The Law of Ukraine on the Regulation of Freight Forwarding Activities is the main document that defines the legal and organizational principles of the freight industry. The purpose of the document is to create conditions for the development and improvement of the transport services market, which directly affects the quality of the trade sector, including at the international level. The main participants in the process are the cargo owner, carrier and forwarder.

Basic concepts and terms of forwarding

For a simplified understanding of the foundations of the Law, a number of key terms and concepts are used, the meanings of which are established by the legal field.

Thus, a transport and forwarding service is an activity aimed at organizing and ensuring the transportation of import, export or transit cargo under a previously concluded contract.

TE activity is the provision of services related to the movement of products, ensuring all stages of the process specified in the document.

Freight forwarder – a business entity, enterprise or individual who implements a full range of measures to organize and fulfill the terms of the concluded contract at the expense of the customer. The list may include preparation of documentation and cargo for transportation.

Client – a natural or legal person, a consumer of the freight forwarder’s services.

Carrier – a natural or legal person who assumes the obligation to deliver to the place of destination and transfer products to the direct recipient or an intermediary who regulates relations with the forwarder.

Participants in the activity are all persons who are directly involved in the movement of goods. These can be clients, carriers, transit agents, customs brokers and inspectors, employees of ports, railway stations, owners or users of road, river, sea transport involved in cargo transportation, including container transport.

Features of the legislation on the issues of activity

The law regulates any relationship that is formed in the process of providing transport and forwarding services, regardless of the type of transport used, except for pipeline, and the type of product. It doesn’t matter if it is about importing or exporting goods. The relevance remains in those cases when the direct carrier acts as a forwarder.

Relations are additionally regulated by articles of the Civil and Commercial Codes, the Laws of Ukraine “On Transport”, “Foreign Economic Activity”, “Cargo Transit”, other acts, charters and codes.

An important nuance is the provision of a whole list of services to the client, which is established by the legislation of Ukraine or those countries with which relations are formalized, international trade is conducted.

In the event of a disputable situation, international codes and standardization in the field of trade can be used to regulate the situation.

The main indicators of the work of the forwarder

According to the law, a freight forwarder can be a legal entity or an individual who, in order to carry out a certain type of activity, owns transport, storage facilities, containers and other equipment necessary for the provision of a range of services. Agreements can also be concluded with non-residents of Ukraine.

To coordinate actions, professionals have the right to unite in voluntary specialized unions or associations. The associations contribute to the formation of a healthy competitive environment in the labor market and the improvement of the qualifications of specialists. Additionally, community members have the opportunity to defend their rights, develop and implement measures to improve the quality of services provided to clients.

Draft regulations governing the activities of participants in TE activities may be developed by the established associations. Also, their responsibilities include creating conditions for deliveries, integrating specialized local companies into the world market.

The performance indicators of a specialist or a specialized company can be determined by several characteristics:

  • is a specialist (or a specialized company) capable of maintaining high-quality transport services;
  • Does the transportation of goods across the territory of the country and to other countries in accordance with established international standards;
  • is it possible to charter ships, attract other types of vehicles for transportation, deliver products to ports, warehouses and storage terminals, and deliver on time;
  • does it provide customers with additional services in the form of work related to the completion and processing of products, their changes, warehousing and storage;
  • does it keep records;
  • whether it provides a service for the examination of the goods.

Additionally, a good forwarder should be a specialist in filling out all the necessary documents, without which official shipment, loading, transportation of goods, customs control, declaration, personal liability insurance and the like is impossible.

The professional’s field of activity also includes all calculations that accompany the transportation of products: customs duties, taxes, estimated losses and the amount of their compensation.

Regulation of activities by the state

The task of state institutions in the field of transport and forwarding services is to protect the economic interests of the country. The functions of the regulator are performed by the Cabinet of Ministers, which ensures the implementation of state policy, as well as monitors the implementation of all regulations and laws by all participants in cargo transportation.

Separate programs allow providing support to companies in the development of the transport services industry.

Also, the function of the state is to protect the rights and interests of all participants in the process, including the end consumers of products. The work is aimed at increasing the volume of trades, exports, creating equal conditions for all market participants.

Creation of a favorable “climate” in the transportation industry contributes to the stimulation of international cooperation, which has a positive effect on the economic situation of the country.

Client and freight forwarder rights

Equal rights of the client and the contractor are the main condition for their cooperation in the legal field.

The forwarder has the right to independently choose the type of transport for the carriage of goods, create the necessary delivery conditions, taking into account the interests of the customer. The contract must include those situations in which the contractor has the right to deviate from the conditions established by the document. Also among his rights are:

  • receiving reimbursement of expenses that were incurred in the interests of transportation of products;
  • retention of cargo until payment for goods or services rendered by the customer is received, as well as until reimbursement of expenses or payment of compensation for damage incurred during transportation;
  • the ability to refuse the client to fulfill the clauses of the contract if he did not provide the necessary papers and information about the product, contributing to its safe delivery.

The client also has the right to demand from the forwarder the provision of papers and information about the quality and conditions of delivery of his goods. He can choose the route and type of transport, set his own requirements.

Until the parties come to a general agreement on all points, the contract is not signed. In the event of a subsequent violation of the terms of the contract by one of the parties, the proceedings are conducted in court. The reason for going to court may be poor-quality transportation of a certain type of product, provided that the client has given the freight forwarder all the necessary instructions and information.

According to the Law, the cargo owner is in a more advantageous position, because the contractor takes all responsibility for the transportation of products. On his shoulders lies the search for a carrier, and subsequently, control over the observance of the necessary characteristics of the transportation of a certain type of cargo.

Often the level of responsibility of the customer and the service provider is indicated in separate clauses of the contract. In order for both parties to the agreement to be relatively safe, it is necessary:

  • prescribe in the document specific cases in which the freight forwarder is relieved of responsibility for failure to comply with the conditions;
  • to impose on the cargo owner the obligation to provide all the necessary information about the goods in writing (in case of legal proceedings, there will be evidence of the client’s guilt);
  • to set the deadlines for making claims – so that they do not arise after the receipt of the delivered products and their damage by third parties;
  • to provide for situations in which the customer changes the instructions after the freight forwarder has started to perform the work – this is unacceptable;
  • to stipulate the degree of responsibility of the customer and the contractor for the success of the transportation carried out;
  • to distribute responsibility in the case of multimodal transportation among all participants in the process.

The legal literacy of the contract is the only guarantee of protection against risks for both the client and the forwarder , because the legislation in this industry is quite flexible, which does not establish clear boundaries between the responsibilities of the parties entering into cooperation.

It is the responsibility of the client to timely pay for the work performed, as well as to accurately fill out the documentation regarding the characteristics of the cargo. Also, the contractor must have the documents that are necessary for the passage of customs control.

The customer retains the right to demand from the contractor responsibility for the number of seats and compliance with the conditions for the carriage of products. Preserving the integrity of the cargo and its packaging is also an additional condition that the contractor must fulfill.

All controversial issues are resolved in accordance with the legislation in force in the country, in a court order.