What is freight forwarding and how to master it

Direct import is one of the quickest and most affordable ways to acquire products from China, India, and other manufacturing countries. Getting items directly from manufacturers also makes it possible for eCommerce sellers of any size to cut costs on generic items or sell private label goods, which is increasingly needed to gain an edge on crowded marketplaces. However, it takes the right resources and infrastructure to import on your own, considering significant hassle in the form of logistics processes, paperwork, and regulations. You probably know a lot about logistics, shipping carriers, and fast shipping programs. But how much do you know about freight forwarding? Freight forwarders step in to take this process out of your hands by acting as an intermediary between suppliers or manufacturers, shippers and transport, and customs, to help you move goods as quickly and as efficiently as possible.

This blog post covers what you need to know to help you find the best freight forwarder for your business.

What is freight forwarding in shipping?

Freight forwarding is the process of getting a shipment of goods from point A to point B. This can involve the use of one or more carriers and shipping methods, such as rail, air, ocean, and road.

For example, freight forwarding leather handbags from Italy could involve transporting them to the UK by train, shipping them to New York and flying them to Los Angeles.

What does a freight forwarder do?

A freight forwarder arranges the whole shipment process for you, from start to finish. This includes planning the journey, contracting shipping carriers, and complying with local laws. Using a freight forwarder to complete this process brings significant benefits.

1) Provide knowledge and expertise

Freight forwarders are experts in their field, and know the fastest, most reliable, and cheapest method to forward your goods at any point in the year. They also know how to handle emergency situations, such as delays, re-routed shipments, or adverse weather, to least impact your delivery.

2) Ensure compliance

The international movement of goods requires strict adherence to different rules and regulations. A freight forwarder ensures that you are fully compliant with the Harmonized Tariff Schedule, Import Security Filing, local customs documentation, taxes, and any other shipping restrictions. This helps you avoid hefty fines and, in some cases, legal action.

3) Share networks

Freight forwarders also have an international network, working with numerous different carriers and storage providers. This helps them find you the most reliable solution at the best price, as well as other eCommerce businesses who can help you to achieve (and save on) full shipping containers.

4) Support growth

Ultimately, a freight forwarder can make international expansion possible for your eCommerce business, without hiring an international logistics expert. You can reduce your product prices by sourcing items internationally, or increase your reach by breaking into a global market – all with the support, knowledge, and connections of your freight forwarder.

Benefits of using a freight forwarder

Freight forwarders work as intermediaries, taking most import processes off your hands. There are several benefits to this, including that sellers no longer have to handle customs paperwork and import regulations.

1) Better efficiency for freight import and logistics

Most freight forwarders will help you find and select the best, fastest, or most cost-effective solution for import and transport, depending on your preferences. Freight forwarding companies take care of the import and logistics across air and ocean freight.

Even if they recommend their standard services, these are likely to offer significant savings of both time and money. They have the experience needed to make smart choices, will handle the paperwork, pay fees reliably, and deal with any issues that might pop up.

For example, your freight forwarder will handle risk assessment and management, warehousing, international payment solutions, and direct communication with your supplier or manufacturer. This all contributes to speeding up the process.

2) They will handle customs and import paperwork

Your freight forwarder will handle all ancillary services including documentation for:

• Cargo Insurance
• Customs Clearance & Paperwork
• Non-vessel operating common carrier documentation
• Bills of lading
• Warehousing documentation

Because documentation varies a great deal depending on your country of export and port of import, having a freight forwarder to handle everything for you simplifies the process, while ensuring you don’t face fines or issues from missing paperwork.

3) Get cargo insurance and protect yourself against lost/damaged goods

Insuring your goods before import protects you and the freight carrier. While it’s often difficult and expensive to insure goods on your own, most freight forwarders include complete insurance as part of their standard package deal.

4) Achieve faster fulfillment warehousing

A good freight forwarder will move your cargo from your manufacturer directly to your warehouse, handling all the details in between (including warehousing where necessary).

