As an overseas business looking to move goods in and out of the UK, important factors like packing, storage, insurance, tracking and documentation to clear customs can make trading with the UK challenging. Engaging the services of a freight forwarder can help to ensure your goods safely reach their intended destination in a timely and proficient manner, minimising the potential for unexpected delays and costs.
The following guidance looks at what a freight forwarder does, the benefits and drawbacks of using a freight forwarding service, and the likely costs involved.
What is freight forwarding?
Freight forwarding is a service industry involving the global movement of goods, on behalf of both importers and exporters, including those bringing goods to and from the UK. It’s the coordination and shipment of goods from one place to another, via land, rail, sea and air, where a freight forwarder acts as an intermediary, or broker, between the client and carrier.
The import and export of cargo, especially in bulk, can involve long and complex transport routes, using either a single or multiple carriers, including road haulage companies, rail companies, shipping companies and airlines. It will also involve compliance with various rules and regulations when it comes to customs procedures. Freight forwarders are specialists in logistics, but will often offer a range of services, including customs clearance and other cross border services, to help importers and exporters get their goods across international frontiers.
Who are freight forwarders?
A freight forwarder is an individual or, more often, a company which arranges for high value or large quantities of goods to be transported to locations around the world on behalf of its clients. The different types of freight forwarders can be broadly divided into three categories:
Local companies: these are generally small and single office companies which tend to deal with clients in the local area in question, or operate at a seaport or airport concentrating on particular types of traffic.
National companies: many freight forwarders have offices in all the major ports and airports throughout the UK, as well as in the largest industrial towns and cities. They may also have warehousing or handling depots from where they run their own services, and will often have agents or correspondents in the overseas markets in which they operate.
International companies: the international freight forwarding company will have its own offices overseas, and offer a wide range of importing and exporting services worldwide.
There are no hard and fast rules about the way in which a particular freight forwarding company is organised, where there will be significant overlap between the three different types. Each company may provide its own unique range of services to meet the requirements of its client base and, as with any business, these services may vary with market demands.
What does a freight forwarder do?
The freight forwarding service industry has a wealth of transport providers to meet the needs of the international trading community, including those importing goods to and from the UK. However, getting your shipment from its point of origin to its point of destination isn’t simply about arranging haulage and delivery of your goods. Freight forwarders typically offer a broad range of international services and solutions when it comes to moving goods, very often taking control of the end-to-end process, including compliance with customs procedures.
The services of a freight forwarder can include:
- advising you on the best routes for international shipping according to the nature of the goods, their origin and destination, seasonality, risk and urgency
- advising on costs, including packaging and freight charges, fees for licences and certificates, fees for obtaining customs clearance, and the level of customs duties and taxes
- negotiating, bidding and booking your shipment for road, rail, sea or air freight
- preparing or advising on all shipping documents for the transportation of your goods, including any safety and security requirements for controlled or hazardous goods
- arranging for the payment of freight charges on your behalf
- arranging for picking, packaging, labelling, loading and stowage of your goods
- arranging for warehousing, storage and inventory services where necessary
- consolidating small consignments into full loads, and arranging for the deconsolidation of larger consignments into smaller loads for inland distribution
- arranging inland transportation to the shipment’s final destination
- putting appropriate insurance in place to cover your goods for any risks in transit
- tracking your shipment as it moves from the point of origin through to point of destination
- ensuring you have the correct licence and/or certificate for your goods to clear customs, where many goods may be subject to strict licensing and controls
- making sure all customs clearance and any other documentation is in place, as required by both overseas and UK customs authorities
- submitting any relevant customs declarations, either themselves or through a specialist customs broker, and ensuring compliance with all overseas and UK customs procedures
- delivering your goods to an agreed location within a specified timescale.
Even though a freight forwarder isn’t usually the one physically moving your cargo, they can be an efficient and cost-effective way to import and export goods, especially in large volumes, or for urgent and high value shipments. Freight forwarders essentially act as intermediaries between businesses and transport companies, and can use their knowledge of the rules and regulations that apply in both the country of origin and the country of destination, and their network of trusted partners, to get the job done at the best possible price on your behalf.
Many freight forwarders are also Authorised Economic Operators, enabling them to take advantage of simplified customs clearance procedures, including deferred payment of import duties and charges which might otherwise need to be paid before goods are released.
Who needs a freight forwarder?
