Chapter one

What is Freight Forwarding and custom

clearing?
1.1 What is Freight Forwarding?
Freight
Freight transport is the physical process of transporting commodities and
merchandise goods and cargo.
Freight Forwarding
Performed by a freight forwarder, this originally included arranging transport and
preparing documentation on behalf of the shipper, including both importing and
exporting (depending on INCOTERM). With multimodal transportation and
containerization becoming more prevalent, the responsibilities of freight
forwarders have grown. Today it often consists of transport operators providing
container services, who are often additionally responsible for multimodal inland
and international transportation. Those who practice the latter are typically called
non-vessel operating common carriers (NVOCCs).

The scope of responsibility for most freight forwarders today means that they
can effectively provide the following services:

 Consultation on the most efficient and cost-effective means of transport

 Act as a shipper’s agent, preparing documentation, and arranging transport
services
 Serve as the principal transport operator directly responsible for the carriage
of goods
 Provide specialist services managing container packing and unpacking,
customs clearances, and the raising of insurance claims
Consolidating these responsibilities into one role over which the freight forwarder has oversight
can streamline your processes and improve communication between departments. Everyone will
be able to coordinate their logistics through that position, which serves as a central hub.

Who is freight forwarder?

In the most succinct and layman terms, a Freight Forwarder is a multi-function agent/operator
who undertakes to handle the movement of goods from point to point on behalf of the cargo
owner.. The essence of freight forwarding is to ensure that the cargo is picked up from the seller
and delivered to the buyer at the required place, at the right price and in the same condition that it
is picked up from origin using the most suitable resources and routing possible..

If you think why you need a freight forwarder, as per the WTO, global trade in 2017 was worth
USD.17.2/- trillion and with forecasted volume growth of 4.4% in 2018 and 4.0% in 2019..As
per UNCTAD, in 2017 global trade carried was around 10.7 billion tons with containerized
shipments accounting for 1.8 billion tonnes carried in 148 million TEUs, covering 9117 billion
ton-miles.. Staggering isn’t it..??

If you are an importer or exporter imagine having to go through the activities of arranging trade
and finance documentation, negotiating freight contracts, monitoring the movement of the cargo,
transportation, customs clearances, port inspections and all other activities by yourselves for the
above volume. Especially if you don’t know about the intricacies of the industry or you a
beginner to importing.. Daunting huh..!!

That is where a Freight Forwarder comes in.. A well established and experienced freight
forwarder is expected to have below capabilities (either owned or outsourced)

 experienced in all modes of transportation – road, rail, air and sea

 able to provide cost-effective and efficient cargo shipping solutions based on the
customer’s requirement
 able to arrange storage for the cargo (usually all big forwarders have their own
warehouses)
  able to arrange the distribution or “forwarding” of the cargo as per the instructions of
their client
 have the capability to negotiate freight rates with the shipping line
 able to book cargo with the shipping line as per the requirement of the client or under
their own contract
 process all relevant shipping documents such as certificates of origin, customs and port
documentation, bills of lading and associated shipping/negotiating documentation (Eur1,
Certificate of Origin, etc)
 issue their own approved house bill of lading (HBL) although they are not an NVOCC
 arrange transportation of the cargo from/to the customers’ premises and port
 have a thorough knowledge of over border cargo movement
 MAY or MAY NOT also do Customs Clearance
 may or may not be accredited to customs, port etc and cannot do customs clearance if not
accredited
 acts as a carrier in cases where they issue house bill of lading

Freight Forwarder’s role in the supply chain:

 Traditionally it has been confined to arranging transport and preparing

documentation as an agent of the shipper (importer or exporter depending on
the INCOTERM).
 With development the role of the freight forwarder also started to change
due to containerization and multimodal transportation, instead of acting only
as an intermediary, some become transport operators offering container
services, as well as multimodal inland and international transportation. We
know them now as non-vessel operation common carriers (NVOCCs) and
can issue transport documents.

The Freight Forwarder can therefore fulfil one or more of the below services:
 Act as a shipper’s agent arranging transport services and preparing
documentation.
 Act as a transport specialist advising shipper on most cost efficient and best
means of transport.
 Act as a multimodal transport operator (MTO) which means he becomes the
principal transport operator with the direct contractual responsibility for the
carriage of goods door to door, assuming liability for those segments of
transportation for which he himself may not be the actual operator.
 Act as a specialist service provider in packing, container packing /

unpacking, customs clearances and the raising of insurance claims.

What is custom Clearing?

