There is a significant difference between freight forwarding and logistics. Both have freight as a primary focus, but both are separated by how the freight is achieved.
A freight forwarding company’s main objective is to move freight from point A to point B as quickly as possible. A logistics company takes the whole process from beginning to end, from the first step until it reaches its destination.
Thus a freight forwarding company focuses on moving freight while a logistics company has many other services that support this process.
The heart of what makes a freight forwarder different from a regular logistics company lies in how each industry operates on the legal side of shipping freight.
Incoterms are trade terms that outline which party will be responsible for freight costs and arrangements. It includes where the freight will be picked up from, who will arrange freight transport, how much it is going to cost, and which party is responsible for arranging customs.
Freight forwarding arrangement
In a freight forwarding arrangement, the freight forwarder acts as an agent with no responsibility in organizing freight transportation or payment of freight charges. Suppose there are any issues with freight charges paid or not being paid by the customer. In that case, the forwarding company cannot do anything about it unless they want to take legal action against their client invoicing them for lost freight charges due to non-payment.
In a logistics arrangement, however, this responsibility falls on the logistics company itself, so if there are any disputes regarding freight charges paid or not being paid by the customer, the freight logistic company can handle it since they take full responsibility for freight payment instead of freight forwarder (Incoterm, 2012).
Operations and procedures
There is also a difference in the operations and procedures that logistics and freight forwarding companies undertake. A freight forwarding company has smaller staff members and less equipment to help with freight transportation operations.
Generally, a logistics company has more significant staff members and uses modern technology to plan their freight movements (George & Curran 2013). Furthermore, freight forwarders offer services like air freight, but there are certain conditions for this service. Airfreight involves passing on your freight charges to an airline responsible for transporting your products safely. It may be the most expensive transportation model, but it’s faster than freight transportation by sea or freight transportation via a logistics company.
The main objective for freight forwarding companies is to move freight from point A to point B quickly without having any responsibilities for freight arrangements, while logistical companies take care of all aspects from beginning to end from the first step until it reaches its destination.
Thus, a freight forwarding company focuses on moving freight while a logistics company has many other services that support this whole process in one package.
When shipping goods, whether domestically or internationally, freight is very different from traditional courier work, which Express couriers handle.
Express Couriers manage time-sensitive shipments for businesses and individuals through door-to-door service via planes, trains, automobiles, etc. It includes not only documents but also merchandise. Depending on the shipment size, though, items may go through more than one mode of transportation. For freight shipping, the focus is always on the freight itself.
Freight Shipping Services
You can choose to use freight forwarding companies that specialize in freight shipping over long distances. In contrast, logistics services may provide freight movement and supply chain management, and warehousing.
For example, you could be moving your household goods across town or seas. It would help if you had expertise in managing large freight shipments – which may necessitate special equipment like cranes, straps, etc. Logistics service providers offer door-to-door service through multimodal distribution networks, while freight forwarders are focused on transporting freight between two destinations via ship, plane, truck, etc.
When looking for a company that will freight ship freight or handle logistics for your business, you should consider whether your freight requires freight shipping services (longer distances) via freight forwarding companies or multimodal distribution networks (shorter distances).
And remember, freight forwarding is always transportation-focused, while logistics is often used as a catch-all phrase for supply chain management.