International Freight Forwarder: The Key to the Logistics Chain

The International Monetary Fund (IMF) projects that 55% of global trade growth will take place in advanced economies by 2026, while 45% will occur in emerging markets. This means that international freight forwarders must stay updated, innovate, and add value to their services to ensure efficient cargo handling worldwide.

During The Logistics World Summit & Expo 2023, Jorge Cañedo, Regional Vice President for the Northern Freight Zone of the Mexican Association of Freight Forwarders (AMACARGA), delivered the presentation “The Importance of the International Freight Forwarder.” In his talk, he highlighted the key functions of freight forwarders, the essential skills they must possess, and the major challenges they face in international trade.

What Is the Current Role of an International Freight Forwarder?

An international freight forwarder plays a critical role in global trade. According to Jorge Cañedo, a freight forwarder acts as an integrator and orchestrator of the logistics chain, requiring expertise in customs procedures.

Today, the freight forwarder’s role extends beyond transportation. They must be well-versed in technology and act as facilitators for businesses looking to enter new markets, whether for buying or selling products.

Additionally, freight forwarders must understand financial instruments to advise companies on the best purchasing or selling strategies for goods.

“All freight forwarders must continuously train and stay updated because regulations and requirements change every six months or every year. It is essential for companies to hire freight forwarders with a trained staff. It's also valid to ask how many members of their management team hold certifications from the International Federation of Freight Forwarders Associations (FIATA) or hazardous materials certification,” advises Jorge Cañedo.

The Main Responsibilities of an International Freight Forwarder

• Coordinating shipments from origin to final destination.
• Managing all transportation, storage, and packaging processes.
• Providing risk management advice for international logistics operations.
• Understanding customs regulations in both the country of origin and destination.
• Offering a global cargo network to support importers and exporters.

The Freight Forwarder’s Multidisciplinary Activities

Cañedo emphasizes the difference between a customs broker and a freight forwarder.

Customs Broker vs. Freight Forwarder

• A customs broker is a specialist in Mexican customs law, playing a key role in global trade. They are the starting point for any international project and the go-to consultant for customs procedures in other countries.
• A freight forwarder, however, has a comprehensive national and international network that includes customs brokers, warehouses, and insurance providers. This enables them to resolve unexpected issues and ensure a smooth logistics process.

Do you know the differences between a logistics agent, a freight forwarder, and a customs broker?

Key Activities of a Modern Freight Forwarder

• Understanding a company’s needs to offer the best cost-effective solution.
• Designing a customized logistics plan that integrates all steps for seamless transportation.
• Assessing service levels, supplier performance, and cargo risk.
• Ensuring cost savings by offering the best value rather than the cheapest option.
• Allowing the client to focus on their core business while the freight forwarder manages logistics 24/7.
• Adapting to the client’s business model and the realities of international trade.

According to Jorge Cañedo, freight forwarders specialize in specific industries, routes, or both. The current market trend is for freight forwarders to focus on industry-specific logistics.

Industry-Specific Logistics

“By focusing on a particular industry, freight forwarders can better understand their clients' needs. Some key sectors include automotive, aerospace, pharmaceuticals, and perishables. Historically, shipping lines controlled the perishable goods sector, but freight forwarders are now gaining ground. A freight forwarder is not just a freight reseller—they provide an integrated supply chain solution.”

How Should a Freight Forwarder Prepare?

Cañedo highlights that international trade has undergone significant disruptions due to events such as:

• The Russia-Ukraine war
• The COVID-19 pandemic
• Supply chain reconfigurations
• Chinese port closures
• Nearshoring trends

Key Strategies for Freight Forwarders

To stay competitive, freight forwarders must:

• Provide risk management consulting to clients.
• Adopt data analytics to improve shipment tracking and compliance monitoring.
• Integrate data from both importers and third parties.
• Stay updated on new technologies and best practices.
• Speak the same language as their clients to expand into new markets.
• Become experts in free trade agreements, international regulations, and Incoterms.
• Stay closely involved in customs processes to intervene when necessary.

Do you know the differences between a logistics agent, a freight forwarder, and a customs broker?

“Before choosing a freight forwarder, importers should check if they have a well-trained staff, an in-house or outsourced network, and the right technological infrastructure. Being a good freight forwarder requires both time and investment,” concludes Jorge Cañedo.