Freight forwarding involves coordinating the logistics involved with international freight movement. For example, this may include the stock of goods for a retail business. Small businesses may choose to engage a freight forwarder who manages the logistics and acts as an intermediary between shippers and transport companies. Forwarders are responsible for planning and organising the entire freight movement process. This includes cargo insurance, warehousing and shipment scheduling and tracking. They often have knowledge of import and export regulations and can act as advisors to the parties involved. This article will discuss how freight forwarders can assist with importing and exporting goods and how to formalise this relationship with a freight forwarding agreement.
What is a Freight Forwarder?
A freight forwarder acts as an agent on behalf of the shipper. They manage the logistics of moving freight from one country to another. Furthermore, their responsibilities include:
- negotiating the most commercially effective deals for their clients;
- advising on import and export regulations;
- assisting with documentation;
- advising on the storage of goods and any insurance; and
- making bookings to ensure the freight reaches its destination seamlessly, alleviating pressure from the shipper.
Entering a Freight Forwarding Agreement
A freight forwarding agreement is between a shipper and a freight forwarder. The agreement identifies the key terms of the arrangement and ensures that all parties are clear on their responsibilities and obligations. Freight forwarders play an essential role in moving the shippers’ products from point A to point B. Therefore, it is essential to manage this relationship with a written agreement.
Continue reading this article below the formPros and Cons
Below are some other pros and cons of entering into freight forwarding agreements.
| Pros | Cons |
| Add On Services – many freight forwarders will include additional value-added services such as document handling, cargo insurance, inventory management, etc. | Fees – in addition to paying the stock moving fees, your freight forwarder will likely charge you hefty fees for providing their services. You will need to weigh up these fees with the value you receive. |
| Convenience – the import and export of goods are complicated and often heavily regulated. Having someone with specialised knowledge of these regulations and the end-to-end processes to manage this side of the business will remove significant stress for you. | Lock-In Contracts – being locked into a contract with a particular freight forwarder may limit your ability to forge business relationships with other service providers. |
| Efficiency – freight forwarders often streamline the shipping process by tapping into their knowledge of the system and their networks. Having contacts within the industry also enables them to negotiate cost-effective solutions on your behalf whilst transporting your goods along the most economical route. | Limited Control – You often give up certain control over your supply chain by engaging a freight forwarder to look after your stock transport. |
What to Include in a Freight Forwarding Agreement?
Having a written agreement in place when entering a freight forwarding arrangement will ensure that each party knows their obligations and liabilities. It will also limit the possibility of forgetting an essential step in the process. Some key terms to consider when drafting your agreement include:
- services – what services the freight forwarder offers or excludes;
- engagement – how are you contacting your freight forwarder when you wish to transport your goods and what information or documentation are you required to provide them;
- price – whether services are on a fixed price basis or will fluctuate subject to changes in the market rate;
- payment terms – how and when you must make payment;
- damage – who is liable for freight damage;
- delays – who incurs liability for any loss incurred as a result of delays in shipment; and
- concluding the contract – whether the contract has an end date and how parties can terminate.
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Key Takeaways
Freight forwarders can help eliminate the stress of importing or exporting goods. Your freight forwarder will look after all the logistics involved with ensuring your stock gets from point A to point B without you having to lift a finger. Having a freight forwarding agreement assists in managing the relationship with your freight forwarder. Furthermore, it ensures that both parties understand the terms of service.
If you are entering a freight forwarding agreement, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A freight forwarder acts as an agent on behalf of the shipper. They manage the logistics of moving freight from one country to another.
A freight forwarding agreement is between a shipper and a freight forwarder. The agreement identifies the key terms of the arrangement and ensures that all parties are clear on their responsibilities and obligations.
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