Using brokers and forwarders

The freight forwarding industry can provide a range of key services to traders, taking over on your behalf many of the responsibilities involved in transporting your goods around the world as quickly, securely and affordably as possible.

As well as arranging the transport of your goods – whether by air, sea, rail or road – freight forwarders frequently provide other services in areas such as customs clearance, export documentation and insurance. They often offer distribution, warehousing, packaging and other supply-chain services. Most forwarders will take over specific parts of the process for you, and can often offer control of the entire transport process. Many transport and logistics operators also offer freight-forwarding services.

This guide outlines the ways in which freight forwarders can help traders. It explains the roles of forwarders, customs agents and brokers and lists the key considerations when looking to hire a freight forwarder.

Find out more about moving your goods in our sections on transporting your goods and preparing goods for transport.

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What a freight forwarder can do for you

The role of a freight forwarder is to help importers and exporters transport their goods. This page explains the responsibilities and services of forwarders and how they can help international traders.

The freight forwarder’s core responsibilities

Most freight forwarders are likely to specialise in particular service areas, modes of transport or markets. Freight forwarders are often seen as the travel agents of international trading. If you have a consignment of goods you need to move from country A to country B, a forwarder will identify and book the best routes, modes of transport and specific carriers for you dependent on your requirements. Many transport and logistics operators also offer freight-forwarding services.

Using a forwarder can cut your costs. Because they arrange for the transport of huge numbers of consignments, they can consolidate loads going to a single destination to keep freight charges down for individual traders. However, as with most business transactions, you should compare prices from a range of suppliers to find the best level of cost and service for you.

For information about deciding whether to use a freight forwarder, see the page in this guide on how to arrange your own transport or use a freight forwarder.

Other services freight forwarders provide

Freight forwarders typically offer a wide range of secondary trade-related services as well as their core transport ones. These include:

• customs clearance – forwarders can complete customs paperwork on your behalf, and pay any taxes or duties owed
• other documentation issues – eg Bills of Lading, or any documents required by banks before payment is released
• insurance – many forwarders will be able to supply insurance services
• inventory management
• logistics and supply-chain management of value-added activities

Bear in mind that you’ll also be able to use your forwarder as a valuable source of information and advice about the international trading process. This can be particularly useful for businesses that are new to international trade.

For example, you can ask a forwarder as part of your contract to help you ensure your goods are properly packaged and labelled for export. For information about export packaging, see our guide to how to label and package goods being shipped out of the UK.

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Freight forwarders and customs agents and brokers

For many traders, the most important category of trade-related service providers is freight forwarding. In addition to arranging transport for your goods, freight forwarders also offer a range of other services – from customs clearance and trade documentation to insurance and supply-chain management. While many forwarders offer a range of services, customs agents and customs brokers provide a different service. This page explains what each type of service provider does and how they can help traders.

See the page in this guide on what a freight forwarder can do for you.

Customs agents and customs brokers fulfil similar roles to each other and the terms are often used interchangeably.

While a freight forwarder will arrange for your goods to be transported from one country to another and typically provide other services as well (such as customs clearance), customs agents and brokers make sure that your goods can be cleared through customs en route to the final place of delivery in the UK.

Agents and brokers in the UK usually operate as direct representatives, but they can also act as indirect representatives. A direct representative acts in your name and can’t be held liable for your customs debt. An indirect representative acts in their own name but on your behalf. They can be held liable for your customs debt.

Most freight forwarders also offer customs-clearance services. However, you should note that in some countries outside the UK customs broking is a licensed profession. This means you’ll be limited in the range of people you can appoint to clear your goods through customs for you. However, when most consignments arrive at their final port/airport of destination, they are customs cleared by the importer in conjunction with their locally appointed customs broker.

Whether you decide to use a freight forwarder or a customs broker or agent, make sure that you provide them with full and accurate information. The key things to provide are a copy of the commercial invoice and the tariff classification code for your goods (unless you have asked them to classify the goods for you).

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Arrange your own transport or use a freight transporter

This page explains the factors you need to consider when deciding whether or not to outsource your transporting needs to a freight forwarder.

