BIFA - Benefits of using a freight forwarder - June 2022

BIFA - Benefits of using a freight forwarder - June 2022

Benefits of Using a Freight Forwarder

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Introduction

One of BIFA’s main roles is to support its Members and one of the best ways to do that is to provide the arguments as to why freight forwarding is so important to making international trade work.

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Benefits of Using a Freight Forwarder

In many ways this is the single biggest argument in the sectors favour. International trade needs an active freight forwarding sector to connect all the relevant parties and ensure that freight moves. This has been amply demonstrated during the COVID-19 pandemic and the issues stemming from EU Exit. The freight forwarder is a problem solver, and the sector has played a

significant role in ensuring that the country has the necessary products available to keep it functioning. This booklet aims to highlight the range of services that freight forwarders provide ensuring a diverse market from which importers and exporters can select their international transport partners. This diversity provides the greatest opportunity, allowing the customer to select the most

appropriate supplier based on those factors which are important to them. Beyond the commercial reasons on which traders base their decision to do business with one another there are wider reasons, and this booklet aims to provide Members with the arguments as to why the sector and the individual freight forwarder is so important.

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General Points

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The freight forwarding market provides greater customer choice: • Matching the size of the freight forwarder to the customer • Widening the scope and variety of the services offered • Increasing the opportunities to match customer needs with the forwarder’s capabilities • Facilitating risk management e.g.: - Forwarders will select the most suitable routing/ carrier to meet the customer requirements - The customer can use

The large number of UK based freight forwarders ensures a competitive market: • Allowing access to market rates appropriate to the routing/service provided • Market knowledge and monitoring ensures that rates remain competitive • Service/rates are tailored to a clients’ needs • Prevents market dominance by a few large entities.

Location:

• The customer can choose between a locally or a nationally based freight forwarder • By using a freight forwarder, the customer has access to an international agency and communications network.

the forwarder with the most relevant industry knowledge/skill sets.

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Benefits of Using a Freight Forwarder

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The neutrality of the freight forwarder in choosing the most appropriate mode, routing and carrier to meet customer requirements, therefore increasing: • Choice of carriers • Viable options for sailings / flights / routings • Wider range of service options e.g., Consolidation / Groupage by a variety of modes • Access to value added services.

Using a BIFA Member will:

Miscellaneous reasons

• By using a freight forwarder, the customer will have access to: - A broad range of skills, knowledge and experience - Relevant IT systems for the necessary interface with carriers, Customs etc. rather than having

• Ensure that the BIFA Standard Trading Conditions (STC) are incorporated providing a sound contractual basis underpinning each shipment • Provide a well understood legal framework for international transport contracts through the industry accepted BIFA STC • Allow “mirror” contracts where forwarders sub- contract with other forwarders (co-load) usually using the same STC • Clearly define the rights, responsibilities and liabilities of the BIFA Member and their customer where the BIFA STC are incorporated.

to purchase, update and maintain them themselves.

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Services Offered

In general terms the services offered by freight forwarders can be categorised by the following main headings:

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Freight Management

Supply Chain Management Warehouse Facilitations and Inventory Management Documentation

Management of Suppliers

Consignment Management Facilitation of Customs and Frontier Activities Other Services

These wide-ranging services are expanded on the following pages.

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Benefits of Using a Freight Forwarder

Services Offered 1 Freight Management

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Identify the rate Based on the service required the forwarder is able to negotiate the most appropriate rate. Identify the mode Not all shipments are based on urgent time-sensitive delivery, so identification of the most suitable mode (air, ocean, road or rail) for an individual shipment is an important value add. Identify the correct carrier Carrier frequency and uplift capability varies. It’s not sufficient to obtain an attractive rate if the transit time does not bring value. Carrier routes and services are not limitless and due consideration must be given up to the point where responsibilities transfer between the different parties facilitating trade.

