Differences Between Freight Forwarders and Customs Brokers | International Customs Clearance Logistics Company Miami
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Differences Between Freight Forwarders and Customs Brokers
November 5, 2012

Differences Between Freight Forwarders and Customs Brokers

What is a freight forwarder?

A freight forwarder is an agent for the exporter in moving cargo to an overseas destination and can be an integral part of your logistics plan. Their expertise in ocean freight and air freight as well as all of the paperwork involved can make your export and import business run smoothly.  These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade. Export freight forwarders are licensed by the International Air Transport Association to handle air freight and the Federal Maritime Commission to handle ocean freight.

Freight forwarders can help exporters prepare price quotes by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. They can even help arrange for warehouse space and storage of products at destination. The costs for their services are legitimate export costs that should be included in the price charged to the customer.

Freight forwarders should review all documents to ensure that everything is in order. This is very important when dealing with letter of credit payment terms. They may also prepare the bill of lading and any special required documentation. After shipment, they can route the documents to the seller, the buyer, or to a paying bank. Freight forwarders can also make arrangements with customs brokers overseas to ensure that the goods comply with customs export documentation regulations.

What is a customs broker?

A customs broker is an individual or company that is licensed to transact customs business on behalf of others. Customs business is limited to those activities involving transactions related to the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.

In other words, an importer, whether into the United States or another country, hires a customs broker to guide their goods into a country. Like the forwarder, the broker will recommend efficient means for clearing goods through the red tape of customs entry rules and regulations. The broker can also estimate the landed costs for shipments entering the country. U.S. exporters typically do not book shipments directly with a foreign customs broker, because freight forwarders often partner with customs brokers overseas who will clear goods that the forwarder ships to the overseas port. Conversely, those same foreign customs brokers contract the services of the domestic freight forwarder when the goods are headed in the opposite direction.

Both freight forwarders and customs brokers are an integral part of international logistics and are worth the fees for all the time and headaches they will save you.