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Freight Forwarding & Logistics

Freight forwarder is a third party logistics provider. As a third party (or non asset based) provider a forwarder dispatches shipments via asset-based carriers and books or otherwise arranges space for those shipments.
Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security. Logistics is a channel of the supply chain which adds the value of time and place utility.


 

Freight forwarders typically arrange cargo movement to an international destination. Also referred to as international freight forwarders, they have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's export declaration, bill of lading.

Commercial invoice is document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the document must include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the Harmonized System codes for those goods. A commercial invoice must also include a statement certifying that the invoice is true, and a signature. A commercial invoice is primarily used to calculate tariffs.

Shipper's Export Declaration (SED): Automated Export System (AES) is the system used by U.S exporters to electronically declare their international exports to the CBP (Customs and Border Protection). Formerly, this declaration was only made by the paper Shipper's Export Declaration (SED).

A SED is required when any one commodity on a given shipment exceeds $2500 in value.

A bill of lading (sometimes referred to as a BOL,or B/L) is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport.

It is quite evident that a bill of lading can be used as a traded object. The standard short form bill of lading is evidence of the contract of carriage of goods and it serves a number of purposes:

  • It is evident that a valid contract of carriage, or a chartering contract, exists, and it may incorporate the full terms of the contract between the consignor and the carrier by reference (i.e. the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement intégral) issued by the carrier sets out all the terms of the contract of carriage);
  • It is a receipt signed by the carrier confirming whether goods matching the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport); and
  • It is also a document of transfer, being freely transferable but not a negotiable instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instrument, it may be endorsed affecting ownership of the goods actually being carried. This matches everyday experience in that the contract a person might make with a commercial carrier like FedEx for mostly airway parcels, is separate from any contract for the sale of the goods to be carried, however it binds the carrier to its terms, irrespectively of who the actual holder of the B/L, and owner of the goods, may be at a specific moment.

and other documents required by the carrier or country of export, import or transshipment. Much of this information is now processed in a paperless environment.

 

Export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers. Export is an important part of international trade. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import.

International trade is exchange of capital, goods, and services across international borders or territories.[1] In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. International trade is a major source of economic revenue for any nation that is considered a world power. Without international trade, nations would be limited to the goods and services produced within their own borders.

International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade does not change fundamentally depending on whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or a different culture.

Transshipment is the shipment of goods to an intermediate destination, and then from there to yet another destination.

One possible reason is to change the means of transport during the journey (for example from ship transport to road transport), known as transloading. Another reason is to combine small shipments into a large shipment, dividing the large shipment at the other end. Transshipment usually takes place in transportation hubs. Much international transshipment also takes place in designated customs areas, thus avoiding the need for customs checks or duties, otherwise a major hindrance for efficient transport.

Note that transshipment is generally considered as a legal term. An item handled (from the shipper's point of view) as a single movement is not generally considered transshipped, even though it may in reality change from one transport to another at several points. Previously it was often not distinguished from transloading since each leg of such a trip was typically handled by a different shipper

History of Freight Forwarders

The original function of the forwarder, was to arrange for the carriage of his customers' good by contracting with various carriers. His responsibilities included advice on all documentation and customs requirements in the country of destination. His correspondent agent in far-away lands looked after his customers' interests and kept him informed about matters that would affect movement of goods.

In modern times the forwarder still carries out those same responsibilities for his client. Freight forwarder still operates either with a corresponding agent overseas or with his own company branch-office. In many instances, the freight forwarder also acts as a carrier for part of a movement it can happen that in a single transaction the forwarder may be acting either as a carrier (principal) or as an agent for his customer.

Freight Forwarder Roles in Different Countries

USA

In the U.S., a freight forwarder involved with international ocean shipping is licensed by the Federal Maritime Commission as an Ocean Transportation Intermediary. Similarly, freight forwarders that handle air freight will frequently be accredited with the International Air Transport Association (IATA) as a cargo agent.

The International Air Transport Association (IATA) is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. IATA's mission is to represent, lead and serve the airline industry. IATA represents some 230 airlines comprising 93% of scheduled international air traffic. Currently, IATA is present in over 150 countries covered through 101 offices around the globe.

UK

In the U.K., freight forwarders are not licensed, but many are members of the British International Freight Association (BIFA). Freight forwarders in the UK consolidate various goods from different consignors into one full load for road transport to Europe, this is often known as group age. Some freight forwarders offer additional related services like export packing and case making. The regulations regarding exporting untreated timber pallets and cases has got increasingly more strict and many for countries an exporter will be expected to provide a phytosanitary certificate or risk the expense of having their cargo fumigated.

Australia

In Australia most licensed Customs Clearance Agents (now more commonly referred to as Customs Brokers), operate under a freight forwarder.

Ireland

Even in smaller markets, such as Ireland, the role of freight forwarders is strategically important. International merchandise trade is worth €148 billion to the Irish economy. 82% of manufactured products are exported, further highlighting the importance of the freight forwarders to a nations' economy. Associations like the Irish International Freight Association and FIATA help maintain the professionalism of this industry through educational and representative roles. The FIATA Diploma in Freight Forwarding is an example of how this can be achieved.

 

 

Freight Forwarding, Logistic Services

Freight forwarding is a service used by companies that deal in international import and export. Freight forwarders specialize in handling and shipping goods to foreign countries. They can provide estimates of transportation and shipping costs as well as inform you of other costs associated with shipping your product to foreign markets. Examples of their services include:

  • Negotiating and arranging the best method of transport for your product to get to the target destination.
  • Coordinating the movement of your goods to their destination
  • Preparing the necessary paperwork.
  • Providing advice on packing, labeling and marking of goods.
  • Arranging warehouse storage and cargo insurance

The two main types of freight forwarders are air freight forwarders and ocean freight forwarders. A number of them specialize in arranging shipments to certain countries or areas of the world while others focus on particular types of products. Because shipping can incur significant costs, finding a good freight forwarder can save you money and help you keep your product's export price competitive. Freight forwarders are not government organizations. They privately-owned businesses and are therefore competitive, so suggestion is to: contact more than one and do a cost comparison. Charges are based on the weight, distance, and type of goods being shipped.

While the freight forwarder doesn't actually move the freight itself, it acts as an intermediary between the client and various transportation services. Sending products from one international destination to another can involve a multitude of carriers, requirements and legalities. A freight forwarding service handles the considerable logistics of this task for the client, relieving what would otherwise be a formidable burden.

Freight forwarding services guarantee that products will get to the proper destination by an agreed upon date, and in good condition. 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 product along the most economical route by working out various bids and choosing the one that best balances speed, cost and reliability.

A freight forwarding service generally provides one or more estimates to the client along with advisement, when necessary. Considerations that effect price will range from origin and destination to special requirements, such as refrigeration or, for example, transport of potentially hazardous materials. Assuming the client accepts the forwarder's bid, the freight is readied for shipping. The freight forwarding service then undertakes the responsibility of arranging the transport from point of origin to destination.

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 management and management, and methods of international payment are also commonly provided to the client by the freight forwarding service.

A good freight forwarding service can save the client tremendous 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.



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