A freight forwarder is a service provider that works with manufactures or merchant exporters physically move the products around the world. While the core activity of a freight forwarder is physically moving products from point A to point B, they also help with all other activities in an international shipment. These include customs compliance for exports and imports, documentation such as payment, shipment, licenses, certificates of origin, and packing compliance. Freight forwarders are familiar with rules and regulations of many countries and they make the actual movement of the shipment smooth and slick.

To export a shipment, an exporter needs multiple documents such as contract of sale (or purchase order), commercial invoice with product description, unit price, buyer details, shipping address and transportation document such as bill of lading, or airway bill. In addition, depending on the destination country and type of the product shipped, some countries will demand packing list, certificate of origin, attestation from chamber of commerce or embassy, pre-shipment inspection certificate. Customs officials in export/import control will look for HS Code (or commodity code), product description, country of origin. Freight forwarder will create all these documents and make it easy for exporter. 

An exporter simply needs to provide the product details, and whom are they shipping it to. The freight forwarder will the heavy lifting, create all required documents and put them into a format recognized by the customs officials. There might be a small fee for the admin work, getting certificate of origin, and various other licenses. 

Often times, things don’t go as planned. Let’s say, a shipment is stuck in customs. As an exporter, you don’t know whom to call. Freight forwarder will help you with that. For this reason, it’s imperative to look for a freight forwarder with customs accreditation. This accreditation shows that they have competency in customs regulations, knows insider details, apply correct tariff and make sure correct duties and taxes are paid. As an exporter, you put your heart and should into the international sale. Freight forwarder will make sure your product gets delivered overseas intact. 100% of the agony in the export are taken away by freight forwarder.

‍What should exporter learn about international trade? As an exporter, one need a small bit of knowledge foreign trade. For example, exporter need to understand the Incoterms of the trade. Incoterm is a contract that determines the responsibility and liability transfer from seller to buyer. Incoterms also determine what a seller is paying for and what a buyer is paying for. For example, let’s say you are going to a bazaar with your shopping bag. After you make payments to the cashier and put the products in your shopping bag, the product becomes yours and the responsibility of store owner ends. Likewise, when you ship goods overseas, the shipment goes through multiple hands - you, local carrier, port where loading and unloading happens, ship line and the international carriers. When you are negotiating a sale with a foreign buyer, you must use appropriate Incoterms. 

Incoterms are updated every 10 years. As of 2022, Incoterms 2020 is the latest version. There are 11 Incoterms that can be applied to a sale contract. From Ex works - where the buyer is responsible for everything to DDP - where seller is responsible for everything and a range of 9 others in between. Once Incoterms are agreed in a written contract, it becomes globally recognizable in all courts of law. 

‍How to factor the cost of a freight forward? Typically, the major cost of the freight forwarder is the physical movement of the goods. Other services offered such an origin certificate (charged as per chamber of commerce or embassy), packing list, licenses are admin work and the cost associated are minimal. The bulk of the cost comes in transportation. Transportation cost depends on the weight and volume of the goods, type of the goods, delivery speed, and destination country. 

A freight forward acts as broker between shipper and carrier. Say if you want to book an airline ticket, you can go to the airline website, search for the ticket and book it. However, if you want to book freight in the same airline, you cannot do it using the airline website. You need an agent to book space for you and create airway bill. That agent is freight forwarder. A freight forwarder will give you a list of options with different tariff, different delivery dates, different routes, and different carriers. As an exporter, you determine what is the correct airway for you depending on the urgency and cost. In any case, it’ll be actually cheaper to use the freight forwarder because of the economy of scale. 

‍Long term relationship: A good relationship with a freight forward is essential for an exporter. Freight forwarder must know the product, its properties, the raw materials used in making the product. This will help freight forwarder determine if there are any dangerous goods. Some exporters will have multiple forwarders. This is because, not all forwarders are good at every type of goods. Some forwarders specialists in frozen goods, some in heavy and bulk, some in electronics etc. Freight forwarders will help you determine the appropriate mode of shipment like air, land or sea. For example, a tractor cannot go in airline. Large machineries tend to be shipped via ship. Smaller and expensive shipments can be shipped via airplane. Shipping mode also depends on the destination, delivery speeds, perishable nature of goods, temperature controlled or not and other requirements.