Freight forwarder - What does a freight forwarder do and what does it cost?
A freight forwarder is an organizer for arranging transports. The freight forwarder organizes and arranges the entire logistics process of a transport, without performing the transport itself. This includes engaging the right transport companies, arranging permits, administrative matters, negotiating prices (with transporters), customs formalities, groupage, transshipment and all other matters involved in exporting a transport.
A freight forwarder can take the organization of the entire transport from A to Z out of your hands. This is called expediting. A company that can do this is called a freight forwarding company. Freight forwarders are mainly used for international transport requests that require a lot of transshipment. Consider, for example, the delivery of a container of goods from a factory in China to a company in the Netherlands. These are complex processes that require many different things to be thought of, and the freight forwarder can do all that.
What exactly does a freight forwarder do?
A freight forwarding company (or freight forwarder) arranges transportation. Thus, the company does not perform the transportation itself but engages other companies so that the transportation is done properly. A freight forwarder's strength is its knowledge and network. They work of with a worldwide network of agents that they can engage to handle part of the transportation chain. Some transportation companies employ a freight forwarder, while there are also applied freight forwarding companies.
Why does one hire a freight forwarder?
It is almost impossible for most people to engage a transport company on the other side of the world without being present there and speaking the relevant language. Go look for a good transport company in China or Bangladesh yourself and try to book a transport there. The freight forwarding company has the experience and knowledge and can carry it out.
In addition to organizing the transport, a freight forwarder often takes care of all peripheral matters. For example, he takes care of permits and the handling of administrative formalities.
The freight forwarder can arrange all of the following:
- The organization of the entire transport
- Applying for and taking care of the necessary permits
- Requesting and negotiating prices from carriers
- Booking cargo with appropriate transportation parties (container ships, trucks, trains, etc.)
- Taking care of customs formalities, such as imports and taxes
- Groupage; combining small loads so that the shipment becomes cheaper
- Figuring out the best mode of transportation (land, sea or air)
- Insuring goods
Everyone's specialty
Many times, freight forwarders have a specialty they are good at. For example, some carriers focus primarily on sea container transport while others focus on road transport. FENEX is the trade association for freight forwarders and they distinguish the following specialties:
- Sea cargo
- Seaport expedition
- Inland shipping expedition
- Railexpedition
- Warehousing and distribution expedition
- Customs Expedition
- Air freight forwarding
Many transportation companies have a shipping department. For example, the transportation company may do part of the transportation itself, and part of it involves external help. The latter is done by the forwarding department. This is in contrast to freight forwarding companies that only act as intermediaries.
What does a freight forwarder cost?
Many freight forwarders work with a collective invoice that lists all freight forwarding costs. This is convenient, as there are quite a few different cost items when importing and/or exporting goods.
What the total expedition costs depends on exactly what services you are outsourcing. Furthermore, it depends on exactly what the job entails.
here is a simplified table that lists some common freight forwarding services, along with estimated prices. However, actual costs can vary significantly depending on a range of variables, including the specific details of the shipment (such as weight, volume, nature of the goods), the transportation method chosen, distance, time of year, fuel costs, customs and import/export fees, and other factors.
Keep in mind that these figures are hypothetical and are for illustrative purposes only.
| Services | Estimated Cost (Euro) | Variables |
|---|---|---|
| Air freight (per kg) | 2 - 4 | Weight, volume, destination, urgency |
| Sea freight (per container) | 1000 - 4000 | Volume, destination, ocean rates |
| Road transport (per km) | 1 - 2 | Distance, toll roads, weight/volume |
| Customs clearance | 50 - 150 | Complexity of goods, customs duties |
| Storage (per day) | 10 - 30 | Size of goods, duration of storage |
| Insurance (percentage of goods value) | 0,5 - 2% | Value of goods, nature of goods |
Importing from outside EU
If you are importing goods from outside the EU, most attention will be paid to the formalities surrounding customs clearance. Customs checks whether your imported products are allowed to enter the Netherlands and the EU. Customs clearance involves a number of costs. These include clearance fees, excise duties, import duties and usually VAT. The most important are the import duties and VAT you have to pay. The amount of these two items depend on the origin of the imported product and the type of product. Depending on its complexity, this can take quite a long time in some cases. A good freight forwarder will help you in this process.
So what you end up paying depends on the size and complexity of the job. You can also make your own choices. For example, you can authorize the forwarding agent as fiscal representative. In practice, this means that you do not have to pay the VAT owed on the entire order all at once during customs clearance. If you arrange this properly with the forwarding agent, you will not have to pay this until your next VAT return.
The freight forwarder can often arrange transportation cheaper than you can do it yourself. One reason for this is groupage: the merging of multiple freights. This eliminates the need to book a container on a ship separately, but allows multiple shipments to go into one container. The same applies, for example, to a truck in which a forwarder can combine multiple shipments.
Difference carrier vs. freight forwarder
A carrier and a freight forwarder both play important roles in the logistics and transportation industry, but their functions are different:
Carrier: A carrier is an individual or company that provides the actual physical transportation service. They are responsible for loading, transporting and delivering goods from one location to another. Carriers can use different modes of transportation such as trucks, ships, planes, trains, etc. They are directly involved in the transportation of goods and may own vehicles and infrastructure themselves.
Freight forwarder: A freight forwarder, on the other hand, is an intermediary or broker who acts on behalf of the shipper. The freight forwarder organizes transportation and logistics for goods shipped by their customers, but does not perform these services themselves. Freight forwarders negotiate with carriers to get the best rates and transit times, and they also coordinate other services such as customs clearance, warehousing, packaging, and insurance. They usually do not have their own vehicles or infrastructure.
In short, a carrier performs the physical task of transporting goods, while a freight forwarder acts as a logistics expert who arranges and manages the shipment of goods. Both are essential to an efficient and effective supply chain.
VIDEO: The role of the freight forwarder
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Affiliated forwarders
Freight forwarders often do not have licenses themselves. Therefore, it can be difficult to find a good freight forwarder. It is therefore typically a profession that still finds work a lot through word of mouth. An important quality indicator for the freight forwarder is the FENEX membership. In our company directory you can easily see whether a forwarder is a member of this club or not. Below are a number of affiliated forwarders.
Information for beginning freight forwarders
To set up a shipping company in the Netherlands, no specific permits are required to operate. But you do need to make sure your company is registered with the Chamber of Commerce.
While there are no specific licenses, there are some certifications and memberships that can be useful and important to the reputation and efficiency of your forwarding company:
1. Authorized Economic Operator ( AEO) certification: This certification, provided by Customs, can simplify and speed up the process of customs inspections.
2. FENEX-Membership: FENEX is the Dutch Organization for Forwarding and Logistics. Being a member of this organization can give your company credibility in the industry.
If you are a novice shipper, here are a few recommendations:
Education and Training: It is essential to have thorough knowledge of the logistics industry, international trade, customs laws, modes of transport and other relevant topics. Consider taking a relevant education or course.
Networking: Build relationships with carriers, customs agents, and other industry professionals. This can help you secure better deals and create more opportunities for your business.
Technology: Take advantage of modern technology to make your operations more efficient. This can include supply chain management software, tracking systems, and other technologies.
Customer Service: Focus on providing excellent customer service. Satisfied customers are likely to be repeat customers and may also refer new customers to your business.
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