Shipping goods to international markets involves several tasks. Business houses may have their in-house arrangements to ship goods abroad or they may rely on freight forwarders to do this for them.
It depends on whether businesses want to focus on their main business activities or whether they would also prefer to handle non-core activities such as packing, freight forwarding, etc.
With the growth of the global economy, the shipment of goods both domestic, as well as international, has increased exponentially. USD 19 trillion worth of annual exports were recorded in 2019.
Companies have to decide on handling their exports or leaving it to the expertise of freight forwarders. If they want to handle exports instead of letting outside agencies do it, then to meet the growth in demand, they must invest in the latest logistics infrastructure, technology, and skilled manpower to handle the associated tasks. They have to weigh the costs and benefits of such a move before taking it forward.
Most organizations these days prefer to let third-party operators take care of their company’s non-core functions so that they can concentrate their resources on increasing their core business.
Freight forwarders specialize in getting lower costs without sacrificing on the quality of the job. They help with the logistics of moving goods from point A to point B in the most cost-effective manner.
Freight forwarders are the intermediary between the consignor of goods and the point of distribution, such as the destination port. They arrange the inland transport, port and customs documentation, the shipping on board ocean vessels, and other supplementary activities.
Because of their rapport with government and other service agencies, they are able to get work done smoothly, besides getting favourable rates, schedules, etc.
Established freight forwarders are reliable and help in the planning, coordinating, and movement of your cargo to their destination efficiently.
As can be seen, the main responsibilities of a freight forwarder are to arrange for shipping the cargo and process its export documentation.
Freight forwarders are essentially Non-vessel Operating Common Carriers (NVOCCs) though there are some differences between the two. The main difference being that an NVOCC issues its own Bill of Lading known as the House Bill of Lading (HBL).
Freight forwarders may or may not own warehouse space, a transport fleet, or other assets that are required for the successful export of cargo to its overseas destination.
When they do not own such infrastructure, they lease or hire them from other service providers. Freight forwarders are examples of second-party logistics providers.