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What are the applicable laws that govern cargo shipments from the U.S.?
Ocean cargo shipments, ocean Carriers, and Freight Forwarders are regulated by the Federal Maritime Commission.
What is the definition of "Shipper"?
Shipper is the entity that initiates a shipment of goods by issuing shipping instructions to either a Freight Forwarder or directly to a carrier. Shipper's name appears on the Ocean Bill of Lading or on the Air Waybill. A Consignee, if owner of goods, could also issue shipping instructions and therefore appear as both the Shipper and the Consignee.
What is the definition of "Carrier"?
Carrier is the entity that transports the goods such as ocean line or airline.
What is the definition of "Consignee"?
Consignee is the entity to whom the cargo is being shipped to.
What is the function of a Freight Forwarder?
Freight Forwarder is the entity that takes the necessary steps such as preparation of all documents, insurance certificates, packing, etc. in order to execute and coordinate the shipping instructions given by the Shipper.
Is it mandatory to use the services of a Freight Forwarder?
No. The Shipper can issue shipping instructions and deliver cargo directly to the Carrier.
So why would someone want to use the services of a Freight Forwarder?
Because most shipments require many other collateral services such as warehousing, arrange for inland freight, consolidate cargo, crating or packaging, preparation of banking documents, etc.; such services are not provided by the Carriers. A Freight Forwarder can also advise on the best, most efficient manner in which to ship the cargo based on its experience and the constant contact with different carriers, airlines, etc.
Who contracts the services of a Freight Forwarder?
Either the Shipper or the Consignee can contract services of a Freight Forwarder. However, according to Federal Regulations and in cases of Ocean shipments, regardless of who contracts the Freight Forwarder, the Forwarder acts as agent for the Shipper and the Shipper is ultimately responsible to the Carrier for payment of ocean freight.
What is the importance of a Federal Maritime Commission (FMC) License?
To obtain a FMC license to handle ocean cargo a Freight Forwarder must satisfy very strict conditions imposed by FMC and must also post a bond in order to guarantee payment of ocean freight amounts collected from Shippers. This bond must be renewed each year in order to maintain the license current and it offers added security to the Shippers. Many Shippers don't realize that they responsible to the Carriers for payment of ocean freight and find out too late about the perils of dealing with unlicensed Freight Forwarders.

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