We cover everything you need to know about freight forwarding and the digital technologies transforming the industry, including:
What is freight forwarding?
What services do freight forwarders offer?
What is the difference between a freight forwarder and a digital freight forwarder?
What are the benefits for shippers and carriers using digital road freight forwarders?
How do digital freight forwarders manage day-to-day operations?
What do real-time visibility and GPS tracking mean in road freight logistics?
How can data analytics improve forecasting and planning in logistics?
1. What is freight forwarding?
As you will see, freight forwarding is a very wide-ranging topic, but let’s start with a simple definition: it is the coordination and shipment of goods on behalf of shippers via sea, air or land.
In addition to the actual transportation of the goods, many other activities are involved, such as packaging, customs clearance, export control, cargo tracking, etc.
The companies which manage all this are known as freight forwarders, who – acting as middlemen for the shipper – contract carriers to move the shipment from one destination to another.
For the purposes of this article, we’ll focus on road freight forwarding.
The diagram below shows the typical road freight forwarding activities:
The process starts with the collection of the goods from the shipper's warehouse by the carrier and transport to the final warehouse or distribution hub. In the case of Less than Truckload (LTL) shipments, goods are typically consolidated with other loads and transported through various hubs or relay points until they reach the final destination. Full truckloads (FTL), on the other hand, consist of entire trailer loads. FTL can be reserved for one customer or be made up of multiple customer shipments consolidated in one trailer load. However, regardless of the type of truckload, everything is coordinated and monitored by the freight forwarding company.
2. What services do road freight forwarders offer?
Road freight forwarders are transport specialists who handle and coordinate the shipment of goods from the shipper to the recipient. Their responsibility is to find the most efficient and cost-effective routes and transport methods to meet the client's needs.
A freight forwarder will consolidate partial shipments that are less than a truckload (LTL) and book them with one carrier for the entire transport, thus reducing costs.
They also arrange the transport of 'special goods' (e.g. aerospace spare parts, live animals, or valuables) and 'dangerous goods' (e.g. explosive or radioactive materials).
As a rule, freight forwarders are responsible for the shipment until it reaches its destination and will update the client on the goods' location and estimated arrival time.
Below is a summary of some of the services a road freight forwarder provides:
Optimized and tailored transport solutions for clients
Storage of goods
Packaging and labeling of goods
Consolidation of shipments
Handling of shipping documentation
Supporting the carrier with customs clearance (if necessary)
Tracking and status updates on shipments
Expedition of shipments
The activities of a freight forwarder are many and varied. With their expertise, they provide stress-free solutions for companies' transport needs and are the backbone of global logistics.
3. What is the difference between a freight forwarder and a digital freight forwarder?
The difference between a traditional freight forwarder and a digital freight forwarder is in the underlying processes used to book and manage freight. Traditional freight forwarders rely on paper, email, and phone calls, making exchange times slower. Digital road freight forwarders use technology to coordinate and control the transportation of goods, including activities like carrier sourcing, vetting, tracking documentation, pricing, data analysis, and reporting.
Overall, digital road freight forwarders operate more efficiently than traditional players in the market due to their technology-driven processes.
Here are a few examples:
Digital freight forwarders use online tools to make communication and access to information easier for customers. Using an online portal or TMS, shippers and carriers can interact in real-time, while dashboards offer access to information such as shipment data and performance reports.
They use GPS technologies to provide real-time cargo tracking services. Customers must only log in to the freight forwarder's platform or be connected via API to receive proactive shipment notifications straight into their EDS/TMS system.
Pricing and invoicing
Advanced tools allow customers to view the forwarder's pricing breakdown for different transport options. In addition, they can compare carrier rates, request quotes, and use automatic invoicing - all online.
Digital road freight forwarders tend to have a competitive pricing advantage due to their big data gathering, processing and execution approach.
Data analysis and forecasting
Digital freight forwarders have access to massive amounts of data which can be captured and utilized for predictive analysis, transport planning, market trends interpretation and inventory management.
Digitization changed the shipping paperwork game allowing speedy access to documentation.
For example, proof of deliveries (PODs) is transmitted within only 48 hours post-execution instead of 14-30 days by traditional players.
