What exactly is freight forwarding? A very quick guide to the essentials

International freight is a complicated business, with lots of different players at every level of operation. As such, it's not always obvious what everybody does, or why what they do is important.

This is especially true for freight forwarders, who are deeply integrated into industry processes but whose role requires a bit of explanation. It's not immediately obvious what it means to 'forward' freight, and how their function differs from the role of carriers.

So let's break it down to the essentials.

What those other words mean

Here's a quick glossary of industry terms that are relevant to freight forwarding:

A supply chain is the entire process involved in supplying a product to a customer, from the acquisition of raw materials, to manufacture, retail, and delivery.

Logistics is the organisation of the supply chain, ensuring the success and efficiency of the entire operation. It's the management of how things flow from one link of the chain to the next. It involves literally moving things around: transportation, materials handling, packaging and storage.

Freight or cargo refers to goods or produce being transported by either aircraft (air freight) or boats and ships (sea freight), and sometimes the word is also used for road transit using vans, trains and trucks/lorries.

Importing and exporting refers to the movement of goods across international borders. This means that the goods are subject to international trade laws and various national jurisdictions, such as customs.

A carrier is the person or company responsible for transporting goods. Carriers are either public (transporting other people's or companies' goods), or private (a company transporting only its own goods). Delivery companies like UPS, TNT, FedEx, DHL and DPD are all public (or 'common') carriers for whom transportation is their primary business.

So where does a freight forwarder fit in?

A freight forwarder is there to simplify the process for the person or company looking to import or export their goods. Freight forwarders will deal with the logistics on your behalf, arranging the storage and shipping of your goods, preparing the necessary documentation and labelling, negotiating lower freight charges with carriers, and filing insurance.

Freight forwarders produce their own house bill of lading or air waybill, which is a document that provides the details or terms and conditions of a shipment, and is signed by the forwarder instead of the carrier. The forwarder and its agents are usually put down as the consignor and consignee (sender and receiver) of the cargo.

International freight forwarders make things much easier for importers and exporters by navigating and negotiating the logistics quagmire of international delivery so that you don't have to.

While the word 'freight' typically refers to heavier cargo, freight forwarders can also help you with the shipment of smaller parcels (express delivery), and most deliveries can be made door-to-door.

Want to find out more about what freight forwarding can do for you? Get a quote with international freight forwarder Transglobal Express, for air freight, sea freight, and express parcel delivery. We negotiate reduced prices with major carriers including UPS, DHL, TNT and DPD.

(Image credits: Bill Abbott,  Håkan Dahlström)

How Cecil the lion is changing airline policy

When Cecil the lion was killed by an American big-game hunter in Zimbabwe in July, the controversy made big waves. As outrage gained momentum on social media, conservation organisations rallied, high-level government officials spoke out, and even late-night chat show hosts made pleas for charity donations on his behalf.

The repercussions of the incident have also been felt by the courier industry, with petitions being sent out to carriers asking for a ban on the transportation of big-game hunting trophies, as a way of trying to deny hunters their prizes.

Last month, Delta Air Lines, American Airlines and Air Canada—the big North American airlines—joined a long list of companies who have opted to go ahead with the trophy ban. They are not required by international law, but are doing so seemingly on ethical grounds. They now prohibit the transportation of the "big five": lion, leopard, elephant, rhinoceros and buffalo.

Animal cargo - what are the rules?

The International Air Transport Association (IATA) abides by the Live Animals Regulations (LAR) as a global standard for live animal cargo. For carriers, live animals are usually either a prohibited or a restricted item.

UPS is one company that will transport some live animals, but not obviously dangerous animals, such as those that are poisonous or venomous, or pests such as locusts and mosquitoes. Live bees, strangely enough, can be transported as long as they come with the right packaging.

Endangered or threatened animals are protected under the what-it-says-on-the-tin Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) from 1975, which requires a CITES permit for the transportation of endangered species. But most carriers, including UPS, outright refuse to transport endangered species.

A matter of opinion?

Hunting trophies are a different matter. Airlines are not obligated by international law to prohibit the transport of hunting trophies, even of endangered species. The actual hunting of endangered animals often requires a permit, but can be done legally, and current U.S. law permits the importation of all "big five" animals.

UPS and FedEx are two companies who have not followed the new trend of banning hunting trophies, both stating that they comply with international and U.S. law. UPS' public relations director, Susan Rosenberg, has said that, beyond the law, the ethics of transporting hunting trophies is a matter of opinion and that UPS avoids making judgements.

What do you think? Should all carriers ban hunting trophies? Or should they keep a more hands-off approach?

Transglobal Express is an international freight forwarder. Visit our website for a quote and get great discounts on all major carriers for air freight, sea freight and door-do-door parcel delivery—lions not permitted.

(Image credits: Joe Ross, jude_the_obscure, under a Creative Commons 2.0 license.)

What air cargo can tell us about the global economy

Every now and then, a news article reminds us that air cargo is, or has been, considered a bellwether of the state of the global economy. As the Wall Street Journal recently explained, in an article on the stumbling Chinese economy:

“Air cargo is widely tracked as a leading indicator for trade because shippers deciding whether to send items by plane are often swayed by last-minute economic developments. The recent drop in volumes has analysts concerned, even as maritime shipping out of Asia has remained healthy.”

