Understand Freight Forwarding to Improve Your Profits

For more efficient operations and to avoid fraud, it is essential for those in charge of transporting both within and outside the country to know more about freight forwarding. This requires knowledge of the standard procedures, documentations and legal requirements.

Freight forwarders are rarely the carriers themselves. They do not normally own the ships, airlines and trucks that carry the goods. They are the ones that serve as the intermediary between their client and the various transportation services.

You do not have to be an expert in freight forwarding if this is not your business, but it is important to have a working knowledge of the procedures, terms and precautions used in this function. Among the many things to consider, here are some of the most important:

Incoterms. The short term for “international commercial” terms, they are the commercial terms published by the International Chamber of Commerce (ICC). They are composed of three letter trade terms referring to common sales practices. These terms were made to avoid confusion and to clearly convey instructions, costs and risks with regards to the transportation and delivery of goods. They are the terms normally accepted by governments and companies worldwide to interpret the terms used in international trade. You must be familiar with these terms to avoid confusion. An example of this is FAS, which means Free Alongside Ship.

Bills of lading and other transport documents. You must be familiar with the various documents used in transporting. The bill of lading is a legal document between the shipper (your company) and the carrier detailing the description, quantity, condition and other matters regarding your shipment.

Assignment of liabilities. Knowledge of who is accountable for losses is critical. You must know if it will be the freight forwarder, the carrier, or your company who will bear the risk. This will enable you to know what party is accountable and when you must be the one to get insurance. Insurance expense must be factored in to the cost of the product being sold or bought. You may also determine if the price being quoted already incorporates responsibility for the cargo so that you can compare if the price is reasonable.

Maritime fraud. One of the most important things to learn for those starting out are the various ways fraud may be committed. There are many kinds of maritime fraud like cargo theft and documentary fraud. Documentary fraud is when the documents are forged or contains false statements. Tremendous losses may occur if you did not take care against these illegal practices.

Freight forwarding is a complex function that demands a wide range of skills from legal to finance to management and many more. The more you learn about this vital task, the better your operations will be.

BusinessCoach, Inc., a leading business seminar provider, conducts an excellent seminar on this entitled “Freight Forwarding Procedures and Documentations.” Contact (02) 727-5628, (02) 727-8860, (0915) 205-0133 or visit www.businesscoachphil.com for details.

Click here to view details of the seminar: Freight Forwarding Procedures and Documentations »

*Originally published by the Manila Bulletin. C-4, Sunday, June 24, 2012. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.