 Customs clearance is the act of taking goods through the customs authority
to facilitate the movement of cargo into a country (import) and outside the
country (export).
 Also, the customs clearance means a document issued by the customs
authority to a shipper indicating that all duties have been paid and the
shipper’s goods is cleared for export
 Before shipping various goods, a shipper may wonder what customs
clearance means and how it’s relevant to their shipping options. Every
international ocean freight shipment must meet the quota of customs
clearance in each country.
 Customs clearance is a necessary procedure in permitting goods that are
transported to a country through an authorized customs broker. Within this
process, there’s also information regarding shipments with imports and
exports with parties involved in the process.

Who is a Clearing Agent..??

 Every country has its own set of regulatory
requirements relating to customs but one common requirement is that the clearing agent or
customs broker (as they are referred to in a few countries) have to be accredited with the local
customs authorities, border agencies, port and other authorities relevant to the shipment of
goods..

They should have a valid clearing license at the time of clearing the goods on behalf of the
customer. A few countries have very strict licensing requirements which are regularly reviewed
and the agents that don’t follow these, may have their licenses revoked. A clearing agent is
essentially an agent who specifically takes care of the customs clearance aspect of the
business. In many countries, clearing agents write examinations. Only after the passing of this
exam, they can transact as a clearing agent in that country. USA and India are some of the
examples where customs license examinations are held. Some countries like Australia however,
seem to have stopped the customs examinations, preferring “acquired experience” over customs
license examinations for the purpose of licensing customs brokers. Apart from the obvious
function of lodging documentation with customs, a clearing agent has many other equally
important responsibilities which affect them directly and also their clients.

What is a Customs Broker/agent?

A customs broker is an agent for importers that assist importers with the transaction of their
customs business. These agents are authorized by tariff laws. A customs broker is either a private
individual or firm that are licensed by the U.S. Customs and Border Protection (CBP) to organize
custom entries, payment of duties, and how this process may be affected by CBP discharges
goods from custody.
Clearing agents represent the shipper and arrange the customs’ clearances of
imported goods. Clearing agents are responsible for:

 Arranging customs clearance/release with the appropriate requirements, such

as customs stops, port health exams, and more
 Collecting payment from the shipper for taxes and duties, as well as making
payments to Customs and SARS
 Framing the Bill of Entry before submission via electronic data interchange
to customs
 Calculating the import duties and VAT payable/taxes
 Establishing the proper harmonized tariff heading of the goods for customs
 Assisting with clearing instructions to confirm that all information received
from the shipper and consignee is accurate before submission to customers’
clearance

Similar to freight forwarders, clearing agents are specialists with a specific set of
expertise. While you could likely fumble your way through the legalities of
shipping internationally, you’ll almost certainly save more money and time by
leaving international logistics to the international logistics experts.

 Clearing Agents’ role:

The clearing agent acts on behalf of the shipper (importer or exporter depending on
the INCO Terms) and arranges for the customs clearances of the imported goods.

The role entails:

 Determining the correct harmonized tariff heading of the goods for customs
duties, if applicable.
  Calculating the import duties and taxes / VAT payable.
 Assist with the clearing instruction to confirm that all information received
from shipper and consignee is accurate before submitted for customs
clearance – strict rule that is adhere to and if not, huge penalties that could
follow both the clearing agent and the importer / consignee.
 Framing the Bill of entry (BOE) to be submitted via electronic data
interchange (EDI) to customs / SARS.
 Collecting payment from the shipper for duties and taxes / VAT and making
payment to Customs / SARS authorities.
 Arranging the customs clearance / release with the relevant requirements, i.e.
customs stops, port health exams, and many more requirements per specific
cargo requirements that needs to be met before a release could be obtained,
as well as to avoid penalties / delays.

Upon clearance been received cargo will be release to consignee through the
various processes that still needs to be followed in the various modes of transport:

 Air – draw cargo from ground handling agent or handover agent’s

warehouse and deliver to consignee.
 LCL (less than container load) – goods are collected from a specialized
customs licensed warehoused and then delivered.
 FCL (full container load) – release notice arrange depending on the shipping
line depot agreement and transport agreement, then only then will the
container be delivered to consignee.
 Road freight – all depends on the INCO terms and limitations of the
vehicle / site to where the cargo needs to be delivered upon release has been
receive.
From the all that has been summarized above I am sure you agree it is best to leave
it up to the experts or have tools that could assist, as well as guide you as there is
so many areas in the supply chain that you need to understand and know off to not
cost yourself additional cost to bottom line.

So before you decide to just move forward with a freight forwarder and/or clearing
agent asks the relevant questions to find out if they can assist with what your entire
requirement to make your project successful.

1.2 Freight classification for shippers

WHY IS FREIGHT CLASSIFICATION IMPORTANT?

Freight is classified by its dimensions, description, and other factors in order to make for a
smooth shipping and billing process for customers. Industry standards prevent the process of
shipping freight from becoming cumbersome and ambiguous.

