FREIGHT FORWARDING AND LOGISTICS; THE ULTIMATE GUIDE

FREIGHT FORWARDING AND LOGISTICS

 

With innovative technology and easy access to the internet, life has become so easy. Everything is just a click away. You can get everything from basic groceries to luxuries from another corner of the world at your doorstep, without having to step out of your comfort zone.

 

 

Online shopping- national and cross-border e-commerce has laid down a platform with a plethora of opportunities where the buyers and the shoppers can both enjoy the benefits. However, have you ever thought of the system, the people involved in the “shipment process”?  E-commerce trade depends on the proper function of the transportation or the shipment industry. They are the ones delivering the commodities from one part of the world or city to another. The ease of shipment, the safety of the packages, and timely deliveries are some of the many factors that define the success of the corporate world.

 

The system of shipment works in two ways freight forwarding and logistics operation. Oftentimes, people confuse the two, because they serve the same purpose with similar procedures.

 

As the supply chain is taking over the industry, the difference between freight forwarders and logistics operators is blurring day by day. However, there are certain differences between the two that need to be understood to ensure seamless transportation and customer experience.

 

People often consider logistics operators as people who own the major chunk of the transport process, while freight forwarders as the intermediary, who just deliver the goods. To know what is true and what is not, let us look in-depth into the two.

 

The Difference between Freight Forwarders and Logistics Operators

 

Despite the differences between freight forwarding and logistic operation, they deal with the same mode of transportation such as:

 

 

The mode of transportation determines the safety of the goods, speed of delivery, and cost of freight. Therefore choosing the type of shipment is highly dependent on the type of goods you are delivering and the place you are delivering to and through.

 

 

What is Freight Forwarding?

 

Freight forwarding company arranges commercial modes of transportation to deliver the goods for other firms. It is the process of planning, coordinating, and delivering goods or commodities on behalf of the shippers to the buyers from city to city or country to country. Freight forwarding also involves customs brokerage, planning a warehouse location to ease the shipment process, and insurance for supplying the cargos or any mode of transportation. 

 

Therefore, a freight forwarder is often considered as an intermediary, a connection between your shopping of the goods to the delivery of your good. They are responsible for delivering the consignments safely and on time to their destinations.

 

To understand better, here is a more professional definition:

 

“A freight forwarder or as you may call them- a shipper is a legal or authorized person who are responsible for the transportation and delivery of goods internationally. They are an intermediary between the sellers (import or export companies), the transport companies, and the buyers”.

Basic functions and role of freight forwarding involve:

 

  • Determining and navigating the best route with safe and friendly conditions to ease the process of physical shipment
  • Selecting the appropriate consignments for the carriers
  • Handling the customs brokerage or relevant documentations to deliver goods in different countries
  • Monitoring and supervising the movement of goods from the start till they are delivered to the customer’s doorstep –they track the complete shipment

 

Challenges faced by freight forwarders

 

It is not easy to facilitate trade across the borders, certain sipping issues that may arise are:

 

  • Difficulty in the preparation, packaging, and transportation of the consignments
  • Improper documentation or custom brokerage can make it difficult for the consignments to enter different borders
  • Irrelevant or incorrect passing of shipment details makes it difficult to organize, regulate and execute the consignments
  • Abrupt changes in the mode of transportation, causing chaos in the whole freight forwarding process
  • Ensuring the safety and security of the consignments throughout the shipment process.

 

Benefits of using a freight forwarder

 

Albeit the challenges and not-so-smooth process of shipments, freight forwarders have made it easy for local businesses to expand internationally. Even though the transportation industry did suffer during the covid19 pandemic, but now things are getting back to normal.  Cross-border e-commerce has seen a dramatic surge and is the new model for trading, arising the need for more freight forwarders.

 

Some benefits of using a freight forwarder are:

 

  • Cost-effectiveness as a network of different logistics and supply chain management companies reduce the cost of shipment
  • E-commerce and digitization have increased the availability of freight forwarders. Like you can type “find a freight forwarder near me” and you can get instant quotes for reliable sources
  • The process has become more transparent and reliable as the freight forwarder breaks down the cost and the whole process to help you understand
  • Freight companies maintain data graphs for the easy-to-take routes that allow a fast, timely, and seamless delivery of goods
  • They are the experts; they know how to deal with consignments, ensure their safety and specialize in many areas like handling household items, taking care of fragile stuff, providing cold storage, and many more.

 

What is Logistics Operations?

 

Unlike freight forwarders, the logistics operators own the assets. From intermodal land transport via trucks to air and water transport via fleets of boats and planes, they own the mode of shipment but with no access to the routes. While the freight forwards acts as the intermediary, the logistics operators will try to cover all the aspects of supply chain management. They often specialize in providing the perfect conditions or carries for the goods such as cold storage, dry box, or dealing with long haul or large-scale consignments.

 

Logistics operators deal with the physical movement of goods and commodities aligned with the supply chain.