With established channels, existing relationships with every party involved, and experienced teams to handle paperwork, your freight forwarder should be able to cut days or even weeks off the import process.

How to choose a good freight forwarder

While there are dozens of freight forwarding solutions, it’s important that you choose an option matching your eCommerce store needs and expectations.

For example, if you need fast import solutions with all the bases covered, you should look for that. If you want a budget solution, you should focus on that.

You also have to cover your bases to determine what the freight forwarder actually offers, what they charge, and why.

Licensed for ocean and air freight handling

Any freight forwarder must be licensed with the FMC (Ocean) and IATA and TSA (air) or as an NVOCC (Non-vessel operating common carrier) where applicable. You should be able to request and see this licensing at any time.

Years of experience with freight forwarding

Check how many years the freight forwarder has been in business, their staff size, number of offices, and their global partnerships.

Larger companies can deliver more and more quickly and can frequently do so more efficiently by leveraging their network. Smaller freight forwarders may have advantages as well, but you should examine them closely before signing a contract.

Port-to-Door full-service solutions

The smaller your eCommerce company, the more likely it is you need a port-to-door solution with potential warehousing and logistics in between. A full-service solution like DHL or UPS will move your inventory from the supplier right to your door, taking every other step off your hands.

eCommerce inventory inspection and packing support

Does your freight forwarder support specific retail or eCommerce solutions? For example, you may be able to request inventory inspection, inventory consolidation, or even packing and reboxing depending on the solution.

Freight warehouse solutions

Do you need warehousing between initial pickup and delivery? What about at the port? Will your freight forwarder offer this if needed?

Transparent Pricing

Nearly all freight forwarders will offer custom quotes based on your company size, volume of import, location/destination, and the complexity of regulations surrounding the product(s) you are importing.

However, you should be able to request and receive clear quotes, understand what the total import will cost (including customs fees, storage at port, import duties) and have a representative or agent who can help you understand fee structures. This is often a problem sellers run into, and end up having to cut into profits when an unexpectedly large bill comes up.

Ask:

1. How much does insurance cost? What is included
2. Do rates fluctuate seasonally?
3. Do you offer flat rate? How do you determine pricing?
4. What volume commitment do I need to reduce costs?
5. How much does document preparation and AES filing cost?

Export compliance

When you hire a freight forwarder, you want them to handle compliance. However, it’s legally still your responsibility. Check and ensure that your freight forwarder is competent enough and has the resources to manage compliance in any country you’re importing from or exporting to.

What is the freight forwarding process?

So how do you find the right company to take on such a mammoth task for your business, and what happens next? The freight forwarding process is relatively simple, especially when compared against doing it yourself.

1. Finding a good freight forwarder

First, you need to find a good freight forwarder. In conducting your search, it’s important to look out for:

1. Industry experience – international shipping isn’t easy, so look for someone with extensive freight forwarding experience and ask for eCommerce testimonials
2. Country experience – freight forwarding requires international connections, so ensure that your provider has experience and networks in the country you’re shipping to or from
3. Different services – ensure that your forwarder offers a variety of services to choose from, including air, rail, sea, and ground
4. Locations – ask where you would need to deliver and receive goods, to calculate your own shipping costs
5. Paperwork – check that your forwarder will complete all necessary paperwork, including customs manifests

You can find and connect with potential freight forwarders using Google, searching eCommerce learning resources, attending shipping conferences and events, and asking other sellers. Common freight forwarders for eCommerce include DHL Supply Chain & Global Forwarding, Kuehne + Nagel, UPS Supply Chain Solutions, DB Schenker Logistics, and Maersk.

2. Shipping your goods to a freight forwarder

Once you have found a freight forwarder and an arrangement is in place, you must send your products to the freight forwarder’s warehouse. This is known as export haulage and may be conducted by yourself, or by using a logistics provider.

