What is freight forwarding, and should you use it? An objective guide for your business

Date
October 25, 2022
Category
Freight
Written by
Adrian Breen

There’s a growing demand for freight forwarding as more eCommerce companies are using this service to keep pace with today’s customer delivery expectations. Projections show us that the freight forwarding market is expected to grow to $220 billion in 2026, up from $180 billion in 2021.

Freight forwarding can have a positive impact on your logistics if you’re currently dealing with time-consuming or inefficient processes. However, it’s not the best solution for every company. Weigh the impact of using a freight forwarder by learning the full scope of the advantages and disadvantages.

What is freight forwarding?

Freight forwarding is when a business hires an intermediary company to move goods through the supply chain on its behalf. Specifically, freight forwarders help eCommerce companies with the transportation of their products. Although you can work directly with Freight carriers (the shipping companies), they typically only work with businesses doing very high levels of freight shipments.

From your manufacturers warehouse to your distribution center or 3PL. A Freight forwarder can manage the whole process.

Freight forwarding companies offer an array of services to eCommerce businesses, including:

  • Booking cargo space
  • Preparing documents, including customs clearance & cargo insurance
  • Arranging air, sea, and road transportation of goods

Freight forwarders help eCommerce companies that have complex supply chain management systems in place by creating a seamless freight experience.

What are the benefits of freight forwarding for eCommerce companies?

Freight forwarders offer a wide breadth of logistics services that are beneficial to eCommerce companies. Depending on your current system in place, a freight forwarding company may be able to help you streamline some — or all — of the supply chain process.

Full scope of logistics solutions

A freight forwarding company can assist you with every step of the freight shipping process. It acts as the logistics intermediary to plan the entire process for your eCommerce business. A freight forwarder can also help you with the consolidation of your logistics process.

For example, if you have many contracts with many companies for the various steps of the logistics process, a freight forwarding company can handle all of those steps with just one contract. This makes it easy when you need to get a hold of someone with questions or concerns — the freight forwarder is your only point of contact.

Most freight forwarders have a large network that they can tap into to provide services. Within their large network, freight forwarders have access to logistics solutions that you might not have otherwise. This includes solutions like finding freight space or helping you optimise the freight space you do have.

More shipping efficiency & cost savings

Your customers want quick deliveries that aren’t cost prohibitive. And so do you for your freight shipping process. Freight forwarders can help you find the most efficient and inexpensive way to ship or bring in products from overseas.

Instead of having to coordinate contracts with multiple logistics companies yourself, freight forwarders will negotiate on your behalf.

Freight forwarding companies have experience in the work they do and diversity in the companies they work with. They have long-standing relationships with logistics companies and work with them to find cost-effective and efficient solutions. For example, freight forwarding companies can use their large network to find shipping prices that fit within your budget.

Freight forwarders are able to negotiate better freight costs because they’re handling cargo for multiple companies at once. They’re able to get bulk prices that a single company wouldn’t normally qualify for.

Customs and cross-border regulation assistance

One of the main driving forces of an increasing freight forwarding market is cross-border eCommerce activity. When you deal with international shipping or imports, the sheer number of rules and regulations to follow can be confusing and overwhelming. If your business doesn’t abide by the exact international export or import regulations, it could result in costly fines or shipping delays.

Freight forwarders can handle export, import, and other customs documentation for all your international shipments. They’ll make sure that all necessary documentation gets filed properly and in a timely manner.

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What are the challenges of freight forwarding?

While freight forwarding certainly has its benefits, it’s not the right fit for every eCommerce company. By understanding both the benefits and challenges of freight forwarding, you can make an informed decision about whether you need it.

Not as much hands-on control over the process

Even with a large logistics network to rely on, freight forwarders don’t have complete control over the entire logistics process. Their primary responsibility is to help you plan and coordinate the transportation of your goods. They have less hands-on control of the individual subcontracted steps in the process.

When you work with a freight forwarding company, it is your sole point of contact, and typically you won’t be able to make direct contact with the individual transport companies. If you need direct end-to-end control over your logistics process, a freight forwarder likely isn’t the best option.

It's really important when you are choosing a freight forwarder. That they offer a tech enabled platform to track, manage and book your freight process in an online portal. This will make the process a lot more convenient. Real time tracking will provide full visibility into your freight shipments. It means you can be better prepared for delays and disruptions.

Unplanned & unexpected delays

There are many cases where even the best freight forwarder can’t plan for or predict a delay. Delays that happen because of weather or national and regional emergencies or because of the truck driver shortage aren’t always predictable but can happen at any time.

For example, right now, the truck driver shortage is estimated at 80,000, and experts expect that number to double by 2030. Even the most experienced and long-standing logistics providers are at risk of experiencing last-minute labor shortages.

And it’s not just the truck driver shortage — unexpected delays happen without warning, like the container ship that was stuck in the Suez Canal last year, blocking any other container ship from getting through one of the world’s busiest trade routes for six long days. No matter how carefully your freight forwarder coordinates shipments, they can’t unblock the Suez Canal.

When these unexpected delays happen, it’s not always easy to get resolutions or answers from your freight forwarder.

The fact is that every freight forwarder transports goods for hundreds of other companies. So, in situations like the Suez Canal blockage or cargo containers stuck in a port, freight forwarders deal with questions and inquiries from many other customers, and you could be competing for their attention. Whereas if you manage freight contracts yourself, you have more flexibility in dealing with an unplanned situation.

Does your eCommerce company need freight forwarding services?

Whether you need a freight forwarder depends on what you need to improve about your current logistics process. If you need more cost-effective and streamlined logistics processes, a freight forwarder may be the best solution. However, if you need more control over the logistics process, a freight forwarder could be counterproductive.

One solution that works for any eCommerce company is Wayflyer Freighter. Freighter gives you access to flexible terms, an easy logistics booking process, and, best of all? Best in market freight rates.

Even if your freight forwarder negotiates a great rate, you’ll still have to pay freight costs in full before your inventory is ready to sell. But with Wayflyer Freighter, you can extend the payment terms on the cost of your freight shipment, releasing cashflow for you eCommerce business.

Want to find out what our Freighter rates are? Compare rates now.

How are you thinking about inventory planning for 2022?

Find out how Wayflyer can help plan, source and finance your inventory orders by filling out the form

Written by
Adrian Breen
Adrian Breen is a Growth Manager at Wayflyer

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