Overview of freight forwarding
Freight forwarding is a service industry that involves moving goods around the world on behalf of importers and exporters. Freight forwarders specialise in moving cargo. They also arrange customs clearance of goods, maintain all documentation, oversee cargo packing and will at times deal with the movement of dangerous goods.
This guide gives you information on the business of freight forwarding and identifies the key issues surrounding the moving of goods.
Customs and frontier controls
Organisations such as HM Revenue & Customs (HMRC), the Department for Environment, Food and Rural Affairs (Defra) and the Rural Payments Agency have an interest in UK frontier or border controls. Many products crossing the UK frontier will be subject to some types of licensing and control – some products may be prohibited from entering at all.
One of a freight forwarder’s main functions is to arrange customs clearance of goods crossing the frontier. Freight forwarders can do this themselves, or subcontract it to a company that specialises in customs broking.
In order to provide customs services, the freight forwarder needs to have sufficient funds available to handle the bonds and guarantees required for duty and taxes payments. He or she also needs specific software that can communicate with the HMRC central computer. Nearly all the HMRC functions are now electronic, and special software for reporting and payments is necessary.
The UK Trade Tariff
The ‘Integrated Tariff of the United Kingdom’ sets out the duties and measures affecting the import, export, and transit of goods to and from the UK and consolidates UK-specific data with the European Union TARIC data.
Find commodity codes and other measures applying to imports and exports by accessing our online UK Trade Tariff tool.
International trade documentation for freight forwarders
Documentation is a requirement in international trade and for moving goods. Well-ordered and accurate documents are essential for a freight forwarder and are required for a successful export order and receipt of payment for delivery. Freight forwarders need to know exactly what document is required and when.
When preparing to move goods, the freight forwarder must first receive clear instructions from the importer or exporter – ideally well in advance of the goods being moved. These should be in writing and can be done via email or fax. However, the shipper will often hand the paperwork over to the driver collecting the goods, which is standard practice for air freight. If any instructions are taken over the telephone, they should then be confirmed to the customer in writing to avoid any later problems.
Other documents that are provided by the importer or exporter include invoices, packing lists and licences. Responsibility for hazardous goods declarations also lies with the shipper.
Each mode of transport will have its own document of carriage, such as the:
- air waybill – for air freight
- bill of lading – for sea freight
- CMR consignment note – for road freight
The issuer of these documents may differ, but freight forwarders need to be familiar with them and their individual procedures.
Freight forwarders should also understand documents that relate to customs clearance at import and export.
Packing goods for export and deciding on packing materials to be used
Packing goods for export requires specialist knowledge and is a service that a freight forwarder can offer.
When deciding on packing for a piece of cargo, the freight forwarder needs to ensure that the goods are received in the same condition as when they left the consigner, warehouse or factory. They must also bear in mind the ease of handling, risks in transit and delivery and protection from unauthorised access and the environment. Customers should be advised – as early as possible – to consider the fragility of the goods and plan the packing for any specific risks in transit. Over-packing can add unnecessary costs that might incur extra costs on the product.
Wood used for packing is subject to international legislation. Many countries require phytosanitary – plant health – certifications to show that the wood has been fumigated. Countries such as China, New Zealand and Australia have very strict controls over the use of packing materials. Waste wood used in containers for securing cargo is also subject to the same regulations. Not being aware of this could prove costly if the container has to be returned to the port of origin for re-packing.
Freight forwarders also need to be aware of legislation over the safe disposal of the materials used for packing goods.
Freight forwarders’ regulations for moving dangerous goods
Transporting dangerous goods is covered by national and international legislation. A freight forwarder might not come into direct contact with the goods, even though they will be passing on the documents and instructions to those who are. The documents must be prepared accordingly and the goods must be packed appropriately.
Even if you decide not to handle consignments of dangerous goods, you need to recognise them if they are presented for carriage. There are many products that have a danger classification and it’s not always possible to know this from the name of the product. For more information see the guide on hazardous substances and the environment – the basics.
The manufacturer or shipper has the prime responsibility for correctly classifying, packing and documenting dangerous goods. However, if the freight forwarder is loading these items into containers or onto pallets, they should be aware of dangerous goods and each aspect surrounding their movement. The British International Freight Association (BIFA) runs specialist training courses on dangerous goods. View a list of BIFA courses on dangerous goods on the BIFA website.
Each mode of transport has its own compliance requirements regulations. As multimodal transport specialists, forwarders are required to have a professional understanding that the carriage of dangerous goods is subject to compliance with national and international regulations including:
- Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009 (CDG 2009) which apply to the carriage of dangerous goods by road, rail and internal EU waterways
- European Agreement concerning the International Carriage of Dangerous Goods by Road known as ADR and incorporated into CDG 2009
- International Maritime Dangerous Goods Code
- International Civil Aviation Organisation (ICAO)
Freight forwarders and cargo agents, packers and others involved in the preparation and shipping of dangerous goods must undergo recurrent training to ensure that their consignments are in compliance and will be quickly and easily accepted by airlines. You can read frequently asked questions on dangerous goods on the International Air Transport Association website.
In addition, those involved in international shipping need to be aware of safety and security requirements that now apply. In order to benefit from faster processing of your consignments, you should see the guide Economic Operator Registration Economic Operator Registration and Identification (EORI) Scheme.
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Institute of Export Helpline
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