SIC 4731 Arrangement of Transportation of Freight and Cargo

Encyclopedia of American Industries | 2005 | Copyright

SIC 4731
ARRANGEMENT OF TRANSPORTATION OF FREIGHT AND CARGO

This category includes establishments primarily engaged in furnishing shipping information and acting as agents in arranging transportation for freight and cargo. Also included in this industry are freight forwarders, which undertake the transportation of goods from the shippers to receivers for a charge covering the entire transportation, and, in turn, make use of the services of other transportation establishments as instrumentalities in effecting delivery.

NAICS Code(s)

541618 (Other Management Consulting Services)

488510 (Freight Transportation Arrangement)

Industry Snapshot

Companies engaged in the freight transportation arrangement business offer numerous services, ranging from import advice to shrink-wrapping freight crates. These firms are transportation middlemen that support the movement of cargo through the services they offer. Although relationships between forwarders and carriers may develop, the companies involved in arranging freight transportation are not affiliated with any particular carrier.

Automation, consolidation of information, and a strong customer orientation were the hallmarks of the industry in the 2000s. Freight transportation arrangements were rendered by two major types of establishments: freight forwarders and customs brokers. Although many large companies offered both types of services, the businesses were distinct.

Organization and Structure

Freight Forwarders. Freight forwarders operate under many names and licensing requirements. All freight forwarders, however, are transportation intermediaries that arrange the movement of cargo according to customers' needs. Supplementary services such as shipment tracing, warehousing and storage, and the preparation of letters of credit also are offered by forwarders. Freight forwarders often are referred to as "transportation architects."

Through working with numerous air, road, rail, and water transportation companies, these establishments endeavor to find the least expensive and most efficient freight routings possible. Their services are popular with shippers because freight forwarders are not affiliated with one carrier and therefore are not biased or restricted. Also, forwarders are known for their expertise in the ever-changing regulations that affect cargo movements, such as hazardous goods handling, documentation, and insurance. The carriers, in turn, welcome the business from forwarders. In fact, smaller carriers, who cannot afford to maintain sales staffs, depend on the business tendered by forwarders.

All forwarders that are involved in ocean, truck, or rail forwarding must be licensed by either the Federal Maritime Commission (FMC) or the Interstate Commerce Commission (ICC). However,...

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