Freight Forwarding

A freight forwarder is a company that arranges commercial transportation for the cargo of other firms. The freight forwarder generally assumes responsibility for consignments until they reach their destinations, depending on the trade and transport terms agreed, such as the Incoterms from the International Chamber of Commerce.
A very important role of a freight forwarder is to collect and consolidate consignments that are less than a truckload or a container load, and obtain common carrier transportation for the long-haul transport of the consolidation, thus making its transport more efficient and reducing transport costs. Freight forwarders often also act as custom broker and undertaken Customs and other clearance formalities on behalf of the shipper.

Freight forwarding includes tasks such as:

  • deciding on the best route and conditions for the physical transport,
  • booking consignments with the carriers,
  • handling the documentary requirements for goods in the various countries of the transport chain, and
  • monitoring the movement of consignments, and obtaining and supplying tracing and tracking information for the client.

Challenges

Main trade facilitation issues in shipping are:

  • compliance with product-related regulations for the preparation of the consignment, its packaging and the transport equipment used,
  • preparing proper documentation to accompany the goods or to pass to parties in the transport chain, such as waybills, certificates of country of origin, and certificates for agricultural goods,
  • passing relevant detailed information about the consignment to the parties that organize and execute (part of) the transport so that they can comply with regulatory requirements and procedures,
  • dealing with changes to the planned transport and hence changes in the required documents, for example when changing the mode of transport used,
  • dealing with changes in ownership of and responsibilities for the goods and transport, and
  • ensuring the security of the goods during transport.

Implementation solutions

Solutions to these trade facilitation issues are: implementing recommendations from International Transport Organizations; using harmonized and standardized documentary requirements; using the Incoterms from the International Chamber of Commerce; applying modern Information Technology through shipping portals; using modern information exchange throughout the transport chain; and using UNECE and UN/CEFACT Recommendations.

In international transport, separate freight forwarders are often used to organize the export of a consignment and to organize the import of the consignment in the country of destination. Freight forwarders often have arrangements between themselves to optimize the transport of several consignments through consolidation of consignments or by subcontracting the arrangements for a specific part of the transport leg. In freight forwarding, the international and national regulations on the goods, transport means and routes have to be taken into account. The required procedures and formalities for authorities have to be followed.

FIATA is the International Organization of Freight Forwarders, which publishes a number of rules, best practices, and standardized FIATA documents and their electronic equivalents, such as the FIATA Multimodal Transport Waybill and FIATA Forwarding Instructions.