Freight Forwarder in Vietnam: Questions to Ask First

A freight forwarder in Vietnam books space on ships, planes and trucks for your goods, and handles the paperwork that goes with them. Hiring the wrong one can mean lost cargo, surprise charges and weeks of delay. Ask the six questions below before you sign anything.

1. Is the company allowed to do this work?

Logistics is a regulated line of business in Vietnam. The Commercial Law of 2005 defines logistics services, and Decree 140/2007/ND-CP sets the conditions for companies that offer them. Decree 140/2007/ND-CP requires a logistics business to hold lawful business registration under Vietnamese law. Ask to see the business registration certificate. Check that logistics or freight forwarding is listed among the company's activities.

Ask for the tax code and the registered address too. Then match the name on the quote to the name on the certificate. A trading name that differs from the registered name is a reason to ask more questions.

Sources: Commercial Law No. 36/2005/QH11 (2005); Decree No. 140/2007/ND-CP on conditions for logistics service business (2007).

2. Is it acting as your agent or as the carrier?

A forwarder can work in two ways. As an agent, it books carriers for you and passes on their terms. As a principal, it issues its own transport document and takes on the carrier's duties.

This matters when something goes wrong. Ask the forwarder to say in writing which role it plays on your shipment. Ask whose name will appear on the bill of lading. If the answer is vague, treat that as a warning.

3. What is the limit on its liability?

Most forwarders limit what they will pay if goods are lost or damaged. Decree 140/2007/ND-CP also sets default ceilings on a logistics company's liability. For services that are not transport, the parties may agree their own limit, and if they do not, the default cap is 500 million dong per claim, unless the customer told the logistics company the value of the goods in advance and the company confirmed it, in which case the limit is that full value. The limit is often far below the value of your cargo.

Ask three things. What is the limit per package or per kilogram? Can you declare a higher value and pay for it? Does the company carry its own liability insurance? Then read the clause that says how fast you must report damage. Short deadlines are common, and missing one can end a claim.

For high-value cargo, ask about cargo insurance as a separate cover. Compare the price of the policy with the value of the goods. The cost is usually small beside the loss it protects against.

Sources: Commercial Law No. 36/2005/QH11 (2005), chapter on logistics services; Decree No. 140/2007/ND-CP (2007).

4. What exactly does the quote cover?

Ask for the quote in writing, in one currency, with every charge on its own line. Look for these items:

• Main freight, by sea, air or road.
• Charges at the origin port or airport.
• Charges at the destination, including terminal handling.
• Customs clearance and any inspection fees.
• Trucking to your door.
• Storage, if the goods wait.

Then ask what is not included. Storage fees, container return delays and fuel or currency surcharges are the usual surprises. Ask how long the quote is valid. Freight rates move often, so a quote with no end date is a quote you cannot rely on.

Also ask which trade term the price is built on. Incoterms 2010, the rules from the International Chamber of Commerce that took effect on 1 January 2011, set which party arranges and pays for each stage. A price quoted as FOB covers a very different set of costs than one quoted as CIF. Make sure the forwarder and your supplier use the same term.

Sources: International Chamber of Commerce, Incoterms 2010 announcement (2010).

5. Which documents will it prepare, and which must you supply?

Paperwork errors can hold up a shipment for days. Ask the forwarder to list every document and who owns each one. A typical import or export file includes:

• The commercial invoice from the seller.
• The packing list.
• The bill of lading or air waybill.
• The customs declaration.
• Any licence or certificate the goods need, such as a certificate of origin.

Ask for drafts before the goods ship. Check names, addresses, weights and descriptions line by line. A small mismatch between the invoice and the bill of lading can hold a container at the port.

Tell the forwarder honestly what is in the shipment, and state the value of the goods in writing. Under Vietnam's logistics decree, the liability limit depends on whether the customer gave notice of the goods' value beforehand, so a wrong or missing description can weaken your claim if something is lost.

6. Who can you call, and how will it report?

Ask for a named contact for your shipment, and a second person for when the first is away. Ask how often you will get updates and in what form. Good forwarders send a booking confirmation, a sailing or flight date, an arrival notice and a delivery receipt without being asked.

Finally, ask for two customer references and call them. Choose references that shipped goods like yours, on the same route. A forwarder that is strong on Hai Phong to Europe may be weak on Ho Chi Minh City to the United States.

A short checklist

Before you hire, you should have the registration certificate, a written statement of agent or principal role, the liability limit in writing, an itemised quote with an end date, a document list with owners, and one contact name. If a company cannot give you these, keep looking. The few days you spend asking will cost far less than one failed shipment.

Sources: Commercial Law No. 36/2005/QH11 (2005); Decree No. 140/2007/ND-CP (2007); International Chamber of Commerce, Incoterms 2010 (2010).