Forwarder’s Cargo Receipt (FCR)

Introduction to Forwarder’s Cargo Receipt

When freight forwarder acting as agents for the consignee, have received the goods and all necessary documentation and payment of charges from the seller, freight forwarder issues a Forwarder’s Cargo Receipt (FCR). The seller will use the FCR to confirm to the buyer and/or the bank that he has delivered the goods for shipment and that the carriage is being arranged by freight forwarder.

Freight forwarder will arrange the ocean transport and the ocean carrier will issue a Bill of Lading (B/L) or Sea Waybill (SWB). The Bill of Lading (B/L) or Sea Waybill (SWB) is used to obtain release of the goods at destination.

It is also possible to combine the use of the FCR with a House Bill of Lading (HBL) or House Sea Waybill (HSWB) if the customer is using a NVOCC to supply ocean carriage. If freight forwarder is the NVOCC and has issued a House Bill of Lading (HBL) or House Sea Waybill (HSWB), there is no need to also issue a Forwarder’s Cargo Receipt (FCR) unless there are specific reasons to do so.

In many ways the Forwarder’s Cargo Receipt (FCR) document looks similar to the Bill of Lading (B/L) and House Bill of Lading (HBL). But it is distinctly different than a House Bill of Lading (B/L), Sea Waybill (SWB), House Bill of Lading (HBL) or House Sea Waybill (HSWB) in that it does not evidence a contract of carriage.

A FCR cannot replace the Bill of Lading (B/L), Sea Waybill (SWB), House Bill of Lading (HBL) or House Sea Waybill (HSWB). It is always used together with one of these documents. A Forwarder’s Cargo Receipt (FCR) is issued by a freight forwarder who is acting as agent on behalf of the consignee. We use Forwarder’s Cargo Receipt (FCR) to facilitate payment.

When the shipper has delivered his goods to the agent/freight forwarder (and any required documentation), he will receive the Forwarder’s Cargo Receipt (FCR) as proof that the goods have been delivered for shipment.

The Letter of Credit (L/C) will stipulate which documentation must be in place before payment for the goods will be effected. If the buyer and seller have agreed that the Forwarder’s Cargo Receipt (FCR) is to act as proof that the goods have been made available for shipment, the Letter of Credit (L/C) must clearly state that payment can be effected upon presentation of a Forwarder’s Cargo Receipt (FCR).

The advantage to the shipper of using the Forwarder’s Cargo Receipt (FCR) to effect payment (instead of a Bill of Lading (B/L), Sea Waybill (SWB) or House Bill of Lading (HBL) is that the Forwarder’s Cargo Receipt (FCR) can be issued before the goods have been shipped by the ocean carrier. Therefore, the seller can obtain payment for his goods faster than if he had had to wait for the Bill of Lading (B/L) to be issued.

To the consignee, there is an advantage when freight forwarder consolidates goods from multiple shippers into one container. In such case, a separate Forwarder’s Cargo Receipt (FCR) will be issued to each of the shippers but only one Carrier Bill of Lading (CBL) or Sea Waybill (SWB) will be issued by the carrier. This will save the consignee documentation and customs clearance fees at destination.

When a Forwarder’s Cargo Receipt (FCR) is issued by freight forwarder, the carrier will issue a Bill of Lading (B/L) or a Sea Waybill (SWB). When a Carrier Bill of Lading (CBL) or Sea Waybill (SWB) is issued, the shipper/seller under normal circumstances has the right to amend the release instructions (i.e. consignee name and destination).

By accepting a Forwarder’s Cargo Receipt (FCR), the shipper assigns the benefit of these forwarding instructions to the consignee (buyer). In other words, the seller waives his right to revoke any delivery instructions after he has delivered the goods to freight forwarder, and freight forwarder is not legally obliged to comply with the shipper’s instructions after receipt of the cargo and issuance of the Forwarder’s Cargo Receipt (FCR). Freight forwarder will comply with the buyer’s instructions.

We should note that although the Forwarder’s Cargo Receipt (FCR) is used as a vehicle for payment, freight forwarder is not involved in the monetary transaction and change of ownership between the seller and the buyer. Freight forwarder issues the Forwarder’s Cargo Receipt (FCR) as a receipt for the cargo. 

