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Freight Forwarders & Customs Brokers - What's the difference?

Posted by Ascent Global Logistics on May 5, 2017 11:00:00 AM

Global supply chains are extremely complex networks which require involvement by various professionals who must execute different tasks. Two of the most important parties involved in an international shipment are the freight forwarder and the customs broker. One company is often both the freight forwarder and the customs broker, however, the two can be independent of each other due to the differences in responsibilities and capabilities. 

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Freight forwarders are supply chain experts who focus on the logistics and transportation of an international business transaction.

Forwarders are agents who arrange for cargo to travel from an origin to a destination within a specific time frame. Essentially, freight forwarders arrange and monitor all of the fine details so that shipments flow across international borders with compliance and efficiency, mitigating delays.

Freight forwarding companies can contract directly with carriers or can utilize a client's negotiated contract to secure bookings via ocean, air, rail or truck. Once a shipment is ready to go, whether it be import or export, the shipper/consignee will send basic details to the freight forwarder which will then make the booking with the carrier.

Freight forwarders advise shippers of estimated freight costs, port charges, costs of special documents, insurance costs and terminal handling fees. Freight forwarders can also assist companies with initial pickup (depending on the Incoterm), interim storage and consolidation of freight.

The freight forwarder is responsible for a number of export formalities, which in the United States includes Schedule B classifications, Shipper's Letter of Instruction (SLI), Automated Export System (AES) filings, Export Licenses, Foreign Standards and Certifications as well as Denied Party Screenings.

CUSTOMS BROKERS

Customs brokers are international trade experts who are responsible for preparing and clearing a customs entry upon shipment arrival to a port of entry (or technically up to five days before the vessel docks for ocean freight and upon take off of the final flight into the U.S. for air freight).

Customs brokers are also referred to as a Licensed Customs Brokers (LCB’s) if they have successfully completed the extensive examination and application process with U.S. Customs and Border Protection (CBP).
Fun Fact - The LCB exam pass rate is actually less than the bar (law) exam!

Due to the complexity of importing goods into the United States, many importers hire customs brokers to help clear U.S. import shipments.  Individuals are able to self-clear goods for their own account, but corporations, partnerships and associations rely on licensed brokers to navigate the various facets of “customs business”. 

According to 19CFR 111.1, the term “customs business” means those activities involving transactions with U.S. Customs and Border Protection (CBP) concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes or other charges assessed or collected by U.S. Customs and Border Protection upon merchandise by reason of its importation, or the refund, rebate or drawback thereof.

It also includes the preparation of documents or forms in any format and the electronic transmission of documents, invoices, bills, or parts thereof, intended to be filed with U.S. Customs and Border Protection (CBP) in furtherance of such activities, whether or not signed or filed by the preparer, or activities relating to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs.

No person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license issued by the Secretary.

Customs brokers can also help shippers with:

  • Importer Security Filings (ISF)
  • Classification of Goods (The HTSUS – Harmonized Tariff System of U.S. - is very complex and often overwhelming for new shippers)
  • Calculation of Duties, Taxes and Fees
  • Dispatching for Final Delivery
  • Coordination of Customs Exams 
  • Customs Bonds
  • Duty Drawback
  • Reconciliation
  • Liaison between the importer and various government agencies such as U.S. Customs Border and Protection, U.S. Department of Agriculture, U.S. Consumer Product Safety Commission, U.S. Federal and Drug Administration, etc.

Hiring a company that is both a freight forwarder and a customs broker can make the import and export process convenient and seamless due to its ability to provide door to door service. This includes securing the transportation space, gathering necessary paperwork, clearing the goods and arranging the final delivery.

An international logistics partner which is both a freight forwarder and customs broker can also help importers and exporters make intelligent routing and mode selections to produce economical solutions that meet the delivery time frame. Additionally, a freight forwarder and customs broker combo can help an importer or exporter understand and select an optimal Incoterm based on the desired amount of risk and responsibility.

The international transportation and trade experts at Ascent Global Logistics assist clients with both freight forwarding and customs brokerage. Contact us today to learn more about our International Freight Forwarding solutions

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Topics: International Freight Forwarding, Freight, Importing, Exporting

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