(a) Packing and transportation of goods to port or terminal
(b) Marine transport
(c) Air transport
(d) International forwarding and customs agency
(e) Cargo insurance
(f) Credit insurance
(g) Prevention of loss and damages
(h) Labeling
(i) Land export and import
Packing
Cardboard (two or three waves)
Crate (wood with or without cardboard)
Wooden boxes (heavy and expensive)
Barrels (metal, plastic, wood; for the transportation of fluids; fluids must fit
the material of the barrel)
Sacks (jute, paper, plastic, cloth)
The Goods can be transported …
Loose (each unit – box, barrel, etc. – separately)
Unitizing (one unit composed of sub-units) – shrink, containers, big bags or
semi bulk, stretch, etc.
Marine Transport
The carriage fee or rate + charges, fees, levies, duties and
commissions =
carriage tariff
Influenced by:
Fixed and variable transport costs (such as the distance traveled, expenses and fees in various ports,
balancing the cargo, frequency, size and type of vessel, properties of the
goods, modes of loading and warehousing, volume/weight ratio, transport risks,
possible damage to cargo, size of cargo and its composition, etc.)
But “Likes are not treated as likes” – different prices are quoted for similar
situations.
This is because of additional costs related to the market in the goods and to
the marine transport marketplace.
The carriage fee is determined also by “what the traffic can bear” – how in
demand are the goods, how valuable they are, etc.
The conditions of the global marketplace in marine transport and the competition
in it also determine the quoted price – as well as fees, levies, charges,
commissions and taxes in the various ports and in the various origin and
destination countries. Changes of technology also influence prices.
Tariffs are determined as CLASS RATE – a class of transport, which
includes many types of cargo with the same rate or
A COMMODITY RATE – specifically tailored to every type of cargo and
multiplied by the weight or the mass (volume). Payment is according to the
higher of the weight and the mass.
To this the exporter should add charges (such as the Heavy Lift Charge or
the Extra Length Charge) and other levies…
such as the CAF (Currency Adjustment Factor – a currency hedge in
favor of the shipowner);
the BAF (Bunker Adjustment Factor – a percentage of the rate
intended to offset certain expenses of the ship operator);
a War Risk (or Political Risk – to offset a high insurance
premium);
a Congestion Surcharge (to offset expenses which are the result of long
periods of waiting at the port) or
a THC (Terminal Handling Charges – imposed by the port itself for
the right to anchor).
Containers
Door to Door (House to House)
An empty container is deposited with the exporter in a pre-determined date.
The Exporter fills it and transports it to the harbor.
In the destination country – the container is deposited with the importer.
He empties it, returns it to the port.
Pier to House
In the port of discharge, cargo and goods from different suppliers are
concentrated in one container which is then sent to the importer / buyer.
House to Pier
Like House to House – but because the container contains goods for various
buyers, the container itself is not sent to any single buyer.
Pier to Pier
Cargoes reach the port, get containerized by the agent in the port of loading.
In the port of discharge, it is emptied and each cargo is sent separately to
each buyer.
Consolidation
Transporting the cargoes of a few sellers in one container.
REMEMBER !!! Compare Prices – you will always find a cheaper alternative !!!
Types of Ships
Liner – operate in regular lines with regular vessels
in pre-determined dates
Charter(ed) – Voyage Charter – Cargo owner charters a vessel to transport the cargo
from port of loading to port of unloading Time Charter – Cargo owner or shipping company charters a vessel for a
defined period of time (upto a few years) Bareboat Charter – Long term (5-15 years) charter (common in the
transport of fuel and grains). The lessee takes care of the cargo, of operating
the vessel and its crew
Container ships – Built like a beehive with cells the size of containers
RORO – Cargo rolled on wheeled carriages under deck (for transporting
vehicles, etc.)
Multi Purpose Boat
Tankers (fluids, liquids, fuel)
Bulk – Transports grains or chemicals in bulk
Lash – Carry with them big platforms or rafts
Conference
All shipowners are organized in a cartel called “Conference”
Marine Bill of Lading (MBL)
Serves as a receipt for the cargo, proof of existence of a
carriage contract and proof of ownership. It is negotiable and endorseable.
