How To Set Up A Freight Forwarding Company

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Each nation’s economy gets boosted by the fact that they export goods to other countries. You might not think it, but exports usually make up several billion dollars to a country’s GDP.

One notable example is China, the largest producer of electronic goods globally.

Freight is an industry worth trillions. It provides the backbone that countries need to export goods to foreign nations. As you can imagine, it’s also one of the most lucrative industries.

Believe it or not, getting started as a freight forwarding company isn’t as hard as it might seem.

If that’s something that interests you, keep reading to find out more about what it takes to start up this kind of interesting business. 

 

What is a Freight Forwarding Company

To start if you’re not quite sure what a freight forwarding company is I want to first define what this exactly is to help you get a better idea.

A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier (NVOCC), is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution  – Wikipedia

So basically a freight forwarder is a company that delivers a product to the end seller.  As an example this could be a barge that leave China with a load of goods and ships them to the United States for other companies to sell.

 

Choose a Business Location

You’ll need to establish some headquarters for your business. For many freight forwarders, it makes sense to do so at a major air or sea port. That’s because it’s easier to administer shipments and oversee operations.

Of course, you could have satellite offices in other parts of the country. But, it makes sense to place your headquarters near an important port.  This can take some work to find the right place since many sea ports are crowded.

However what I’ve found is that it can be worth paying the price to be in a decent location.  On top of that it can also help with logistics and keeping on top of communication between your company and those shipping the freight.

Set Up Offices at Your Chosen Destinations

Next, you’ll need counterparts in other countries to take care of shipments there. In the grand scheme of things, setting up individual offices isn’t expensive.

An alternative is to partner with another shipping firm. You could both agree to share resources, including office space. The advantage is you can offer a broader service and get more profits.

 

Invest in Transportation

barge
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You can’t have a freight forwarding business if you don’t have a transport fleet! For a start, you need to have a network of road vehicles at each country you service. You may wish to outsource that aspect of your business to save costs.

Another thing you will need is a fleet of planes and cargo ships. Sites like GlobalPlaneSearch make it easy to locate aircraft. And others such as NautiSNP help you find suitable cargo ships. There’s no denying the Internet is full of business resources!

You might be wondering why I’m not suggesting you lease or contract air and sea craft for your business. The answer is simple: profit! You can sell space on them to other freight forwarders. And if you own your transport, your running costs will be lower.

 

Decide If You Wish to Specialize in Anything

Many freight forwarding companies will transport almost anything from one location to another. But, others specialize in particular niches.

For example, you might only wish to carry certain things like vehicles or military items.

I recommend you spend a lot of time researching the market. Find out if you could make more profit specializing in a niche area. If you can, you should then decide whether the risk is low enough to warrant such a move.

Build Up Industry Relationships

Last, but not least, it’s worth linking up with other companies in the industry. That’s because many of your customers are likely to be other cargo businesses.

They will usually be ones that cannot afford such an operation as freight forwarding. Instead, they might only prefer to act as a broker or “middleman.”  This could present a huge opportunity to you to step in and help.  

 

One Final Thought…

As one final thought to think about as I end this article is that the need for shipping companies is only growing and with more and more stuff needing shipped why be the company that steps in to help.

This might sound like a bigger business to start but it’s one that could be very profitable.  So what are your thoughts are you thinking about starting a Freight Forwarding Company?  Share your thoughts and comments below.

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One Comment

  1. There is A LOT of money in creating a business as a middle man! I have an uncle that has created millions for himself using this type of strategy. This is a great article to help folks understand the basics of how freight fowarding works.

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