Airfreight forwarding

Outline

I. Introduction to airfreight forwarding1. Introduction2. Infrastructures

II. International Air Cargo Operations1. International Associations2. Legal Issues3. Documentation4. Rates and Charges5. Extend of carrier’s liability6. Claims and actions

III. Air Cargo Operations in Vietnam

I. Introduction to airfreight forwarding

1.1. Advantages 1.2. Disadvantages

- High speed

- Quick service

- Easy Access

- No physical barrier

- Natural Route

- National Defense

- Risky- Very costly- Small Carrying Capacity- Huge Investment

I. Introduction to airfreight forwarding

2. Infrastructure

2.1. Airport

2.2. Aircraft

2.3. Loading/ Unloading Equipments

II. International Air Cargo Operations

1. International Associations1.1. International Civil Aviation Organization (ICAO)ICAO’s objective are to:- Ensure the safety and orderly growth of worldwide civil aviation;- Enhance the arts of aircraft design and its operations, for peaceful

purposes;- Encourage the development of airways, airport and air navigation

facilities;- Cater to the needs of passengers and operators for safe,

frequent, efficient and economical air transport;- Ensure that the rights of countries are fully respected to avoid

discrimination, allowing every country equal opportunities to operate international airlines;

- Eliminate unfair competition and practices; and- Promote flight safely and further developments in international

civil aviation.

1. International Associations

1.2. International Air Transport Association (IATA)

Some of IATA’s interest, in relation to its members, are:

- Safety and security;- Industry viability and recognition;- Products and services;- Standards and procedures; and- Industry support

1. International Associations

1.3. International Federation of Freight Forwarders Associations (FIATA)

FIATA’s objectives are to:- Unite the freight forwarding industry around the world- Represent, promote and protect the interest of the freight forwarding

industry by acting as advisor or expert in dealings with international transport companies;

- Familiarize people with the services of freight forwarders through the dissemination of information and distribution of publications;

- Introduce measures to enhance the quality of service rendered by freight forwarding companies, by developing and promoting uniform forwarding documentation, standard trading conditions and so on; and

- Improve the speed and efficiency of freight transportation by providing industrial or vocational training for the employees of freight forwarders, solving liability insurance problems, and distributing e-commerce information tools like barcodes, radio frequency scanners and electric data interchange software.

1. International Associations

1.4. ASEAN Federation of Forwarders Associations (AFFA)AFFA’s objectives are to:- Unify all freight forwarders in the ASEAN region through

national forwarders associations;- Foster, promote, develop and maintain close cooperation

between and among freight forwarders in ASEAN;- Represent members in their collective interests in

relation to freight forwarding matters peculiar to the ASEAN region; and

- Pursue all measures to improve the quality, standard and professionalism of freight forwarders in the ASEAN region.

2. Legal Issues

- Convention for the unification of certain rules relating to international carriage by air, 1929/ Warsaw Convention

- Protocols to amend the convention for the certain rules relating to international carriage by air:- The Hague Protocol 1955- Guadalajara Convention 1961- Montreal Agreement 1966- Guatemala Protocol 1971- Montreal Protocol 1975 No 1, 2, 3, 4

3. Documents

3.1. Air Way Bill (AWB)

3.1.1. Air Waybill (AWB) or air consignment note refers to a receipt issued by an international carrier company for goods and an evidence of the contract of carriage.

- AWB is not a document of title to the goods. Hence, it is non-negotiable.

- AWB is always a received for shipment document.

3.1. Air Way Bill (AWB)

3.1.2. Different types

• Base on issuer: – Air line airway bill– Neutral airway bill

• Base on consolidation services– House airway bill– Master airway bill

3.1. Air Way Bill (AWB)

3.1.3. Functions– Evidence of the contract of affreightment– Confirmation of shipment– Freight Bill– Insurance Certificate– Custom declaration– The guide to the air staffs

3.1. Air Way Bill (AWB)

3.1.4. Contents of AWB• First side:

– AWB number– Name and address of the issuer– Airport of departure– References to originals– References to conditions of contract– Shipper– Consignee– Charge Code– Issuing carrier’s agent

3.1. Air Way Bill (AWB)

• First side:– Accounting information– Currency– Routing– Declared value for carriage– Declared value for customs– Insurance Amount– Handling information– Other fees and charges– Number of Pieces

