Freight Forwarding

Freight Forwarding In The United States

In the United States, those handling domestic freight over the road register with the DOT’s FMCSA. The Federal Motor Carrier Safety Administration plays a similar role to the entities above. These registered forwarders serve as carriers, accepting freight for transport. They remain liable for the delivery of freight, and do so under their own bill of lading.

International ocean freight forwarders arrange shipments both to and from the United States. These forwarders register with the Federal Maritime Commission as “Ocean Transportation Intermediaries”. The two classification options for transportation intermediaries are ocean freight forwarders and NVOCCs.

  • Ocean Freight Forwarder. Entities in the United States dispatching shipments via common carriers. They book or arrange space for these shipments on behalf of the shippers.
  • Non-Vessel-Operating Common Carrier (NVOCC). These are common carriers that publicly serve to carry out ocean transportation services. NVOCC’s issue their own bill of lading or equivalent document. But, they do not operate or own the vessels in which the cargo is being transported.

Pros And Cons Of Freight Forwarding

As with any logistics service, there are many factors that play into the end-to-end process. Freight forwarding may seem like a win-win situation for customers. Despite this, there are also some caveats to be aware of before diving in with a forwarder service. Below are a few of the advantages and disadvantages of freight forwarding.
Advantages of Freight Forwarders
  1. Freight forwarder services offer competitive pricing based on services needed from a customer. They can also lower prices through the consolidation of cargo from other customers. This allows for a single full container load with multiple customers’ cargo. Also, this serves to reduce final freight charges for less than container shipments.
  2. Freight forwarders usually specialize in a specific service, mode of transportation or market. This allows the company to choose the services the forwarder should handle. In turn, this gives the company greater control over the handling of their shipment.
  3. Knowledge and expertise are crucial when importing or exporting products. This work is performed via the customs clearance process. Freight forwarders have the most up-to-date information on customs regulations. Additionally, they can handle documentation, pay tariffs and handle taxes.
  4. One of the main advantages of a freight forwarder is their ability to offer services relating to a trade. Some services include documentation, bank paperwork, cargo insurance and inventory management.
Potential Disadvantages of Freight Forwarders
  1. Often, freight forwarding services aren’t the operators of the transportation moving the cargo. For this reason, their influence on what happens on board the ship, rail car, truck or airplane are minimal. Additionally, their participation in the transportation steps is typically completely hands-off.
  2. If you perform all documentation and forwarding, your costs are controllable. But, with a freight forwarder there is no way to know what kind of a service markup the forwarder is adding. A company might charge $2,500 for land transportation to a destination. Conversely, a freight forwarder can state the price as $5,500 and skim the $3,000 markup off the top.
  3. Product loss is a hard reality of some shipping processes. Putting trust in a freight forwarder to handle all shipping can lead to loss of supply chain control. If the freight forwarder is detail oriented, things are fine. But ineptitude can wreak havoc on shipments and lead to losses.

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