Freight Forwarder’s Receipt – Meaning, Benefits, Functions and Responsibilities

Freight Forwarder’s Receipt (FCR) is a receipt or a document that freight forwarder or freight consolidator or their agent issues to the shipper. This receipt serves as proof or certification of the receipt of the cargo. Another name for FCR is Forwarder’s Cargo Receipt. This receipt proves that the freight forwarder has got the cargo. And that the cargo is being held on behalf of the buyer. In the normal course, once the cargo is received by the Freight Forwarder, a major portion of the seller’s responsibility is over.

Generally, the freight forwarder receives the cargo in the vendor’s country. After receiving the cargo, the freight forwarder makes arrangements for transporting the cargo to the buyer on the basis of the buyer’s instructions.

Freight forwarder issues FCR when they get the cargo, necessary documents, and any relevant charges from the seller. Once the seller gets the FCR, he or she can prove to the buyer and bank that the delivery is complete from his or her side.

Along with serving as the proof of the receipt of cargo, FCR also helps with trade finance and LOC (letters of credit). However, a point to note is that FCR is not a transport document. Also, unlike the BoL (bill of lading), FCR does not serve as proof of title to the goods. Thus, it is of no use when claiming cargo from a carrier.

FCR -Title Document

Since FCR is not a document of title, generally, there is no need for the original FCR for the release of the cargo. So, there is no requirement for the freight forwarder to issue the FCR as the original document. However, the seller and the bank may insist on the original FCR. And, this is why the freight forwarder issues three originals, as well as many copies of FCR.

Freight Forwarder’s Receipt – Benefit to Consignee

For the consignee, it is beneficial if he or she has multiple consignors shipping from the same location and same time. In such a case, the freight forwarder would combine the cargo from all shippers in one container. Also, the freight forwarder would issue separate FCRs to each shipper, but just one CBL (Carrier Bill of Lading) or SWB (Sea Waybill). It would save the consignee from customs clearance fees, as well as from maintaining several documents.

Another benefit to the consignee is that the shipper normally has the right to modify some release instructions. These changes could be in the name of the consignee and destination if the carrier issues CBL or SWB.  The shipper, however, gives up this right once he or she accepts the FCR. Or after delivering the cargo to the freight forwarder.

Functions that FCR Serve (And Don’t Serve)

Following are the functions that Freight Forwarder’s Receipt serves (and don’t serve):

  • It serves as a receipt for cargo or a receipt claiming that cargo is with the agent/freight forwarder.
  • FCR is not proof of a carriage contract with the ocean carrier or the freight forwarder. Instead, the proof of a carriage contract is the document from the ocean carrier. And these documents could be BoL (Bill of Lading), or from NVOCC, such as House Sea Waybill.
  • FCR in no way serves as a document of title.
  • It is not endorsable.
  • One can not use FCR to get the release of the cargo at the destination. The authorities would only release the cargo on the presentation of SWB (Sea Waybill) or BoL (Bill of Lading). So, we can say it is a document that is of use only at the origin. More so, it is to substantiate that the seller has delivered the goods to the freight forwarder.

FCR – Responsibility of Freight Forwarder

While issuing the FCR, there are two primary responsibilities of the freight forwarder:

  • Freight forwarder is responsible for correcting the description of the cargo if there is a need. Since the bank and the buyer rely on the description of the cargo in the FCR to release the payment, it is crucial that the description is accurate. So, if there is any damage or shortcomings, the freight forwarder should clearly make a note of it in the FCR. It is very important for the freight forwarder to ensure the description in the FCR corresponds with the description in the CBL (Carrier Bill of Lading) and SWB (Sea Waybill). This would help to avoid confusion as the buyer would expect to receive the cargo as per the description in the SWB (SWB) or BoL (Bill of Lading).
  • Freight forwarder is responsible for taking good care of the cargo. If there is any damage to the cargo in the custody of Freight Forwarder, then he or she will be liable to the consignee. But, if the cargo is delivered to the carrier and BoL or SWB covers it, then it is the responsibility of the carrier to take care of the cargo. A point to note is that the Freight Forwarder is responsible for the cargo as long as cargo is in their custody.

Freight Forwarder’s Receipt – How it is Different from Bill of Lading?

There could be some similarities between the FCR and BoL (Bill of Lading) and HBL (House Bill of Lading). But, in terms of usage and importance, FCR is very different from BoL and HBL. Unlike BoL and HBL, FCR does not serve as evidence of a contract of carriage.

Moreover, FCR can not replace BoL, HBL, or any other similar documents, such as SWB (Sea Waybill), and HSWB (House Sea Waybill). Instead, the buyer and seller use FCR along with these documents.

Usually, the Letter of Credit (LoC) will state the documents that a bank would need for releasing the payment. If the two parties agree that FCR can serve as proof for the availability of goods for shipment, then LoC should clearly mention so. This would allow the bank or another party to release the payment on the presentation of FCR.

If such is the case, then it is beneficial for the shipper to use FCR for the payment. This is because the shipper gets the FCR even before the ocean carrier ships the cargo. So, in this scenario, the seller gets the payment relatively faster than if the seller had to wait for the Bill of Lading.

Final Words

Freight Forwarder’s Receipt is one of the documents in international trade. Though it is not very important, it still plays a small crucial role. FCR serves as proof that the supplier has delivered the cargo. Also, FCR could be necessary for the release of the payment to the supplier, as per the conditions agreed between the parties.

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Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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