Like many other specialized areas, the logistics and transportation industry has its own set of terminology. In fact, if you’re listening to two logistics pros chat about an upcoming shipment, it might even sound like they’re speaking an entirely different language. To help you decode the transportation, freight and logistics words you might hear, we dug deep into our glossary of transportation terms and pulled out one common one that causes an uncommon amount of confusion for many: freight forwarder. We’ll walk you through exactly what a freight forwarder is, what a freight forwarder does, what kind of services a freight forwarder offers and why you might want to use a freight forwarder when you’re shipping
What Is a Freight Forwarder?
In short, a freight forwarder is a company that coordinates the movement of goods from their origin to their destination on behalf of another person or company.
What Exactly Does a Freight Forwarder Do?
Think of a freight forwarder like the conductor of an orchestra. However, instead of managing a group of musicians in service of producing a beautiful piece of music, a freight forwarder coordinates all the moving parts involved when transporting goods from their origin to their destination.
This can include things like:
- Hiring and organizing multiple carriers to move goods via road, rail, ocean, and/or air freight. (Note: Most freight forwarders do not move items themselves, but rather contract with carriers who move the goods.)
- Managing every step in the journey, starting with the pickup at the origin point and finishing with delivery at the final destination.
- Providing or arranging for storage and warehousing, as needed, while the goods are in transit.
- Creating consolidations of less-than-container loads for smaller shipments going to similar destinations.
- Preparing documentation, including bills of lading and any paperwork needed to clear any ports along the way.
These distinctions should start to give you a sense of exactly what a freight forwarder does. However, this role can often get confused with another, similar one within the logistics industry.
What’s the Difference Between a Freight Broker and a Freight Forwarder?
You may also have heard of “freight brokers,” and maybe you’ve even heard the term used interchangeably with “freight forwarder.” However, there are a few important differences between the two.
Both freight brokers and freight forwarders can act as intermediaries between a carrier and a shipper. However, a freight broker never takes possession of the cargo itself. In contrast, a freight forwarder usually will, which creates an important distinction.
Because a freight forwarder takes legal possession of the shipments they work with, they can therefore be held liable for any damage that occurs to the cargo while it’s in their care. In contrast, freight brokers—who only arrange the transportation—don’t have that same responsibility. Instead, that liability often falls instead to the carrier actually moving the cargo.
Now that you have an understanding of the difference between a freight broker and a freight forwarder, let’s take a closer look at the services a freight forwarder might offer.
What Falls Under “Freight Forwarding Services?”
In addition to coordinating the movement of cargo from origin to destination, freight forwarders can also provide a wide roster of value-added services.
These include: Negotiating better pricing than shippers would be able to find on their own.
- Simplifying charges and invoices across multiple carriers to a single number that represents the all-in cost for moving an item from origin to destination.
- Optimizing the flow of cargo to increase efficiencies and lower costs.
- Establishing the most effective mix of freight modes to reach a shipper’s business goals and budget needs.
- Arranging for specialized final mile delivery services, including inside delivery and white-glove service.
- Connecting shippers with cargo insurance to protect shipments in transit.
- Offering guidance or assistance around packaging to prevent damage and create shipping efficiencies.
- Preparing international shipments for quick and easy customs clearance. Forwarders can also often connect shippers with additional assistance when there are problems.
- Acting as a one-stop shop for businesses who don’t have the time or bandwidth to coordinate with multiple carriers to move their goods.
This list will give you a good idea of how useful a freight forwarder can be, but let’s take a look at a few business cases for hiring a freight forwarder.
Why Would I Need a Freight Forwarder?
At the end of the day, there are a number of things you can do yourself, as a shipper, but there are also a number of good business reasons to consider working with a freight forwarder.
Every operation will have its own set of unique needs. However, to give you a few ideas, a freight forwarder can:
- Create significant efficiencies by using their experience to improve logistics flow.
- Simplify challenging shipments, such as international cargo or cargo that falls under hazardous materials regulations.
- Offer access to services you couldn’t get otherwise, such as consolidations, which allow you to share a container with other shippers.
- Save you time, by doing all the legwork and coordination around moving your cargo from Point A to Point B.