Definition
A forwarding company, commonly referred to as a freight forwarder, is a business that arranges for the shipment of goods from one location to another. The company acts as an intermediary between the shipper and various transportation carriers such as air, sea, road, and rail. Forwarding companies offer a range of services including packaging, warehousing, and customs clearance to ensure that goods reach their destination securely and efficiently.
Key Functions
- Transportation Coordination: Selecting the most appropriate mode of transport for the shipment.
- Documentation: Handling required legal and transportation documents.
- Customs Clearance: Ensuring compliance with import and export laws and regulations.
- Warehousing: Providing storage facilities for goods if needed.
- Consolidation: Combining multiple smaller shipments into a single larger shipment to reduce costs.
Examples
- DHL Global Forwarding: A division of Deutsche Post DHL that provides air and ocean freight services.
- Kuehne + Nagel: Offers a comprehensive range of logistics services including air and sea freight services.
- Expeditors International: A global logistics company specializing in international shipping and freight forwarding.
Frequently Asked Questions (FAQs)
What is the main role of a forwarding company?
The main role of a forwarding company is to organize and coordinate the shipping process, ensuring that goods are transported from one location to another in the most efficient and cost-effective way. They handle logistics, documentation, and customs clearance.
How do forwarding companies handle customs clearance?
Forwarding companies are knowledgeable about international trade regulations. They prepare and submit necessary documentation, pay applicable tariffs, and handle communication with customs officials to ensure goods clear customs smoothly.
Are forwarding companies responsible for the transportation of goods?
No, forwarding companies do not own the transportation vehicles. Instead, they act as intermediaries, sourcing transportation from various carriers to best suit their clients’ needs.
What types of goods can a forwarding company transport?
Forwarding companies can handle a wide range of goods, including perishable items, hazardous materials, large machinery, and retail products.
- Logistics: The detailed planning and execution of the movement and storage of goods.
- Supply Chain Management: The management of the flow of goods and services from raw materials to the end customer.
- Customs Broker: A professional who prepares and submits documentation for clearing goods through customs.
- Bill of Lading (BOL): A legal document issued by a carrier to acknowledge receipt of cargo for shipment.
Online Resources
- Freight Forwarding - Wikipedia
- DHL Global Forwarding
- Expeditors International
Suggested Books for Further Studies
- “The Logistics Handbook” by James F. Robeson and William C. Copacino
- “Global Supply Chain and Operations Management” by Dmitry Ivanov, Alexander Tsipoulanidis, and Jörn Schönberger
- “International Logistics: The Management of International Trade Operations” by Pierre A. David
Fundamentals of Forwarding Company: Transportation Basics Quiz
### What is the primary responsibility of a forwarding company?
- [x] Coordinating the shipment of goods
- [ ] Producing goods for export
- [ ] Selling goods to end customers
- [ ] Manufacturing transportation vehicles
> **Explanation:** The primary responsibility of a forwarding company is to coordinate the shipment of goods by using various carriers.
### Which document is crucial for customs clearance handled by a forwarding company?
- [ ] Sales invoice
- [x] Bill of Lading (BOL)
- [ ] Marketing brochure
- [ ] Employment contract
> **Explanation:** The Bill of Lading (BOL) is crucial for customs clearance as it acts as a receipt of freight services and a contract between the shipper and the carrier.
### Do forwarding companies own the transportation vehicles?
- [ ] Yes, they own all types of transport vehicles.
- [x] No, they do not own the transportation vehicles.
- [ ] It depends on the company's size.
- [ ] Only for sea transport.
> **Explanation:** Forwarding companies act as intermediaries and do not own transportation vehicles. They coordinate with various carriers to transport goods.
### Which of the following is not a service typically provided by a forwarding company?
- [ ] Warehousing
- [ ] Customs Clearance
- [ ] Documentation
- [x] Product Manufacturing
> **Explanation:** Forwarding companies do not produce or manufacture products. They specialize in logistics and transportation services.
### What is the term for consolidating smaller shipments into a larger one to reduce costs?
- [ ] Fragmentation
- [ ] Packaging
- [x] Consolidation
- [ ] Distribution
> **Explanation:** Consolidation involves combining smaller shipments into a single larger shipment to reduce transportation costs.
### Which type of freight forwarding involves transporting goods via airplanes?
- [ ] Sea Freight
- [ ] Road Freight
- [x] Air Freight
- [ ] Rail Freight
> **Explanation:** Air freight involves the shipment of goods via airplanes and is one of the methods managed by forwarding companies.
### Which entity does the forwarding company interact with for compliance with import and export laws?
- [ ] Manufacturing units
- [ ] Retail outlets
- [x] Customs officials
- [ ] Local municipalities
> **Explanation:** Forwarding companies interact with customs officials to ensure compliance with import and export laws.
### A Bill of Lading acts as a:
- [x] Contract between shipper and carrier
- [ ] Product warranty
- [ ] Tax invoice
- [ ] Service agreement
> **Explanation:** A Bill of Lading acts as a contract between the shipper and the carrier, acknowledging the receipt of goods.
### Which term describes the management of the flow of goods from raw materials to the end customer?
- [ ] Forwarding
- [ ] Warehousing
- [x] Supply Chain Management
- [ ] Consolidation
> **Explanation:** Supply Chain Management is the management of the flow of goods from raw materials to the end customer.
### What kind of materials can forwarding companies handle?
- [x] A wide range of goods including hazardous materials, perishable items, and large machinery.
- [ ] Only non-perishable items.
- [ ] Only hazardous materials.
- [ ] Only perishable items.
> **Explanation:** Forwarding companies can handle a wide range of goods including hazardous materials, perishable items, and large machinery.
Thank you for learning more about forwarding companies and testing your understanding with our sample quiz questions. Continue elevating your knowledge in logistics and transportation!
