Setting up as a Freight Forwarder

Introduction ability to work on several different tasks Although English is the common and projects at the same time will be language of international trade, the A freight forwarder provides a service to very useful. For all that, it is unlikely to ability to speak other languages will give people and companies wishing to send be 9 to 5 work all the time. You will be you a headstart. Such linguistic ability items from one country to another. The working to help your customers meet will allow you to offer the personal touch goods that are shipped can vary from tight delivery deadlines and you may when dealing with clients, Customs an envelope up to huge machinery. The sometimes have to make contact with departments and shippers overseas. mode of transport can be road, rail, sea people in entirely different time zones. You should also be prepared to travel or air. Forwarders arrange the transport occasionally, whether it is simply to details so that the freight arrives at your local airport or to the other side its destination in good condition In addition, the successful freight of the world. and at the right time. They research forwarder has a broad range of skills shipping prices, provide information and abilities which may be summed up on routes, book space, prepare as knowledge of the industry. You will What formal training do you and check documentation, handle be entering a complex market filled with various regulatory requirements and, if a multitude of differing practices and need? necessary, arrange storage. regulations, so some of your knowledge For the most basic freight forwarding, will be theoretical, gained from studies, no formal training or qualifications are and could involve international trade officially required but industry tuition Thanks to experience and know-how, law, economics, finance or trade. is highly desirable and recommended. forwarders frequently offer additional It will also consist of practical If your business is more complex, services including Customs brokerage, experience in the freight forwarding however, involving the carriage of holding inventory, insurance, haulage trade or in something very similar. hazardous materials, forwarding and other carriage such as shipping The more awareness you have of freight overseas, or the provision of and overseas market consultancy. overseas markets, shipping methods, insurance, you may well be required Freight consolidation – grouping goods insurance, paperwork, cargoes and under IATA regulations or UK law to hold from various places together to reduce Customs procedures the better. qualifications yourself or ensure one or costs – is an indispensable part of the Compliance with regulations is essential more of your employees do. services that are offered. and knowledge of the transport of dangerous goods or the UK Department There is a wide choice of training The industry is large, very well of Transport Aviation Security regime available in all aspects of the freight internationalised, and is populated may be needed. industry, and even if you have plenty of with companies ranging from sizeable experience you may find some of the multinationals to sole operators. This A broad range of contacts will be following courses will enable you to fill profile looks at setting up a small freight useful when building up your company in the gaps in your current knowledge. forwarding business, and examines or winning new business. This will be some of the issues involved, as well as complemented by a friendly disposition, suggesting promotional methods and patience, and the ability to sell yourself sources of further information. and your business. Ideally, you will already have an idea of which sectors Are you suited to this type or specific companies you intend to target as customers, so sources of of business? informal advice within the trade will As a rule, the business of freight be useful both at start up and as your forwarding is carried on in an office, so business grows. some experience of everyday clerical work is essential. It also means that communication skills, numeracy and the

Redfern House, Browells Lane, Feltham, Middlesex TW13 7EP United Kingdom T: +44 (0)20 8844 2266 F: +44 (0)20 8890 5546 E: [email protected] W: www.bifa.org Page 1 of 4 Setting up as a Freight Forwarder

