Shipping Companies - Architects of Transport

Just like the construction site would not be much of a sight without its consigned constructor, a crew would not be a crew without its director; freight transportation would not be an efficient phenomenon without the freight forwarder. While it may be easy to contemplate why the combination of land, labour and capital going into a project would require constant supervision and management; it is not clear as to why any amount of goods would require such special attention in being transported across small or great distances. The advent of carrier services has created the illusion of this process being as simple as sending a post card or email; truth be told, freight forwarders would pat themselves on the back for making the general public feel that way!


Interesting Fact: - The US Freight Industry generated a revenue of around 43.740 billion in 2008 alone!1

This amazing figure gives us an insight into how actively involved the freight forwarding industry is in trade and commerce! The questions in need of answering then are as follows:


What sort of role(s) do firms of this industry play?Which other industries benefit from freight forwarding?
How important is efficient transport of goods for trade and commerce?


Primary Roles and Responsibilities


Toiling and striving to ensure the timeliness and safety of international traded merchandise, a typical shipping company in the freight forwarding industry assumes the following responsibilities:


Transportation of merchandise from factory/warehouse to portsPackaging of cargo; possibly tailored to suit the specific demand of the customer
Paper work; proper documentation, customs clearance
Shipping; usually employing air freight or ocean freight


Apart from the aforementioned basic services, there are a number of subsidiary functions performed as well:


Storage of merchandise
Tracking inland transportation
Warehousing
Booking cargo space
Negotiating freight charges
Insurance of cargo2


Types of Goods Handled

Not the kind to discriminate (as long as the good is legal), all kinds of commodities and items are consistently packaged, parceled, forwarded, imported and exported by freight forwarders. Most commonly, these are the industries that are dependent on them for ensuring they have great access to international markets:
Agricultural Industry
Automotive Industry
Chemicals Industry
Consumer Electronics Industry
Non-durable Consumer Goods Industry
High Tech Industries
Pharmaceutical Industry
Textiles Industry
Clothing (Fashion) Industry3


Efficacy of Transport

In this era of increased globalization and cut throat competition, more and more firms look to outsource their manufacturing and target international (faraway) markets for their products. Transportation and delivery costs account for a substantial proportion of the cost firms have to entail in order to properly exploit the wonders of globalization. Thus, economic pressure has increased on all countries to achieve maximum cost efficiencies in trade and exports to further offer their products at competitive prices! Research reveals that logistics costs usually amount to 30% of the delivered cost and in rare instances, 10%.4

High transportation costs discourage the growth of trade; enter the freight forwarder who will have the knowledge and expertise to minimize the aforementioned costs for any firm. Less cost means more net profit, more net profit encourages trade and investment!
Interesting Fact: - The least developed countries generated revenues of 176.3 through exports of goods and services just in 2008!5


Conclusion

Substantial growth in trade has been experienced by the reduction of cost and time of merchandise transportation. With developing countries like China, India etc on the rise, shipping companies seem to be in for the long haul!


References:

1 Freight Forwarding Brokerage & Agencies -- www [dot] ibisworld [dot] com/industry/retail.aspx?indid=1209&chid=1

2 Freight Forwarding -- www [dot] hktdc [dot] com/info/mi/a/hkip/en/1X006NHM/1/Hong-Kong-Industry-Profiles/Freight-Forwarding.htm

3 Laura Wood. ''Research and Markets: Global Analysis of the Freight Forwarding Industry Including Market Sizing, Forecasts, Trends, Trade Flows and Profiles of the Key Market Players'' -- www [dot] reuters [dot] com/article/pressRelease/idUS165033+19-Jan-2009+BW20090119

4 International Asset Management Company Limited.''Pakistan's International Freight Forwarding Sector.'' -- www [dot] nttfc [dot] org/reports/Freight%20forwarding%20report%20-%20050114.pdf

5 World Trade Developments. -- www [dot] wto [dot] org/english/res_e/statis_e/its2009_e/section1_e/its09_highlights1_e.pdf