Land Freight Forwarding: Pros vs. Cons

Land freight like other modes of transport is suitable in certain conditions and impossible in others. For example, we can’t move cargo by trucks across the Atlantic ocean from the UK to Canada, or at least not yet. 

Land freight forwarding is affected by many geographical, political, and economical factors. Still, sometimes it may be the perfect solution for your transportation challenges. 

Things to know about cross border land freight

There are questions that shippers usually ask when it comes to cross border land freight forwarding. The most common questions are : 

Is customs brokerage or customs clearance required?
Customs clearance is required almost always when it comes to cross-border transport freight. Still, it may be as simple as submitting a form online sometimes. The customs requirements and procedures differ based on the factors mentioned earlier. If there are economical or political agreements between the countries across the route of the shipment, customs clearance would be following special procedures.

It also depends on the HS Code (Harmonized commodity System Code). Sometimes it’s simple export-import processing while other times it will require special approvals and licenses on both sides origin and destination. 

In the end, it is safe to say that most of the time, customs clearance is required, and almost always assigning a customs broker would be a smart move.

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How much will duties and taxes be?
Duties and taxes are usually paid at the destination and follow the customs tariff in that destination country. If the country of origin or country of manufacturing of the shipped items has special trade agreements with the destination country, then custom duties will be calculated differently. For example, Canada and the United States are following special free trade agreements which means that sending Canadian goods into the United States or vice versa, follows special customs formalities and customs duties. It’s work mentioning that the land freight forwarding and trucking revenues between the United States and Canada are close to US$ 800 Billion.

Is the cargo insured when it’s moved cross-border?
Land freight insurance is not as organized and clear as in air freight (US$ 20/lbs). Liability and coverage may differ from one country or region to another and from one trucking service provider to another. That is why it is always recommended to make this condition (Liability) clear when confirming a shipment with your trucker and if worries are still there, it may also be good to arrange for a 3rd party insurance.

What are the basic documents needed for cross-border trucking?
Commercial documents are always a basic requirement for customs clearance at the origin, destination, and sometimes in transit points too. The basic documents that will be needed for commercial use are the commercial invoice, packing list, and certificate of origin. For personal use, a certificate of origin is not always a requirement.

More documents may be required depending on the country of origin and/or destination if there are special restrictions or agreements, the nature or description of the cargo (i.e. health certificate or FDA approval for medical and pharmaceutical items), and the value of the cargo. Sometimes also the recipient of the cargo may be an influencer in the required documents for customs clearance such as a letter from the receiving bank in case of an L/C (Letter of Credit). 

How land freight rates are calculated

Calculating the cost of land transportation is simple. If the equipment is used as a Full Truck or the shipper wants to do a simple container drayage service, the charges will be most likely a lump sum for the whole job.

More calculations are needed in the case of LTL (Less than TruckLoad) service. In most of the world, it is calculated based on the chargeable weight in Kilogram, the chargeable weight is the higher value between the gross weight and the volume weight whereas the volume weight is calculated based on the ratio of 1:3 which means each 1 CBM equals 333 Kgs.

The situation is a bit different in North America where the chargeable weight and land transportation cost will depend on the class of the cargo too. This cargo class depends on different factors such as density, handling, stowability, and liability. The higher the class is, the higher the freight cost becomes.

Common land freight accessorial fees

Land freight forwarding accessorial charges are there to either support the original freight rate (such as Fuel and security charges), to compensate on the profitability of the over-all truck trip (such as overweight and oversize charges), or it can be for extra services or requirements needed such as tailgate fees, or pick up/delivery to a residential area, multiple stops fees, re-weighing the cargo, … etc.

It is always important to pay attention to the accessorial charges as much as the basic land freight rate since it may accumulate to a big difference in the overall cost of the shipping.

Digital Freight Forwarding, making the job easier

All that was discussed earlier shows that completing a smooth land transport job with a low cost may not be a simple task. However, having a smart platform to automate all these steps and come back with multiple solutions may be a perfect tool to save both time and money. This is why using such a digital freight forwarding platform can be beneficial in the land, air, or sea freight shipping. As it helps to calculate the chargeable weight, give multiple options from service providers, assist with a smooth and automated shipping process, and even help with the commercial documents. 

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Karim Nasser

VP at Globitex with more than 15 years of experience in shipping and transportation in Air, Sea, Land freight, and courier. Now for a couple of years, more into digital freight. I believe in a saying “ in shipping, we deliver hope not only shipments”.