What is A Freight Forwarder & What Do They Do?
What is a freight forwarder, exactly? And how are they different from shippers, freight brokers, and 3PL logistics companies? It’s common for businesses to get confused with these roles as they all play a part in your supply chain but have unique responsibilities.
Learn more about what freight forwarders do, how they differ, and why they’re worth investing in for moving your goods.
What is a Freight Forwarder?
A freight forwarder, as the name suggests, is responsible for the physical forwarding of your commodities from start to finish in your supply chain. They don’t transport your freight but work with the providers who do to ensure a seamless process, such as handling storage and shipments.
Freight Forwarder vs. Freight Broker vs. 3PL: What’s the Difference?
Not to be confused with a freight broker, who connects shippers and carriers on a top-level through load boards. While they’ll similarly act as an intermediary as a freight forwarder does, they aren’t involved with the physical possession of your goods. Therefore, they aren’t legally responsible for them.
Freight brokers won’t oversee the movement of your cargo, as they’re typically restricted to national borders. Businesses often work with freight brokers for domestic shipping and accessing quality load boards to build a network.
In contrast, freight forwarders obtain stricter government licensing, have existing networks, and specialize in international shipping with complex clearance regulations. Since they work with the physical movement of your goods, they’re legally responsible for them and have cargo insurance as added protection.
Freight forwarders also differ from a 3PL logistics company. 3PLs outsource a wide range of logistics and transportation management services, including freight forwarding, inventory, and warehousing. A freight forwarding company is focused on moving your goods between two locations, while 3PLs are more focused on managing the logistics side of these services on a lower level.
What Does a Freight Forwarder Do?
What freight forwarding companies do depends on the provider. Some may have a smaller footprint and only distribute domestic freight, while others offer international services. However, most freight forwarders typically include the following:
Intermediary For Your Business & Transportation Providers
Freight forwarders liaise between your business and providers that physically distribute your commodities. They have a private network of trusted carriers and partners they work with for large-volume domestic and international shipments. These may include independent freight brokers, small logistics companies, and international shippers.
Their intermediary responsibilities include:
- Gathering trade agreements or Incoterms (International Commercial Terms) and the signatures required for completion
- Conducting risk assessments and reviewing cargo insurance policies
- Communicating with freight brokers for loads, facilities for order processing, shipping providers for transit, warehouse managers for storage, retail representatives for delivery, etc.
They act as a middleman for all cargo transport communications and oversee the service providers responsible for the movement of your goods.
Pricing Negotiation for Freight Transport
Think of a freight forwarder as a business partner. They’ll negotiate on your behalf to get you a fair shipping rate within their existing network. You may even receive discounted pricing due to their established relationships.
Additionally, a freight forwarding company can reduce your transportation costs. They’ll review the shipper’s routes and optimize them to make them more cost-efficient. They may re-route your freight to cut delivery times or consolidate your intermodal transit to save on shipping charges.
Their pricing negotiation responsibilities include:
- Optimized routes for time, transport mode, destination, and commodity type
- Guidance on the best transport mode, packaging, labeling, loading, and storage based on the nature of your cargo and budget
- Filing cargo insurance claims when necessary so you don’t pay liability costs
Freight Origin Handling
As a business owner, you shouldn’t decide on how your freight should be distributed without the help of professionals. You risk choosing the wrong mode of transport for heavy equipment, potentially resulting in freight damage and liability costs from lack of cargo insurance coverage.
Freight forwarders have the expertise and knowledge of industry regulations, like weight load limits, to plan your shipping routes for you. They’ll arrange your freight’s origin handling and the appropriate haulage to ensure it’s securely and safely transported.
Their freight origin handling responsibilities include:
- Taking possession of your freight for storing, packing, and shipping preparation
- Managing inventory during transportation and storage processes
- Inspecting freight for damage and customs compliance issues once unloaded at the warehouse
Whether via rail freight transport, sea, air, or over-the-road (OTR) trucking, a freight forwarder executes the logistics required to move your commodities effectively.
Import & Export Customs Assistance for International Freight
The freight forwarding market is complex, especially for international shipping. There are comprehensive import and export customs regulations your goods must adhere to while in transit.
That’s where the help of freight forwarders comes in. They’ll hire customs brokers to verify your packaged commodities comply with customs clearance.
Their customs assistance responsibilities include:
- Obtaining the necessary documents for import and export customs approval to prevent delays
- Hiring a customs broker to inspect the freight per the origin and destination country’s regulations
- Unloading and loading freight for transport to its final destination
Freight Destination Handling
A freight forwarding company provides end-to-end services until your goods are safely delivered and on schedule. They keep your shipping provider accountable for freight destination handling, including direct-to-consumer, warehouses, and retail stores.
Their freight destination responsibilities include:
- Deciding the mode of transportation to the import warehouse and its final destination
- Managing the freight delivery with the warehouse, retail store, or 3PL company
- Organizing the timely shipments and safe arrival of your goods
Simplify Your Shipments: Partner With Lone Star Logistics for Freight Forwarding Today
Freight forwarding is a comprehensive and time-consuming process, especially for businesses with international supply chains. There are complex government shipping restrictions to understand, with multiple moving parts and teams to track until your freight reaches its final destination.
Let us help you simplify your shipments.
At Lone Star Logistics, we’re a federally certified freight forwarding company with extensive experience in diverse industries to meet your exact logistics needs for your market. We’ll cover your freight distribution at each step, from load board to transit, warehousing, and delivery.
Learn more about our freight forwarding services or get a free quote today!
