Traditionally there are some differences between freight forwarders and brokers but often the roles of the two are interchangeable and adapted to suit the bespoke needs of the client. For many importers and exporters the more important of the two categories when transporting goods is freight forwarding, although this can vary from business to business.
The world of global supply chains is a wide array of very complex networks which require involvement by many professionals who must perform different and often detailed tasks. Two of the most important parties involved in shipping internationally aside from the business owner are the freight forwarder and the customs broker.
In addition to arranging transport for your imported goods, freight forwarders can also offer a diverse range of other services which often include customs clearance, trade documentation, insurance maintenance and supply-chain management. While many forwarders offer an array of services, customs agents and customs brokers can provide a different set of services overall typically more centered on customs declarations and associated compliance.
The distinction is often more prevalent in the US market and the functions overlap more in the UK market. You will need to clearly establish who will be completing the shipping and freight formalities and whether they will also be completing the required customs formalities. Often Freight forwarders will provide shipping prices which excludes customs entries and taxes.
It is important that that the representatives you select can provide reliable, accurate and cost-effective services for both shipping and any associated customs activities. So check with your chosen representative what their responsibilities and capabilities are prior to shipment.
Freight Forwarding
A freight forwarder will arrange for your goods to be transported from one country to the next and typically provide other services as detailed in the previous paragraph, customs agents and brokers make sure that your goods can be cleared through customs whilst travelling to the final place of delivery in the UK. Most freight forwarders offer customs-clearance services as part of their post-landing services but in many cases, they will select a third-party broker to complete entries.
Freight forwarders can Negotiate freight rates, organize shipping and freight and onwards transport. Effectively they can offer a bespoke supply chain solution overseeing all aspects of the process.
International trading is full of complexities and differing regulations and a forwarder will provide guidance in all areas of the process including documentation, packing, scheduling and methods of transport. It is an invaluable service to prevent many of the problems that can arise during the process.
It should be noted that in some countries outside the UK customs broking is a licensed profession. Here in the UK the industry has been somewhat unregulated which is partly why the AEO (Approved Economic Operator) scheme is an excellent measure for ensuring that the freight forwarder has been fully approved by customs and excise.
Not all freight forwarders will complete customs entry or have direct links to customs and excise to complete customs formalities on the behalf of the importer or exporter. In these circumstances, often the importer will choose to use another customs broker to assist with the clearance process. Again here it is important as the importer or exporter that the freight forwarder you choose can also complete customs formalities to a high standard. It may be worth checking whether they have links themselves to customs and excise and whether they are an approved economic operator for customs activities.
Customs Broking
Customs brokers are considered international trade experts who are responsible for preparing and clearing a customs entry of goods upon shipment arrival to a port of entry. Customs brokers essentially help guide the goods of an importer into a country, the job of the broker is to recommend efficient means for clearing goods through the red tape of customs entry rules and regulations.
This also includes the preparation of documents or forms in any format which includes the electronic transmission of documents, invoices, bills, or parts thereof. There are other tasks that customs brokers can help shippers with such as the classification of goods, calculations of duties, taxes and fees, dispatching for final delivery, coordination of customs exams, customs bonds, duty drawback and reconciliation. Agents and brokers in the UK typically operate as direct representatives, but they can also act as indirect representatives when it comes to the importation of goods. A direct representative acts only in your name and cannot be held liable for your customs debt. An indirect representative acts in their own name but on your behalf. If there is customs debt, the indirect representative can be held liable for your customs debt.
Often customers brokers will expand upon their customs services and offer freight forwarding and general shipping services, it is worth checking as an importer or exporter whether they can offer all the same shipping and forwarding services as a freight forwarder would as sometimes shipping companies may not be as proficient in all areas of the process.
Conclusion
Often the role of the freight forwarder and customs broker can overlap and be interchangeable, particularly in the UK market. For an importer or exporter, it is important that they are aware which party is responsible for negotiating freight, overseeing shipping schedules and mode of transport and who will be overseeing the necessary documentation and clearance process. Effectively you need to ensure that shipments are compliant and moved as smoothly as possible from origin to destination.
This includes securing the transportation space, gathering and organizing the necessary paperwork, clearing the goods and arranging the final delivery. An international logistics partner which is both a freight forwarder and customs broker can also help importers and exporters make intelligent routing and transportation mode decisions to produce the most cost-effective economical solutions that meet the delivery time frame.
The distinction between the two terms is more applicable to other markets and increasingly in the UK you will find that freight companies will offer both services.
You just need to ensure that your chosen representative is reliable, accurate and cost effective and also that any associated customs activities are completed to a high standard.