Freight companies or shipping companies primarily provide services related to shipping. In other words, they are responsible for transporting cargo from one point of region to another. They are best specialized in door-to-door services, transporting cargo from one place to another, customs clearance, customs duty, local delivery, etc. The freight industry plays a very crucial and integral role in the overall supply chain of goods as its job is to supervise and manage each component within the supply chain. It is impossible to imagine trade occurring between different countries and within the country itself without freight companies. It would be impossible to import and export raw materials and transport materials and products in bulk.
Some of the components involved in the freight supply chain are transportation, warehousing, distribution, and delivery. Each component’s function is briefly described below –
Freight companies use multiple modes of transportation such as by road, rail, ocean, and sea. A typical freight company generally provides an intermodal mode of transportation. Inter-modal transportation refers to the use of multiple modes of transportation for the same cargo. For example, cargo can be transported within different states of a country by freight trains, and then the cargo can be picked up by a pickup truck.
Transportation by road – This mode of transportation is used to transport goods within national borders. This is also the cheapest mode of transportation for shipment.
Transportation by rail – This mode of transportation is used to transport goods within different states of a country.
Transportation by the sea – This mode of transportation is generally used for international trade. The transit time for transporting goods by sea is usually long as they have to go through multiple custom clearances. Hence, transportation by sea usually encounters delays.
Transportation by air – This mode of transportation is used when the transit time is short. This mode of transportation is also the most expensive mode of transportation for carrying shipments.
Warehousing system – The freight companies often partner with third-party logistics companies for the warehousing of goods. Logistics companies provide services related to warehousing, transportation, and inventory management. The warehouse is a building where shipped goods are stored and from there the cargo is distributed to its final destination; i.e, the customer/receiver. The warehouse staff is responsible for loading, packaging, and distributing the products. They are also responsible for minimizing or reducing any potential errors associated with packaging and delivery. Modern warehouses have become digitalized. This system of digitalized warehouses is known as a warehouse management system. The warehouse management system contains software that allows the warehouse staff to track the location of the products, gather information in real-time, check delivery details, and manage inventory. The warehouse management system has made the distribution of goods more convenient.
Let’s take an example of freight shipping from Canada to the US
Canada and the United States are the largest trading partners in the world. Shipment from the US to Canada or vice versa involves the same procedure as international trade between other countries. Shipment arriving from Canada goes through customs clearance. For customs clearance, documentation is required; specifically, an invoice that mentions the shipment date, name, and address of the shipper and the consignee, details of the items. In order to get clearance, the carrier must provide legal documents, then only the parcel is allowed to enter the US borders.
Shipments under 800 US dollars can be cleared without duty whereas shipments over 800 US dollars cannot be cleared without duty. Freight shipping between Canada and the US remains the most profitable trading business in North America.
- Posted by WiserTech Solutions
- On July 5, 2021