The terms freight forwarder and carrier are often used interchangeably. However, there are legal differences that you should be aware of to avoid logistics mistakes and ensure that your cargo arrives safely and in the fastest possible way.
In this article we look at the difference between carriers and freight forwarders, the liability overview for carriers and freight forwarders, as well as their scope of duties and responsibilities so that you make the right choice for your delivery.
What is the difference between a freight forwarder and a freight carrier?
The freight forwarder and freight carrier are important links in logistics and therefore essential for the German economy. Logistics is one of the strongest economic sectors in Germany and therefore depends on efficient and high-quality service providers.
In recent years, Germany has established itself as the strongest country in European freight transport and is itself one of the leading economic countries in import and export at the international level.
It is therefore important to know which specific solutions are offered by each part of the logistics process. For example, a freight forwarder can itself be a freight carrier, but a freight carrier cannot itself be a freight forwarder, due to major differences in liability.
What is a freight forwarder?
A freight forwarder of a shipping company takes over the entire processing, organisation and scheduling of a client’s freight shipment in order to transport a load safely from A to B. The freight forwarder thus ensures efficient and rapid transport of freight, including all associated contracts and insurance. They follow the client’s instructions and accommodate them as much as possible.
The client signs a forwarding contract with the freight forwarder, which guarantees the safe shipment and delivery of the goods. According to transport law, the freight forwarder is liable in a transport contract for damage to goods and damage caused by delay, but only if the goods are in his care.
What service does a freight forwarder offer?
- Packaging and labelling of cargo
- Paying customs duties
- Taking out insurance
- Completing a freight contract
- Determining the means of transport (truck, freight train, sea freight or air freight)
- Calculating transport costs and shipping costs
- Route planning
- Booking the carrier
- Tracking of goods via GPS
- Storage
The freight forwarder uses its large network of transport companies, calculates the transport costs, takes care of efficient route planning and compliance with transport law.
However, a freight forwarder is not responsible for transporting freight, as the freight carrier takes over this from a logistics company. Because this is where the major difference lies between freight forwarder, freight forwarder and transport company.
What is a freight carrier?
The carrier specialises in the transportation, delivery, shipping and scheduling of goods. They work within a transport company with its own fleet of vehicles.
The freight forwarder concludes a freight contract with the carrier for the transport of goods. According to this, the carrier is liable for damage to goods and damage caused by delay as long as the goods are in his care or that of his transport assistants.
What services does a freight carrier offer?
- Truck transport and driver
- Sea freight and captains
- Freight trains and train drivers
- Air freight and pilots
- Loading and unloading cargo
- Safe transport of goods from A to B
A freight forwarder, compared to a freight forwarder, specialises in the safe handling and physical shipping of cargo. Trucks are often used for this as they guarantee quick and efficient delivery. Rail transport is only used 37% of the time in Germany.
Freight forwarder vs. freight carrier: an example
Let’s say an e-commerce company that specialises in selling coffee wants to ship coffee beans from Latin America to Europe. However, large shipping companies specialising in the transportation of goods do not accept individual orders from companies. The e-commerce company therefore turns to a freight forwarder that specialises in transporting freight from overseas.
The coffee beans, along with other orders, are then transported to Europe by sea and brought to the appropriate warehouses by land. The carrier transports the cargo by sea. The freight forwarder orchestrates the shipping as well as further truck transport and all related contracts. The difference between a freight forwarder and a freight carrier therefore lies in the distribution of tasks and liability.
When is the freight forwarder also a freight carrier?
There are around 15,000 freight forwarders in Germany who have steadily expanded their range of services over the last few years. As a result, many freight forwarders also offer freight management, which includes everything from processing to transporting the freight to delivery. These freight forwarders are also called fixed-cost freight forwarders.
Liability of freight forwarder vs. carrier
There is also a difference between freight forwarder and carrier when it comes to liability. The freight forwarder is only liable for the freight as long as it is in his care. In comparison, the freight carrier has sovereignty over the goods, e.g. in labelling and packaging the freight, in storage and in receiving them from the client. The carrier can set their own liability limit up to which amount the freight is insured in the event of damage according to transport law.
According to the transport contract, the carrier is liable compared to the freight forwarder for damage to goods and damage caused by delay as long as the freight is in his care. If the goods are in a truck, ship, train or plane and damage or loss occurs, the carrier is liable. This clause does not apply in the event of force majeure events over which the carrier had no influence.
Rights and obligations of freight forwarder vs. carrier
The rights and obligations of a freight forwarder (§§ 453-466) and freight carrier (§§ 407-450) are set out in the HGB (Commercial Code). The exact distinction between freight carrier and freight forwarder is also marked here.
In order to protect his rights and obligations, the freight forwarder must first conclude a freight forwarding contract with the client. They can set a limitation of liability regarding the amount of possible liability, e.g. in the ADSp (General German Freight Forwarder Conditions).
The freight forwarder is then obliged to conclude all contracts, communicate with the carriers and make payments that are necessary for the safe transport of the freight. It is bound to the instructions of the client.
The carrier, in turn, is bound to the instructions of the freight forwarder and is subject to his specifications. The carrier concludes a freight contract with the freight forwarder. They are obliged to transport the goods safely from A to B and to adhere to the freight forwarder’s instructions. The carrier only has to be paid when the goods are delivered.
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