What Is a Freight Forwarder – The Ultimate Guide

Freight forwarder refers to a company or individual that conducts services of receiving goods and shipping them on behalf of other companies or individuals.

The purpose of this guide is to elaborate the various functions, types, benefits, and responsibilities of freight forwarders, among other features.

It will grant you a clear understanding of when you want to do business with freight forwarders.

Responsibility of Freight Forwarder when Shipping from China

Responsibilities of Freight Forwarder when Shipping from China include:

• The freight forwarder’s primary responsibility is to plan for cargo movement from China to its destination point.
• Freight forwarders prepare and process import documents required for international freight forwarding.
• They are responsible for coordinating communication with the companies participating in the international freight forwarding process.
• Reviewing and making documentation ready such as commercial invoice and bills of lading.

Responsibilities of Freight Forwarder Specified by International Conventions include:

• Providing CMR insurance that will cover the entire transportation period.
• Notifying the parties involved before the transportation process commences.
• When forwarding dangerous cargo, it is important for freight forwarders to comply with the provisions of ADR convention.
• They should comply with requirements for transport of goods that are oversized in locations through which their forwarding services are located.
• Making price quotations ready.
• Giving information about freight prices, cost of exceptional documents charges at the port, insurance, and cost of handling goods.
• Advising on the best packaging for goods, which will ensure that they are not damaged in transit.

Responsibilities of Freight Forwarder in International Road Freight Forwarding using Automobile Transport Include:

• Providing valid insurance for the vehicles to be used in transportation
• Planning for efficient transportation with their trucks or subcontractors’ vehicles.
• Paying road tolls and providing all necessary licensing authorization.
• Ensuring that the appropriate transportation means with adequate load capacity is used.
• Giving information daily regarding the vehicle’s location using the latest technology in location systems.
• Appropriate and swift notice if there is any deviation from the route and if you should incur any cost.

Responsibilities of Freight Forwarder Regarding Loading and Unloading include:

• Provision of written notification about the expected date that the cargo will reach its destination. This information should be not later than a day before the arrival day of the shipment.
• Compliance with the timeline for loading and unloading.

Responsibilities of a Freight Forwarder for Claims for Incurred Damages include:

• Giving information and documents certifying the compliance to deadlines.
• Presentation of information that states adherence to the timelines of transportation of the cargo.

How Freight Forwarder compare to Customs Broker

• Freight forwarder refers to a company that conducts services of receiving goods and shipping them on behalf of other companies.

They are experts in the supply chain, and they concentrate on the logistics process and transportation of cargo.

• On the other hand, a Customs broker is a private individual, corporation, or association regulated, licensed, and regulated by the government to assist importers and exporters meet government requirements.
• Freight forwarder term is wide-ranging, whereas a custom broker in particular.
• Many freight forwarders can easily carry out custom brokers’ functions, but not every custom broker can carry out freight forwarders’ tasks.
• In an export transaction, custom brokers only focus on the import side, whereas freight forwarder focuses on both the import and export sides.
• Freight forwarders of an exporter can work in conjunction with a customs broker to facilitate issues within an export transaction.

Difference between China Sourcing Agent and China Freight Forwarder

• Freight forwarder refers to a company or person that plans and organizes for shipment for individuals or companies to a final destination.

The China sourcing agent acts as a go-between you and the manufacturer when you have no time to visit China to meet with the suppliers on your own.

• A freight forwarder’s primary purpose to their clients is to organize cargo from the manufacturer to the final destination.

Sourcing agents’ primary objective is to assist clients with locating sources and manufacturers in china.

• Sourcing agents require knowledge of the Chinese language to transact on their client’s behalf with the manufacturers.

On the other hand, freight forwarders do not necessarily require multiple language know-how as their primary purpose is cargo transportation.

• Freight forwarders enter a contact, mostly long-term, with the client, while sourcing agents are legal entities in China.
• A sourcing agent in China is well informed on the business environment, including the purchasing cost, quality, and delivery time.

A freight forwarder is well-versed in the logistics process and will help you ship your products with so much ease to your specified destination.

• Using freight forwarders will enable you to focus on your business as they take care of complex transport and customs procedures.

