What Is the Power of Attorney?
Power of Attorney is a legally binding document which assigns legal powers to the freight forwarder on the behalf of an importer/exporter.
The word ‘attorney’ refers to someone who has been appointed to act for someone else. It’s most commonly used as an alternative name for lawyers, as lawyers are appointed by clients to handle legal matters on their behalf.
The power of attorney is a legally binding document. It serves to denote that whoever has signed the document is transferring powers from themselves or their business to the third party stated in the document.
In shipping, power of attorney (POA) is needed when the importer or exporter of goods wants to appoint an agent—usually a freight forwarder or customs broker—to handle various aspects of their shipment on their behalf.
Having said what a POA is, it’s also worth noting what it isn’t. It’s not a contract between the importer/exporter and their freight forwarder. Instead, it assigns legal powers from the former to the latter.
Also, there is no need to involve a lawyer when granting the power of attorney.
A POA (which is sometimes called a ‘letter of empowerment’) gives the forwarder or agent control of the cargo so they can:
- Prepare, sign and submit relevant shipping documentation on behalf of the seller/buyer
- Act as an intermediary between the seller and buyer of the goods
- Handle the cargo
- Secure customs clearance for the freight
A shipper who wishes to give a freight forwarder the right to process customs clearance documents on their behalf will need to draw up a power of attorney. The document must state which powers are being granted and it must be sent with the consignment for inspection by customs officials at the port of arrival.
The POA must be ready before the freight is shipped. This will ensure that any issues regarding the shipment are directed to whoever has been granted POA, rather than the person or business granting that POA.
As with all shipping documents, the content should be worded precisely and accurately so that the nature of the agreed transfer of power is clear. Naturally, shippers should ensure they trust the agent to whom they are granting the POA.
There are four types of power of attorney that relate to shipping:
Export Power of Attorney
This is an authorization from the shipper to the freight forwarder to handle the cargo and deal with customs clearance documentation. The POA must be signed by the shipper.
Import Power of Attorney
This is an authorization from the buyer or seller of a consignment to a freight forwarder, permitting them to act on their behalf and handle customs and other entry requirements. Customs law in the USA requires that an import POA is signed by the customs broker or freight forwarder.
General Power of Attorney
This is an authorization from a shipper giving their forwarder or agent authority to handle all issues relating to the shipment on their behalf.
Durable Power of Attorney
This is an authorization from a shipper giving their forwarder or agent authority to handle specific issues relating to the shipment on their behalf. The POA document must clearly and explicitly state the issues concerned.
In the USA, shippers will need to supply the following details on a document granting power of attorney:
- Their name
- The name of the business shipping the goods
- An IRS, importer, or social security number
- A signature (ideally this should be witnessed or notarized)
- A declaration that the forwarder or agent named in the document is being granted the power to act on behalf of the signatory
Your customs broker or freight forwarder will explain the power of attorney process to you, and will help you to procure or generate the necessary document. If you are shipping without the assistance of a broker or forwarder, POA templates are available for download online.
The POA document must specify a time at which the power of attorney ends. Usually, this is when the shipment is completed.
The power of attorney shipping document formalizes the transfer of responsibility for a shipment from the shipper to their agent. It enables freight forwarders to handle the complexities of customs clearance and other issues that may arise on behalf of their clients.
This helps to avoid unnecessary delays affecting the shipment and ensures that customs rules and regulations are adhered to. These benefits make the POA an essential document for businesses wishing to minimize the burdens of managing international shipping.
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