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  February 17th, 2023 | Written by

Customs Broker vs. Freight Forwarder: What’s the Difference?

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The terms ‘customs broker’ and ‘freight forwarder’ can both seem confusing. Not to mention the fact that, just by their names, the two jobs seem to overlap! However, there are important nuances here, and both jobs are unique. To learn exactly why and how keep reading our guide on customs broker vs. freight forwarder: what’s the difference?

 The job of a freight forwarder

Organizing the details of your logistics

The first task of freight forwarders is to help you manage the details of your logistics. To a somewhat surprising extent, at that. They can help their clients organize bulk shipments by consolidating smaller ones and help alleviate warehousing and fulfillment stress. They go over insurance costs for your freight and even manage other freight expenses on your behalf. In other words, all the annoying minutiae which typically require dedicated employee teams to handle your hired freight forwarder can step in! That makes them ideal for new and small businesses that cannot afford to have a dedicated team for this yet. That is the first difference between a customs broker vs. freight forwarder since the former does not offer such in-depth services.

 Arranging transportation of goods

The second task that a freight forwarder would tackle would be arranging the best mode of transportation for your goods. The process goes like this: first, you provide the freight forwarder with your requirements. Such as how large your shipments need to be, how quickly they need to arrive at their destination, how much you are willing to spend on transportation, etc. With that data, the freight forwarder then looks at all the options available, including land, ocean, and air transport, and picks the ideal choice for you. That frees you of annoying considerations such as ocean freight vs. air freight shipping for your business. Naturally, the freight forwarder also arranges the details with the carrier, so you don’t need to worry about that!

 Dealing with the paperwork trail

The final thing that a freight forwarder helps with is paperwork! And this is likely to be the most significant selling point for many businesses. Paperwork takes a lot of time and knowledge to handle, and any mistakes can be costly. Well, a freight forwarder will handle all the documentation needed to get your cargo where it needs to be. The latter also handles customs documents in a slight overlap of customs broker vs. freight forwarder. However, they also handle port, airport, and booking documents. That gives them a much broader scope of services than a customs broker.

 The job of a customs broker

Legal representation and advice

The first task of a customs broker is to represent you and offer you legal advice. In other words, they can handle all the work required for your shipments to fully conform to the rules of the governments you are involved with. That is invaluable since even if you become an expert in logistics, laws frequently differ between countries, and keeping track of them all. At the same time, you do international import and export can be complicated. Notably, your customs broker also keeps track of the latest changes in regulations that are pertinent to you and both assists you with complying and informs you of them.

 Handling customs costs

Interestingly, a customs broker frees you from worrying about duties upfront. They are cleared to pay them on your behalf and then bill you later. Of course, if you set up a clearinghouse account and authorize them, they can also pay directly from it and circumvent any complications. Your customs broker does charge you for an annual user fee and a status report, but their handling of duty costs more than makes this worth it! A customs broker will also refund you if you have overpaid duties, meaning that it frequently pays off to have them on retainer in a literal sense!

 Supervisions of goods and paperwork

As mentioned previously, there is a slight overlap in what a customs broker vs. freight forwarder does. And this is seen in that both are in charge of the paperwork related to their work. A customs broker will manage all documents required to legalize your goods’ import and export. They also store and keep those transaction documents for up to five years on your behalf. However, customs brokers are also frequently in charge of supervising the customs process. By this, we mean they’ll monitor the goods through customs and check that all regulations are correctly adhered to. They are also there to offer consultation on any problems that can pop up during the clearance process.

Deciding on a customs broker vs. freight forwarder

Now that you’ve gone over your guide on ‘customs broker vs. freight forwarder: what’s the difference?’, it should be clear to you that they are, in essence, two very different jobs. A freight forwarder is there to help you with pretty much every aspect of your logistics. Hiring a freight forwarder will be invaluable for anyone struggling to handle all the work associated with them. On the other hand, a customs broker is invaluable for anyone who doesn’t want to deal with the problems and legalities of international shipping. They are highly specialized, but they can efficiently perform their job to exact specifications. Ultimately, it is not fair to say you should pick either a freight forwarder or a customs broker. If you need their services and can handle the associated costs, it is frequently intelligent to hire both!

 Author Bio

Felipe Felson is an experienced freight forwarder, warehouse manager, and logistics specialist who works closely with Next Stop Movers experts. His experience in the field and extensive legal education allow him to handle any task that comes his way. And he likes to share advice on topics he’s specialized in through his excellent guest blog posts!