Functions of Forwarder’s Cargo Receipt

Basically, Forwarder’s Cargo Receipt (FCR) functions as:

Receipt for cargo

The Forwarder’s Cargo Receipt (FCR) is a receipt by the agent/freight forwarder that the goods are in his custody. The Forwarder’s Cargo Receipt (FCR) does not confirm shipment and can therefore be issued before the Carrier Bill of Lading (CBL) has been issued. 

The Forwarder’s Cargo Receipt (FCR) is not evidence of contract of carriage

The Forwarder’s Cargo Receipt (FCR) does not evidence of a contract of carriage with the ocean carrier, freight forwarder or NVOCC. The evidence of contract of carriage will be the document issued by the ocean carrier (i.e. the Bill of Lading or Sea Waybill) or the NVOCC (House Bill of Lading or House Sea Waybill). 

The Forwarder’s Cargo Receipt (FCR) is not a document of title and it not used at destination

The Forwarder’s Cargo Receipt (FCR) is not a document of title. It cannot be negotiated, and it cannot be endorsed to other parties. The consignee cannot be ‘to order’ and the consignee’s name must be entered in full.

There is no requirement that a Forwarder’s Cargo Receipt (FCR) is presented at destination to obtain release of the goods. The release of the goods take place based on the Bill of Lading (B/L) or Sea Waybill (SWB). In fact, the Forwarder’s Cargo Receipt (FCR) is seldom used at destination. It is primarily a document for origin use. 

Freight Forwarder’s Responsibility under a Forwarder’s Cargo Receipt

There are 2 main areas of responsibility of an agent/freight forwarder issuing Forwarder’s Cargo Receipts (FCRs):

Responsibility for correct description of the goods

The consignee and the bank will rely on the description of the goods in the Forwarder’s Cargo Receipt (quantity, condition, etc.) to effect payment to the seller. It is essential that freight forwarder clearly notes any damages or shortcomings on the Forwarder’s Cargo Receipt (FCR) or refuse to accept the cargo if the physical goods received do not match the description.

Freight forwarding acting as agents for the consignee, will arrange a Carrier Bill of Lading (CBL) or Sea Waybill (SWB) that covers the carriage performed by the ocean carrier. Freight forwarder should ensure that the description in the Carrier Bill of Lading (CBL) or Sea Waybill (SWB) corresponds with the description in the Forwarder’s Cargo Receipt (FCR). The consignee will expect to receive the goods as described in the Bill of Lading (B/L) or Sea Waybill (SWB). 

Responsibility to care for the goods while in the agent’s custody

Freight forwarder’s responsibility to care for the goods is closely related to what we have just discussed. Freight Forwarder is responsible to take good care of the goods while they are in his custody. If freight forwarder damage the goods, freight forwarder become liable towards the consignee.

However note that when goods are delivered to the carrier and covered by a transport document (Bill of Lading or Sea Waybill), it becomes the carrier’s responsibility to care for the goods. Freight Forwarder is only responsible for the goods under the Forwarder’s Cargo Receipt (FCR) as long as the goods are in his custody. This is distinctly different from a House Bill of Lading (HBL)/House Sea Waybill (HSWB) where freight forwarder take on responsibility as carrier. 

Originals and Copies of Forwarder’s Cargo Receipt

The Forwarder’s Cargo Receipt (FCR) is not a document of title and an original is not needed to effect release of goods at destination. As such, there is no reason why the Forwarder’s Cargo Receipt (FCR) should be issued as an original document.

However, often the shipper (and the bank) will insist to receive an original Forwarder’s Cargo Receipt (FCR) and therefore the Forwarder’s Cargo Receipt (FCR) is often issued in 3 originals and a reasonable number of copies. It is actually more correct to issue 1 original Forwarder’s Cargo Receipt (FCR) and a reasonable number of copies. But 3 originals is market practice in some areas of the world today. 

Amendment of Forwarder’s Cargo Receipt

The issuing agent should ask to have the original Forwarder’s Cargo Receipts (FCRs) returned the shipper request an amendment to the Forwarder’s Cargo Receipt (FCR). Amendments should be made in writing and are subject to acceptance by the freight forwarder. The freight forwarder must ensure that no changes to the description of the goods are made that can affect his position towards the consignee.