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How you can start your own freight forwarding company


The term “Freight Forwarding” could be new to some people. Sometimes people take the wrong meaning out of it. Majority of people understand it as an organisation dealing with  import and export or distributors or deliverers like any other courier company. To fully grasp the meaning and purpose of it, one needs to consult a person who is or in the past associated with this business.

Simply put, Freight Forwarding is a procedure of planning and transporting manufactured goods internationally. It is an international door to door shipping. There are a variety of global companies who sell their goods internationally. The question arises, ‘how do they trade their goods or products in the international market?’ The answer is ‘they charter a freight forwarding company’.

Before touching upon the further features to start this business, one needs to investigate the history regarding freight forwarding.

Historical Background:

The FIATA International Federation Forwarders Association called this process an architect of transport that has clarified the status of freight forwarders in the trade market. In England, the very first freight forwarding company was established, named Thomas Meadows and Company Limited of London, during the middle of the 19th century. This company published a paper ‘Understanding the Freight Business’ in 1972 that addressed the unique methods and techniques of trading.

Earlier, the primary task of the forwarders was to organise transport by hiring different transporters. The basic obligations of forwarders consisted of assistance regarding papers and also the customary conditions of the destined country. The foreign correspondent agent reviewed the condition of the products and took all the measures that ensured the safety of the products.

Commenting on the present period, not much has changed. The principal responsibilities remain the same, however there are now sub-branches in foreign countries where a correspondent representative looks after everything. In this way in a one contract the forwarder is playing a role of a transporter or as a mediator for his client in cooperation.

The following list is a scanned version of those core functions/services provided by Freight forwarders:

  • The very first job is to arrange a warehouse and freight space.

  • Next, is the preparation of shipping and paperwork that is according to international law.

  • Keeping the track of the local goods that are being transported.

  • Further, is to put together the freight insurance guidelines.

  • Lastly, comes the negotiation of the transportation charges.

Basically, freight forwarding is a worthwhile trade concept where one can accommodate the process of shipping globally.

Some Principal Tips and Tricks to begin a Freight Forwarding Business:

Analysing the Industry:

Before starting any type of business, one should have a clear idea what is its scope in the market. Similarly, if one is going to start Freight Forwarding, then total research should be performed. This research consists of the detailed evaluation of the functions and tasks involved in freight forwarding. Since this is an international business dealing with international manufacturers and consumers, then one must investigate the competition level on global levels.

The recommended approach for starting this business is having experience as a freight forwarder or hiring such employees who were attached to this business in the past. The advantage of this experience is that one will have a clear idea of the flaws or shortcomings of this trade, hence he will work accordingly.

Estimated investment required for the business:

The plus point of starting this business is that one doesn’t need much of an investment in starting. Arranging huge offices and warehouses is the secondary stage. At the start all you need is a computer system having an internet facility and a mobile to directly communicate with the clients.

The main expense for this business at the start, is investing in good software. According to the need and requirement, there are so many already designed software programs available.

To gain the most out of the business, the better approach is to compare the overall expense and the profit. Following points should be kept in mind while doing it:

·         The list of services included in your research and what is their expense.

·          The charge sheet of the competitors in the market.

·         Comparing the competitor’s charge sheet with yours.

Usually, a freight forwarder charges 15-25% after the package is delivered on time and safely. 

Tactical Approach when planning:

There are some important points required while planning for this business.

·      Create a specific objective statement that has a professional approach to it.

·      Establishing long term plans where you see your business in a few years.

·          Establishing KPIs(key performance indicators), that will show the successfulness of your company and maintaining the track of the testimonies of the progress your business is making.

·         Determining your core abilities like establishing connections is very crucial. These connections will help you to be in touch with your agents around the world.

·         Introduce a strategy that will touch upon both long-term and short-term targets.

·         Then comes the implementation of the planned strategy, since this business does not function without a strategy.  

Establishing  Alliances around the Globe:

There is an online platform called Digital Freight Alliance that helps to bring together logistics suppliers  around the globe. This helps to develop the connections with the agents in the international domain. This platform will help to flourish the business actively.

Whenever a company wants to sell their goods in a new country, the first thing they do is to assess the available shippers in that country. Next, they will turn to the international network collaborators to find the suitable servicer for their goods. This shows making an alliance in this business plays a vital role.

Advantages and disadvantages of this business:

The business of freight forwarding is not easy as it sounds to be. There is this common notion that freight forwarding is easy to maintain, but there are some obstacles too. The main investment in this business is ‘learning’. Obviously because this business deals on an international level, the major time is served to fulfil the legal requirements.

One of the biggest challenges in this business is to deal and tackle the interruptions in the stock chain. Transportation can never be always smooth since there are sometimes delays and delivery issues. Although forwarders are not responsible for these problems, they are compelled to cure these problems. Late deliveries and lost products can damage the image of the company.

This business comes with so many advantages too. This business is meant for you if you know how to win the trust of your clients and persuade them to work with you.

Conclusion:

Every business requires a pure dedication and struggle. Having a great vision is very important. Freight forwarding is definitely a worthwhile yet a troublesome business. Shipping luggage internationally requires a lot of patience. It depends totally upon you how you tackle the obstacles and flourish your business toward mighty heights.