For many national and transnational corporations, supply chain management is a business function that is essential to long-term success. Freight forwarding companies (FFCs) is a confusing term for a lot of people, even for people who work in the industry. What exactly do these businesses do? Are they a shipping firm? Are they a distribution/warehousing agency? The simple answer to this question is “no” – freight forwarding companies are not classified as shipping or distribution agencies; however, they can assume some of the responsibilities commonly performed by such firms. So, there’s no doubt it can be a little confusing. If you want to learn more, then make sure you read on.
A breakdown on freight forwarding companies
As outlined earlier, FFCs focus predominantly on the storage and shipping of products on behalf of shipping firms. They provide a range of critical services in the realm of supply chain management. Indeed, these are as follows:
- Booking/renting cargo space
- Development of export/shipping documentation
- Negotiation of cargo fees/rates
- Insurance of cargo/shipping
- Consolidation of merchandise
- Monitoring inland transportation
If that still sounds a little confusing to you, then think of it this way – the best freight forwarding companies are responsible for arranging the importation/exportation of your merchandise.
Why should I use FFCs?
International laws can be quite complex and convoluted. The required documentation can vary significantly from country to country, which is why many transnational corporations use a commercial FFC to act as their logistical partner. This is because these businesses are well-versed in the documentation, custom laws and other relevant legislation applicable to import/export transactions.
Consequently, you won’t have to worry about complex legislation regarding international shipping. You can leave these processes and jargon to the work of your associated FFC. In terms of other advantages, you won’t have to worry about insurance, warehousing requirements, risk assessment, management of cargo and various methods of international payment.
Can freight forwarding companies handle B2B shipping?
Thankfully, most FFCs are trained in business to business shipping. Business to business (B2B) refers to a situation in which one firm makes a direct commercial transaction with another corporation. This means you don’t need to go through another intermediary or another supply management firm, which save you a lot of money in the long run.
What happens if there are delays?
It is essential to recognise that shipping delays are not the fault of your chosen FFC. A lot of these delays can be attributed to things external to the scope of your FFC, including poor weather, breakdown in communications, port delays or unforeseen route changes. While it can be frustrating for the host business, freight forwarding companies are not responsible for these changes/delays.
There are still restrictions on some products
Working with freight forwarding companies doesn’t mean you can bypass regulations about particular goods and substances. Regardless of whether your merchandise distributed via sea, air or land, prohibited items cannot be transported. Some examples of prohibited items include:
- Sharp objects
- Dangerous goods (like flammable liquid and toxic items)
- Perishable items
Do some freight forwarding companies specialise in specific cargo types?
Some FFCs specialise types of cargo, whereas other businesses will accept many different types of merchandise. While it is beneficial to work with a business that specialises in your merchandise field, it can be hard to find a suitable intermediary if you work in a highly niche industry. At the end of the day, we recommend that you do as much research as you possibly can. You should learn about the industry, what your needs are and speak to as much FFCS that operate in your country and internationally!