A brand usually uses a forwarder when it moves goods across a border in bulk, such as containers or air freight from a factory to a US warehouse or 3PL, and does not want to book each leg itself. An order going to a customer by parcel does not need one: it goes through a parcel carrier or a 3PL.
What Does a Freight Forwarder Do?
The main services are:
- Booking cargo space. Booking, arranging or confirming space with the carrier, and coordinating the movement from origin to the vessel.
- Shipping documents. Preparing or processing the carrier's bill of lading or other shipping documents, dock receipts, delivery orders and consular documents.
- Export filing. Preparing the export documents, including the Electronic Export Information filed in the Automated Export System.
- Storage and insurance. Arranging warehouse storage and cargo insurance.
- Advice. Advising exporters on letters of credit, licenses, inspections and other documents.
FIATA, the international federation of freight forwarders associations, adds consolidation (combining smaller shipments into one load), handling, packing and distribution of goods.
Types of Freight Forwarders in the US
US law splits the role by mode, and each mode has its own license or approval.
Ocean freight forwarders and NVOCCs
The Shipping Act groups ocean freight forwarders and NVOCCs (non-vessel-operating common carriers) as ocean transportation intermediaries. An ocean freight forwarder dispatches shipments from the United States via a common carrier, booking space for shippers and processing the paperwork. An NVOCC is a common carrier that "does not operate the vessels by which the ocean transportation is provided": it is a shipper toward the ocean line and a carrier toward its own customers, and, in the Federal Maritime Commission's description, issues its own house bill of lading. A US-based company needs an FMC license to act as either, plus proof of financial responsibility, most likely a surety bond, of $50,000 for an ocean freight forwarder license or $75,000 for an NVOCC license. The International Trade Administration notes that most freight forwarders are also NVOCCs.
Air freight forwarders
US aviation security rules call a business that arranges air freight an indirect air carrier. It holds no FAA air carrier certificate, uses airlines' flights, and needs a TSA-approved security program to hand cargo to airlines flying larger aircraft. IATA's Cargo Agency Program is a separate industry accreditation, not a government license.
Domestic freight forwarders
Within the US, a freight forwarder assembles and consolidates shipments, takes responsibility from pickup to destination, and uses carriers for the moves. Federal law counts it as a carrier, unlike a freight broker, which arranges transportation without being the carrier. It registers with the US Department of Transportation, and needs a separate motor carrier registration to run its own trucks.
Freight Forwarder vs. Customs Broker
Fig. 1 · Comparison
| Item | What it does | US license or approval |
|---|---|---|
| Ocean freight forwarder | Books space on common carriers for US exports and processes the shipping documents | FMC license plus proof of financial responsibility |
| NVOCC | Sells ocean transport as a carrier and issues its own house bill of lading | FMC license plus proof of financial responsibility |
| Indirect air carrier | Arranges air cargo on airlines' flights | Approved TSA security program to tender cargo to airlines |
| Customs broker | Files import entries, classifies goods and pays duties with CBP for importers | CBP customs broker license |
A forwarder without a customs broker license from US Customs and Border Protection (CBP) cannot file entries for its clients: the importer files for itself or uses a licensed broker.
Export filing works differently: the Census Bureau's rules let a forwarder file the export data as the exporter's authorized agent, and that role asks for a power of attorney or written authorization, not a customs broker license. For how forwarders and brokers hand goods off to a 3PL warehouse, see 3PL vs freight forwarder vs customs broker.