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A container shipping story

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1 A container shipping story
This story is designed to help simplify the overall process of how containers move from one place to another and to explain the roles that each of our departments have to play in each and every shipment we carry at Maersk Line. Along the way, fact boxes will also help clarify some of the more common terms in container shipping that people new to the industry often find confusing. Text slide with image Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation 1

2 A container shipping story
One upon a time, there was a French toy seller, Mr. Robert, who had a beautiful shop right in the heart of Marseille. Christmas was coming up and he had to hurry and purchase the toys that would bring joy to all the children. He decided that, for the first time, he would import some toys from Asia, from a famous brand company in Hong Kong. Well, great idea, but how would he do that? He consulted the big White Pages to search for a company that he knew booked containers for overseas transport… MSC, CMA, MAERSK… “Maersk?... What a strange name...but I kind of like it, let’s try them!” he thought with excitement. Ring ring, ring ring... “Good morning, Maersk Line, how can I help you?” answered a kind voice “Good morning, I would like to import a container or two full of toys from Hong Kong. It’s my first import and I don’t know what I need to do, can you help me?” “Certainly sir,” said Marie, Customer Service agent, while consulting MePC for routing details, “we actually have a direct service from Hong Kong to Fos-sur-Mer that sails every Sunday. The transit time is about 20 days.” “And how much would that cost?” “Our sales department can give you all the relevant information about costs for this type of shipment. Stay on the line while I put you in contact with one of my colleagues...” Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

3 Customer Service… how can we help you?
Export Customer Service assists customer from the booking stage to the B/L issuance. The booking department receives booking requests from customers, checks vessel allocation and empty equipment availability, and in case of carrier haulage they also arrange transport. The booking department is responsible for the booking confirmation. Export customer service verifies the load list before vessel arrival and checks after vessel departure the loaded containers, notifying customers in case of containers not loaded. The documentation dept is in constant contact with customer and GSC in Manila for all documentation related issues. Why don’t we just transport goods by plane… isn’t that faster? Container shipping is the most efficient way to transport large volumes of goods across the world. While airplanes are faster, container ships can carry more goods in one go. It would take hundreds of airplanes to carry all the goods that can fit on just one large container ship. Transporting goods in large volumes also makes it cheaper, for us and our customers, we call this ‘economies of scale’. Transporting goods by container ship is also better for the environment. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

4 A container shipping story
Mr. Robert speaks with Luc from Sales… “Good morning Mr. Robert,” said Luc from Sales, “Marie told me about your shipment request and for a shipment of 2 containers of toys from Hong Kong to Fos-sur-mer we can give you a rate of usd 500 per container…” Luc then proceeded to explain to Mr. Robert about the various additional charges involved at origin and destination… “If that rate is OK for you I can make a contract for the rate and pass you to our bookings department who can check availability and confirm a booking for you.” “You are very kind,” responded Mr. Robert, “but I will need to think about it some more. Thank-you and I may call back soon.” Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

5 Sales… not just a pricing desk.
The sales department is responsible for keeping alive profitable relationships with customers. Maintaining open dialogue and long lasting business relations with our clients, the sales action consists mainly in evaluating in the most accurate way each business opportunity and working on the offer. This involves focusing both on price negotiation and on our specific service strengths, aiming to close cost-effective agreements. Sales is dynamic, requiring understanding of market trends, looking for relevant info about competitors, being always well informed and maintaining open perspective for new business opportunities as well as caring for existing customers and trying to satisfy their needs until the moment of the booking - always in close cooperation customer service, finance and operations departments. 3 letter acronyms… our main charges explained. BAS – Basic Freight: This is the price we charge for essentially “renting” the container and the space on our vessel BAF – Bunker Adjustment Factor: Covers the cost of fuel to run our vessels THC – Terminal Handling Charge: Covers the cost of cranes and other activities at the terminal (OTHC at origin, DTHC at destination.) CAF – Currency Adjustment Factor: Some areas charge this to help recover costs related to currency exchange rates IHI / IHE – Inland Haulage (Import / Export): Covers the inland transport leg (rail / road) Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

6 A container shipping story
After a quick ring around to the other shipping lines he found, Mr. Robert decided that the transit time with Maersk was the best for him and the price was quite competitive, so he rang Luc from Sales back to confirm a contract for the shipment and Luc in turn put him back in contact with Marie in Customer Service who created the booking. “OK,” said Marie to Mr. Robert, “I’ve created the booking for you here and will send you the acknowledgement soon so you will have the details including the booking number, but unfortunately the system is telling me the vessel we want is full so I will have to send a request to capacity for additional space for your containers before I can confirm the booking for you.” “Oh, I hope that you can put these containers on that vessel, it is very important that these toys arrive in time for Christmas or the children will be very disappointed. I will wait for your confirmation.” Marie sent the request to capacity and the following day received confirmation that the additional space could be granted so she promptly sent a confirmation to the customer. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