WHAT IS NMFC®? According to the National Motor Freight Traffic Association (NMFTA),
“The National Motor Freight Classification® (NMFC®) is a standard that provides a comparison
of commodities moving in interstate, intrastate and foreign commerce.” As a non-profit
membership organization, the NMFTA exists to provide standards for classifying freight, carrier
identification codes and standard point location codes

.HOW DO SHIPPERS USE NMFC®? NMFC informs the freight classification process,
providing a uniform approach to negotiated rates for carriers and shippers. An NMFC number is
found by identifying the materials in a shipment. Descriptions are first separated by a general
product grouping (noun), then narrowed down to individual items that are each assigned a class.
These NMFC product descriptions can change over time, so it is important to confirm that the
correct number is being used to help prevent miscalculated rates on the bill of lading. //
WHAT ARE CLASSES? There are a total of 18 NMFC® classes, where 50 is the lowest and
500 is the highest class. The higher the class, the higher the rate for every hundred pounds you
ship. Classes are based on four transportation characteristics: density, handling, stowability and
liability. Collectively, these characteristics determine the appropriate rate for that class, which is
then entered onto the bill of lading.

HOW IS FREIGHT’S DENSITY MEASURED? The overall shipment, including pallets or

other packaging, is measured and weighed to determine its density. To calculate density, divide
the total weight of the shipment by the total cubic feet. Saia’s Density Calculator is a fast and
efficient tool to determine the density of a piece of freight. Simply plug in the dimensions (in
inches) and the weight of the item, and the shipment density will be calculated for you

1. Density

Density describes the space your cargo occupies in relation to its weight. It’s calculated by
dividing the weight of the item in pounds by its volume in cubic feet. Unless there are any major
concerns with stowability, handling, or liability, density is the most significant factor when
assigning a freight class.

How to calculate density:

1. Measure the length, width, and height in inches of your freight in its packaging.

2. Multiply Length x Width x Height to calculate the volume of your cargo in cubic inches.

L x W x H = inches3

3. To calculate cubic feet, divide the volume of your freight in inches3 by 1,728 (the number
of cubic inches in a cubic foot).

inches3 / 1,728 = feet3

4. To calculate density, divide the weight of your freight by total cubic feet.
 feet3 x weight in lbs = freight density

2. Stowability

Stowability quantifies the ease or difficulty of loading and carrying your cargo onto and off
of the truck.

Most freight is easily stowable in trucks, trains, and boats, but some cargo is
regulated by government or carrier policies that will make stowability more
difficult. For example:

 Some items cannot be stowed together.

 Hazardous materials must be transported according to specific safety policies
and regulations.
 Excessive weight, length, or oddly shaped protrusions may make it
impossible to load your cargo with other freight.
 Some freight can’t bear an additional load, and therefore can’t be stacked.

3. Handling

Freight is often loaded using mechanical equipment. Most freight poses no difficulties, but some
cargo requires special attention because of its weight, shape, fragility, or other safety
hazards.

4. Liability

Liability measures the probability of freight theft or damage, as well as the likelihood of
damage due to adjacent freight. Perishable cargo, or cargo that is prone to spontaneous
combustion or explosion, is classified according to liability and assigned a value per pound.
Freight Shipping Classification Chart (lowest cost to highest
cost)

There are 18 freight classifications. Use this chart to help determine your freight shipping class:

Weight Range per

Cost Class Name Examples
Cubic Foot

Cargo that fits onto a standard, shrink-

Lowest cost 50 - Clean Freight Over 50lbs
wrapped 4x4 foot palette; very durable
55 Bricks, cement, hardwood flooring 35-50lbs
60 Car accessories and car parts 30-35lbs
Car accessories and parts, bottled
65 22.5-30lbs
beverages, books in boxes
Car accessories and parts, food items,
70 15-22.5lbs
automobile engines
77.5 Tires, bathroom fixtures 13.5-15lbs
85 Crated machinery, cast-iron stoves 12-13.5lbs
92.5 Computers, monitors, refrigerators 10.5-12lbs
Boat covers, car covers, canvas, wine
100 9-10.5lbs
cases
110 Cabinets, framed artwork, table saw 8-9lbs
125 Small household appliances 7-8lbs
150 Auto sheet metal parts, empty bookcases 6-7lbs
5-6lbs
Clothing, couches and other stuffed
175
furniture

Auto sheet metal parts, aircraft parts,

200 4-5lbs
packaged mattresses
Bamboo furniture, mattress and box
250 3-4lbs
spring, plasma TVs
 300 Wood cabinets, tables, chairs 2-3lbs
400 Deer antlers 1-2lbs
Highest cost 500 Bags of gold dust, ping pong balls Less than 1lb

1.2 Documentation in freight and shipment

The transport document is issued by the “Carrier” whether a shipping line, airline,
trucking company or railroad. They come in various forms and each serves several,
but not necessarily all of the following functions.

