The Role of the Freight Forwarder

Freight Forwarders are key members of your international team! If chosen carefully a forwarder will help make your international business a success!

 

What part do they play in the international transaction?
  1. Assist with freight quotes and costs of international shipping.
  2. Provide an itemized list of costs.
  3. Arrange for booking space for freight on airlines, vessels and other modes of transport.
  4. Consolidate shipments from different suppliers.
  5. Provide a shipper with the foreign destination's documentary requirements.
  6. Prepare shipping documents, banking and other collection papers necessary in the transaction.
  7. Process shipping documents and handles certification and legalization procedures, when necessary.
  8. Distribute documents to the necessary parties in the transaction - banks, offices, buyers, suppliers, etc.
  9. Arrange for insurance coverage, if needed.
  10. Arrange for U.S. and/or foreign customs clearance and pre-shipment inspections, if necessary.
  11. Provide facilities for warehousing in foreign destinations.
  12. Provide information on hazardous materials, if needed.
  13. Provide other specialized services, if needed.
Points to consider when choosing a freight forwarder

General Information about the company

  • Is the company a full-service freight forwarder?
  • Staff experience and size.
  • Years in business and what are their business hours?
  • Does the company specialize in certain commodities and shipping methods?
  • Is company certified to handle hazardous shipments?
  • Weekly tonnage to various cities, and countries.
  • Support services: experienced in handling letters of credit.
  • Other charges: is there a charge for faxes and other incidentals?
  • What are charges for documentation handling, local and destination handling charges, and banking?
  • What are future growth plans?
  • Do they have warehouse facilities and what type of security is available for those facilities?
  • Communications between offices: are foreign offices as dependable as the local office?

Global Capability - What services are available globally. In which countries are they strong. Do they have:

  • Agent or foreign owned facilities?
  • Bonded warehousing facilities?
  • Packing functions such as JIT and pick-and-pack, administrative functions such as invoice capabilities, where are the international locations?
  • Where are they weak?

Price - how is price determined?

  • Flat rate?
  • Volume price breaks.
  • Based on total weekly commitment.
  • Seasonal increases.
  • What are fuel and storage charges?

Transit times

  • Percentage of on-time deliveries.
  • Money back guarantee.
  • Alternative shipment methods and pre-alert notifications.

Allocations with airlines, trucking, etc.

  • What is the tonnage per week?
  • Daily or weekly consolidations?
  • How many of the weekly consolidations have extra space?
  • Is charter service available in peak seasons, i.e. Christmas?
  • Top 3 preferred carriers (Air), if needed.
  • Inland carriers are utilized to and from what cities?
  • Transit time, direct or cross-dock - on truck and off loaded?

Computer/EDI capabilities

  • Is the forwarder capable of connecting to a shipper's company, bank, and/or other parties in the transaction?
  • Are they filing SED's on the Automated Export System (AES)?
  • Any future plans for electronic transmission of documents?
  • Are they a member of C-TPAT (Customs Trade Partnership Against Terrorism) program?

Insurance

  • Cost of insurance.
  • Availability of insurance policy photocopy.
  • Specifics of coverage available.

Experience with certain types of products and transactions

  • Returns and repairs.
  • ATA Carnets.
  • Temporary import bonds.
  • Drawback program.
  • Palletizing, crating and handling of cargo.
  • Sensitive to damage and other packing issues.
  • Hazardous material regulations.

Invoicing options

  • Do they have monthly billing?

Industry references

  • Ask for references from freight forwarders.
  • Interview a number of freight forwarders and ask to visit their facilities.
  • Negotiate rates based on services the company will use.
What a freight forwarder expects from a company they represent

General information about the company

  • Company information - contacts, phone numbers.
  • Product information - special handling, packaging, etc.
  • Export licensing and clearance information for AES filing.
  • Power of Attorney or individual shipment authority.

What services will the company require?

  • Special types of delivery needs.
  • Volume the company will be shipping.
  • Letters of credit transactions.
  • Documentation needs - preparation and legalization.
  • Marine insurance.
  • Consolidations.
  • Warehousing.
  • Special shipments - drop shipping to certain customers.
  • Will the company be processing ATA carnets?
  • Temporary import bonds.
  • Labeling and marking.

The company will involve the forwarder early in the transaction and early in the planning process for expansion efforts.

  • The freight forwarder must know the parties to the transaction. If the transactions involve letters of credit, the forwarder must have a copy or the original so documents can be prepared exactly as needed to comply with the letter of credit.
  • Involve the forwarder early in the process if the product needs special crating, handling, consolidating and/or any other type of special service.
  • If warehousing, JIT, pick-and-pack services are needed in other countries, ask your forwarder about these special needs.
  • If new strategies involve moving some of the production to other countries, contact the forwarder for services they can provide very early in the planning process.

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