Best Compliant Practices for Freight Forwarders International freight forwarders play a significant role in ensuring the security of the global supply chain. Without their supervision and control over the export process, in addition to the exporter’s role, there could be possible breaches of security. Many exporters rely solely on their freight forwarder’s expertise and truly believe that the responsibility of compliance and global security falls on the freight forwarder’s shoulders. Having a compliance program in place is a good selling tool for a freight forwarder and also demonstrates to the U. S government their commitment to being compliant however; even with these measures in place, however, a customer’s lack of knowledge in the compliance area can leave a freight forwarder vulnerable and susceptible to fines and penalties if extra steps are not taken. Having best practices in place can further assist a freight forwarder in avoiding these pitfalls. Freight forwarders may have compliance responsibilities under the Export Administration Regulations even when their actions are based on information and or instructions provided by the exporter. Freight forwarders should be formally trained in U. S export regulations so that they are able to scrutinize the information being provided and minimize their exposure as well as their customers’. Hiring a freight forwarder to perform these actions does not relieve the exporter of their compliance responsibilities, however, and if an error is not identified or rectified prior to export, the exporter may actually place blame on the freight forwarder for not catching their omission or error. This may lead to both parties being exposed to possible fines and penalties and, perhaps even a loss of that customer to the freight forwarder. Freight forwarders are responsible for the information they file via the Automated Export System on behalf of their customer and it is important that they understand their obligations under the Export Administration Regulations, as no person, including an agent, may proceed with any transaction knowing that a violation of the EAR has occurred or is about to occur. As freight forwarders, we must all understand our client’s needs but it is also critical to determine their level of knowledge and or possible shortcomings in all areas of the global supply chain, particularly in the compliance area. While routine freight forwarder procedures (i.e., tracing and tracking, customer service, etc.) complement a client profile, best practices will further enhance those processes and will offer protection for both parties against compliance deficiencies. Utilizing best practices is one of many ways in which a freight forwarder can offer their support to the export controls that are in place necessary to ensure global security. Best practices can vary from freight forwarder to freight forwarder dependent on their client base, of course; however, the best practices outlined below pertain t ...

1. Best Compliant Practices for Freight Forwarders
International freight forwarders play a significant role in
ensuring the security of the global supply chain. Without their
supervision and control over the export process, in addition to
the exporter’s role, there could be possible breaches of security.
Many exporters rely solely on their freight forwarder’s
expertise and truly believe that the responsibility of compliance
and global security falls on the freight forwarder’s shoulders.
Having a compliance program in place is a good selling tool for
a freight forwarder and also demonstrates to the U. S
government their commitment to being compliant however; even
with these measures in place, however, a customer’s lack of
knowledge in the compliance area can leave a freight forwarder
vulnerable and susceptible to fines and penalties if extra steps
are not taken. Having best practices in place can further assist a
freight forwarder in avoiding these pitfalls.
Freight forwarders may have compliance responsibilities under
the Export Administration Regulations even when their actions
are based on information and or instructions provided by the
exporter. Freight forwarders should be formally trained in U. S
export regulations so that they are able to scrutinize the
information being provided and minimize their exposure as well
as their customers’. Hiring a freight forwarder to perform these
actions does not relieve the exporter of their compliance
responsibilities, however, and if an error is not identified or
rectified prior to export, the exporter may actually place blame
on the freight forwarder for not catching their omission or error.
This may lead to both parties being exposed to possible fines
and penalties and, perhaps even a loss of that customer to the
freight forwarder. Freight forwarders are responsible for the
information they file via the Automated Export System on
behalf of their customer and it is important that they understand
their obligations under the Export Administration Regulations,
as no person, including an agent, may proceed with any
transaction knowing that a violation of the EAR has occurred or

2. is about to occur.
As freight forwarders, we must all understand our client’s needs
but it is also critical to determine their level of knowledge and
or possible shortcomings in all areas of the global supply chain,
particularly in the compliance area. While routine freight
forwarder procedures (i.e., tracing and tracking, customer
service, etc.) complement a client profile, best practices will
further enhance those processes and will offer protection for
both parties against compliance deficiencies. Utilizing best
practices is one of many ways in which a freight forwarder can
offer their support to the export controls that are in place
necessary to ensure global security.
Best practices can vary from freight forwarder to freight
forwarder dependent on their client base, of course; however,
the best practices outlined below pertain to the global supply
chain as a whole regardless of a freight forwarder’s customer
base, regardless of the specific commodities. Any gaps and
deficiencies within a freight forwarder’s current operating
procedures should be identified (such as lack of formal training,
no written procedures in place, etc.), addressed, and rectified—
and best practices implemented.
• As outlined on the BIS website, best practices are based on the
following four principles: Industry and government should work
together to foster secure trade that reduces the risk of diversion
of items subject to export controls.
• Secure trade will reduce the diversion of dual-use items to
prohibited end-uses, end-users, and destinations.
• Secure trade will encourage the more expeditious movement of
legitimate trade through borders and ports
• Industry can achieve secure trade objectives through
appropriate export management practices
Here are the specific best practices exporters, reexporters and
trade facilitators, and freight forwarding companies should all
be implementing, as provided by the BIS’s
website(www.bis.doc.gov/complianceandenforcement/frbestprac
mts req5_16.html):