Pre-book space (per individual or repeat shipments)

A consistency of traffic flow allows pre-planning to take place and forwarders can often secure space in advance providing more confidence in uplift/delivery. Some forwarders have permanent bookings with carriers and therefore shipped as booked is more likely. Reporting Historic patterns of shipment can help produce forecasts and therefore better plan for future shipments. Reports can also provide information on volume, costs, service performance indicators and exception issues.

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2 Supply Chain Management Services Offered

The differences between freight forwarding and logistics are subtle and there is often an overlap between the two. We have tried to clarify the differences as follows:

Many forwarders provide both these services, thus fulfilling the dual role of freight forwarder and logistics provider. Some see the difference between the two activities as being determined by whether the service provider undertakes the activity themselves or arranges to have it carried out by another party. In all probability, in the former scenario the supplier is acting as a logistics supplier, whilst in the latter as a freight forwarder. It is important not to become too pre-occupied on this point and often it is the provision of the service and how it is undertaken that determines whether it is a freight forwarding or logistics activity. However, regardless of definition, in both roles the international transport service supplier is managing the supply chain in line with their clients’ needs.

freight forwarder

In the strictest interpretation of the term, a “freight forwarder” acts as an intermediary between the company that manufactures the goods and the final destination for the shipment. Although freight forwarders do not carry out the shipment themselves, they offer different transport modes such as sea / ocean freight, rail freight, road transport and air freight.

logistics

Logistics is a wider term, “logistics companies” plan, implement, and control the movement and storage of goods, services, or information within a supply chain and between the points of origin and consumption. A proper supply chain may include transportation, shipping, receiving, storage, and management of all or one of these functions.

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Benefits of Using a Freight Forwarder

3 Warehouse Facilitations and Inventory Management Services Offered

Many freight forwarders provide a wide range of warehousing, storage, and inventory control services to assist their customers.

Some activities such as “temporary storage” are Customs regulated procedures utilised by freight forwarders to facilitate the easier flow of cargo.

Aside from activities related to the import/export of freight many freight forwarders can provide long term storage, stock control inventory management and reporting solutions to their clients.

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4 Documentation Services Offered

Although we hear much of digitisation, freight forwarding is still an industry that is largely paper based, if only because many Customs authorities require a preference or movement declaration in paper format which must be retained for a specified number of years. The freight forwarder retains

• Preparation of shipping documents as applicable at Master or House level including bills of lading, air waybill, CMR notes etc. • Present or make documentation available to: - Shipping lines to secure cargo release - Other relevant parties to secure the release of a consignment shipped under a Letter of Credit • On the customer’s behalf the freight forwarder will check invoices, packing lists and other documents required to facilitate the movement of freight

these original and other important documents on behalf of their customer. The importance of this service is only apparent if an HMRC or VAT official asks for them at a later date as part of an inspection. Most freight forwarders will either raise, or arrange to have raised, the relevant documents to facilitate the movement of cargo. These include but are not limited to:

• Arranging for the certification of documents as appropriate with Chambers of Commerce etc.

• Presentation of documents to Customs authorities whilst arranging or undertaking import or export customs clearance on a client’s behalf and providing wider support to clients relative to customs compliance.

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5 Management of Suppliers Services Offered

Freight forwarding is complex, it requires the activities of many different suppliers to be co-ordinated to ensure that cargo is successfully moved.

Supplier management is undertaken on a continuing and per individual shipment basis. Opposite are some aspects of this role undertaken by the freight forwarder:

• Using industry knowledge to select suitable suppliers dependent on activity/mode

• Obtaining and managing cargo capacity including permanent bookings to secure space on their customers’ behalf

• Negotiation and monitoring of freight rates on behalf of the customer

• Establishing if the client has any special requirement relating to equipment, documentation, and personnel – passing this information to the chosen supplier and monitoring compliance • Monitoring service levels including adherence to departure dates, schedule reliability levels and accuracy of invoicing etc.