4. What are the benefits of using digital freight forwarders?
From real-time visibility to faster payments and digital documentation, shippers and carriers can profit in many ways. Here are some of the most notable:
Benefits for shippers:
Automatic notifications and updates in real-time
Dedicated freight forwarder platforms like sennder’s shipper platform to view and manage orders digitally
Efficiency and cost reduction
Consolidated loads and optimized routes
Access to an international carrier network at competitive prices
Optimized inventory management
Digital access to transport documentation
Data to drive KPIs and carrier performance
Automatic booking and invoicing
Sustainability and compliance
Optimized transport through digital planning
Access to electric vehicles
Measurable Scope 3 (unowned supply chain asset) carbon emissions data
Key information on demand
Real-time tracking and updates
Greater reliability and customer satisfaction
Benefits for carriers:
Real-time tracking of shipments
Access to digital apps for driver communication
Accurate ETA information
Online marketplaces like sennder’s carrier platform to find orders or manage transports.
Easier carbon emission reporting
Efficiency and cost reduction
Easy access to carriers’ rates and availability
Electronic upload of shipping documents
Automatic goods receipts to trigger payments and online invoicing
Fewer empty loads through optimized planning
Real-time tracking information for shippers
Improved response time and accuracy
5. How digital freight forwarders manage operations
How do digital road freight forwarders handle day-to-day operations, such as bookings, unexpected delays, billing and payments? Read on for the details.
Bookings and shipments
Bookings and shipments are handled on digital platforms like an online marketplace, where shippers and carriers can connect and manage proposals, orders and shipments. They have complete visibility and will receive the latest ETAs or be notified if any delays occur.
A shipper, for example, places an order with the forwarder and supplies the details for the shipment. The order will then be assigned a unique customer reference number.
The digital freight forwarder will automatically match the shipper’s order demand against carrier availability and capacity in a process known as digital freight matching.
The platforms also integrate many other freight forwarding services into a single system, automating processes and increasing efficiency.
Documentation and paperwork
International freight transport generates vast amounts of paperwork, from certificates of conformity, delivery notes and invoices to customs and export control documentation. Digitization is revolutionizing the way paperwork is handled in the logistics industry.
The digital freight forwarder’s platform is a portal that shippers and carriers use to quickly access or download transport documentation at each stage of the shipping process.
For example, a driver scans their goods upon delivery, generating a digital goods receipt, which in turn, is uploaded by the shipper as an electronic proof of delivery for its customer. This digitization of paperwork has helped streamline processes, reduce handling time and save costs.
Although there are still some exceptions with customs paperwork, transport agencies and regulatory bodies accept digital versions of most compliance documentation. The introduction of digital signatures and encryption technologies has further increased security.
Unexpected delays or issues
Full end-to-end transparency on shipments means that digital road freight forwarders can react quickly when unexpected delays or incidents occur. They can inform their customers and proactively take steps to recover the situation.
With an integrated global overview, they can offer alternative routes to avoid delays while customers receive updated ETAs in real time.
Carrier selection and carrier routing
Depending on their size and geographical reach, digital road freight forwarders may work with many different carriers.
The forwarder's criteria for carrier selection will depend on their customers' needs and business strategy. However, in general, they will want to work with carriers who can best fulfill the following criteria:
Cost efficiency, quality, and reliability
Variety of services offered
Capacity (size of its network)
The forwarder attracts new carriers to its platform via its website or other targeted marketing activities. After registering and passing the vetting process, carriers will be onboarded and set up in the forwarder’s network with access to its online marketplace.
Digital technologies help forwarders to optimize routes and truckloads. The forwarder's platform can identify the optimum routes for a particular shipment and consolidate the orders, thus offering carriers the fastest and most efficient transport options. This also minimizes CO2 emissions and prevents empty runs.
The data also allows freight forwarders to predict potential bottlenecks before they occur. With GPS technologies, forwarders gain a complete overview of their network, live and in granular detail.
Communication and customer service
One of the substantial advantages digital freight forwarders have over traditional counterparts is their use of technology to enhance customer experience and service levels.Digital road freight forwarders use GPS technologies to provide real-time updates to their clients. These alerts include details of any traffic disruptions, bottlenecks or unexpected delays - or even to tell consignors a shipment has arrived on time.
Such technology-enhanced communication enables quick and efficient resolution in real-time.
Accounts payable are an excellent example of how digital technologies have helped streamline and automate core business processes.
