What is a freight forwarder, and why do you need one?
Unless you're making the goods you're selling on Amazon by hand, you probably order your Amazon inventory from a manufacturer. Though it may sound simple, getting your goods from your manufacturer's warehouse to Amazon's warehouse can be a lengthy and complicated process, especially if your manufacturer is in another country.
But what does freight forwarding mean? Say you want to ship a product from your supplier to Amazon warehouses, or maybe to your business. This could be from a Chinese manufacturer, or wherever else in the world, and often found through Alibaba, Global Sources or TradeIndia.
Freight forwarders are the companies that help get inventory from the factory (yours, or your supplier’s) your destination of choice – in our case, that’s an Amazon Fulfillment center.
In other words, freight forwarders exist to simplify the process of shipping your products from an international manufacturer to Amazon’s warehouses. It's important to note that freight forwarders don't actually transport your products — they only arrange for them to be shipped.
Instead, they organize your importing and exporting of goods, as well as organizing storage and shipping logistics. They’ll prep your documents, organize and track your shipments (by land, air, and sea), book cargo space for goods, find your warehouse space, consolidate your shipment for better costs, negotiate freight costs, and often, handle all the insurance involved.
Hiring a good freight forwarder is like hiring your own shipping agent. They have years of experience and deep networks in the industry. They can give you advice, organize the flow of goods, deal with all the bureaucracy in the middle, and make smart decisions if something goes wrong.
Odds are, you’re not a shipping and logistics expert. Even if you do the web research to get started, a freight forwarder will use their expertise and professional network to save you a lot of time, energy, and risk.
Optimize Costs with Freight Forwarding
As a novice international seller, you risk paying way more than you should for many services. Sometimes this is due to simple mistakes, other times you just don’t know the right people to talk to for a given service.
Always ask for a complete breakdown for what is included in the quote. Not all companies offer the same combination of services. Any known freight forwarder will provide you the full breakdown of included services, and associated costs. This makes comparisons easier as well.
Here are some major factors to consider to determine your final cost. Check with each company to see how their prices added up, and which costs are tacked on as extras:
Pallets – among other issues, getting your cargo on a pallet before shipment can lead to added costs on air freight. To avoid these issues, have it palletized after clearing Customs, to work with Amazon’s packaging requirements.
Mode of Transport – air, sea, and land costs differ, depending on speed of shipment, weight, and many other factors.
Fullness of Container – you will hear the terms FCL and LCL thrown around, which mean Full Container Load and Less than Container Load, respectively. The cheaper option depends on the size of your shipment, so be sure to consider both.
Weight & Volume – pricing can depend on both, and generally whichever is the more expensive of the two wins out.
Incoterms – ask about these options. Incoterms define the sets of rules that establish which responsibilities (and liabilities) you have for each step of the freight shipment process. There are about a dozen major choices, but if you’re shipping from China, you’ll usually encounter three. Ex-Works (EXW), Free On Board (FOB), or Free Carrier (FCA). The best option for you will depend on the size of your shipment, so be sure to ask the freight forwarders which they recommend.
Special Considerations: some cargo types require different handling, containers, storage, specialist equipment like cranes, etc
Insurance – it’s often an optional extra, but always worth getting. Shipments getting damaged or lost at sea is a more common occurrence than you’d think, and you don’t want your business to sink from the loss. There’s high enough competition between companies that shopping around won’t save you all that much.
Destination costs – terminal handling charges, port security fees, warehousing fees, unpacking and unloading from ports or warehouses, inland haulage (if required).
Amazon FBA fees and packaging requirements – Amazon FBA has specific requirements for how items should be packaged, labelled, and stored. A great forwarder will be familiar with the requirements and can take care of this. Ask whether there are additional services for packaging or if it’s included in the plan. Mistakes here could lead to your whole shipment getting sent back to the manufacturer, at your expense.
Fluctuating fuel costs – if you hear the terms BAF or CAF, these surcharges are adjustments made to compensate for fluctuations in fuel costs
Port-to-port, or door-to-door – more service means higher costs. Your forwarder might only get your shipment to the port (not Amazon warehouses), and sometimes only certain ports, such as those on the Pacific coast.
This can all seem like a lot, but don’t be intimidated. Once you’ve gotten the basics down, it becomes a pretty straightforward process. It helps to remember that if it actually was so complicated, many stores would never have stock.
Freight Forwarders Help Avoid These Common Pitfalls
A good freight forwarder can advise you about everything below, and plenty of other suggestions for your specific product. They’ll know your product category and any relevant information about it, which saves you a ton of time and money.
Before you begin, check that your product doesn’t break any Intellectual Property (IP) laws. You may not realize if you are potentially breaching a patent. If your product is similar to a big brand, check that company’s website for patent numbers, then do a Google search on that number to find what the patent covers. If at all unsure, get legal advice.
That said, here are some of the major areas where freight forwarders can guide you:
Hazardous materials – many materials are banned from shipment by plane, and sometimes even ships. Pallets from certain countries may need to be stamped as fumigated in order to clear customs, which can cause delays.
Shipping Specifics – many products require special handling in order to be shipped safely. For example, food, electronics, or pharmaceuticals.
Environmental issues – goods containing animal products are often subject to more stringent regulations. What’s that wallet made of? Or that knife handle? There could be many potential wildlife or eco-conservation issues with your materials, whether product or packaging.
Packaging Specs – If you have a boat shipment that won’t fill its own container (that’s LCL, if you’ve been keeping up), it will generally be shared with someone else, so you want to make sure each package is labelled appropriately, or else risk it getting lost or separated. Freight forwarders often provide these services.
Paperwork! – perhaps the biggest headache of all this. Ask about documentation like Bill of Lading, bank papers, customs bonds, and other paperwork required for shipping. What do they handle for you, and what’s your responsibility? The sooner you get your part done, the smoother your process will be.
For Amazon sellers, freight forwarding is one of the best ways to take control of your Amazon store's logistics. They make transporting your products simple and cost-effective so that you can focus on running a successful business. We hope this article helped you better understand the journey from your supplier to Amazon's FBA warehouses, as well as your options for facilitating this journey.