How Freight Forwarding Works in Singapore
0 October 06, 2017 0 Comments
Singapore is known internationally as the logistics hub of Asia, so it’s no surprise that freight forwarding businesses are commonplace here. Almost all businesses that need to ship their products overseas often come across this term. But what exactly is it and how does it work?
Freight forwarding is a business that specializes in coordinating with other shipping companies that have their own cargo transportation. Freight forwarders, also known as Non-Vehicle Operating Common Carriers (NVOCCs) are often called the travel agents of international trading, as they operate in a similar way.
They take advantage of established relationships with multiple carriers by working out various bids in order to secure not only the most economical route, but also the safest and most efficient. This saves businesses a lot of time and money in shipping their products.
Freight forwarding is a complicated process that needs the agent to be constantly on his or her feet and have a good grasp of international customs, an established relationship with multiple transportation companies, and excellent communication skills in order to comply with the following process:
- Export Haulage – This is the part where the cargo leaves the shipper and is moved to the warehouse of the freight forwarder, usually by container truck or by train. It could take anywhere between a few hours to a few weeks.
- Export Customs Clearance – Clearance is always needed for any cargo before it leaves the country of origin. In Singapore, these checks are performed by licensed customs brokers who submit details and supporting documents about the cargo’s nature.
- Origin Handling – The cargo is received and loaded to the vessel. A forwarders cargo receipt is issued after validating by comparing the supporting documents with existing booking details.
- Freight – The consignee is not subject to direct interactions with the shipping line except for the surcharges levied in the industry, as this transaction is made between the forwarding agency and the shipping line.
- Import Customs Clearance – Authorities in the destination country are required to check customs paperwork regarding the cargo. Import customs clearance can begin even before the cargo arrives in the destination country’s shipyard. Freight forwarding service agents can perform this transaction as long as they have a valid license.
- Destination Handling – This process involves receiving the necessary documents about the cargo’s details from the point of origin, and is handled by the forwarding agent present with the cargo.
- Import Haulage – Upon reaching the country of destination, the shipping company takes the cargo from the shipyard to the forwarding agency’s warehouse in the said country of destination. The cargo is then taken to the destination point, carried either by the transportation agency or by the consignee themselves.
Remember that the forwarding agent is the individual or the firm’s representative (usually the latter) that undertakes the coordination and movement of goods. These companies can provide these services either directly or through one or more sub-contractors.
These sub-contractors are often common carriers who have the means of transporting either goods or people via land, air, and sea, and offer their services to the public.
There are three main categories of businesses in the logistics services industry. A logistics company may offer one of more of these services, and they can often overlap into one another.
- Transportation – Cargo transportation can be offered directly via the forwarding service or via a sub-contracted shipping company.
- Handling – Logistics services may specialize in handling shipments to ensure that they are in peak condition upon reaching the area of destination. This also includes securing space in the vessel, whether via air freight or sea freight.
- Storage – Before and after the shipment is delivered, it is stored in a warehouse owned either by the logistics company or by a shipping company that charges a storage fee.
Cargo transportation is available via sea freight, which is good for heavier or larger shipments that need to be delivered in bulk, or via air freight, which delivers smaller, lighter shipments much faster. Land freight services can be offered via trucks or rail.
Whether the cargo is transported via local freight or international freight, the aforementioned services may be provided in these geographical areas:
- Within Singapore – Local freight services can operate in bonded warehouses and areas outside the designated free trade zones.
- Free Trade Zones – Designated areas of ports, terminals, and airports designated as “free trade zones” are available areas of operation for freight forwarding companies.
- Outside Singapore – International freight forwarders may have the capacity (e.g., resources, contacts, transport vessels) to import and export cargo both in and out of Singapore.