A. Bills of Lading

A bill of lading is a contract between the owner of the goods (normally the
exporter) and the carrier of the goods. Its guarantee document to their customers
for their goods handed over to carrier for purpose of delivering to the design
destination. BL is very specific documents; what being it move, how much it, what

did the commodity look like where is going.

Function
 Receipt for good(guarantee of the cargo good)
 Documentation of title
 Evidence of contract
Types of Bills of Lading
1. Marine/Ocean/ Bill of Lading: is a bill of lading used only for
carrying goods by ship, in other words, a ‘port to port bill of lading
2. “Conventional Bill of Lading” or “Break-bulk Bill of Lading” are
solely used for carriage at sea of conventional goods with the exclusion
of containers.
3. Straight Bill of Lading: In this B/L the title to the goods is conferred
directly to a party named in the letter of credit (the importer usually), as
such the title to the goods is not transferable to another party by
endorsement (signature). In other words, the bill of lading is not
negotiable.
4. Order Bill of Lading
In an order bill of lading-negotiable bill of lading-the title to the
goods is conferred to the order of shipper or to the order of a named
party in the letter of credit (the issuing bank usually). The purpose of an
order bill of lading is to protect the interest of the shipper or the named
party to the title to the goods.
5. Clean Bill of lading: A Bill of Lading without any restrictive
clauses. It is a bill of lading stating: “shipped on board in apparent good
order and condition”.
6. Foul Bill of Lading: is a bill of lading with a restrictive clauses are
called “foul bills of lading” or “Unclean bills of Lading”, “Claused bills
of lading” or “Dirty bills of lading”
.7.Received for Shipment Bill of Lading: a bills of lading issued when
the shipping company receive goods from the shipper. It does not
confirm shipment of goods.
8. Shipped Bill of Lading: A bill of lading issued when the goods are
actually shipped
 9. Negotiable/Nonnegotiable Bill of Lading: Negotiable bills of
lading are bills of Lading which can be transferred to a third party by
endorsement. In order to say negotiable, Bill of lading must meet the
following two conditions:
I. it must be drawn up to or to bearer,
II. It has to be clean.

10. Multimodal Transport Bill of Lading: is a bill of lading involving both sea
and other transport modes, but with different carriers involved at each stage, e.g.
another shipping company, a road hauler, a railway company, an air transport
company, an inland shipping company, etc.

The Multimodal Transport Bill of Lading is issued by sea carrier and them states
on it that they will be responsible for the goods during the entire period of
transport.
B. Commercial Invoices
The commercial invoice serves as a bill for the goods from the importer to the
exporter, and it also serves as evidence of a transaction. Commercial invoice
itemizing the merchandise sold and the amount due for payment. These
commercial invoices must contain very specific items of information, such as
quantities, description, and purchase price, country of origin, assists, transportation
charges, commissions, installation service, and financing charges.
C. Pro Forma Invoices
An abbreviated invoice sent at the beginning of a sale transaction, usually to enable
the buyer to obtain an import permit or a foreign exchange permit or both.
D. Packing Lists
A document describing the contents of a shipment. It includes more detail than is
contained in a commercial invoice but does not contain prices or values. It is used
for insurance claims as well as by the foreign customs authorities when examining
goods to verify proper customs entry.
E. Inspection -Certificates
A document issued by an inspection company or other person independent of the
seller and buyer that has inspected the goods for quality and/or value. It may be
required for payment under the terms of the sales agreement or a letter of credit .
F. Certificate of Origin:
A document in which the exporter certifies the place of origin (manufacture) of the
merchandise being exported.

Freight Bill
The bill of lading ordinarily does not contain information about the freight charges,
though some altered forms do include these charges.
 Contain the same information with bill of lading except it dose contain
fright charge.
 The fright charge may prepay by the shipper or billed collect from the
consignee.

NATIONAL MOTOR FREIGHT CLASSIFICATION 100-AA

uNIFORM STRAIGHT BILL OF LADING ORIGINAL—NOT NEGOTIABLE

 Carrier’s Pro No. _______________________

Shipper’s Bill of Lading No. _______________

Consignee’s Reference/P.O. No. ___________

Name of Carrier ___________________________________________________________ Carrier’s Code

