Presentation on theme: "1 CHAPTER VII INTERNATIONAL TRANSPORTATION Types of International Transportation Types of International Cargo Ocean Freight Costs Ocean Bill of."— Presentation transcript:
1 CHAPTER VII INTERNATIONAL TRANSPORTATION 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
2 Truck 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
3 Air 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
4 Air Transportation Air freight By weight or volume Steep progressive rate structure Depending on commodities
5 Air Transportation Air freight carriers Airlines: Own or lease air planes Operate air planes Air freight consolidators Air freight wholesalers for less than container load (LCL)Air freight wholesalers for less than container load (LCL) Small shippers pay the consolidator less than they would pay the airline themselvesSmall shippers pay the consolidator less than they would pay the airline themselves More waiting time for consolidationMore waiting time for consolidation Freight forwarding service by freight consolidatorFreight forwarding service by freight consolidator Export customs clearance service by freight consolidatorExport customs clearance service by freight consolidator
6 Air Transportation Air freight carriers International couriers Documents and small packagesDocuments and small packages House to house serviceHouse to house service One to three day guaranteed deliveryOne to three day guaranteed delivery DHL, UPS, Federal Express, Emery, US Postal ServiceDHL, UPS, Federal Express, Emery, US Postal Service
7 Ocean Transportation Least expensive transportation mode Faster, more fuel-efficient vessels Shipping lines Own or lease the cargo vessels Operate the cargo vessels Belongs to Conference or Non-conference
8 Ocean 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
9 General 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
10 Bulk 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
11 Container 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
12 Container 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 2.23 M/T & Cargo 21.77M/T) 40 Footer: W.8' x H.8' 6" x L.40' 45 Footer, 48 Footer, and 53 Footer High 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
13 Container Cargo Specialized container Tanker container Reefer 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
14 Ocean Freight Cost Basis Ocean Freight (Pure freight) : Rate tariff published & filed with the FMC Terminal Handling Charges (THC): Ancillary Charges for moving cargoes on the pier, loading or unloading. Separately charged since 1991 Surcharges : Additional charges or add-on costs 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
15 Ocean 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 lading Non-Negotiable Bill of Lading: Straight B/L Consigned to the importer. Cargoes are released only to the consignee. Endorsement not needed
16 Non-Negotiable Sea Waybill & Air 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
17 Multimodal Transport Document Multimodal (Through, 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
18 Letter 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 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 Letter of Credit by either pre-printed wording or an on board notation with the date of shipment
Letter of Credit and Ocean Bill of Lading Shipment date: the date of B/L issuance or On Board notation date If the bill of lading contains the indication “intended vessel,” an on board notation is required indicating the date of shipment and the name of actual vessel. 19
20 Letter 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 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
21 Letter of Credit and Ocean Bill of Lading If the Letter of 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 Letter of Credit with the date dispatched, taken in charge or shipped on board
22 Letter of Credit and Ocean Bill of Lading A multimodal bill of lading (continued) It must also appear to indicate the place of dispatch, taking in charge or shipment and the place of final destination stated in the Letter of Credit, even if it states, in addition, a different place of dispatch, taking in charge or shipment or 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
23 Letter of Credit and Ocean Bill of Lading 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 (3 rd 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.
24 Letter of Credit and Ocean Bill of Lading 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
25 Letter of Credit and Ocean Bill of Lading 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.” Date of the B/L later than latest shipment date in the L/C
26 Letter 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/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
27 Parties Responsible for Shipping Arrangements 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.
28 Parties Responsible for Shipping 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.
29 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.
30 Arrival 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 8 th day after vessel arrival for CY cargos 13 th day for CFS cargos excluding weekend & holidays Much shorter free period for reefer containers