FREGHT FORWARDING

Freight Forwarding
Introduction
Freight Forwarding is a vital part of international trade activity. The company will
face many difficulties if it does not take into account how the goods will be
delivered to the market. The issue of freight forwarding must be considered at an
early stage of the development of the export marketing plan as it raises several
concerns that need to be addressed quickly. Not only does the exporter need to
understand which INCOTERMS to stipulate and work to, but the method of
transport also needs to be considered (see road, rail, sea , air). Packaging is also
another factor that needs to be considered, as is insurance. Much of the hassle
can be taken out of the exporter’s hands by using an effective freight forwarder,
but as with any supplier care needs to be taken to ensure that the supplier meets
the needs of the organisation.
Selecting a Freight Forwarder
There are certain criteria to take into consideration when selecting a freight
forwarder to undertake export transportation.
1. Cost: Keeping costs down will always be one of the most important criteria for
any exporting company, so it is important to approach more than one forwarder
in the first instance to ascertain the best price. Rates between forwarders always
vary because some forwarders specialise in some destinations but not others, so
their rates for those areas will invariably be better. Always attempt to find out
whether the service to the destination you require is the forwarder’s own service,
or whether they will subcontract the work to another forwarder – subcontracted
work will usually be more expensive.
2. Members of The British International Freight Association (BIFA). ‘BIFA’ is the
professional organisation for freight forwarders: to qualify for membership,
forwarders must adhere to certain standards and regulations. This results in a
general standard, which must be maintained in all areas of their operations.
However, whilst it may be preferable to the exporter for the freight forwarder to
be a member of BIFA, it is not illegal for them to operate without membership
and does not mean they will not be able to offer a quality service.
Services Provided by a Freight Forwarder
Traditionally, the role of the freight forwarder was simply to undertake
transportation on behalf of exporting companies. However, they must now
provide a whole range of additional services to keep up with the competition.
1. Export transportation This is still the key role for most freight forwarders
2. Export Documentation Advice. Forwarders are constantly dealing with export
transportation so it is vital for them to keep up to date with documentation
requirements for the countries with which they do business. It will be within their
own interest to convey any knowledge and advice to existing and potential
exporters, so they may obtain the business when transportation is required.
3. Storage: Many forwarders now have their own depots and warehouses as well
as offices, and are willing to store goods for exporters for a number of reasons.
These may include exporters wanting goods out of their own premises to make
room for more stock, but not wanting to actually export the goods yet, so they
may use the forwarder’s warehouse.
4. Order Picking: Some companies, such as mail order companies, may store a
large quantity of goods with forwarders, which may be broken down and
consolidated into orders as and when they are processed at the company’s
premises.