Chap07

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CHAPTER VIICHAPTER VII INTERNATIONAL INTERNATIONAL

TRANSPORTATIONTRANSPORTATION Types of International Transportation Types of International Cargo Ocean Freight Costs Ocean Bill of Lading Non-Negotiable Sea Waybill Multimodal Transport Document Letter of Credit and Ocean Bill of Lading Parties Responsible for Shipping Arrangements Arrival Notice

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Truck and RailTruck and Rail

Primary carriers among countries in the same continent such as the USA, Mexico, & Canada. EU countries

Containerized piggyback service on rail Combined transportation of ocean and

inland to domestic final destination

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Air TransportationAir Transportation

Most expensive but fastest mode of transportation

High valued goods Fragile goods Perishable goods Shorter transit time: Speedy delivery Less burden on inventory: Just-in-time

delivery

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Air freightAir freight

By weight or volume By weight or volume Steep progressive rate structure Steep progressive rate structure Depending on commodities Depending on commodities

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Air TransportationAir Transportation Air freight carriers Air freight carriers

Airlines: Operate own air planes Airlines: Operate own air planes Air freight consolidators Air freight consolidators

• Air freight wholesalers for less than Air freight wholesalers for less than container load (LCL) container load (LCL)

• Small shippers pay the consolidator less Small shippers pay the consolidator less than they would pay the airline themselves than they would pay the airline themselves

• More waiting time for consolidation More waiting time for consolidation • Freight forwarding service by freight Freight forwarding service by freight

consolidatorconsolidator• Export customs clearance service by freight Export customs clearance service by freight

consolidatorconsolidator

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Air freight carriersAir freight carriers

International couriersInternational couriers

• Documents and small packages Documents and small packages • House to house service House to house service • One to three day guaranteed delivery One to three day guaranteed delivery • DHL, UPS, Federal Express, Emery, US DHL, UPS, Federal Express, Emery, US

Postal ServicePostal Service

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Ocean TransportationOcean Transportation

Least expensive transportation mode Least expensive transportation mode

Faster, more fuel-efficient vesselsFaster, more fuel-efficient vessels

Shipping linesShipping lines Usually own the cargo vessels Usually own the cargo vessels Operate the cargo vessels Operate the cargo vessels Belongs to Conference or Non-conferenceBelongs to Conference or Non-conference

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Ocean TransportationOcean Transportation

NVOCC's (Non-Vessel Operating Common Carriers) Do not own or operate the vessels Freight consolidators and wholesalers: Less

freight than shipping lines for small shipments Specialized in LCL cargoes-- Small shipments

in a container without expensive export crating Have a warehouse or terminal for receiving

and consolidating small shipments Have own rate tariffs filed with the Federal

Maritime Commission Issue a negotiable ocean bill of lading

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General CargoGeneral Cargo

Packaged cargo transported not in container

Fiberboard (Cardboard) box, crate(wooden box), fiber drum, steel drum, wooden barrel, bag or sack, and bale

Loaded in the cargo holds Refrigerated holds for frozen meat or fresh

fruit

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Bulk CargoBulk Cargo

Cargo without package

Dry bulk cargo: Coal, grain, ore, gravel loaded into the holds by cranes or clamshells or conveyor system

Liquid bulk cargo: Gasoline, edible oil, liquidified natural gas (LNG) or liquidified petroleum gas (LPG) loaded into the tank by piping system

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Container CargoContainer Cargo

Packaged cargo transported in a container

House to house service Shipper's load and count notation on the

B/L Unloaded to Container Freight Station

(CFS) in the case of more than one cargo owner and Container Yard (CY) in the case of one cargo owner

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Container CargoContainer Cargo

Container size (Outside dimension)Container size (Outside dimension) Standard:

• 20 Footer: W.8' x H.8' 6" x L.20' (7' 8"x 7' 10"x 19' 4")

• 40 Footer: W.8' x H.8' 6" x L.40' (7' 8"x 7' 10"x 39' 4")

High Cube: • 40 Footer: W.8' x H.9' 6" x L.40' (7' 8"x 8'

10"x39' 4") • 45 Footer: W.8' x H.9' 6" x L.45' (7' 8"x 8'

10"x44' 4")

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Container CargoContainer CargoSpecialized container

Tanker container Refer container

Advantages of containerization No need for expensive crating Prevents theft at the dock Fast loading & unloading leading to savings on

both time and money Savings on freight through consolidation of

small shipments

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Ocean Freight CostOcean Freight Cost

Pure freight: Rate tariff published & filed with the FMC

Surcharges: Add-on costs after pure freight published• Currency Adjustment Factor (CAF): When US

dollar drops, CAF goes up. • Fuel Adjustment Factor (FAF):Bunker charge.

When price of bunker c fuel increases, FAF goes up

• Terminal Handling Charges (THC): Charges for moving cargoes on the pier, loading or unloading. Regular lines usually include these charges in the ocean freight

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Ocean Bill of LadingOcean Bill of LadingNegotiable Bill of Lading: Order Bill of

Lading • Made out "To order" or To the order of ----."

