International Freight Forwarders: Current Activities and Operational Issues

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International freight forwarders (IFFs) are such important logistical intermediaries that almost every company engaged in trade uses an IFF at one time or another.[1] In fact, a recent study of some of the largest U.S. companies found that more than 90 percent of them use IFFs to facilitate cross-border shipments.[2] While IFFs are frequently used because of the logistical expertise they bring to shipments, there is some disagreement as to what is meant by an IFF as well as the functions provided by such firms. Common definitions portray IFFs as logistical specialists for export shipments.[3] Other views, however, indicate that IFFs provide both export and import services.[4] Recent research has identified approximately two dozen functions - ranging from the payment of freight charges to the provision of legal services - that are offered by IFFs.[5] What is the relevance of IFFs for purchasing managers? Because purchasing's primary responsibilities involve the acquisition Of goods and services for their firms, there is more of an inbound, vis-a-vis outbound, emphasis. With respect to shipments, this inbound focus means that purchasing managers are generally importing products for their companies. As a result, according to conventional wisdom, purchasing managers should be more likely to use customshouse brokers (CHBs), whose expertise lies in facilitating import shipments.[6] Several recent studies, however, suggest that dramatic changes are occurring in the functions and activities of IFFs. For example, one group of researchers point out that many IFFs are expanding their service offerings in an effort to provide customers and potential customers with one-stop shopping.[7] Another study suggests that some IFFs are choosing to provide one-stop shopping by offering services such as nonvessel operating common carriers (NVOCCs) and/or CHBs.[8] The relevance of these changes for the purchasing function is illustrated in a recent study by the authors.[9] Results from this study, which involved a regional sample of purchasing managers, indicated that international freight forwarders - generally regarded as export specialists - are used slightly more than customshouse brokers - the import experts - in global sourcing activities. Although no explanations were offerred for the heavier utilization of IFFs by the purchasing professionals studied, the findings suggest the need for purchasing managers to be knowledgeable about the attributes, functions, and activities of both types of service firms. A review of the literature reveals only a limited number of empirical studies dealing with IFFs. The earliest such study investigated a regional (Northeast United States) sample of IFFs - and found most of them to be small, emerging one stop service companies.[10] A second empirical study, national in scope, likewise showed IFFs to be smaller enterprises, and also found that service was the primary reason shippers use IFFs.[11] WHY WAS THIS RESEARCH DONE? The previous studies, while providing valuable baseline information about IFFs, also generated important questions for further research. These include (1) the actual functions provided by forwarders; (2) issues associated with the provision of one-stop services; (3) issues associated with co-loading; and (4) the influence of intermodalism. Consequently, this study was undertaken to find answers to the following questions: 1. What are the various functions currently provided by IFFs? 2. To what degree have the growth of intermodalism and logistics outsourcing influenced the nature of forwarding operations? Has this influence been positive or negative? 3. To what degree is one-stop service being offered by IFFs? 4. Among those companies providing several intermediary services, how prevalent is conflict among the intermediaries' roles? What types of conflict exist between (among) these roles? …