Ins and Outs of Freight Forwarder — Why do sellers need a F.F?
WHAT IS FREIGHT FORWARDER?
Freight forwarder (FF) acts as an intermediary between the client and various transportation services. The duty is to transport the goods entrusted by the consignor from one place to another through the established way of transportation. Freight forwarder is the agent for transportation company (air, sea and land) to collect and carry the goods. It plays an important role in completing the trade between the consignor and the merchant.
Sending products from one international destination to another shall relate to a large number of carriers, requirements and legalities.
The freight forwarding service utilizes established relationships with carriers of all kinds, from air freighters and trucking companies, to rail freighters and ocean liners. Freight forwarding services negotiate the best possible price to move the goods along the most economical route by working out various bids and choosing the one that best balances speed, cost and reliability.
In the international freight market, freight forwarding industry is standing between the cargo owner and the carrier, accepting the entrustment of consignor, providing chartering, booking, stowage, preparation of relevant documents, customs declaration, inspection, insurance, container transport, unpacking, issuing bills of lading, settlement of various expenses, and even settlement of foreign exchange.
THE MISSION OF FREIGHT FORWARDER
A freight forwarding service generally provides one or more estimates to the client along with advisement, when necessary. Considerations which effect price range from origin, destination, shipping channel to special requirements, such as refrigeration or, for example, transport of potentially hazardous materials(DG). in the event that client accepts the forwarder’s bid, the freight is readied for shipping. Then the freight forwarding service undertakes the responsibility of arranging the transport from point of origin to destination.
The work of a freight forwarding company ( called F.F for short below ) is about much more than making shipment arrangements. These companies also handle storage, including special needs storage such as climate controlled storage. In addition, they process the paperwork necessary to go through customs and satisfy any requirements from the countries of origin or destination. F.F also tracks shipments, provide mechanisms for claims in the event that there is a problem, and provide similar services.
A good freight forwarding service can save the client untold time and potential headaches while providing reliable transportation of products at competitive rates. A freight forwarding service is an asset to almost any company dealing in international transportation of goods, and is especially helpful when in-house resources are not versed in international shipping procedures.
ADVANTAGES OF FREIGHT FORWARDER
One of the many advantages of using freight forwarding is that it handles ancillary services that are a part of the international shipping business. Insurance and customs documentation and clearance are some examples. As a consolidator, a freight forwarding service might also provide Non-Vessel Operating Common Carrier (NVOCC) documentation, or bills of lading, warehousing, risk assessment and management, and methods of international payment are also commonly offered to the client by the freight forwarding service.
One another advantage to use a F.F is that every aspect of the shipment will be handled by the company. Shipping internationally can be extremely complex, and if there are mistakes coming out, shipments may be held up or sent back. F.F ensures that goods move quickly with no hold-up and their expertise can also get the overall process much faster. Complicated paperwork which might take an average person a day to get through can be quickly finished by a F.F because the personnel are familiar with all the steps and required information.
Some F.Fs provide services such as dropping off, shipping containers at homes so that people can pack them and then pick up the containers for shipment. Some may also offer packing services. Many people doing international businesses use the services of a F.F to ensure that their goods arrive in a good condition and as quickly as possible. Such companies can also be useful for businesses which are not large enough to be able to maintain accounts with major shipping companies.
WHY DO SELLERS NEED A FREIGHT FORWARDER?
(1) Why sellers need a F.F instead of shipping line?
It is not easy to work directly with shipping line or airline to book space, especially for small cargo. They don’t bother to have dealings with personal buyers or sellers. And that’s why freight forwarding industry came out and exists all the way.
#2 Rate; F.F acts as a 3rd party combining goods from many sellers, providing bulk cargo to shipping lines and accordingly getting lower price. The buying power of a F.F is much greater than the average importer, so the shipping rates from F.Fs are much better.
Shipping lines do not offer consolidation services. This is something that forwarders developed, by consolidating clients’ cargo at one place, to create enough ‘pay load’ to fill a container. The proportion of costs are spread across each cbm/ton and a sell rate is created which includes the freight from port to port, and the added service features either side.
