International trade holds the promise of exciting new markets, but for exporters, it can also be a double-edged sword. Partnering with a third party may be necessary to navigate the complexities of logistics and compliance. However, relinquishing control over these crucial aspects can feel unsettling, and rightfully so. Ensuring your shipments are properly reported in the Automated Export System (AES), export documents are completed accurately and U.S. export regulations are followed is paramount. It’s not something you can leave solely to chance.
That’s where reliable freight forwarders come in. They become extensions of your team. Building a strong relationship with your forwarder is key to a compliant and successful export journey. I spoke with Chrissy Blanchard-Schaffer, International Customer Service Manager at RBP Chemical Technology in Wisconsin, about ways to cultivate a strong relationship with a freight forwarder.
Keep these seven tips in mind before outsourcing your logistics and export compliance responsibilities and you’ll feel confident that your freight forwarder is a true partner, not a liability.
1. Find the right fit when choosing a freight forwarder.
Selecting the right freight forwarder is the foundation for a successful partnership. Look for a company with experience in your industry and familiarity with the specific lanes you typically use. Do they offer additional services you might need, such as crating for delicate cargo or expertise in handling hazardous materials? Are they familiar with shipping to the countries to which you will be exporting? Competitive rates are important, but don’t prioritize price over experience and a strong reputation for customer service.
While building a strong relationship with a primary freight forwarder is important, Blanchard-Schaffer recommends not putting all your eggs in one basket. Maintain a network of several trusted forwarders. Your shipment’s contents and destination may necessitate using different forwarders at different times.
2. Establish clear communication from the start.
Establish open lines of communication with your freight forwarder from the outset. Clearly communicate your shipping requirements, timelines and any specific instructions or preferences you may have. Providing comprehensive information upfront will enable your forwarder to tailor their services to meet your needs effectively. And don’t be afraid to ask questions! A good freight forwarder should be happy to explain procedures, answer your questions and address any concerns you may have. Regular communication throughout the shipping process keeps you informed and allows for proactive problem-solving if issues arise.
3. Use a Shipper’s Letter of Instruction (SLI)—and make sure it, along with your other export documents, is accurate!
An SLI is a form that provides all the essential data your freight forwarder needs to complete the Automated Export System (AES) filing, prepare other export documents and handle your shipment efficiently.
If your export shipment requires that you or your agent file your export information electronically through AES, the National Customs Brokers and Forwarders Association of America (NCBFAA) has created a specific version of the SLI that includes the additional information required for a freight forwarder to file on your behalf. You can download the free SLI template here.
Accurate export documentation is crucial for international shipments to clear customs smoothly, so you need to ensure the information you provide on your SLI is accurate. Any discrepancies or errors in documentation can lead to delays and additional costs. When Blanchard-Schaffer is completing an SLI, she includes the following statement on the form: “Forwarder must provide shipper with copy of bill of lading and AES filing upon export,” which relates to our next tip…
4. Request copies of your Electronic Export Information (EEI) filing.
The Automated Export System (AES) is the electronic filing system used by exporters to submit export information to U.S. Customs and Border Protection (CBP). While the responsibility of filing with AES can be outsourced to a freight forwarder, the liability cannot. Keeping records of these filings ensures compliance with export regulations and provides valuable documentation for your records.
How should you request this information from a freight forwarder who filed on your behalf? Just ask. A good freight forwarder knows that they are required under the U.S. Foreign Trade Regulations to provide that information. Also, the Automated Commercial Environment (ACE) where AES is filed has a reporting feature where you can log in and see what export shipments have been filed using your company’s tax ID number. We explain how to do so here.
Alternatively, you can file through AES yourself. With export documentation and compliance software such as Shipping Solutions, filing is as simple as clicking a button. The same data you entered to complete your export documents is easily uploaded to AESDirect. This method eliminates redundant data entry, which reduces mistakes and provides substantial cost savings. Some Shipping Solutions customers say they recouped their investment in the software in less than 10 export shipments. Plus, you get the added benefit of keeping the AES filing in-house, which is safer since the exporter is responsible for the accuracy of the data regardless of who files it.
5. Understand export regulations.
Export regulations can be complex and subject to change, particularly in today’s rapidly evolving global trade landscape. Stay informed about export controls, sanctions and compliance requirements relevant to your industry and target markets. Your freight forwarder can offer valuable guidance on navigating regulations and ensuring your shipments remain compliant, but you are ultimately responsible, so make sure you’re aware of what’s required of you.
6. Understand how Incoterms impact the shipment.
Incoterms, developed by the International Chamber of Commerce (ICC), are internationally recognized standards that define the responsibilities of buyers and sellers in a sales contract. The specific Incoterm used in your agreement will dictate which party is responsible for tasks like loading, unloading, customs clearance and insurance at various stages of the shipping journey.
Getting copies of certain documents, like the bill of lading, may be more difficult depending on which Incoterms 2020 rule is used. If the buyer hires the freight forwarder, the forwarder may feel no obligation to provide you, the seller, with copies of documents. But Blanchard-Schaffer said that she still has the same demands even if she didn’t choose the forwarder—copies of the AES filing and the bill of lading. In her experience, most freight forwarders have had no problem complying.
If a forwarder isn’t cooperative, you should go to your buyer and ask them to choose a different freight forwarder in the future. What should you say? “We have obligations for record-keeping here in the United States to stay in compliance with U.S. export laws and regulations, and your forwarder didn’t meet our needs as far as export documentation. Please find another freight forwarder.”
You can learn more about all 11 Incoterms 2020 rules in our article An Introduction to Incoterms. You’ll especially want to understand these Incoterms, where the buyer chooses the freight forwarder:
- Ex Works (EXW) is the only Incoterm that makes export clearance the responsibility of the buyer, but under the U.S. Export Administration Regulations and the Foreign Trade Regulations, the seller does not escape responsibility for export compliance.
- Free Carrier (FCA) includes a provision so the buyer can instruct the forwarder to provide the seller with a copy of the bill of lading so that the seller may satisfy the terms of a letter of credit. (An international carrier won’t typically provide a seller who did not present the goods directly to them with a bill of lading, which is the case when using FCA.)
7. Provide feedback and evaluate performance regularly.
Continuously evaluate the performance of your freight forwarder and provide feedback on their services. Constructive feedback helps identify areas for improvement and ensures your needs are being met. Also, take their feedback. If you’re not providing them with the information they need to do their job well, you’re only hurting yourself.
Annually, Blanchard-Schaffer compares the rates and services offered by her network of freight forwarders. She’ll get quotes from six or eight other forwarders to ensure her current freight forwarders are competitive. But, she warns, price is only part of the equation and not the end all when selecting a forwarder. Look back at the past year with your freight forwarder. How was the service? Was there poor communication? Were there delays? Did you struggle to get copies of documentation on time? All of those considerations should be taken into account, not just price.
Learn More
Fostering a strong partnership with your freight forwarder is paramount. To learn more about this topic, check out the following articles:
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