Under the Hague principles, a bill of lading (BL) must include the following:
(a) Name and address of shipper / exporter
(b) Port of loading and port of discharge
(c) Date of loading and place of issuance of BL
(d) Name of vessel (ocean liner, etc.) and voyage number
(e) Cargo identification marks
(f) Description of goods – number of units, weight, volume (mass)
(g) Condition of goods (if not filled – no external or visible damage)
(h) BL must be “clean on board” not “foul”
A Marine Bill of Lading must include these to be valid:
(a) The words “bill of lading” and the words “lading” or “shipped” (which prove
that goods have been loaded on board vessel)
(b) Date of loading
(c) Confirmation of the shipping company
(d) Numbers of original bills of lading, if any
(e) The words “Clean on Board”
(f) Name of the shipper
(g) Name of the consignee or “To Order” (of the shipper) together with
endorsement of the shipper
(h) Name of vessel
(i) Port of loading, final destination and is re-loading required
(j) Name of parties to be notified upon arrival to the port of discharge
(k) Marks and numbers stamped on the packages
(l) Abbreviated description of the goods (weight, number of units and volume /
mass)
(m) How many original copies of the MBL are there and is the presentation of all
original copies required to in order to release the goods
Types of Marine Bills of Lading
Shipped MBL – Goods were loaded and carrier received them in good order
Direct MBL – No transshipment allowed Ocean Through MBL – Transit MBL. When more than one carrier handles the
goods, each one is responsible for the goods only during his tenure and under
the terms and conditions of his contract
Pure Through MBL – Pure transit MBL. The first carrier must transport the
goods from the port of loading to the port of discharge through an intermediate
port and is responsible for damages.
Combined Transport BL – Covering all modes of transport (not only sea)
Forwarder BL – Issued by an agent, an international forwarder
Freight Forwarder BL – Issued by FIATA, the international organization of
forwarders
IMPORTANT The Hague Principles regulate the legal relationship between carrier and
shipper from loading to discharge.
It covers only exported goods, carried by vessels by sea
It applies only when a transport contract has been incorporated in the BL
It does not cover goods (such as animals) on deck
Air Transport
Types of Transport Tariffs
Air transport tariffs are indicated by IATA – but often these tariffs are
ignored. SHOP AROUND.
Minimum Rate – not in accordance with actual weight (when under 45 kg.)
General cargo Rate (GCR) – for all kinds of cargo
Specific Commodity Rate (SCR) – per a minimum weight of a specific type
of cargo and valid for a limited period of time. Cheaper than GCR.
Unit Load Device (ULD) – Special tariff for cargo transported as a unit
on a surface or in a container. Only weight is limited (maximum and minimum)
The tariff is derived from:
1) Destination of cargo
2) Type of goods – SCRs can be negotiated with the local IATA representative
3) Minimum Rate
4) Weight / Mass (volume) ratio (every 6 cu.m. equal 1000 kg.) – if W/M exceeds
this ratio – payment will be according to weight
REMEMBER Try to exceed the minimum rate and the minimum weight
Negotiate an SCR or a ULD wherever possible
Make sure that the W/M ration does not exceed the allowed ratio
Airway Bill
Issued by the air carrier.
Mainly a confirmation of transport – not of ownership or any right to goods.
Absence of airway bill does not effect validity of contract of air carriage or
the applicability of the treaty – but may prevent carrier from resorting to
exemptions and other restrictions in the treaty.
Airway bill is proof of weight, measurements, quantity and packing. It is also a
carriage invoice, an insurance policy (if insurance taken out by carrier) and a
customs declaration (if no other declaration is required by law).
Not negotiable and ownership cannot be transferred by its endorsement or
transfer.
Only consignee can accept delivery at discharge. Buyer appears under “also
notify” when bank is consignee and fiduciary on behalf of seller. Buyer receives
power of attorney from bank to release and clear the goods.
Issued in three original duplicates to shipper, consignee and carrier.
International Forwarding and Customs Agency
The international organization of forwarders – FIATA – created a document system
called FBL (Forwarder’s Bill of Lading - equivalent to MBL). The forwarder
responsible for goods door to door (house to house).
FCR (Forwarder’s Certificate of Receipt) – A receipt issued by forwarder
confirming receipt of goods at the factory to be carried to destination.
FWR (Forwarder’s Warehouse Receipt) – Receipt issued by forwarder that it
received goods in a warehouse to be carried to destination.
Airfreight Forwarder – As opposed to marine forwarders, airfreight
forwarders have to comply with certain professional and financial conditions.
Some of them are IATA forwarders – with minimal volume of activity, proven
acquaintance with airfreight rules, skilled staff and so on. IATA forwarders get
5% of carrier’s rate and are allowed to issue airway bills to shippers on behalf
of air carriers.
An airfreight forwarder:
Arranges a number of shipments, unites them and passes them to the aircraft,
handles commercial export / import operations for exporter / importer, prepares
all paperwork, takes care of transit from one aircraft to another and of air
insurance (if client demands it), consolidates cargoes, issues airway bills and
selects routes.
Customs Agent deals with goods only within the port while an
international forwarder handles the goods from door to door.
