A freight forwarder can make an exporter’s life much easier. So here’s a guide to finding the right freight forwarder to refine your logistics process.
It can be hard to get your head around the logistics of exporting—new and existing exporters alike. Fortunately there are professionals who can take care of these things for you; they’re called freight forwarders.
About freight forwarding
A freight forwarder is a person or organisation that specialises in arranging documentation, terms of carriage and customs clearance for the transport of goods to dispatch to customers. The forwarder acts as an agent on behalf of your business and has the power to negotiate with the carriers on matters such as priority cargo and shipping rates. Freight forwarders aren’t just for exporters; they also work on behalf of importers and on domestic shipments as well.
Freight forwarders work with customs brokers to ensure your shipment makes it out of Australia and safely to its destination. A customs broker is a person or organisation authorised to execute customs clearance procedures for exporters. They may also work with importers, too.
While it’s true that you can probably handle these things within your own company, there are a number of advantages to working with a freight forwarder. “In essence, any company that’s dealing with international freight, a freight forwarder can actually add value to,” says Jo-Ann Murphy, manager of international supply chain at Post Logistics. “A freight forwarder provides the services to facilitate the functions between the different countries and management. The skill set required to do that well is quite unique.”
Unless your business is big enough to have its own logistics division, having someone on staff to manage forwarding is probably not the best use of human resources when specialist freight forwarders can leverage better deals and access certain benefits not available to individual companies. “Larger companies may have enough staff for their own division. Woolworths does, but they’re more anomalies as opposed to the standard,” says Murphy. “If you’re working with a shipping line, for example, they will just give you rack rates unless you’re really large.”
Depending on how you want to transport your cargo, sometimes you won’t have a choice as to whether you need to use a forwarder or not, she notes. “For airfreight you have to be IATA [International Air Transport Association] accredited for all international airlines or else you have to pay full rates. So the airlines will encourage you to operate through freight forwarders. They actively discourage individual interactions.”
Cargo that falls short of a full container load also requires a freight forwarder because a shipping liner won’t take part loads. A freight forwarder can combine your part load with another business’ part load to satisfy the carriage lines.
Add to that the paperwork that comes with export customs compliance processes and you’re better off calling in the professionals. They do cost money, but they can offset their own cost by saving you a packet too. “It’s a direct cost saving and an efficiency cost saving with your staff and your labour and your overhead,” reminds Murphy.
The Right Freight Forwarder
Factors that determine the right freight forwarder for your business include the type and volume of product you’re looking to shift, the pick-up point and destination of the product and the mode or modes of transport by which the cargo will travel.
“There are a lot of freight forwarders and their areas of expertise vary greatly. You have the large multinationals who have a global infrastructure, which suits some customers, but you also have niche players that suit other customers,” remarks Murphy. “I know some forwarders would look at the total logistical environment end-to-end as opposed to commodity-based point-to-point, so it comes down to what a particular exporter is looking for in a provider. And if they’re too particular, often the large players won’t even deal with them because the cost of service is too great, they won’t give the same sort of love as a smaller provider.”
The type of product you’re exporting will immediately narrow down your choices, particularly if you have cargo that needs particular attention, for example fragile goods, such as glassware or specialist instruments, or a shipment requiring refrigeration, like food or pharmaceuticals. It is advisable to seek freight forwarders who deal with your type of product so they know how to handle it for export. A good place to start would be to ask businesses similar to yours whether they can recommend a freight forwarder, or you can make enquiries with the freight forwarder as to comparable clients to see if they may be a good match for your business.
Similarly, the volume of product you want to move could determine both the mode of transport by which it will need to travel and whether or not a particular freight forwarder can move it. Freight forwarders manage small loads by fitting them together with other small loads to make up full containers so the more clients a forwarder has, the more likely they’ll be able to fit you in. However, it’s also true that some of the larger companies won’t bother with the small stuff. On the other hand, if you have massive shipments, some of the smaller companies don’t have the leverage to deal with it properly and it may mean that some modes of transport, for example moving it by airfreight, becomes too expensive for you.
Service Location Limitations
Service locations could further refine your choice of forwarder. If you’re exporting from a remote or regional area, for example, there may only be a handful of organisations that service your location. Additionally, the destination of your goods may determine who you choose. Some might specialise in particular regions, countries, or even specific locations within countries, while others might provide a broad global service, which suits businesses that export to several countries.
