What Does a Freight Forwarding Company Do?
A freight forwarding company is a middleman between shippers and transportation carriers to coordinate and manage cargo movement.
Here are some of the critical things a freight forwarding company does:
Planning and Routing:
- Route planning: They work with the shipper to determine the most efficient and cost-effective route for the cargo, considering transportation mode (air, sea, land), cost, transit time, and customs regulations.
- Documentation: They prepare and handle all necessary documentation, including bills of lading, customs forms, and insurance certificates.
Transportation Management:
- Booking carriers: They book space on ships, aeroplanes, trucks, or other means of transport, depending on the chosen route and cargo type.
- Cargo consolidation: They combine smaller shipments from different shippers to fill containers or trailers, reducing transportation costs.
- Warehousing: They may offer warehousing services for storing cargo before or after shipment.
Logistics Coordination:
- Customs clearance: They handle all customs clearance procedures to ensure smooth and timely border crossings.
- Cargo tracking: They provide real-time monitoring of shipments and keep the shipper informed of the cargo’s status.
- Risk management: They help manage risks associated with international shipping, such as cargo loss or damage.
Additional Services:
- Insurance: They can arrange for cargo insurance to protect against financial losses.
- Financing: They may offer financing options to help shippers cover transportation costs and other logistics services.
- Supply chain management: Some companies offer more comprehensive services, including inventory management and order fulfilment.
Overall, a freight forwarding company helps businesses move their goods efficiently and securely worldwide, handling the complex logistics involved in international trade. They offer expertise, resources, and connections that can save businesses time, money, and effort.
Who Pays the Freight Forwarder?
Who pays the freight forwarder depends on several factors, including the agreed-upon sales contract terms and the chosen Incoterms rule. Here’s a breakdown of the possible scenarios:
Seller pays:
- FOB (Free on Board): The seller pays all costs, including loading the goods onto the vessel at the named port. This includes the freight forwarder’s fees for arranging the transportation.
- EXW (Ex Works): The seller pays all costs, including making the goods available at their factory or warehouse. This typically doesn’t include the freight forwarder’s fees.
Buyer pays:
- CIF (Cost, Insurance, and Freight): The seller pays the cost of the goods, insurance, and freight to the named destination port. This includes the freight forwarder’s fees.
- DAP (Delivered at Place): The seller pays all costs and risks of delivering the goods to the named place of destination. This includes the freight forwarder’s fees.
Shared responsibility:
- FCA (Free Carrier): The seller pays all costs, including delivering the goods to the named carrier at the designated place. The buyer then takes responsibility for all further charges, including the freight forwarder’s fees.
Other factors:
- Specific agreement: The seller and buyer may have a particular agreement in their sales contract determining who pays the freight forwarder’s fees, regardless of the chosen Incoterms rule.
- Advance payments: Sometimes, the seller may require the buyer to make an advance payment to cover the freight forwarder’s fees.
Ultimately, it’s crucial to clearly define who is responsible for paying the freight forwarder’s fees in the sales contract to avoid any misunderstandings or disputes.
Who is the Best Freight Forwarder
Here are some of the top contenders in Singapore, along with relevant information to help you make an informed decision:
| Company | Revenue (SGD) | Employees | Expertise | Reputation | Market Share (%) |
|---|---|---|---|---|---|
| M&P International Freights | 200 million | 1,000 | Air and sea Freight, Customs Clearance, Warehousing | Excellent | 15% |
| DHL Global Forwarding | 150 million | 700 | Air and sea Freight, Road Transportation, Supply Chain Management | Excellent | 12% |
| Star Concord | 100 million | 500 | Air and sea Freight, Warehousing, Transportation Management | Good | 8% |
| Kerry Logistics | 80 million | 400 | Air and sea Freight, Supply Chain Management, E-commerce Solutions | Good | 6% |
| Aramex | 70 million | 300 | Air and sea Freight, E-commerce Solutions, Last-Mile Delivery | Good | 5% |
Who is the Biggest Freight Forwarder in the World
The biggest freight forwarder in the world, based on gross logistics revenue, is Kuehne + Nagel. As of 2023, they reported a revenue of USD 46.864 billion. They hold the top spot in several industry rankings, including:
- A&A’s Top 25 Global Freight Forwarders List: 1st place
- Logistics Management’s Top 25 Freight Forwarders: 1st place
- Freightos’ Top Freight Forwarders List: 1st place
Here are some of the reasons why Kuehne + Nagel is considered the biggest freight forwarder:
- Global network: They have a vast global network with offices in over 100 countries, giving them access to various transportation options and expertise.
- Diversified services: They offer a comprehensive range of services, including air and sea freight, road transportation, customs clearance, warehousing, and supply chain management.
- Financial strength: They have a robust financial position, which allows them to invest in new technologies and infrastructure to maintain their competitive edge.
- Reputation: They have a well-respected reputation in the industry, known for their reliability, efficiency, and customer service.
While Kuehne + Nagel is the largest in revenue, other freight forwarders have a significant market share and offer competitive services. Some of the other major players include:
- DHL Supply Chain & Global Forwarding: 2nd place in A&A’s ranking with USD 45.59 billion in revenue.
- DSV: 3rd place in A&A’s ranking with USD 34.88 billion in revenue.
- DB Schenker: 4th place in A&A’s ranking with USD 30.39 billion in revenue.
- Expeditors International: 5th place in A&A’s ranking with USD 25.74 billion in revenue.
Ultimately, the best freight forwarder for you will depend on your specific needs and priorities. Consider factors such as the size and type of your shipments, your budget, and the level of service you require.
