The role of the freight forwarder

The role of the freight forwarder is often misunderstood and mistakenly confused with that of the carrier, the customs broker, the warehouse operator or other participants in the transport process. In fact, the freight forwarder always acts in the cargo interest, and, in the ideal case, is not bound by the physical performance of the specific elements of the transport process, but only assigns them to subcontractors in order to effect cargo delivery from the starting point to the final destination. The freight forwarding contract is concluded between the shipper or the consignee and the freight forwarder while the latter concludes relevant contracts with various subcontractors - for transportation, for transshipment and storage, for cargo surveys, for customs clearance (in places where the freight forwarder does not have own personnel) etc. The freight forwarder also establishes relations with various institutions involved in transportation, import, export or transit of cargo. In short, the role of the freight forwarder is to professionally replace the shipper or the consignee, relieving the latter of any transport commitments, organising the smooth cargo movement from the starting point to the final destination. The freight forwarder should not enter into a conflict of interest by simultaneously representing the shipper or the consignee and any other party in the transportation process. For example, being an agent of a vessel carrying specific cargo from/to specific port for which port and cargo the freight forwarder has been assigned to provide services.

Freight forwarders can act in three legal statuses:

- Proxy - acting as a direct representative, on behalf and for the account of the shipper or the consignee. In this case, legal relations arise directly between the shipper/consignee and the relevant parties - physical service providers, and the freight forwarder is expected to show the necessary professionalism in selecting a subcontractor and representing the shipper/consignee during negotiations, contracting and service performance. Payments are effected directly by the shipper/consignee to the subcontractors. The freight forwarder should receive a separate remuneration from the customer - the shipper or the consignee.

- Forwarding agent - acting as an indirect representative, on his own behalf and for the account of the shipper or the consignee. Then the legal relationship arises between the freight forwarder and the relevant parties – physical service providers, and the freight forwarder is expected to transfer the result of these services to the shipper or the consignee, based on the freight forwarding contract. In this case, payments with subcontractors go through the freight forwarder, who bears the risk of non-payment by the shipper or the consignee. In addition to payments, the freight forwarder is also responsible for the organisation of the whole transportation process, bearing the risk of downtime and other charges caused by lack of good process coordination.

- Transport operator - acting as a contractual carrier, issuing a house shipping document to the shipper. In this case the master shipping documents are issued on the name of the freight forwarder by the subcontractors. In addition to all risks and responsibilities for the forwarding agent, the transport operator is also liable for cargo damage or shortage and has the right to recourse claims against the subcontractors.

Freight forwarders can provide global logistics services without any restrictions in their geographical scope, mode of transport or cargo type. However, some of them are profiled in a given geographical area, mode of transport or cargo type and, due to their expertise in the relevant field, they often receive orders to work as subcontractors for other freight forwarding companies. This explains the high level of cooperation in the freight forwarding industry.