the manufacturer to our homes. According to the U.S. Department of Commerce e-commerce sales in the second quarter of 2022 accounted for 14.5 percent of total retail sales. In order to maintain such a static it’s vital that businesses have a reliable logistics strategy that ensures that warehouses are well stocked for on time delivery to the customer. For that to happen business owners must coordinate with manufacturing facilities across the globe to be certain that products are moving efficiently and at cost effective rates.
But not all businesses can afford to have their own manufacturing plants and logistic fleets like Amazon, Home Depot, and Walmart. These business owners rely on third party shipping companies to pick up containers and pallets at random warehouses in China and are unsure as to exactly when their products will arrive in the United States. The manufacturer calculates a shipping price based on the size and weight of the freight and presents that price to the customer. Based on how much time passed from the original shipping estimate will determine how much the rate will increase. It is not uncommon for that rate to surge anywhere from 25% to 50%. That’s very hard for business owners to swallow yet there is little much for them to do since they are desperate for the product. Not having products to sell for the upcoming holiday shopping season would spell total disaster for any retailer.
Freight Forwarder Meaning In Shipping
For small to midsize businesses freight forwarders play an important role in ensuring that products are delivered on time and on budget to local warehousing facilities. Freight forwarders will take all the responsibilities of moving your freight from overseas in the most transparent way possible with a real time tracking dashboard. This allows all to see how the freight is progressing during both the marine and land journey.
While freight forwarders don’t own containers, trucks, or rail lines they are at the epicenter of logistics with constant knowledge of anticipated time of delivery and cost of freight. They play a pivotal role for major brands to keep warehouses stocked for consumer demand. Without the knowledge of when a product will arrive or what the fee is, there is no possible way a business can be profitable (it is unfortunate but many Amazon sellers will lose money on increased freight charges when they are forced to keep prices down due to the competition).
So What Do Freight Forwarders Actually Do?
According to FIATA International Federation of Freight Forwarders Associations, freight forwarders will service any need that pertains to the goods to be delivered safely at a cost effective rate. This includes but is not limited to consolidation, storage, handling, packing or distribution of goods, compensation to shipping companies, declaration at customs, and insurance. To keep it simple, freight forwarders ensure the goods being shipped are safe and secure, always in the right place at the right time, while keeping shipping costs down. Having a good relationship with your freight forwarder is the key to your logistics strategy. At any point along the freight journey a business owner should be able to pick up a phone and call the freight forwarder to know exactly where his or her goods are and when they will be delivered.
What Are Some Of The Obstacles a Freight Forwarder Will Navigate?
Unpredictable Transit Times: Everyone is good at what they do best which is why many retailers choose to outsource manufacturing to countries like China. Even with increased costs of shipping containers from overseas it is still half the cost of producing products here in the United States. But when the pallet or container is ready to be picked up and the manufacturer chooses a global shipping company they have no idea when they will receive the goods. True they do their best to get the freight out as early as possible but thereafter all the customers receive is a tracking number with no tracking information available. So while you anticipate to receive the goods by the end of the month you really have no leverage as to when they will arrive. Freight Forwarders will have real time updates on where your shipment is up to and when you can anticipate the arrival. This allows retailers to secure stock for a busy upcoming holiday season.
Capacity Issues: With more purchases taking place online than ever before the demand for delivery of goods is at an all time high. Just to give a little insight into how reliant we are on the logistics industry, Amazon ships on average 1.6 million packages a day. That is 66,000 per hour, and 18.5 orders per second. Amazon is smart enough to be their own logistics company and is not reliant on third party logistics companies that deal with worker shortages and other capacity issues. For small to midsize companies, not having their own freight forwarder means that they are subject to anything that may cause a delay in shipping. Try and imagine standing in line at the bank waiting to make a deposit. The only way you will be serviced is to wait your turn. The same is true in logistics. When you rely on a global shipping company to handle your freight you have to wait your turn and are subjected to potential capacity issues that cause delays in your goods being delivered on time. Freight forwarders will put your freight first making sure that if there are any issues along the way there is a solution to keep your goods moving for on time delivery.
Limited Visibility: When using a global shipping company there is a method to track your goods but not visible to the customer. True, you receive a tracking number but you usually are only able to observe the beginning and end points of the journey. One of the major advantages when using a freight forwarder is real time shipping visibility. This means that at any moment along your freight journey you know exactly where it is and when it will arrive. You also know who is carrying your freight all throughout the marine, rail, and truck journey. Trusted logistics providers will give you access to a custom portal to see all the touch points until your freight is received.
Freight Forwarders Have Access To All Methods of Transportation
Whether using intermodal transportation or air cargo, freight forwarders will have access to an array of logistics solutions to ensure on time delivery. Cost for air freight is typically very expensive but having a trusted logistics partner will give you access to better rates. This is mainly because freight forwarders ship in volume and can combine your shipment with others as opposed to shipping one pallet individually. Access to air freight is important when you are desperate to deliver goods to warehouses in the United States. Often retailers will have to make a price adjustment to help offset cost but at least there is a solution to meeting the consumer demand.
Freight forwarders play a vital role at the heart of the supply chain. They see to it that no downtime is incurred keeping to the date of scheduled delivery. This is not to say that freight forwarders are for everyone and must be used as a logistics partner. As a matter of fact they are more expensive than going with random global shipping partners. Smaller companies that need to be more economical and keep freight costs down need to order well in advance to have their products in time for the holiday shopping season. Just how long in advance no one knows for sure but it's somewhere like six to eight months prior.
Very often it’s the smooth handover of freight between two countries that keeps shipments running on time. In today's day and age customs are very vigilant to know exactly what is in the container, where it is coming from, and where it is going to. Often this will be done by the global shipping service and if they can’t seem to get in touch the goods will sit idle at customs. Delays can be anywhere from days to weeks or even months. It’s unfortunate for both the shipping company and the customer, since no one wants a pallet sitting around accumulating dust. According to FreightWaves, freight that gets stuck by customs is primarily due to incorrect or lack of proper documentation. There is a boatload of documentation that needs to be provided when shipping internationally, especially when shipping a huge container. This is why many businesses choose to hire a freight forwarder to take sole responsibility of seeing to it that all goods are delivered on time at a cost effective rate. With a real time dashboard and a static cost business owners can conduct business as usual without worrying about empty warehouses prior to a busy holiday shopping season.