In CIF imports, is it common for the exporter-designated forwarder's partner to refuse inland transport, prioritizing risk over margin? Can I request this through a customs broker? Released

Under CIF or CFR terms, it is a very common practice in trade for the importer-side partner of the exporter-appointed forwarder to refuse inland transportation. Behind this phenomenon are clear reasons regarding the forwarder's business model, profit structure, and scope of responsibility. As a customs broker, I will explain this situation in detail and discuss alternatives.

1. Why Import-side Forwarders Do Not Get Involved in Inland Transportation for CIF/CFR Imports

A. Contractual Relationship and Role of the Forwarder
Under CIF (Cost, Insurance and Freight) or CFR (Cost and Freight) terms, the carrier designated by the exporter pays the freight from the export origin to the designated port (or place) of the import destination. In these terms, the transport contract is concluded between the exporter and the exporter-side forwarder. That is, the import-side forwarder, as a partner of the exporter-side forwarder, is in a position to act on behalf of the exporter-side forwarder according to their instructions and contracts. Their primary duties are to assist with procedures prior to import clearance, such as issuing Arrival Notices (A/N) and Delivery Orders (D/O). Consequently, as the exporter's transport agent rather than the importer's, the import-side forwarder focuses on the exporter's requirements and tends not to prioritize the importer's additional requests (e.g., inland transportation).

B. Low Profitability and High Risk
Inland transportation of LCL (Less than Container Load) cargo has a relatively low unit price and carries the possibility of various accidents, such as cargo damage, delays, or loss during the transport process. If a forwarder arranges inland transportation directly, they bear a "moral responsibility" for potential accidents. While this may not be a contractual liability, it can lead to deteriorating relations with the importer and a drop in credibility, placing a heavy burden on the forwarder. In many cases, it is judged that taking on potential risks for small margins does not yield significant practical benefits. Particularly for LCL inland transport, competition among transporters is fierce, making profit margins even thinner.

C. Differences in Business Models (Comparison with FOB/EXW)
Under terms like FOB, EXW, or FCA, where the importer directly designates the forwarder and requests transportation, the forwarder proactively responds to the importer's needs and generates profit by providing overall logistics services, including inland transport, because they secured the cargo through their own sales efforts. In such cases, the import-side forwarder has sufficient motivation to arrange and take responsibility for transportation across all segments. However, under C-terms, this motivation is lacking, and import-side forwarders strongly tend to limit themselves to simple agency work.

In conclusion, the practice where the import-side partner of an exporter-designated forwarder refuses inland transportation, prioritizing risk over margin, can be seen as a perfectly common result of rational business judgment.

2. Feasibility of Requesting Inland Transportation through a Customs Broker

A. Primary Business and Role of a Customs Broker
It is possible for the importer to request inland transportation from a customs broker's office instead of contacting inland transporters directly. In fact, many importers want to handle everything from customs clearance to inland transportation in one package. However, a customs broker's primary duty is acting as an agent for import customs clearance, and arranging inland transport is a secondary service.

B. How Customs Brokers Are Involved
While customs offices possess expertise in clearance, they hold a similar stance to forwarders regarding the potential risks of arranging inland transport. That is, they may be reluctant to become a direct party to the transport contract to avoid "moral responsibility" for accidents occurring during inland transport. Therefore, when receiving such requests, customs offices often process them in the following ways:

• They introduce a reliable inland transporter and encourage the direct conclusion of a contract between the importer and the transporter.
• In some cases, they may arrange everything collectively, including inland transport in connection with clearance work, but even then, they clarify that responsibility for the transportation itself lies with the transporter. This occurs more actively when the customs office is partnered with a comprehensive logistics company or operates its own logistics department.

In conclusion, it is entirely possible to request inland transportation through a customs broker, and the broker will likely cooperate for the importer's convenience. However, it is important to understand that while the broker's role focuses on clearance, inland transport is often provided in the form of an introduction or linkage.

3. Suggestions for Importers

If you continue to import under CIF/CFR terms, it is important to establish a clear strategy for inland transportation at the destination.

• Direct Dealings with Inland Transporters: By contracting directly and using a few reliable inland transporters on a regular basis, you can increase freight bargaining power and manage service quality stably.
• Utilization of Comprehensive Logistics Companies: Using a comprehensive logistics firm that provides various services like clearance and inland transport all at once is another option. In this case, you can process work conveniently by unifying the point of contact.
• Reviewing a Switch to FOB Terms: If possible, you may consider switching the transaction to FOB terms through consultation with the exporter. In this case, the importer can designate the forwarder for all transport segments, allowing for proactive logistics management and improved cost efficiency.

While trade logistics may seem complex, if you accurately understand the role of each party and respond wisely, you will be able to build an efficient import process.