Freight forwarders serve clients in the manufacturing sector, providing them with the necessary logistics to take their goods to market. For example, a Chinese clothing factory might need all of their shipped goods to be transported, first by road to a railway terminal, then by train to a port, and then finally by ship to their global customers. A global forwarding company arranges all of this and ensures the process runs smoothly.
Global supply lines
Global supply lines are complex and often vulnerable to disruption. It has been commonplace for decades now for manufacturers to ship their goods directly to clients worldwide. Some businesses, particularly those producing light, low-cost goods, rely on the postal service or couriers. For businesses making larger items like bulk clothing or furniture, this is impossible. A global forwarding service is able to match the appropriate shipping solution to the client need, whether that be a fast and light air freight service, or containerised shipping for bulky goods.
Benefits of logistics in-house
Some companies do logistics in-house. For most, however, this is an unnecessary and capital-intensive investment that involves building a large team, owning or renting means of transportation, and dealing with legal and logistics requirements. A forwarding company can help by connecting clients to the road, rail, and sea freight services, providing end-to-end logistics that ensure goods are delivered to customers on time and in one piece.
Different businesses have different logistics requirements. Some of the most common clients of global forwarders are manufacturers without an in-house logistics team. In order to deliver to clients, they may require shipping either regionally or intercontinental. This requires both shipping to a major ship or airport, then passage on a freight ship or aircraft, and then finally distribution to clients. This is an extremely complex process. An appropriate service must be matched to your cargo, dependent on size, weight, hazardous status, and delivery location. Time-sensitive goods such as fresh fruit require specialized services. Then, transport must be arranged to the port. This needs to be coordinate so that it matches the sailing schedule of the ship (or aircraft) that your goods will be load on. Some goods are containerized before being placed aboard a ship; this can take place at the client’s premises or at the port.
Then the goods are embarked on a ship. Long-distance crossings can take varying amounts of time, dependent on the schedule, weather conditions, and the route itself. At this stage there are legal and customs requirements, as well as paperwork such as the bill of lading. All of this is handled by the forwarding team.
Finally, the ship arrives and is offloaded onto onward transport to the customer. This could take the form of rail or road transport, or more rarely onward sea or air shipments. For routes to unusual destinations such as small islands, it is likely more than one sea crossing will be required; first to a nearby major port, then onwards to the final destination. Delivery to the client is carried out by road transport.
Throughout the process, care is to ensure there is no damage to the goods. For fragile goods, extra care is for the most expensive and damageable cargo, a white glove service is recommended. White glove services include dedicated extra services and personal handling of the goods, and are appropriate for shipments such as musical instruments, paintings, or breakable machinery. Unusual cargos such as cars require specialized services too. In this case, there are dedicated ships designed to take cars as cargo.
One important thing to consider is whether your cargo is large enough to take up an entire shipping container (or multiple containers). If not, you will require an LCL, or less than container load service. In this service, your cargo is merged with other customers to form a full container, of course taking care to protect and separate them to avoid confusion or losses. These services are normally cheaper as they involve less weight but may be slightly slower as the cargos will require matching to fill an entire load. For special shipments or white glove services, the cargo may not be containerized at all. In this case, it is loaded directly into a ship or specialized container than ensures no damages occur. Naturally, these services require more time and cost due to the personalized care and staffing requirements.
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A forwarding company enters into an agreement with a client to ship all or some of their goods on a regular basis. This means you need to provide details on your usual production, client delivery locations, and goods type. With all of this information, the forwarder can find regular services and provide a rough timescale for client delivery. You can then pass this information onto clients, advertising on your website the approximate delivery times. Every care is to ensure prompt delivery, but both sea and air transport can still be at the mercy of weather conditions and traffic in ports.
2021 was an unusually bad year for cargo delays. Just 40% of sea freight shipments made it to their destination port on time: this compares very unfavourably with the long-run average of 20% late shipments. As you can see, in both cases it requires a certain amount of flexibility. A forwarding company will always advise you of any potential and actual delays, so you can pass on the information. Both adverse weather and heavy traffic going into ports, as well as man-made factors such as strikes, can delay shipments.
For most businesses, building out a shipping function is something they are not ready to do. This is true even for the very largest multinationals when international transport is in. For this reason, global freight forwarding is a competitive and tightly-margined industry, with companies competing on both price and reliability. A freight forwarding agreement marks a firm bond between two businesses that work together to fill one’s customer needs.