Presentation on theme: "CHAPTER VII INTERNATIONAL TRANSPORTATION"— Presentation transcript:
1CHAPTER VII INTERNATIONAL TRANSPORTATION Types of International TransportationTypes of International CargoOcean Freight CostsOcean Bill of LadingNon-Negotiable Sea WaybillMultimodal Transport DocumentLetter of Credit and Ocean Bill of LadingParties Responsible for Shipping ArrangementsArrival Notice
2Truck and RailPrimary carriers among countries in the same continent such as the USA, Mexico, & Canada. EU countriesContainerized piggyback service on railCombined transportation of ocean and inland to domestic final destination
3Air Transportation Most expensive but fastest mode of transportation High valued goodsFragile goodsPerishable goodsShorter transit time: Speedy deliveryLess burden on inventory: Just-in-time delivery
4Air Transportation Air freight By weight or volume Steep progressive rate structureDepending on commodities
5Air Transportation Air freight carriers Airlines: Operate air planes Own or lease air planesOperate air planesAir freight consolidatorsAir freight wholesalers for less than container load (LCL)Small shippers pay the consolidator less than they would pay the airline themselvesMore waiting time for consolidationFreight forwarding service by freight consolidatorExport customs clearance service by freight consolidator
6Air Transportation Air freight carriers International couriers Documents and small packagesHouse to house serviceOne to three day guaranteed deliveryDHL, UPS, Federal Express, Emery, US Postal Service
7Ocean Transportation Faster, more fuel-efficient vessels Least expensive transportation modeFaster, more fuel-efficient vesselsShipping linesOwn or lease the cargo vesselsOperate the cargo vesselsBelongs to Conference or Non-conference
8Ocean Transportation NVOCC's (Non-Vessel Operating Common Carriers) Do not own or operate the vesselsFreight consolidators and wholesalers: Less freight than shipping lines for small shipmentsSpecialized in LCL cargoes-- Small shipments in a container without expensive export cratingHave a warehouse or terminal for receiving and consolidating small shipmentsHave own rate tariffs filed with the Federal Maritime CommissionIssue a negotiable ocean bill of lading
9General Cargo Packaged cargo transported not in container Fiberboard (Cardboard) box, crate(wooden box), fiber drum, steel drum, wooden barrel, bag or sack, and baleLoaded in the cargo holdsRefrigerated holds for frozen meat or fresh fruit
10Bulk Cargo Cargo without package Dry bulk cargo: Coal, grain, ore, gravel loaded into the holds by cranes or clamshells or conveyor systemLiquid bulk cargo: Gasoline, edible oil, liquidified natural gas (LNG) or liquidified petroleum gas (LPG) loaded into the tank by piping system
11Container Cargo Packaged cargo transported in a container House to house serviceShipper's load and count notation on the B/LUnloaded 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
12Container Cargo Container size (Outside dimension) Standard: 20 Footer: W.8' x H.8' 6" x L.20'1,172 cubic feet (33.2 cubic meters)24 M/T (Tare M/T & Cargo 21.77M/T)40 Footer: W.8' x H.8' 6" x L.40'45 Footer, 48 Footer, and 53 FooterHigh Cube:40 Footer: W.8' x H.9' 6" x L.40'45 Footer: W.8' x H.9' 6" x L.45'48 Footer, 53 Footer
13Container Cargo Specialized container Advantages of containerization Tanker containerReefer containerAdvantages of containerizationNo need for expensive cratingPrevents theft at the dockFast loading & unloading leading to savings on both time and moneySavings on freight through consolidation of small shipments
14Ocean Freight CostBasis Ocean Freight (Pure freight): Rate tariff published & filed with the FMCTerminal Handling Charges (THC): Ancillary Charges for moving cargoes on the pier, loading or unloading. Separately charged since 1991Surcharges: Additional charges or add-on costsCurrency 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
15Ocean Bill of Lading Negotiable 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 ladingNon-Negotiable Bill of Lading: Straight B/LConsigned to the importer. Cargoes are released only to the consignee. Endorsement not needed
16Non-Negotiable Sea Waybill & Air Waybill Cargoes are released only to the consignee on the Sea Waybill without surrendering an original Sea Waybill.Often usedWhen consignee, or importer does not need to sell the goods during transitSpecially convenient in the case of a very short transit time.Processing shipping documents through exporter’s bank and importer’s bank take several days
