In this day in age, the era of digitization is slowly influencing all industries from traditional food delivery to logistics solutions, and the freight forwarder’s role is increasingly dynamic and embedded into the manufacturer’s supply chain. It is no wonder that people start to wonder that do freight forwarders in recent times really need an office to work from? Or, Can a freight forwarder work from home?
The more services a freight forwarder provide to its customer, the less appealing it is to work from home. However, if you structure your business correctly, work with a niche customer group that is specific to you, you can work as a licensed freight forwarder from home with ease. You just need the right business structure to do so.
Ultimately, whether you can operate as a freight forwarder depends on how involved you are with your client’s supply chain. A non-assets-based freight forwarder essentially does not own any trucks, airplanes or vessels, where the freight forwarders basically act as an intermediary between the cargo owner and the carrier only.
What extent of service are you providing?
It is pertinent to explain in the industry there are: –
- 1PL (First Party Logistics)
- 2PL (Second Party Logistics)
- 3PL (Third Party Logistics)
- 4PL (Fourth Party Logistics)
1st Party Logistics services providers are companies that handle their own logistics requirements with their own transport equipment, without an outsourced logistics provider.
2nd Party Logistics service providers are where companies outsource their transportation needs to logistics providers that own the asset necessary to run the business.
3rd Party Logistics service providers provide outsourced services on a larger scale, they do not necessarily own the transportation asset. A 3rd party logistics provider’s primary task is to engineer a holistic solution that its clients need.
4th Party Logistics service providers are more involved than the 3rd Party logistics service provider, in a sense they can function as part of the supply chain operation of its customers. A 4th Party Logistics provider can recondition the cargo in services such as repackaging, palletizing, and product mixing.
With that said, if are working from home as a freight forwarder, you wouldn’t be at a scale where it is justifiable to own transportation assets to operate.
A stay-at-home freight forwarder, to a certain extent, can ONLY operate as a 3PL provider as they can broker services from its own vendors.
What does a Freight Forwarder Do?
For illustration purposes, let’s look at a standard inquiry a freight forwarder would encounter.
if your client has contracted you, a freight forwarder, to provide DDU shipment from Port of Los Angeles to Jakarta Port in Indonesia.
|Shipment Term||Delivery Duty Unpaid|
|Port of Loading||Port Los Angeles|
|Port of Discharge||Port Jakarta|
|Pick up Location||Chatsworth, CA 91311|
|Delivery Location||Serang, Indonesia|
|Cargo Description||Hydraulic Equipment|
|Cargo Volume||2 x 20’ Container|
As a non-asset-based freight forwarder, you will need to broker sections of this transportation with multiple vendors.
- For the pick up from Chatsworth to the Port of Los Angeles, you need a licensed transporter, one with an FMCSA license, to haul the empty containers to your client’s location for the cargo loading, and subsequently, haul the laden container to the port of Los Angeles.
- For USA Customs Clearance, you need to work with a Licensed Customs Broker that is qualified to ascertain the proper HS Code on the items exported, and fill in the proper CBP form.
- To acquire the ocean freight rates and sailing schedule, you will need to refer to shipping agents that suit your customers’ needs.
- Once the cargo arrives at Jakarta, your Jakarta’s freight forwarder agents will take over this stage of the logistics and clear the local customs and deliver it to Serang, Indonesia.
All of this service is wrapped in a service package that you provide to your clients. In exchange for your overseas freight forwarder network and local vendor’s services, you provide the service at a mark-up.
When can a Freight Forwarder Work from Home?
The correspondence between your vendors and your clients can be done via E-mail. So technically speaking, you can operate as a freight forwarder in the comfort of your home.
All you need is a phone and a laptop. Everything else is sub-contracted to other 2PL service providers.
As a Freight Forwarder, you need to make sure that you have all the required licenses to operate as one. Please refer to the United States Customs Border Patrol website and fill in the OP-1 form.
Registering as a Freight Forwarder in the USA has a relatively low barrier to entry, you can either be a sole proprietor/individual, a partnership, or a corporate company. As long as you met the requirements of the Department of Transport, with a proper business license, you are good to go.
What a freight forwarder brings to the table for its customers will determine its value as a “logistics architect”, not whether a freight forwarder works from home or a posh office. They provide: –
- Competitive Ocean Freight rates
- A network of freight forwarders located globally to arrange shipment
- Close monitoring and follow-up
- Shipment advice
- Customized logistics service
When a Freight Forwarder Can’t Work from Home?
Once a self-employed freight forwarder has reached a critical size in terms of responsibilities held, where there is a need for a dedicated team for a specific section of the business operation. It may not be feasible to operate the freight forwarder’s business from home.
Moreover, the more established your freight forwarder business is, the more important your company’s reputation will be as a factor in securing larger, more established clients.
Having a bonafide business address with an office will provide security to the client that the business is not a one-time, hit-and-run scheme.
A freight forwarder may also take the leap into expanding its business to other areas of logistics service.
This is arguably the most natural course of business expansion for a freight forwarder, to have assets such as trucks and warehouses, or a satellite office in other states.
As a business in this stage, it is not feasible at this stage to operate a freight forwarder business from your home.
Steve Jobs started Apple with his partners in his garage. Well, a freight forwarder can start off from there too, in order to minimize overhead costs. But when Apple has grown into a multibillion-dollar company. That garage really doesn’t fit a company of that magnitude.
The logistics industry is evergreen and dynamic, it is not too recent in the past where the standardized container box has revolutionized the way cargo is shipped.
The next technology advancement may be looming in the future, where the role of a freight forwarder will once again change to suit the times.
Who knows, with blockchain technology and A.I automation, there may not be even a need for a freight forwarder to exists.
Until that day, a freight forwarder, in its many shapes and sizes will continue to sprout and aid the logistics administration.
Freight forwarders exist to provide a service-based solution. If your service is up to the client’s requirement, it really doesn’t matter where the service is provided.