The thriving shipping and forwarding industry in the European Union is attracting more and more entrepreneurs who would like to start a freight forwarding business under his jurisdiction. Although at first, in order to be allowed to launch a shipping and forwarding company in the EU, the entrepreneurs must receive a freight forwarding license, which implements the need of passing a certain list of regulations. We have prepared all the information needed in this article, in case you are planning to start a freight forwarding business.
Introducing freight forwarding
Generally forwarding means transporting goods for companies or individuals. Defined more strictly, forwarding includes dispatching and handling of the products for customers as well as storing and transporting cargos, preparing the documents, insurances and sometimes customs clearance.
The forwarder must apply for a different license kind depending on the way of transportation they use – either air, water or transport. When it comes to Europe, it is easy to predict that due to the massive road system the continent has, the main transportation type would be automobile.
According to the forwarding conditions announced by CLECAT, the forwarder is supposed to obtain a general access license that authorizes their forwarding business or a special forwarding license.
In the next step we will compare two license types applied in Germany and Bulgaria.
Advantages of Germany:
- High density of highways
- High quality infrastructure
- Forwarder-friendly legal requirements
- Accessible geographical location
Advantages of Bulgaria:
- Low level of wages for professional drivers
- Low starting costs
- Low taxes in general
- Moderate legal restrictions
In the following part of the article we will be discussing freight forwarding licenses and business in Germany because in this country the only requirement to start forwarding activities is the achievement of a transportation license.
License authorizing transportation service activities
The EU transportation license must be obtained by entrepreneurs planning to operate in the European Union. The license is always issued by a municipal authority, and after the validation period of 10 years can be renewed. The license carries the name of its owner.
Freight forwarding license in the EU: steps to take
We have prepared a list of several stages:
- Registration of transportation company. It is the best decision for those coming outside of Germany and European union (including Liechtenstein, Norway and Iceland) to register a GmbH company in Germany.
- Gaining a certificate of professional competence. The leading position holders in the company (director, transportation manager) are required to have a specialized degree and relevant work experience in the field.
- Financial stability control. The starting company needs to hold enough material resources to prove its future stability. The required amount is stated as 9000 EUR at minimum for the first truck submitted for the license and as 5000 EUR additionally for each next truck. Banks provide the type of certificate proving the availability of funds.
- Filing of the appeal and obtaining of the license.
- Creating an accounting system for the newly licensed company.
The list of documents needed for the appeal:
- A filed application
- A proof of reliability
- Company registration certificate
- Shareholders’ list
- A certificate provided by the police
- Certificates delivered by tax office
- Employees’ social security certificates
- An extract from the trade register
- A financial status confirmation
- Qualification evidence documents for senior management
- Driving test certificates
- A list of trucks to be used for forwarding
- Other documents required by a municipal authority.
Freight forwarding license price
The costs of the licenses can be different in each area or city. Typically, the license price varies on the scale from 200 EUR to 5500 EUR for the license exclusively. As for the copy, required for each vehicle, its price ranges between 55 EUR and 100 EUR. The license also obliges the company to register a permanent address and an equipped office.
In some cases, licensing may be declined:
- The company did not provide enough evidence of its stability.
- The company’s financial state is not considered to be adequate.
- The enterprise has lost its license within last twelve months.
- The senior management of the company did not provide qualifications confirmation.
- Information delivered in the application was intentionally false.
Still have questions about freight forwarding?
In COREDO we are ready to assist you with all stages of obtaining a freight forwarding license in the EU. Our specialists will help you with every step of launching a transportation business and provide expert legal advice.