Freight shipping is necessary in order to move goods from one country to another.

Any individual, partnership, or corporation engaged in (a) the booking of or arranging for cargo space for export shipments on ocean carriers, or (b) the preparation and/or processing of any necessary shipping papers in connection with export ocean transportation, or (c) the clearance of export shipments in accordance with the regulations of the United States Government, or (d) the arranging for certification of consular documents. From this definition, it is evident that little similarity exists between the activities of foreign freight shipping Houston forwarders and those of domestic freight forwarders. The essential difference to be noted is that the international freight forwarder has none of the characteristics of a carrier. He receives goods for transportation and delivers them to the carrier by which they are to be transported, but he does not assume, and is not paid for, the transportation.

The Foreign versus the Domestic Forwarder

In domestic transport, whether by land or by sea, the freight forwarder assembles numerous small shipments from different shippers and consolidates them into larger shipments is called carload lots in the case of railroads. Since the railroads and the motor carriers offer lower rates per pound for large shipments than for small ones, the forwarder receives the advantage of the lower volume rates on his traffic. He usually charges the shipper the same rate that the latter would pay the underlying carrier on small lots, and therefore receives the amount of difference between the low volume rate and that which he himself has to pay the carrier. In domestic transportation, the term freight forwarding does not carry the connotation of consolidation of functions that it does for international trade. Freight forwarding in the domestic sense implies merely the grouping of a few shipments to meet minimum requirements as to weights.

In contrast, the foreign freight shipping Houston forwarder acts as an agent of the shipper or carrier, a capacity in which he performs functions in regard to customs, prepares waybills, books cargo space, advises on export and import quotas and licenses, or prepares consular invoices. When he reserves or books space on a specific carrier, the foreign forwarder usually does so for the shipper and not for himself, and he usually does not issue his own bill of lading. His compensation is an agency fee, paid by the shipper-exporter or by the carrier and, as will be shown later, sometimes by both. Basically, therefore, the freight forwarder acts as an agent of the exporter (he is then a forwarder, strictly speaking), of the ocean carrier (in which case he serves as a freight broker or steamship broker), or of the importer (customhouse broker).