Insights & News

The Difference Between Freight Forwarder & Customs Broker

image of a port with containers and multiple modes of transportation

Posted On March 13, 2024

Today, businesses meet various challenges when dealing with international shipping. 

Indeed,  in the growing complexities of global trade, following rules and regulations while moving freight across the globe requires experience and expertise.

This is where freight forwarders and customs brokers come in.  

What is a freight forwarder?

A freight forwarder is a company or an individual that arranges and oversees the efficient transportation of goods from their point of origin to their final destination.

Freight forwarders deal with domestic and international freight shipping. They have expert knowledge of the transportation and logistics industry and act as intermediaries between carriers and shippers.

Above all, freight forwarders ensure smooth and cost-effective shipping. They undertake various administrative and logistical duties to avoid shipment errors and other issues that could cause delays, unnecessary charges, or compliance violations. 

A freight forwarder often acts as a shipping advisor who helps businesses scale their overall transportation procedures, saving them money and time. 

Today, it’s an indispensable service for any cross-border logistics operations. In fact, the global freight forwarding market size is expected to grow from approx. $169 billion in 2023 to approx. $207 billion by 2028.

What exactly does a freight forwarder do?

A freight forwarder works on many levels to coordinate and facilitate the entire transportation process. 

In international shipping, services provided by freight forwarders include:

  • Find and book the ideal mode of transport for every shipment: road, rail, sea, or air, or plan efficient intermodal shipping.
  • Negotiate rates with national and international carriers.
  • Optimize freight rates, taking into consideration port/airport charges and other fees.
  • Deal with freight insurance.
  • Handle the required documentation needed for every shipment.
  • Ensure compliance with import and export requirements and incoterms.
  • Consolidate small loads to create bulk shipments.
  • Assemble/disassemble shipments as required.
  • Keep cargo safe and arrange crating and packaging.
  • Regulate warehousing and fulfillment processes as needed.
  • Track shipments all the way to their destination, offer updates, and solve any problems that might arise.
  • Advise businesses on current logistics requirements and best practices.

Many international freight forwarders also offer customs brokerage services.

What Is A Customs Broker?

A customs broker is a company or an individual that facilitates the import/export of goods.

Customs brokers act as liaisons between the shipper and the customs departments in every country. If based in the US, a customs broker for international shipping is licensed and regulated by the United States Customs and Border Protection (CBP). 

An international shipping broker advises traders on everything they should know concerning customs and freight.

Plus, they issue and submit all clearance documentation paperwork and communicate with local customs offices on the shipper’s behalf. 

Companies that use a customs broker for shipping take advantage of consultation services and updates on import/export requirements and regulations.

It’s worth noting that the global customs brokerage market size was valued at approx. $23.76 billion in 2022 and is expected to reach approx. $36.77 billion by 2028.

What Exactly Does A Customs Broker Do?

A customs freight broker helps businesses dealing with international trade handle all customs processes, ensuring compliance and smooth operations. 

Services provided by a freight customs broker include:

  • Offer expert advice on all import/export requirements and navigate through certain countries’ complex regulatory and tax systems, such as Australia or Brazil.
  • Submit paperwork and payments to country-specific customs departments and other government agencies as required.
  • Deal with clearance and customs compliance issues.
  • Determine product classification and handle binding ruling requests.
  • Submit any special documents in advance, as dictated by government regulations – like the ICS2 protocol in Europe.
  • Act as the Importer Of Record (IOR) on the shipper’s behalf.
  • Supervise and monitor customs processes.
  • Store related transaction documents on the shipper’s behalf for a period of at least 5 years.
  • Assist with dispute resolutions and customs audits.
  • Advise on special duties and trade agreements between countries, for example, the United States-Mexico-Canada Agreement (USMCA) or the Central American Free Trade Agreement (CAFTA).

Customs brokers and freight forwarders work together to get your cargo shipped through countries and continents and have it delivered seamlessly and on time.

They can be separate service providers or different departments of the same international shipping logistics provider.

Customs Broker Vs. Freight Forwarder: What’s The Difference?

The difference between a freight forwarder and a customs broker is that a freight forwarder manages the transportation of goods. In contrast, a customs broker handles cargo entry at the point of customs.

Freight forwarders arrange and streamline shipment transportation from Point A to Point B.

They do not normally deal with customs clearance procedures unless they offer certified customs broker services – which is exactly what we do at Flat World Global Solutions.

On the other hand, both customs brokers and freight forwarders help businesses streamline and optimize the entire international shipping process for every individual shipment. 

Customs brokers and freight forwarders work in similar ways:

  • Enhance transportation procedures
  • Ensure compliance
  • Offer up-to-date advice
  • Provide cost-effective shipping

Leveraging International Shipping For Success

At Flat World Global Solutions, we help businesses move inventory across the globe seamlessly and effectively.

Our state-of-the-art technology, coupled with our innovative approach and deep experience in international shipping, offer our customers tailored solutions to meet their cross–border transportation and customs compliance needs.

At Flat World Global Solutions, we prevent challenges from becoming roadblocks. Our value-added services in international logistics not only improve competitive positioning but also increase profits. Contact us to find out more.

FAQ #1 – Do Freight Forwarders Clear Customs?

Freight forwarders are responsible for the transportation of goods from an origin to a destination and undertake a variety of transport-related services.

By definition, customs brokers deal with various freight clearance procedures and documents.

However, freight forwarding companies often have customs brokerage experts who offer freight clearance services.

FAQ #2 – What Is An Importer Of Record?

An Importer Of Record (IOR) is the party responsible for customs and legal compliance of the country of import. An IOR can be the owner of goods, a legally designated individual, or a customs broker.