Freight forwarder: definition, role, functions and tools for transporting goods

A freight forwarder is a company responsible for managing the successive transport of imported or exported goods on behalf of its customer. They play an essential role in international trade and commerce. An international freight forwarder 's skills go far beyond the simple notion of commercial management: he or she must master the logistical, legal and customs aspects, and draw up all the obligatory documents. This freight forwarder also has dedicated tools at his disposal to assist him and ensure the confidence of his customers. Let's take a closer look at the functions, obligations, missions and tools of the freight forwarder:

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What is a freight forwarder?

In this first part, we define a freight forwarder, explain his role and detail his functions.

Definition

A freight forwarder is a company or individual who :

• is mandated by the consignee or consignor of goods,
• organizes and coordinates successive modes of transport: sea, land and air,
• handles all logistics and transit matters,
• handles administrative formalities,
• is responsible for customs clearance,
• ensures compliance with the regulations in force in each country,
• plays a crucial role in the import-export business.

A freight forwarder operates on a national level, such as France, or accompanies international trading companies on a wider scale, in all territories, for example, African countries, Switzerland, the United States, etc. The term "freight forwarder" is also used to describe a forwarder who is responsible for all the administrative formalities.

We use the term "freight forwarding" to designate a forwarding activity in English, the language used in the business world for exchanges between professionals from different countries.

The role of the freight forwarder

The role of a freight forwarder is to ensure that the goods entrusted to him arrive at their destination in the condition in which he received them.

The international freight forwarder plays a key role in the commercial success of an international trade activity: the smooth running of your imports and exports of goods transiting French soil or foreign territories depends on his multiple skills.

A freight forwarder's job is to :

• organize, store, pack and ship goods according to precise standards,
• contact and coordinate all the players involved, such as carriers, insurance companies, customs offices, etc,
• ensure permanent traceability of goods, so as to be able to inform customers and guarantee that goods arrive at their destination,
• complete all administrative formalities in accordance with international laws, and pay all fees due.

⚠️ In view of the many constraints involved in freight forwarding, the role of the international freight forwarder is essential: he coordinates all transport logistics, ensuring that all mandatory documents (such as customs clearance) are issued in all countries in due form.

The term " customs broker" is used to designate an economic operator authorized by the State to carry out the administrative formalities associated with import and export declarations, and to settle customs formalities.alise the administrative procedures involved in import and export declarations, and to handle customs formalities.

The customs declarant is therefore the forwarder appointed by the customer to forward the goods.

Difference between forwarding agent and freight forwarder

These two terms are used to designate an international forwarder or transit agent. The difference between the two lies in the mode of remuneration linked to the forwarder's status.

The forwarding agent is an executor with obligations of means.

The forwarding agent is bound to his customer by a contract of agency. The customer mandates the forwarder to comply with instructions, such as the obligation to work with certain operators and carriers. The forwarder's responsibilities are therefore limited. Some forwarders even work within the company itself.

The freight forwarder: a major role with performance obligations.

The freight forwarder is bound to his customer by a commission contract. The customer chooses a qualified freight forwarder to relieve him of as many constraints and responsibilities as possible. The freight forwarder carries a great deal of responsibility on his shoulders. This is why the international freight forwarder is the recommended professional.

The 7 functions of a freight forwarder

Here's what an international freight forwarder does:

• Function no. 1: Ensuring follow-up between different modes of transport. The freight forwarder is the guarantor of the correct routing of goods. He organizes and coordinates shipments via multimodal transport: road, sea or air;

• Job no. 2: find places for goods to transit. The international forwarder carries out this task by owning storage facilities or renting warehouses for this purpose;

• Task 3: optimize shipping costs. The freight forwarder will group different goods within the same shipment, in the same way as a mover does with the belongings of different customers. This makes it possible to get the most out of the costs incurred with a carrier by purchasing a large volume of freight transport.

• Function no. 4: contact the right people to reserve loading and unloading space. Freight forwarders have a well-stocked contact book and select the best operators. This is an asset for international trade activities: deliveries and shipments benefit from the best conditions;

• Function no. 5: negotiate transport costs. This is an additional advantage of an international forwarder: by managing a high volume of freight transport, they are in a position to lower prices vis-à-vis carriers;

• Function no. 6: insuring goods. The freight forwarder is familiar with insurance conditions according to the means of transport and the type of goods in transit. He must file insurance claims, an obligation that covers him not only in the event of damage or late delivery, but also vis-à-vis his client;

• Job no. 7: editing shipping and export documentation. An experienced international freight forwarder guarantees, for example, that all mandatory documents will be issued and presented at the right time.

Forwarder formalities and obligations

Customs forwarders must comply with the new Union Customs Code 5CDU, which came into force on May 1, 2016. This Code modernizes customs procedures and strengthens security measures: today's technologies in fact make it possible to harmonize rules and simplify a number of declarations. Before turning to the question of tools, let's review the formalities and obligations that a forwarder must fulfill.

Bill of lading

The bill of lading is the contract of carriage between the forwarder and the carrier.

It stipulates the nature of the goods and the carrier's liability. In possession of this contract, the forwarder can demand delivery of the goods: this document is an official title deed transmitted by endorsement.

The packing list

The packing list lists all the goods to be transported. It lists and specifies the number of packages, pallets, cartons, weight, volume, cubage, dimensions, including brand names and type of packaging.

