What is an international freight forwarder?

Navigating through the world of global trade can be a labyrinth. But an international freight forwarder can help coordinate your shipping odyssey. In this article, we'll learn about the world of forwarding companies, the types of freight forwarders, and tips for choosing one for your own company. We’ll even introduce you to Wise Business for low-fee international payments.

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Table of Contents

What are international freight forwarders? Difference between freight forwarders and freight brokers Ocean freight forwarders Air freight forwarders Top global freight forwarder list Tips for choosing a freight forwarder 1. Look at their industry experience 2. Evaluate their network 3. Consider their services 4. Ensure they can handle your type of cargo 5. Check their customer service 6. Verify their accreditation 7. Analyze their financial stability

What are international freight forwarders?

International freight forwarders are essentially travel agents for your goods. If you have a bunch of packages in New York City that need to reach Tokyo, freight forwarders figure out how they get there and which route is the safest, quickest, and most cost-effective. They're experts in arranging the storage and shipping of merchandise on behalf of shippers.

Freight forwarders offer an extensive range of supply chain services:
1. Tracking inland transportation
2. Preparing shipping and export documents
3. Warehousing
4. Booking cargo space
5. Negotiating freight charges
6. Freight consolidation
7. Cargo insurance
8. Insurance claim filing

Freight forwarder bills

Freight forwarders usually ship under their own bills of lading or air waybills (called house bill of lading or air waybill). A bill of lading (BoL) is like a receipt – a contract between a freight carrier and a shipper. It's proof that the carrier has received the freight as described and agreed to deliver it to the specified destination.

Since freight forwarders have their own BoL or air waybill – known as a 'house' bill (HBoL or HAWB), this document works the same way but is issued by the freight forwarder instead of the actual carrier. This way, the forwarder takes responsibility for your shipment as if they were the carrier.

After shipping with a freight forwarder

Once your shipment arrives at its destination, the freight forwarder agent or associate handles document delivery, meaning they make sure the paperwork follows your shipment and ends up in the right hands.

These international freight forwarding services can be provided by a single global freight forwarder or a network of freight forwarding companies working together. From air to roads to sea freight forwarders, you'll find a variety of specialties within this field. Some might handle all types of cargo, while others might concentrate on specific markets like dangerous goods, fast-moving consumer goods, or temperature-controlled items.

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Are freight forwarders for big or small businesses?

Whether you're a small business branching out into international markets or a large corporation managing complex shipping logistics, a reliable international freight forwarder can simplify your operations and give you peace of mind.

But keep in mind that freight forwarders are not movers. The items they transport are usually commercial goods, not personal items, although some do offer relocation services. They’re also not the party that physically moves your freight but rather the ones who arrange the carriers to move it for you.

Dealing with international freight forwarding companies involves juggling many different tasks, one of which is managing international payments. From paying freight charges to covering insurance, these payments can often involve multiple currencies and hefty fees.

When paying for freight forwarding services, you may need to transfer funds via an international invoice. This could become more expensive if you’re making regular or large overseas payments from your business account, as the unpredictable FX markets create the risk that an affordable payment today could shift in a matter of hours.

Organisations planning to receive regular overseas shipments may find it more cost-effective to open an international payments account for your business. This provides you with a range of FX tools to limit your foreign currency exposure, as well as competitive exchange rates for your payments.

The currency tools on offer include a forward contract, which can secure a favourable rate for up to two years. This could help you to limit risk and gain more accurate shipping cost forecasting. For future payments, FX orders can be used to automatically trigger an international transfer when a preferred rate has been reached.

When working with a foreign exchange provider, your business can rely on a more tailored and cost-effective solution for managing your global supply chain and freight forwarding needs. For more information, speak to one of our specialists today.

Paying an international freight forwarder
When paying for freight forwarding, you may need to transfer funds internationally. This can make things pretty expensive - that's where Wise Business comes in. Wise has high transfer limits, uses the mid-market exchange rate, and has auto-conversions which can help you send your transfers at the perfect moment

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Difference between freight forwarders and freight brokers

Both freight forwarders and freight brokers play big roles in the shipping industry, but they are very different ones.

A freight forwarder, as we just talked about, is a jack-of-all-trades in international shipping. They help with all aspects of transporting goods from one location to another, organizing various carriers like trucks, ships, and planes to get your goods from point A to point B. Beyond just transportation, freight forwarders often deal with export documents, customs clearance, and cargo insurance.

