Magazine article Business Credit

Freight Forwarders: The Most Profitable Secret in Exporting Today

Magazine article Business Credit

Freight Forwarders: The Most Profitable Secret in Exporting Today

Article excerpt

Globalization. It's a buzzword for the '90s. Moreover, it's becoming a necessity for survival as domestic competition increases and companies cling to their dwindling portion of U.S. market share. The quest for worldwide expansion has led many companies, both large and small, down the exporting trail, in search of an ever elusive entrance into the global marketplace.

The numbers speak for themselves. A survey published in Transportation and Distribution magazine revealed that 97 percent of responding Fortune 500 companies are actively involved in global commerce. And on average, international shipments represent 25 percent of their outbound tonnage. But while Goliath rumbles forward, David is not asleep.

Survey results indicated that small- and medium-sized firms are also engaging heavily in international trade, with overseas shipments accounting for 28 percent of their outbound tonnage.

With the ever increasing emphasis on international trade, what are the key factors to maintaining a profitable exporting business? Experts say one is to make sure that your product is truly wanted; success is often linked to a quality product with a strong reputation. But just as important, and often overlooked, is the part that keeps the exporter's engine hitting on all cylinders: the international freight forwarder. Freight forwarders are a vital fink for shippers, serving as a crucial intermediary in the maze of global logistics.

Keeping Exporter's Ducks in a Row

A popular intermediary in global trade, the international freight forwarder facilitates the cross-border movement of goods. Handling the details of export shipments, freight forwarders provide a vast number of services that help shippers save time, money, and keep the exporting process running smoothly. The international freight forwarder should not be confused with the various other third-party expediters which service companies wishing to export goods.

A "shippers association," explains David Clements, a salesperson for the Harper Group, Inc., a San Francisco, Calif., freight forwarder with more than $432 million in annual sales, groups shippers which export like commodities together and "goes directly to ocean carriers to negotiate transportation rates."

In contrast, a "customs broker" is responsible for handling the importation of a product into a country. Wayne Burl, assistant vice president of transportation with A.N. Deringer, Inc., a 400 employee customs broker and freight forwarder in St. Albans, Vt., says that as a broker they "clear goods into a country, mainly taking care of the customs paperwork" while as a freight forwarder, they "arrange for the transportation of those same goods."

But to add yet another twist, some freight forwarders are now going by the name "third party logistics provider" because they are becoming involved with the different logistical aspects of the exporting process such as warehousing, documentation, customs clearance, and duty drawbacks. According to Clements, freight forwarders are no longer confined to solely arranging transportation on carriers and preparing shipping documents. Many of the larger freight forwarders, such as the Harper Group, have expanded their operations to become full service forwarders, branching out into the entire gamut of services which need to be addressed when a product is shipped.

"The traditional role of a freight forwarder used to consist exclusively of the port-to-port transportation of goods," Clements maintains. "But today this role is changing because shippers want to hire a single source to handle all of their transportation needs. Transportation departments within companies are expensive and full-service freight forwarders have the ability to lower both administrative and transportation costs and provide more accurate exporting information." Clements concludes that in the '90s, the term "full service" is coming into play. …

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