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. Their skills go beyond simple commercial management: an international freight forwarder must master the logistical, legal and customs aspects, and draw up all the obligatory documents. This freight forwarder also has dedicated tools to assist him and ensure the confidence of his customers. Let's take a closer look at the freight forwarder's duties, obligations, tasks and tools:

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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 person who :

• is commissioned by the consignee or consignor of goods,
• organises and coordinates successive modes of transport: sea, land and air,
• manages all matters relating to the necessary logistics and transit,
• handles administrative formalities,
• is responsible for clearing goods through customs,
• ensures compliance with the regulations in force in each country,
• plays a crucial role in import-export activities.

A freight forwarder operates on a national level, such as France, or provides support to international trade companies on a wider scale, in all countries, including Africa, Switzerland and the United States.

The term "freight forwarding" is used to designate the activities of a forwarding agent in English, the language used in the business world to communicate between professionals from different countries.

Tasks and role of a 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 many skills.

A freight forwarder's job is to :

• organising, storing, packing and shipping goods in accordance with precise standards,
• contacting and coordinating all the parties involved, such as carriers, insurance companies, customs offices, etc,
• ensuring that goods can be traced at all times so that customers can be informed and goods can be guaranteed to arrive at their destination,
• to complete all administrative formalities in accordance with international laws and to pay any charges due.

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

The term " customs agent" is used to designate an economic operator authorised by the State to carry out the administrative procedures associated with import and export declarations, and to settle customs formalities.The customs declarant is therefore the forwarder appointed by the customer to transport the goods.

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

Difference between forwarding agent and freight forwarder

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

The forwarding agent acts as an executor with obligations of means.

Transit agents are bound to their customers 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 freight forwarder's responsibilities are therefore limited. Some forwarding agents 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 therefore carries many responsibilities on his shoulders. This is why the international freight forwarder is the recommended professional.

The 7 functions of a freight forwarder

Here are the specific services provided by an international freight forwarder:

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

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

• Task 3: optimise shipping costs. The freight forwarder will group different goods together in the same shipment, in the same way as a removal firm does with the belongings of different customers. This makes it possible to recoup the costs incurred with a carrier by purchasing a large volume of freight.

• Job 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;

• Job no. 5: negotiating transport costs. This is an additional advantage of an international freight forwarder: by managing a high volume of freight transport, they are in a position to bring down prices with carriers;

• Job no. 6: insuring the goods. Freight forwarders are familiar with insurance conditions depending on the means of transport and the type of goods being shipped. They must file insurance claims, an obligation that covers them not only in the event of damage or late delivery, but also vis-à-vis their customer;

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

Formalities and obligations of the freight forwarder

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

The bill of lading

The bill of lading is a document that acts as a bill of lading and proof: it is the contract of carriage between the forwarder and the carrier.

This contract stipulates the nature of the goods and the carrier's liability. Once in possession of this contract, the forwarder can demand delivery of the goods: this document is an official title 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, cubic capacity, dimensions, brand names and type of packaging.

It is used to ensure the exact traceability of goods at any stage of transit and, above all, on final receipt of the order by the consignee, in order to check that all the 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. The buyer may also request it to verify the origin of the goods.

The freight forwarder will have to pay the corresponding charges at the corresponding rate of customs duty.

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

1. the consignee,
2. the sender
3. the country of origin,
4. the various successive means of transport,
5. the customs description,
6. the weight of the 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 for a copy of the invoice in English to be sent 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 details of the seller and buyer (address, company name, etc.),
• the date of issue of the invoice
• the invoice number
• the currency used for payment,
• the units of measurement used to assess the value of the goods,
• the precise identification and description of the items,
• the quantity of goods delivered
• the unit value of the goods,
• the total value of the items,
• the total invoice price including any taxes,
• the terms of payment (30 days, on receipt of invoice, etc.),
• the discount or reduction granted by the seller, if any,
• the terms of delivery using the required Incoterm,
• the successive means of transport used.

List of obligations of an authorised customs agent

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

• Document watch,
• International regulatory monitoring,
• 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,
• Transmission of declarations,
• Holding of 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,
• Management of insurance documents,
• Administrative management: certificates, visas and licences,
• Declaration with the option of pre-clearance
• Simplified customs clearance at 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 the freight forwarder takes on: he must also assemble all the export documents and formalities of an administrative, legal and financial nature, etc.

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

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The tools of the international freight forwarder

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

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 freight forwarders.

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

• integrated order management
• automated logistics tracking
• centralisation of data and all documents,
• a customer and supplier portal
• cash flow monitoring,
• a dashboard with the main business KPIs.

TRADE.EASY offers a host of benefits that simplify the management of logistics and formalities, including :

• integration of incoterms
• document management (printing of the PFI, commercial invoice and packing list, import of all other documents for centralisation by operation),
• recording of bill of lading information,
• setting up automatic workflows based on the compulsory 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 essential feature: shipment tracking.

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

Thalia Gescom: commercial management with a Transit module

Thalia Gescom is a modular ERP solution with a central sales management base to which you can add modules depending on your business: design office, garage and spare parts shop, central purchasing office, import-export activity, etc.

Despite its rather austere interface, the tool meets the needs of all commercial activities, including stock management, purchasing, quotations and invoicing. Image of the software interface:

Focus on the Transit module:

• you can add this module to manage freight transits;
• This makes it easier for freight forwarders to manage orders and supplies relating to exports and imports;
• Its advantage: once you have entered the invoices for the charges, you can calculate the "warehouse approach coefficient" by customs nomenclature;
• On the import-export side, the software can be used to manage orders and invitations to tender.

Cosmos: a tool for managing formalities

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

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

The integrated multimodal transport management feature enables freight forwarders to organise and manage their costs.

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

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

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

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