• Cargoes are released only on presentation of an original bill of lading duly endorsed by the shipper or consignee named in the bill of lading

Non-Negotiable Bill of Lading: Straight B/L • Consigned to the importer. Cargoes are

released only to the consignee. Endorsement not needed

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Ocean Bill of LadingOcean Bill of Lading

Long form B/L: It contains all terms & conditions of carriage

printed on the reverse side of the B/L

Short form B/L: It contains some of terms and conditions by

reference to a source or document

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Non-Negotiable Sea WaybillNon-Negotiable Sea Waybill

Cargoes are released only to the consignee on the Sea Waybill without surrendering an original Sea Waybill.

Often used When consignee, or importer does not need to

sell the goods during transit Specially convenient in the case of a very

short transit time.

Processing shipping documents through exporter’s bank and importer’s bank take several days

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Multimodal Transport Multimodal Transport DocumentDocument

Multimodal (Combined or Intermodal) Bill of Lading

Covers two or more transportation modes: truck or rail – vessel-truck or rail

Covers all transportation from the place dispatched, taken in charge or shipped on board to the place of final destination

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Letter of Credit and Ocean Bill of Letter of Credit and Ocean Bill of LadingLading

Ocean Bill of Lading must conform to conditions of Letter of Credit (UCP 600)

To be accepted by banks, a bill of lading must appear to

indicate the name of the carrier and be signed by the carrier or its agent, or master or its agent

indicate that goods have been shipped on board on a named vessel at the port of loading stated in the Credit• Shipment date: the date of B/L issuance or

On Board notation date

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To be accepted by banks, a bill of lading must appear to (continued) indicate shipment from the port of

loading to the port of discharge stated in the Credit

be the sole original or the full sets of originals as so issued

contain the terms & conditions of carriage

contain no indication subject to a charter party

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If the Credit calls for a multimodal bill of lading, it must appear to

indicate that goods have been dispatched, taken in charge or shipped on board at the place stated in the Credit with the date dispatched, taken in charge of shipped on board

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Letter of Credit and Ocean Bill of Letter of Credit and Ocean Bill of LadingLadingIf the Credit calls for a multimodal bill of

lading, it must appear to (continued) indicate the place of dispatch, taking in

charge or shipment and the final destination of stated in the Credit, even if

• it states a different place of dispatch, taking in charge or shipment or place of final destination or

• it contains the indication “intended” as to the vessel, port of loading or port of discharge

meet other terms & conditions of a standard bill of lading

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Letter of Credit and Ocean Bill of Letter of Credit and Ocean Bill of LadingLading Banks accept a bill of lading which

bears a clause of “shipper’s load and count” or “said by shipper to contain” in container shipment

indicates as the shipper or consignor of the goods a party other than the beneficiary of the Credit (3rd party B/L)

indicates that transshipment will or may take place if cargo shipped in Container, Trailer or LASH (Lighter Aboard Ship) barge and covered by one B/L even if the L/C prohibits transshipment

bears a reference to charges additional to the freight.

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Banks reject a bill of lading which states that the goods are or will be

loaded on deck indicates a defective condition of the

goods or the package: Not clean B/L shows a transshipment, if it is

prohibited by the Credit, unless it is a multimodal transport document or the cargo is shipped in Container, Trailer or LASH

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Letter of Credit and Ocean Bill of Letter of Credit and Ocean Bill of LadingLading Common discrepancies in Bill of Lading

Less than a full set of original Bill of Lading presented

Changes not initialed by the signor of the B/L Not properly endorsed No "On Board" notation indicating the date

of shipment and the name of the actual vessel, if the B/L contains the indication “intended vessel“ or similar qualification such as “Received for shipment”

Date of the B/L later than shipping date in the L/C

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Common discrepancies in Bill of Lading (continued)

Stale B/L not presented to the negotiating bank within specified time after shipment stipulated in the L/C (Presentation date)

Different markings from L/C Different description of the goods from L/C in

general terms Not clean (foul) B/L with a notation of

defective goods or packages On-deck shipments

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Parties Responsible for Shipping Parties Responsible for Shipping ArrangementsArrangements

Under a CFR or CIF Transaction

Exporter is responsible for shipping arrangement, loading, paying freight or freight & marine insurance premium

Exporter may ship by the least expensive vessel even though it is the slowest. Long voyage is a waste of time and money.

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Parties Responsible for Parties Responsible for Shipping ArrangementsShipping Arrangements

Under FOB Transaction Importer is responsible for shipping

arrangement, paying ocean freight and marine insurance premium

Exporter responsible for loading the cargo on the carrier

Exporter may ship by the most convenient vessel even though its freight is higher than other vessels.

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Parties Responsible for Shipping Arrangements

First, import on a CFR or CIF basis Second, if you can get a better freight rate, then

change to the FOB FOB ties up line of credit less than CFR or CIF,

specially when the freight portion is very high.

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Arrival NoticeArrival Notice

Carrier unloads Containers with one cargo owner to C.Y. (Container Yard) and Containers with more than one owner to C.F.S. (Container Freight Station)

Arrival Notice to “Notify Party” in the B/L indicating ETA and wharf demurrage starting date, generally 8th day after vessel arrival for CY cargos 13th day for CFS cargos excluding

weekend & holidays Much shorter free period for reefer

containers

Chap07

Business

Transcript of Chap07