Importing and exporting goods are key components for many retailer and manufacturing businesses. When we think of an internal chain of any business that sells goods overseas a freight forwarder, logistics provider is likely to come into the equation.
International shipping could offer your business many opportunities and great prospects, however we understand that this may seem complex. This article aims to explain what freight forwarding is so you can decide whether you may need one now or in the future.
Let’s start with a business directory definition which explains that a freight forwarder is “a company specialising in arranging the storage and shipping of merchandise on behalf of its shippers. It usually provides a full range of services including: tracking in land transportation, preparation of Airfreight, Roadfreight, Seafreight and Railfreight and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance and filing of insurance claims”
In a nutshell, a freight forwarder is a company that arranges your importing and exporting of goods. Whether that be from the manufacturers which may be in China, then to a shipping port to move by Seafreight to America where goods need to be delivered via another form of transport for example a truck or rail and then the rest of the products may come from America to United Kingdom via Airfreight.
This process is called a supply chain and is a business process that can easily be managed by using a freight forwarder. By managing the process with a single freight forwarder, you can cut costs and build revenue. Freight forwarders act as an extension to your business providing bespoke results as these middle agents know that every business supply chain is different.
A freight forwarder acts as a mediator between clients wanting to export goods and the shipping companies that perform those tasks. The freight forwarder doesn’t move your goods themselves.
The freight forwarder you chose will utilse already established relationships with carriers and will save you an untold amount of time and money by not doing it yourself.
Terminology in any industry is something that a consumer may have to get used to when understanding what Freight Forwarders are talking about when they communicate to one another. This simple guide should get you started- however, for a more in-depth guide BIFA is a handy resource.
Use containers which come in a verity of different shapes and sizes from 20ft to 40HC or a Reefer which is a chilled container. A freight forwarder will work with Seafreight companies like Maersk, MSC, CMA etc.. and will book space on a container ship.
A Freight Forwarder would often call a container a TEU, which would mean a Twenty-foot equivalent unit. So If your products fitted into a 40FT container this would equal 2 TEU.
LCL is an abbreviation somebody in the industry may use when refereeing to a Less than Container Load, this could also be known as groupage.
LCL is when you have a shipment which doesn’t fill a container, for example it could be 1 or two boxes, and these will be put into a container with other shippers going to a distribution warehouse at the destination for onward delivery.
This is the fastest form of logistics and it is normal for high value products to be transported this way as well as being the mode of transport for time critical shipments.
The airlines use specialist equipment like ULDs which fit the shape of a plane, they also use flat rack pallets and car silages. Rather taken weeks to arrive you can send your freight overnight and delivered next day.
There are similar terminologies such as groupage or LTL (Less than Trailer Load) or Full Trailer Loads (FTL) Groupage is like LCL but instead of one or two boxes, the goods could take up 50 or 60% of a vehicle. Typically, when using roadfreight a 40ft axel vehicle with canvas sides is used which is known as a tautliner.
Incoterms, what do they mean?
Incoterms are the key to any shipment. It clearly indicates who is responsible for payment in the supply chain, dependent on the INCOTERM the shipper may only be liable to pay for your products to get delivered to the port, others may include all charges from door to door. For example, DDH is Duty delivered tax’s (aren’t paid) That means the consignee needs to pay all taxes of shipment.
Some examples of common INCOTERMS used:
The seller's minimum responsibilities. Delivery by the seller is deemed to be when goods are placed at the buyer's works or warehouse. Goods aren’t cleared for export and are not loaded onto any collecting vehicle. The buyer then incurs the costs and responsibilities in taking the goods from the seller.
Seller delivers freight cleared to carrier nominated by the buyer at the named place. If the seller's premises are chosen then the seller is responsible for loading. If at any other place the seller is not responsible for unloading.
Seller clears goods for export, delivers to buyer's nominated carrier and pays the cost of carriage to named destination. Buyer bears all risks after delivery. If subsequent carriers are used the risk passes on delivery of goods to first carrier.
To find more information about INCOTERMS click here.
You’ve found us! Here at FSC Ocean we are freight forwarding specialists. We are based in Putney, which is close to Fulham, London as well as having a network of offices around the world. We implement tailored, streamlined logistics solutions that deliver reliable, cost effective value to our customers! Call us today or get in touch here to see how we can benefit your supply chain and get your goods imported to create better business opportunities for you.