What’s The Difference Between a Customs Broker vs Freight Forwarder?
October 28, 2022 Beginners Guides, Customs
When shipping internationally, you may come across the terms ‘customs broker’ and ‘freight forwarder’ – but you may be unaware of the difference. Do you need one for a service, but not the other? Do you need both, for different services?
While in the same industry, a customs broker and a freight forwarder have distinct roles. Each one has a critical role to play in ensuring the smooth sailing of your shipment – whether it be by air or sea.
If you’re looking to import to or export from Australia, read on to discover what a customer broker does (and the difference from a freight forwarder).
What does a customs broker do?
A customs broker (sometimes called a customs clearance agent) is a specialist in ‘customs clearance’. Their role is to deal directly with the government, port and airport authorities to make sure that your import complies with customs legislation.
Their primary role as a service provider is to help importers navigate through a very complex regulatory system, ensuring their goods are ‘cleared’ for entry into Australia.
A customs broker will help you with a range of responsibilities, such as:
- calculating what duties and taxes are payable on your import (including how to get a refund of paid customs duty);
- interpreting Harmonised System Codes to ensure your goods are correctly classified;
- understanding what tariffs are applicable to your goods and utilising Australia’s free trade agreements; and
- preparing and submitting import declarations to government agencies (making sure your goods are legally allowed to enter the country)
Customs brokers must be licensed by the National Customs Brokers Licensing Advisory Committee (NCBLAC). There are several different licence types for a range of businesses. These are:
- Corporate customs brokers – these licences are granted to companies or natural persons that own businesses jointly with others;
- Sole trader customs brokers – as the name says, these are licences granted to natural persons operating as a sole trader; and
- Nominee customs brokers – these licences are for natural persons operating as a customs brokers but employed by a corporate or sole trade customs brokerage.
What’s the difference between a freight forwarder and a customs broker?
The simple difference is that freight forwarders handle the transport of goods, while a customs broker deals with the entry of goods at the point of customs.
Freight forwarders help you get your goods from Point A to Point B however, do not handle customs clearance unless they employ customs brokers as part of their business – which is exactly what we do at International Cargo Express.
Freight forwarders specialise in all things transport and logistics, coordinating the large-scale movement of goods to make sure your products get to where they need to be in the most cost-effective way possible.
Freight forwarders traditionally act as the agent of a shipper or importer to move cargo, and will advise cargo owners on issues such as:
- the costs of shipping like freight rates, port charges and insurance costs;
- the required documentation needed for a particular shipment;
- the different methods of shipping goods internationally (such as transhipment, coastal shipping and cross trade shipping);
- keeping cargo safe from external threats (including from biological hazards such as the infamous khapra beetle or the brown marmorated stink bug);
- the rules around importing particular types of goods (whether food, prohibited goods or COVID-19 safety equipment); and
- understanding how the Incoterms affect international transactions.
It’s very clear that both customs brokers and freight forwarders require a high level of attention to detail to support businesses in their shipping journey.
Why are customs brokers crucial for importers and exporters in Australia?
Customs brokers are licenced professionals. They can help you:
- Navigate a complex system of law – customs regulations in Australia are governed by a myriad of extremely lengthy federal laws such as the Customs Act 1901, the Customs Regulation 2015, the Customs (Prohibited Imports) Regulations 1956 and others. Don’t risk it – let a licenced professional manage your clearance for you;
- Minimise the risk of delays – nobody wants their goods held up at customs. Without a customs broker to flag the issues, you could be exposed to extra costs and delays if your goods get held up;
- Reduce the risk of non-compliance – paying the right duties and taxes, lodging accurate declarations, classifying your cargo with the correct HS Code: these are all critical steps that must be completed, otherwise you’ll risk the seizure (and even the destruction) of your cargo.
Note that many freight forwarders employ in-house customs brokers (such as here at ICE) to provide an end-to-end service for your shipping needs.
Case Studies: When ICE Brokers Saved the Day
Everyday, we’re helping our clients successfully navigate the complicated world of customs.
Some real-world examples have included:
Spotting tariff concessions
At ICE, we apply tariff concessions for importers across dozens of industries on a regular basis.
We can apply a tariff concession if a product is not available locally in Australia against the majority of chapters contained in the tariff.
We’ve historically saved our customers considerable amounts of money by identifying products for tariff concessions and applying them accordingly.
Saving a Brisbane importer $2,500 per shipment
On January 2021 one of our regular Brisbane importers approached us to handle a new line of cargo which we’d never heard of before.
Our brokers got stuck into some extensive research – scouring through local manufacturers to determine if a similar product was made.
We called local businesses and issued letters explaining that we were considering applying for a tariff concession, and if there would be any objection.
With no argument from local business, we managed to successfully lodge the concession and saved our client an average of $2,500 AUD in customs duty on every shipment.
Avoiding dumping duty tariffs (and saving thousands of dollars)
We worked with a client who learned first-hand the value of a customs broker when importing aluminum extrusions and profiles.
These items are subject to dumping duty if brought in as individual items.
Fortunately for our client, these items were part of a larger structure being shipped – that did not attract dumping duty.
We worked closely with the client to gather all the evidence showing that the items in the shipment made up this complete structure and saved the client from paying thousands of dollars in dumping duty.
ICE: Your Full-Service Logistics Provider
Why go for one or the other, when you can have both?
Here at ICE Cargo, we’re a full-service logistics provider that employs both seasoned freight forwarders and customs brokers – and we’ve been doing it in Australia for over 30 years.
By engaging ICE to handle your shipment, you’ll reap the benefits of:
- A highly experienced service provider that handles every step of the shipping journey, from origin to destination, door to door;
- Our five seasoned in-house licensed customs brokers (located in Sydney) – which means in-house transfer and a much less chance of error (we don’t outsource here);
- Years of combined experience working with Australian government agencies – prepared to solve any complexities that arise whether relating to a tariff or a large-scale container vessel shipment; and
- Tariff concessions and duty reductions where possible.
Still wondering the difference between a customs broker and a freight forwarder?
Get in touch with our friendly team today and we can explain to you the exact service we provide.Request A Quote
or call us on 1300 227 461
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