FORWARDER RELATIONS TO OTHER PARTIES

Many shippers wonder whether a freight forwarder is the same as a logistics company,
such as a third-party logistics provider (3PL). Although both terms denote crucial
players in the shipping sector, there are key differences between logistics and freight
forwarding companies that you should be aware of if you plan on shipping cargo
anywhere.

Understanding the distinction will help eliminate any possibilities for confusion when
communicating with industry professionals about your shipments. Continue reading to
learn the differences between logistics and freight forwarding. There are many types of
companies in the transport, forwarding, and logistics sectors, such as freight forwarders,

carriers, and logistic companies. The activity scope of the companies may over.

What is a logistics company (3PL)?

Logistics companies are businesses that offer logistics outsourcing support. This
usually includes warehouse activities such as storage, supply chain management,
picking, packing, and fulfilling orders. Essentially, logistics companies help with
transport of the goods and other activities needed to fulfil the entire supply chain.

Besides organizing transport, logistics companies also offer a range of supplementary

services, including IT systems integration, inventory management, reporting, reverse
logistics and more. Businesses can save considerable time and resources by delegating
their logistics operations to 3PLs since it allows them to focus on their own industry
and priorities without the need to hire and train in-house logistics experts. While most
3PLs can provide “complete” logistics services, these can be scaled and customized

There are two types of carriers in logistics:

◼ Common carrier – a transport provider that offers services to any company or

person; can work with more shippers
◼ Contract carrier – a transport provider that offers services to a specified shipper in
the long term according to the needs of the customer.
What is a freight forwarding company?

A freight forwarding company coordinates the transport of shipments from one location
to another, using one or more carriers and shipping methods. For example, for an
intercontinental delivery, a freight forwarder may arrange for products to be moved
from a factory to a port by truck, to be transported by ship to the destination port, and
then moved by another vehicle to the recipient. Due to the operational complexities
involved, freight forwarding companies act as intermediaries between shippers and
international logistics providers. They will often be able to negotiate special rates with
shipping lines and carriers, which individual shippers would not be in a position to do
because they don’t have the network and industry connections.

When goods are in transit, freight forwarders usually take care of almost all essential
paperwork, including customs documentation, bill of lading, letter of invoice,
import/export declarations, and insurance forms. They also provide additional services
such as warehousing. These advantages are the reason why many businesses rely on
them for international freight shipping.

What is a freight forwarder? What does a freight forwarder do?

A freight forwarder is a company or person that organizes shipments to get goods from
one point to another, oftentimes providing multimodal transportation options. It
connects its clients (shippers) with a freight carrier.

Freight forwarder contracts with a carrier to move goods, but not always – freight
forwarder can move the goods by himself, acting as a freight carrier. The freight
forwarder’s main task is to oversee the entire transportation process.

Freight forwarder not only plans shipping process, but it can also offer customer service
like:

◼ optimizing and managing shipments for the best speed and cost
◼ assembling and consolidating shipments
◼ insurance coverage options
◼ performing or providing for break-bulk and distribution operations of the
shipments
◼ cross-docking
◼ cargo tracking
◼ paperwork assistance
◼ packing and storage
◼ customs brokerage
◼ and more.

Freight forwarders have to be experts in managing the logistics necessary to ensure that
goods arrive on time and negotiate tariffs. In terms of shipping across borders, such
entities have to know international trade law, customs services and procedures, and
import duty.

CARRIER AND FREIGHT FORWARDER– DIFFERENCES

❖ A freight carrier moves cargo, and a freight forwarder organizes and oversees the
entire transportation process.
❖ Freight forwarders can act as intermediaries between a carrier and a shipper.
❖ Freight carriers conclude a master agreement, freight forwarders – house.
❖ You can conclude a contract with a freight carrier instead of concluding one with
a freight forwarder. Nevertheless, in some cases, the freight forwarder can be the
carrier.
❖ Carriers are held liable for any damage that occurs to the cargo while handling it.
Bear in mind that national laws have different definitions of freight forwarders and
freight carriers.