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5 Tips on How to Choose a Proper Freight Forwarder (Part 2)

Posted on Tuesday, July 8th by

The selection of a freight forwarder is not a random process, but one that involves a considerable amount of research. You need to make sure they have the necessary experience and knowledge of how to best handle your shipments, the logistics of a business being paramount to its success. So here are another five tips on choosing a proper freight forwarder, as well as some basic specialised terminology you should be familiar with when handling shipments.

5 tips on choosing a proper freight forwarder



1) Find out what their shipment management strategy is.

You should know exactly who to contact in order to submit your paperwork, who will be in charge of the shipment and whom you should contact for any problems that might arise. You should also know whether contact will be via telephone, automatic web tracking or email.

2) Verify if they have agents operating in the country of destination.

These can prove vital in whenever DDU, DDP or DAP shipments are due, as well as in the event of any unexpected situations your customer may be faced with, such as delays due to various reasons. Their agents can provide assistance in such situations.

3) Make a list of requirements.

You should write down things like preferred start time, goals related to shipping speed, commodities and so on, aspects related to packaging, incoterms or cargo volume, for instance.

4) Check whether they have one or several service providers.

There may be no space available with a particular shipping company, so they should be able to rely on the services of another to provide a solution in such situations.

5) Check whether they provide cargo insurance.

The freight forwarder should be able to provide insurance in case your cargo is stolen, damaged or lost.

There is also some basic terminology you should learn prior to selecting a freight forwarder and looking into freight forwarding. Here are a few terms to start with:

FMC

– The Federal Maritime Commission is the federal agency that regulates the activity of vessel and non-vessel operators.

Freight forwarder

– Also referred to as forwarding agent or simply forwarder, this is an individual or a company that manages shipments of goods from manufacturers to end destinations, customers or markets for other individuals or companies.

OTI

– The Ocean Transportation Intermediary operates as an ocean freight forwarder, a non-vessel operating common carrier (NVOCC) or both under a license provided by the Federal Maritime Commission.

NVOCC

– A non-vessel operating common carrier is a freight forwarder or consolidator that operates as a carrier despite having no vessels in possession. NVOCCs are physically responsible for the shipments they handle and emit their own bills of lading. The latter is one of the aspects that differentiate them from freight forwarders. Also, freight forwarders operate as agents subordinated to shippers or consignees, whereas NVOCCs operate independently. Finally, NVOCCs often have more favourable ocean freight rates.

IAC

– The term “indirect air carrier” defines any US individual or entity that handles shipments for customers without having an air carrier operating certificate issued by the Federal Aviation Administration. An IAC uses – at least in part – a passenger air carrier for shipping. They must draw up a security plan according to the TSA regulations. Basically, an IAC is a freight forwarder that also handles air freight shipments.

IATA/CNS

– The International Air Transport Association is the trade association for the airline industry which also formulates industry regulations. The Cargo Network Services is the US subsidiary of IATA.

Independent freight forwarder

– This term refers to any freight forwarder outside the global 25 freight forwarders. An independent freight forwarder does not have work points in every major country but agents operating worldwide to respond to the needs of customers.

The term

freight forwarder

is commonly used and encompasses a wide range of service providers. You may be looking for a business partner that operates under the following licenses and/or provides the following services:

• A non-vessel operating common carrier (NVOCC) licensed by the Federal Maritime Commission (FMC) for ocean freight shipping;
• An indirect air carrier (IAC) licensed by the International Air Transport Association (IATA) or the Cargo Network Services (CNS) for air freight shipping;
• A customs house broker to handle customs clearance procedures;
• An intermodal trucker for container trucking within the US;
• A rail consolidator for domestic rail freight shipping within the US;
• A domestic LTL/FTL trucker for US trucking;
• Warehousing services;
• Container freight station (CFS) services;
• Documentary or notary public services.

You should note that some freight forwarders only provide some of these services, but similarly, it is possible that you do not need to use all of them either.

It is essential that you are aware of the services a freight forwarder provides that address your needs and the licenses, certificates and authorisations issued by authorities like the IATA or FMC under which they operate. You should make a list of requirements and hand it to the freight forwarder so that they know exactly what services you are looking for. Keep proper evidence of your shipping activity and remember that it is your responsibility to provide accurate information regarding your shipment and classify the commodities properly, among others.

Make sure you do not select your freight forwarder based solely on their lower freight rates or fees retained for logistics services. Remember that the selection of a freight forwarder involves the same degree of research as that of an accountant or vendor. Many providers of freight forwarding services only set these low freight rates to lure customers. Also, keep in mind the fact that your future freight forwarder can only return effective logistics services if provided with all the necessary information to meet the company’s needs, which they must fully understand. Also, they must understand the way in which the company operates.

You should note that freight rates are subject, in part, to commoditisation and that prices and services go hand in hand in the field of logistics. Therefore, a proper freight forwarder will enable you to centre your attention on your core expertise. They will know how to address your various business needs and manage your shipping options.

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