If you’re entirely new to importing or exporting goods in and out of the UK, or you just want the process to be as straightforward as possible, using a freight forwarder can prove to be a sensible investment. The benefits of using a freight forwarder include:
- Taking advantage of their knowledge and expertise, and wide network of connections, to get the best deal when it comes to cost, speed and reliability, where a freight forwarder can save you both time and money if you’re exporting large volumes of goods or high value items.
- Avoiding the cost of investing in compatible software to make customs declarations, where a freight forwarder will have access to the necessary software to file online declarations, for example, through the UK’s Customs Handling of Import and Export Freight (CHIEF) system.
- Minimising the risk of error that could result in the seizure of goods and imposition of penalties, where the importance of making correct customs declarations, and having the right documentation in place for controlled goods, cannot be underestimated.
- Provision of an end-to-end freight service, including transportation and customs clearance, plus extras like picking, packing, storing, insuring and tracking, meaning you’ll only have to deal with one person or company when moving goods in or out of the UK.
- Peace of mind that your shipment is in safe hands, where moving goods in and out of the UK involves detailed coordination and regulation — and if something goes wrong, or you need to submit an insurance claim, the freight forwarder should be able to help with this.
There are, of course, potential drawbacks to using a freight forwarder. These can include a loss of supply chain control, as well as a lack of control when it comes to costs, not least as there’s plenty of scope for unscrupulous freight forwarders to include all kinds of hidden markups. However, with the right company, who can provide a service specifically tailored to your needs, freight forwarding can provide you with the ideal import and export solution.
How much does freight forwarding cost?
The way in which the cost of freight forwarding services are calculated can vary from company to company. When using a freight forwarder, in most cases, you’ll agree a quote for the entire end-to-end process of moving your shipment from its point of origin to its point of destination. That means that the costs can comprise several different elements, depending on the services incorporated into any agreed package. These costs can include:
- Transport costs, including road or rail haulage from the supplier location to a port or airport, any sea or air freight costs, and local transport to get to your delivery point.
- Shipment specific costs, where hazardous items could include special packaging and labelling, very heavy items might need specialist lifting equipment or additional man power for loading, or perishable items might require refrigerated transport.
- Picking and packing costs, where your items might need, for example, to be placed on pallets to be loaded into a container or packed for air freight.
- Any necessary storage both before and after shipping, including any inventory charges involved in holding your goods.
- Extra fees for specific routes, such as the costs of passage when using the Panama Canal or using specific ports, especially for peak delivery times.
- Documentation costs, including any licences, certificates and customs clearance paperwork.
- Any customs charges paid on your behalf, including import VAT, import duty and excise duty.
- Any insurance to cover your goods for risks in transit.
- Surcharges, to cover things like fluctuations in the price of fuel or currency exchange rates.
- Administration or handling fees.
It’s crucial that you get an itemised quote from your freight forwarder so you can see what is and isn’t covered in the overall cost. The main job of a freight forwarder is arranging for the transportation of your goods but, as many will also deal with other aspects of importing and exporting, it’s important to know exactly what type of services your chosen provider is offering. You can then compare quotes before signing and committing to any contract.
How to choose a freight forwarder
When choosing a freight forwarder, you should always use an experienced operator who is a member of the British International Freight Association (BIFA). Members of BIFA must have in force a freight forwarder liability insurance policy and adopt industry-recognised standard trading conditions, where companies will be audited prior to being admitted for membership.
The other key factors to take into account when choosing a freight forwarder could include:
- The level of freight forwarding service you want, from freight shipping to complete supply chain management and shipment tracking
- The procedures in place to deal with your shipment, not least how well the freight forwarding company communicates, where taking clear instructions and keeping you informed of any developments affecting the safe and timely delivery of goods is crucial
- The size of the budget available to you when importing or exporting a particular shipment
- The timescales involved, especially where goods are perishable or needed urgently
- The need for any special licensing requirements, or for safety and security measures for hazardous or dangerous goods.
Amongst the 1500+ BIFA members, there are varying sizes of freight forwarding companies, although size shouldn’t be considered as a criterion for measuring the standard of service or the range of services to meet your specific importing and exporting needs. For example, you may need a specialist in a particular location, where not all freight forwarders cover every market. You may also find that if you use a large forwarding company for a relatively small shipment, your needs might not necessarily be prioritised.
It’s about finding a company that can not only meet all of your freight forwarding needs, but with whom you feel confident you can establish a trusted relationship.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
