freight forwarding chapter 1

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What we will cover

What is common among the top 3companies?

What does a Freight Forwarder do?:

Definition of Freight Forwarder:

Historical Perspective:

TOP 25 global forwarding companies


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Common among TOP 3 companies

DHL (2011 Gross Revenue USD 31.160 Billion)

Kuehne& Nagel (2011 Gross Revenue USD 22.181 Billion)

DB Shankar (2011 Gross Revenue USD 20.704 Billion)

They are the top 3 Global Freight Forwarding Companies withannual revenues in Billions of Dollars in the year 2011 as per thedata compiled by Armstrong & Associates, Inc., a recognized leaderin supply chain market research and consulting based in USA. Thecomplete list of top 25 Freight Forwarding Companies and thesalient features of the business traffic generated by thesecompanies is presented in Appendix 1 at the end of this chapter.Itwould not take much time to reach the conclusion that FreightForwarding is a big business with many multinational companies

operating successfully. One of the Freight Forwarding companies,Kuehne& Nagel is the majority shareholder of Worlds No. 6 rankingContainer Liner shipping co.,Hapag Lloyd.A look at the columntitled Traffic Handled & Remarks will enable you to know thatFreight Forwarders are performing the range of activities listedbelow:


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DHL Express

DHL Express is a division of the Germanlogistics company Deutsche

Post DHL providing international express mail services. Deutsche Post

is the world's largest logistics company operating around the world.[2]

DHL is a world market leader in sea and air mail.[3][4]

Originally founded in 1969 to deliver documents between San

Francisco and Honolulu, the company expanded its service throughout

the world by the late 1970s. The company was primarily interested in

offshore and inter-continental deliveries, but the success ofFedExprompted their own intra-U.S. expansion starting in 1983. DHL

aggressively expanded to countries that could not be served by any

other delivery service, including the Soviet Union, Eastern Bloc, Iraq,

Iran, China, Vietnam and North Korea.

In 1998, Deutsche Post began to acquire shares in DHL. It finally

reached majority ownership in 2001, and completed the purchase in

2002. Deutsche Post then effectively absorbed DHL into its Expressdivision, while expanding the use of the DHL brand to other Deutsche

Post divisions, business units and subsidiaries. Today, DHL Express

shares its well-known DHL brand with other Deutsche Post business

units, such as DHL Global Forwarding and DHL Supply Chain.

The DHL Express Service has ceased domestic operations in the

United States of America, as of February . 4.65 lakhs FTE
http://en.wikipedia.org/wiki/Division_(business)http://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Deutsche_Post_DHLhttp://en.wikipedia.org/wiki/Deutsche_Post_DHLhttp://en.wikipedia.org/wiki/Express_mailhttp://en.wikipedia.org/wiki/Deutsche_Posthttp://en.wikipedia.org/wiki/San_Franciscohttp://en.wikipedia.org/wiki/San_Franciscohttp://en.wikipedia.org/wiki/Honoluluhttp://en.wikipedia.org/wiki/FedExhttp://en.wikipedia.org/wiki/Soviet_Unionhttp://en.wikipedia.org/wiki/Eastern_Blochttp://en.wikipedia.org/wiki/Iraqhttp://en.wikipedia.org/wiki/Iranhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/North_Koreahttp://en.wikipedia.org/wiki/Deutsche_Posthttp://en.wikipedia.org/wiki/DHL_Global_Forwardinghttp://en.wikipedia.org/wiki/DHL_Exel_Supply_Chainhttp://en.wikipedia.org/wiki/DHL_Exel_Supply_Chainhttp://en.wikipedia.org/wiki/DHL_Global_Forwardinghttp://en.wikipedia.org/wiki/Deutsche_Posthttp://en.wikipedia.org/wiki/North_Koreahttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Iranhttp://en.wikipedia.org/wiki/Iraqhttp://en.wikipedia.org/wiki/Eastern_Blochttp://en.wikipedia.org/wiki/Soviet_Unionhttp://en.wikipedia.org/wiki/FedExhttp://en.wikipedia.org/wiki/Honoluluhttp://en.wikipedia.org/wiki/San_Franciscohttp://en.wikipedia.org/wiki/San_Franciscohttp://en.wikipedia.org/wiki/Deutsche_Posthttp://en.wikipedia.org/wiki/Express_mailhttp://en.wikipedia.org/wiki/Deutsche_Post_DHLhttp://en.wikipedia.org/wiki/Deutsche_Post_DHLhttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Division_(business)