Specialization of sourcing agents in your trading area may help you plan to expand or launch new products.

How Freight Forwarders Work

Freight forwarders organize and facilitate goods’ shipment to the destination using either railway freight, freight air, or ocean freight.

It is essential to have all the necessary information about freight forwarders if you participate in international business to avoid being intimidated.

They work with several transportation services and manage documentation used in the import and export process.

Freight forwarders help clients receive effective and efficient transportation services by acting as middlemen.

It is essential to choose a well-established freight forwarder who is reliable.

Such freight forwarders have experience and larger network for seamless shipping process.

Experienced freight forwarders are also able to solve challenges that might be encountered in the logistics process.

You should ensure that the documents for transporting the cargo are completed before entrusting your shipment to a freight forwarder.

Popular Types of Freight Forwarding Services

Some of the popular freight forwarding services include:

• Customs clearance
• Supplying cargo Insurance
• Packing
• International export and import documentation
• Inventory management
• Storage
• Consolidating freight
• Warehousing

Benefits of Working with Freight Forwarder when Importing from China

Some of the benefits of working with freight forwarder include:

• Have a thorough knowledge of cargo movement over the border, and will ensure efficiency.
• Experienced in all modes of transport; therefore, they can choose an appropriate model that suits the client’s cargo.
• Technology versed freight forwarders can provide you with instant quotes.
• Able to use their contract to book cargo with the shipping line as per your requirement.
• They enable you to focus on your business as they take care of complex transport and customs procedures.
• Freight forwarders will help you move the shipment from China to your location in a smooth manner.
• Freight forwarders’ expertise in China’s logistics process will enable them to easily contract airlines, shipping lines, and haulers on your behalf and negotiate freight rates.
• Cargo passage through the series of processes and regulations required by different countries will be easier for you when you use freight forwarders.
• Freight forwarders will effectively meet handling unprojected objects like delayed goods.
• Ensuring that your shipment is insured from loss or damage as they supply insurance.
• They leverage their buying power to reduce transport costs.
• Cost savings: they can negotiate costs due to the large number of containers shipped each day.
• Contract free: freight forwarders do not work with binding agreements. Thus, they have the freedom to deal with anyone they want.
• Saving you money by ensuring the goods arrive at your specific destinations.
• Assistance in packaging, warehouse customs, and any other shipping requirements.
• All big freight forwarders, in most cases, have their warehouses where they can arrange storage of customer’s cargo.

Depending on the region where you’re shipping good from, here is a List of all International Freight Forwarders.

But when it comes to shipping from China, Tj chinafreight is your trusted freight forwarder.

Certifications required to be a Freight Forwarder in China

Freight forwarders require operating within specific legalities, standards, and regulations.

Some of the certifications needed to be a freight forwarder in China include:

Authorized Economic Operator (AEO)

AEO has point missions for international trade, which include:

• Ensuring a basis for legitimate trade.
• Reinforcement of safety and security.
• Standardization of the applications of custom controls.
• Provision of an electronic environment.

AEO ensures that freight forwarders are bound by anti-smuggling measures and measures to prevent terrorist threats and people trafficking.

When a freight forwarder has an AEO status, they portray to clients that they are trustworthy and reliable.

ISO 90001:2015

Continuous business improvement and being at the peak of meeting ISO 9001:2015 enables freight forwarders to attract potential partners.

This certification will ensure the following factors:

• Continuous improvement: freight forwarder’s business partners are assured that they are working with a proactive partner.
• Leadership: the freight forwarder’s management strives to meet their standards and set new ones to be achieved.
• Integrated approach: this part of ISO 9001:2015 standard ensures that management systems are well integrated to contribute to a responsive and streamlined business.
• Management of both risk and opportunity: opportunities need to be found and developed and weak areas identified, and solutions created.

Dangerous Goods Certificate

It makes the freight forwarder able to ship dangerous or hazardous goods as they are well educated on how to handle them.

Several hazardous goods can be highly reactive when they meet factors such as water, air, or other types of reagents.

Holding this kind of certification will open new opportunities to the freight forwarder when trading conditions are harsh.

How to Ship Imports from China using Freight Forwarder

Shipping imports from china using a freight forwarder entails the following process:

1) Importer Requests Quotes and Orders the Goods

First in line is when the importer places an order for the supplier’s goods.