3. Documentation

Upon receipt, your goods will be checked and then your freight forwarder will complete and submit the required documentation for customs clearance. In some cases, customs clearance will be obtained before the cargo is shipped.

4. Transportation

Your goods are then physically transported using the chain of carriers arranged by your freight forwarder. Depending on the freight forwarder chosen, you may receive updates at each stage of the journey.

5. Arrival

Upon arrival, your freight forwarder arranges for all outstanding documentation, carrier bills, and duties to be completed.

6. Import

Your shipment is then sent to its final destination – either by your freight forwarder, yourself, or a logistics provider. This is known as import haulage and is the final stage of the freight forwarding process.

What’s the difference between third-party logistics (3PL) and freight forwarding?

So far, so good? What you might be questioning is: what’s the difference between logistics (3PL) and freight forwarding. Freight forwarding is arranging the chain of shipping services and carriers to move products from one point to another. The freight forwarder is not, at any time, responsible for your products – that responsibility lies between you and the carriers. Third-party logistics, or 3PL, is the storing and shipping of products to different locations. Logistics providers are responsible for storing your products in their warehouse, picking products for delivery, and successfully delivering them to your customers.

Which one should you choose? Typically, a freight forwarder is used for importing goods from another country and exporting large quantities of goods to another country (for example, B2B). A logistics company is used for acquiring or selling goods domestically and for transporting goods to and from your freight forwarder. Both can be used to create a successful eCommerce operation.

6 Great global freight forwarders

Not all freight forwarders are created equal, and many are considerably more expensive than doing it yourself. However, a good freight forwarder has a lot to offer, because they allow eCommerce sellers to cheaply import goods, which usually amounts to significant savings over local manufacturing or importing through an intermediary (or building the complex infrastructure to import directly yourself). While the best freight forwarder will depend on your specific needs, budget, and eCommerce shop – as well as the countries you import from – the following are among the best available.

Each of these companies is a large and well-established freight forwarder. You may be able to save by choosing a less well-known solution, but this will come with risks as well.

Flexport

Flexport offers air, land, and sea freight forwarding with a strong software backbone that provides complete transparency throughout the shipping process. Flexport provides useful visual alerts, real-time tracking and transport management, plus extremely transparent rates. Flexport is relatively new to the industry, having been founded in 2013, but has since grown to 9 offices around the world to serve a truly global audience. Flexport has much to offer for eCommerce sellers of all sizes, thanks to their modern take on freight forwarding, accountability, and transparency in their processes.

Freightos

Freightos is a freight service intermediary between eCommerce sellers and freight companies of every type. They work with more than 75 top providers to ensure global coverage for all eCommerce sellers. Their services include import/export, FBA prep, warehousing, and much more.

For most sellers, the big advantage of going with Freightos is a quick and easy way to compare and connect with solutions, even smaller freight forwarders, so you can find a quality solution in less time. Freightos also offers a complete range of software for comparing options, tracking shipments, managing imports, and much more.

Kuehne + Nagel

As one of the world’s largest freight logistics companies, Kuehne + Nagel is able to offer a complete freight forwarding and logistics solution for eCommerce and retail. Kuehne + Nagel focuses on providing modern technology solutions for improved and customized freight handling, including inventory tracking and consolidation, break-bulk and cross-dock facilities, logistics automation, box and piece picking, co-packing, home delivery, and reverse logistics. With over 125 years of industry experience, as well as a wide partner network, plus a strong focus on providing green solutions Kuehne + Nagel has a lot to offer for most eCommerce sellers.

DB Schenker

With 140+ years of experience as a global freight forwarder and supply chain management solution, DB Schenker is one of the oldest and most experienced freight forwarding solutions you can find. They are a full end-to-end solution, with a large global reach. DB Schenker offers air, ocean, and land freight, ideal for importing from Asia or from South America. DB Schenker’s solutions also extend to customs clearance, pickup from suppliers and fairs, warehousing, co-packing, fulfillment, production supply, along with trade advisory in handling trade documentation, comprehensive risk management, and transportation compliance.