The factors you should consider when deciding if you should use a freight forwarder include:

• the scale or complexity of your transport needs – the more complicated your requirements, the more likely you are to benefit from using a specialist service
• whether you have the expertise or experience to arrange transport yourself – remember you also have to consider technical requirements such as customs clearance procedures
• whether you have the time and expertise to manage the process yourself
• cost – freight forwarders may be able to offer lower freight rates than you can negotiate with carriers, but you should be clear about all fees and surcharges you’ll be liable for and about the level of service you’ll receive
• the possible convenience of using a freight forwarder to handle most or all of your trade-related services rather than having to manage multiple service providers
• whether you can comply with security arrangements and labelling rules for your goods

As with most business decisions, it’s a matter of weighing up the costs and benefits. There is no simple answer. The cost-benefit equation will differ from business to business, and possibly also from transaction to transaction.

For information about the factors that influence the cost of moving your goods, see the page in this guide on the costs of using a freight forwarder.

Bear in mind that you may be able to gain valuable advice from your freight forwarder. In the same way that accountants are often a useful source of general business advice, working with a freight forwarder can be a good way of learning about international trade.

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Finding and choosing a freight forwarder

As with all aspects of international trade, it pays to do your research before choosing a freight forwarder to look after the transportation of your goods. Draw up a shortlist of at least three and compare them before selecting one. This page explains how to find and choose the right level of service for you.

How to find freight forwarders

There are many bodies that can help you search for freight forwarders, including:

• experienced exporters – preferably those in your sector, whose freight needs are likely to be similar to yours
• your trade association – it should be very familiar with the freight needs of businesses in your sector
• freight-forwarding trade associations – particularly the British International Freight Association (BIFA) for UK freight forwarders and the International Federation of Freight Forwarders Association (FIATA) for those overseas

Find your nearest BIFA members on the BIFA website- Opens in a new window.

Bear in mind that while there’s a relatively small number of major global freight-forwarding companies, there are thousands of smaller specialist operators.

Find local freight forwarders under the category “Freight Forwarding and Storage” on the Yell.com website- Opens in a new window.

How to choose a freight forwarder

The most important factor in choosing your shortlist of freight forwarders should be their experience with the routes and goods your business deals with. For example, if you transport goods that need refrigerated containers, ask for references from businesses with similar needs.

Other things you should find out about your shortlisted candidates include:

• which ancillary services they can provide, and how they charge for them
• how long they’ve been running and how well established they are – ask for references
• how willing they are to explain the process to you as it unfolds – this can be a valuable learning opportunity if you’re new to international trading
• the overall cost for their services – see the page within this guide on the costs of using a freight forwarder

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The costs of using a freight forwarder

It’s not possible to give a precise indication of costs, but this page outlines some of the main influences of the costs of using a freight forwarder.

Basic determinants of cost

The five main factors that influence cost are:

• mode of transport, eg airfreight can be significantly more expensive than transit by road, rail or ship
• distance/destination – the farther your goods have to travel, or the more unusual the destination, the higher costs are likely to be; particularly due to rising fuel cost
• weight and volume – charges are usually based on the weight of goods, but calculation switches to volume above a certain threshold (one cubic metre per tonne for shipping, three for road, and six for air)
• value – in some instances, such as earthenware and woollen textiles, charges are calculated on the basis of goods’ value per tonne
• the type of contract you have with the freight forwarder – while most forwarders usually charge per shipment, some will agree an annual service contract, so you should weigh up the costs and benefits of each type

Extras for which there will be charges

Loads that require special handling of any sort will usually attract an extra charge.

This covers goods such as:

• dangerous goods
• perishable goods and live animals
• outsize goods that don’t fit in standard containers
• other irregular goods, eg a load that can’t have anything stacked on top of it, or goods that require a special crane for loading

However, extra charges depend on your contract. Freight forwarders and carriers sometimes add an additional fee for handling these types of products. Always ensure that you get a full quotation from your freight forwarder and understand exactly what you are and what you are not paying for.

Security for road goods

Some dangerous goods travelling by road, normally moving in large quantities, are subject to legislation. The rules mean any company transporting dangerous goods must:

• only offer dangerous goods to carriers that have been appropriately identified 
• make sites that temporarily store dangerous goods secure
• run security awareness training  
• have a security plan in place, if you deal with high consequence dangerous goods

Read guidance for businesses on transport security for dangerous goods on the Department for Transport (DfT) website- Opens in a new window.

Read about your obligations when moving dangerous goods by road on the DfT website- Opens in a new window.

