PPCC Training Manual 9 (1).doc

122 freight forwarding and clearing one category of

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12.2 Freight Forwarding and Clearing One category of expects with which procurement agencies might consider establishing permanent collaboration is the freight forwarders (clearing and forwarding agents). The freight forwarder can assist buyers who prefer to take delivery on FRC or FOB basis to work out proforma calculations on various modes of transportation. At a later stage, the freight forwarder can arrange with carriers, call the goods forward from suppliers, coordinate and consolidate part- shipments, supervise loading and discharging operations, issue and check the many transport documents, make freight payment on behalf of the shipper and keep him informed of expected arrival of the goods. The freight forwarder's services are particularly valuable for clients in land- locked countries and for other clients for whom combined transport operations need to be organized. Very often, freight forwarders act as insurance brokers. They may also be able to offer services related to the inward clearance of shipment in the country of destination or at least have a working arrangement with a local customs broker. It is usually possible and advisable for procurement agencies, should they wish to establish more permanent collaboration with a freight forwarder, to choose a firm which has a wide network of offices in exporting countries, thus saving the buyer the effort of dealing with different freight forwarders in different supplier countries. Their knowledge of port practices and requirement, as well as custom rules, regulations and tariff structures, can be very helpful in getting goods cleared quickly and efficiently. Freight forwarders usually work on commission basis. In most trades, they receive a forwarder's commission from carriers ranging from one to five per cent of the freight payable. For such services as customs clearance, packing and cartage, a fee based on the weight of the goods is usually charged, and for documentary work, a flat fee is charged for each type of document issued. Given the multiplicity of charges and the possibility of duplicate charges on shipper and carrier, any procurement agency that may wish to establish a more permanent relationship with a freight forwarder ought to insist in the first place on complete information on all charges directly or indirectly payable to the freight forwarder ' for the services rendered to his client. It is normal practice that freight rates and related cost are negotiated. 83
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Where the award is on C&F/CIF basis, as soon as the shipping documents are received, the Clearing section should make the necessary applications for exemption from duty (if needed) or may go ahead and process the necessary documentation needed to clear the goods. The buyer should be proactive so as to clear the goods from the port as soon as it arrives.
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