Digital freight forwarders can generate invoices automatically once a shipment has been scanned at its final destination. The invoice contains all the details of the shipper's order created in the forwarder's system. The shipper can view and download it and confirm the payment on the forwarder's platform with a simple button click.
Because of this automation, there are fewer risks of manual errors, the shipper can take ownership of its goods, and both the forwarder and carrier get paid on time.
Carrier invoices can be generated automatically by the freight forwarder and submitted on the carrier's behalf as soon as the shipment has been scanned at its destination. They can also view the invoice status as it is being processed.
And with sennder's driver app for iOS or Android, for example, the proof of delivery (POD) can be uploaded by the driver to sennder's platform, which automatically generates an invoice for the carrier.
Some of the features, in summary:
Automatic invoicing for shippers and carriers
Real-time invoice status
Uploading of PODs to generate payment
Insurance and liability
Things are bound to happen when goods are shipped around the world. Damages and losses are just part of the business.
Because freight forwarders are liable for the shipment from its collection to the final delivery, they must ensure they are protected from third-party claims for damages or loss. Therefore, most forwarders or carriers will have freight forwarding liability insurance (FFL). They can thereby avoid financial losses and damaging customer relationships.
The liability insurance is paid by the forwarder but passed on to the customer and is typically included in the freight forwarder's quotation. Liability insurance otherwise follows the same procedure as any other insurance policy.
Not to be confused with liability insurance, freight insurance is a coverage that shippers may wish to purchase based on the commercial value of the load. Depending on the policy, shippers may be reimbursed for the total or partial value of the load in case of loss or damage. The insurance policy will also usually cover a wide range of eventualities.
The freight forwarder may also arrange coverage as part of its value-added service to the customer or the carrier. In this case, they will coordinate with an insurance broker on their behalf and secure negotiated rates.
Thanks to digitization, buying insurance coverage with a digital road freight forwarder is automated and streamlined. In addition, many forwarders have teamed up with digital insurance brokers and integrated them into their ecosystem, thus providing end-to-end cargo insurance solutions.
As a result, a shipper using the forwarder's platform can add insurance as an option during the booking process, choose from different policy types to suit its needs or compare market rates, all within one system.
6. What do real-time visibility and GPS tracking mean in road freight logistics?
Real-time shipment tracking typically uses GPS technology to track shipments through potentially multiple carriers and locations.
It is one of the most value-added services that digital road freight forwarding companies offer.
The tracking data is transmitted to a server and accessible on the freight forwarders platform. Shippers can then track and receive automatic real-time updates on the location and condition of their transport from the point of collection to the final drop-off.
This data is also stored in the system and can be used for predictive analytics. Such real-time information can help freights forwarders react quickly to unexpected events or delays and find alternative transport solutions for their customers. It also provides valuable information on transportation efficiency, from fuel usage and carbon emission levels to carrier performance. The above chart shows sennder’s GPS tracking coverage, which provides real-time location and status of goods from A to B. Access to this kind of granular information provides customers visibility, insight and reassurance.
Real-time visibility Lets you track the movement of a product through its entire supply chain and provides valuable real-time data on inventory and logistics workflows. With this knowledge, businesses can better understand their supply chains' operations and make better data-driven decisions.
Another advantage of end-to-end visibility is that it allows companies to react quickly to supply disruptions and anticipate issues in advance.
This results in a more agile, flexible, cost-effective and resilient supply chain.
Fundamentally intermediaries between the shippers and carriers, digital freight forwarders provide vital real-time visibility for their customers. Whether customers use supply chain visibility (SCV) technology via the forwarder's single hub platform or an API, they benefit significantly from full transparency and big data analytics. As a result, such services are quickly becoming logistic industry standards.
7. How can data analytics improve forecasting and planning in logistics?
Emerging technologies like AI and machine learning solutions are increasingly used in logistics as companies recognize the value of big data to feed predictive analytics tools.
Digital freight forwarders store and consolidate vast logistics data that can be used to optimize business processes and provide enhanced forecasting capabilities.
Operationally, this could mean the prediction of potential transport bottlenecks, identifying and correcting carrier inefficiencies or reducing emissions through predictive algorithmic route planning.
On a macro level, combining industry knowledge, geopolitical analysis, and historical data can provide an informed outlook on future market trends and demands.
Above is an example of sennder’s industry cohort analysis chart from its European road freight market report.