 

Role of Logistics Operators

 

Logistics operators play a major role in the transportation industry:

 

  • The physical movement of the products or goods from the producer to the consumer
  • Logistics operators also deal with four major fields of procurement, production, recovery, and recycling
  • They also deal with the complete process of transportation, storage of the goods in ideal conditions, packaging safely, intricate cargo handling, distribution, and information processing, along with the tracking of goods to ensure a timely delivery
  • They also, at times deal with the documentation and custom brokerage
  • In alignment with the supply chain, logistics operators also deal with warehouse management, dealing with rejected or returned goods, and working with the freight forwarders

 

“In a supply chain, there is also a concept of “reverse logistics” that deals with handling, transporting and discarding the returned, useless or rejected goods.”

 

Challenges Faced by a Logistics Operator

 

It is a common saying that pros come with cons, and to be honest logistics have their fair share of challenges and setbacks.

 

  • Difficulty in cutting the fuel cost for transportation
  • A need for constant up-gradation of business strategies in alignment with new technology and business models
  • Logistics is a complex process, providing transparency to the customers can be challenging at times
  • Shortage of transport drivers
  • Dealing with government regulations and tackling the economic crisis
  • Dealing with environmental issues as the use of eco-friendly packaging can increase the cost by many folds
  • Irrelevant customer information, incomplete documentation, and difficulty in clearing the customs

 

Benefits of Using a Logistics Operator

 

During the lockdown and even after it, people have become comfortable with shopping from their homes. As the fear of corona still lingers around, logistics operators are serving the people at their doorstep.

 

  • People often find the intermediary services as unreliable, as logistics owns their transportation has they offer better reliability and compliance
  • Better organization, development, implementation, and execution of the shipment process
  • Logistics operators have a better knowledge about the industry, the vendors, and marketplace as they deal with all aspects of the supply chain and not just transportation
  • They can offer cost reduction with discounts and account-specific pricing
  • They can easily deal with day-to-day transportation with better time restoration and labor cost reduction

 

To enjoy the benefits of freight forwarding and logistics all you have to do is to find the right person!

 

Importance of Freight Forwarding and Logistics

 

Freight forwarding and logistics are boosting international trade and helping the world’s economy to grow. The ease of transport has made developing countries such as India, Africa, Pakistan, and Bangladesh expand their businesses into the bigger markets or the leading giants such as the US and China. 

 

E-commerce shopping platforms like Amazon, Shopify, Alibaba, AliExpress, and many more have given unlimited power to their users. They can excess to anything, from anywhere at any time. in the past, our grandparents used to wait for ages to get things from abroad that too if any of their relatives or family live there. Now, the millennials can shop from the corner of the world and get it delivered to their homes, thanks to the transportation and shipment industries. 

 

However, the difference between freight forwarding and logistics is crystal clear, the provide similar services such as:

 

  • Inventory management
  • Doorstep, or even door-to-door services
  • Order tracking- from the purchase to delivery
  • On-time and demand reporting
  • Insurance of the cargos and consignments
  • Customs clearance and brokerage
  • Relevant documentation and banking options for international trade
  • Ensuring the safety of packaging and transportation `
  • Secure storage
  • Seamless customer support and experience

 

The Concept of Dropshipping

 

Now that you are familiar with the various aspects of logistics and freight forwarding, you need to know one more thing to choose the right mode of shipment for you. And, that is dropshipping.

 

Dropshipping is an easy way out for online retailers or emerging entrepreneurs who are just starting out. The shipment is seamless because herein the retailer or the seller can sell anything without having the need to store any of the purchased goods. Your job is to market the products and attract buyers. Once you have enough orders you can purchase that good and deliver it to them. All you need is an active social media platform and the know-how of the dropshipping method.

 

However, certain factors like the availability of the products you are marketing at the time of purchase, access to a supplier, and a reliable mode of delivery are important to consider before you ideate the dropshipping business model.

 

Dropshipping allows online retailers to test and try a variety of products in the market, calculate their demand without buying the products upfront.  Although dropshipping seems like a hassle-free way to get into the e-commerce trade, yet there are major setbacks. Since you are not storing or stocking up the products in a warehouse or anywhere, you got no control over the orders. If a customer orders a thing you marketed but is not available anymore you would have to decline the order. You also have no control over the pricing, if you set the price a week ago, maybe the actual price in the market has increased. The packaging and shipping are also a blind game; you do not what is happening. Delayed or damaged shipping can end your e-commerce career before you even start out.   

 

Therefore, for a successful business or cross-border e-commerce, you have to decide the shipment method beforehand.

 

Successfully Delivered; The Concept!

 

A freight forwarder or logistics operator is directly responsible for the state-of-the-art service, fast delivery, and accuracy with every consignment. Without them your company cannot function internationally, they are the backbone of cross-border e-commerce. Whether you need freight forwarding or a logistics company depends on your company, you can choose whatever suits you best.

 

You have to keep in mind that the availability of freight forwarders can fluctuate while a logistics operator tends to have their own transports such as cargos available at all times. However, they both alleviate the daunting procedures associated with shipment and delivery of the goods, logistics and freight forwarding are important to keep your business moving and growing up the scale of success.

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