CHAPTER VII INTERNATIONAL TRANSPORTATION

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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

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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

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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)
• 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

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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

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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

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Ocean Transportation

• Shipping lines (Cont.)
• Shipping Conference
• Ocean Shipping Reform Act (OSRA) of 1998 did not
  remove antitrust exemption for freight rate
  fixing, but allowed members to negotiate a
  separate confidential contract with shippers.
• Conferences 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

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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

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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
•  

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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

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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
  

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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

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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

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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

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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
• On average, vessel carries around 5,500
  Twenty-foot equivalent units (TEUs).
  Recently-built, giant vessels can carry even
  14,500-16,000 TEUs

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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

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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

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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 exporters
  bank and importers bank take several days

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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

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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

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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.

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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

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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

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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

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Letter of Credit and Ocean Bill of Lading

• Banks accept a bill of lading which
• bears a clause of shippers 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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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

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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

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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

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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.

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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.

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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 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

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