Forwarders and forwarding agents are persons who conduct the business of arranging the transport of goods for others. Forwarding agents are not ordinarily carriers and do not ordinarily undertake that goods will be carried. Their function is to act as agents in concluding contracts for the carriage or handling of customers’ goods with carriers or other independent contractors.
The FIATA definition of a forwarder is “A forwarder provides services of any kind relating to the carriage, consolidation, storage, handling, packing and distribution of the goods as well as the ancillary services including customs and fiscal matters, declaration of goods, procuring insurance and collecting or procuring payment or documents relating to the goods. FIATA Model Rules for Freight Forwarding Services.”
Forwarding agents vs shipping agents
The Forwarder or forwarding agent’s role and functions are as follows:
- Acts for cargo owner
- May arrange door to door
- May undertake consolidation and packing
- Deals with customs documentation for import and export
In contrast the Shipping Agent’s role and function are:
- Acts for shipowner /charterer
- Only deals with sea transit / port
- Usually do not undertake consol / packing
- Do not deal with customs for cargo
Forwarders’ role in cargo preparation
Sometimes the shipper relies on forwarder to prepare the cargo for export e.g., packing and stuffing. If the shipper’s cargo does not fill up a container, then the cargo is consolidated with other cargo into a container for the shipment. In such a case, the forwarder performs additional consolidation for LCL (Less than Container Load) cargo in this case.
The forwarder’s regular function is to liaise with and arrange shipment arrangements with ocean carriers. A key aspect of this duty is to ensure that correct information is provided to the ocean carrier for them to make arrangements to receive and transport the goods. This will include making bookings and preparing the draft bills of lading for the shipment.
In the English Court of Appeal case of Geofizika DD v MMB International Ltd (Greenshields Cowie & Co Ltd, Pt 20 defendant), it is explained that the freight forwarders’ duty was to procure a contract of carriage in accordance with the instructions of the client and that the freight forwarders were not in any way responsible for the supervision of the carriers’ performance of the contract or for the carriers’ failure to perform it.
In the case, the buyers requested that the cargo be shipped RO-RO (roll on, roll off). The freight forwarders sought to arrange carriage with carriers who they had not used before.
The carriers subsequently sent the freight forwarders a booking confirmation which stated ‘ALL VEHICLES WILL BE SHIPPED WITH “ON DECK OPTION” this will be remarked on your original bills of lading.’ The bill of lading contained at cl 7(2) a liberty clause that provided that goods ‘may be carried on deck or under deck without notice to the Merchant’.
On receipt of the original bills of lading, the freight forwarders declared the shipment under their open cover with their insurers. The open cover provided that loss or damage would be covered on alternatives in respect of vehicles, inter alia, shipped under deck or on deck in containers of all solid construction, on Institute Cargo Clauses (A), and in respect of, inter alia, vehicles shipped on deck not containerized, Institute Cargo Clauses (C).
The freight forwarders declared the shipment for cover under the first of those options, and issued a certificate of insurance that provided, inter alia, “Warranted shipped under deck”. Cover under clauses (A) was all risks and covered loss by being washed overboard, whereas (C) was much more restricted and did not cover goods being washed overboard.
As the bills of lading had not been claused on their face to show shipment on deck, the freight forwarders considered that they had been shipped under deck. The ambulances were, in fact, shipped on deck, unpacked and unprotected. During the voyage two of them were washed overboard.
The forwarders were held liable to the sellers who could not claim under the marine cargo insurance due to the breach of warranty for their negligence in not checking that the ambulances could be shipped on deck and thereby the warranty could not be complied with.
Forwarders’ role as agent
The freight forwarders role as an agent can be seen in cases where they do not issue any contractual documents (e.g., bill of lading, airway bill) and where their role is to arrange for transport e.g., arranging haulage for containerized cargo
Liability as agent
Liable if fail to exercise due care e.g., wrong execution of instructions or booking given to carrier. The cargo owners may pursue claims for loss or damaged cargo against the forwarder on the flawed premise: “We only deal with you and you are responsible for the safe transport and delivery of our goods.”
Forwarders’ role as principal
Where the forwarder issues contractual documents such as bills of lading and airway bills, they represent themselves to the goods owner as a contractual carrier.
Liability as principal
If bills of lading are issued, the forwarder functions as NVOCC (Non-Vessel Operating Common Carrier) will attract the full responsibility of that of a carrier. A NVOCC is a person who holds himself out to provide who assumes liability but does not operate the vessel upon which the cargo is carried.
Photo credit: iStock/ Kanda Peeraoranan
