A freight forwarder or forwarding agent is a person or a company who co-ordinates and organizes the movement of shipments on behalf of a shipper (party that arranges an item for shipment) by liaising with carriers (party that transports goods). The carriers may use a variety of shipping modes, including

ships A ship is a large vessel that travels the world's oceans and other navigable waterways, carrying cargo or passengers, or in support of specialized missions, such as defense, research and fishing. Ships are generally distinguished from boats, ...

airplane An airplane (American English), or aeroplane (Commonwealth English), informally plane, is a fixed-wing aircraft that is propelled forward by thrust from a jet engine, Propeller (aircraft), propeller, or rocket engine. Airplanes come in a vari ...

truck A truck or lorry is a motor vehicle designed to transport freight, carry specialized payloads, or perform other utilitarian work. Trucks vary greatly in size, power, and configuration, but the vast majority feature body-on-frame construct ...

s, and

railroad Rail transport (also known as train transport) is a means of transport using wheeled vehicles running in railway track, tracks, which usually consist of two parallel steel railway track, rails. Rail transport is one of the two primary means of ...

s, and often use multiple modes for a single shipment. A freight forwarder does not move the goods but acts as an agent in the

logistics Logistics is the part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the Consumption (economics), point of consumption according to the ...

network and will carry out freight consolidation, rate negotiations, shipment tracking, customs and other documentation, among other tasks. FIATA describes a freight forwarder as the "architect of transport". International freight forwarders typically handle cross-border logistics and have additional expertise in preparing and processing

customs Customs is an authority or Government agency, agency in a country responsible for collecting tariffs and for controlling International trade, the flow of goods, including animals, transports, personal effects, and hazardous items, into and out ...

documentation and performing activities pertaining to the regulations of different countries. Freight forwarders typically have information with respect to

commercial invoice When used in foreign trade, a commercial invoice is a customs document. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the do ...

, shipper's export declaration,

bill of lading A bill of lading () (sometimes abbreviated as B/L or BOL) is a document issued by a common carrier, carrier (or their Law of agency, agent) to acknowledge receipt of cargo for shipment. Although the term is historically related only to Contract of ...

and other documents required by the carrier or country of

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...

import An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

, and/or

transshipment Transshipment, trans-shipment or transhipment is the shipment of goods or containers to an intermediate destination, then to another destination. One possible reason for transshipment is to change the means of transport during the journey (e.g. ...

. Modern freight forwarders offer an end-to-end process i.e. shipping the goods from the place of origin to the final destination and may offer additional services such as warehouse planning, cargo insurance and customs brokerage. Together with tracking, freight forwarding agents often have real time information on the freight. Some forwarders may specialize in niche areas such as rail-freight, and collection and deliveries around a port.

History

The first international freight forwarders were innkeepers in

London, England London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

who held and re-forwarded the personal effects of their hotel guests in the early 1800s. One of the earliest freight forwarders was Thomas Meadows and Co. Ltd., established in 1836. With the increase in trade between

Europe Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and Asia to the east ...

and

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, Medows served as an intermediary to arrange for the transportation of freight from the manufacturers to customers through

rail transport Rail transport (also known as train transport) is a means of transport using wheeled vehicles running in railway track, tracks, which usually consist of two parallel steel railway track, rails. Rail transport is one of the two primary means of ...

and

steamship A steamship, often referred to as a steamer, is a type of steam-powered vessel, typically ocean-faring and seaworthy, that is propelled by one or more steam engines that typically move (turn) propellers or paddlewheels. The first steamships ...

s. The services were later expanded to cover consultative solutions and handling

requirements.

Definition

A freight forwarder is an entity who co-ordinates and organizes the movement of shipments on behalf of a shipper (party that arranges an item for shipment) by liaising with carriers. A carrier is an entity that transports goods for a fee, and may use a variety of shipping modes, including

s, and

s, including multiple modes for a single shipment. For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck, flown to the destination city and then moved from the airport to a customer's building by another truck. A freight forwarder does not move the goods but acts as an agent in the

network and will carry out freight consolidation, rate negotiations, shipment tracking, customs and other documentation, among other tasks. International Federation of Freight Forwarders Associations (FIATA) describes a freight forwarder as the "architect of transport".

