Shipment Contract : The Beginner’s Guide to Freight Forwarding Agreement (2024)
Importing from China ? Shipping is a risky and complex process.
The good news is you can find a reliable freight forwarder in China for shipping.
Then signing a shipment contract can be the antidote against a wide range of common mistakes and issues.
In this guide to freight forwarding agreement, you’ll find answers to :
• Template or Sample
• Basic clauses
• Key suggestions
With above,
We will help you handle the shipping process confidently and successfully.
What is shipment contract ?
A shipment contract in freight forwarding is an agreement between the freight forwarder and the shipper or importer, which sets out the terms and conditions under which the freight forwarding service is provided.
The basic clauses in a freight forwarding agreement
Typically, a standard freight shipment contract contains clauses addressing important matters including:
• service scope
• payment terms
• compensation
• late deliveries
• liability protection
• risk and termination
Services
As the modes of transport can vary, it is important to clearly define exactly what services what you use and what your forwarder offer.
As set out above, specific shipping service ( FCL container shipping , LCL , Air Freight, Courier, Railway, Multimodal transport ) must be defined.
For a shipper or importer, stipulating the service to be provided by a freight forwarder ensures all shipping industrialization steps will be completed.
For a freight forwarder, having a services clause is about to manage expectations with the client and make sure they know what they’re paying for to avoid disputes arising.
Payment
A shipping contract will include terms and conditions relating to how and when to make freight payment.
Seller or importer need to pay full amount money to forwarder before shipping ( Freight 100% prepaid via T.T ) according to international common rules.
However, freight forwarder can allow monthly credit or freight collect based on mutual trust and long-term cooperation.
Meanwhile, freight forwarder will offen charge interest for when is payment due in a shipment contract.
So, the payment clauses in the freight forwarding agreement include :
• Bank Account
• Payment time allowed.
• Interest when due
• Specified amount
Compensation
Shipping safety is always the first priority. However, shipping risks can’t be 100% avoided.
You may need a freight forwarding agreement to claim for compensation when cargo is unavoidably damaged or delayed in transit.
But note freight forwarders have very limited liabilities since they are just agent, not carrier.
For this reason, the shipment contract will usually include such clauses which state that any shipping damage or shipping delay is beyond the control of the freight forwarder and they are not liable for any loss suffered as a result of the damage or delay.
You can’t expect the freight forwarder to pay those damage or delay unless it occurs as a result of the freight forwarder’s negligence in taking care of the goods.
Alternatively, you need to buy the freight insurance first to cover most of the shipping risks.
And the compensation scheme on the shipment contract must be carried out through equal negotiation.
It must both reflects the interests of the client and respects the benefits of freight forwarder.
The key tips when signing shipment contracts
1.Make sure the forwarding company is real exist. Examine the freight forwarder’s qualification and contract performance capability , including the forwarding qualification, emergency treatment scheme, reputation, etc
2.Ensure cargo is packed in good condition by supplier, otherwise it is meaningless for shipping, let alone claim for compensation.
3.Keep in mind the clauses about the responsibilities, don’t go against the confirmed terms, since the freight forwarding agreement is enforceable.
4.Pay attention to both execution time and termination time.
FAQ
Frequently asked questions in shipment contract.
When to sign a shipping contract ?
Shipment contract isn’t necessarily for every type of shipment.
It is normally signed when using FCL container shipping or commerical air freight with relatively large freight amount ( Large than $ 1000 ).
When the service is LCL or courier, it is unnecessary to take time to draft the contract as normally the shipping costs to pay won’t much.
Do I need to sign contract for every shipment ?
It depends.
If you only ship several shipments yearly, then it won’t be a trouble to sign the contract for every of your shipment.
However, if you have a regular business and continuous shipments, then a annual contract could be fine. But pay attention to the payment clauses especially the shipping costs since they fluctuate frequently.
Can I use our own shipping agreement template ?
Sure. As long as the basic freight forwarding terms and conditions can be negotiated.
CONCLUSION
Shipping can be complicated, but a properly drafted shipment contract ensures that both importor and freight forwarder are on the same page.
If you plan to ship from China, now or in the future, please contact me, and I will provide you with a solution subsequently.
