How to pay an international freight forwarder

How to pay an international freight forwarder

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Import and export goods overseas via ocean freight forwarding

Moving goods overseas can be a minefield of paperwork, fees and complex logistics. When used under the right circumstances, working with an international freight forwarder could provide UK businesses with the ultimate shipping solution.

A cost-effective global supply chain relies on knowing the right use case for freight forwarding services. Furthermore, knowing how to book and pay for these services without losing the value of your pound is key, as is knowing what to look for in a provider.

 

What is freight forwarding?

Freight forwarding companies are service providers hired to oversee the movement of goods. Although the term ‘freight forwarding’ usually refers to the shipping of goods by sea, many cargo forwarders also offer transportation by land and air, with transport by road often referred to as ‘international road haulage’.

 

How freight forwarding works

An international freight forwarder will act as a middleman between an importer and an exporter. They're tasked with managing and arranging the safe transportation of international goods into the UK.

This begins with arranging transportation from the international supplier to the port or airport. They prepare documents and licences for export at origin and for arrival at UK customs authorities. They will also oversee the booking and loading of cargo, and will arrange shipment insurance.

 

When will I need freight forwarding services?

Businesses book freight forwarding services when they want specialist import/export help. If you plan to export high-value items or large volumes of goods, working with a cargo forwarder could save time and money. These companies offer established trade routes, knowledge of packing and moving certain types of goods, the ability to arrange customs clearance and an understanding of the bonds and guarantees needed for duty and tax payments.

For many businesses, this combination of expert services will significantly reduce the stress and cost of exporting or importing goods across frontiers.

 

What to consider when booking international freight services

After you’ve selected the right international supplier for your business, you’ll need to find an experienced freight forwarder to collect the goods and deliver them to you safely.

Your chosen global freight forwarder will ideally be equipped to manage the perishability, size and weight of your goods. Trade experts advise working with an established member of the British International Freight Association (BIFA). You may also wish to check whether your chosen freight forwarder has experience moving goods to the country you’re importing or exporting to.

 

Freight forwarding fees

The cost of the cargo forwarding services you opt for will depend on a plethora of variables, including:

  • Type of cargo (delicate, perishable, hazardous, large items etc)
  • The weight and volume
  • Packing method
  • The size and number of containers used
  • Carrier costs and documentation fees
  • Potential administration fees

In most cases, you can calculate a quote online on each freight forwarder’s website to find the best service and price. You’ll need to factor freight and delivery into cost of goods sold (COGS) in your bookkeeping, too.

As the importer, you’ll need to provide full written instructions in advance of the pick-up/drop off. You’ll be responsible for licences, invoices, packing lists and international transport documents. You also hold all responsibility for the declaration of any hazardous goods and will need to obtain export licences for restricted goods or animals, if necessary.

 

How has Brexit affected freight forwarding?

Following the end of the transition period on January 1st 2021, the UK is now outside of the EU’s customs union, meaning that importing goods from overseas may require UK businesses to pay customs duties and file additional paperwork. A country’s regulations can be applicable even if the goods are only passing through that country, meaning there may be some extra costs or paperwork to consider for your import and export needs.

This will of course depend on the individual agreement that the UK has with the country you are exporting to or importing from. The UK has already signed trade agreements with a large number of countries following the completion of Brexit, while others are in the pipeline. It’s worth researching what the regulations and requirements are for the country in questions, with the UK Government website providing up-to-date information. The freight forwarder you are hoping to book with should also be able to provide you with a concrete list of the costs and paperwork required.

 

Paying an international freight forwarder

When paying for freight forwarding services, you may need to transfer funds via an international invoice. This could become more expensive if you’re making regular or large overseas payments from your business account, as the unpredictable FX markets create the risk that an affordable payment today could shift in a matter of hours.

Organisations planning to receive regular overseas shipments may find it more cost-effective to open an international payments account for your business. This provides you with a range of FX tools to limit your foreign currency exposure, as well as competitive exchange rates for your payments.

The currency tools on offer include a forward contract, which can secure a favourable rate for up to two years. This could help you to limit risk and gain more accurate shipping cost forecasting. For future payments, market orders can be used to automatically trigger an international transfer when a preferred rate has been reached.

When working with a foreign exchange provider, your business can rely on a more tailored and cost-effective solution for managing your global supply chain and freight forwarding needs. For more information, speak to one of our specialists today.

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