On the other hand, a freight broker is more of a matchmaking service – connecting businesses that need to transport goods with carriers willing to transport those goods. They have a broad network of carriers and use it to negotiate favorable shipping rates for their customers. But unlike freight forwarders, freight brokers don’t ship under their own bills of lading, and they don't provide extra services like packing, warehousing, or handling customs documentation.

Understanding these roles can help you figure out whether a freight broker, a freight forwarder, or maybe both are needed to help streamline your international business.

Now let’s go ahead and break down the two most common types of freight forwarders in the industry.

Learn More: How to Start an Import-Export Business: Complete Guide

Ocean freight forwarders

Ocean freight forwarders are a specific type of global forwarder specializing in goods transportation via sea routes. They focus on using cargo ships to transport large quantities of goods across continents.

One of the main roles of an ocean freight forwarder is to consolidate shipments from various shippers into one shipping container—this process is known as Less-than-Container Load (LCL). It’s a cost-effective solution for businesses that don't have enough goods to fill an entire container.

When there's enough cargo to fill a whole container, that's called a Full Container Load (FCL). Ocean freight forwarders can also handle these larger shipments, like cars, commercial orders, and household furnishings.

Ocean freight forwarders provide various other services, including freight rate negotiations, cargo insurance, packing, storage, and port-to-port or door-to-door delivery. This all makes shipping large amounts of goods over long distances easier and more efficient for businesses.

Air freight forwarders

Up above, air freight forwarders specialize in transporting cargo by air. They serve as an intermediary between shippers and various airlines. Choosing air cargo services usually means speed and efficiency, so these forwarders prioritize quick transit and tight delivery schedules.

Just like their counterparts down below, air freight forwarders handle all the logistical procedures for shipping goods, providing services like packing, warehousing, customs clearance, and cargo insurance. But why would a business specifically choose air freight? Well, in addition to its speed, it also offers a higher level of security, reliable departure and arrival times, and less need for local storage.

Air freight forwarders use an air waybill (AWB)² instead of a bill of lading. It's used as a receipt of goods like a BoL, but it doesn't give ownership rights to the goods to the holder of the document, unlike a BoL.

Expedited delivery is where air freight forwarders outdo the competition. When time is of the essence, businesses often turn to these global forwarders to get products to their destination swiftly. For example, fashion retailers might use air freight to bring a new clothing line to stores quickly, or tech companies might count on them to transport the latest gadget in time for a big product launch.

Air freight forwarders also provide services to almost any geographical area worldwide, so your goods reach even the most remote locations.

With all these benefits come higher costs than sea or land transport, given its speed and efficiency. Some goods might also be unsuitable for air transport due to size, weight, or safety restrictions.

Top global freight forwarder list

Let's explore some of the top global freight forwarding companies that have significantly influenced the world of logistics with their excellent services.

Kuehne + Nagel: Established in 1890, this Swiss global transport and logistics company is considered the world's leading sea freight and air freight forwarders. They also specialize in road freight and dedicate themselves to sustainable logistics.

DHL Supply Chain and Global Forwarding: While DHL is a popular express delivery and logistics company, they also offer supply chain and global forwarder services. These services include inventory management, supply chain design, shipping, and warehousing solutions. As well, they provide customers with integrated door-to-door transportation services from more than 220 countries.

DSV: DSV is a global provider of transport and logistics services, honing in on the automotive, industrial, pharmaceutical, energy, and technology industries. Customers can choose from solutions such as door-to-door transport, air, sea, and road freight forwarding, warehousing and distribution, customs clearance, and value-added services. DSV also offers innovative IT systems, such as track and trace systems, barcode scanners, and online tracking capabilities.

DB Schenker: DB Schenker offers comprehensive logistics services and holds top positions in automotive, technology, consumer goods, trade fair forwarding, special transports, and services for major sporting events.

Sinotrans: What sets Sinotrans apart is that the company also offers consulting services to develop and manage customized supply chain solutions that fit their customer requirements. They also have a wide network of global agencies that offer fast and reliable transportation and service.

C.H. Robinson: One of the largest freight forwarders in North America, this US-based company offers a comprehensive set of logistics services. They provide solutions to customers ranging from small businesses to Fortune 500 companies, including integrated technology solutions such as carrier rate management tools, product tracking systems, optimization tools, and business intelligence resources.

