The movement of freight is essential for our modern society to function smoothly. Without the ability to move products safely from one area or country to another, the global economy would simply collapse. As with many other aspects of the 21st Century, the business of freight forwarding is undergoing change driven by new technologies. Let’s take a brief look at the history of freight forwarding.
What is Freight Forwarding?
A freight forwarder is an entity that assists in arranging the shipping of goods from their point of origin to their final destination. Freight forwarders do not actually physically transport merchandise or raw materials. Their purpose is to work as an intermediary between companies that need to ship products and the shipping and transportation firms that can ensure delivery. They can be instrumental in negotiating the logistical complications involved in shipping, allowing the shipper to concentrate on their business.
Freight forwarders offer services that help companies that need to move their products to locations where those goods can be used. This can be retail establishments or distribution centers. The forwarder’s job is to make sure the goods arrive by a specific date and in an undamaged state. According to thebalancesmb.com, most freight forwarders offer these kinds of services to their shipping clients:
Packaging - Freight forwarders will assist the shipper in determining the proper manner in which to package their goods based on the intended destination. International shipments or those that will be stored for a significant amount of time require different packaging than that for a simple in-state delivery.
Labeling - Assistance with labeling, including any special requirements for international shipments, is another service offered by a freight forwarder.
Documentation - There can be complicated documentation involved with shipping. Invoices, bills-of-lading, inspection certificates, and export licenses are among the types of documents that a freight forwarder can help a shipper create.
Warehousing - In the event that the merchandise needs to be stored while being transferred between transportation companies, the forwarder will help arrange warehouse locations.
Insurance - The freight forwarder will provide insurance service that protects the shipper from liability in the event of damaged goods.
The Origins of Freight Forwarding
The practice of freight forwarding has origins in the late 18th Century. The first forwarders were innkeepers who assisted their guests by holding and forwarding their belongings and goods. Seizing on a business opportunity, companies such as Thomas Meadows and Company Limited in London sprung up to serve merchants and manufacturers, according to mach1global.com. They used a network of local carriers to arrange transportation and helped its clients with documentation and customs information.
Business to business freight forwarding grew in importance throughout the 19th and 20th Centuries. Industrialization made it possible for large quantities of goods or products to be manufactured in a factory in a single location. In order for this type of production to be financially beneficial to the factory owner, there must be a way to get the finished products to prospective customers. Transporting the goods in a safe and effective way is an essential component of an industrial society.
Transportation Technology and Freight Forwarding
There have been major technological developments throughout the last several hundred years that completely changed the way people and goods can move around the world. These changes made it possible to move goods more quickly and efficiently. They also opened new and distant markets to manufacturers. Freight forwarders became a more important resource that helped companies navigate the increasingly complex shipping and delivery systems that were becoming available.
The combination of railroads and steamships ruled the late 19th Century and the early 20th Century. International shipments became more common and freight forwarders that could handle their complexity became an integral part of the manufacturing and shipping landscape.
Motor vehicles, an improved network of roads, and the rise of the airplane led to further growth in international shipping in the 20th Century. Add in the development of huge container ships and it is easy to see why freight forwarding is an important factor in negotiating the complexity of commerce in the 21st Century.
Changes in Freight Forwarding
The purpose of freight forwarding has remained essentially the same throughout the centuries. Freight forwarders help get a customer’s goods shipped safely to their chosen destination. The means employed by freight forwarders has evolved over time to take advantage of the current technology to meet the demands of more complex shipping routes.
Keeping track of the growing number of carriers and shipments inevitably led to a tremendous amount of paperwork for the forwarding companies. Keeping up with this clerical work was an onerous task and limited the earning potential of freight forwarders. This was especially true of smaller enterprises.
Companies that specialize in freight forwarding have benefitted from the digitization of information and the rise of computer systems and networks. Broadband connectivity, mobile devices, and dedicated software have made freight forwarding more efficient. Rather than spending hours on the phone tracking down carriers, forwarders can engage them through the web in a fraction of the time.
Computerization has led to increased effectiveness in the freight forwarding industry. It has also allowed smaller companies to compete on an even playing field with more resource-rich enterprises. As the global economy continues to expand, the need for freight forwarders will only become more critical to the world’s commerce in the future.