Functions and responsibilities

The original function of the forwarder was to arrange for carriage by contracting with various carriers. Forwarder responsibilities included advice on documentation and customs requirements in the country of destination. His correspondent agent overseas looked after his customers' goods and kept him informed about matters that would affect the movement of goods. Modern freight forwarders offer an end-to-end process i.e. shipping the goods from the place of origin to the final destination and may offer additional services such as warehouse planning, cargo insurance and customs brokerage. In a single transaction, the forwarder may be acting as a carrier (principal) or as an agent for his customer or both. Together with tracking, freight forwarding agents often have real time information on the freight. Some forwarders may specialize in niche areas such as rail-freight, and collection and deliveries around a port. International freight forwarders typically handle cross-border logistics and have additional expertise in preparing and processing

documentation and performing activities pertaining to the regulations of different countries. Freight forwarders typically have information with respect to

, shipper's export declaration,

and other documents required by the carrier or country of

, and/or

. Freight forwarders often charge a fee for the activity and might include transportation costs from factory and to delivery, freight charges, customs and other fees and documentation charges.

Organizations

Modern freight forwarding organizations serve as pivotal entities in the facilitation of global trade, orchestrating the movement of goods across international borders. These organizations cater to diverse customers including business-to-business (B2B), business-to-consumer (

B2C Direct-to-consumer (DTC or D2C) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or middlemen. Direct-to-consumer sales are usually transa ...

), and consumer-to-consumer (C2C) requirements. These organizations have evolved significantly, transforming from managing a network of contracted agents to corporations with a direct presence across countries. These organizations often have presence in multiple countries with larger entities having revenues running into billions of dollars. However, studies have noted a significant presence of small companies as well. The freight forwarding organizations have also undertaken diversification of revenue streams and has undergone

digital transformation Digital transformation (DT) is the process of adoption and implementation of digital technology by an organization in order to create new or modify existing products, services and operations by the means of translating business processes into a d ...

. Digital technologies such as

barcodes A barcode or bar code is a method of representing data in a visual, Machine-readable data, machine-readable form. Initially, barcodes represented data by varying the widths, spacings and sizes of parallel lines. These barcodes, now commonly ref ...

electronic data interchange Electronic data interchange (EDI) is the concept of businesses electronically communicating information that was traditionally communicated on paper, such as purchase orders, advance ship notices, and invoices. Technical standards for EDI exist to ...

, and

enterprise resource planning Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suit ...

have enhanced operational efficiency. As per a 2023 report, the global freight forwarding market was valued at $201.6 billion in 2021 and is expected to grow at a

CAGR Compound annual growth rate (CAGR) is a business, economics and investing term representing the mean annualized growth rate for compounding values over a given time period. CAGR smoothes the effect of volatility of periodic values that can render ...

of 3.9% from 2022 to 2030, reaching $284 billion by 2030.

United Parcel Service United Parcel Service, Inc. (UPS) is an American multinational corporation, multinational package delivery, shipping & receiving and supply chain management company founded in 1907. Originally known as the American Messenger Company specializi ...

DHL Group Deutsche Post AG (), trade name, trading as DHL Group, is a German multinational corporation, multinational package delivery and supply chain management company headquartered in Bonn, Germany. It is one of the world's largest courier companies ...

FedEx FedEx Corporation, originally known as Federal Express Corporation, is an American Multinational corporation, multinational Conglomerate (company), conglomerate holding company specializing in Package delivery, transportation, e-commerce, and ...

Maersk (), usually known simply as Maersk ( ), is a Danish Freight transport, shipping and logistics company founded in 1904 by Arnold Peter Møller and his father Peter Mærsk Møller. Maersk's business activities include Port operator, port operat ...

, and

Deutsche Bahn (, ; abbreviated as DB or DB AG ) is the national railway company of Germany, and a state-owned enterprise under the control of the German government. Headquartered in the Bahntower in Berlin, it is a joint-stock company ( AG). DB was fou ...

are the largest freight companies by revenue. Cumulatively, the top ten companies generated a revenue of $538.8 billion in 2023.

