Freight Forwarders Role in Shipment Organization Of various Merchandized Goods
A freight forwarder, forwarder, or forwarding agent, is a person or a business entity that organizes shipments for individuals or corporations to get the goods from the point of origin to the desired market or from a producer directly to the customer or a distribution center.
A freight forwarder dispatches shipments via a common carrier and books
or otherwise arranges space for those shipments on behalf of shippers. The
forwarder typically deals in cargo that is being exported. He/she will arrange the
transportation, process the documentation, and perform related activities incident
to the shipment.
The term "international shipping agent" better
describes the services provided by a freight forwarder. It better describes the
forwarder's duties, which depending on the transaction, could include:
Advise the exporter about the costs associated with the exportation such
as freight charges, port costs, consular fees, and related costs.
Be an expert on the most appropriate transportation methods for moving
different kinds of cargo, as well as on booking the transport itself.
Arrange for the transportation of the goods by land, sea, or air as required.
To be familiar with any applicable export and / or import regulations.
Prepare documentation such as the bill of lading required for
transportation and payment to the exporter under letters of credit.
Assist in obtaining cargo insurance.
Recommend proper packaging for safe shipment.
Advise on other charges likely to be incurred.
Translate documents.
Routing of documents after shipment via banking channels to the buyer.
Work with customs brokers in the port of importation to ensure efficient
entry of the goods, proper customs valuation, the payment of duties, and
the filing of duty drawbacks.
Keep clients informed throughout the whole process.
The freight forwarder is legally an agent. Therefore, like a shipbroker, the
forwarder owes a fiduciary relationship to his/her client. The fiduciary
relationship requires the forwarder to act solely in its client's interest – to put the
interest of their client ahead of their interests.
In the U.S.A., freight forwarding firms are licensed by the International Air
Transport Association to handle air cargo and by the Federal Maritime
Commission to handle ocean cargo.
A freight forwarder will usually be compensated by charging its client a fee for
services provided. The forwarder may also earn commissions on bookings made
with the actual carriers, calculated based on the transportation services to be
performed.
Since the transportation of goods between two locations will often involve
multiple modes of transportation (e.g., truck, rail, ship, air), the freight forwarder
will need to coordinate the transportation of the goods with different carriers that
are required for different portions of the journey.
Someone working in the freight forwarding industry needs to develop an understanding of
all modes of transport. Also need to learn deal with other aspects of international
trade, such as export and import regulations, banking, letters of credit, marine
insurance, warehousing, packing, etc.
Many people ask why an exporter will choose to use a freight forwarder when making arrangements for shipping goods directly with the carriers(s). The
fact is that freight forwarders can secure transportation rates that exporters may
not be able to get on their own. Their established relationships with carriers may
allow them to obtain better prices, from which their customers can benefit. Besides, their extensive knowledge of documentation requirements, regulations,
transportation costs, and banking practices can make the export process a lot
easier for companies.
One should not confuse the freight forwarder with the NVOCC (Non-vessel
Operating Common Carrier). An NVOCC is "a common carrier that holds itself out to the public to provide
ocean transportation, issues its bills of lading or equivalent documents, but
does not operate the vessels that transport cargo."
An NVOCC is a carrier. It enters into a contract of carriage with the cargo
shipper. It undertakes responsibility for the carriage like a shipowner that owns
a vessel. However, the NVOCC is a carrier that does not own or operate the
vessel used to perform the carriage.
Resources:
The web site for the National Customs Brokers and Forwarders Association of
America provides details of it, 1000 plus members, by state and city, continuing
education opportunities, and timely articles.
The web site for the Federal Maritime Commission
describes the licensing,
bonding, and related information for freight forwarders and NVOCC's. There is
also a
comprehensive list of licensed freight forwarders and NVOCC's available for reference.
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Role of a freight forwarder
A freight forwarder, forwarder, or forwarding agent, is a person or a business entity that organizes shipments for individuals or corporations to get the goods from the point of origin to the desired market or from a producer directly to the customer or a distribution center. A freight forwarder dispatches shipments via a common carrier and books or otherwise arranges space for those shipments on behalf of shippers.
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