Freight forwarding is a critical component of the logistics industry, responsible for moving goods from one location to another. However, sometimes disputes arise during international freight forwarding and these disputes endanger the safe delivery of goods. Freight forwarders are obligated by law, through the Federal Maritime Commission (FMC), to act fairly and use their best efforts to prevent disputes from occurring. In this blog, we will focus on one such obligation – 46 CFR § 515.32 and freight forwarder duties related to resolving international disputes.
What is 46 CFR § 515.32?
46 CFR § 515.32 is a provision under the Shipping Act of 1984 that governs the duties of freight forwarders in handling international disputes. According to this provision, freight forwarders must make every attempt to resolve any disputes that arise while handling international shipments. This includes establishing a proper dispute settlement system, training staff on dispute resolution techniques, and informing customers and shippers of the dispute resolution process. See 46 CFR § 515.32 – Freight forwarder duties. | Electronic Code of Federal Regulations (e-CFR) | US Law | LII / Legal Information Institute (cornell.edu)
What are the duties of a freight forwarder in resolving disputes?
A freight forwarder’s primary duty is to ensure that the shipment is delivered to the correct destination within the stipulated time frame. However, if a dispute arises, the forwarder must make every effort to resolve the issue as quickly as possible. This includes facilitating communication between shippers and carriers, gathering all relevant documents, and keeping track of all the steps taken to resolve the issue. The forwarder’s job also involves understanding the changing regulations and laws related to international shipping, as well as being aware of any tax or customs implications.
In addition, a freight forwarder needs to be familiar with local market conditions and have good relationships with suppliers and customers in order to ensure smooth operations. Finally, freight forwarders need to keep accurate records and provide timely and comprehensive reports to their customers. This is essential in order to maintain trust and ensure a successful working relationship. With all these considerations, it’s no wonder that freight forwarding is such an important function within the global supply chain industry.
What actions can a freight forwarder take to avoid disputes?
Freight forwarders can take proactive measures to prevent disputes in the first place. For instance, they can ensure that the terms and conditions of shipping are clearly outlined in the contract. They should also get all the necessary permits, licenses, and permissions to make the shipment. Additionally, they can use technology to track the shipment and provide real-time updates to all parties involved. Finally, freight forwarders should also use third-party mediation methods to resolve disputes if they arise. By taking all these measures, freight forwarders can ensure a smooth and hassle-free shipping experience for their customers.
What happens if the dispute cannot be resolved?
If a freight forwarder is unable to resolve a dispute, the FMC provides an option for mediation or arbitration. In mediation, a neutral third party is designated to help the parties reach a mutually acceptable solution. If mediation fails, then the parties can go to arbitration where an arbitrator makes the final decision. However, this process can be expensive and time-consuming, making it essential for freight forwarders to make every effort to avoid disputes.
What are the consequences of failing to meet the obligations under 46 CFR § 515.32?
If a freight forwarder fails to meet the obligations under this provision, they may be subject to fines, license revocation, or suspension. Moreover, they could end up losing business as their reputation would be adversely affected. It is, therefore, critical for freight forwarders to be aware of their obligations under this provision and ensure that they meet them at all times.
International disputes can be a significant cause of concern in freight forwarding, and they can have a cascading effect on the delivery of a shipment. Freight forwarders are obligated to resolve disputes through 46 CFR § 515.32, and failure to meet these obligations can have serious consequences. Through proactive measures such as contract transparency, technology, and adherence to regulatory procedures, freight forwarders can avoid disputes and continue to provide a reliable and efficient service. Visit our international trade practice to learn more International Trade Law Lawyer | Transnational Matters.