The buyer requests suppliers for a quote, which in most cases is accompanied by a proforma invoice.

A proforma invoice provides an estimate, but this can be subject to change.

Once the quote has been approved, the buyer can place a purchase order.

A contract that states the details of the agreement, projected shipping date, points of origin and destination, and the goods’ prices is known as a purchase order.

2) Agreeing on Shipping Incoterms

After a purchase order is made to the goods’ supplier, the agreement should be governed by many incoterms.

The buyer and supplier, at this point, go ahead and put in place incoterms which are most appropriate to the transaction to be made.

The incoterms determine which of the contract parties should engage a freight forwarder in the shipping process’s specific stages.

EXW terms, which are the most used, state that the importer will be responsible for all the shipping process steps.

3) Engaging a Freight Forwarder

After a purchase order has been made and incoterm selected, the importer then identifies and arranges for a freight forwarder.

They will help to ship the goods from the point of origin to the end of destination.

4) Freight forwarder Arranges Export

After identifying a freight forwarder, they will arrange to collect goods by contacting the relevant supplier and planning to export the importer’s goods.

The process will entail preparing several critical documents required in the entire shipping process for customs purposes.

Some of the documents that the supplier will need to prepare to include:

• Packing list
• Certificate of origin
• Shipper’s letter of instruction
• Packing declaration
• Manufacturer’s declaration
• Dangerous goods form

Some of the documents that the seller will be required to prepare to include:

• Export declaration
• Permit to export or import prohibited goods
• Import declaration

5) Booking of Freight

As soon as all shipping documentation is ready, the freight forwarder books for export shipment.

Booking of freight should be made very early to avoid disappointing the importer, especially during peak seasons for shipping.

6) Goods to Travel to International Port or Depot

When the cargo is ready and well packed for shipment, the freight forwarder will organize for it to be transported to a depot or port where it should be shipped.

7) Goods Processed through Export Customs Clearance and Placed in Transit

Before the goods are dispatched from the port or depot, the freight forwarder processes them through custom clearance.

The documentation required by governing agencies is verified to ascertain that the goods being shipped comply with regulations and standards.

8) Goods Arrive in the Importer’s Country for Import Clearance

The importer’s goods undergo custom clearance once they reach their country destination.

9) Goods are Transported from the Port to the Buyer.

After the goods undergo custom clearance, the freight forwarder will organize them to be delivered to the final destination.

Difference between Freight Forwarding and Logistics

Freight forwarders organize and facilitate goods’ shipment to the final destination by using either railway freight, freight air, or ocean freight.

On the other hand, logistics companies are responsible for taking care of the physical movement of goods in the supply chain.

Freight forwarders have a lot of knowledge and experience concerning the shipment of goods, unlike logistics companies.

Freight forwarding companies have a partnership with several logistics companies, but they do not possess assets themselves.

On the other hand, logistics companies own all the assets such as fleets of trucks, planes, or boats.

Freight forwarders have access to all shipping routes and can organize for shipment across borders efficiently.

On the other hand, most logistics companies only possess transport modes but lack access to shipping routes.

How NVOCC Services compare to Freight Forwarding Services

Non-vessel operating common carrier (NVOCC) refers to a company that plans shipment for either corporations or individuals.

That is, they obtain goods from manufacturers to a final point of delivery, market, or customer.

NVOCC agree with shipping lines shipment of a given number of containers each year and sign a contract.

They help individuals and corporations cut on sales, staffing, and transportation costs.

Some of the differences between NVOCC and freight forwarding services include:

• Shipping documentation: freight forwarders give their Bill of lading, which is dependent on standardized documentation provided.

The Bill of lading supplied by NVOCC may not be dependent on any global standard.

• Containers: freight forwarders do not own most equipment used in the shipment of products, while NVOCC has and operates their containers’ fleet.
• Specific role: freight forwarders act as agents to their clients while NVOCC acts as middles men to their clients as they fulfill most of the work for them.

Cost of using Freight Forwarders in China

Before giving their shipping quotation, freight forwarders require the following information:

• Total cargo volume.
• Port of loading.
• Supplier incoterm.
• Total weight.
• Port of destination.
• Delivery incoterm.

