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Differences Between Freight Forwarders and Customs Brokers

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.

The Importance of Insurance: When Cargo is Lost at Sea

The Importance of Insurance: When Cargo is Lost at Sea

Over the years beachcombers have found more than seashells along the shoreline.

Back in 2002, three containers fell from a cargo ship just off the shore of North Carolina dumping more than 33,000 Nike sneakers into the ocean. These shoes eventually started washing ashore in the Pacific Northwest unfortunately the sneakers weren’t tied together so beachcombers had to search for matching pairs.

Each year, manufacturers around the world ship over 100 million containers on ocean freight carriers. These containers are the size of semi-trucks with an average size of 8-foot by 40-foot and can hold up to 58,000 pounds.  It’s estimated that 10,000 of these large containers are lost at sea each year, Though some of these containers come open many more of them drop to the bottom of the ocean never to be seen again. With an increase in import and export business this number too will increase.

The main cause of cargo going overboard is weather.  Even with advance technology and ways to track weather and storms there really is no way to stop it.

Another threat to ocean cargo is pirates. No not pirates as pictured in the movies, but gangs of thieves that will stop cargo ships, board them and steal the products on board. An increase in law enforcement in hot spots has reduced these numbers greatly but no completely.

Even with the above stated you still maybe wondering; why should I purchase ocean cargo insurance?

The simple answer is to reduce your exposure to financial loss. If you’re an exporter who has not been paid for the goods at the time of shipment, or an importer who has paid for all or part of the goods prior to receiving them, you run the risk of suffering a financial loss if the goods are lost or damaged during transit.

Additionally, you may be required to post a bond and/or cash deposit in order to obtain release of your cargo following a general average even though there was no loss or damage to your goods. By purchasing insurance, your insurance company assumes the responsibility and can usually expedite the release of your cargo.

Lastly, your sales contract may obligate you to provide ocean cargo insurance to protect the buyer’s interest or their bank’s interest. This is especially true when selling goods CIP (Carriage and insurance paid to) or CIF (Cost, Insurance, and Fright). Failure to do so can not only subject you to financial loss if there is loss or damage to the goods, but non-compliance with the terms of your contract with the buyer can lead to loss of sales and legal problems.

Cargo insurance can be a confusing and choosing the right insurance a daunting feet so like many other aspects of the international logistics process it is wise to work with a professional. Freight forwarders are trained in all aspects of ocean freight process and help you navigate the seas safely.

Impending Strike Looms Large

Impending Strike Looms Large

Ten years ago the West Coast was literally shut down when the Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) talks to strike a new labor deal couldn’t be agreed upon. The ramifications were felt instantly and did their part to stagger the United States’ economy and economic growth, resulting in billions of dollars in damage to the U.S. economy. You can read about it’s beginning Here.

Today, 10 years after that epic collapse, the United States is staring at a similar situation happening on the East Coast. If the two sides can’t come to an agreement by the September 30 deadline, there is a definite potential for a strike along the entire East Coast from Maine to Florida, and on to Texas. Although many are speculating that the U.S. government wouldn’t allow this to happen at such a dire time for the economy, many involved in importing and exporting are preparing themselves for the worst.

As the September 30th deadline grows closer, many importers are already rerouting freight. Pending the outcome of the outcome of the situation, many estimate that there will be delays expected, regardless of the end result in the talks.

Should the strike actually take place, every port along the entire East Coast will be shut down, and any and all vessels will not be allowed to enter. Rerouting to the West Coast, or even Canada will cause considerable delays, and will certainly add to traffic and frustration even more once the freight is brought across the country by truck.

DRT will monitor the situation closely, but if you have any questions regarding the on time arrival of your goods you can contact one of our representatives today and get further assistance.

Newly Established Foreign-Trade Zone at Port of Miami Means Faster Shipping and Fewer Import Duties

Newly Established Foreign-Trade Zone at Port of Miami Means Faster Shipping and Fewer Import Duties

A new Foreign Trade Zone has been established from Southwest Eighth Street to the Broward County line that is aimed at giving American businesses’ a competitive hand in the global economy. This is especially beneficial to the Miami downtown area which claimed the fifth largest export market in the U.S in 2010.

