Freight forwarder comparison guide basics: compare the total landed cost, the service scope and the liability limit, not just the headline rate. The cheapest quote often leaves out costs or caps what the forwarder owes you if the cargo is lost. This guide shows small shippers what to line up side by side.
Compare the same job, not the same price
Ask every forwarder to quote the exact same shipment. Give each one the same weight, volume, goods description, pick-up address and delivery address. Name the trade term you want, such as FOB or CIF, so everyone prices the same split of costs and duties between buyer and seller. The Incoterms 2020 rules, published by the International Chamber of Commerce, set out who handles costs and obligations for each term.
Then put the quotes in one table. Add a line for each charge: freight, origin handling, documents, customs clearance, delivery and any fuel or peak season surcharge. A blank line is a warning. Ask whether it is zero or simply not quoted.
Sources: International Chamber of Commerce, Incoterms 2020 page (iccwbo.org).
Check what the service really covers
Two quotes can look alike and cover very different work. Ask each forwarder these questions:
- Does the price include pick-up, or only port to port?
- Who files the customs declaration, and what is the fee?
- Are storage and demurrage charges excluded, and from which day do they start?
- Is the transit time a promise or an estimate?
- Will your cargo travel on its own, or share a container with other shippers?
Get the answers in writing. A small shipper has little leverage after the goods have moved, so the email thread is your record.
Find out which terms govern the contract
Most forwarders work under written trading conditions, either their own or an industry set. One widely used set is the FIATA Model Rules for Freight Forwarding Services, which FIATA updated on 3 October 2019. These rules apply only when the contract refers to them, whether in writing, orally or otherwise. Ask which set applies, and ask for a copy before you sign or book. Company conditions may differ from the FIATA text, so read them as written.
Read the clause on liability first. It tells you what you can recover when something goes wrong.
Sources: FIATA, press release on the updated Model Rules, 3 October 2019; FIATA Model Rules for Freight Forwarding Services, October 2019, section 1.
Understand the liability limit
A forwarder is not an insurer. Under the FIATA Model Rules, liability for loss of or damage to goods is capped at 2 SDR per kilogram of gross weight, unless a larger amount is recovered from a party the forwarder is responsible for. An SDR is the International Monetary Fund's Special Drawing Right, a unit of account. Other losses are capped at 10,000 SDR for each incident. If the delay causes a loss, the forwarder's liability is limited to the fee for the service that was delayed.
Think about what this means for a light but valuable load. Electronics or samples may be worth far more per kilogram than the cap pays. In that case the limit will not cover your loss. Ask each forwarder if their own limit is the same, higher or lower. Then compare it with the value of your cargo.
Notice periods matter too. The Model Rules say damage that is not visible should be notified in writing within 6 consecutive days of delivery. Other claims must be notified within 14 days of when you knew or should have known of the event. Missing a deadline can weaken your claim.
Sources: FIATA Model Rules for Freight Forwarding Services, October 2019, sections 2, 8.3 and 9.
Decide on insurance before the cargo moves
Under the FIATA Model Rules, a forwarder will not arrange insurance unless the customer gives express instructions in writing. Any cover is also subject to the usual exclusions of the insurer. So silence means no cover from the forwarder.
You have two simple options. Ask the forwarder to arrange cargo insurance and get the policy terms in writing. Or buy a cargo policy yourself from an insurer or broker. Either way, compare the insured value, the excess and the exclusions. Compare the premium with the risk, not only with the cheapest option.
Sources: FIATA Model Rules for Freight Forwarding Services, October 2019, section 3.
A short checklist before you book
- Same shipment details sent to at least three forwarders.
- Every charge listed, with exclusions named.
- The governing terms received and the liability clause read.
- Your cargo value compared with the liability cap.
- Insurance decided in writing, and claim deadlines noted.
Pick the forwarder whose full answer is clearest, not the one with the lowest first number.
Sources
- FIATA, "FIATA Updates Model Rules on Freight Forwarding Services": https://fiata.org/news/press-releases/2019/3-october-1910.html
- FIATA Model Rules for Freight Forwarding Services, October 2019 (PDF copy): https://www.leschaco.com/fileadmin/user_upload/201910_FIATA_Model_Rules_Leschaco.pdf
- International Chamber of Commerce, Incoterms 2020: https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-2020/