The final cost you will pay a freight forwarder is determined after the manufacturing and packaging of the products.

At times, you can an estimate of the total cost.

Shipping cost estimates by freight forwarder will be based on the various stages of the shipping process, as shown below:

• Factory to port transportation: the cost of transporting an FCL 20’’ container ranges between $ 50 to $ 480 depending on the distance to be covered.
• China export clearance: export clearance documents that should be obtained by a freight forwarder range between $ 100 to $ 300.
• Freight cost depends on the location, weight destination, and cargo volume, and the price ranges between $ 30 to $ 40 per cubic meter.
• Insurance: most freight forwarders use an insurance rate of 0.2% * 1.1* cargo value.
• Port of destination charges: port charges range between $ 100 to $ 450.

The quotation offered by freight forwarders tends to be complicated and challenging to denote for someone not experienced in the logistics field.

The quote tends to be something like this:

• CFS charges: $69.30
• ENS fee exempt: $30.00
• Origin documentation fee: $30.00
• Re-weighting and VGM sending fee LCL: $15.00
• Freight: $277.20
• Export customs clearance fee: $23.00
• Destination other charges: $590.62
• Cargo insurance: $63.15

It is important to note that the freight cost is the only one which many consider.

Requesting a total DAP or DDU price based on weight, volume, the port of loading, the port of destination, and the final address point will minimize costs.

Freight Forwarding Documents need to Ship from China.

Before your shipment from China can reach your destination, you need to file proper documentation to the relevant authorities adequately.

Freight forwarding agents will help you achieve the required documentation.

But it’s essential you know what is needed.

Keeping track of your freight forwarding documentation will limit encountering a lot of mishaps along the way.

The purpose of freight forwarding documents when shipping from China includes:

• Identifies the goods you want to ship.
• Act as proof of ownership of goods.
• Allows you to prepare accordingly.
• They are documentary evidence for claiming compensation.
• Confirms the delivery of goods in perfect condition.
• Respects the contract of carriage.

Some of the main elements of freight forwarding documents include:

• Date of issue.
• Description of merchandise.
• Volume and weight of cargo.
• Payment terms.
• Corresponding signatures.
• Notices of the shipping duration.

The following are some of the essential documents required in shipping from China:

Commercial Invoice

It is a formal note for payment and is used in customs to declare that the goods are exported across international borders.

The exporter prepares this invoice.

Some sellers might want to pay fewer taxes to escape some formalities.

If the commercial invoice is checked carefully, and this is established, might your goods be withheld, and you may suffer losses.

Information contained in the commercial invoice includes:

• Description of goods.
• Tax identification numbers of both seller and buyer and their information.
• HS code.
• Currency to be used.
• Exportation date.
• The number of bills of lading.
• Instructions for payment.
• The destination of the goods.
• Delivery terms.

Bill of Lading (B/L, BOL)

The Bill of landing is a document that will give you details of a shipment of merchandise.

It states the goods’ title and requires the freight forwarder to release the cargo in a specified port.

The Bill of landing is issued to you by the shipping company, and you can use it as proof of shipment for insurance companies and customs.

You can also deliver it to the bank as proof so that the seller can execute the letter of credit.

This document can also be sent to you as the buyer to pay off the contract.

The various types of lading documents include:

• Inland bill of lading
• Ocean bill of lading
• Airway bill of lading

Packing List

A shipping company issued a packing list that will show you all goods shipped and the packing information.

The importance of a shipping list in the shipping process includes:

• It informs all the parties involved in the importation process about the contents of the baggage.
• When the buyer confirms the number of goods received, it can be used as a guide.
• The packing list is essential in booking space for shipping goods with international carriers.
• The details in the packing list make it possible to obtain a certificate of origin.
• Serves as proof for an inland bill of lading.

Information provided in the packing list includes:

• Each package’s quantity.
• The number of commercial invoices.
• A detailed description of each package.
• Delivery destination.
• Contact address of the Consignee.
• Details and contact of the shipper.

Pro Forma Invoice

Proforma invoice gives you all the essential information about the shipment: how many goods are shipped, the features and dimensions of the goods.

