Forwarder


Persons and Businesses
Related to Shipping

THE FORWARDER

Definition

The 'forwarder' could be defined as follows: "a person who arranges the transport of goods in his own name but for the account of his principal and carries out one or several activities related with transport, reception, delivery to a third carrier, store, insure, clear through customs (inbound and outbound), export or arrange to export."

Merriam-Webster's Collegiate Dictionary defines the term forwarder as follows: "an agent who performs services (as receiving, transshipping, or delivering) designed to move goods to their destination."

With regard to sea transportation, the forwarder, also called 'forwarding agent', 'shipping agent', or 'freight agent', is an intermediary between the shipper and the ship (or the shipping company) for the shipment of goods, or between the ship (or shipping company) and the receiver for the reception of goods, who takes care of all the transport formalities and ensures the good outcome of the shipment and/or the reception of the goods.

Categories of Forwarders

The shipment of goods, on an international scale, is a very complex and laborious transaction, which usually involves a great number of administrative, consular, fiscal and customs formalities, whereby usually several carriers are involved (sea, road, rail, air, inland waterways) and whereby it is often necessary to call on a certain number of secondary transport functions such as packaging, storage, grouping, control, insurance, etc.

All these tasks cannot be efficiently performed by the shipper (the owner of the goods) or by the carrier (the owner or any other transporter). In order to ensure an easy flow of goods from the seller to the buyer and at the lowest cost, it is in the interest of merchant exporters and importers as well as other transporters  to get their import and export transactions organized and coordinated by forwarding agents.

The forwarding agent is a specialist in the execution of transport agreements or contracts and who, because of his broad knowledge of various regulations, acts, statutes, and conventions, his familiarity with several means of transportation and associated tariffs, his connections with other transport agents worldwide, his experience issues that  may arise during transportation, is better suited to act as a neutral intermediary between the seller and the buyer.

Dependent on the sort of service and the line he specializes in, one can distinguish several kinds of forwarding agencies. The main ones are:

  • a freight forwarders or sea forwarding agents;
  • air freight forwarders;
  • rail road freight forwarders;
  • inland navigation freight forwarders;
  • customs brokers and forwarders;
  • factory freight forwarders;
  • groupage freight forwarders;
  • removal freight forwarders.

The duties of the forwarder in sea transportation

To enumerate all the duties of the sea freight forwarder is nearly impossible, since each contract with the customer (in this case the shipper), has its own distinct particularities.

The role of the forwarding agent is more important in the liner trade than in the tramping. In the liner trade, where a greater variety of goods are being carried, the transport agreement between the owner of the ship and the owner of the goods is handled/executed through the agency of the forwarder. The forwarder hereby acts as a trustee and a representative of the owner of the goods, who usually is located inland or abroad. In the tramping, the owner of the ship and the charterer are put in touch with one another via the broker.

Without going too much in details, here is a summery of the tasks of the forwarder:

  • advise exporters and importers about the formalities and appropriate means of transportation;
  • arrange transportation and guarantee the dispatch and all additional handling from one point to another;
  • chose the most efficient/effective harbors and shipping lines;
  • chose of the most adequate means of transportation or route in case of initial or connecting transport;
  • contact the suppliers of the goods on behalf of the buyers (e.g. by fob sale) and in other cases by informing the buyer on behalf of the supplier. The forwarder in the harbor can thus, depending on who appointed him, represent the buyer or the seller.

