Freight forwarders: If they’re ‘just the middleman’, why are they so important?

3 reasons why freight forwarders are critical to supply chain success

The term ‘middleman’ is often used to describe something that is in between other more significant subjects in a transaction and, because of this, the term can have negative connotations.

The nature of a freight forwarder’s job on the surface is almost literally that of a middleman.

A freight forwarder is a conduit sitting between a shipper and delivery location, ensuring goods get from A to B in a timely, cost effective manner.

In this blog, we will scratch beneath the surface to examine the importance of a freight forwarder and why they are arguably the most important cog in the machine that is logistics.

Freight forwarders are the driving force of supply chain success

1. Freight forwarders are responsible for ensuring goods move as quickly as possible

Timing is everything in logistics. The aim of the game is to move from A to B quickly and efficiently.

So a good freight forwarder does everything in their power to ensure the process is as efficient as possible.

However, speed can’t be sacrificed for quality. So one of the main ways freight forwarders improve efficiency is through technology. Automation, machine learning, big data and Internet Of Things are just some of the types of technology the logistic industry implements to improve processes.

The logistics industry spent $52 billion on digital transformation in 2022 – and this number is expected to rise to $75 billion by 2026. (Source)

This level of investment underpins the need for speed and efficiency and freight forwarders are at the forefront of this movement, with Transport Management Systems (TMS) such as CargoWise being a mainstay for the vast majority of freight forwarders.

Hand on touch screen

2. Freight forwarders make sure customs, compliance and other regulatory requirements are met

When shipping goods internationally (and in some countries domestically), there are often strict customs and compliance requirements that, if not met, will result in delays, wasted money and other resources and, in some cases, tarnished reputations.

In worst case scenarios it can also result in heavy fines and criminal prosecutions.

A good freight forwarder abides with all regulations to ensure goods are moved in a timely manner and unnecessary delays are avoided.

A vital part of a freight forwarder’s job is staying abreast with new regulations, such as the International Security Filing (ISF) specific to the United States.

Many of the main regulations in logistics are grandfathered in, so when newer ones like the ISF are introduced it’s important to adhere to and be knowledgeable on them. This can be a time-consuming and arduous process which freight forwarders help make frictionless.

Woman and man shaking hands

3. Freight forwarders have relationships with every stakeholder in the shipping process

Freight forwarders may be the most interconnected persona in logistics, as they have a hand in and relationships with every segment of the chain.

To ensure the best margins for themselves and the shipper, they manage the end-to-end process to make sure they get the best rates for the different modes of transport.

Or if they are shipping in countries they are not as familiar with, ensuring they have the right relationships with the relevant parties, operating on the ground, who are more familiar with the practices in that country.

Without these relationships – owned by the freight forwarder – the process is likely to break down or be unsustainably expensive.

Freight forwarders are the ‘glue’ holding the supply chain together.

The core of the shipping process.

Linchpins working tirelessly to move goods efficiently and cost effectively, while ensuring they meet all of the necessary but sometimes bureaucratic regulatory requirements.

A good freight forwarder has great relationships, communication skills and is open to using new and existing technology. Without this diverse yet cohesive skillset, the logistics would be slower, more expensive and inconvenient.

Middlemen they may be, but ‘just middlemen’ certainly not.