The British International Freight At the same time, many freight Who will you be competing Association (www.bifa.org/training) runs forwarders win long term contracts courses on a variety of subjects: with manufacturers to oversee the against? Your chief source of competition will be • Sea Freight – The Basics regular movement of shipments between specific ports, or cater for other freight forwarders, ranging from • Introduction to Air Cargo. This manufacturers needing a consolidation small companies to multinationals. Their is an IATA-approved course. To service for smaller volumes of freight. competitive threat to your business become an IATA-approved cargo depends on the type of business you freight forwarder, you must provide decide to concentrate on and the evidence that you employ at least Small freight forwarders often specialise customer sector you aim to attract. two full-time staff with either an in a particular type of freight or in Small companies and sole traders may approved course or the IATA or carriage of goods between certain specialise in serving specific regions of FIATA Introductory Diploma areas. It may be worthwhile channelling the UK or individual industries, and it is your know-how to suit one or more • Customs Procedures often the case that they have occupied of the following customer groups or • The Multimodal Freight Training comfortable niches for many years. activities: Programme (MFT) levels 1 and 2, You may be able to compete with these which cover export documentation, • Companies in the world of companies by offering a greater range international contracts, Customs entertainment and sports often of services and skills, and by attempting procedures and carriage of use freight forwarders to arrange to match customers’ increasingly dangerous goods transport for concert sets, sports complex needs. equipment, exhibitions and film sets • Customer Service for the Freight • Importers of perishable goods such Industry, which explores basic Multinational freight forwarders have as fresh fruit and vegetables, fish communication skills numerous advantages. They may also and horticultural products, as well • The full syllabus of Aviation Security be shipowners and hauliers, they handle as refrigerated meat and other foods Training enough freight to be able to book • The movement of livestock between • A full range of Dangerous Goods regular space on shipping lines, and agricultural countries training courses. they frequently have branches in many • Medical and pharmaceutical different countries. Their ability to offer There are other training providers such supplies, particularly those supply chain management is currently as The Institute of Export (www.export. requiring careful handling or special much in demand from manufacturers org.uk) or the Chartered Institute of conditions seeking an integrated service covering and Transport (www.ciltuk.org. supply of components and materials to uk) • Heavy industries, ‘out of gauge’ components and distribution of finished goods. assemblies, such as the aerospace, Who are your customers power generation, and likely to be? sectors • Car and automotive parts Your customers will mainly be exporters, manufacturers. importers or other freight forwarders. You may find your business dealing with hauliers and other freight carriers operating only between towns and regions in the UK, and who occasionally need your expertise to send goods abroad, or you may be contacted by foreign companies looking to arrange for the import of freight from abroad.

Redfern House, Browells Lane, Feltham, Middlesex TW13 7EP United Kingdom T: +44 (0)20 8844 2266 F: +44 (0)20 8890 5546 E: [email protected] W: www.bifa.org Page 2 of 4 Setting up as a Freight Forwarder

How can you promote this • A website is very important for Well-designed stationery will also give freight forwarders, and should not your customers a good impression. enterprise? only be designed to help You should consider brochures and Your promotional efforts should be UK companies find you, but should marketing material, which vary in exclusively directed to reaching your aim to attract the attention of price according to their quality and target market of businesses and overseas companies as well. This use of colour. manufacturers seeking to import may mean translating the most or export goods. Thus you should important parts of the site into If you plan to serve your local market emphasise your ability to cut costs and the relevant languages, making (for example, nearby manufacturers), your specialist knowledge. sure your telephone number transport will be very useful, allowing and international code is clearly you to oversee packaging, loading, and displayed for people calling from • The Yellow Pages is a good place to unloading of imported goods. start. A display advertisement will be abroad, and registering with the expensive but has the advantage of most popular directory websites. promoting your business for at least Furthermore a well designed You will also need to plan for operating a year. For a small additional outlay, website can bring to the attention expenses. These could include you will be able to include your of potential customers all of the advertising and promotional costs, listing on the www.yell.com website services that you offer. You could insurance (employer’s liability, public even provide enhanced services liability, a freight forwarders liability • Your local chamber of commerce such as a ‘track and trace’ facility. policy and possibly professional should be a useful place to indemnity insurance), and utility meet decision makers from local costs such as electricity, heating businesses and begin to build your What start up costs can you and the telephone. reputation. Most chambers organise networking events, seminars, and expect? training days, but you should also Your first decision with regard to costs Finally you may need cash reserves or consider offering the chamber will concern whether to start up your an adequate bank facility as customers some of your expertise in export business from home or to lease office will probably expect a level of credit. documentation and overseas space. Clearly, the first will reduce Some companies obtain credit markets your expenses, but you will need to insurance however the need for firm • Advertising in various trade-related give some thought to the best way to credit control cannot be understated. magazines will also help get your arrange your home office. On the other name known. This will mean hand, leasing an office will be expensive researching the business periodicals but will help give a good first impression in your area, or the magazines to new customers and allow you to devoted to particular sectors, then separate work and home life. deciding on a budget and design for your advertising A computer and internet connection will • Building a list of local be essential for dealing with customers manufacturers, including addresses across the world. and contact names, will allow you to promote your business on If you plan to offer clearance services a continuous basis using both a suitable software package will be mailshots and more personalised needed together with links to the letters informing logistics managers HM Revenue and Customs computer of your services system. There will be general capital expenditure to furnish and equip your office.

