Many exporters, particularly newcomers, believe that freight forwarders and customs brokers are interchangeable terms, but this couldn’t be further from the truth. Because most freight and supplies must be moved over international oceans or airspace, logistics is a very complicated sector with numerous transit destinations and ports. As a result, it is always a collaborative effort between individuals, agents and suppliers to make it happen.
What is a Customs Broker?
Customs Brokers are private individuals, partnerships, groups or corporations that are authorized, regulated, and allowed by the United States Customs and Border Protection (CBP) to assist importers and exporters in complying with federal import and export requirements. Brokers charge their clients a fee for submitting relevant paperwork and making proper payments to CBP on their behalf.
Brokers must be knowledgeable with entry processes, admissibility criteria, classification, value, and duty rates, as well as any taxes and fees that apply to imported goods.
In the United States, there are roughly 14,454 active licensed Customs Brokers.
What is Freight Forwarder?
A freight forwarder, also known as a forwarding agency or NVOCC (non-vessel operating common carrier), is a person or an organization that prepares shipments for people or corporations to get foods from a manufacturer or producer to a market, consumer, or the final destination for distribution.
Freight forwarders and customs brokers share comparable operations and work in the same region, but their areas of specialization differ, despite the fact that they can execute some of the same tasks. Here’s a listingof the key distinctions and how one or the other can be beneficial for your company.
Understanding the Difference between Customs Brokers and Freight Forwarders
A Freight Forwarder is a broad phrase, whereas a Customs Broker is quite specific—among other things, Customs Brokers in the United States must be licensed.
Although many freight forwarders are also Customs Brokers (or have access to brokerage services), not all Customs Brokers are Freight Forwarders.
The import side of an export transaction is the specialization of aCustoms Brokers. The Customs Broker is a foreign country liaisonfor exporters. For example, when exporting out of the US, exporters do not require the services of a Customs Broker in the United States, but of the receiving country.
To help address issues with an export transaction, an exporter’s Freight Forwarder could work with a Customs Broker.
The following are some of the primary services provided by a Freight Forwarder:
- Transportation exchanges
- Picking up and dropping off of goods
- Reaching agreement on freight prices
- Gathering all of the necessary documentation in order for exporting and shipping
- Reserving the required warehouse space
- Taking care of the necessary cargo insurances
- Freight collecting services
Whereas,Customs Brokers primarily provide the following services:
- Valuation by customs
- Customs clearance
- Consultations on international trade
- Classifications of tariffs
- Dealing with automatic customs clearances
- Management of freight
- Management of purchase orders for import and export
When Is It Necessary to Hire a Freight Forwarder?
Using the services of a Freight Forwarder is highly recommended if your company is just getting started with international shipping. From negotiating the cheapest shipping costs, to organizing storage and warehousing for your products, a Freight Forwarder can make the process easier.
A Freight Forwarder lowers your risk and allows you to focus on more important components of your business.
When Do You Need to Hire a Customs Broker?
You might not need a Freight Forwarder if you have an established, effective and efficient logistics plan. You should, however, always use a Customs Broker unless you are well-versed in the difficult realm of international customs. It’s a difficult, time-consuming and constantly changing field that requires knowledge and skill.
The Final Word
While hiring a Freight Forwarder or Customs Broker is not required by law, their services can be vital to a company’s success. Depending on the situation, either or both options may be appropriate.
- Posted by WiserTech Solutions
- On December 10, 2021