Sinotrans Limited

Sinotrans Limited is China’s largest logistics service and one of the largest freight forwarders in the world. They are able to offer a complete package for eCommerce sellers of every size. Sinotrans provides completely scalable services, including sea, air, and land freight, and a range of ancillary services including booking, cargo delivery, collection, CIQ declaration, haulage, distribution, storage, and more.

UPS Supply Chain Solutions

UPS is one of the world’s most well-known logistics suppliers with one of the largest networks of any competitor. Their freight forwarding solution includes ocean and air freight, with online tracking, documentation, cargo insurance, and a service specifically designed to speed up the import process. UPS also works to help calculate import fees and customs in advance, scales from small (less than one shipping container) to enterprise-level imports, and handles import-to-door where desired.

Air vs. sea: Which channel should you use?

When importing to the States, your freight forwarder will need to navigate a large pool of water – should you do this by air or sea?

The question of air vs. sea freight isn’t as complicated as you might think and is largely determined by:

• Distance
• Type of cargo
• Time sensitivity
• Budget.
• Sea freight

Sea or ocean freight is the traditional way to import products overseas and still comes with many benefits, including:

• Cost – it’s cheaper to import goods via the ocean than air.
• Prices – sea freight prices are much less volatile, even during times of global crisis.
• Carbon – an ocean shipment generates significantly less carbon than an air shipment.

However, unless you’re paying for expedited LCL, the sea is the slowest channel and very susceptible to delay, with custom and port hold-ups being common. The ocean can also be very choppy, making item damage more of a risk.

Air freight

Air freight is a more modern way to import products from different countries, bringing benefits including:

• Speed – items arrive in days as opposed to weeks.
• Security – security is heightened when importing via air.
• Reliability – arrival dates and times are very accurate.

However, air transport is limited by weight and space – especially with medical supplies taking priority – making it the most expensive channel. Hazardous items are also prohibited.

Air vs. sea – which is best?

As a general rule of thumb, air freight is best for shipments up to 500kg in weight that contain time-sensitive and/or high-margin products. For example:

• Medical supplies
• Electronics
• Seasonal goods.

Ocean freight is good for shipments over 500kg and those containing low-margin, hazardous, and/or non-urgent items. For example:

• Chemical supplies
• Heavy furniture
• Small, everyday, inexpensive items.

How much do different freight channels cost?

The big question on your mind will be how much do air and sea freight cost? And it depends entirely on what you’re importing, how you’re importing it, and the space available. Typically, carriers charge by actual weight or dimensional weight (the volume in cubic meters multiplied by 167) – whichever is more. Average air freight costs from China to the US are between $1.50 – $5.00 per kilogram for between 8 – 10 days of transit. However, air freight prices fluctuate greatly, depending on demand – something we have seen during COVID. Average ocean freight costs from China to the US sit around $0.50 per kilogram for between 30 – 40 days of transit. These prices are more stable than air. Your freight forwarder should recommend the best channel for your products and the best price for your budget, but it’s always good to do your own research too.

Freight forwarding – final thoughts

Freight forwarders can save you a considerable amount of hassle, making imports from cheaper manufacturing countries like China within reach for even small eCommerce sellers. With large global logistics networks, rich knowledge of industry standards, regional legal restriction and compliance issues, and the ability to leverage networks to reduce the cost and time of import, freight forwarding is often the best and most efficient way to get started with importing goods, whether direct from the manufacturer or a supplier.

Freight forwarding is an exciting option for any eCommerce business – enabling you to grow profit margins, customers, and brand recognition. And, with these top tips for finding the best freight forwarder for your business, international expansion is truly at your fingertips. Remember to review your options, control costs, and ensure your freight forwarder meets your needs and budget before committing. Understanding the value and return you will see from using a freight forwarder will help you determine if it’s right for you and your eCommerce business.

Courtesy: Best logistics company in Lahore