Whether you’ve been in the import-export industry for a while now or are a newbie, you’ve surely heard of customs brokers and freight forwarders. Many assume that these two are the same when in reality, they are not.
To understand the difference between the two, let’s first understand who they are and their roles in the import/export process.
Who Is a Freight Forwarder?
The LawInsider’s Canadian dictionary defines a freight forwarder as “a person holding itself out to the general public (other than as a pipeline, rail, motor or water carrier) to provide transportation of property for compensation and in the ordinary course of its business.”
It is a business that performs the following functions:
- They help the shippers with the required paperwork
- They contract with the mode of transportation chosen by the shipper and ensure safe transportation of the goods
- They also provide packaging and insurance advice for the goods
Who Is a Customs Broker?
A customs broker is a person/organization licensed by the nation’s frontier control authority to assist importers and exporters in getting the forwarded goods cleared at the import country’s customs. This licensing authority is the CBSA (Canadian Border Security Agency) in Canada.
The functions of a customs broker include:
- They act as a liaison between the various government bodies involved in the import process and the client
- They ensure that the shipment is compliant with the local laws
- They ensure that the owed revenues and taxes are calculated correctly, as per the classification that the goods fall under
- They compile paperwork, including receipts of payment, and submit them to the customs authorities on behalf of the client
Let us look at the services provided by these two parties to understand the differences.
- Cargo pick-up from shipper’s office and drops off at port/airport/station.
- Negotiates the tariff and books the shipment
- Books and handles warehousing needs, if any
- Provides freight collection services
- Gets all the documents required for the export ready
- Handles insurance needs of the shipment
- International trade law experts that provide consultation services
- Customs clearance assistance
- Revenue/tax classification experts who can ensure you are not paying a penny above or below what you owe
- Freight management services, including translation and communication between various government bodies to ensure compliance
- Compiled documents are submitted to the customs authorities on behalf of the client
It can be said that while forwarding agents focus on ensuring the smooth shipping of the goods, the mode of transportation, and the transit insurance aspect of things, customs brokers focus on getting the said goods cleared out of customs in the importing country.
Therefore, it is safe to say that customs brokers and freight forwarders must work in tandem to ensure the smooth transit of your shipment.