How to Start a Freight Forwarding Company in the UK (2025 Guide)

Freight forwarding is a dynamic and growing industry that connects businesses with global supply chains. As a freight forwarder, you act as an intermediary between shippers and carriers, coordinating the movement of goods across borders. This comprehensive guide covers everything you need to know to start and run a successful freight forwarding company in the UK, from licensing requirements to operational best practices.

What is a Freight Forwarder?

A freight forwarder (also known as a forwarding agent) is a company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer, or final point of distribution. Freight forwarders don't typically own transport assets but instead:

• Negotiate rates with carriers (airlines, shipping lines, road hauliers)
• Coordinate multi-modal transport (combining road, sea, air, and rail)
• Handle customs clearance and documentation
• Manage cargo insurance and risk
• Provide tracking and customer service
• Offer warehousing and consolidation services

Freight forwarders earn revenue through margins on carrier rates, service fees, and value-added services like customs clearance and warehousing.

Step 1: Company Registration and Business Setup

Like any business, you need to register your freight forwarding company. Most forwarders choose a Limited Company structure for liability protection and professional credibility.

Company Registration

• Register with Companies House: £12-£50 online registration
• Register for Corporation Tax: With HMRC within 3 months of starting
• Open business bank account: Separate from personal accounts
• VAT registration: Required if turnover exceeds £90,000 (2025 rate), or voluntary if you expect to exceed it

Business Structure Considerations

Consider your business model:

• NVOCC (Non-Vessel Operating Common Carrier): For sea freight, allows you to issue your own bills of lading
• IATA Agent: For air freight, allows you to issue air waybills and access airline rates
• Customs Broker: If you provide customs clearance services
• Freight Management: If you coordinate but don't handle customs directly

Step 2: Essential Licenses and Authorizations

While there's no single "freight forwarder license" in the UK, you need various authorizations depending on the services you offer:

EORI Number (Mandatory)

An EORI (Economic Operator Registration and Identification) number is mandatory for any business involved in international trade:

• Purpose: Required for customs declarations, import/export activities, and VAT purposes
• Application: Free through HMRC online
• Processing time: Typically 1-3 business days
• Validity: Permanent (unless business structure changes)
• Format: GB + 9 digits for UK businesses

Critical: You cannot handle international shipments without an EORI number. Apply immediately after company registration.

IATA Accreditation (For Air Freight)

If you plan to handle air freight, IATA (International Air Transport Association) accreditation is essential:

Requirements for IATA:

• Minimum financial standing (typically £50,000+)
• Professional indemnity insurance (minimum £1 million)
• Qualified staff with IATA training
• Security bond or bank guarantee
• Compliance with IATA regulations

Customs Broker Authorization

If you provide customs clearance services, you may need customs broker authorization:

• Customs Declaration Service (CDS): Register to use HMRC's CDS for declarations
• Customs Intermediary: Can be registered as an intermediary to act on behalf of importers/exporters
• Training: Staff handling declarations should have appropriate customs training
• Software: Need compatible customs declaration software

O-Licence (If Operating Own Vehicles)

If you operate your own vehicles over 3.5 tonnes, you need an Operator's Licence. Most freight forwarders work with subcontracted carriers, but if you run your own fleet, see our guide: How to Start a Transport Company in the UK.

Step 3: Insurance Requirements

Freight forwarders require comprehensive insurance coverage to protect against various risks:

Professional Indemnity Insurance

Essential for freight forwarders, covering errors and omissions:

• Coverage: Mistakes in documentation, routing errors, missed deadlines
• Minimum: Typically £1-5 million coverage required by IATA and many clients
• Cost: £1,000-£5,000+ annually depending on turnover and coverage
• Mandatory: Required for IATA accreditation and many carrier agreements

Cargo Liability Insurance

Protects against loss or damage to cargo:

• Covers cargo while in your care, custody, or control
• Coverage limits based on cargo values you handle
• May be required by clients for high-value shipments
• Cost: Varies significantly based on cargo types and values

Other Insurance Types

• Public Liability: Third-party injury or property damage (£1-5 million typical)
• Cyber Insurance: Important for protecting customer data and systems
• Business Interruption: Covers loss of income from operational disruptions

Step 4: Setting Up Operations

Running a successful freight forwarding company requires efficient systems and processes:

Technology Systems

Modern freight forwarders rely on technology to manage operations efficiently:

• Transport Management System (TMS): Essential for managing quotes, bookings, documentation, and tracking
• Customs Declaration Software: For customs clearance services
• Accounting Software: For invoicing, payments, and financial management
• Customer Portal: For clients to track shipments and access documents

Averion TMS is specifically designed for freight forwarders, offering:

• Quote management and customer communication
• Automated CMR and shipping document generation
• Real-time shipment tracking
• Integrated invoicing and payment processing
• Multi-carrier booking management
• Customer portal for self-service

Start a free 2-week trial to see how Averion TMS can streamline your freight forwarding operations.

Carrier Relationships

Building relationships with reliable carriers is crucial:

• Air Carriers: Negotiate rates with airlines or use consolidators
• Shipping Lines: Establish relationships with container shipping companies
• Road Hauliers: Network of reliable road transport providers
• Rail Operators: For intermodal services
• Warehouses: For consolidation, deconsolidation, and storage

Documentation and Compliance

Freight forwarders must handle extensive documentation:

• CMR Consignment Notes: For international road transport
• Air Waybills: For air freight (if IATA accredited)
• Bills of Lading: For sea freight
• Customs Declarations: Import/export documentation
• Commercial Invoices: For customs and payment
• Packing Lists: Detailed cargo information

Digital documentation systems can reduce paperwork time by 2-3 hours daily. Learn more: How to Digitise Your Logistics Workflow.

Step 5: Key Operational Considerations

Pricing and Margins

Freight forwarders typically earn revenue through:

• Carrier Margins: Markup on carrier rates (typically 10-30%)
• Service Fees: Documentation, customs clearance, handling charges
• Value-Added Services: Warehousing, packaging, insurance
• Consolidation: Combining multiple shipments for better rates

Customer Service

Excellent customer service is critical for freight forwarding:

• Real-time tracking and updates
• Proactive communication about delays or issues
• Quick response to customer inquiries
• Transparent pricing and clear documentation
• Problem resolution and claims handling

Compliance and Regulations

Stay compliant with:

• UK/EU Customs Regulations: Post-Brexit requirements and procedures
• Dangerous Goods Regulations: IATA DGR for air, ADR for road
• Sanctions and Embargoes: Check restricted countries and entities
• Data Protection: GDPR compliance for customer data
• Financial Regulations: Anti-money laundering (AML) requirements

Learn more about compliance: How to Stay Compliant with UK & EU Transport Regulations.

Running a Successful Freight Forwarding Company

Building Your Network

Success in freight forwarding depends on relationships:

• Carrier Partnerships: Reliable carriers with competitive rates
• Agent Networks: Overseas agents for destination services
• Industry Associations: Join BIFA (British International Freight Association) or similar
• Technology Partners: Integrate with customs systems, tracking platforms

Specialization Opportunities

Consider specializing to differentiate:

• Industry Focus: Pharmaceuticals, automotive, fashion, perishables
• Trade Lanes: Specific routes (UK-China, UK-USA, etc.)
• Service Type: Express, project cargo, temperature-controlled
• Mode Specialization: Air freight only, sea freight, or multi-modal

Scaling Your Business

As you grow, consider:

• Hiring specialized staff (customs specialists, sales, operations)
• Expanding service offerings (warehousing, packaging, distribution)
• Investing in technology to automate processes
• Opening offices in key locations
• Building a strong brand and online presence

Frequently Asked Questions