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Kuehne& Nagel

Kuehne + Nagel International AG (SIX: KNIN) is aglobal transportation and logistics company based inSchindellegi, Switzerland.[3] It was founded in 1890, inBremen, Germany, by August Khne and FriedrichNagel.[3] It provides sea freight and airfreight

forwarding, contract logistics, and overland businesseswith a focus on providing IT-based logistics solutions.In 2010, Kuehne + Nagel was the leading globalfreight forwarder, accounting for nearly 10% of theworld's air and sea freight business by revenue, aheadofDHL Global Forwarding, DB Schenker Logistics, andPanalpina.[4] As of 2012, it has more than 1,000offices in over 100 countries, with over 63,000employees.[5]
http://en.wikipedia.org/wiki/SIX_Swiss_Exchangehttp://www.six-swiss-exchange.com/search/quotes_en.html?security=KNINhttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Schindellegihttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Bremenhttp://en.wikipedia.org/wiki/Freight_forwarderhttp://en.wikipedia.org/wiki/Freight_forwarderhttp://en.wikipedia.org/wiki/Solutionhttp://en.wikipedia.org/wiki/DHL_Global_Forwardinghttp://en.wikipedia.org/wiki/DB_Schenkerhttp://en.wikipedia.org/wiki/Panalpinahttp://en.wikipedia.org/wiki/Panalpinahttp://en.wikipedia.org/wiki/DB_Schenkerhttp://en.wikipedia.org/wiki/DHL_Global_Forwardinghttp://en.wikipedia.org/wiki/Solutionhttp://en.wikipedia.org/wiki/Freight_forwarderhttp://en.wikipedia.org/wiki/Freight_forwarderhttp://en.wikipedia.org/wiki/Bremenhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Schindellegihttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Transporthttp://www.six-swiss-exchange.com/search/quotes_en.html?security=KNINhttp://en.wikipedia.org/wiki/SIX_Swiss_Exchange


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DB Shenkers

DB Schenker is a wholly owned subsidiary ofDeutsche Bahn

AG that focuses on logistics. The company, created byreorganisation and rebranding of Deutsche Bahn subsidiaries,comprises a logistics division encompassing air, land, and seafreight, and a rail division made up from European rail freightcompanies.

Since December 2007 DB Schenker has been the freight logisticssubsidiary ofDeutsche Bahn. DB Schenker combines all transportand logistic activities of Deutsche Bahn (DB Schenker rail and DBSchenker logistics) employing over 94,600 staff spread acrossabout 2,000 locations in about 130 countries and now is the

biggest freight operator in the UK after buying out English Welshand Scottish Railway (EWS).[2]From 1 January 2009 the logistics operations of DB-Schenker,Railion, EWS, and Transfesa were combined under the brand "DBSchenker
http://en.wikipedia.org/wiki/Subsidiaryhttp://en.wikipedia.org/wiki/Deutsche_Bahn_AGhttp://en.wikipedia.org/wiki/Deutsche_Bahn_AGhttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Rebrandinghttp://en.wikipedia.org/wiki/Freight_rail_transporthttp://en.wikipedia.org/wiki/Deutsche_Bahnhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/English_Welsh_and_Scottish_Railwayhttp://en.wikipedia.org/wiki/English_Welsh_and_Scottish_Railwayhttp://en.wikipedia.org/wiki/Railionhttp://en.wikipedia.org/wiki/Transfesahttp://en.wikipedia.org/wiki/Transfesahttp://en.wikipedia.org/wiki/Railionhttp://en.wikipedia.org/wiki/English_Welsh_and_Scottish_Railwayhttp://en.wikipedia.org/wiki/English_Welsh_and_Scottish_Railwayhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Deutsche_Bahnhttp://en.wikipedia.org/wiki/Freight_rail_transporthttp://en.wikipedia.org/wiki/Rebrandinghttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Deutsche_Bahn_AGhttp://en.wikipedia.org/wiki/Deutsche_Bahn_AGhttp://en.wikipedia.org/wiki/Subsidiary


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What does a freight forwarder do ?

. Carriage of Ocean Freight (represented by number of TEUs

Twenty Foot Equivalent Units of Containers).29,810,841 TEUs are estimated to be the traffic controlledby the top 25 Freight Forwarders globally.

