Efficient logistics can make or break your business. Imagine having to handle documentation, clearances, carrier selection, bookings, warehousing and much more all by yourself. Sounds quite stressful, doesn’t it?
Whether you are importing materials from a continent across or exporting them to your client, freight forwarding plays a crucial role in your supply chains. And understanding how it works can benefit your business in myriad ways. This guide covers the essentials of freight forwarding and why choosing a trusted service provider like Globalex makes a world of difference.
Freight forwarding may seem complex, but it’s all about simplifying the journey of goods from one place to another. This one decision can help you cut costs, streamline your entire supply chain process, and manage risks exceptionally well.
Today, we’ll explore how it works, the steps involved, and key benefits, especially for businesses in the Middle East. So, if you’re looking to optimize your supply chain, read on to discover how freight forwarding can work for you.
What is Freight Forwarding?
Freight forward is the commercial process of managing the shipment of goods on behalf of a business. Think of freight forwarders as intermediaries in your shipment process, taking care of the multiple steps involved. Whether you are the shipper or a carrier, the freight forwarders ensure that your goods move efficiently and smoothly through the global supply chain. How? By working with shipping lines, railways, airlines, trucking services, as well as customs authorities.
Types of Freight Forwarding
Your freight forwarder may work with single or multiple carriers to ship your goods to the discussed destination based on the kind of goods and your exact requirements. Here are the different types of freight forwarding options:
Road Haulage
Different kinds of vehicles make up for road haulage. The choice will ultimately depend on your goods, distance, and other environmental and logistic factors. Some of the options are:
- Container trucks
- Flatbed, semi-low loader vehicles
- Temperature controlled trucks
- Box trucks
- Cars
- Tankers
- Side loaders
Air Freight
If the forwarder decides that air transportation is the best way to ship the goods, then they may choose one of the following ways:
- Direct services where the parcel can fit into the hold of an already scheduled aircraft
- Consolidation is where different shipments are placed in a flight together.
- Charter planes
Sea Freight
If waterways are the go-to option, then your goods may be transported using one of the following:
- Container ships that carry cargo packed into 20 or 40-foot containers. They are placed below the deck, and if they don’t fit, special equipment may be added.
- Tankers to carry liquids, oil, or other substances that require special care
- Breakbulk carriers for single commodities. For example, coal
- Roll-on or Roll-off vessels that transport anything that is wheeled onto it
Steps Involved in the Freight Forwarding
To help you understand the concept better, here’s a brief overview of what a general freight forwarding process looks like:
1. Agreeing to Incoterms
Incoterms stand for International Commercial Terms. These are basic trade terms that the importer and supplier agree on. It outlines what each side is responsible for during the process. This stage is extremely important because your freight forwarder will make all the arrangements based on the terms included. For instance, transportation costs, cargo destination, preferred mode of shipping, customs fees, and more.
2. Origin Handling
In this stage, the freight forwarder is arranging all the necessary documentation like bill of lading, packing lists, certificate of origin and custom compliance forms. Furthermore, an examination of the cargo, in terms of its quantity and quality, is carried out. This is to ensure that the goods match the details provided on the shipping document. If everything checks out, the forwarder ships the goods to the port, railway, or carrier domain (air freight) based on the transportation mode.
3. Export Custom Clearance
The freight forwarder may be responsible for coordinating the paperwork. Here, the forwarder submits all the paperwork on behalf of the supplier and liaises with the customs officer to make sure everything is in order.
4. Shipping
Once everything checks out and the cargo has been cleared, it will be shipped to the destination. As part of their services, the freight forwarding company will negotiate the best prices and safest slots for the cargo.
5. Import Customs Clearance
The process for import custom clearance is the same as the export custom clearance. The forwarder will submit all the documents and liaise with the import custom authorities. Once cleared, the goods are transported to their final destination as discussed in the incoterms.
Why Should You Consider Freight Forwarding for Your Business?
You may still wonder, “What’s the need? I can handle it all by myself.” Our response? How much can you handle yourself? And when you have experts to do it, investing in freight forwarding is a good business decision. Here’s why!
1. Simplification
The burden of getting your logistics right can be a little too overwhelming. Your forwarder takes this burden off you, managing all the steps necessary in moving goods nationally or internationally. They save you important business time and effort.
2. Expertise
Custom regulations can get tricky, especially for countries that have stricter import-export trade rules. Moreover, they vary widely across countries. Thus making it difficult for you to know everything. Freight forwarders have in-depth knowledge of customs requirements, making sure shipments meet all legal standards.
3. Streamlined Documentation
Shipping documentation requires utmost precision. A single mistake can lead to non-clearance from the customs officers, putting your shipment to a stop. Freight forwarders ensure accurate, compliant documentation, which prevents delays and fines that could arise from paperwork errors.
4. Cost Efficiency
Freight forwarders have already established relationships with cargo and carrier companies. As a result, they have better chances of securing lower rates for shipping, warehousing, and customs handling.
5. Access to Global Networks
Simply getting the goods shipped to the receiver is not the aim. The goods should reach the receiver in their best state without any damage. Moreover, they should reach within the stipulated time.
The forwarder’s access to global networks makes all of this possible. They are able to secure faster transit times, reliable carriers, and flexible shipping routes to meet customer deadlines.
Conclusion
Freight forwarding brings about an overall efficiency and reliability in your supply chain, offering you the best way to import or export goods without a lot of risk. Forwarders also provide cargo insurance options to safeguard your shipments from potential damage or loss during the transit.
For UAE businesses, where the markets are fast-paced, and regulations are strictly upheld, a freight forwarder reduces the chances of legal issues and minimizes potential penalties. Visit GlobalEX today to get the best freight forwarding services tailored to your specific requirements all over Dubai, UAE.