12/06/2014
Why use a freight forwarder?
The main reason why most businesses stay away from importing goods for production or exporting their products to other countries is because they aren’t sure of how international trade works. We have heard the stories of cargo getting lost in transit and when your first $ 30,000 (INR 18,90,000) consignment is in transit, you can’t help but worry that something bad might happen. Unfortunately there is no other way of conducting international trade. So how do you become an international brand? You hire a specialist to handle your logistics. These specialists are known as “freight forwarders.”
While freight forwarders will certainly help transport your goods to their destination, there are a lot of other things they should help you with as well.
Did you know that there are more than 800 documents recorded at the United Nations which pertain to commercial transactions worldwide? Your forwarder is the one who should guide you on which ones are applicable for your consignments.
Are you under the impression that you only need to worry about customs regulations in your country? Did you know that if your paperwork doesn’t meet the standards of the destination country, your consignment could be rejected and you could be burdened with the cost of bringing it back to origin? What’s worse is that it could just lie unclaimed and rot. Frightening, isn’t it?
In order for you to get a better understanding of this, allow me to give you a small example. Any consignments which you send to Panama need to be accompanied by a commercial invoice, bill of lading and consular invoice. The consular invoice will need to be in Spanish and can only be obtained from the Panamanian Consulate. All these documents will also need to be countersigned by the Department of Commerce in your country and then legalized from the Panamanian Consulate. Not everybody would know this. But for a freight forwarder, it’s just another day at the office.
As you see, there is a lot more to freight forwarding than just customs clearance and freight rates. A freight forwarder would listen to your requirements carefully and then advise the best method to move your cargo. This includes the documentation required as well.
In countries like ours, the term “freight forwarder” is grossly not common and randomly misunderstood. In a country like Albania, a freight forwarder is thought as someone who can give you freight rates and nothing else. How is that any different from a freight broker then?
Irrespective of where you are in the world, you must understand the deliverables of your freight forwarder and ensure that you receive the services you pay for. Following are some of the services which freight forwarders must offer:-
1. Packaging and labeling - Freight forwarders must assist exporters with packing and labeling requirements for their export. This includes informing them of any requirements in their country as well as requirements in the destination country. There are different packaging and labeling rules in different countries around the world and considering the fact that your cargo will be loaded and unloaded a few times during transport, it is imperative for you to ensure it’s packed and marked properly. Don’t forget about the extreme weather and temperatures your cargo would face on the high seas. So pack and label your consignment properly.
2. Documentation - As mentioned earlier, there are more than 800 internationally accepted commercial documents. It is your freight forwarder’s job to ensure you prepare all the necessary documentation for your consignment. Some of the most common documentation used in consignments includes commercial invoices and packing lists, customs clearance documents, export declarations, bills of lading and certificates of origin, among others.
3. Freights - Apart from offering you the lowest freight rates, freight forwarders must also inform you about various other things like transit times, vessel delays, roll over’s, terminal charges, ports of loading, etc. Always get a complete quotation in writing from a freight forwarder before deciding to use them. You wouldn’t want your bill to show additional charges which weren’t mentioned in the quotation.
4. Service - You might think that once your cargo has sailed there is nothing left for a freight forwarder to do. That’s not true. A freight forwarder must keep you informed of your consignment at all times right up to when the consignee takes delivery at destination and returns the empty container to the shipping line. This is the real time when the shipment has been completed.
Are you shocked to learn that your current freight forwarder doesn't do half the things mentioned here? Perhaps it’s time for a change.