It is used for exact traceability of goods in transit and, above all, on final receipt of the order by the consignee, to check that all goods have arrived at their destination and conform to expectations.

The certificate of origin for each item

This is also an official document certifying the place and country where the goods were manufactured or processed. A certificate of origin is issued for each item by a Chamber of Commerce and Industry.

⚠️ The certificate of origin must be presented to customs officials so that they can authenticate the origin of the goods and apply the rules in force. It can also be requested by the buyer to verify the origin of the goods.

The forwarder must pay the corresponding fees at the corresponding rate of customs duty.

The 7 mandatory fields that must appear on a certificate of origin :

1. the consignee,
2. sender
3. country of origin,
4. successive means of transport,
5. customs designation,
6. weight of goods,
7. any special features.

The commercial invoice

The commercial invoice is proof of the transaction between buyer and seller, i.e. between the company exporting and the company importing. It is customary to send a copy of the invoice in English to the buyer.

To be valid and acceptable, the commercial invoice must not be altered (stained, illegible, etc.) and must include the following information:

• full seller and buyer details (address, company name, etc.),
• Invoice issue date,
• Invoice number,
• currency of payment,
• the units of measure used to evaluate the merchandise,
• precise identification and description of items,
• quantity of goods delivered,
• unit value of merchandise,
• total value of items,
• total invoice price including taxes, if any,
• terms of payment (30 days, on receipt of invoice, etc.),
• any discounts or reductions granted by the seller,
• delivery terms, applying the required Incoterm,
• the successive means of transport used.

List of obligations of an authorized customs agent

Here is a non-exhaustive list of the obligations of a customs broker:

• Documentary watch,
• International regulatory watch,
• Control and application of regulations,
• Integration of the DELTA G procedure,
• VAT reverse charge,
• Management of letters of credit or documentary credits,
• Export and import declarations,
• Monthly declaration of exchange of goods or services,
• Declaration transmission,
• ATA carnets to facilitate customs clearance,
• Chamber of Commerce approval,
• Visas and certificates of origin,
• Calculation of import duties and taxes,
• Multimodal freight management,
• Transport document management,
• DEB/DES management,
• Community transit document management,
• Insurance document management,
• Administrative management: certificates, visas and licenses,
• Declaration with pre-clearance facility
• Simplified customs clearance on approved sites,
• Transit and bonded operations,
• Customs representation,
• Customs management and payment of duties, taxes and VAT.

⚠️ The logistics aspect is not the only responsibility that the forwarder takes on: he must also assemble all export documents and formalities of an administrative, legal and financial nature.

To avoid making mistakes and deliver quality services, freight forwarders use dedicated tools to assist them on a daily basis. Let's discover them.

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The tools of the international forwarder

To manage all aspects of the forwarding business, forwarding agents use international trade and trading software: these tools are specialized to meet the challenges of import-export activities and the specificities of their trade.

TRADE.EASY: international import-export trading software

TRADE.EASY Import Export is one of the most effective references on the market for tools dedicated to forwarding agents.

This comprehensive solution offers an impressive list of functionalities enabling international freight forwarding professionals to control all aspects in real time:

• integrated order management,
• automated logistics tracking
• data and document centralization,
• a customer and supplier portal,
• cash flow monitoring,
• a dashboard with key business KPIs.

TRADE.EASY offers a number of advantages that simplify the management of logistics and formalities, such as :

• integration of incoterms,
• document management (edition of PFI, commercial invoice and packing list, import of all other documents for centralization by operation),
• recording of bill of lading information,
• automatic workflows based on mandatory formalities for each country and/or reference,
• real-time tracking of freight and services in progress, with automatic updates (ETD, ETA, transit time, carbon impact), etc.

The image above shows the benefits of an indispensable feature: shipment tracking.

The transit agent instantly visualizes the essential information for each shipment.

Thalia Gescom: sales management with a Transit module

Thalia Gescom is a modular ERP solution with a central sales management base to which you can add modules according to your business: design office, garage and spare parts store, central purchasing office, import-export activity, etc. Despite a rather austere interface, the tool meets the needs of any sales activity, including inventory management, purchasing, quotations and invoicing.

Despite a rather austere interface, the tool meets the needs of all commercial activities, including inventory management, purchasing, quotations and invoicing. Software interface image:

Focus on the Transit module:

• you can add this module to manage freight transits;
• the freight forwarder can more easily manage orders and supplies linked to exports and imports;
• its advantage: once you've entered the freight invoices, you can calculate the "warehouse approach coefficient" by customs nomenclature;
• on the import-export side, the software enables you to manage orders and calls for tender.

Cosmos: a tool for managing formalities

Cosmos software is also based on a commercial management "core", but oriented towards import-export.

Transit agents can manage their purchases, quotations and invoices, orders, and track actions on a dedicated dashboard.

Integrated multimodal transport management enables forwarders to organize and manage their costs.

The software interface is not very user-friendly. In spite of this, the tool can be used to manage regulatory documents:

• certificate of origin,
• packing list,
• certificate of insurance,
• certificate of conformity,
• etc.

The image below shows the list of regulatory documents centralized in the tool:

Note: a dashboard enables you to monitor ongoing business in real time, so you can better manage your sales activity.