Freight forwarder scams and how not to be a victim.

Freight forwarder scam

Freight forwarders are intermediaries that help an exporter manage the freight shipment by co-ordinating on behalf of the exporter with various entities such as transporter, customs, shipping line etc. It may be beneficial to book freight through a Freight forwarder rather than with the carrier directly because Freight forwarders can offer cheaper price as well as help with co-ordination of the shipment.

However, it is important to choose the right freight forwarder for your shipment. While most of the freight forwarders in the market are genuine, there could be some freight forwarders that resort to fraudulent business practices.

Hidden Charges at Destination:
Freight forwarders may offer you a cheaper quote at the origin only to charge exorbitant fees from the consignee at the destination. This is more prevalent in Less than Container Load (LCL) shipments rather than Full container loads (FCL). It is important to check the destination charges, especially if you receive a quote that is very low compared to the market rate.

Equipment Shortage
Sometimes a Freight forwarder will offer a very cheap freight quote in order to win the business. However at the time of booking, they will show inability to procure the empty container boxes and demand a premium payment to secure these empty containers citing high demand and congestion due to peak season. Lot of times this is just a scam to extract more money from unsuspecting shippers.

Addition Charge to release B/L at Origin
A freight forwarder may quote rock bottom price to secure the shipment business. However at the time of release of the B/L, they will ask for more money under one pretext or the other. If these charges are not paid, then they will hold the B/L.

Exchange rate manipulation
A freight forwarder may quote you a cheap freight cost in USD. However at the time of billing, they may use an inflated exchange rate. In the end, the shipper ends up paying more in local currency.

How can you prevent yourself from being a victim of these scams? Here are some of the things that you can do.

  1. Always work with reputed freight forwarders. Ask for references and check clientele before initiating the business with them.
  2. Do a background check by visiting the freight forwarder’s website, contact information, team page. Search for them on Google and leading social media platforms Twitter, Facebook and Linkedin. It is always good to know what their customers are saying about them.
  3. If the freight forwarder is located in the same city as yours, you may want to pay them a visit and meet them in person.
  4. Ask for landed cost including breakup of charges at origin and destination in writing. If you are working with digital freight marketplace such as Shiplyst, you will automatically receive these charges in your account and on email.
  5. Know your incoterms and which charges you are responsible for.
  6. Find out on how does the Freight forwarder handle incidental charges. Always demand that they seek your approval or proactively inform you about these charges. You can always check all supporting documents related to these charges
  7. Check their policy on currency exchange rate. What reference rate do they use?

Working with a managed digital freight marketplace such as Shiplyst ensures that you only work with high quality and reputed supply chain vendors. At Shiplyst, you will also be presented with breakup of all charges and the same is automatically matched by the system at the time of invoicing.

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