(SCAC)___________________ RECEIVED, subject to individually determined rates or contracts that
have been agreed upon in writing between the carrier and shipper, if applicable, otherwise to the rates,
classifications and rules that have been established by the carrier and are available to the shipper, on
request: From
__________________________________________________________________________________
Date _________________________ Street _______________________ City
________________________ County ___________________ State ________________ Zip __________
the property described below, in apparent good order, except as noted (contents and condition of contents
of packages unknown) marked, consigned, and destined as shown below, which said carrier agrees to
carry to destination, if on its route, or otherwise to deliver to another carrier on the route to destination.
Every service to be performed hereunder shall be subject to all the conditions not prohibited by law,
whether printed or written, herein contained, including the conditions on the back hereof, which are
hereby agreed to by the shipper and accepted for himself and his assigns. Consigned to
_____________________________________________________________________________________
__________________________ On Collect on Delivery Shipments, the letters “COD” must appear
before consignee’s name. Destination Street
_____________________________________________________________________________________
_______________________ City ___________________________________________ County
___________________________________State ________________ Zip __________ Delivering Carrier
____________________________________________________________________ Trailer No.
_______________________________ Additional Shipment
Information___________________________________________________________________________
______________________ Handling Units No. Type Packages No. Type HM Kind of Package,
Description ofArticles, Special Marks and Exceptions (Subject to correction) Weight (Subject to
Correction) Class or Rate Ref. (For Info. Only) Cube (Optional) Freight charges are PREPAID unless
marked collect. CHECK BOX IF COLLECT FOR FREIGHT COLLECT SHIPMENTS: If this shipment
is to be delivered to the consignee, without recourse on the consignor, the consignor shall sign the
following statement: The carrier may decline to make delivery of this shipment without payment of
freight and all other lawful charges. _________________________ (Signature of Consignor) Mark “X”
to designate Hazardous Materials as defined in DOT Regulations. NOTE (1) Where the rate is dependent
on value, shippers are required to state specifically in writing the agreed or declared value of the property
as follows: “The agreed or declared value of the property is specifically stated by the shipper to be not
exceeding _______ per _______.” NOTE (2) Liability Limitation for loss or damage on this shipment
may be applicable. See 49 U.S.C. § 14706(c)(1)(A) and (B). NOTE (3) Commodities requiring special or
additional care or attention in handling or stowing must be so marked and packaged as to ensure safe
transportation with ordinary care. See Sec. 2(e) of NMFC Item 360. Notify if problem en route or at
delivery __________________________________________________________ (for informational
purposes only) Name Fax No. Tel. No. Send freight bill to:
_____________________________________________________________________________________
________________ Company Name City Street State Zip Shipper
___________________________________________________ Carrier
____________________________________________________ Per
_____________________________________ Per _____________________________________ Date
_______________ Shipper Certification This is to certify that the above-named materials are properly
classified, described, packaged, marked and labeled, and are in proper condition for transportation
according to the applicable regulations of the DOT. Per
_________________________________________ Date __________________ Carrier Certification
Carrier acknowledges receipt of packages and required placards. Carrier certifies emergency response
information was made available and/or carrier has the DOT emergency response guidebook or equivalent
document in the vehicle. Per
____________________________________________________________________________ Package
Nos. __________________________________ Date
_____________________________________________________________________________________
_____________________________________ UNIFORM STRAIGHT BILL OF LADING ORIGINAL
—NOT NEGOTIABLE Only carriers participating in the NMFC at the time transportation occurs may
use this publicat

Chapter two
 Freight operation
2. What are the Operations in Freight Forwarding?

The freight forwarding process refers to the flow of goods between destinations. The process is
conducted by freight forwarders. Businesses seeking to expand and grow by trading at an
international level should turn to the freight forwarder to streamline the process and ensure
accuracy. Shipping items provides an opportunity for an organization to expand its customer
base. However, the logistics process involved in international trade is complicated and requires
the skills of a freight forwarder.

The Freight Forwarding Process

A freight forwarder functions by facilitating all aspects of shipping. They do not actually conduct
shipping. Instead, freight forwarding services focus on the intricacies of the process. Freight
forwarders know the changing requirements of international trade and regulations to effectively
ship items around the world.

Freight forwarding firms provide specialized teams of agents to oversee all documentation and
paperwork for the shipping and receiving of goods. The main objective is to ensure that the
goods arrive by the required date. The freight forwarders will handle every step of the cargo
process which may include insurance claims or internal bills of lading

Stages of Freight Forwarding

Export Haulage

The term ‘export haulage’ refers to the movement of goods from the shipper’s location to the
warehouse of the freight forwarder. Usually, a truck or train transports the goods. The time it
takes can vary depending on the distance of the transport, geographic location, and size/amount
of goods. The initial first stage can take from a few hours to several weeks.

Checking of Items
After export haulage, a freight forwarder will always check to make sure that all items were
transported without any problems.

Clearing Export Customs

Prior to shipping, items must have clearance from the country of origin. Customs brokers
perform the process by submitting details concerning the cargo along with any required
documents. The agreement developed between the shipper and consignee is singular and not
managed by the freight forwarding company. Instead, you’ll need a third-party customs broker
service to handle the process.