7 Can we handle the shipment? Equipment and Capacity.
The Equipment department is responsible for the Maersk container fleet management within the Cluster territory and is split into 3 sub-departments: Maintenance & Repairs: the most technical department in Maersk France, responsible for cargo care and container repairs as well as supporting customer service and sales with the technical skills to deliver the most “delicate” reefer services. Equipment Execution: responsible for cargo control data quality. Equipment Planning: responsible for equipment flow optimization from operational and costing point of view, regulating surplus and deficits within the limits agreed with WOC. The Capacity department is responsible for full and empty unit allocation management, finding the space on vessels to deliver our import & export cargo to the final destination. FOB or CIF? All about Incoterms Incoterms are standard terms (copyright by the International Chamber of Commerce) that help traders in different countries understand one another. They describe the selling/buying terms between the shipper and the consignee, but they also help us know where the cargo is controlled and who is responsible for paying what. The most common we see are FOB & CIF… FOB stands for “Free on board” and means that the seller officially ‘delivers’ the goods at the named port of shipment load – for us this means that the consignee pays all freight and destination charges while the shipper pays only origin local charges. CIF stands for “Cost, Insurance and Freight” and the definition between shipper and consignee is a little more complicated – but for us means that it is the shipper paying the freight and origin charges and the consignee only pays local destination charges. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

8 A container shipping story
Mr. Robert calls Marie back… “Marie, my supplier told me now that the factory is actually in China about an hour away from the port of Hong Kong. How can I get the containers, pack them and take them back to the port for loading?” After consulting MePC again for a Store Door product from this new inland origin Marie advised “I can make the booking a Store Door booking for you and our Intermodal department in China will contact your supplier directly to arrange the transport of the empty containers by truck from the depot to the factory for your supplier to stuff the containers, and to take the full containers back to the terminal for loading.” Once all was in order Marie sent a booking confirmation to Mr. Robert. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

9 CY/SD – what does that mean?
Getting containers to the ocean and on the vessel… intermodal & terminal operations. The Intermodal department looks after all land transport. This mainly relates to export cargo arriving to the terminal by train or truck, with full assistance on loading aboard vessels. Intermodal deal directly with suppliers and forwarders to ensure smooth Operations and Customs Clearance as per deadlines established by Operations Cluster, constantly checking schedules in case of delays on both trains and vessels and maintaining relations with carriers. Terminal Operations consists of berthing coordination with terminal and Operation Clusters, vessel schedule/rotations & performance protection, negotiation of new proforma schedules, creating and checking cargo lists, providing proper documentation and support to vessels and crew, analysis of data quality / berth productivity / customs blocked status, yard and vessel planning, as well as claims and safety issues related to the terminals. CY/SD – what does that mean? This describes from where to where the shipping line (that’s us) transports the cargo. CY = Container Yard, meaning a terminal (this can be a sea or inland terminal) SD = Store Door, meaning the customer’s premises (warehouse, distribution centre etc) So… CY/CY = from terminal to terminal SD/CY = from customer at origin to terminal at destination SD/SD = from customer at origin to customer at destination CY/SD = from terminal at origin to customer at destination Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

10 A container shipping story
A couple of weeks later, Marie calls Mr. Robert… “I have good news Mr. Robert, your container has been loaded on the vessel Maersk Surabaya voyage 0824 and is on the way to Fos.” “Thank-you for the notice, now what happens?” “Now the documentation is being created, based on the Shipping Instruction our Hong Kong office has received from your shipper. The Shipping Instruction includes all of the information that tells us what needs to be on the Bill of Lading, for example the commodity type, number of packages, weight and whether the shipment is prepaid or collect. The information is entered into our system which, once the vessel has departed, will produce the export invoice of the charges that your shipper will have to pay in Hong Kong. The finance department will send the invoice and, subsequently, verify payment from your shipper (or confirm that the Bill of Lading can be released within terms of a credit agreement). Once this is done your shipper will be able to collect the Bill of Lading.” Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

