A Guide To Freight Forwarding

Freight forwarding is the movement of goods around the world on behalf of companies involved in both import and export. As well as organizing the movement of cargo, freight forwarders also arrange customs clearance of the goods, as well as handle all the relevant documentation involved.

This article aims to provide you with information on the activities of freight forwarding and identifies the key areas involved in the movement of goods.

Customs Clearance & Controls

Many organizations have an interest in UK border controls. These include HM Revenue & Customs (HMRC), the Rural Payments Agency (RPA) and the Department for Environment, Food and Rural Affairs (Defra). Cerain products entering the UK are subject to licensing and control – one of the main roles of the freight forwarder is to ensure that these controls are adhered to when arranging customs clearance.

In order to be able to do this effectively, the freight forwarder needs sufficient funds available to handle duty and taxes payments, as well as specific software in order to communicate with HMRC, as nearly all the HMRC functions are electronic.

Some freight forwarders will subcontract out the customs clearance of goods to specialist organizations; for those who wish to offer it as part of their services it is essential that they have an annual subscription to the Integrated Tariff of the United Kingdom. This is a 3 volume publication available either in printed format, on disc, or online.

The Tariff provides guidance on customs procedure, the necessary documentation and the classification of different types of goods in the UK and is available from The Stationery Office (TSO), as well as major libraries and customs advice centres.

In addition to the Tariff there is also the European Union Customs Code and the Official Journal of the European Communities which are the definitive legislation regarding international trade regulations and have precedence over UK regulations.

The UK Trade Tariff

The UK Trade Tariff is an online tool that provides free access to information on taxes and levies, rebates, restrictions and other relevant information imports to and exports from the EU. For further information, refer to our guide on using the UK Trade Tariff.

Documentation For International Trade

Well ordered, accurate documentation is an essential requirement for international trade. The freight forwarder will know the exact documentation required depending upon the goods to be moved and the origin and destination.

When organizing the movement of goods, the freight forwarder will require clear instructions from the importer or exporter well in advance of the goods being moved. To avoid dispute these should be provided in writing via email or fax. Any documentation will normally be handed over to the driver collecting the goods, which is standard practice for both sea freight and air freight.

Other documentation required will include commercial invoices, packing lists and any appropriate licenses, particularly with respect to any hazardous goods.

Each mode of transport has its own specific document of carriage:

  • The air waybill – for air freight
  • The bill of lading – for sea freight
  • The CMR consignment note – for road freight

How these documents are issued may differ; as such the freight forwarder needs to be familiar with each different type of document and their respective procedures. They should also understand the different types of documentation relating to customs clearance at the point of import and export.

Export Packaging & Materials

Ensuring that the goods for export are packed correctly requires specialist knowledge and is a service often offered by freight forwarders.

When deciding on the type of packaging to be used, as well as ensuring that the goods are received in the same condition as when they left the consignor, factory or warehouse, the freight forwarder also needs to consider the ease of handling, the potential risks during transit, plus protection from unauthorized access.

The freight forwarder also needs to consider the materials used in packaging the consignment. Wood for example is subject to international legislation, with many countries requiring certificates proving that the wood has been fumigated. Countries such as New Zealand, Australia and China have particularly strict controls on the use and type of packing materials used. Not being aware of these controls could prove extremely costly if a consignment has to be returned to the point of origin for repackaging. A freight forwarder will be able to advise you of any restrictions on the use of packaging as well as any legislation regarding the safe disposal of any packaging materials used.

Regulations For The Movement Of Dangerous Goods

The transportation of dangerous or hazardous goods is governed by both national and international legislation. Although a freight forwarder might not actually come into contact with the actual goods, they need to recognize them when presented for carriage and understand the necessary documents required and packaging standards.

Due to the number of products which have a danger classification it is not always possible to recognize them from their product name alone. As such it is the manufacturer or shipper who has prime responsibility for the correct classification, packing and documentation of dangerous or hazardous goods. If however the freight forwarder is handling the products then they should be aware of the various classifications and procedures surrounding their movement.

The British International Freight Association (BIFA) conducts a number of specialist training courses on the legislation and procedures regarding dangerous goods, a list of which is available on the BIFA website.

Each different mode of transport will have its own compliance requirements for dangerous goods; as multimodal specialists, freight forwarders need a professional understanding that the carriage of such goods are subject to compliance with national and international regulations such as:

  • International Maritime Dangerous Goods Code
  • European Agreement concerning the International Carriage of Dangerous Goods by Road
  • European Agreement concerning the International Carriage of Dangerous Goods by Rail
  • Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2004
  • Carriage of Dangerous Goods by Road and Transportable Pressure Equipment Regulations (UK)
    International Civil Aviation Organisation

Further sources of information:

HMRC National Advice Service Enquiry Line www.hmrc.gov.uk

0845 010 9000

National Export System Helpline

029 2038 6254

The British International Freight Association www.bifa.org

020 8844 2266

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