Chapter five

Freight forwarding overview

 Introduction
• When a business decides to export their
products they soon realize that they have to
deal with the numerous barriers that have to
be overcome to ship the product to the end
customer.
• Several agencies exist that offer
transportation services to shippers but don’t
own any line haul equipment.
• They primarily handle numerous small
shipment and consolidate them into vehicle
load quantities.
Transportation agencies include;
Freight forwarder
Parcel post
Shipper association
brokers
 Freight forwarder
• Definition: - A freight forwarder is an
organization which provides a logistics service
as an intermediary between the shipper and the
carrier, usually on international shipments.
 What a Freight Forwarder Can Offer
• The services of a freight forwarder can vary
between different companies but the main
function of the freight forwarder is to act as
an intermediary between the client who is
hiring them and various transportation services
that are involved in getting the product
overseas to the customer.
 Con’t
The freight forwarder will provide the
client insurance services to make sure that
if the items do arrive damaged, they will
be reimburse and not liable for the
damages.
• freight forwarder is an agent who handles
import/export shipments for a fee.
Some terms
Port" means the area or place to be designated by the Federal Revenues
Board as such;
Customs Clearance means a process of fulfilling customs' formalities for
import and export cargo on behalf of consignor or consignee within
customs station;
Customs Formalities means any customs operations carried out in
connection with importation, exportation or transit of goods from the time
of arrival at the customs port until released from the customs control;
Port Clearance means a process of fulfilling port's formalities for import
and export cargo on behalf of consignor or consignee within port area
until the import cargo is brought out from the port or the export cargo is
loaded onto the ship;
 Con’t

Groupage/Consolidation:- means the grouping together of several

compatible consignments into a full container load.
Protective Agency:- means the representation of a Ship owner to protect
a ship owner's interest and to supervise the work carried out by the
ship's agent when the ,owner's ship is in port.
Ship means:- any kind of floating object used for maritime
transport and includes vessel.
 The Functions of the Freight Forwarder

Generally the functions of the freight forwarder

include the following:
 Port clearance
Customs clearance
Groupage/consolidation
 Warehousing and delivery services
 Cargo handling equipment services
 transport the cargo using other transporters,
 Con’t
 packing services;
 preparation and issuance of relevant documents;
 choice of the most suitable carrier and conclusion
of the contract of carriage;
 follow up movement of cargo;
 consultancy services in freight forwarding.
• Liability of the Freight Forwarder.
 The Freight Forwarder shall carry out his
duties with due diligence.
 He shall be liable for defaults in the
performance of his duties, in particular he shall
be liable for loss of or shortage of or damage
to the goods or delay in delivery of the goods.
 Parcel post
• Parcel post is a small shipments delivery
services by post office.
• Rates are based on distance that delivery is
made from the point of origin.
 Shipper association
• Shipper associations are operationally similar to
freight forwarder in that they consolidate
individual small loads in to bulk shipments to
gain cost economies.
• However, they are voluntary cooperative
organization operating a non profit basis.
• Where members operating, in specific industry,
join to manage small shipment purchase.
• Typically, members purchase product from
common source of supply are located in one
area.
• The association is implemented when group of
shippers establish an administrative office at a
point of frequent merchandize purchase.
• The office arranges for individual purchase
orders to be delivered to local facility.
 Broker
• Brokers are intermediary that coordinate
transportation arrangements for shipper,
consignees, and carriers.
 Special service charges
• In addition to line-haul charges, carriers
frequently provide special services for which
extra charges are made.
Special service generally classified as;
1. Special line-haul services
2. Terminal services
 Special line-haul services
• A. diversion and reconsignment
• Diversion: of a shipment refers to changing
the destination of a shipment while enroute.
• Reconsignment: refers to changing the
consignee of a shipment, usually after it has
reached the original destination.
• B. transit privileges: some transport carrier
established a special services that permits shipments
to be stopped while in transit for processing or storage
before moving on to the final destination.
• C. protection: products b/c of their particular physical
characteristics require some types of protection in
transit in addition to that normally provided.
• For instance, perishable commodities may need
refrigeration or fragile commodities may require extra
packing.
 2. Terminal service
• A. Pick up and delivery
• B. Switching: the movement of railroad cars
from private siding and junction to rail
terminals or station, or vice versa, is referred to
as switching.
• C. Demurrage and detention: referring to
penalty charges imposed on the shipper or
consignee for retaining a carriers equipment
beyond an allowed free time.