What is Freight Forwarding? What do forwarders do?
Freight forwarding is all about the smooth flow of international trade. The freight forwarder is the party who ensures that internationally traded goods move from point of origin to point of destination to arrive:
- At the right place,
- At the right time,
- In good order and condition,
- At the most economic cost.
To accomplish this, expertise is required in a number of different areas:
Close co-operation is required with transporters in every mode – road, rail, sea and air. Freight forwarders are constantly negotiating freight rates with transport providers, comparing the costs of moving cargo along different routes via different modes and then designing logistics infrastructures which provide the best compromise between cost, speed and reliability. Those involved in this aspect derive continuous interest and motivation from the fact that no two operations are the same, given the diversity of the nature of cargoes that are traded and the increasing numbers of doors being opened through the globalisation of world trade. Once a forwarder’s recommendations with regard to cargo routing have been accepted it becomes the responsibility of the forwarder to ensure that the goods concerned are transported and delivered as planned. The process of designing and executing these logistics plans has earned for the forwarder the title "Architect of Transport".
A vital ingredient to successful trading on world markets is that every transaction must comply with a myriad of statutory measures and their related procedures, especially those associated with Customs. It is in this area that the specialised skills and knowledge of the freight forwarder come to the fore. Without these, international traders would become hampered through being distracted from their core activities-meeting the material needs of world business.
To every international trade transaction there is an element of risk and the increased complexity of international trading as compared to local buying and selling requires that these risks are managed with tools which are correspondingly more sophisticated. International traders require that their forwarders be in position to advise and assist them in minimising those risks which are particularly associated with the movement of goods – loss, damage and destruction, although the exposure of forwarders to the international environment in its entirety makes their counsel as regards matters like credit and currency risks very much sought after.
Finance and Payment
Forwarders are entrusted with goods which are very often dispatched under conditions where buyer and seller are not known to one another. Under these circumstances the forwarder must scrupulously ensure that all requirements of the door to door operation are complied with to the letter, especially as far as the accurate and timely production of documentation is concerned – excellence in this filed leads to prompt settlement for goods purchased and satisfied traders. An especially gratifying aspect of freight forwarding is the facilitation, through consultancy and networking, of the entry of new exporters and importers into the international market. More often than not this involves advice as to the alternative methods of financing of the transactions concerned and the establishment of payment methods that are mutually beneficial to both parties.
Cross functional integration
Business in the 21st century will be characterised by an important feature- the way in which suppliers, manufacturers and consumers are being drawn closer and closer together so that, for example, a six pack of Heineken beer purchased in a store in downtown Wichita, Kansas will provide instant input to the Heineken brewery in Holland for the next production to run, the next raw materials purchase order and the next sales forecast. The forwarder is ideally placed to act as the catalyst to maximise the benefit from advances in information technology which are revolutionising these processes. Furthermore the role of the forwarder will be key because, in adopting cross functional integration strategies, companies are increasingly outsourcing their non core activities. The ability to ensure the efficient and effective door to door movement of goods from country to country from the time an order is placed until finished goods are delivered to the final consumer places the freight forwarder in a position to make a unique contribution to the enhancement of value to the activities of exporters and importers.
A career in freight forwarding
The globalisation phenomenon means that international trade is becoming an increasing proportion of each countrys’ economic activities. The intimate relationship which the forwarding industry has with world trade means that the industry provides young people with a number of exciting career opportunities.
- like to work with people,
- have a sense of adventure,
- can be productive in a pressurised environment which is subject to constant change,
- are prepared to study whilst you are working,
- are interested in working with computers in an industry which is becoming increasingly dependent on information technology,
then you should contact the National Association of FIATA in your country who will be in position to put you in contact with their members.
I have been charged for 1600 kgs of freight, but my shipment only weights 850 kgs. Why the difference?
Your chargeable weight was 1600 kgs due to the dimensions of your shipment. All dimensions are multiplied and divided by a standard formula and the sum of that is reflected in volume weight. If that volume weight exceeds your actual or gross weight you will be charged for whichever is the higher weight.
The formula for that is 1:6 or in layman's terms, 1 kg equals 6000 cubic centimeters. If your dimensions, however, are reflected in inches, the factor to consider is 1 lb equals 166 cubic inches.
What must I do when I am told that I must legalize my export?
All export documents must be presented to the receiving country's consulate to have each document stamped with the official seal of that country prior to exportation.
How do I determine the "volume weight"?
Volume weight is determined by using the following calculations for those shipments with dimensions in centimeters: (Length x Width x Height) divided by 6000 = volume in kilograms.
Do all ocean shipments require an original OBL to be surrendered prior to delivery?
In most cases, this is required. The seller has the option of requesting an "express bill of lading" which will allow for the release of the cargo without the original ocean bill of lading.
Are my airfreight charges based on the actual weight of the cargo only?
IATA regulations state that the cost of airfreight must be calculated on the "chargeable" weight. IATA defines the "chargeable weight" as the actual gross weight or the volume weight, whichever is greater.
How come my freight did not make the connection from Amsterdam to Tokyo - I did?
The time between transfers for passengers and cargo differ greatly. While passengers can have schedules with even a ˝ hour to an hour to spare between flights, with cargo it takes a minimum of three-five hours from arrival of one airplane to another. Freight off one airplane might have multiple destinations and has to be transferred. Also, the location on the arrival aircraft could be a factor. This has to do with the balance of the airplane, position goods were loaded in, size of freight and containerized or not.