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Freight Forwarding

International Freight Forwarder | Cost | Selection Criteria
Non-Vessel Operating Common Carrier | Shippers Association | Customs Broker

International Freight Forwarder

The international freight forwarder plays an integral part in the transportation process. Freight forwarders act on behalf of the exporter in arranging transportation services. They are familiar with the import rules and regulations of foreign countries, methods of shipping, U.S. Government export regulations, and documents connected with foreign trade.

Services--Freight forwarders provide a number of services. During the initial planning phases the freight forwarder can help decide:

• Which carriers to use
• Best days of the week to ship
• The best route
• The most economical shipment size

At the beginning of a sale, they can provide the exporter with a quotation on:

• Freight costs
• Port charges
• Consular fees
• Cost of special documentation
• Insurance costs
• Freight forwarder's fees

This information can be used in the preparation of an accurate price quotation to foreign customers. At the shipper's request, the freight forwarder can make the actual arrangements and provide the necessary services for expediting the shipment to its overseas destination. This can include

• Booking space with the carrier
• Completing export documentation
• Arranging for cargo insurance
• Advising on foreign import regulations
• Providing guidance on packaging, marking, and labeling
• Arranging for products to be packed and containerized at the exporter's request

Some freight forwarders are also freight consolidators, but this is not a standard service.

Cost--Freight forwarders operate on a fee basis paid by the exporter. The forwarder's fees consist of an agreed upon amount, plus documentation charges. The cost for their services should be figured into the price charged to the customer. Freight forwarders also collect a percentage of the freight costs from the carrier.

Selection Criteria--Every company has its own needs to consider when selecting a freight forwarder. The following list includes a few suggestions of criteria to consider:

• Is the freight forwarder licensed by the Federal Maritime Commission (FMC) to handle ocean cargo?
  • Currently, all ocean freight forwarders in the United States must be licensed by the FMC.
• Is the freight forwarder registered with the International Air Transport Association (IATA) to deal with international air cargo?
  • Being registered with IATA is not a requirement to handle air freight. However, to register, freight forwarders must meet IATA criteria regarding financial and credit standing, physical facilities, professional qualifications, and ethical practice.
• Is the freight forwarder financially stable?
  • Ask for credit references and check them. Check with carriers to see that the freight forwarder has a good payment record. Review a copy of their annual report. If it's a larger company you can check them on the New York Stock Exchange, NASDAQ, or Dun and Bradstreet.
• Does the freight forwarder have a record of customer satisfaction?
  • Ask the freight forwarder for a list of customers and call them.
• Does the freight forwarder have knowledge of and experience with your product, desired shipment method, and destination country?
  • Many companies feel that a freight forwarder experienced with moving their product, shipment method, and destination market will make a better partner. However, some freight forwarders feel that although they do not have prior experience shipping a given product or shipping to a specific destination, they could handle any move, anywhere.
• Does the freight forwarder have a network of overseas agents?
  • Does the freight forwarder have an office in your destination market? Are they agents or owned and operated offices? Do the offices have the ability to communicate with one another on-line?
• Is the forwarder large enough--with ample facilities--to handle your business?
  • Do they have warehouse facilities if that service is needed? Do they have electronic data interchange (EDI) capabilities? Do they have sufficient staff to handle your volume and other needs?
• Does the freight forwarder have "errors and omissions insurance"?
• Is the freight forwarder willing to take the time to explain terms and procedures in a way you can understand?

The Shipper and Exporter Assistance Program (SEA) of TMD, USDA Agricultural Marketing Service, has recently compiled a directory of freight forwarders who handle a variety of agricultural products. To obtain a copy, contact SEA by telephone at (202) 690-1304, or by facsimile at (202) 690-1340, or view it on-line at http://www.ams.usda.gov/tmd/freight

Non-Vessel Operating Common Carrier

Smaller shippers, with less-than-containerload (LCL) shipments, can take advantage of the lower costs associated with being a big shipper. Non-vessel operating common carriers (NVOCCs) book space on steamships in large quantities at lower rates and sell space to shippers in smaller amounts. NVOCCs consolidate small shipments into containerloads that move under one bill of lading. More favorable rates are passed on to the shipper. Services typically offered by NVOCCs, in addition to customary services provided by freight forwarders, are:

• Consolidation of freight
• Financial liability for goods due to loss or damage

NVOCCs operate as a carrier and should be evaluated by applying the same service, price, and delivery standards.

Shippers Association

Shippers associations operate in much the same way as NVOCCs. They are non-profit associations that represent a number of shippers. The members pool their cargo to increase the volume of total shipments. The shippers association can then book larger amounts of space on steamships at a lower rate than would be available to the individual shippers. There are presently about 40 active shippers associations in the United States; very few deal exclusively in agricultural products.

Customs Broker

Customs brokers act on behalf of exporters and importers to clear goods through customs and deliver the items to the importer's warehouse. They are licensed and regulated by the U.S. Treasury Department. Importers may designate a particular customs broker. Some freight forwarders are also customs brokers.

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