3. • Each company should develop a written policy against
allowing its exports or services to contribute to terrorism or
programs of proliferation.
• Each company should identify one person who reports to the
CEO, general counsel, or other senior management official as
the ultimate party responsible for oversight of the company’s
export control compliance program.
• Each company should create an export control compliance
program. A company should integrate this compliance program
into its overall regulatory compliance, security, and ethics
programs.
• Each company should ensure that relevant company personnel
receive regular training in export control compliance
responsibilities.
• Each company should seek to utilize only those trade
facilitators / freight forwarders that also observe these best
practices.
• An exporter or reexporter should classify each of its products
according to the requirements of the EAR and should
communicate the appropriate Export Control Classification
Number or other classification information for each export to
the freight forwarder and the end-user involved in that export.
• A company should screen all parties to proposed transactions
for the presence of parties who are: subject to an order denying
export privileges; on the Unverified List; on the Entity List or
on any list of U. S. government–sanctioned parties; and should
maintain a record of such screening.
• A company should have procedures in place to detect and
report suspicious transactions to the appropriate authorities.
• A company should pay heightened attention to Red Flag
Indicators on the BIS website.
• When a company encounters a suspicious transaction, such as
those outlined in the BIS “Know Your Customer” Guidance and
Red Flag Indicators, it should inquire further and attempt to
resolve any questions raised by the transaction.
All freight forwarders should implement best practices as their

4. due diligence in the support to secure the global supply chain
and prevent weapons of mass destruction and other sensitive
goods and technologies from falling into the hands of
proliferators and terrorists as the benefits will be reaped by all
within the industry and the nation.
For more information regarding general best practices you can
visit the Bureau of Industry and Security’s
website www.bis.doc.gov.
Five Best Practice Measures for Exporters
On a weekly basis, I meet with exporters all over the country
through training seminars. Within the context of the training or
during sidebar discussions we discuss compliance and logistics
issues. While I could repeat “relying too heavily on service
providers” five times and be done with this article, there are
other mistakes made by newbie and seasoned exporters that I
come across most frequently.
1. Incorporate denied party screening throughout the supply
chain. Exporters must incorporate denied party screening into
their sales, finance, and shipping departments. The smoothest
method to manage screening is to incorporate an electronic
solution. There are programs available that include
documentation and compliance programs. These programs are
relatively inexpensive and can save your company from fines
and loss of export privileges.
2. Utilize a forwarder letter of instruction. Issuing a standard or
per shipment letter of instruction safeguards your shipment and
compliance efforts by effectively communicating the shipping
requirements and regulatory requirements for your shipment.
The letter should be clear and simple. It doesn’t have to be on
the Shipper’s Letter of Instructions format we’ve seen for the
past thirty years. A simple one-page instruction is sufficient.
Make certain to include a clause that requests all documentation
for the shipment to be sent to you following shipment.

5. 3. Work with a forwarder who has invested in technology.
Working with a forwarder who has “cutting edge” technology—
access to billing, shipment status, proof of delivery, etc.—will
free up your time and allow you to manage your exports by
exception rather than managing each export movement
individually. Some forwarders will even let you piggyback on
their own denied party screening and HTS/Schedule B search
engines. If you don’t ask, you won’t get! If they don’t have
these programs, consider their competition!
4. Establish a recordkeeping and audit process. Compliance is
about doing things right and ensuring you continue to do so. We
must schedule self-audits and reviews for export documents and
denied party screening, and we should consistently evaluate our
compliance efforts to ensure procedures are being followed. If
your systems aren’t working to protect you, your customers, and
your country, determine why and what steps must be
incorporated to make certain your processes work functionally.
5. Get involved early in the process. Have sales bring you into
the scope of a new sales territory or a new line of products early
in the process. You can then assess potential risks, licensing
requirements, and logistics issues proactively rather than
reactively.
All of the above should be incorporated into your corporate
compliance manual.
Training should be included whenever it is warranted for
specific subject matter and on a yearly basis as an overview.
Info above was taken from this reference below.
Reference
Cook, T., & Alston, R. (2012). Mastering import & export
management (2nd ed.). New York: American Management
Association.