Freight Forwarder vs Customs Broker vs NVOCC: Who Does What in Exporting

Three roles in one shipment

In a typical export, three jobs must be done: someone arranges the transport (books space with a shipping line or airline, collects the goods, consolidates them and handles documents), someone files the customs declarations at export and import, and someone carries the goods and issues the transport document. A freight forwarder, a customs broker and a carrier or NVOCC are the usual names for these roles.

Many logistics companies offer all three, so the same firm can be your forwarder, your broker and the issuer of your house bill of lading. What matters is the capacity in which it acts for each task, because that decides its liability for loss or delay, who it acts for at customs and which document you receive.

Freight forwarder: agent or carrier

Acting as an agent, a forwarder arranges carriage with carriers in your name or on your account; the carrier's bill of lading or air waybill then governs the transport, and the forwarder is liable mainly for its own care in choosing and instructing others. Acting as a principal, the forwarder issues its own transport document, such as an NVOCC house bill of lading or a FIATA multimodal bill of lading (FBL), and takes on the responsibilities of a carrier towards you.

Check which document you will receive and who signs it as carrier. Under a letter of credit, a transport document issued by a forwarder is acceptable when it meets the UCP 600 rules for that document, including signature by the carrier or a named agent for the carrier, so a forwarder's cargo receipt is not a bill of lading.

• Booking and space with ocean or air carriers
• Pick-up, consolidation (LCL, groupage) and warehousing
• Shipping instructions, bill of lading draft and VGM submission
• Cargo insurance on request
• Coordinating the customs broker at origin and destination

Customs broker: filing the declarations

In the United States, no person may conduct customs business, other than solely on its own behalf, without a customs broker's licence issued by CBP (19 U.S.C. 1641; 19 CFR Part 111). Customs business covers entry, classification, valuation and payment of duties, and preparing documents for CBP. An importer may file its own entries; the broker acts under the importer's power of attorney, but the importer of record stays responsible for the declared classification, value and origin.

In the EU, any person may appoint a customs representative, who acts either directly, in the name and on behalf of the trader, or indirectly, in its own name but on behalf of the trader (Union Customs Code Article 18). A representative must normally be established in the EU. With indirect representation, the representative is also a debtor for the customs debt (Article 77), so representatives may ask for security before they agree to it.

NVOCCs and ocean freight forwarders under US law

The US Shipping Act calls both ocean transportation intermediaries (OTIs): an ocean freight forwarder dispatches shipments from the United States via a common carrier and books space, and an NVOCC is a common carrier that does not operate the vessels (46 U.S.C. 40102). OTIs based in the United States need an FMC licence; foreign NVOCCs may be licensed or registered.

Each must prove financial responsibility to the FMC, usually with a bond: USD 50,000 for an ocean freight forwarder, USD 75,000 for a licensed NVOCC (US or foreign) and USD 150,000 for an unlicensed foreign NVOCC that is registered. You can check an OTI's licence or registration in the FMC's OTI list before you ship.

Which one do you need under each Incoterms rule

• EXW and FCA: the buyer usually appoints the forwarder for main carriage; under FCA the seller still clears export, often through its own broker.
• FAS and FOB: the buyer books the vessel through its forwarder; the seller clears export and delivers to the port or on board.
• CFR, CIF, CPT and CIP: the seller appoints the forwarder and pays main carriage; the buyer's broker clears import.
• DAP and DPU: the seller's forwarder delivers to the destination; the buyer's broker clears import and pays duties.
• DDP: the seller needs a broker at destination and an importer of record, because it pays the import duties and taxes.