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Freight Forwarders Role in Shipment Organization Of various Merchandized Goods

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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.

Panama registered Nordic Odyssey
Panama registered Nordic Odyssey

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: 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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