What is freight forwarding, and should you use it? An objective guide for your business
There’s a growing demand for freight forwarding as more eCommerce companies are using this service to keep pace with today’s customer delivery expectations. Projections show us that the freight forwarding market is expected to grow to $220 billion in 2026, up from $180 billion in 2021.
Freight forwarding can have a positive impact on your logistics if you’re currently dealing with time-consuming or inefficient processes. However, it’s not the best solution for every company. Weigh the impact of using a freight forwarder by learning the full scope of the advantages and disadvantages.
What is freight forwarding?
Freight forwarding is when a business hires an intermediary company to move goods through the supply chain on its behalf. Specifically, freight forwarders help eCommerce companies with the transportation of their products. Although you can work directly with Freight carriers (the shipping companies), they typically only work with businesses doing very high levels of freight shipments.
From your manufacturers warehouse to your distribution center or 3PL. A Freight forwarder can manage the whole process.
Freight forwarding companies offer an array of services to eCommerce businesses, including:
- Booking cargo space
- Preparing documents, including customs clearance & cargo insurance
- Arranging air, sea, and road transportation of goods
Freight forwarders help eCommerce companies that have complex supply chain management systems in place by creating a seamless freight experience.
What are the benefits of freight forwarding for eCommerce companies?
Freight forwarders offer a wide breadth of logistics services that are beneficial to eCommerce companies. Depending on your current system in place, a freight forwarding company may be able to help you streamline some — or all — of the supply chain process.
Full scope of logistics solutions
A freight forwarding company can assist you with every step of the freight shipping process. It acts as the logistics intermediary to plan the entire process for your eCommerce business. A freight forwarder can also help you with the consolidation of your logistics process.
For example, if you have many contracts with many companies for the various steps of the logistics process, a freight forwarding company can handle all of those steps with just one contract. This makes it easy when you need to get a hold of someone with questions or concerns — the freight forwarder is your only point of contact.
Most freight forwarders have a large network that they can tap into to provide services. Within their large network, freight forwarders have access to logistics solutions that you might not have otherwise. This includes solutions like finding freight space or helping you optimise the freight space you do have.
More shipping efficiency & cost savings
Your customers want quick deliveries that aren’t cost prohibitive. And so do you for your freight shipping process. Freight forwarders can help you find the most efficient and inexpensive way to ship or bring in products from overseas.
Instead of having to coordinate contracts with multiple logistics companies yourself, freight forwarders will negotiate on your behalf.
Freight forwarding companies have experience in the work they do and diversity in the companies they work with. They have long-standing relationships with logistics companies and work with them to find cost-effective and efficient solutions. For example, freight forwarding companies can use their large network to find shipping prices that fit within your budget.
Freight forwarders are able to negotiate better freight costs because they’re handling cargo for multiple companies at once. They’re able to get bulk prices that a single company wouldn’t normally qualify for.
Customs and cross-border regulation assistance
One of the main driving forces of an increasing freight forwarding market is cross-border eCommerce activity. When you deal with international shipping or imports, the sheer number of rules and regulations to follow can be confusing and overwhelming. If your business doesn’t abide by the exact international export or import regulations, it could result in costly fines or shipping delays.
Freight forwarders can handle export, import, and other customs documentation for all your international shipments. They’ll make sure that all necessary documentation gets filed properly and in a timely manner.