This guide intends to give you the overall information that you’ll need to know and understand to start up as a freight forwarder and eventually establish your own freight forwarding business. It’s not intended to be a comprehensive guide.
As with any new import and export business venture, there’s a lot to learn and understand and you’ll be learning and improving your skill set as each week passes in the freight business. At the start, it can feel very overwhelming but this is completely normal. As your business plan develops and you start to understand the costs involved in running your own freight forwarding business, everything will become clearer. The British International Freight Association (BIFA) is a crucial resource for training and networking opportunities.
During my career I have dealt with many, many freight forwarding businesses and even setup as a freight forwarder myself, so learned much about the freight industry, shipping industry, customs clearance and supply chain.
After several years I was offered a good deal to sell my freight forwarding business and as it was a part of my business plan and exit strategy, I sold it.
Start up as a small business and you’ll find if you do things the right way, business grows, you’ll handle different types of freight, you’ll gain more and more knowledge and more control as be able to compete with other freight forwarders.
With that in mind, let’s get started. We’re going to address the following points:
How To Start a Freight Forwarding Business:
- Setup Your Business: Limited Company or Self Employed?
- Know the Tools of the Trade
- Have an Good Knowledge of Export Documentation
- Understand Freight Rates
- Understand Incoterms 2020
- Use Third Parties to Reduce Costs
- Understand Export Entries on CDS
- Be Aware of the Skills Required
Starting Freight Forwarding Businesses – On YouTube
The video below explains the the same content as below for those that prefer video:
Understanding the Freight Forwarding Industry
What is Freight Forwarding?
Freight forwarding is a crucial part of the global supply chain, it’s a vital cog in the global economy. It’s the coordination and management of the movement of goods from one place to another, often across international borders. Freight forwarders are the middle men between shippers and carriers, they arrange for the transportation of goods by air, land or sea. They do a wide range of tasks, customs clearance, warehousing and insurance to ensure goods are delivered safely and efficiently.
Freight forwarding is a complicated process that requires in depth knowledge of international trade laws, regulations and logistics. Freight forwarders need to know the different modes of transportation, air freight, ocean freight and land freight and the different types of cargo, hazardous materials and perishable goods. They need to know the different types of shipping documents, bills of lading and commercial invoices.
The freight forwarding industry is competitive, many companies are vying for market share. But with the rise of e-commerce and globalization, the demand for freight forwarding services is increasing, opportunity for new entrants and existing players.
Business Setup: Limited Company or Self Employed?
The first step to take is to decide how to structure any new freight forwarding businesses, including starting your own freight forwarding business. To be clear, ABTS® are not experts in company formation and we can’t offer any advice on this, it’s best to speak to a qualified accountant and discuss your own personal situation.
There are pros and cons to each and we can only give you some of the basics, just to give you a very general idea.
Startup as Self Employed
One of the most important points to be aware of and understand as a self employed individual in freight forwarding, is that being self-employed means that you could be held responsible and personally liable for your company’s debts, so your personal assets are at risk. If you run into problems with your company finances, assess such as your house could be seized in order to cover the debts.
This is of course the worst case scenario but something that’s very important and must be understood and carefully considered.
As a limited company, you have limited liability which protects your personal assets. Your company assets and finances are completely separate from your personal.
You also cannot expense your salary whereas with a limited company you can, meaning any expenses you have as a business, you can offset against profits, reducing your tax liability.
Advantages are that you can pay yourself with minimal paperwork and you don’t have to adhere to the strict rules, upkeep of admin and legal obligations of a limited company.
If your income is more than £1,000, you’ll need to register with HMRC and fill in a Self Assessment Tax Return each year.
Startup as a Limited Company
As mentioned above, as a limited company, your personal liability is protected from any company debts and company finance.
As your freight forwarding business incurs expenses you can claim these in your yearly accounts which help to offset and reduce profits, meaning your tax bill will hopefully be less.
Having a limited company does however mean you have to adhere to certain laws and strict regulations on how the company is run, file accounts each year and make sure all your admin and paperwork is kept in good order.
Another important point, in either case, if your turnover is more than £85,000 per year, you will need to register for VAT.
