Freight forwarder
Encyclopedia
A freight forwarder, forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as a carrier
. A forwarder is often not active as a carrier and acts only as an agent, in other words as a third-party (non-asset-based) logistics
provider that dispatches shipments via asset-based carriers and that books or otherwise arranges space for these shipments. Carrier types include ships, airplane
s, truck
s, and railroads.
International freight forwarders typically arrange cargo
movement to an international destination. International freight forwarders, have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice
, shipper's export declaration
, bill of lading
and other documents required by the carrier or country of export
, import
, or transshipment
. Much of this information is now processed in a paperless environment
.
The FIATA short-hand description of the freight forwarder as the 'Architect of Transport' illustrates clearly the commercial position of the forwarder relative to his client. In Europe there are forwarders that specialise in 'niche' areas such as railfreight and collection and deliveries around a large port. The latter are called Hafen (port) Spediteure (Port Forwarders).
A forwarder in some countries may sometimes deal only with domestic traffic and never handle international traffic.
In Australia most licensed Customs Clearance Agents (now more commonly referred to as Customs Brokers), operate under a freight forwarder.
Bangladesh
In order to start as a freight forwarder a person needs a government license.
Canada
The Canadian International Freight Forwarders Association [www.ciffa.com] was established in 1948 to support and protect the character, status, and interest of foreign freight forwarders by establishing uniform trade practice and regulations and eliminating trade evils and abuses. CIFFA also holds an educational role by providing a certificate and advanced certificate programs.
Ireland
Even in smaller markets, such as Ireland, the role of freight forwarders is strategically important. International merchandise trade is worth €148 billion to the Irish economy. 82% of manufactured products are exported, further highlighting the importance of the freight forwarders to a nations' economy. Associations like the Irish International Freight Association and FIATA help maintain the professionalism of this industry through educational and representative roles. The FIATA Diploma in Freight Forwarding is an example of how this can be achieved.
Nigeria
Freight-forwarding in Nigeria has been in place since the exporting of groundnut
as a cash crop since 1914, though not initially as freight forwarding but as the means of transportation of both goods and services from one country to another. Following the methodology of their British forebears, agents were used to facilitate the transport of goods and services.
UK
In the U.K., freight forwarders are not licensed, but many are members of the British International Freight Association (BIFA). Freight forwarders in the UK consolidate various goods from different consignors into one full load for road transport to Europe, which is often known as groupage. Some freight forwarders offer additional related services like export packing.
USA
In the U.S., companies that handle domestic U.S. freight must be registred with the U.S. Department of Transportation's Federal Motor Carrier Safety Administratoin. Such forwarders are "carriers" who accept freight for transportation and are liable for transporting the freight from origin to destination, under their own bill of lading. The legal definition at 49 USC 13102 (8)is: FREIGHT FORWARDER.—the term ‘‘freight forwarder’’ means a person holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and in the ordinary course of its business— (A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments; B) assumes responsibility for the transportation from the place of receipt to the place of destination; and (C) uses for any part of the transportation a [surface carrier] carrier subject to jurisdiction [of the Department of Transportation] of under this subtitle.
International ocean freight forwarders arranging for shipments to and from the US must be licensed by the Federal Maritime Commission
as Ocean Transportation Intermediaries. An Ocean Transportation Intermediary is either an ocean freight forwarder or a non-vessel operating common carrier (NVOCC). An ocean freight forwarder is an individual or company in the United States that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers. Ocean freight forwarders also prepare and process the documentation and perform related activities pertaining to those shipments. An NVOCC is a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent document, but does not operate the vessels by which ocean transportation is provided. Companies may obtain both licenses and may act in both capacities even on the same shipment. The U.S. legal distinction between the two is that a freight forwarder acts as the agent of a principal (typically a shipper or consignee) and the NVOCC is a transportation company (carrier) that is physically responsible for the carriage of goods and acts as its own principal. Companies acting strictly as an Ocean Freight Forwarder typically do not issue their own contract of carriage (bill of lading) and as agent are generally not liable for physical loss or damage to cargo except in cases of errors in judgment or paperwork or fiduciary responsibility. NVOCC's act as ocean freight carrier and issue their own bill of lading and are legally responsible for physical loss or damage in accordance with the terms and conditions of their bill of lading and tariff. Similar to other countries, freight forwarders that handle international air freight will frequently be accredited with the International Air Transport Association
(IATA) as a cargo agent however they must obtain an Indirect Air Carrier (IAC) certification from the Department of Homeland Security (DHS).
In modern times the forwarder still carries out those same responsibilities for his client. He still operates either as a domestic US carrier, or otherwise with a corresponding agent overseas or with his own company branch-office. In a single transaction, it can happen that the forwarder may be acting as a carrier (principal) or as an agent for his customer or both.
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
. A forwarder is often not active as a carrier and acts only as an agent, in other words as a third-party (non-asset-based) logistics
Logistics
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
provider that dispatches shipments via asset-based carriers and that books or otherwise arranges space for these shipments. Carrier types include ships, airplane
Fixed-wing aircraft
A fixed-wing aircraft is an aircraft capable of flight using wings that generate lift due to the vehicle's forward airspeed. Fixed-wing aircraft are distinct from rotary-wing aircraft in which wings rotate about a fixed mast and ornithopters in which lift is generated by flapping wings.A powered...
s, truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...
s, and railroads.
International freight forwarders typically arrange cargo
Cargo
Cargo is goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck. In modern times, containers are used in most intermodal long-haul cargo transport.-Marine:...
movement to an international destination. International freight forwarders, have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice
Commercial invoice
A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders...