Ancillary charges

Bear in mind that asking your freight forwarder to provide secondary services – such as arranging customs clearance or insurance cover – will obviously lead to higher charges. For information about secondary services, see the page in this guide on what a freight forwarder can do for you.

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Freight trade associations

This page offers sources of help and advice for traders and gives details of the two main trade associations you may need when dealing with freight forwarders, customs agents or brokers.

The British International Freight Association (BIFA) is a membership body representing 1,200 UK freight-services companies. You can contact the BIFA Enquiry Line on Tel 020 8844 2266, or you can read freight services industry guidance on the BIFA website- Opens in a new window.

You can also find a member of BIFA near you on the BIFA website- Opens in a new window.

The International Federation of Freight Forwarders Associations (FIATA) is a global trade association for freight-services providers. BIFA is a member of FIATA, as are similar national associations from 150 countries. Read an overview of freight forwarding on the FIATA website- Opens in a new window. You can contact Switzerland-based FIATA on Tel +41 43 211 65 00.

How trade associations can help resolve problems

When trading internationally, it makes sense to use freight forwarders and other service providers that are members of trade bodies such as BIFA and FIATA. These organisations have codes of practice with which members must comply, so there should be less chance of problems arising.

A further benefit is that in instances where problems do arise, BIFA and FIATA can be called on to help ensure that disputes between freight forwarders and their clients are quickly resolved.

You can download BIFA’s dispute resolution procedures [opens in a new window] and download FIATA’s arbitration rules [opens in a new window].

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CASE STUDY

Here’s how a freight-forwarding service helps my business trade overseas

Based in North Yorkshire, CyberOptics Ltd supplies industry-leading process control sensors and inspection systems to the international electronics assembly market. The company’s global customer base presents regular challenges in shipping its products overseas. Administration manager Susan Harrison explains how a freight-forwarding service helps them achieve their objectives and saves time and money into the bargain.

What I did

Choose a freight forwarder

“We ship and receive goods from all over the world, from small consignments of parts to large and very expensive pieces of equipment. Some shipments are demonstration systems for testing and evaluation, which creates the additional headache of continual transfers from one country to another.

“When I joined, the company had already started to use freight forwarding on an ad hoc basis, via a number of providers. I could see the potential benefits, particularly when I first had to organise some shipments myself and realised what a time-consuming nightmare it can be!

“However, using a variety of providers wasn’t ideal, so after a while I reviewed and rationalised the supplier base, settling on one main provider, Ital Logistics. The main selection criteria were market knowledge in the countries we needed to ship to, a proven track record, competitive pricing and high levels of customer service. I also checked for membership of the British International Freight Association.”

Plan ahead

“Freight forwarding has many benefits, particularly the time saved and the smooth passage of our goods through customs. Not only do our freight forwarders have a thorough knowledge of the customs procedures in the countries we ship to and from, they also have excellent personal contacts ‘on the ground’ and they know all the legitimate shortcuts to speed up the process.

“Having said that, it’s still important to plan ahead. Some goods to certain countries are relatively easy to ship, so we allocate time to do that ourselves. We reserve the freight forwarding service for high-value shipments, goods that we think may create customs issues, or when shipping to countries with a reputation for being ‘difficult’. For example, we recently started exporting to Russia, which has such complex regulations that we couldn’t possibly have done it ourselves.

“Anticipating which shipments require freight forwarding also helps us to build in the cost and price orders correctly at the outset.”

Control costs

“Because freight forwarding is relatively hassle-free, it’s tempting to use it for everything. However, that would be very expensive and isn’t always necessary. For smaller packages such as spare parts, we often just use a standard courier company.

“We allocate costs for freight forwarding services in our annual budget and analyse the previous year’s spending. We also conduct occasional price comparisons, getting quotes from other companies or from our overseas distributors.

“It’s important to remember though, that cost isn’t the only factor. If something gets stuck in customs because the shipper doesn’t have the know-how to get it out, or isn’t inclined to help because they don’t know you from Adam, you might lose an order completely. In general, we’d rather pay for the peace of mind of knowing it’ll get there when it’s supposed to.”

What I’d do differently

Rationalise suppliers sooner

“I wish we’d rationalised the supplier base sooner. Having one point of contact for customs and shipping needs has streamlined the process considerably and allowed us to develop a beneficial working relationship with our provider.”

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