We strongly recommend that you discuss your situation with an accountant to understand the advantages and disadvantages to you personally.
Riches in Niches
Selecting a niche within international shipping is a smart business decision. As the saying goes, “There’s riches in niches”. If you can specialise and focus your attention on one specific area, this can become your unique selling point. If you specialise in a particular type of cargo or industry or can get cheaper rates on particular routes, explore this. As you grow in this area of the industry you could become the market leader for this niche and capitalise on it. Once you are established in this niche, you may find that you can automate much of your process, minimising stress and maximising your profits.
Get the Necessary Licenses and Permits (USA)
To operate a freight forwarding business, you may need to obtain the necessary licenses and permits, especially if you’re based in the US. The specific licenses and permits required will depend on the type of business you are operating and the location of your business.
Always Minimise Your Startup Costs
When you start a freight forwarding business, keeping your start up costs as low as possible and knowing the tools of the trade are absolutely key to your success.
Your business idea is one thing, you may dream of plush offices, an expensive ultra-secure warehousing facility, your logo on the side of a fleet of trucks but the reality is such a business with this business models and huge start up costs is very likely to fail.
Remember, a freight forwarder sometimes has to operate on very small margins. You must be able to withstand the freight industry going through tough business cycles, which of course does happen.
We’ll come back to the subject of starting a freight forwarding business using third-parties at the end of this blog so read on.
Know The Important Tools of the Trade
So, let’s imagine you’ve setup your freight forwarding business and received your first lead.
It is crucial for businesses involved in freight shipping to adhere to proper training and regulations, as these are integral to the broader logistics and supply chain management sectors. Understanding the largest freight forwarders globally can provide valuable insights into industry standards and practices.
As an example, let’s assume you get a call from a client that wants to move a full container load (FCL) from Mombasa, Kenya to Southampton in the UK and contacts your for a quote.
What do you do next?
Here’s a step-by-step guide, and it’s just a guide, for a startup freight forwarder to follow when a client asks for a quote to move cargo (e.g., an FCL from Mombasa, Kenya, to Southampton, UK):
Step 1: Get all Shipment Details
Before you reach out to shipping lines, make sure you have all the information from the client:
- Cargo details: Type, weight, dimensions and special requirements.
- Container type: 20ft/40ft, high cube, reefer, open-top.
- Incoterms: Seller and buyer responsibilities (e.g., FOB, EXW, CIF).
- Pickup and delivery addresses: To check for inland transport costs.
- Customs requirements: Special documentation or permits needed?
Step 2: Find Routes and Carriers
Use online platforms to find available shipping lines, transit times and schedules:
- FluentCargo – Interactive search for global routes.
- SeaRates – Real-time carrier schedules and container tracking.
- RouteScanner – Compare and optimize multimodal routes.
Check multiple options and note:
- Transit time
- Frequency of sailings
- Shipping lines
- Freight costs
Step 3: Contact Shipping Lines for Rates
After you have found the routes, reach out to shipping lines or their local agents for a freight rate quotation. Shipping lines operating from Mombasa to Southampton are:
- Maersk Line
- MSC (Mediterranean Shipping Company)
- CMA CGM
- Hapag-Lloyd
Ask for a detailed quote including:
- Freight rate (container size and type)
- BAF & CAF
- Surcharges (port congestion, war risk, peak season)
- Estimated departure and arrival dates
Step 4: Local Handling Costs & Inland Transport
- Get quotes for port charges in Mombasa and Southampton.
- Container haulage (if door-to-door service required).
- Customs clearance fees and import duties (if applicable).
Step 5: Quote to the ClientCombine all costs into a clear quote:
- Freight from shipping line
- Origin charges (port handling, documentation fees)
- Destination charges (unloading, customs, delivery)
- Customs clearance & duties (if applicable)
- Insurance (if requested by client)
Provide options for multiple shipping lines if possible, with transit time differences and added value services.
Step 6: Send the Quote & Follow Up
- Format the quote professionally and transparently.
- Quote validity period (usually 7-14 days).
- Offer customs brokerage or marine insurance.
- Follow up with client to answer questions and book the shipment.
