What are the differences between a freight forwarder and a shipping agent? Understand!

  • 13/08/2019
  • 11 minutes

The shipping agent and the freight forwarder are two key professionals for logistics, but although they carry names that can be mistaken for each other, they work with distinct situations.

At the moment of loading, it’s possible that the charterer will get in touch with a freight forwarder and a shipping agent. These professions carry names that remind us of similar scenarios, but which should not be mistaken for each other!

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A freight forwarder and a shipping agent have completely different, although equally relevant, courses of action. We talked to Daniel B. Maul Lins, founder of Cargo Snap and a partner at Harms. He works in the two fields with a focus on the Northern and the Northeastern regions and, now, will explain the differences.

What’s a shipping agent?

The shipping agent acts in the name of a company. And, considering that each ship is a company, when it docks at a country, you need someone who knows the local legislation, who has some kind of relationship with the authorities, and who knows about each port’s and each terminal’s procedures. That’s where the work of the shipping agent comes in.

“The shipping agent is often also the one who buys things at the port where the ship has docked”, explains Daniel Lins. The figure of the shipping agent covers the crew’s need for practical information. “This professional also provides operational tips and orientates about how to behave, how to obey the local legislation, and how to deal with the local tongue”, points out Lins. “If that ship demands 50 ports per year, each terminal has a specific rule and a different modus operandi. Thus, the agent contributes so that the ship can have a better operational performance”, he completes.

While the shipping agent supplies the vessel with relevant operational information, he or she also defends the legal interests of the ship. Besides, the agent also helps in case of a medical emergency and offers complete assistance to the ship’s crew. “Colloquially speaking, the agent becomes the ship’s concierge at that port”, sums up Lins about the role of the shipping agent.

The work of the shipping agent begins the moment the ship is nominated to service that particular loading, when the company that will work on that demand is defined. From that moment on, he or she starts interacting with the ship’s captain, owners, and operators to know about how things are on board, to make predictions, and to provide a close accompaniment of this part of the trip.

As the delivery date gets closer, the interaction increases and the shipping agent details what the vessel needs, for example, if it needs to be refueled with bunker — the fuel for ships.

His or her work ends when the ship undocks and is free of any pending matters relating to that port activity. There’s where the operational work concludes, but the agent may stay on as just an assistant or consultant.

What’s a freight forwarder?

“When companies need to transport a certain product between two points, maybe they (the companies) are not the ones best suited for that. Because they don’t know or don’t have a great volume to negotiate with the shipowners. In that case, they resort to the freight forwarder”, explains Daniel Lins.

The freight forwarder deals with the cargo and not with the ship — he or she works as a facilitator in the process, negotiating in the name of several clients and ensuring more interesting fares and conditions than if only a charterer went straight to the market to negotiate.

“The freight forwarder is often subcontracted to accompany the cargo and track it to its final destination, also facilitating the emission of documents”, details Lins.

The figure of the freight forwarder is also welcome when you need to hire any kind of foreign logistics operation. The forwarder provides information about logistics and expertise in that field.

The work of the freight forwarder follows the specific cargo transportation process for which he or she was hired. The forwarder’s responsibility begins when the merchandise is taken out and ends when what has been negotiated is delivered to the predetermined place.

Shipping agents and freight forwarders can work together?

There are few cases where the freight forwarder and the shipping agent work together, because their contractors are usually different. However, in many cases, they work in a way that complements each other through their activities, in different stages and with distinct goals. The shipping agent’s contractor is, more often than not, the shipowner, looking to defend his or her interests. On the other hand, the freight forwarder is always appointed by the charterer, who owns the cargo.

Sometimes, in a COA – Contract of Affreightment, especially for bulk cargo or break bulk cargo, the charterer might put down in a contract who will nominate the shipping agent: the ship or the owner of the cargo.

The figure of the freight forwarder is more common in ships with container cargo and general cargo. “Those types of cargo usually go in liner ships — which have their own, preset route. In this case, the figure of the shipping agent is also predetermined by the shipowner, with the exception of transportation in bulk, in which case the charterer might choose to nominate the shipping agent”, completes Lins.

He continues, “in the case of ore, gasoline, ethanol, and diesel, the charterer has the power to also give an opinion on who will be the mandatary of that vessel in that terminal, because usually the ship is making the route there because of that professional.”

In that case, any kind of contact and interlocution with the ship or with the charterer starts being done through the shipping agent. He or she is the one who will attend to everything that happens during the ship’s stay at the port. “If it arrives on day 1 and leaves on day 5, if it carried an amount of X tonnes per hour, if it rained, if the operation had to be stopped, if there was a strike at the port, or if a hoist broke down. The shipping agent is the one who relays all that information”, says Lins.

There are also the cases of loading project cargo, when the charterer nominates a freight forwarder to coordinate the whole contracting of the logistics chain, from transportation from the factory to the final destination, including the shipping agent. In this case, the shipping agent works for the charterer, but as a subcontractor of the freight forwarder.

What does the market expect from these professionals?

To Daniel Lins, who works at a company with 75 years of experience, these professions went through an automation process, especially in the case of the freight forwarder, but that won’t compromise market opportunities.

“In the next few years, it’s calculated that the market will go back to having a sustainable growth, and that means there’s space for everybody who works as a freight forwarder, because the volume of cargo is huge”. He also alerts about types of cargo that need special treatment. “Not every service can be offered in an equal way; some clients don’t want a commoditized service”.

When it comes to the shipping agent, Lins guarantees, “it’s an activity that will never cease to exist”. He explains: “That’s because it’s a person-to-person activity; the added value is in the person. I believe that commercial relationships tend to be much more on the decision-making drive, where price is primordial, but the best results come from long-term relationships. Smart, mature companies adopt that posture”, he concludes.

Now that you know more about the differences between the freight forwarder and the shipping agent, keep navigating our blog to learn more about customs clearance!