National variations

* In

Australia Australia, officially the Commonwealth of Australia, is a country comprising mainland Australia, the mainland of the Australia (continent), Australian continent, the island of Tasmania and list of islands of Australia, numerous smaller isl ...

, most licensed Customs Clearance Agents operate under a freight forwarder. The entities are registered with the government with the licenses renewed every three years. *

Transport Canada Transport Canada () is the Ministry (government department), department within the Government of Canada responsible for developing regulations, Policy, policies and Public services, services of road, rail, marine and air Transport in Canada, tra ...

is the federal department responsible for implementing and enforcing transportation policies and programs with the

Canada Border Services Agency The Canada Border Services Agency (CBSA; , ''ASFC'') is a federal law enforcement agency that is responsible for border guard, border control (i.e. protection and surveillance), immigration enforcement, and Customs, customs services in Canada. ...

responsible for enforcing most regulations that affect international freight forwarders. The Canadian International Freight Forwarders Association (CIFFA) was established in 1948 to support and protect the character, status, and interest of foreign freight forwarders by establishing uniform trade practice and regulations. * Federation of Freight Forwarders’ Associations in India is the apex body and the umbrella body of 28 associations across

India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...

representing 6,500 custom house agents, employing over 110,000 people. * With more than 82% of manufactured products being exported, freight forwarders are important contributors to the Irish economy. Associations including the Irish International Freight Association represent the industry through educational and representative roles. * In

Kenya Kenya, officially the Republic of Kenya, is a country located in East Africa. With an estimated population of more than 52.4 million as of mid-2024, Kenya is the 27th-most-populous country in the world and the 7th most populous in Africa. ...

and

Tanzania Tanzania, officially the United Republic of Tanzania, is a country in East Africa within the African Great Lakes region. It is bordered by Uganda to the northwest; Kenya to the northeast; the Indian Ocean to the east; Mozambique and Malawi to t ...

, freight forwarders are commonly referred to as clearing and forwarding agents. A license is required, which can be acquired from the respective revenue authorities. Freight forwarders are responsible for clearing consignments through customs, arranging transportation and forwarding the consignment to the consignee. * Freight-forwarding in

Nigeria Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf of Guinea in the Atlantic Ocean to the south. It covers an area of . With Demographics of Nigeria, ...

has been in place since the exporting of groundnut as a cash crop beginning in 1914, though not initially as freight forwarding but as the means of transportation of goods and services from one country to another. Following the method of their British, agents were used to facilitating the transport of goods and services. * Pakistan International Freight Forwarders Association PIFFA has more than 500 freight forwarding companies as members and is the local representative of FIATA and member association for

Pakistan Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the List of countries and dependencies by population, fifth-most populous country, with a population of over 241.5 million, having the Islam by country# ...

. * In the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

, freight forwarders are not licensed, but many are members of the

British International Freight Association The British International Freight Association, also known as BIFA, is the prime United Kingdom trade association representing UK freight forwarders. These are companies that forward goods internationally on behalf of importers and exporters. It ...

(BIFA), a trade association for UK-registered companies engaged in the international movement of freight by all modes of transport, air, road, rail, and sea. BIFA has over 1600 members, known generally as freight forwarders, who offer a wide range of services within these various modes. * Companies handling domestic freight in the

by road must be registered with the U.S. Department of Transportation's

Federal Motor Carrier Safety Administration The Federal Motor Carrier Safety Administration (FMCSA) is an agency in the United States Department of Transportation that regulates the trucking industry in the United States. The primary mission of the FMCSA is to reduce crashes, injuries, an ...

. Such forwarders are "carriers" who accept freight for transport and are liable for delivering the freight under their own bill of lading. International ocean freight forwarders arranging for shipments to and from the US must be licensed by the

Federal Maritime Commission The Federal Maritime Commission (FMC) is an independent agency of the United States government that regulates U.S. oceanborne transportation and the United States Merchant Marine. It is chaired by Louis E. Sola. History The FMC was establish ...

as ocean transportation intermediaries, who are ocean freight forwarders or non-vessel-operating common carriers (NVOCC). NVOCCs dispatch shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers; ocean freight forwarders prepare and process documentation and perform related activities pertaining to shipments.

References