By following these steps a startup freight forwarder can quote efficiently, get competitive rates and have a smooth shipment.uld certainly consider as part of setting up a freight forwarding business.
A Good Solid Knowledge of Export Documentation
This may be stating the obvious but a very good knowledge and understanding of export documentation and procedure is not just important but it’s vital if you have any chance of starting your own successful freight forwarding business.
We’re not going to get into the details of the documentation here as we have written several other blogs and posted other YouTube videos on various export documentation but please know that at a minimum, you’ll need to know about:
- Certificate of Origin, Legalised and Certified
- Bills of Lading
- House Air Waybills
- Master Air Waybills
- Letters of Credit
- UCP 600
To really gain the practical knowledge and understanding required of export documentation and procedure, we offer an online course teaching you exactly what you need to know. Click here for the full syllabus.
Understand Your Freight Rates
Freight rates isn’t something that is usually thought of as far as specialised knowledge when it comes to starting a freight forwarding business because it’s assumed that when you ask for a freight rate from a shipping line or airline, you’ll get a quote as you would any other type of industry.
Shipping freight is different. When you ask a shipping line for a sea freight rate, they may first ask, “FCL or LCL?”. What they’re asking is are you shipping a “Full Container Load” or “Less than a Container Load“? So in the very first instance, you’ve got to understand this.
Next, they may ask you what are the dimensions of the cargo, if less than a container load. That’s no problem and you give the dimensions as needed.
The reply you’ll get is something similar to, “$59 Weight Measure“. You’ve obviously got to know what to do with this and how to calculate it into a quotation for your client. Your shipping line may well charge you “BAF” and “CAF” too, you must be familiar with this.
It’s beyond the scope again of this blog to delve into the details of freight rates but if you want to know more about these terms and gain a basic understanding of freight rates, check out our video below:
Make Sure You Understand Incoterms 2020
Incoterms 2020 are the cornerstone of shipping and freight forwarders MUST understand these terms. Without understanding what Incoterms 2020 are and how to use them, you’ll fall at the first hurdle. We’ve written an extensive blog on the subject so again, we won’t go into much detail here other than to explain that Incoterms are there to make it absolutely clear to the buyer and seller, where each party’s responsibility lies as far as the place of delivery, costs and risk.
There are 11 Incoterms 2020, think of them as code words for shipping. You NEED to know what they mean and understand how to use them.
One of your first startup costs should be a small investment in Incoterms 2020 which you can by from the International Chamber of Commerce.
For more, check out our blog post on Incoterms 2020 or watch the video below:
Use Third Parties Whenever You Can
Starting your own business is exciting. It’s quite natural to want to have everything perfect, your logo, your brand, the right warehouse, trucks with your shiny new logo on the side. Many people when they start their own venture go down the road of massive outlay, fancy new offices with the latest computers and latest iPhone models.
DO NOT DO THIS! When starting your own business and indeed, at all times, KEEP YOUR COSTS AS LOW AS POSSIBLE.
If your current computer works, you can get email, have an internet connection and can create spreadsheets, keep it as it is. Don’t accumulate extra costs. If your phone makes calls, you can answer emails and texts and do what you need to do, do not upgrade it.
Do not go out and get into a lease agreement for a warehouse, until you need it. Enlisting the aid of third parties. Rent some space in a third party warehouse for a fixed amount each month. Find out of you can expand the space should you need more and when you start to outgrow this, then look to rent your own warehouse, when you have an established client base and cash flow to fund it.
Use third party haulage companies to move cargo locally, before you go and buy your own vehicles. Make sure you have enough demand, cash flow and that you’re profitable, before any large outlay of cash or investment.
Always keep your costs to a minimum. They are the key differences between successful freight forwarders and freight forwarders that fail.
Invest in Freight Management Software
Freight management software is a critical tool for freight forwarding businesses, enabling them to manage their operations more efficiently and effectively. This software can help with a range of tasks, including:
- Freight Tracking and Tracing: This allows freight forwarders to track the movement of goods in real-time, enabling them to provide better customer service and respond quickly to any issues that may arise.