, shipper's export declaration
Automated export system
The Automated Export System is the system used by U.S. exporters to electronically declare of their international exports, known as Electronic Export Information , to the Census Bureau to help compile U.S. export and trade statistics...
, bill of lading
Bill of lading
A bill of lading is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified...
and other documents required by the carrier or country of export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
, import
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
, or transshipment
Transshipment
Transshipment or Transhipment is the shipment of goods or containers to an intermediate destination, and then from there to yet another destination....
. Much of this information is now processed in a paperless environment
Paperless office
A paperless office is a work environment in which the use of paper is eliminated or greatly reduced. This is done by converting documents and other papers into digital form. Proponents claim that "going paperless" can save money, boost productivity, save space, make documentation and information...
.
The FIATA short-hand description of the freight forwarder as the 'Architect of Transport' illustrates clearly the commercial position of the forwarder relative to his client. In Europe there are forwarders that specialise in 'niche' areas such as railfreight and collection and deliveries around a large port. The latter are called Hafen (port) Spediteure (Port Forwarders).
A forwarder in some countries may sometimes deal only with domestic traffic and never handle international traffic.
Freight forwarder roles in different countries
AustraliaIn Australia most licensed Customs Clearance Agents (now more commonly referred to as Customs Brokers), operate under a freight forwarder.
Bangladesh
In order to start as a freight forwarder a person needs a government license.
Canada
The Canadian International Freight Forwarders Association [www.ciffa.com] was established in 1948 to support and protect the character, status, and interest of foreign freight forwarders by establishing uniform trade practice and regulations and eliminating trade evils and abuses. CIFFA also holds an educational role by providing a certificate and advanced certificate programs.
Ireland
Even in smaller markets, such as Ireland, the role of freight forwarders is strategically important. International merchandise trade is worth €148 billion to the Irish economy. 82% of manufactured products are exported, further highlighting the importance of the freight forwarders to a nations' economy. Associations like the Irish International Freight Association and FIATA help maintain the professionalism of this industry through educational and representative roles. The FIATA Diploma in Freight Forwarding is an example of how this can be achieved.
Nigeria
Freight-forwarding in Nigeria has been in place since the exporting of groundnut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
as a cash crop since 1914, though not initially as freight forwarding but as the means of transportation of both goods and services from one country to another. Following the methodology of their British forebears, agents were used to facilitate the transport of goods and services.
UK
In the U.K., freight forwarders are not licensed, but many are members of the British International Freight Association (BIFA). Freight forwarders in the UK consolidate various goods from different consignors into one full load for road transport to Europe, which is often known as groupage. Some freight forwarders offer additional related services like export packing.
USA
In the U.S., companies that handle domestic U.S. freight must be registred with the U.S. Department of Transportation's Federal Motor Carrier Safety Administratoin. Such forwarders are "carriers" who accept freight for transportation and are liable for transporting the freight from origin to destination, under their own bill of lading. The legal definition at 49 USC 13102 (8)is: FREIGHT FORWARDER.—the term ‘‘freight forwarder’’ means a person holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and in the ordinary course of its business— (A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments; B) assumes responsibility for the transportation from the place of receipt to the place of destination; and (C) uses for any part of the transportation a [surface carrier] carrier subject to jurisdiction [of the Department of Transportation] of under this subtitle.
International ocean freight forwarders arranging for shipments to and from the US must be licensed by the Federal Maritime Commission
Federal Maritime Commission
The United States Federal Maritime Commission is an independent federal agency, based in Washington D.C., responsible for the regulation of oceanborne transportation in the foreign commerce of the U.S.-Mission:The FMC:...
as Ocean Transportation Intermediaries. An Ocean Transportation Intermediary is either an ocean freight forwarder or a non-vessel operating common carrier (NVOCC). An ocean freight forwarder is an individual or company in the United States that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers. Ocean freight forwarders also prepare and process the documentation and perform related activities pertaining to those shipments. An NVOCC is a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent document, but does not operate the vessels by which ocean transportation is provided. Companies may obtain both licenses and may act in both capacities even on the same shipment. The U.S. legal distinction between the two is that a freight forwarder acts as the agent of a principal (typically a shipper or consignee) and the NVOCC is a transportation company (carrier) that is physically responsible for the carriage of goods and acts as its own principal. Companies acting strictly as an Ocean Freight Forwarder typically do not issue their own contract of carriage (bill of lading) and as agent are generally not liable for physical loss or damage to cargo except in cases of errors in judgment or paperwork or fiduciary responsibility. NVOCC's act as ocean freight carrier and issue their own bill of lading and are legally responsible for physical loss or damage in accordance with the terms and conditions of their bill of lading and tariff. Similar to other countries, freight forwarders that handle international air freight will frequently be accredited with the International Air Transport Association
International Air Transport Association
The International Air Transport Association is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. The executive offices are at the Geneva Airport in SwitzerlandIATA's mission is to...
(IATA) as a cargo agent however they must obtain an Indirect Air Carrier (IAC) certification from the Department of Homeland Security (DHS).
History of freight forwarding
The original function of the forwarder was to arrange for the carriage of his customers' goods by contracting with various carriers. His responsibilities included advice on all documentation and customs requirements in the country of destination. His correspondent agent overseas looked after his customers' and kept him informed about matters that would affect movement of goods.In modern times the forwarder still carries out those same responsibilities for his client. He still operates either as a domestic US carrier, or otherwise with a corresponding agent overseas or with his own company branch-office. In a single transaction, it can happen that the forwarder may be acting as a carrier (principal) or as an agent for his customer or both.