<u>Often small companies have problems with shipping costs because they cannot supply a shipment large enough to use an intermediary such as a railroad. However, they can often get good rates by using a distribution specialist called a freight forwarder:
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Further Explanation:
Freight forwarder:
Freight forwarder is an intermediary party between the supplier and the transportation entity. Freight forwarder does not transport the goods personally, they setup and organize the whole transportation process. They get the information from the supplier and the size of the product, destination and other related information, then they use their expertise skills to find out the best transportation type as per the client’s requirement.
Small companies do not bulk order and they face problem to contact to the shipping agencies because these agencies do not prefer small packages or charges heavily for transporting the goods. Therefore, these small companies use freight forwarder to supply their goods. Freight forwarder collects the goods from small companies and makes a large shipment, then contacts a shipping agencies and take their help to supply the products.
Small companies do not have to pay unreasonable cost for the transportation of the goods and the freight forwards earns commission by taking many orders from small companies.
Learn more:
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2. Learn more about the effect on demand
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Answer details:
Grade: Senior School
Subject: Business Studies
Chapter: Supply Chain
Keywords:small companies, shipping costs, supply, shipment large, enough, intermediary, railroad, good rates, distribution specialist, puts, small shipment, together, create a single, large one, transported, cost-effectively, by truck or train.