- Freight Auditing and Payment: This enables freight forwarders to automate the auditing and payment process, reducing the risk of errors and improving cash flow.
- Freight Optimization: This allows freight forwarders to optimize their freight operations, reducing costs and improving efficiency.
- Freight Documentation: This enables freight forwarders to generate and manage freight documents, such as bills of lading and commercial invoices.
When selecting freight management software, it is essential to consider the specific needs of your business, including the type of cargo you handle, the modes of transportation you use, and the level of automation you require. It is also important to consider the scalability and flexibility of the software, as well as its integration with other systems and technologies. Investing in the right software can significantly enhance your operational efficiency and help you stay competitive in the freight forwarding industry.
Develop Customer Service Policies
Developing customer service policies is an absolute must for a successful freight forwarding business. You need to ensure that you are providing excellent customer service to your clients, and meeting their needs and expectations.
Start by developing a customer service policy that outlines your commitment to customer service. This policy should include guidelines on communication, response times, and issue resolution. Additionally, it should cover important aspects of your services such as customs clearance, freight management, and supply chain management.
Ensure that your customer service policies are in line with your business goals and objectives. Providing value to your clients and meeting their needs and expectations should be at the core of your policies.
Leveraging technology can significantly enhance your customer service. Implementing freight management software can help you track shipments, manage inventory, and communicate effectively with clients. Utilizing data analytics can also improve customer service by identifying trends and patterns in customer behavior, allowing you to proactively address their needs.
By developing comprehensive customer service policies and utilizing technology, you can ensure that your freight forwarding business provides exceptional service, meets client expectations, and stands out in the competitive freight forwarding industry.
The Two Skills You’re Going To Need
There are two major skills required that you’ll need for starting and running your own successful freight forwarding business.
Negotiating skills and presentation skill.
Negotiating really is a certain type of skill that improves over time and the more you practice. It’s a major part of business in general but running a freight business, you’ll be negotiating with customers, with shipping lines, with airlines, warehouses and trucking companies.
You’ve got to know how to negotiate and understand how to get the best deal possible, which may not actually always be what you’re demanding. There’s more to consider for successful negotiations. Our negotiating skills blog reveals more so check it out.
Presentation skills are needed as you’ll be presenting to companies and need to explain to them in a clear and concise way, why they should entrust their cargo to you.
You’ll need to make sure you have the answers to their questions, understand freight rates, understand exactly what you can offer that company, what makes you unique and why they should work with you.
Present confidently but not arrogantly.
Bringing It All Together
That brings us to the end of this short introduction on how to start your a freight forwarding business. I hope it’s useful and given you enough to think about and research.
I spent many many years in this industry, I started my a freight business many, many years ago, ran it successfully but learned many lessons along the way as if can be a very competitive market, so you have to be able to adapt.
I sold the business in the end and was rewarded financially for my efforts and if you would like to learn the best practices to run your own successful freight forwarding company, definitely consider our Export Documentation and Procedure course, where I teach you the practical lessons that you’ll need to know, not just what to do but also what not to do!
Starting a freight business, shipping freight can be very rewarding and I enjoyed my years in this area of import and export and gave me a great understanding of the whole supply chain.
Take advantage and learn from my mistakes so you don’t suffer the same stress and financial losses that I did. You’ll have less grey hair than I do now at my age! 🙂
Start a freight business with the right knowledge and you’ll have every chance of great success.
How To Get Clients For Your Freight Forwarding Business
Knowing how to get clients for any business is the million dollar question. There’s no quick answer to that, it’s going to take time, energy, some grit and hard work. Below is a YouTube video where I discuss some of the methods that worked for me in my career and I’m sure are still very relevant today.
Understanding Export Documentation and Procedure – Online Course For £849
ABTS® offer an online Export Documentation and Procedure course that will teach you the practical knowledge you need to to understand and to trade successfully and confidently whilst maximising your profits when trading internationally.
Alan Bracken has over 40 years of commercial experience in logistics. He skips all the theory you’ll never need to know about the supply chain but teaches you the practical side of how to move goods around the world, preempting issued, being proactive, not reactive.
Check out our reviews on TrustPilot to see just how our courses have benefited our students.