What really do clearing and forwarding agents do?
Clearing and Forwarding agents:
Clearing and Forwarding agents are a link between the owners of goods and owners of means of transport. They help cargo owners in efficient movement of goods to the buyers by completing a number of procedural and documentary formalities. Some of the documents involved in customs clearance are :
- Exports Documentation: Purchase order from Buyer, Sales Invoice, Packing List, Shipping bill, Bill of Lading or air way bill, Certificate of Origin and any other specific documentation as specified by the buyer, or as required by financial institutions or LC terms or as per importing country regulations.
- Imports Documentation: Purchase Order from Buyer, Sales Invoice of supplier, Bill of Entry, Bill of Lading or Air way bill, Packing List, Certificate of Origin, and any other specific documentation required by the buyer, or financial institution or the importing country regulation.
Customs Agents prepare the document of Shipping Bills in house for submission while rests of the documents are obtained from the client. Preparing shipping bill involves Classification of cargo under specific classification which is a critical activity in the entire process.
Customs clearance agents are also called Carrying and Forwarding agents. They are registered and licensed by Customs to operate. Their role is limited to acting on behalf of and representing clients as third party agencies engaged in customs clearance.
Customs Agents are linked through EDI with customs in most of the countries and use documentation software to facilitate entire process.
Performance of clearing and forwarding functions;
- Aid in the local transportation in container transportation and also work on reservation of shipping space.
- Aid in selection of mode of transport, packing, marking and labeling and completing customs and port formalities.
- Its duty is also on cargo insurance, advising exporters on trade laws and educating exporters.
- Its duty is coordination with other agencies and procuring of necessary documents.
- Clearing and forwarding as a function coordinates the complexity of ¢financial, transport, and other service activities. They can be thought of as travel agents for cargo ¢shipped to overseas locations. Freight forwarding agents negotiate inland and ocean rates besides offering valuable ideas on optimal and the most cost-effective shipping alternatives.
Clearing and forwarding is carried out by freight forwarders or agents. These agents aid in the performance of clearing and forwarding functions in the following ways;
- A freight forwarder makes recommendations regarding receiving payments for exports. These forwarding agents provide custody and control of material in ¢transit. They assist or prepare commercial invoice, packing list, draft, transmittal letter etc.
- Clearing & Forwarding Agents performs various logistics services that may expound to shipping but mainly a Clearing & Forwarding Agents service may include creating an invoice for international shipping, making arrangements for the shipment pickup and cargo delivery reports, arranging and coordinating customs for attaching warehousing, thoroughly completing all the documentation work required for your shipment, and finally confirming the delivery of your shipment.
- Clearing & Forwarding Agents have established relationship with shipping lines, sea, air and land transportation system including rail services, trucking, and shipping ocean liners. Once the shipment has been handed over to the Clearing & Forwarding Companies Agents, the shipper or the cargo owners can rely on clearing and forwarding agents for timely shipping and safe delivery of the cargo. NOTE:A good Clearing & Forwarding Agents will always be perfect in logistics skills of how to arrange for careful shipping of cargo whether they are dangerous cargo or require any additional support meets the shippers’’ specific wishes all along the sailing or shipping routes.
- Clearing & Forwarding companies Agents manages the trucking logistics for airfreight and ocean freight import and export. Apart from that, Clearing & Forwarding Agents are also ready to even provide packaging, letters of credit and consular documentation. NOTE: Clearing & Forwarding Agents calculation of clearance and freight charges depends upon the distance and other arrangements made thereof for the safety of the product such as refrigeration facility, container facility, or some other sort of preservation facility is required, or if there is any hazardous material included in the package, or the number of carriers that would be required to carry the goods, etc.
- Clearing & Forwarding Agents calculate all these factors for selecting the best bid then add their own fee and then give the client a cost. If the Clearing & Forwarding Agents agree with shipper or cargo owner over the same frames of price, time and task, then it becomes the responsibility of the Clearing & Forwarding Agents to ship the assigned cargo to the destination.
- Clearing and forwarding agents find out freight rates.
- The agents pay freight bill and receive bill of lading from shipping company.
- Clearing and forwarding agents enclose bill of lading and send copies to shipping line and customer or to the bank acting intermediary.
- Clearing and forwarding agents arrange adequate parking including shipping marks.
- The agents also receive call forward notice from shipping company.
- The clearing and forwarding agents register details on custom entries forms and send to customs. The financial stability of customs brokers or other third party providers is therefore one of the issues to be carefully considered in their selection. Others are:
a)Competence of managerial and operational staff
Within the East African Customs Union Partner States (Burundi, Kenya, Uganda, Tanzania and Rwanda), there is an agreement by the customs administrations and revenue authorities that customs brokers undergo required, uniform training to enable them to obtain practicing certificates issued by Customs as a condition for their licensing. Continuous professional development will also be undertaken for those agents with practicing certificates, in collaboration with the International Association of Freight Forwarders (FIATA).
b) Membership in a national association of freight forwarders
In some countries (such as within the EAC Partner States) membership in a national association is a prerequisite for licensing with Customs. If a clearing agent firm is not a member of a national association, it is a clear sign such a company might be having problematic issues with Customs, and has therefore not been recommended for initial licensing or renewal. However, membership should not be construed as evidence of a firm’s integrity or professional standing at the present moment.
c) Agreements with other third party service providers
Clearing and forwarding companies provide transportation services within the same firm, or through an arrangement with third parties. Even if the qualifications of the clearing firm could be impeccable, engaging dubious transporters may cause delays if the truck is seized by Customs for one offence or another. For example, a truck conveying goods that have been cleared legally through Customs that are, however, commingled with others which have been smuggled. This may cause the delay of all the goods if the truck and the goods are seized.
d) Reputation within Customs
Customs brokers interact with Customs on a day-to-day basis whether face-to-face or electronically. Therefore, usually customs officials have a good understanding and insight into the competence and integrity of potential agents.
e) Period of operation
Keeping all factors constant, a company that has been in operation for a long time without a break is likely to have more sound governance and reputation in comparison with a complete beginner. Since most clearing firms in many countries in Africa are in the small and medium enterprise category, it would be quite risky to entrust the job of clearing large quantity, high value goods to a firm that may not have the capacity to deliver.
Adopted from Rita Nadia,