Finally, the mode or modes of transport you choose for your cargo is also an important factor that will determine which freight forwarder you choose. This is because some freight forwarders have special relationships with carriers that could determine aspects like discounts and priority for your shipment.
If you expect to send most of your cargo by sea, it’s best to find a freight forwarder aligned with a shipping line, or similarly, if you’re looking for someone to handle airfreight, seek out an airfreight forwarder. Don’t forget that you may want to combine modes, with air-sea freight an option. In this case, a freight forwarder with connections at an external port, for example hubs like Singapore or Dubai, will prove helpful. And remember that airfreight forwarders with IATA accreditation will make things smoother for you.
The Freight Forwarding Bill
Generally speaking, a business will need to provide a commercial invoice and shipping details to a forwarder, who will then take care of the other details. Components of your forwarding bill will include handling, freight activity, customs processes, local cartage, import charges and terminal charges as well as a fee for the forwarding service. “At the end of the day, the size of the business will also affect what you’ll pay. The bigger you are, the more volume you send, the lower your costs,” says Murphy.
But it’s not just money that makes the freight go round; the relationship you develop with your forwarder is also a significant factor. A freight forwarder needs to understand and care about your products and your business, so choose an organisation that will take the time to understand what you do, and one with whom you feel comfortable in building a relationship.
“Freight forwarding is a service, it’s about people and feeling confident they’re going to deliver what you’re after. It’s very important that there’s a partnership between the two organisations,” says Murphy. “The more understanding the freight forwarder has of what the customer’s objectives are, their direction, their strategy, their focus, the better it’s going to be in terms of being able to get more out of that relationship. It really helps the way people deal with each other too.”
A forwarder with good interpersonal skills can also provide tangible rewards for your business in their relationship with carriers. “A better relationship between the forwarder and the shipping line will ensure things like the pricing and they’ll ensure capacity as well. It could be the ability to get your container on board during peak season,” says Murphy. “If you want to pull strings, it’s definitely about relationships.”
Choosing a freight forwarder is dependent on so many factors that it’s hard to know where to start. While examining your business and looking at what you want from a forwarder is the best way to begin, sometimes it’s the rapport that goes beyond just a supplier-client relationship that could prove the clincher.
Options Besides Freight Forwarding
Forwarding is best suited to shipments containing several items going to the one destination, such as a supplier servicing a distributor in another country. One off items or shipments with only a few items might be better served through regular post, which you can manage yourself.
“Australia Post international services are very competitive for goods up to 20 kilograms, especially when sending product samples and online fulfilment,” says Mohammad Khan, international business development manager for NSW/ACT at Australia Post.
Far from being the humble post office, Australia Post now boasts a range of international services, from courier deliveries and priority mail services as well as standard airmail. The best part is that all these products can be lodged at any post office nationally. Metropolitan businesses can even order pick-up.
As for documentation, there’s just the consignment note and a customs declaration form to be completed. “There’s no requirement for formal customs clearance in the destination country if your goods are under the duty free threshold,” says Khan.
There are, however, restrictions on what can’t be sent overseas, some of which may apply to specific countries. Check www.auspost.com.au for details.
Freight Forwarding Fact:
The volume of a standard 40-foot shipping container is 67.5 m3 which can carry more than 30 metric tons in cargo.
Finding A Forwarder
The different freight and logistics councils and associations in Australia represent the majority of operators in the sector. They can provide you with impartial advice on forwarders to suit your business. Most of them have member listings on their website.
Australian Airfreight Council (www.australianairfreight.com)
National network of State and Territory based airfreight councils.
Australian Federation of International Forwarders (www.afif.asn.au)
Represents members who conduct business as an international forwarder but are not exporters themselves.
Australian Freight Councils Network (www.freightcouncils.com.au)
A network of 11 air and sea freight councils whose aim is to improve Australia’s logistics environment.
Australian Logistics Council (www.austlogistics.com.au)
A national umbrella body representing the transport and logistics industry.
Customs Brokers and Forwarders Council of Australia (www.cbfca.com.au)
Represents members who work in international trade logistics and supply chain management service provision.
Logistics Association of Australia (www.laa.asn.au)
For Australian practitioners and students in the industry to share their knowledge and experience of logistics.