A good F.F will learn your business, spot the trends and recommend alternative efficiency improvements to maximise your profits. Sometimes shipping less more frequently, is better than shipping bulk less often. Quick example is cash flow vs storage costs. More about that in this article here.
#5Customs & Excise;
A F.F declares your import or export to HM Customs & Excise for a small fee, pays out the due funds and re-invoices you at net cost! Well, shipping lines and Airlines would never do this.
How do you want your expensive investment of goods delivered? Protected, wrapped, to FBA Spec and no doubt sitting neatly on secure pallets? Then again, you need a F.F to ensure this happens. We may even throw in some photos before it gets to ‘Amazon World’ too!
(2)Why sellers need a 3rd F.F instead of direct supplier to help with shipping?
(We get millions of updates from Amazon sellers who purchase goods from China and they opened by saying: ‘ supplier helps me with shipping, thanks’. What an awkward chitchat? Can you please listen to me for further two minutes? )
Suppliers are professional on products but unfamiliar with logistics, they do not know the process of logistics, the value of modern logistics. They do not understand the program optimization, customer demand on shipping. Most of them can only tell cheap or expensive, fast or slow but don’t know there’s a third option. They are not able to provide the proper schemes on shipping. You completely get all things about shipping which are to a great extent one-sided and amateur from supplier. You have no idea about the mechanism, variability, market prices behind.
Not all problems result from trade war or full capacity at warehouse. Lots of hidden reasons exist, some are delayed at warehouse because of carelessness, not prompt dealing or undisclosed alteration of shipping channel. For instance, Many buyers didn’t notice that FedEx IP takes only 3-5 days until they use a F.F. Suppliers told them how much FedEx takes, but they didn’t mark clients which service of FedEx they use when they actually choose FedEx IE instead of IP. (Normally FedEx IP takes 3-5 days while FedEx IE takes 5-7 days or even longer)
One more thing, many suppliers don’t standardize the measuring method, and there is always a huge gap between the actual measure and weight. So there will be money running off accordingly if they raise th weight and size in purpose. While almost all F.F use standardized measuring device to avoid error or mistake.
The shipping price given by supplier is almost built on a cost-plus basis, which is a pretty common phenomenon.
On the one hand, suppliers want to make further profit on the basis of product fee; Why not gain some other profit if there is? Actually suppliers take it for granted to earn extra shipping money. They think they provide C&F, so it is fair and sensible to make money from goods and service as well.
On the other hand, to avoid the price change because of price fluctuation of the market or personal improper consideration, unprofessional calculation or even mistakes.
The up-regulation on rate is the equivalent of drawing a safety line, leaving room to prevent accidents. This won’t happen for a F.F, who can always get first-hand accurate price.
The supplier does not have enough time and energy to follow up the logistics information and track the situation of the goods systematically and regularly. For a specialized freight forwarding company, however, it is the duty to follow it up and feed back the latest status to clients.
And if there is a transportation problem happens, F.F are quicker to get back to you, offering selective solutations and getting them solved in time.
#5 Consolidation and warehousing;
Supplier is unwilling to do gathering work especially for same or similar products from his/her competitors. F.F owns warehouse and professional storage rack to do the consolidation, and most importantly, F.F is reliable to keep all secret. One supplier doesn’t know any information of others.
#6 Value-added services;
F.F at source area can on the one hand help to follow up the production and do basic inspection work before the data of delivery from factory.
On the other, F.F would help check the situation of the goods, helping with labeling, repacking, and remediation, picture and video feedback after the goods come to warehouse.
Even there are lots of advantages for having a F.F, but definitely be careful when you choose one. Before using the services of a F.F, there is a necessity of getting reviews and recommendations. Many nations do not regulate companies which advertise themselves as offering freight forwarding services, which means that customers might end up in the care of a company who does not have experience or is engaging in fraudulent activities. Major shippers may recommend forwarding companies they work with, and other sources of recommendations can include embassy personnel as well as other people or businesses which have had need of a forwarding company in the past. Last but not least, you never know what it is till you try. So letting small parcels for testing before bulk shipment can be a good idea if you are not that confident about the F.F.
YCD INTERNATIONAL LOGISTICS