SPECIAL TASKS IN THE HARBOUR

  • Inform of tariffs and agreements on freights - inform the sailing dates.
  • Booking of freights, conclude transport contracts with sea carriers as well as with land carriers.
  • Coordinate between the different means of transportation.
  • Give instructions.
  • Call off goods.
  • Correspond with owners or shipping agents regarding deliveries for shipment (also receptions).
  • Draw up shipping documents and get them initialed; customs documents, consular documents (e.g. consular invoices, certificate of origin, bill of health).
  • Delivery of Forwarders Certificate of Receipt and other FIATA documents.
  • Release documents necessary for shipment or reception.
  • Briefing with stevedores and shipping agents in case of direct transshipment and preparing of inland means of transportation (e.g. order railway wagons).
  • Obtain the necessary insurance contracts for transport and storage.
  • Delivery, reception and control; make the necessary declarations about quality and state. Supplementary controls by own or specialized third party services: weighing, measuring, quality control, taking of samples, repairing or packaging.
  • Execute contacts with average adjuster in order to appoint experts in case of particular average.
  • Signing of an average bond in case of general average (always with reservations) and notify insurer and party entitled to the goods.
  • Clearing (in and out) of goods: payment of dues and taxes, request  licenses.
  • Transshipment on inland means of transportation and on seagoing vessels and vice versa.
  • Mediate with the bank for payment against documents.
  • Storage and guard over goods.
  • Group and unbundle  shipments.
  • Put containers at ones disposal.
  • Group small parcels to make a full container load.
  • Act as a coordinator for combined transport sea-land.
  • Receiving goods accompanied by a letter of guarantee and for signing of the document.
  • Signing of letters of guarantee by outgoing cargoes.
  • Make an application for handling dangerous goods in incoming and outgoing cargoes.

The forwarder as agent or as principal

THE FORWARDER AS AGENT

In principle the forwarder is the agent from the shipper (or the receiver) of the goods.

It is difficult to enumerate the obligations of the freight forwarder as agent, because the terms of each contract with the shipper are usually different and can often be found in a booking note, a receipt or be in accordance with the uses and customs of the location.

As long as the freight forwarder as agent has the goods in his custody or under his trust, he is responsible for them on behalf of his customer (principal or shipper). He has to care for the goods with due diligence as if he was himself the owner of the goods, until they have safely reached their destination. However, it has to be stressed that the forwarder is not the carrier but only an intermediary between he who has goods to be transported (the customer) and he who is actually does the carrying (shipping company, railway company, road carrier, etc.). This difference is of the utmost importance for legal reasons to determine the respective liabilities.

In that respect, the forwarder can be held responsible for the injudicious choice of the carrier. He can also be responsible if, due to his negligence, the goods arrive late or if no directions or the wrong directions with regard to the goods have been given to the carrier. As long as the goods are in his custody he has the responsibility of a " depositary." He shall inspect the goods when loaded and/or discharged for possible damage and inform the shipper accordingly. He is authorized to accept expenses made for carriage and storage, which were not taken into consideration, but if there are no current tariffs, he needs to negotiate the lowest possible price. In any case, he is not allowed to make any profit for work that he is performing himself. For such services he can, as an agent, demand compensation.

In some cases (except in CIF or FOB sales) the freight forwarder as agent may be obliged to insure the goods and even be liable if he neglects to do so.

The freight forwarder, as agent, who makes contracts with another agent to perform duties abroad on his behalf,  remains responsible for the mistakes or the negligence of the latter.

He also remains responsible for payment of the freight and possible dead freight for the booked shipping space, even if it happened while in the care of the agent. He is also responsible as principal with regard to dangerous goods for which he has not informed the risk factor to the owner.

The freight-forwarder as agent has, with respect to his commission or remuneration, a lien on the goods in his custody (and possibly on the title of the goods), but it is very doubtful if such right of retention goes any further. It certainly does not give him a right of retention on all expenses due by the shipper and it can by no means be exercised while the goods are in possession of the carrier.

THE FORWARDER AS PRINCIPAL

A recent trend in the forwarding trade, is for forwarders to act more and more on their own as principals and take on themselves the responsibility of a carrier for a part  or even for the entire carriage of the goods until they reach their final destination.

It is sometimes very difficult to ascertain whether a person, who presents himself as a forwarder, acts as agent or as principal. The fact that the forwarder issues his own bills of lading, that he is remunerated on a lump-sum freight basis , that he exercises seizure for security in his own name, that the ship concerned is owned by a related firm operated by the forwarder, that the forwarder collects the freight, etc. are sufficient indications that he acts as principal.

The fact that the freight-forwarder as agent enters his name as shipper on a bill of lading does not absolutely give him the responsibility of a carrier, although it could be an indication. But, in case the forwarder centralizes goods (e.g. as by grouping), and books shipping space in anticipation that he has grouped these goods effectively, it is generally accepted that such an agent has acted as a principal.

The position of a forwarder as principal with the responsibilities of a carrier, is in many respects the same as the responsibility of the carrier who delivers the bill of lading. He usually has the right to employ subcontractors to carry out the contract partially or completely, or he can even be forced to do so if he does not own or control enough shipping space.