Customs Clearance for Importation

When the shipment arrives at its destination then the authorities must check the import
documents. However, this stage process can actually start before the cargo arrives. A freight
forwarder will obtain clearance before the cargo arrives which saves time and streamlines the
process.

Destination Arrival and Handling

Many processes take place during this stage when the cargo arrives. The freight forwarders
receive all documents for the goods such as the carrier bills and outstanding documentation. This
process is always managed by the freight forwarder.

2.1 FREIGHT TRANSPORTATION OPERATIONS

TODAY

INTRODUCTION:
Freight operations consist of everything required to move an item of freight from its origin or
shipper to its destination or receiver. In the United States, most freight operations are handled by
the private sector and are considered part of the supply chain management of business
operations. The public sector owns and manages many of the facilities, including the highway
system, that are required to move freight. It also regulates and taxes freight movement. This
division in ownership and responsibility creates some unique challenges for freight planning.

Public Versus Private Sector:

Movement of freight is unique because it is predominantly managed by the private sector across
facilities owned and maintained by the public sector. The most telling distinction between how
these entities view transportation is in their respective definitions of transportation. The public
sector defines transportation as the effective and efficient movement of people and goods from
one place to another.

The private sector defines transportation as the creation of place and time utility, where place
utility means that goods or people are moved to places of higher value and time utility means
that this service occurs when it is needed. In the public sector, planning for transportation
improvements occurs from 6 months in the short term to 20 years or more in the long term. In the
private sector, short term planning is delivery of tomorrow’s goods, while long-term is
considered 6 months to a year in the future. This difference in time frames has made partnering
between public and private stakeholders difficult, particularly when the players do not
understand this difference.

Transportation goals also vary between the public and private sector. Goals of the public sector
are to provide safe, reliable, and sustainable transportation to all users. Because transportation is
considered a public utility in the sense that it is vital to the overall public interest, it is the
responsibility of the public sector to ensure that it operates effectively and fairly. Goals of the
private sector are to provide reliable, cost-effective service to specific customers in a competitive
environment of providing a better service than the competitors.
 Logistics:
Movement of freight is a derived demand, meaning that goods are moved only in response to a
need. A firm needs a commodity, either as input to a product or as an item to sell to a consumer.
The provider of the commodity ensures delivery of the product to the customer. Several players
can be involved in accomplishing this, including transportation firms, wholesalers, and third-
party logistics firms that specialize in providing logistics management services.

Influences:
Evolution of the movement of freight since World War II has occurred quickly due primarily to
the influences of four exogenous factors:

 Globalization of business
 Deregulation of transportation and a changing governmental infrastructure
 Organizational changes in business
 Rapidly changing technology

Globalization has impacted freight movement in many ways, from foreign sourcing of
procurement to selling goods to other countries to multifaceted international distribution,
manufacturing, and marketing. With improved transportation services, use of land bridges—
moving goods across countries without those countries being either the origin or destination for
those goods—has increased.

Commodities:
Freight is made up of commodities that vary from raw materials to finished goods. Most raw
materials are shipped as either dry bulk, such as coal or grain, or liquid bulk, such as oil or milk.
Processed goods can be shipped in almost any form, either containerized or no containerized.
The diversity of types of freight can be seen from examples like mail, automobiles, machine
parts, scrap, garbage, hazardous materials, computers, pressurized liquid natural gas (LNG),
clothing, and fresh flowers. How this incredibly diverse population of goods is grouped for
transportation planning analysis is still an area of discussion and research.

Modes:
Freight, more so than people, travels by many modes including rail, water, air, and pipeline as
well as truck. Figure 37.1 shows growth by mode of freight movement over the last ten years of
the 20th century. For almost all movements by modes other than truck, freight trips must also be
multimodal. In other words, freight must change modes during a shipment from its origin to
destination

2.1.2 Ocean Freight Forwarder operation

What is an Ocean Freight Forwarder operation?

A freight forwarder is a person or company with the know-how to safely and effectively
transport your freight from point A to point B. While freight forwarders don’t generally own the
trucks, ships, or airplanes necessary to move your cargo, they serve as middlemen who know
every step of the complicated shipping process and can ensure that your goods get to their
destination. Some forwarders specialize in air freight, while others work exclusively with ocean
freight.

An ocean freight forwarder specializes in moving freight via cargo ships. This specialization
enables ocean forwarders to know precisely how to complete any shipment and build the
relationships necessary to get the best ocean rates, which they can then pass on to their
customers.

Ocean Freight Forwarding Services

Despite how crucial freight is to the world economy, it’s a pretty difficult field to navigate.
That’s why even the most seasoned of shipping professionals rely on a sea freight forwarder’s
services for their ocean shipments. An ocean forwarder knows what goods can be shipped, the
correct procedures for shipping them, all of the paperwork required for shipping, how to get your
cargo on a vessel, and what to do in case something goes wrong. That means that with the right
ocean freight forwarding services, you can be confident that your freight is in good hands and
worry about the more important parts of your business.
Ocean freight quotes?