This invoice also contains the final pricing of the goods, which helps you make the final purchasing decision.

A Proforma invoice is not a valid invoice but is viewed as a legally binding agreement.

The exporter of the goods prepares it.

Certificate of Origin

The certificate of origin will help you prove that the goods in the shipment have been wholly obtained, produced, manufactured, or processed in a particular country.

This document is provided to you by the exporter.

Situations that you may need the certificate of origin include:

• When an importer needs it
• During the shipping process, when customs order it.
• To meet the country’s requirements.

Information that must be stated in a certificate of origin include:

• Mode of transport
• HS code about customs declaration.
• Exporter details.
• Number, quantity, and the packages type.
• The number of the certificate.
• Invoice number and date.

There are two types of certificates of origin, namely:

• A non-preferential certificate of origin specifies where they processed the goods, but the goods do not qualify for exceptional treatment.
• Preferential certificate of origin: this will state the manufactured goods’ location with some trade agreement with your country.

For example, when you are trading within the Commonwealth of Nations.

Import/Export Declaration

Import/ Export declaration is a document prepared by either you or the exporter, and you will be required to submit it to the customs office.

The form of this declaration will be different depending on the requirements of a particular customs office.

You may find the samples online for your perusal.

CE Certificate

CE certificate helps you prove that the goods are compliant with EU laws and directives, usually concerning health and safety.

This certificate is obtained by notified bodies, which you can access online.

You must note that you will not require this document in every case as sometimes the manufacturer of the goods can self-certify them.

In other cases, you may require an independent quality checking procedure.

Certificate of Manufacture

Certificate of manufacture is a document used by the exporter to communicate to the buyer the goods are ready for ordering.

Besides, it also indicates that the goods are of the right quality and adhere to required standards.

Information contained in the certificate of manufacture includes:

• Product name.
• The date on which the manufacturer got the product.
• Name and signature of the inspector of quality control.
• Quality and quantity of goods.
• Batch number.
• Output number.
• Amount charged on the product and applicable duty.
• Date of signing.

Inspection Certificate

An inspection certificate is an essential requirement when shipping goods of high value as it proves that they are of good quality as specified.

Some of the benefits of getting an inspection certificate include:

• It gives assurance about the quality of the goods to be shipped.
• Provides evidence through a third party. And under the letter of the credit transaction.

Goods Insurance Certificate

Goods insurance certificate provides information on:

• Policy number.
• Premium amounts.
• Liability of the freight forwarder to third parties
• Contact information of the settlement agents
• Validity period.
• Coverage limit.
• Circumstances for compensation.
• Shipping information.
• Details of the policyholder.
• The process to follow in case of a loss.

Dangerous Goods Certificate

This is a certificate used for goods that might be a risk to the health, safety, and environment.

It must be completed and signed by well trained and experienced personnel.

Role of 3PLs in Freight Forwarding

3PL (third party logistics) refers to a company that allows you to outsource logistics functions from warehousing up to delivery and grants you the chance to focus on other parts of the business.

Some of the logistics services covered by 3PL include:

• Transportation
• Warehousing
• Picking
• Packing
• Inventory forecasting.
• Order fulfillment.
• Freight forwarding.

The role of 3PL in freight forwarding entails:

• 3PL oversees all the client’s logistics operations and supply chain.
• They assist in picking, managing inventory, packing, order management, processing and reporting, distribution, shipping, and return logistics.
• Ensuring domestic and international transport.
• Warehousing of cargo.
• Customer brokerage.

How to Find Reliable Freight Forwarder in China

Finding a reliable freight forwarder is very important in the overall process.

The following steps are essential in obtaining a reliable freight forwarder:

Knowing the Type of Freight Forwarder, you need

Freight forwarders function in different categories, and so the first essential step is finding one that is suited for your kind of business.

Choosing the right type of freight forwarder will depend on:

• The type of goods that you require.
• Transportation requirements.
• Mandatory handling requirements if the goods are delicate.
• Storage requirements.

Based on the above requirements, you can choose the most suitable freight forwarder.

For example, global freight forwarder, low-cost freight forwarder, and consultative freight forwarder.

Evaluating the Forwarders Location

After fin