Tips for choosing a freight forwarder

Choosing the right global forwarder can make a difference in the smooth running of your international business operations. Here are some tips to guide you:

1. Look at their industry experience

Industry experience is the most important aspect of a freight forwarding company. A company that has been around for a while is likely better equipped to deal with potential mishaps.

Think about it this way: if you were embarking on a complicated journey, would you prefer a seasoned guide who's traveled the path countless times or a newbie who’s just learning the ropes? The same principle applies when shipping goods internationally.

Experience doesn't just mean the number of years a freight forwarder has been in business. It's much more about their specific experiences with different types of cargo, various shipping methods and routes, and unique customer requirements.

An experienced forwarder would have come across and solved many challenges over their career – misrouted cargo, last-minute changes in shipping regulations, and delayed customs clearance. They've learned from it all and tailored their processes, resulting in a more efficient, reliable service.

2. Evaluate their network

Experience also plays a huge role in building relationships. Over time, these forwarders have established solid connections with carriers, customs officials, and foreign agents. A freight forwarder with a strong network of international partners can make sure your goods are handled properly throughout their journey, from customs to the final delivery.

3. Consider their services

Freight forwarding includes a broad range of services, but not all forwarders may have what you need. Do they only offer port-to-port services, or can they deliver door-to-door? Consider the following:

Transportation: Does the forwarder offer the type of transportation your cargo needs? This could be air, sea, road, or rail - or a combination (multimodal). A single forwarder might not handle all types, so choosing one that does can mean a more seamless service.

Freight Forwarder Services
Customs clearance: Some forwarders can handle the complex paperwork, duties, and import/export regulations for you.
Warehousing and storage: If your shipment needs to be stored before, during, or after transit, does the forwarder have the facilities to accommodate this?
Consolidation and deconsolidation: If you're not shipping a full container load, your cargo will need to be consolidated with other shipments. Likewise, it'll need deconsolidating upon arrival. Can the forwarder handle this?
Packaging and labeling: Some forwarders also offer services like pallet wrapping and box labeling to ensure your shipment is packaged properly for the journey.
Insurance: While no one likes to think about their shipment being lost, damaged, or delayed, it can happen. Can your forwarder advise on insurance options or even take care of it for you?
Tracking: Monitoring your shipment in real-time gives peace of mind and helps with planning. Check whether the forwarder offers a sophisticated tracking system.

4. Ensure they can handle your type of cargo

Depending on your business, you'll have specific shipping needs. Types of special cargo include perishable goods that require timing and temperature control, oversized and heavy cargo, high-value goods that need special insurance and secure handling, and hazardous materials.

5. Check their customer service

Have you ever heard the saying that people may not remember what you did, but they remember how you made them feel? This is especially true when it comes to customer service. A 2016 study by Forrester Research found that 72% of businesses³ say improving customer experience is their top priority.

Forwarding freight internationally is a tedious process and can often hit unexpected bumps. When that happens, you need a freight forwarder who's available, responsive, and proactive in offering solutions. Check how quickly they respond to inquiries, their problem-solving capabilities, and their willingness to go the extra mile. A good freight forwarder should make your life easier.

6. Verify their accreditation

Verifying your freight forwarder's accreditation ensures you're dealing with a reputable professional who meets industry standards. Accreditation within the freight forwarding industry is granted by various authoritative global and national associations. These bodies set specific standards that freight forwarders have to follow, so there’s a level of integrity within the industry.

International freight forwarding associations include the International Federation of Freight Forwarders Associations (FIATA). Associations by country also exist, such as the British International Freight Association (BIFA) in the U.K. or the Transportation Intermediaries Association (TIA) in the U.S.

These organizations conduct checks and monitor members to make sure they’re adhering to industry regulations, ethical business practices, and high service standards.

7. Analyze their financial stability

A forwarder in poor financial health might not be able to pay carriers, which could lead to service interruptions and shipping delays.

Without sound finances, forwarders might struggle to meet their obligations. This can cause all sorts of problems, like your goods being held until payment is received or, even worse, your forwarder going out of business mid-shipment.

Performing a financial health check on your potential freight forwarder isn't just smart – it's crucial. Checking their credit rating with a credit agency or speaking to their financial references can give you a good look at their financial health.

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Sources:

1. https://www.trustpilot.com/review/wise.com
2. https://www.ups.com/us/en/supplychain/insights/knowledge/glossary-term/air-waybill.page
3. https://www.forrester.com/press-newsroom/72-of-businesses-name-improving-customer-experience-their-top-priority/