Does an Ocean Forwarder Charge Less than an Air Forwarder?

Unsurprisingly, ocean rates are less expensive than air rates. But there are tradeoffs. If speed is a
priority, you may want to look elsewhere. Ocean shipments take over one month to be delivered,
whereas air shipments take a few days. Reliability is also a factor that should be considered.
While air shipments run on a very tight schedule, it’s not uncommon for freight ships to take
longer than expected to embark. That said, there is a reason why 90% of cargo is sent via the
ocean. It is the most cost effective and environmentally friendly way to send goods
internationally. It’s also the best (and sometimes only) way to send oversized and hazardous
items.

How Do I Calculate Ocean Freight Rates?

You can calculate ocean freight costs and fees by using our freight rate calculator. Simply enter
your dimensions and weight to get an instant estimate. If your shipment is large enough, you may
want to look into container rates.

2.1.3 Air Forwarding & Air Freight

Forwarders

Air cargo forwarding

What is air cargo?

When you think of cargo, you likely visualize massive ships carrying thousands of containers
across the ocean. But in many instances, cargo is sent by air — often right under your nose… or
airplane seat. You probably also think of air cargo as a prohibitively expensive option. But in
certain cases and with the right air freight forwarder, you could end up paying less to ship faster.
 What is Air (Freight) Forwarding?
 Air freight forwarding is the process of organizing and planning the transport of freight
from one point to another by air.
 While freight forwarders don’t physically move your cargo, they do assist in every facet
of your shipment, simplifying the process and taking on the burden of communicating
between all of the people and moving parts that are typically involved.
 Some forwarders specialize in ocean freight, while others work specifically with air
freight.
 An air freight forwarder specializes in moving freight by air on either passenger aircrafts
or specially designed cargo aircrafts. This specialization enables them to better
understand the intricacies of air freight, create a relationship with the TSA, and, in many
cases, provide better air rates.

Air Freight Logistics

 International air cargo is heavily regulated. As such, many opt for a freight forwarder
who works exclusively with air shipments.
 An international air freight forwarder can help you navigate through all key freight
documents, insurance, customs, air freight logistics, and any turbulence you encounter
along the way.
 An international air freight forwarder can also ensure that your goods are packed to fit the
non-traditional shape of an aircraft and effectively optimize the space you pay for.

Air Freight Transportation & Process

 Air shipments are faster and more reliable than ocean shipments. As counterintuitive as it
might seem, they can also be cheaper.
 How is that possible?
 The way prices are calculated for ocean and air shipments are fundamentally different.
The cost of sending cargo on a ship is generally calculated by its volume. Conversely, the
cost of sending cargo by air is generally calculated by its weight.
  Additionally, ocean shipments commonly have minimum weights and measurements that
must be met.
 As such, large and heavy shipments are almost always cheaper to send by ocean, but
smaller and lighter shipments can actually be cheaper to send by air.
 The trick is to figure out whether your freight meets that happy medium.

Air Freight Brokers

Air freight can be fraught.

Airlines typically offer cargo options, but for many shippers it can be hard to figure out the best
option from a wide variety of choices. Air freight brokers help navigate this complexity by
delivering the best shipping options at the best price. Air freight brokers can also help plan the
shipment and coordinate between multiple carriers or destinations, ensuring that goods arrive on
schedule and on budget. Brokers are adept at negotiating for space, speed, and cost, saving you
the time and hassle and making shipping smoother than going it alone.

Top Air Freight Companies

Air freight is a fairly fragmented field, with the top ten air freight companies and
forwarders dominating only 39% of the market.

The top air freight companies have remained ahead of the pack for years:

 DHL Global Forwarding

In 2015, DHL Global Forwarding air freight revenue reached $5.4 billion dollars. In
2015, it moved 2.1 million tonnes of air freight, over 60% more than the next forwarder
in line.
 DB Schenker
Headquartered in Germany, the freight giant employees nearly 100,000 employees
around the world. In 2015, it saw $3.8 billion in air freight revenue.
  Kuehne + Nagel
Between ocean and air freight shipping, this company holds close to 10% of the freight
market. IN 2015, air freight revenue reached $3.3 billion.
 Panalpina
Founded in 1936, the Swiss forwarder saw $2.5 billion in air freight revenue in 2015. It
also has one Boeing 747, leased from Atlas Air Cargo, which it called “Spirit of
Panalpina”.
 Expeditors
A relative newcomer, founded in 1979 in Seattle, Washington, this US forwarder had
$2.51 billion in air freight revenue in 2015.

2.1.4 Land freight operation

 Driving a train through europe must finally become as easy as driving a truck.

