With the internet and technology moving at an unprecedented pace, businesses now interact with and cater to the needs of customers across vast geographical boundaries. To cater to these needs, they have to work with shippers, freight forwarders, exporters, and other professionals.
Having such a vast logistics network can oftentimes make understanding the functionalities of each aspect quite a challenging thing to do. One confusion that arises due to this is whether a freight forwarder can be the exporter of records.
This article is aimed at clearing the air around this confusion. To further comprehend this, we’ll look at what a freight forwarder and exporter of record, the differences between their responsibilities, and determine whether one can fulfill the duties of the other. Let’s begin!
Freight forwarder vs. exporter of record
Both freight forwarders and exporters of record play a critical role for businesses when it comes to importing or exporting products or materials. However, to make the most of their shipping operations, it’s paramount for businesses to understand how both of them function. First, let’s look at what does a freight forwarder do.
Freight forwarder
A freight forwarding logistics company is one that basically serves as an intermediary between companies that import and export goods and businesses that need them. The freight forwarder manages multiple aspects of the transportation process. Common examples include storing goods before shipment, booking cargo space, ensuring customs clearance, and more.
However, businesses keen on importing and exporting goods must know that a company offering freight forwarding services does not transport the goods themselves.
These entities focus on developing and harnessing relationships with logistics providers that are actually involved in the shipment. When working with such providers, a freight forwarder actively plans each aspect of the shipment on behalf of the business they’re working for.
Exporter of record
When it comes to international trade, one of the main aspects is compliance. To ensure such compliance, the goods being imported or exported must be accurately described and valued. In addition, they must also be in line with the laws and regulations pertaining to import and export licenses, taxes and duties, restrictions, and more.
Such requirements mention that an export of record must be listed on all shipments. An exporter of record is a critical entity in the logistical structure of a business. The exporter of record is the legal exporting entity for goods that exist within a country. Nevertheless, it’s possible that this entity can also be both the shipper and the owner of the goods as well.
However, in cases where the exporter is not the owner, they may very well be a third-party export service provider. Despite this, the exporter of record is responsible for adhering to all legal requirements of the country where the goods are exported from.
Roles of a freight forwarder and exporter of record
Alright, so now that you are well aware of what an exporter of record and a freight forwarder is, let’s focus on the roles and responsibilities each of them has.
The role of a freight forwarder
As far as shipping operations are concerned, the primary role of a freight forwarder is to prepare the shipment of goods a company has. To make such arrangements, the freight forwarder contacts other logistics, transportation, and warehouse storage companies.
A freight forwarder, by working with other businesses, ensures that its client has a reliable solution for domestic and international import and export operations. Some of the key services that are part of a freight forwarder’s role in logistics include:
Confirming all necessary documents for importing or exporting goods.
Choosing transporters to move the goods to their destination.
Finalizing freight charges on behalf of the business they work for.
Monitoring and managing the goods during storage and transportation.
Filing insurance claims when necessary.
The role of an exporter of record
As mentioned, the exporter of the record is usually the owner of the goods, however, it’s possible for the owner to appoint an agent on their behalf. Having a professional exporter of record is essential because such individuals have expertise in local and international shipping.
Furthermore, working with these individuals can also help companies ensure compliance with regulatory requirements, have better cost efficiency, and facilitate cross-border transactions. Some of the key roles of an exporter of record include:
Preparing and packing goods to be shipped.
Conducting accurate product valuation and classification that can later be used for paperwork.
Ensuring export clearance by meeting all regulatory requirements and provisioning the required documents.
Meeting any unforeseeable expenses that may arise during the export process.
Storing export transaction documents as per the legal requirements.
According to the Incoterms buyers (importers) and sellers (exporters) have adopted, the exporter and importer assume different responsibilities during the shipping process. Take an example, under FOB terms, the exporter just needs to transport goods onto the board of the vessel and the importer has to handle the subsequent shipping. Yet for DDP shipping terms, the exporter should deal with the whole shipping process.
Both importers and exporters can ask global freight forwarders’ help when they have the shipping needs.
Can a freight forwarder be the exporter of record?
When it comes to whether or not a freight forwarder can be an exporter of record or not, the answer is not as straightforward as one might anticipate. To be the exporter of record means taking all legal responsibilities during the exporting process. In practice, the exporter is usually the factory.
The freight forwarder and the exporter of record are two separate entities providing varying, yet complementary services. While a freight forwarder can not be an exporter of record in most cases, it’s possible for global logistics companies to offer services of both. For example, Foresmart can aid in arranging shipping as well as customs clearance, to set you free from complicated shipping across borders.
It is worth noting that the exporter is also known as a shipper and consignor, but the shipper is not always the exporter.
In LCL shipping, different shippers’ cargoes in different factories are combined into one container in the consolidation warehouse. To indicate that the container is received by the shipping company, the shipping company will then sign the master bill of lading (MBL) to the freight forwarder who consolidates the cargo. Hence, in the MBL document, you will see the freight forwarder listed as the shipper. Next, the freight forwarder will sign several house bills of lading (HBL) to different factories or exporters (who are shippers here), so they can send the HBL to consignees who can pick up the cargo at the destination with the HBL.
Conclusion
International shipping and logistics operations are often challenging to comprehend. One such role that succumbs to such challenges is that of a freight forwarder vs. an exporter of record. Both these services are essential, but a freight forwarder is usually not an exporter of record.
FAQs
What does a freight forwarder do?
A freight forwarder can help companies simplify bulk shipping orders and streamline their operations. In addition, it can also help them have access to storage and warehousing solutions as well as insurance coverage that may be needed.
What does an exporter of record do?
An exporter of the record agent is needed when the shipper isn’t generally familiar with the export requirements or the owner of the goods does not know how to calculate their accurate value. The exporter of record may also be required if the shipped goods need to be replaced.
