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What is a freight forwarder?

Freight forwarding is a service used by companies that deal in international or multi-national import and export. While the freight forwarder doesn’t actually move the freight itself, it acts as an intermediary between the client and various transportation services. Sending products from one international destination to another can involve a multitude of carriers, requirements and legalities. A freight forwarding service handles the considerable logistics of this task for the client, relieving what would otherwise be a formidable burden.

Freight forwarding services guarantee that products will get to the proper destination by an agreed upon date, and in good condition. The freight forwarding service utilizes established relationships with carriers of all kinds, from air freighters and trucking companies, to rail freighters and ocean liners. Freight forwarding services negotiate the best possible price to move the product along the most economical route by working out various bids and choosing the one that best balances speed, cost and reliability.

Why are the shipping rates so volatile?

While there are several factors involved, the primary is market demand. Traditionally from Dec through April for imports, especially from Asia to the U.S., it is called the “slow season.” Because the retail market slows down after Christmas. However from mid January through early February there is an upsurge of cargo moving to beat the Chinese New Year deadline whereby factories all over China shut down for weeks. This usually keeps rates high as there is always space problems for cargo getting on vessels. From May through November this would be the “peak season” where there is a big demand for cargo moving into the U.S., so the Carriers raise the rates during this period, with the GRI (general rate increase), and PSS (peak season surcharge).

Another factor is fuel, or what is called the Bunker Fuel factor. This is a floating surcharge that the Carrier’s can change when oil prices rise or fall. It is called the BAF.

What are the definitions of common, contract, and broker Authority?

Common carriers provide for-hire truck transportation to the general public. Common carriers must file both liability (BI & PD) insurance and cargo insurance. Contract carriers provide for-hire truck transportation to specific, individual shippers, based on contracts. Contract carriers must file only liability (BI & PD) insurance. Brokers arrange for the truck transportation of cargo belonging to others, for compensation, utilizing for-hire carriers to provide the actual truck transportation. Brokers must file either a surety bond or trust fund agreement.

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