What is a Freight Forwarder and How They Can Help Your Business

Freight Forwarder.  Its a term that we’ve all probably heard of but few of us know what the term actually means.  Who is it referring to?  What business function do freight forwarders serve?  And lastly, how can a freight forwarder save my business money?  I plan on touching on all of these questions, at least in part, in this blog post on freight forwarders and freight forwarding.

A freight forwarder, at its core, is nothing more than a third party logistics provider (3PL).  A third party that helps arrange for the transport of goods between a business and a transportation company.  The 3PL often has relationships with a variety of freight companies.   ShippingDiscounts.com is basically a 3PL or freight forwarder as well.  We’ve established discounted rates with over 30 different freight partners.  Then through our sales staff and online presence we go out and try to persuade businesses to utilize our existing relationships with these different freight companies.

We often run across customers that ask us why they should use a freight forwarder like our company instead of going directly to the freight company.  This is a very valid question and may not be so obvious to someone that has never worked with a 3PL before. 

First and foremost is our buying power.  We bring a large book of business when we head to the negotiating table with each of our individual freight partners.  By pooling the shipments of all of our customers together we’re able to negotiate deeper percentage discounts, qualify for more FAKs, as well as establishing breaks or reductions on common accessorial fees.  Now this isn’t to say that if you’re pumping out 100+ freight moves a week, you couldn’t also get a very good deal with your preferred freight provider, but you need to be approaching these types of volumes to get the kinds of rates that we’re able to negotiate.

Another major reason that a freight forwarder may benefit your business is the choice and variety of selection in freight companies they have to offer.  3PL’s like ShippingDiscounts.com have already gone out and done the work of negotiating with most of the major national and regional LTL freight companies out there and have secured great discount freight rates.  On top of that, the technology tools that a company like ours can offer your business for no additional charge will greatly enhance the efficiency of your freight or shipping personnel.  I can’t tell you how many times I’ve gone on a freight sales call and the shipping manager tells me that they commonly use the same three or four carriers to do their freight and that each time they have a move, they take the time to call each of these freight providers to get a quote.  Once you’re set up on a transporation management system (TMS) online with a freight forwarder, they’ll give you the ability to generate multiple quotes in seconds and from 20 to 30 providers, all at once.  So now you start to reduce your costs and bottom line by finding the best rate or fastest transit time from a variety of carriers insteading of being married to just a few.

Although there are many other benefits to using a freight forwarder, I would suggest that maybe the most important reason other than cost reduction is for the enhanced level of customer service that they provide.  At our company we realize that moving freight can be a major headache and a time consuming part of your daily business activities.  We also know that there is nothing more stressful than dealing with freight when an issue arises.  Whether it be damage in transit, a re-weigh, or a missed pickup.  A great freight forwarder will be able to help you deal with these problems in a much more efficient way than dealing with the carrier directly.  Its much easier to call your personal sales rep or talk to your direct accounting liaison versus getting transferred to a major calling center, which is often the case when you call one of the major national freight companies. 

A freight forwarder is technically a “middleman” and some potential customers scoff at their use because of that fact, but they help freight companies by acting in essence as an extension of their salesforce and by reducing their customer service load and they benefit the business that is doing the shipping by giving them access to better rates and technology tools that will help them streamline their business operations.

Now is the time to go out there and negotiate the best freight rates for your business that you can.  If you are a small or medium sized business, cash flow is critical to you.  Its common knowledge that in this economy its a great time for your business to get out there and shop your rates and put more available cash back in your businesses coffers. Finding a dependable freight forwarder is a great first step. Please contact us today if you’d like more information on how we can help your business.