An estimate from Clarkson Research Services puts theglobal container trade in 2011 as 150.6 million TEUs. Hence,the share of the business placed by top 25 global freight

forwarders alone is approximately, 20 %.

If you consider all the freight forwarders in the world, thebusiness controlled by them will be around 50 %. Thisincludes the containers booked by Freight Forwarders onbehalf of their customers as well as the containers carriedby Freight Forwarders as NVOCCs (Non Vessel OperatingCommon Carriers - This concept will be discussed in detailin Chapter 3).


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Definition of FF The term freight forwarder originated from forwarding

(moving from one place to another) of freight (goods orcargo). Basically, a freight forwarder is a person orcompany involved in theprocessing and/or movement ofgoods on behalf of another company orperson whichcrosses international boundaries. The freight forwarder

provides services in the following two main fields:

The movement of goods out of a country on behalf ofexporters or shippers, in which case the forwarder would betermed an export freight agent;

The bringing of goods into the country on behalf of

importers, in which situation the forwarder is called animport freight agent, customs house agent (CHA), customsclearance agent, clearing and forwarding (C&F) agent orcustoms broker.


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Historical perspective Transportation is vital for the development of human civilization. When

transportation is within a community, it is simple. As the civilizationdevelops, people began exploring trading opportunities, from one country toanother and that has led to the birth of transportation by sea. The IndustrialRevolution of the eighteenth and nineteenth centuries applied steam powerto transport and later the development of marine engines ultimatelyfacilitating even faster movement of goods. Along with the development ofglobal trade, the trade support mechanism also developed. One of theimportant trade support mechanisms is the development of transportintermediaries.

At the beginning of the thirteenth century, Venice had a trade route via theAlps to Germany and other European Countries. The merchants of Veniceused to employ the services of a middleman, the so-called "Fracture" whowas a combination of carrier and forwarding agent. His wagon transported

the merchant and his goods and he was escorted by a troop of armed guardsto protect life and property against highway robberies. He also arranged forthe payment of local dues / tolls on the many border crossings and attendedto the change of horses on the stations. The merchandise was conveyedunder a consignment note and was soldpersonally by the merchant atdestination.


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Contd .

Three hundred years later around 1600, the "Fracture" had become

an independent operator who knew his way over the lands. He wasfamiliar with the various trade routes and merchandise centers, had

organized wagon trains, had set up transportation agencies and

transit storage places, had issued bills of lading and collected duties,

merchandise values from the consignees. He was the international

forwarding agent for the rich merchant princes.

At the close of the 18th century the forwarding agent started

assisting the merchants in finding new markets and supplies, thus,

he contributed in great measure to the extension of trade. In the

middle and towards the end of nineteenth century, when the

codification of the law of commerce developed, the forwarding agentwas called upon to render counsel. Thus, the freight forwarding

business developed through an evolutionary process up to the

present stage. The evolution can be summarized in to 3 phases as

follows:


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Contd .

Phase 1: The transport intermediary is simply known as Customs

Broker. Levying customs duties by government agencies has beena basic part of trade throughout history. Customs Brokers did thejob of collection of customs duties from the traders and facilitatethe movement of goods. They handled the preparation of inwardentry (clearance) documents and filed the export declarations(shipping bills) on behalf of importers and exporters.

Phase 2: The Customs Brokers who were essentially middlemenand agents of the traders were asked by shippers or consignees toidentify ships for moving their cargo. The transport intermediary inthis phase is known as

Freight Forwarder.Customs brokers and agents who acted onbehalf of shippers to arrange freight transport and buy space onships evolved into freight forwarders. These freight forwarders alsoarranged warehousing either from their own warehouses or hiredfrom other warehouse providers. The freight forwarders were alsorequired by their customers to facilitate road haulage or railhaulage for transportation of the cargo to or from the port. Hence,freight forwarders added transport assets or entered into contractswith hauliers.


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Contd

Phase 3: Today, a modern freight forwarderlikes to be called as a Freight LogisticsProvider (FLP). Freight Forwarders havealso evolved as Third Party Logistics (3PL)Providers doing a range of services in

addition to the functions performed byfreight forwarders in Phases 1 and 2. Todaysfreight forwarders are no longer merecustom house agents. The details of the

functions will be discussed in the nextchapter.

freight forwarding chapter 1

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