The coalition has the ambition to increase the modal share of rail freight in Europe from
currently 18% to 30% by 2030 as the macro-economic better solution for European growth.
That's why we sent the longest mobile artwork - Noah's Train - on its journey through Europe.

Why is it necessary?

The European land freight transport market is an important economic sector. Its impact on
environment and society is often underestimated but massive: 275 million tons of CO 2 emissions
and 50,000 premature deaths/fatalities are caused each year. The sector is expected to grow by
30% by 2030 and volume growth will most likely have a high affinity to road. A higher modal
share of 30% of rail freight by 2030 will lead to a 100 billion EUR economic gain due to less
externalities, 290 million tons of saved CO2, 40,000 less premature deaths due to avoided
pollution, 5,000 less fatalities due to saved truck accidents.

How can we achieve that?

We are raising awareness of the necessity of engagement of railway undertakings, infrastructure
managers and policymakers across Europe in acting to realize this modal shift Rail Freight
Forward is a coalition of European rail freight companies which are committed to
drastically reducing the negative impact of freight transport on the planet and mobility
through innovation and a more intelligent transport mix. The coalition has the ambition to
increase the modal share of rail freight to 30% by 2030 as the macro-economically better
solution for European growth. It strives to engage railway undertakings, infrastructure
managers and policymakers across Europe in acting to realize this modal shift.

International road freight transport is defined as the transport by road between two places (a
place of loading and a place of unloading) in two different countries irrespective of the country
in which the vehicle is registered. It is composed of 4 categories:

 International loaded: Place of loading of goods in reporting country (i.e. country in which
the vehicle performing the transport is registered) and place of unloading in a different
country.
 International unloaded: Place of unloading of goods in reporting country (i.e. country in
which the vehicle performing the transport is registered) and place of loading in a
different country.

Rail freight forwarding

Is defined as the transport by road between two places (a place of loading and a
place of unloading) in two different countries irrespective of the country in which
the vehicle is registered. It is composed of 4 categories:

 International loaded: Place of loading of goods in reporting country (i.e.

country in which the vehicle performing the transport is registered) and
place of unloading in a different country.
  International unloaded: Place of unloading of goods in reporting country (i.e.
country in which the vehicle performing the transport is registered) and
place of loading in a different country

2.1.5 Multimodal freight forwarding

operation?
Whenever we want to ship goods, we look for a combination of several essential factors such as
security, trust or compliance with legislation and transit and delivery times.

As customers of a logistics company, we rely on the service. Usually, we will not be aware of
all the process, from receipt of the goods, the path they take and how they are delivered to the
final destination.

There are several ways of international transportation, whether by land, sea or air. If the
distances are short, the most popular and effective way – as long as the roads are able to circulate
– is to make the journey by car, van or truck. Not all countries have roads in good condition,
therefore it is sometimes more effective to send the goods by train or plane, especially if the
distance exceeds several hundred kilometers and the stations and airports are close to roads that
make us reduce the delivery time. If we refer to the shipment of large quantities of goods, we
will have to make the shipment by ship. Those large ships that carry hundreds of containers and
sail the seas and oceans of the entire world are well known. Also in this sense, river navigation
through large rivers comes into play. Land, sea and air are three ways of getting cargo from one
place to another, but they do not necessarily have to be done in parallel. Multimodal transport
is a way of working that brings together these three ways for our goods to travel.

Benefits of multimodal transport

There are many advantages to this freight forwarding option. These are some of them:
  Different modes of transport are used and grouped together in a single contract
 It is faster than other methods and expands nationally and internationally
 It is more efficient in transshipment operations of materials and goods
 It moves from one mode of transport to another without needing to handle the goods
 There is no breakage of the load unit, so the goods cannot be separated. It is therefore
possible to know at all times where the shipment is located

To these beneficial features we have to add that in recent years the large port terminals have
been significantly improved and connected in a formidable way with means of transport such as
road, rail and inland waterways. This improvement positively affects the entire logistics chain. a
Multi-Modal transport.. As the name may indicate, it is a method of transportation of goods from
Point A to Point B using Multiple Modes of transportation, covered under one bill of lading.
This Point A and Point B are in different countries. Multiple modes of transport include – road,
rail, air and sea. So who then is a Multi Modal Transport Operator?

Based on the above definition, we can say that under the current scenario all of the below
entities MAY be termed as a Multi Modal Transport Operator:

1. Shipping Lines – because under Carrier Haulage, they undertake rail, road modes of
transport – either via their own infrastructure or via 3rd party
2. Freight Forwarder – because in a lot of cases specially where they issue House Bills, they
are taking on the role of the carrier and as such may and in a lot of cases do offer rail,
road and sea modes of transport – either via their own infrastructure or via 3rd party