Redfern House, Browells Lane, Feltham, Middlesex TW13 7EP United Kingdom T: +44 (0)20 8844 2266 F: +44 (0)20 8890 5546 E: [email protected] W: www.bifa.org Page 3 of 4 Setting up as a Freight Forwarder

What are the legal issues to Numerous sets of rules govern Joining BIFA international trade and also Standard Most UK freight forwarders are consider? Trading Conditions will be used in Members of BIFA and enjoy the This section is intended solely as a contracts for the carriage of goods strength of the BIFA Standard Trading guide. You should consult a qualified and you should be aware of how they Conditions (STC) which they use for professional before making any are interpreted and implemented, as their international freight contracts. decisions you believe will affect your well as being familiar with a number of They are a fair set of conditions business. standard types of contract. You need to regularly reviewed against consumer be very clear as to your responsibilities legislation and the Unfair Contracts and liability under any new contract you Your business will be affected by two Terms Act. They have been developed strike. broad categories of law. The first is over a number of years and have been domestic law governing all business regularly upheld in the Courts. owners and employers in the UK, and In addition you should be familiar the second is international trade law with agency agreements and the Law Liability insurers and brokers will often and local regulations which dictate most Applicable to Agency, letters of credit require a freight forwarder to be a of the procedures you will follow or and bills of lading. You may well be the Member of BIFA before providing cover. need to know about when importing or principal or contractor for forwarders exporting freight. across the world. • The UK Companies Act applies If a freight forwarder meets the criteria to all companies and sets out for entry to the Association following You will also need liability insurance to company legal status, directors’ an audit they join as a Probationary protect your exposure to liability under responsibilities and standards of Member. Full Registered Trading Common Law or any of the Conventions governance Membership can be obtained by or Trading Conditions which you meeting the conditions imposed at • You should research registering your operate against. business with Companies House the entry audit and this should be and ascertain if you need to register achievable within three years. for VAT • Under Health and Safety legislation BIFA also provides training at reduced all employers are required to prices to Member companies and is a ensure their workplace is safe. This valuable source of industry information. means formulating a health and safety policy and carrying out a risk Information on how to join BIFA can be assessment found at http://www.bifa.org/content/ • In addition, the Employers’ Liability Join-Enq.aspx (Compulsory Insurance) Regulations require all employers to take out insurance against staff accidents and injuries, and to display a copy of the certificate of insurance in the workplace.

This Guide has been produced by the Association with a view to providing general industry guidance to Members. However, it is not legal advice nor is it a substitute for legal advice. The Association is only in a position to provide general non-legal guidance as each Member’s situation may be different and this may affect particular legal advice that may be given by suitably qualified lawyers to each Member. The Association is not able to provide legal advice and if you wish to ensure that any specific action you intend to take while relying on this general guide is legally appropriate you are advised to consult a qualified lawyer experienced in the relevant legal field which may include forwarding, transport, logistics, international trade and commerce in advance of taking such action.

Redfern House, Browells Lane, Feltham, Middlesex TW13 7EP United Kingdom T: +44 (0)20 8844 2266 F: +44 (0)20 8890 5546 E: [email protected] W: www.bifa.org Page 4 of 4 July 2012