Customs Agent deals with the following:
Reserving space in a vessel, coordination of acceptance of containers, provision
of information regarding prices, routes, schedules, preparation of documents for
exporter including BL, CO and all other documents demanded by the customs. The
agent appraises and classifies the goods for customs purposes, obtains a gate
pass and arranges the transportation of the goods to the buyer’s location.
The buyer is responsible for the activities of the agent.
Cargo Insurance
About 0.15% of value of cargo, except if dangerous or fragile
cargo. One Time Policy expires with completion of transport. Open Policy or Current Policy – see above. REMEMBER Insurance is cheap – use it abundantly.
Insure the cost, the profit, the carriage rates, the marine insurance premium,
port expenses and land transport, customs agency, import taxes and so on.
Double marine insurance is allowed.
Marine insurance is subject to the London Clauses. Institute Cargo
Clauses deal with general cargo. A Clauses Coverage – All risks insurance against loss or damage caused by
random event which happens outside the cargo and effects it.
Does not cover loss or damage which is the result of intentional behaviour of
the insured, general leakage, loss or vaporization of mass or weight, normal
wear and tear, inappropriate packing or preparation of insured goods, breach of
contractual schedules and obligations by insured or owners, charterers or
operators of vessel, inherent defects, war, nuclear fusion or fission,
radioactive material, incapacitation of vessel known to insured at time of
loading.
B Clauses Coverage – loss or damage due to fire, explosion, shipwreck,
capsizing, derailment of a land vehicle, collision or contact with another body
except water, unloading in distress, earthquake, volcanic eruption or thunder,
general average, penetration of sea, lake, or river water into the ship’s
warehouses, lift, etc., total loss of cargo which fell in the sea during
unloading of loading.
C Clauses Coverage – covers only catastrophic marine disasters such as
fire, explosion, shipwreck, drowning, capsizing, derailment, collision,
unloading in distress, general average or dumping in the sea.
Credit Insurance
Both private and state companies (such as ECGD in the United
Kingdom, COFACE in France and OPIC in the USA) provide insurance:
- Against the credit risks of the buyer
- Against political risks (war, terror, acts of state)
- Against financial risks (non convertibility, non repatriation)
Credit risks insurance policy serves as collateral. It is pledged against
credit, which goes towards financing the production of the goods and working
capital.
Credit insurance firms check and rate clients (or rely on credit rating agencies
such as Moody’s, Fitch-IBCA for banks or Dun and Bradstreet). They issue
policies guaranteeing payment to the supplier / exporter in case of the buyer’s
bankruptcy, refusal to pay, default, nationalization and expropriation, etc.
Insurance is provided mainly or only to firms registered in the domicile of the
insurance company or in another member of the same customs union or trade block
(EU, EFTA, etc.) – so, it is recommended to establish subsidiaries in these
territories to be eligible.
Premiums range between 0.5-0.7% per insurance unit for a period of 90 days.
Prevention of Loss and Damage
Use only new packings suitable to the goods
Fit crates and cardboard boxes with metal corners
Use shrink wherever possible, tie and strengthen everything massively
Do not paste labels with descriptions, pictures, brandnames, trademarks or
labels on the packages – these attract thieves. Mark the packing with letters
and numbers on at least two of its sides. Proper packing is an implied warranty
in the carriage contract and an expressed warranty in a marine/ air insurance
policy.
Mark the packages with instructions: “Fragile”, “Printed”, “Handle with Care”,
“Avoid X-rays” and so on.
The standard marking of cargo should include:
1) Initials or abbreviated name of consignee (full name and address required in
case of road or rail transport)
2) Reference number (order number or similar). Avoid indicating the date
3) Name of port and final destination and “via” in case of transit
4) Package number out of total (example: 2/20)
5) Mark the packages Big, Clear and Brief (BCB)
6) Use metal, plastic or strong cloth tags – do not use cardboard or wood tags
7) Marks bags and sacks with sealing liquid
8) Mark dangerous and radioactive materials with warnings, the chemical
composition and the shipper’s name
9) Use Latin letters as well as local alphabets – a maximum of 10 lines of 17
characters each
10)It is advisable – but not required – to mark gross weight in case of air
transport. Net weight and measurements are not required at all – unless
chemicals or dangerous materials are involved.
11)Some countries demand to mark the name of country of origin, number of import
license, etc. – pay attention to local regulations
Change your markings often.
Use big packages to pack smaller and non-uniform packages in.
Leave no empty space inside the package – fill empty spaces with paper,
Styrofoam, pad the goods and tie them tightly.
Do not overfill the crates, sacks, or boxes.
Do not concentrate the goods in one part of the package (internally) – spread
them evenly.
Place light cargo on heavy cargo.
Separate types of packings (cardboard boxes from crates, etc.)
Do not leave any space between the wall of the container and the
