Freight Forwarder vs. Customs Broker: What is the Difference?
Many importers and exporters, particularly newcomers, believe that freight forwarders and customs brokers are interchangeable terms.
Customs brokers and freight forwarders both provide unique services and play an essential role in international trade and transportation. Many overseas transactions make use of both forwarders and brokers, and in certain cases, the same organization will perform both.
Here’s everything you need to know about forwarders and brokers, how they fit into the international shipping process, and particular instances of how they could be employed.
What is a Customs Broker?
A customs broker is a person or corporation who is licensed and controlled by the government to assist importers and exporters in the preparation and clearance of a customs entry.
Licensed customs brokers are logistics professionals who understand port of entry procedures, admission regulations, freight classification, freight appraisal, and financial issues such as the payment of tariffs and taxes on imported products. They provide customs brokerage services to businesses to ensure that their goods pass through customs clearance efficiently.
What is a Freight Forwarder?
A freight forwarder is a person or firm who organizes the storage and delivery of goods on behalf of a company. Freight forwarders wear several hats and provide a wide range of services, including transportation, paperwork and documentation preparation, tracking, freight rate negotiations, consolidation, insurance, warehousing, and other areas of supply chain management.
Freight forwarders do not transport your products. They act as a go-between for shippers and transportation companies, ensuring that the process runs smoothly and that items arrive on time.
Freight forwarding services encompass a wide range of logistical and administrative tasks that may cause problems for the shipper. Errors (even inadvertent ones) can create lengthy delays and are illegal. While a freight forwarder isn’t required for international shipping, their knowledge and contacts can help you save time and money.
Differences Between Freight Forwarders and Customs Brokers
The primary distinction between a freight forwarder and a customs broker is that the freight forwarder is responsible for the logistics of transporting the shippers’ products from origin to destination. A forwarder enters into direct contracts with carriers to arrange bookings via ocean, air, rail, or truck, as well as advise shippers on expected freight costs, port taxes, special document expenses, insurance costs, and terminal handling fees.
The customs broker, on the other hand, works with the administrative side of things, such as document completion and ensuring the shippers’ products are transferred into or out of a country. Customs brokers often specialize in the import side of an export transaction and have direct contact with a variety of government agencies, including the Department of Agriculture, Consumer Product Safety Commission, FDA, and, of course, the United States Customs Border and Protection.
Because importing goods into the United States is complicated, many importers engage customs brokers to help clear U.S. import cargoes. Individuals can self-clear products, while businesses, partnerships, and associations must rely on certified brokers to manage the complex parts of “customs business.”
Freight forwarders without certified customs broker capabilities frequently collaborate with a customs broker to help resolve challenges with an export transaction.
Which One Does Your Company Need?
Shipping logistics are difficult regardless of the option a shipper chooses. Moving goods globally, regardless of preference, necessitates a partner who is detail-oriented and precise. Of course, the shipper can always manage it on his own, but these transactions are always best handled by an expert.
Hiring a freight forwarder and customs broker can make the import and export procedure more convenient and straightforward.
When Should You Use a Freight Forwarder?
If you are just starting in international shipping, hiring a freight forwarder is highly recommended. A freight forwarder can help you manage the process by negotiating the best shipping costs and arranging storage and warehousing for your items.
A freight forwarder eliminates risk and allows you to focus on the important areas of your business.
When Should You Use a Customs Broker?
If you have a proven effective and efficient logistics plan, you may not require a freight forwarder. However, unless you are well-versed in the complicated world of international customs, you should use a customs broker. It is a sophisticated, time-consuming, and ever-changing field that necessitates knowledge and skill.
Conclusion
Global trade is critical to economic development. However, trade has become increasingly complex, necessitating the coordination, transportation, and clearance of goods by a number of experts. Shippers can handle their shipments or work with freight forwarders, customs brokers, a combination, or a firm that does both functions.
Understanding what each offers is critical for maintaining efficient supply chain operations and meeting the shipper’s and market’s timing requirements.
A freight forwarder arranges for goods to be transported from an origin to a destination within a particular time frame, whereas a customs broker is in charge of preparing and processing a customs entry upon shipment arrival at a port of entry.
There are advantages to each approach; however, choosing an experienced organization that can perform both jobs can save not only time but also money on logistics. A forwarder enters into direct contracts with carriers to arrange bookings via ocean, air, rail, or truck, as well as advise shippers on expected freight costs, port taxes, special document expenses, insurance costs, and terminal handling fees.
At Turkish Goods, we pride ourselves in covering every aspect of the global trade process and making sure your order reaches you without a hitch. With our partnership with Trem Chart, we handle all customs processes and the only thing you need to do is wait for your order to arrive safely.