3.1. Air Way Bill (AWB)

• Second side (only in 3 originals):– Information about carrier’s liabilities– Terms and condition of contract of carriage

3.1. Air Way Bill (AWB)

• 3.1.5. Allocation• Original 1: for carrier, signing by shipper• Original 2: for consignee, signing by shipper and

issuing carrier• Original 3: for shipper, signing by issuing carrier• No 4: for final destination• No 5: for final airport• No 6, 7, 8: for the 3rd, 2nd and 1st carrier• No 9: for carrier’s agent

3.2. Other documents

- Commercial invoice- Packing list- Cargo manifest- Shipper’s letter of instruction- Certificate of quality, quantity, live animals,

dangerous goods- Custom declarations

4. Freight and Charges

4.1. Freight rate: the rate declared in air freight tariff on the AWB issuing day.

4.2. Basis for calculation- Quantity- Volume/ measurement- Value Total freight = freight rate X number of units Freight in Air transport is regulated in the unified freight

tariff of IATA: TACT rules (The Air Cargo Tariff): rules to calculate freight TACT freight rate:

Freight rate for North American area Freight rate for other areas

4. Freight and Charges

4.3. Different types- General Cargo Rate (GCR): the normal rate applied for

normal general cargo carried between two airport.- GCR- N (normal): for goods with quantity < 45kg- GCR- Q (quantity) for goods with quantity ≥ 45kg (45kg, 45-100,

100-250, 250- 500, 500- 1000, >1000)- Minimum rate: the rate to guarantee profit for airlines- Special Commodity rate (SCR): the rate applied for

special commodities in a certain routes.- Class Rate/ Commodity Box Rate (CBR): freight rate

classified by commodity (live animals: 150% GCR, high value commodities: 200% GCR, books, journals, magazines, luggage, mortal remains/ ashes: 50% GCR)

4. Freight and Charges4.3. Different types- Freight All Kinds (FAK): single freight that is charged irrespective of

the commodity- ULD rate: the rate that is charged when the goods are consolidated

in unit load devices- Delayed shipment charge- Fast shipment charge: the rate applied for cargo sending within 3

hours- Unified Cargo rate: single freight that is charges irrespective of the

section- Group rate: the rate that is applied for forwarders or airlines’ agents,

who usually send goods in containers, pallets or other transport articles

- Subscribed rate: the rate that is charged when charter an entire aircraft to carry the goods

5. Extend of carrier’s liability to the goods

5.1. Warsaw Coventions

• Period of liability=> “from airport to airport”

5. Extend of carrier’s liability to the goods

5.1. Warsaw Conventions

• Basic of liability: – Loss, damage, and delay in carriage– Exceptions

5. Extend of carrier’s liability to the goods

5.1. Warsaw Conventions

* Limitation of liability

• Passengers: 125,000 francs

• Registered luggage or goods: 250 francs/kg

• Private luggage: 5,000 francs

• Franc unit consisting of 65.5 milligrams gold of millesimal fineness 900

5. Extend of carrier’s liability to the goods

5.2. Hague protocol 1955

5.3. Guadalajara Convention

5.4. Guatemala Protocol 1971

5.5. Montreal protocol 1975- No. 1, 2, 3, 4

6.Claims and Actions

6.1. Claims

Limitation of claims:

• Warsaw Convention:

• Hague Protocol:

6.Claims and Actions

6.1. ClaimsClaims documents:- Application- AWB- Cargo documents- Documents of damages- Report on compensations (consisting of

indemnity and other fees and charges)

6.Claims and Actions

6.2. Actions

- Claimer

- Defendant

- Limitation of actions

III. Air Cargo Operations in Vietnam

1. Air transportation organizations in Vietnam

- Vietnam Airlines- Pacific Airlines- VASCO (Vietnam Air Service Company)- SFC (Service Flight Corporation of Vietnam)

2. Legal Issues

• Civil Air Law 1991

• Civil Air Law 2006

• Regulations of international air cargo operations 1993

3. Extend of carrier’s liability to the goods

3.1. Period of liability

3.2. Basis of liability

• Exceptions

3.3. Limitation of liability

4. Claims and actions

4.1. Limitations of claims

4.2. Limitations of actions