This follows a stagnant couple of months in the air cargo market, where volume grew only 0.7% in July—the lowest of the year. A drop in air cargo traffic to and from China is specifically viewed as evidence that the economy is wobbling, in the wake of the Chinese government devaluing the yuan in order to reinvigorate exports. This was followed by plummeting Chinese stock markets and worldwide drops in share prices.

In the same way that Chinese exports have an impact on the overall volume of global air freight, so too does the Chinese economy affect the global economy—and one is often a good indication of the other. So when economists aren't seeing growth in air cargo, it could very well be a symptom of a larger problem.

Freightfully important

Part of this connection is because air freight is itself a huge facilitator of global trade. According to the International Air Transport Association (IATA), over US$6.4 trillion worth of goods—approximately 35% of world trade by value—is transported by air cargo. This is because air cargo supply chains make it possible to deliver high quality goods efficiently and at relatively economical prices.

The IATA is also quick to point out that air cargo creates millions of jobs, as well as being a vital component in the implementation of worldwide health and immunisation programmes, not to mention disaster aid.

As such, air freight is viewed as a reliable indicator of economic changes not merely because it reflects the ebbs and flows of the economy, but because it plays its own massive role in global trade.

So one way or the other, it makes sense for the analysts to keep a close eye—and to worry a little at signs of stagnation, even when there may be growth in other areas like sea freight.

Transglobal Express offers worldwide freight forwarding with all major carriers. To keep up to date with air freight industry news, follow our news and updates. 

(Image credits: John Murphy, Robert Stanklewicz under a Creative Commons 2.0 license.)

A shark whale of a time with UPS

In 2005 and 2006, UPS donated their services to the Georgia Aquarium. They transported four whale sharks, the largest fish on Earth, across the Pacific Ocean. The sharks were in Taipei, Taiwan, and needed delivering to Atlanta, Georgia, in the U.S, a distance of over 8,000 miles.

Ralph and Norton, two males, were delivered first, followed by two females, Alice and Trixie, a year later. What names they were given by their parents in whale shark language is unknown.

The whale sharks each measured between 11-16 feet in length and weighed about 2,000 pounds. Although they needed to be carried by air, it was soon realised that the sharks wouldn’t fit into economy class. So how was this unusual cargo transported?

 

From UPS, with tanks

The trip required two custom-build tanks, measuring 8 feet by 24, which with the weight of the water and the whale sharks would exceed 50,000 pounds. The tanks came with marine life support systems and a lab that enabled monitoring. While a Boeing 747 plane can carry up to 120,000 pounds in weight, it needed to be distributed over the plane’s point of balance, which is over its main gear.

The trip was time-sensitive situation, as the whales would naturally foul up the water. The plane also needed to make a stopover in Alaska for an official inspection before it would be allowed into the U.S.

As an entire operation, it was incredibly complex, but the UPS team managed to pull it off and the whale sharks were delivered to their new home.

 

Just a small donation

It seems unusual that UPS would shoulder the cost of such an expensive enterprise—but had UPS not donated the transport, costs would have ratcheted up for the Aquarium, to hundreds of thousands and potentially millions of dollars.

 
The same team also transported two beluga whales from Mexico City, which are even heavier than whale sharks at up to 3,500 pounds. UPS also helped FEMA in the wake of Hurricane Katrina, and took the Terracotta Army on tour around the world in 2009.

You can read the full adventures of Bland Matthews, the UPS worker who helped to co-ordinate these deliveries, over at Priceonomics.

For deliveries that aren’t quite so live and flipping, get discounts on international delivery for all major carriers, including UPS, with Transglobal Express. 

(Image credits: Christian Jensen, Warren Lynn under a Creative Commons 2.0 license.)

FedEx bids for TNT - market control or fair play?

Last month, delivery titan FedEx made a bid to acquire rival company TNT, with an offer of $4.8 billion. As a result, the European Commission launched an investigation to determine if FedEx would violate regulations by dominating the market—specifically, the delivery of small packages in some European countries.

So why does FedEx's domination of the European market matter to the Commission?

Healthy competition

The principle behind the regulations of the European Commission is one of healthy competition. FedEx and TNT are two of four giant global delivery companies—the other two are UPS and DHL. If FedEx acquire TNT, the concern is that they will become too powerful and risk controlling too much of the market.

In 2012, UPS made a similar bid, attempting to purchase TNT for $6.8 billion. Antitrust regulators rebuffed this attempt because it risked ‘duopoly'. This is because at the time DHL was considered the only viable competition.

Is it really an issue?

FedEx insists that it's not the same situation as last time. They say they don't have a large market share in Europe, and therefore they won't disrupt market dynamics with the acquisition. Currently their market share in Europe is only 5%, one of the smallest, while TNT's is third place with 12%, after DHL and UPS. If the deal is made, the FedEx-TNT merger would put them in second place.

Some industry experts, such as Roger Sumner-Rivers of ParcelHero, who spoke to Forbes, believe that the merger will actually result in stronger competition in Europe and around the globe. The idea is that as TNT will make up for FedEx's weakness in Europe, while FedEx will bolster TNT's less strong American network.

This is different from the proposed UPS-TNT merger, where UPS already had a strong European presence and would have bagged 30% of the market.

To be continued...

FedEx's offer expires at the end of October. Pending regulatory approval, the transaction would be made in the first half of 2016. The EU will make their decision by mid-January—an extension of the original timescale.

We'll be keeping up with news of the merger. To stay apprised, you can follow industry updates on the Transglobal website.

(Image credits: BriYZZ, EDDIE under a Creative Commons 2.0 license.)