Freight forwarding is part of the TSL sector, which is sometimes referred to as the „bloodstream of the economy”. For this system to work with the expected efficiency, all the elements must be closely connected. What is freight forwarding and what is its role?
In this article:
- What is freight forwarding?
- What are the types and classification criteria of forwarding?
- Forwarding and logistics – differences
- What does a forwarder’s job looks like?
- Forwarding orders
- Methods to make freight forwarders’ work easier
- fireTMS: digitalisation of freight forwarding in practice
What is freight forwarding?
Freight forwarding deals with the organisation of cargo transport. This is indicated in Article 794 of the Civil Code, which states that:
” § 1. By a forwarding contract the forwarder undertakes, against remuneration, within the scope of their enterprise, to send or receive a consignment or to perform other services connected with its transport.”
In practice, this is a complex process which involves much more than the collection of the goods from the contractor and their transport to the destination. The freight forwarder must coordinate all necessary activities to ensure timely and safe delivery. The term freight forwarder is also commonly used to describe a forwarding company.
What are the types and classification criteria of forwarding
Forwarding can be national or international. We also distinguish between profit-oriented forwarding and unpaid services, i.e. in-house services (e.g. when a manufacturer delivers their goods themselves). Another method of division is:
- branch forwarding – uses only one mode of transport to transport the goods,
- intermodal forwarding – uses more than one type of transport.
With regard to the nature and scope of activities, forwarding can be divided into so-called pure, which deals exclusively with forwarding activities, and mixed, which deals also with additional activities.
The often-used classification criterion concerns the type of means of transport. Then we distinguish forwarding
- by rail, i.e. using only railway wagons. Therefore, the railway forwarding does not include transport of goods on road sets (huge-pack), nor intermodal transport,
- by sea, in which transport is carried out by sea or ocean-going vessels,
- by air,
- by road, in which the forwarder uses a lorry or a road set, i.e. a combination of tractor and semi-trailer.
Forwarding and logistics – differences
Forwarding is not synonymous with logistics, although the terms are often used interchangeably. Logistics deals with planning and managing the flow of goods. On the other hand, forwarding is an organisational activity resulting in transport from A to B. Forwarding is therefore a part of logistics, but with a much narrower scope of practical activities. It can therefore be said that a logistician is also a freight forwarder, but it is wrong to call a logistician a specialist in freight forwarding.
What does a forwarder’s job looks like?
The role of the forwarder is to organise transport in such a way that it is timely, safe and cost-effective. The responsibilities of this specialist include:
- advisory services in the field of cargo transportation,
- selection of the optimal means of transport,
- preparation of relevant documentation,
- conclusion of agreements with contractors
- collection and delivery of goods.
In practice, a large part of the freight forwarder’s work time is taken up by checking the current status of loads, unloads and transports. The person employed in this position also deals with the preparation of quotes for contractors and their ongoing support, including, of course, monitoring of payments. On top of this, there is searching for new forwarding orders, insuring goods and many other activities without which the transport of cargo could not take place. To meet all these challenges, companies invest in TMS software, which significantly increases the efficiency of the forwarder’s work as well. Therefore, digitalisation is one of the most important trends in the TSL industry for 2022.
Forwarding orders are contracts concluded between contractors and the freight forwarder, the object of which is to organise the transport of cargo. Such a contract can be concluded in any way, even as a verbal agreement, but in practice a written form or more often an electronic one (e.g. by e-mail) is used.
Each forwarding order should include such basic elements as:
- data of each contractual party,
- information about the cargo (type, weight, hazard class or value),
- methods of securing the shipment,
- dates and locations of loading and unloading,
- specification of the means of transport and driver’s details,
- rate for performing the service,
- additional conditions, if the order specification requires so.
It is worth knowing that the forwarding order is the most important document for the insurer when liquidating a damage incurred during the cargo carriage. The forwarder is responsible for the careful organisation of transport in accordance with the instructions of the contractor specified in this document. Consequently, it is also necessary to prepare forwarding orders reliably. These documents can be automatically generated in fireTMS system.
Methods to make freight forwarders’ work easier
The role of the freight forwarder largely involves carrying out repetitive tasks and, above all, carefully monitoring the situation and reacting quickly to its changes. Exemplary work organisation is therefore essential. A computer with an Excel spreadsheet and a telephone are simply not enough to handle many orders.
That is why companies from the TSL industry are increasingly turning to software that automates the most time-consuming processes, makes it easier to control the status of orders or search for new ones on transport exchanges. It is therefore worth investing in a TMS system that enables comprehensive transport and forwarding services.
fireTMS: digitalisation of freight forwarding in practice
The need for digitalisation of freight forwarding is recognised by the entire TSL industry, as digitalisation provides measurable benefits in an increasingly competitive market. The implementation of an efficient TMS system makes the forwarder’s work more effective, putting the company ahead of the competition.
How does it work in practice? We will explain it using the example of fireTMS transport and forwarding software. Here are its most important functions for freight forwarders:
- planning of optimal routes with minimisation of empty runs,
- automatic creation and handling of orders,
- automatic generation of transport documents,
- integration with transport exchanges,
- monitoring of vehicles (using GPS systems),
- monitoring of order execution,
- control of payment deadlines with automatic debt collection,
- risk detection (e.g. late arrival for loading),
- communication with drivers via mobile application and SMS,
- scheduling of work based on information on the availability of free vehicles in specific time slots.
In an era of skyrocketing operating costs for forwarding and transport companies, caused for example by rising fuel prices, the efficiency of individual processes becomes particularly important. The competition is also looking for the best solutions on the market. For many companies, fireTMS has proven to be an effective way to strengthen their position in the TSL industry. Would you like to discuss how this system can improve your business?