What is Freight Forwarding?

SimplyDuty
Jul 25, 2017 · 6 min read

What is Freight Forwarding?

What do freight forwarders do? They are companies that are in the business of overseeing packing, shipping, and worldwide cargo movement, as well as customs clearance and documentation for importers and exporters. As a service industry that moves goods worldwide, basically what they do is move all kinds of cargo, including some goods that are dangerous.

Freight Forwarder Functions

One of their main functions is arranging for customs clearance for goods entering the UK. Many of those goods and products are subject to certain licensing and control issues from government organizations like the Rural Payments Agency, HM Revenue & Customs (HMRC), Food and Rural Affairs (Defra), and the Department for Environment. On the other hand, some goods could be prohibited and can’t enter at all.

Freight Forwarder Requirements

One of the main requirements for being a freight forwarder is having sufficient funds available for handling the numerous guarantees and bonds that customs may require for paying taxes and import duty on behalf of their clients. They also have to have special software that is absolutely necessary for communicating with the central computer at HMRC since practically all of their functions have now become electronic, including duty calculations.

Documentation

All international trade, of course, requires proper documentation. Freight forwarders must, at all times, have accurate and orderly documentation because it is a very serious requirement for any cross-border export order. A freight forwarder must be constantly aware of what documents will be required and when. The first step in freight forwarding is for the freight forwarder to get crystal clear advance instructions. These will come from an importer or exporter in writing and could be sent via fax or email.

In the majority of cases, shippers just give the paperwork to the truck drivers when they pick up the goods. This is standard practice in the air freight industry. In the event that instructions are given by phone, confirming them in writing with the client is a must for avoiding issues later. Importers and exporters will also provide additional documentation to the freight forwarder, including but not limited to licenses, packing lists, invoices, bills of lading for sea freight, air waybills for air freight, and/or CMR consignment notes for road freight.

Packing for Export

This requires specialized knowledge and many freight forwarders offer it. It’s necessary for freight forwarders who offers cargo packing to make sure that any goods or products arrive in the exact condition as they were in upon leaving the factory, consigner or warehouse. In addition, issues such as ease of handling, protecting against transit risks, unauthorized access, and environmental hazards must be taken into consideration by freight handlers. On the one hand, fragile items may require additional packing care, however, over-packing can often succeed in adding costs that are unnecessary and end up increasing the end cost of goods and product pricing for the shipper.

Dangerous Goods Regulations

International and national legislation dictate that freight forwarders mustn’t have direct contact with any dangerous goods in spite of the fact that they have to pass on the instructions and documents to the people who they are going to. Those particular documents have to be properly prepared and the dangerous goods appropriately packed by the freight forwarder.

Some freight forwarders make the decision not to be handling dangerous goods consignments, however, it is still crucial to be able to recognize dangerous goods in the event that they happen to be presented. Since a number of goods and products can be classified as dangerous, knowing them just by their name can be difficult, so consulting a hazardous substances guide is very important.

Those freight forwarders who do handle dangerous good are subject to recurring training for the purpose of ensuring that all of their consignments comply and will also be accepted by the airlines with no delays caused by non-compliance.

Customs and boundary checks.

Many establishments like Rural Payments Agency, (Defra) Department for Environment, Food and Rural Affairs, AND (HMRC) HM Revenue & Customs, are interested on UK boundaries. For the majority of goods to enter or leave the UK boundary, some control and licensing needs to be carried out, as some goods are not allowed to enter the UK territory.

For this reason, freight forwarders are the ones who participate in customs clearance of cargo entering or leaving the UK territory. They can contract customs brokers companies to carry out the function or do it themselves.

For these custom services to be provided, freight forwarder needs to be financially stable in order to pay for the taxes and bonds management. Apart from the funds, a certain software is needed so as to communicate directly to HMRC central computer, since all tasks of HMRC are digital. The software also will be used in making payments and issuing reports and classifying products using HS Code look up tools.

Trade tariff of the UK

This inclusive UK tariff has the function of grouping all the actions and duties that affect the exports, imports, and movement of cargo into and out of the UK. The tariff also associates particular UK data with TARIC data of the European Union.

Intercontinental trade certification for freight forwarders

To move goods globally, being certified is an obligation. Freight forwarders should have all papers including payments receipts for any delivery or for any export. It is their duty to know which type of documentation is needed for the transportation services.

Before moving of cargo, exporters or importers need to give out specific directions pertaining the movement to the freight forwarders. The directions should be penned down, and channeled through a fax or email, so that they can be handed to the driver supposed to transport the goods.

Invoices, licenses, and a list of the contents of the package, are some of the documents exporters or importers need to provide.

Different carriage documents depending on type of transport

For a road freight, it will need a CMR consignment note

For seas freight, a bill of lading is required

For air freighting, an air waybill is necessary.

Packing cargo for export and which material is used to pack

When doing packing of goods for exportation, freight forwarders need to be familiar of the procedure. It is the duty of freight forwarders to certify that the cargo is received in the same condition as it was sent. Also, they should have knowledge in how to handle the goods, the risks involved while transporting, delivery requirements and ways of protecting them from getting into hands of unwanted party. Having knowledge on handling of goods is important for determining the fragility, ways of packing and transporting them safely.

An international rule is followed when employing wood as a packing material. Some countries require an examination to be conducted to prove that the wood’s health and if it is fumigated. If these requirements are not met, the goods can be returned to their origin for a fresh re-packing.

Guidelines for freight forwarders in transporting hazardous goods

There are national and Intercontinental laws which govern transportation of hazardous goods. Though high chances are that freight forwarders will not have a direct contact with the cargo to be transported, the need to make sure that the goods are well packed and the documentation is all complete.

It is the absolute duty of and responsibility of the shipper or producer to properly categorize, pack and certify hazardous goods. Though this is the case, freight forwarders who will be loading the cargo into containers or pallets will need to have knowledge of the hazardous goods and what needs to be done when transporting them. The BIFA (British International Freight Association) is responsible in offering training programs of handling hazardous goods.

Actually, every type of transportation comes with its specific requirements to be followed. It is the duty of the freight forwarders to have knowledge of all these requirements when transporting dangerous goods. This knowledge is attained through attending training courses offered by various governmental institutions.

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