How To Pay Your Freight Forwarder?

This article explains how to pay cargo forwarders and what to consider when choosing a payment method. Also, discussed all the details related to payments, i.e., risks and benefits. Knowledge about the financial relationship could be helpful to you in making informed decisions.

What is freight forwarding?

A shipment forwarding business shipping goods on behalf of its customer. It is like a freight broker but provides extensive services. They are responsible for ensuring safe, secure, and on-time goods distribution. Besides, they have an extensive network of partners that they can rely on to get the job done.

Freight forwarding cost structure

The cargo forwarding cost includes various factors (Transportgeography, 2022).

• Weight and volume of the goods
• Type of cargo
• Packing and palletization
• Destination costs
• Documentation fees
• Insurance price
• Administration charge

Additionally, the cargo forwarding business may charge extra for supplementary services. All these factors will be considered when calculating the cost of the freight forwarding services and will be included in the final price quoted to the customer.

How are freight forwarders paid?

The most common payment method is by charging a percentage of the total cost of the shipping of the goods (FIATA, 2021). This percentage is based on the following.

• Value of the goods
• Weight
• Volume
• Distance

Yet, some cargo forwarders may also charge a flat fee for their expertise, regardless of the value or weight of the shipping goods.

Besides these standard fees, cargo forwarders may charge extra for supplementary services such as packing, palletization, and documentation. Mentioned fees are included in the final price quoted to the customer.

How are freight forwarders commonly paid?

Cargo forwarders may also need payment in advance before the goods are shipped. This is to ensure that the shipment forwarding business has the necessary funds to cover the cost of the shipment.

In some cases, the customer may be able to pay the cargo forwarding company after the goods have been shipped.

The payment method and terms will vary depending on the cargo forwarding company and the specific details of the shipment. So, reviewing and understanding the payment terms is important before agreeing to work with a shipment forwarding business.

Can you negotiate with the freight forwarder?

Shipment forwarding is a competitive industry. Therefore, most cargo forwarders are willing to negotiate their fees. Yet, it is important to remember that the cargo forwarding cost includes several factors. Therefore, a cargo forwarding company depends on these aspects, its business model, and operating costs.

Yet, businesses must understand shipping needs and requirements while negotiating with a freight forwarding company. This will help you decide what you are willing to compromise to get a better deal. For example, you may be willing to pay a higher fee for faster transit times to reduce costs.

It is also important to remember that a cargo forwarding company is a business; like any business, its goal is to make a profit. As such, they may not be willing to negotiate on certain aspects of their service, i.e., insurance coverage or the quality of their packing materials. In these cases, it may be better to look for a different cargo forwarding company that can offer the services and terms you need.

Negotiating with a shipment forwarding company is always a good idea if you are looking to save money or get a better deal on your shipment.

How do freight forwarders invoice customers?

Cargo forwarders invoice their customers after the goods have been shipped. The invoice includes all the fees associated with the shipment. For example, it includes the carrier costs, the shipment forwarding services such as customs clearance, and any extra charges that may apply. The exact details of the invoice will vary depending on the cargo forwarding company and the specific details of the shipment. Yet, most invoices will include the following information.

• The name and contact information of the cargo forwarding business
• The name and contact information of the customer
• The date of the invoice
• The date that the goods were shipped
• The details of the shipment, including the weight, volume, and value of the goods, the type of cargo, and the destination
• A breakdown of the charges, including any extra services that were provided
• The total amount due

In some cases, the invoice may also include payment terms, such as the due date and any late payment fees that may apply. So, it is important to review the invoice to ensure that all the information is correct and you understand the charges applied. If you have any questions or concerns, you should contact the shipment forwarding company to discuss them.

Once the invoice has been received, the customer has time to pay the cargo forwarding business. The exact payment terms vary depending on the shipment forwarding company. Most cargo forwarders must generally pay within 30 days of the invoice date. The customer can pay the cargo forwarding company using various payment methods, such as a check, bank transfer, or credit card.

Due payment policy for freight forwarders

The due payment policy for an international freight forwarder varies depending on the terms agreed upon between the goods forwarding company and the customer (FIATA, 2019). In most cases, the shipment forwarding business must pay within a certain number of days after the goods have been shipped. This condition ensures that the cargo forwarding company has the necessary funds to cover the cost of the shipment. In contrast, others may allow the customer to pay after the goods have been shipped. Sometimes, it applies different payment options, such as a discount for early payment or the ability to pay in installments.

The cargo forwarding company may charge late payment fees or interest if the customer fails to pay on time. Also, they may take legal action to recover the unpaid amount. Therefore, paying on time is important to avoid penalties or legal action.

Payment in advance

Some freight forwarders charge before the goods are shipped. This is to ensure that the shipment forwarding company has the necessary funds to cover the cost of the shipment and any extra services provided.

Payment after shipment

Other freight forwarders may allow the customer to pay after the goods have been shipped. In these cases, the customer has time to pay the cargo forwarding company, such as 30 days after the shipment date.

Payment in instalments

Some freight forwarders may offer the option to pay in instalments. This option allows the customer to spread the cost of the shipment over a longer period.

Discount for early payment

Some freight forwarders may offer a discount for early payment. This option incentivizes the customer to pay before the due date.

Late payment fees and interest

The cargo forwarding company may charge late payment fees or interest if the customer fails to pay on time. Besides, they may take legal action to recover the unpaid amount.

Various payment methods

Freight forwarders may offer a variety of payment methods, such as

• Bank transfer
• Credit card

So, it is important to review the payment terms and choose a payment method that is convenient and secure.

Automated processes with Spotos

At Spotos, we want a clear, simple, and easy way of moving freights. This is why we developed a self-service logistics platform. With us, you can order trucks as pizza, book instant freights as Bolt, and enjoy paperless mode as DocuSign. Spotos is essential if you are eager to reduce transportation costs, save time and maximize efficiency with automated processes. It is not only a convenient marketplace but much more.

• Network. Spotos is a unique ecosystem with an extensive network of shippers and carriers. We have access to over 70k trucks and more than 3k carriers in Europe.
• Simplicity. At Spotos, we want a clear, simple, and easy way of moving freight. This is why we developed a self-service logistics platform. So order trucks as pizza, book instant freights as Bolt, and enjoy paperless mode as DocuSign.
• Automation. Everyone goes digital, do you? Automation is not a panacea in business but a definition of efficiency, optimization, and maximization. With Spotos, every step of your logistics is automated. Also, AI-based pricing algorithms ensure the instant booking and the best price.
• Transparency. Transparency is an essential pillar of future logistics. With Spotos, you will get price and cost transparency, guaranteed cargo safety, and settled cargo claims if necessary. Also, Spotos promises complete control of shipments with real-time truck visibility.

Spotos promises no monthly subscriptions and no strings attached. Just compare quotes and choose the smart pricing for your needs.

• Smart price – a cost-effective choice
  • The auction rate is a dynamic pricing algorithm
  • Price increases nearby the delivery date
  • Define budget interval by yourself
  • Spotos offers the best-possible rate
  • Pay only the lowest rate
• Fixed price – 100% freight delivery
  • A fixed rate is our pricing option which guarantees your freight delivery by 100%, and normally it is more expensive