The Forwarding Practices of Exporters
exporters use the services of a forwarder primarily for convenience
Exporters use the services of a forwarder primarily for convenience. New exporters can benefit from the services of a good and honest forwarder.
In less developed countries, it is a business practice that the exporter utilizes own contacts or sources of export services like trucking and customs declaration, especially in ocean shipments, instead of relying on the forwarder, which is the practice in developed countries.
Referring to Case Sample: Freight Consolidation (1), XYZ Consolidator may offer UVW Exports to transport their goods at US$70/CBM, including such charges as the inland freight (cartage) and handling, from UVW Exports' premises to Port B. If UVW Exports uses its own contacts in the forwarding instead of a consolidator, the freight rate of US$55/CBM from PQR Shipping plus all other charges may amount to less than US$70/CBM. Exporters should always check the options.
Importer's Specified Forwarder
or Consolidator and Its Implication
Some importers may specify the forwarder to use for their imports. The international freight forwarder either has own office or a handling agent abroad.
Case Sample: Freight Consolidation (2)
Further to Case Sample: Freight Consolidation (1), assuming that XYZ Consolidator has an office named XYZ Branch at the importing country of DEF Imports, and DEF Imports contracts XYZ Branch to handle a shipment from UVW Exports at the exporting country, the sales term is FOB Port A in the exporting country. The contract, in which UVW Exports is informed in advance by DEF Imports, calls for a delivery from Port A to DEF Imports' premises---meaning that DEF Imports has to pay XYZ Branch the agreed- upon CBM (cubic meter) cost to cover such charges as the ocean freight from Port A to Port B in the importing country, and the handling charge, documentation fee, and inland freight from Port B to DEF Imports' premises.
XYZ Branch notifies XYZ Consolidator of the contract and requests it to coordinate with UVW Exports. As the trade term is FOB Port A, UVW Exports must arrange and pay for the cartage from its premises to Port A, plus the brokerage fee and other charges. Under this situation, XYZ Consolidator may offer to handle the trucking and customs declaration for UVW Exports. The exporter (the UVW Exports) must check the options before accepting the offer. Depending on the country, the cost can be lower, or higher, when the exporter uses its own contacts.
In another instance, the importer, especially the new customer, may not inform the exporter that a forwarder will be involved in the delivery. The exporter becomes aware of such involvement only after receiving the letter of credit, in which a forwarder is specified. Such incidence must be avoided as the cost of exporting can be affected, for example, the diversion of cargo to another location designated by the forwarder, which may cost more.
