Freight forwarding: Definition, Types and Benefits

What is freight forwarding

Freight forwarding is the process of carrying out logistics and transportation responsibilities to allow seamless movement of goods across the supply chain. Freight forwarders are logistics service providers who handle the tasks of containerisation, documentation, warehousing, transportation, and tracking the movement of containers in transit. They assist shippers by extending their expertise and services in the supply chain, allowing them to carry out cost-effective and agile transportation of goods. Let’s learn more about freight forwarding. 

What do you mean by freight forwarding? 

The strategic planning, optimisation, and execution of the shipping process to ensure maximum efficiency is known as freight forwarding. It applies to all modes of transport, including trains, trucks, planes, and ships, making intermodal transportation of goods across the globe easier. Freight forwarding is the alignment, coordination, control, and management of logistics and transportation processes on behalf of the shipper. The international shipping of goods includes multiple steps, including booking and reserving modes of transport, documentation, customs clearance, cargo consolidation, risk management, and other arrangements. Freight forwarding makes it easier for shippers to get relieved of the tedious transportation process and facilitates hassle-free worldwide shipping.  

With advancements in technology, the freight forwarding process has been automated and is improving operational efficiency. Digitisation in freight forwarding has made it easier for shippers to skim through various freight forwarders and their services to choose the best for their shipping requirements. Let us learn more about freight forwarders. 

What is the purpose of freight forwarders? 

Shipping across the globe is tedious since it requires compliance with a diverse set of trade regulations, negotiating for transportation, and tracking the movement of goods. Shippers involved in these activities lose track of their internal business, and the profitability margin fluctuates. Therefore, manufacturers and suppliers hire freight forwarders for integrated supply chain management. Freight forwarders are 3PL service providers that act as intermediaries between the shipper and other shipping parties to facilitate communication and transportation. The exporter, importer, shipping carrier, customs, and banks rely on freight forwarders if the shipper hires them. 

  • Freight forwarders help streamline and optimise supply chain operations to improve transportation processes. 
  • They help make transportation easy, cost-effective, and less time-consuming. 
  • Shipping freight forwarders manage every key aspect of logistics and transportation, using their trade network and managing all operations. 
  • They also look into storing goods and finding the most suitable, affordable and reliable shipping method. 

Role of freight forwarders in freight forwarding  

Freight forwarding benefits shippers and other shipping parties in many ways. Let’s learn more about the role of freight forwarders in shipping. 

  1. Prepare necessary shipping documents, including the bill of lading, invoices, and receipts. 
  2. Selecting the best mode of transport to move goods to the destination.  
  3. Offer door-to-door service to facilitate straightforward pickup and drop off of goods. 
  4. Negotiating and coordinating with different shipping carriers for intermodal transport. 
  5. Cargo consolidation and deconsolidation in case of LCL (less than container load) shipments. 
  6. Inventory management and warehousing of goods temporarily. 
  7. Mandating cargo insurance and filing it if required. 

These are a few reasons shippers prefer hiring freight forwarders and avoid the hassle of going through logistics and transportation activities. 

Types of freight forwarding in shipping 

Shippers can select from a range of freight forwarding options based on their mode of transport. Let’s learn more about the types of freight forwarding in shipping. 

  1. Air freight forwarding– Air transportation is one of the fastest transport methods across international borders. Freight forwarders involved in air freight forwarding facilitate shippers needing to transport small-dimension, high-value, and time-sensitive shipments across the globe. Air freight forwarders have an excellent knowledge of documentation handling and network with different airlines. They look into two types of air freight forwarding- one in which the goods are directly loaded in a plane and shipped to its destination airport; the other one is a deferred service where goods are taken to another destination from where they are unloaded and loaded onto another flight for its final delivery. It is the task of freight forwarders to look into easy facilitation of deferred services. 
  2. Sea freight forwarding– It is the most economical method of international shipping. Freight forwarders have a diverse network with various shipping lines to provide their clients with the best and most cost-effective shipping routes. Ocean freight forwarding involves booking vessel spaces, documentation, customs clearance, loading, unloading and tracking goods. Such freight forwarding also looks into LCL and FCL shipments and manages cargo consolidation and deconsolidation. In the case of specialised shipping containers such as reefer containers, it is essential to load and track the container’s condition during transport carefully. 
  3. Road freight forwarding– Popularly used for domestic and intermodal transport, road freight forwarding mainly occurs using trucks and vans. Road freight forwarders are responsible for handling route planning, documentation, and tracking cargo movement. They also use road freight forwarding to move goods to other modes of transport, such as railway stations, seaports, and airports. 
  4. Rail freight forwarding– Commonly used for long-distance domestic transportation, the rail network is a cost-effective and fast means of transportation. Rail freight forwarders reserve cargo space in trains, negotiate competitive rates, and ensure the security of goods during movement. They also handle rail logistics, including documentation and custom clearances. 
  5. Multi-modal freight forwarding– It is a dynamic and effective method of moving goods using more than one mode of transportation. Freight forwarders with diverse networks in all fields facilitate the transhipment of goods using a combination of various modes of transport. Multi-modal freight forwarders are certified experts in supply chain logistics and transport network expertise. They single-handedly handle all the shippers’ requirements, from documentation to shipping. 

Benefits of freight forwarding 

The advantages of freight forwarding are as follows- 

  1. A diverse range of solutions– Freight forwarding can help shippers tackle various shipping challenges, such as adhering to regulatory compliances and completing custom clearances. Freight forwarders are experts in supply chain resources and can quickly help shippers navigate the complexities of global trade. 
  2. Cost-effective shipping– Shippers often struggle to find economic logistics and transport facilities that offer reliable services. Freight forwarding allows shippers to get the best shipping solutions at cost-effective rates. By carrying out complete and proper documentation, negotiating with transportation service providers, and optimising routes, freight forwarders help reduce additional shipping costs. 
  3. Time-saving– If the documentation is not done correctly, failure to adhere to regulatory compliances and geopolitical events in shipping can lead to delays in the movement of goods. Freight forwarding helps navigate these challenges and conduct core operations with utmost efficiency. 
  4. Risk management– Risk assessment and contingency plans are essential in shipping. Lack of risk management can lead to disruptions in the supply chain and financial losses. Freight forwarders act as shippers’ advisors and help avoid risks such as regulatory barriers in shipping

Tracking and visibility

Freight forwarding uses container tracking technologies in shipping to ensure the safety of goods during transportation and avoid cargo tampering and damage. 

These benefits of freight forwarding make international shipping easier for all shipping parties. LOTUS Containers is a shipping container solution provider that offers its services across the globe. From buying shipping containers to leasing them, we offer a range of container types and sizes.

Weekly stock report

What we have in stock:

Our news

Always up to date


Good contacts for your business. Network now.