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Freight Forwarders - "The Architects of Transport"

What is a freight forwarder?

Forwarders or freight forwarders act as intermediaries between the company that needs to ship the goods and the final destination of the goods. For example, they arrange the transportation of the goods (say oranges) from a producer (in sunny Spain!) to the final destination (to stores in the London area). A freight forwarder acts as an expert in the logistics network. Though they do not carry out the transport themselves, they offer various modes of transport (air, sea, rail, road) and contract with one or several carriers to move the goods across the countries.

Why would you use freight forwarders?

Answer: to stay focused on your core competence and business. Let the expert on logistics, e.g., your forwarder, ensure that the goods to be shipped arrive at the final destination following all applicable national and international laws, guidelines, and agreements. And all this is done at the right time and cost-effectively. Freight forwarders use their partner network contacts to negotiate the best possible price. This may involve using established commercial routes with regular and scheduled departures or charter flights, evaluating different offers, and selecting the best route to optimize speed, cost and reliability, considering all the variables necessary to analyze each case. This is time-consuming work, especially if it’s not your daily bread and butter.

Going for 1PL, 2PL, 3PL, 4 PL or 5 PL? What’s the difference?

In first-party logistics (1PL), the client company takes care of its logistics operations’ planning, implementation, and management by itself with its own staff and equipment. In second-party logistics (2PL), the customer buys individual logistics services such as transport, storage, customs clearance, etc., from an external logistics company, thus freeing itself to focus more on its core business.

In third-party logistics (3PL), a company outsources the entire supply chain services (not the core services) to external logistics service providers (3PLs), which many freight forwarders are today. A 3PL is a logistics service provider that controls and manages the material flows or related activities of its client company. However, the outsourced logistics functions are usually relatively routine for the client’s operations, and the client retains control of the logistics.

In the case of fourth-party logistics (4PL), the service provider provides logistics services throughout the customer’s supply chain by combining and coordinating services, service providers, know-how, and technology. The 4PL service provider offers its customers complete solutions for multiple customer’s needs simultaneously and even across industry boundaries and is also responsible for managing and developing its customer’s logistics.

A 5PL, or fifth-party logistics provider, is known as a “logistics aggregator.” They will aggregate the demands of the 3PL and others into bulk volume for better rates with different airlines and shipping companies. On top of that, a 5PL operator plans, organizes and implements logistics solutions on behalf of other entities. 5th party logistics is often related to e-commerce, and in recent years, it has been considered the most popular logistics service for that today.

Choose the right partner.

So there is a wide range of how deep one wants to build a relationship with a forwarding company. One clear advantage of having a deeper partnership with your logistics partner is the know-how you gain from their expertise. For example, advice on optimizing transport costs: freight charges, special documentation costs, etc. Or guidance on supply chain optimization (the best mode of transport and the best route for the shipment) according to the origin and destination, seasonality, nature, and urgency of the goods. Partners can help with proper packaging, labeling, loading, and storing of the goods. And you also have their expertise to utilize for customs procedures, from the appropriate tariff item for your goods to the necessary documents for customs clearance and logistics services.

The right partner will be an asset to the client, allowing them to focus on their core competencies. Also, a great logistics partner will make logistics more efficient and alleviate pressure from the client company. The client is always free to choose how much of their logistics they want the partner to handle - some parts of the chain or outsource it fully.

Having a reliable logistics partner is fundamental to making your supply chain more efficient. A professional and modern freight forwarder with the proper know-how and insight can help you in many ways. You just need to find the right fit. Some companies are experts in specialized commodities like pharmaceuticals or dangerous goods. A personalized logistics service is a sensible method of transport if your destinations are hard to reach, if you need to reach several destinations within a short period, or if your shipment is non-standard in size or volume. When it comes to handling complex transportation, critical materials, or challenging circumstances, JetLogistics is the most experienced team in the Nordics region.

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