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: Operate air planes
Own or lease air planes
Operate air planes
Air freight consolidators
Air freight wholesalers for less than container load (LCL)
Small shippers pay the consolidator less than they would pay the airline themselves
More waiting time for consolidation
Freight forwarding service by freight consolidator
Export customs clearance service by freight consolidator

6. Air Transportation Air freight carriers International couriers
Documents and small packages
House to house service
One to three day guaranteed delivery
DHL, UPS, Federal Express, Emery, US Postal Service

7. Ocean Transportation Least expensive transportation mode
Faster, more fuel-efficient vessels than before
Around 80% of international cargoes by volume & 70% of international cargoes by value carried by vessels
The most important transportation mode for international cargos

8. Ocean Transportation Shipping lines Own or lease the cargo vessels
Operate the cargo vessels
Were either Conference Liners (belonging to Shipping Conference) or Non-Conference Liners (not belonging to it) for many decades
Shipping Conference
Made rules and freight rates applicable to all members, thanks to the exemption from price fix prohibition of anti-monopoly or anti-trust laws of many countries
Antitrust exemption in the U.S. since Shipping Act of 1916

9. Ocean Transportation Shipping lines (Cont.) Shipping Conference
Ocean Shipping Reform Act (OSRA) of did not remove antitrust exemption for freight rate fixing, but allowed members to negotiate a separate confidential contract with shippers.
Conference’s fixed freight rates became no longer binding
Gradually Conferences have been dissolved. Ended in 2008 in the U.S. Nowadays they do not exist. No more price fixing exemption

10. Ocean Transportation Major shipping lines per TEU capacity
A.P. Moller-Maersk Group (MAERSK) of Denmark
Mediterranean Shipping Company (MSC) of Switzerland
CMA CGM of France
COSCO Shipping of China
Evergreen Marine of Taiwan
Hapag-Lloyd of Germany
Hamburg Sud of Germany
Yang Ming Marine of Taiwan

11. Ocean Transportation
Orient Overseas Container Line (OOCL) of Hong Kong
United Arab Shipping Co. (UASC) of Middle East
NYK Line of Japan
Mitsui O.S.K Lines (MOL) of Japan
Hyundai Merchant Marine of Korea
K Line of Japan
Pacific International Lines (PIL) of Singapore
Zim Integrated Shipping Services of Israel

12. 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

13. 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

14. Bulk Cargo Cargo without package
Dry bulk cargo: Coal, grain, ore, gravel loaded into the holds by cranes or clamshells or conveyor belts
Liquid bulk cargo: Gasoline, edible oil, liquidified natural gas (LNG) or liquidified petroleum gas (LPG) loaded into the tank by piping system

15. Container Cargo Packaged cargo transported in a container
House to house service, if FCL
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

16. 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 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

17. Container Cargo Specialized container Advantages of containerization
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
On average, vessel carries around 5,500 Twenty-foot equivalent units (TEUs). Recently-built, giant vessels can carry even 14,500-16,000 TEUs

18. 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

19. Ocean Bill of Lading Negotiable Bill of Lading: Order Bill of Lading
Made out "To order" or To the order of bank of importer."
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

20. Non-Negotiable Sea Waybill & Air Waybill
Cargoes are released only to the consignee on the Sea or Air Waybill without surrendering an original Sea or Air 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

21. 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

22. 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

23. 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.

24. 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

25. 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

26. 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

27. 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 (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.

28. 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

29. 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

30. 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

31. 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 to an Importer.

32. 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.

33. 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.

34. 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
8th day after vessel arrival for CY cargos
13th day for CFS cargos excluding weekend & holidays
Much shorter free period for reefer containers