11 Finance is not just about numbers… What is a B/L?
It is a big department, involved in different activities: Accounts, ledgers, accounting system and registers for local APM entities Payments of invoices to our suppliers Filings & payment of any Corporate and Regional tax including VAT Reconciliation of all local Balance Sheet accounts All internal/external financial reporting, monthly reporting, budget annual accounts book-close, BOD files cash Forecast, Financial Exposure Analysis, Statutory Financial statements External/internal audit in connection with preparation of the annual accounts, tax statements & other statutory controls Reporting & controlling Planning and coordination of local reporting process Daily cash flow monitoring to get a true picture of available liquidity Financial exposure analysis Reconciliation all Bank accounts / Supplier sheets accounts Credit collection: dunning & customers’ relationship follow-up Release of export B/Ls, print & dispatch export invoices Customers’ follow-up on Credit Agreements & related compliancy…and much more! What is a B/L? B/L (or BOL) is the abbreviation for “bill of lading”, which is a document issued by a carrier, (e.g. a ship's master or by a company's shipping department), acknowledging that specified goods have been received on board as cargo for transport to a particular destination. A through bill of lading is what we call a B/L that covers 2 or more forms of transport, i.e. covering the inland leg as well as the sea leg of a shipment. The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

12 A container shipping story
The vessel is arriving… Mr. Robert rings Marie, “Good morning Marie, I have received an Arrival Notice, but what does that mean I have to do? When can I collect my containers?” “Well we just received confirmation that your containers have been customs cleared and your shipper should have sent you the Original Bill of Lading. You will have also received an import invoice that shows the charges that need to be paid here. After paying the relevant collect charges and submitting the Original Bill to our office, we will give you the Delivery Order which is what you will need in order to collect the container from the terminal.” “Ah, great so I will come into your office to collect the Delivery Order so my cousin Eric can collect the containers for me.” Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

13 Delivering the goods… Import and Freight Cashier What is a DO?
The import department are responsible for delivering the containers to the customer. This involves first ensuring all containers on arriving vessels are declared to customs authorities by sending the import custom manifest and that the customer knows that the container is arriving by sending an arrival notice. The import department check that all the invoicing details are correct so that the invoice can be sent to the customer for payment. Freight cashier is responsible to timely collect freight. Import department collect the original B/L duly endorsed issue delivery order enabling customer to pick-up container – this is the official ‘delivery’ of the container to the customer. If the shipment is moving over land by carrier haulage (meaning we organise transport) the import department also arrange this through a transport order. Throughout this whole process the import department support the customer in solving any issues that arise with customs formalities, invoicing or transportation arrangements. What is a DO? D/O is the abbreviation for the term Delivery Order. A Delivery Order is a document from a consignee, a shipper, or an owner of freight which orders the release of the transportation of cargo to another party. Usually the written order permits the direct delivery of goods to a warehouseman, carrier or other person who in the course of their ordinary business issues warehouse receipts or bills of lading. A Delivery Order should not to be confused with delivery instructions. Delivery Instructions provide specific information to the inland carrier about the arrangement made by a forwarder. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

14 A container shipping story
Mr. Robert comes into the office and picks up his DO… “Thank-you very much,” he says after the DO has been handed to him, “this tells me where we should bring the containers after we have unpacked them right?” “Correct,” says Alice the freight cashier, “the address is right here under ‘please return empty containers to’. You will need to make sure that you return them within 7 days after you have picked them up from the terminal or detention charges will apply.” “Right, but there’s also a time limit to pick the containers up from the terminal as well?” “Yes, you also have 7 days in which you can pick up the full containers from the terminal or demurrage charges will apply.” “Mmm… that’s OK for these first 2 containers, but maybe if I do expand my business next year I will have to spread my shipments out, or see if I can have some more days to unpack… is that possible?” “It is sometimes possible, but usually only under special circumstances so it’s better to plan your containers to avoid needing freetime.” “Thank-you, the staff at Maersk have been most helpful and I will make sure that the next time I import toys I will call Maersk again.” Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

15 Supporting our very helpful staff…
There are several departments which we call support functions, the wizards behind the scenes that ensure the rest of the organisation can help our customers on the front line… The IT department are responsible for supporting IT business needs, group policies, guidelines and projects and to maintain a reliable IT hardware/software infrastructure able to deliver high quality IT services and solutions. There are two main areas in IT, Business and Infrastructure. The HR department is split into 2 sections, Business Development Support & Organisational Development and Administration. HR are responsible for: Performance Culture: Performance Appraisal, Bonus Scheme, Salary review etc Talent Management – Entry Level Programmes, Succession planning, Leading Others, Talent Identification etc HR Functional Excellence – Reporting and data maintenance, contracts, overtime & vacations, recruitments, analysis, Employee Engagement, LMS, training, industrial and unions relations, payroll, organisation changes etc. Which is demurrage and which is detention? Both demurrage and detention refer in the container shipping industry to charges related to allowed time (freetime) for the handling of our containers. Demurrage is essentially storage charges for not picking up a full container from the port within the freetime days, while detention is what we charge if empty containers are not returned on time. The term Demurrage actually comes from the field of vessel chartering and refers to the period during which the charterer remains in possession of the vessel after the period of time normally given to him to charge and discharge the cargo. Proudly brought to you by the Italian Clusters Internal Communications Team. Container Business Presentation

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