Shipping logistics—from choosing the most efficient mode of transportation and routes to handling documentation and customs clearance procedures—tend to be extremely taxing for many businesses, particularly if they ship their products or supplies worldwide. To alleviate logistical and operational challenges in global trade, these businesses tend to enlist the help of freight forwarders to organize the transportation of goods on their behalf.
Freight forwarders are typically in charge of coordinating transportation to be used for shipments by choosing the best shipping routes, handling essential paperwork such as customs declarations and import/export permits, and consolidating multiple shipments, among others. Through their services, more businesses are also able to expand their options when sourcing for materials. Hence, it becomes feasible to, say, conduct product sourcing in China even if your business is based on the other side of the globe since you can count on a freight forwarder to get the supplies to you in a timely manner.
To better understand how freight forwarders ensure smooth and efficient global supply chains, here are some key aspects in which they help businesses with.
1. Optimizing Route Planning and Transportation Modes
Freight forwarders bring in their logistics expertise by helping businesses determine the most cost-effective transportation mode to use for their shipments—whether by air, sea, or land. They also analyze which routes can get the goods to their destination fastest without compromising the cargo’s safety.
By considering factors such as distance, costs, and potential disruptions, they can present a shipping option that suits the business’s particular needs. For example, if your shipment is time-sensitive yet you still want to keep your overall shipping expenses low, your freight forwarder may suggest a combination of air and rail transportation to balance speed and cost.
2. Consolidating Shipments
For smaller businesses struggling with high shipping costs, they can consult with a freight forwarder to consolidate their shipments with that of other businesses in the same container, thus splitting the overall shipment cost between multiple clients. This approach allows even small businesses to participate in global trade without having to pay hefty shipping fees.
Do note that shipment consolidation may require more time as the freight forwarder will have to wait for there to be enough cargo to fill a container. Hence, this route may not be advisable for those in need of urgent shipment. Still, if slightly longer lead times aren’t an issue, consolidation remains to be the most cost-effective way for small businesses to ship globally.
3. Handling Customs Clearance
Instead of having to deal with complex customs regulations and documentation on your own, freight forwarders navigate international trade regulations and take care of duties and taxes on your behalf. They ensure that key documents such as bills of lading, commercial invoices, and import/export permits are prepared and submitted accordingly so that your shipment won’t encounter any complications.
By expertly handling customs clearance, freight forwarders are then able to move goods between countries with little to no delay. This reduces costs shouldered by businesses due to delays while also ensuring that the global supply chain remains efficient.
4. Offering Risk Management
Businesses with sensitive or high-value cargo may require insurance or contingency plans to ensure their shipment reaches its destination safely. Freight forwarders can offer businesses peace of mind by arranging needed cargo insurance and special shipment conditions (for instance, procuring refrigerated containers to prevent spoilage). In cases of delays, damage, or theft, they’ve also got contingency plans in place to resolve the issue and see that you’re financially compensated for any loss.
Through providing extensive risk management solutions, freight forwarders are able to minimize the risks apparent in global supply chains, encouraging more businesses to ship or receive goods internationally.
5. Providing End-to-End Tracking
Accurate shipment tracking is vital for any businesses as it allows them to gauge whether they’re right on schedule or if they should prepare for delays. Freight forwarders often provide real-time tracking systems, enabling businesses to proactively monitor their shipments through a software or mobile app.
This increased visibility then gives businesses peace of mind while also acting as an early warning if any adjustments need to be made. For example, an automotive manufacturer sourcing parts from different countries can accurately track which parts shipments are being delayed and thus adjust production schedules to minimize disruptions.
6. Warehousing and Inventory Management
In some cases, freight forwarders may also provide warehousing services to help businesses store and distribute goods more efficiently. They offer storage facilities in strategic locations, allowing businesses to store their goods closer to their markets. This setup also reduces shipping costs and delivery times, which provides more savings for businesses.
Some will even include inventory management services, meaning that they’ll track stock levels and manage replenishments. By integrating warehousing and inventory management, freight forwarders are able to help businesses optimize logistics, reduce costs, and streamline supply chain operations.
Global shipments require much planning, documentation, and risk management to ensure that disruptions are minimized in every step of the way. Freight forwarders make this possible by bringing in their expertise in shipping logistics and providing business with both the knowledge and tools needed to get their goods to their destination quickly. This way, supply chains can operate more smoothly and efficiently, ultimately improving global trade and economic growth.
Also Read: What Is Order Fulfillment in Supply Chain Management? Definition and Usability