17Multimodal Transport Document Multimodal (Through, Combined or Intermodal) Bill of LadingCovers two or more transportation modes: truck or rail – vessel-truck or railCovers all transportation from the place dispatched, taken in charge or shipped on board to the place of final destination
18Letter of Credit and Ocean Bill of Lading Ocean Bill of Lading must conform to conditions of the Letter of Credit (UCP 600)To be accepted by banks, a bill of lading must appear toindicate the name of the carrier and be signed by the carrier or its agent, or master or its agentindicate that goods have been shipped on board on a named vessel at the port of loading stated in the Letter of Creditby either pre-printed wording or an on board notation with the date of shipment
19Letter of Credit and Ocean Bill of Lading Shipment date: the date of B/L issuance or On Board notation dateIf the bill of lading contains the indication “intended vessel,” an on board notation is requiredindicating the date of shipment and the name of actual vessel.
20Letter of Credit and Ocean Bill of Lading 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 Letter of Creditbe the sole original or the full sets of originals as so issuedcontain the terms & conditions of carriagecontain no indication subject to a charter party
21Letter of Credit and Ocean Bill of Lading If the Letter of Credit calls for a multimodal bill of lading, it must appear toindicate that goods have been dispatched, taken in charge or shipped on board at the place stated in the Letter of Credit with the date dispatched, taken in charge or shipped on board
22Letter of Credit and Ocean Bill of Lading A multimodal bill of lading (continued)It must also appear toindicate the place of dispatch, taking in charge or shipment and the place of final destination stated in the Letter of Credit, even ifit states, in addition, a different place of dispatch, taking in charge or shipment or final destination orit contains the indication “intended” as to the vessel, port of loading or port of dischargemeet other terms & conditions of a standard bill of lading
23Letter of Credit and Ocean Bill of Lading Banks accept a bill of lading whichbears a clause of “shipper’s load and count” or “said by shipper to contain” in container shipmentindicates 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 transshipmentbears a reference to charges additional to the freight.
24Letter of Credit and Ocean Bill of Lading Banks reject a bill of lading whichstates that the goods are or will be loaded on deckindicates a defective condition of the goods or the package: Not clean B/Lshows 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
25Letter of Credit and Ocean Bill of Lading Common discrepancies in Bill of LadingLess than a full set of original Bill of Lading presentedChanges not initialed by the signor of the B/LNot properly endorsedNo "On Board" notation indicating the date of shipment and the name of the actual vessel, if the B/L contains the indication “intended vessel.”Date of the B/L later than latest shipment date in the L/C
26Letter of Credit and Ocean Bill of Lading 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/period)Different markings from L/CDifferent description of the goods from L/C in general termsNot clean (foul) B/L with a notation of defective goods or packagesOn-deck shipments
27Parties Responsible for Shipping Arrangements Under a CFR or CIF TransactionExporter is responsible for shipping arrangement, loading, paying freight or freight & marine insurance premiumExporter may ship by the least expensive vessel even though it is the slowest. Long voyage is a waste of time and money.
28Parties Responsible for Shipping Arrangements Under FOB TransactionImporter is responsible for shipping arrangement, paying ocean freight and marine insurance premiumExporter responsible for loading the cargo on the carrierExporter may ship by the most convenient vessel even though its freight is higher than other vessels.
29Parties Responsible for Shipping Arrangements First, import on a CFR or CIF basisSecond, if you can get a better freight rate, then change to the FOBFOB ties up line of credit less than CFR or CIF, specially when the freight portion is very high.
30Arrival NoticeCarrier 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, generally8th day after vessel arrival for CY cargos13th day for CFS cargos excluding weekend & holidaysMuch shorter free period for reefer containers