• Aggregated buying / negotiating power as the freight forwarder has a wider client base

• Local contact with suppliers

• Reduction of the customer’s workload because they have fewer suppliers to monitor.

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6 Consignment Management Services Offered

The freight forwarder will manage an individual consignment to ensure that at the very least it has departed from origin, and where applicable arrived at destination.

Here are some examples of how a freight forwarder will undertake this function on behalf of their customer:

Establish if there are any special handling requirements based on the nature / size of the freight being shipped or the location of the collection / delivery points

Make all relevant arrangements with multiple suppliers for moving the cargo

Where required, monitor destination processes including arrival, customs clearance and final delivery Acting upon customer instructions, the freight forwarder will select the most suitable routing, carrier and whether it will be a “direct” or “consolidated” movement

Verify accuracy of shipment related information including checking weights, dimensions, suitability of packing etc.

Move the consignment in line with deadlines etc.

Monitor the consignment via “Track and Trace” systems etc.

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7 Facilitation of Customs and Frontier activities Services Offered

Trade is being increasingly monitored and regulated by officialdom. We have seen the growth of regimes such as the Authorised Economic Operator (AEO) scheme which aim to encourage compliance by focussing on:

• Adherence to documented procedures

• Taking corrective action

• Training

• Self-Assessment including documented audits • External assessment, usually by Customs authorities

Many BIFA Members are

accredited to the AEO standard indicating a commitment to customs compliance which will benefit potential customers.

At an operational level a freight forwarder will be able to: • Prepare and submit

It is important for the client to recall that forwarders can only provide guidance, the ultimate decision making and responsibility for customs and other regulatory compliance rests with the importer and exporter.

• Maintain and retain customs records accurately • Assist with other Government departments such as DEFRA • Have access to various government IT and commercial inventory systems to facilitate customs entries and monitor clearance and release.

customs declarations in line with customer and customs requirements • Provide guidance to enable customers to make decisions on customs related matters • May operate additional procedures which assist clients such as a Customs Warehouse, or Simplified Declaration authorisation

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Services Offered

8 Other Services

In addition to the services previously discussed, freight forwarders may offer many other services including:

It is clear that the forwarding sector offers a very broad range of services which benefits the wider economy. It is unlikely that any one freight forwarder can offer all services. More specialist activities, such as moving livestock, bullion and military goods, for example, will require the services of freight forwarder with the relevant knowledge and access to specific facilities and equipment. BIFA’s Standard Trading Conditions highlight certain categories of goods that the BIFA Member will have to agree to handle in writing before any services can be provided in their respect.

• Guidance on Incoterms and the apportionment of costs and responsibilities

• Specialist services handling: - Pharmaceuticals - Cool-chain - Perishables - Livestock and pets - Excise goods

• Management reports relating to cargo movements

• Warehousing related services: - Fulfilment warehousing - Third party logistics - Customs warehousing

• Regulatory and compliance updates

• Insurance services

• Specialist customs consultancy and management services.

• Project forwarding for unusual and difficult to handle consignments

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Conclusion

Freight forwarders, in particular SME, are essential to make supply chains work, they provide an invaluable range of services such as groupage / consolidation enabling the smaller shipper to engage in international trade when otherwise they might not be able to do so.

Links the shippers and carriers

Interfaces with inventory systems at ports and airports

The freight forwarder:

Connects via their IT systems with commercial systems to facilitate the movement and tracking of cargo

Provides access via IT to essential customs and other regulatory systems

Simplifies the commercial arrangement for their customers often on favourable credit terms

There are simply too many shippers and consignees for the carriers to successfully manage all their client relationships, particularly given national regulatory and commercial variations. It is the freight forwarder who gives the individual, nationally based trader the opportunity to engage in international trade.

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British International Freight Association Redfern House Browells Lane Feltham Middlesex TW13 7EP United Kingdom

T: +44 (0)20 8844 2266 E: [email protected] W: www.bifa.org

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June 2022