. “Florida businesses have a powerful new tool: those that use the zone will now save substantially on import duties and processing fees in addition to having stronger security measures and faster delivery of goods. This is good news for Florida exporters that will help spur Florida’s economic recovery,” declared Paul Piquado, the department assistant secretary for import administration.   DRT International, who has been in the import and export business since 1996, is excited about the benefits and savings to South Florida businesses and the potential stimulation to the local economy. DRT International CEO Desmond Falla commented, “The creation of a new Foreign Trade Zone at PortMiami will enable our customers to save on import duties and processing fees at the same time incurring faster delivery times of goods. This is a win for businesses and the trade industry of Miami.

Key Traits to Look for in your 3rd Party Logistics (3PL) Handler

Key Traits to Look for in your 3rd Party Logistics (3PL) Handler

In the world of successful shipping, being a smart, confident decision maker when it comes to logistics is paramount. Spend too much time focusing on one sole aspect, and risk neglecting another. Spend too much money in one avenue of business, and watch as another begins to wither away. But there is a tried and true method to success with 3rd party logistics.

Below is a list in order of importance that helps you redirect your focus, and strengthening the chances of long term sustainability. By prioritizing the aspects that go into successful 3PL, you can rest easy knowing that you are following a tried and true method that’s helped other for many years.

1.) Forge meaningful relationships based on good business practice, and trust. Of course, you want to find the best price, and best overall cost involved- but that isn’t always the most important part. Forge a good working relationship with all your vendors, service providers and shippers to ensure there are no gaps in your expectations. Let them know what you expect from them, and what you will allow and you can rest easy knowing that the first part of getting your product delivered successfully is taken care of. If you have repeated problems/ incidents with any service provider, move to the next one. There are hundreds of companies vying for your business, and willing to deliver the best service they can.

2.) Hire people who can see the same light at the end of the tunnel as you. The people you have managing your logistics have the most direct effect on the bottom line. Any notions of a square peg fitting into a round hole here are fraught with danger. Being able to rely on your managers, and their ability to strive for the same company goals as you can’t be stressed enough. Employ the right kind of people, and be clear with them about the direction you want to head, and what you expect from them.

3.) Demand results, and be willing to pay for them. With so much going on, it’s often difficult to remember to reward a job well done. This is an avenue that will provide positive energy throughout the workplace, and promote further positive results from all those involved. If you are clear about what constitutes a success regarding a job, then drive those involved to exceed your expectations. This generally is done by recognition, whether publicly, or through compensation. Either way is a wise investment for you.

4.) Spend face time with your 3PL. Hold meetings (bi-annually or annually) to reconnect with them, and update them on any future expected changes, or to deliver a new direction you are wanting to head. This is also a good time to get any feedback from them, as they generally don’t offer this feedback on a consistent basis. Let them know of any shortcomings, or spectacular achievements they may have contributed to, and ask to see what you can do differently in order to help them.

5.) Begin to view your 3PL as an employee. After all, you pay them to deliver a specific service, don’t you? Let them see that you are aware of the service they provide, and that you are connected with the quality of work they do. Listen to their needs, and communicate yours to them. As previously mentioned, this approach will plant a seed deep into the ground that can be watered for many years to come. Treating your 3PL as a valued employee will allow you to build upon the working relationship and have great avenues of communication.

6.) Find a way to measure your success that involves your 3PL. By taking the time to address good and poor performances on a regular basis, you and your 3PL provider will be able to understand each other better. Whether it’s monthly, or annually, set goals, and let your 3PL see where you and they currently stand in relation to that goal. If necessary, motivate them to make changes, or reward them for a job well done. Remember: they want to achieve the same goals as you. It’s a true win-win situation

By following these important steps, you can achieve all the goals you initially set out to meet. A 3rd party logistics provider should compliment your business, not hinder it. By keeping open channels of conversation, and clearly pointing out your expectations you can regain confidence in meeting your direct objectives.