There are typically several parties involved in an International Trade transaction. In addition to the buyer and seller, their respective banks are involved to assist in forwarding and sometimes reviewing documents, issuing letters of credit, and receiving or remitting payment as necessary. Other parties include the following:
Exporter (seller/beneficiary) – The exporter is the company selling the goods to a foreign buyer. When a letter of credit is used, the exporter must comply with the terms and present the required documents to the buyer’s bank. This party is also called the beneficiary since it receives the benefits offered by the letter of credit.
Freight Forwarder – A freight forwarder is a company, other than a carrier, who, in the performance of contracts, transports property for the general public by employing the services of rail, water and other carriers. A freight forwarder typically offers pre-shipment, shipment and/or post-shipment services. If the seller does not use a freight forwarder, the transaction could have increased risk. However, depending on their level of expertise, the seller could potentially increase profits by eliminating a freight forwarder.
Steamship Company / Carrier – The steamship company receives merchandise from the exporter/shipper or freight forwarder and arranges for transport of the merchandise.
Customs House Broker – A customs house broker acts as an agent for the importer. They receive the shipping documentation from the bank, clear the merchandise upon arrival and arrange for delivery of the goods to the importer.
Importer (buyer/applicant) – The importer is the company purchasing the goods from a foreign supplier. This party is responsible for paying for the merchandise. If a letter of credit is used, this party is also called the applicant since they apply for the letter of credit from their bank.