Slides on Transporation 1

FREIGHT FORWARDING & FREIGHT FORWARDING & TRANSPORTATIONTRANSPORTATION

Before the era of containerization there were only two modes of transportation: 1. Air 2. SeaAfter the era of containerization: 1. Air 2. Sea 3. Sea/Air 4. Road 5. Inland waterway

WHO IS A FREIGHT WHO IS A FREIGHT FORWARDERFORWARDER

He is a logistic partner providing part or total functions of the supply chain with a view of reducing cost and increasing customer service.

SERVICES OF FREIGHT SERVICES OF FREIGHT FORWARDERFORWARDER

1. Adviser/Consultant Packing – Choice and type of packing Routing - Choice of itinerary and mean of

transport Insurance – Type of coverage Custom regulation- In/Out bound LC – Banking requirements

2. 2. Organizer forOrganizer for Import/export transit consignments. Consolidation – Groupage shipments Breaking bulk of consolidation Special and Heavy transport – Project

cargo

3 Imports : Unloading of Cargo Breaking bulk of consolidation Custom clearance.

4. 4. ExportExportPick up Packing and MarkingFreight space bookingDelivery to carrier Issue of transport documentsSupervising DepartureDispatch Advise to customerCustom Clearance

55. Imports. Imports

Custom ClearanceUnloading of cargoTransporting of cargoBreaking bulk of consolidation

6. Transit6. Transit

Re packingStorage in boundRe forwarding

FREIGHT FORWARDERS FREIGHT FORWARDERS RELATIONSHIP WITH VARIOUS RELATIONSHIP WITH VARIOUS

PARTIESPARTIESPort Imp/Exp Control Customs & Trade Control F Exchange Control Health Control Counsular

Consignee/ FF Carriers & Consignor All operators

Cargo Insurers

PERFORMANCE OF PERFORMANCE OF CONTRACTCONTRACT

Customer Instruction

Forwarder Accepts Transportation in

a Most suitable manner

ETA – Not Guaranteed

LIABILITY OF FREIGHT LIABILITY OF FREIGHT FORWARDERFORWARDER

Liable only for his/employees faults.Acts of omissions or commissions by 3rd party not liable provided due diligence is exercised in selecting the carrier.

EXTEND OF LIABILITY & EXTEND OF LIABILITY & LIMITATION AMOUNTLIMITATION AMOUNT

Limited to …………. per kg or PKG, cannot exceed the MKT value of goods at the time of acceptance by Freight Forwarder

Not responsible for consequential losses

FREIGHT FORWARDERS FREIGHT FORWARDERS LIEN & DETENTIONLIEN & DETENTION

Right to hold & detain any goods or other securities for all debts present and previous outstanding

Time limit – Time bared - six months.Period starts - Date of delivery of goods

CONSOLIDATIONCONSOLIDATIONAssembling of small parcels of cargo from

several consigns at one point of origin, intended for several consigners at another port of destination dispatching the parcels as one consolidated consignment to the consolidators agent at the destination and delivering them to the respective consigners.

Contd.Contd.

DOCUMENTATIONDOCUMENTATION

1. House B/L2. Forwarders Cargo receipts3. Forwarders certificate of transport

(CT)4. FBL/FIATA B/L (International

Federation of FF association)

ContdContd

SHIPPING MANIFESTSHIPPING MANIFEST

This gives the details of the clients and his cargo in the container. This is important to the agent in the receiving country to report to customs and also to have an idea of the type of cargo, volumes of cargo etc.

SizeCon/ NoB/L No Qty Nature VolumeM/NoShipp Wt

ContdContd

LIABILITY OF LIABILITY OF CONSOLIDATORSCONSOLIDATORS

By issuing his own B/L FF assumes role of the carrier.

Responsible for entire transportResponsible for loss or damage even the

when the cargo is in the custody of the carrier.

Responsible for delay in delivery.

ContdContd

ADVANTAGE OF ADVANTAGE OF CONSOLIDATIONCONSOLIDATION

Low Freight rateWide range of destinationDoor to door delivery

INCO TERMSINCO TERMSIt is a 3 letter code identifying the liability

and the responsibility of an Importer and Exporter.

There 14 terms available. Eg. EXW,FOB,CFR,CIF ,DDU,DDP etc.

OCEAN BILLS OF LADINGOCEAN BILLS OF LADING

1. Is it negotiable? Yes/No2. Document of title Yes/No3. Transferable Yes/No 4. Contract Yes/No5. Is it a Receipt Yes/No

AIRWAY BILLAIRWAY BILLEquivalent document of ocean B/L

Is it Negotiable?

If “Yes” - Why ?

If “No” - Why ?

KINDS OF B/LKINDS OF B/L

Classification IShipped on B/L – Cargo on Board the

vessel

Received for shipment B/L – Shipping company confirms receipt of goods for shipment on vessel mentioned.

Contd.Contd. Classification II – According to beneficiaries To a named person – Name and address of the

consignee is given.Hence delivery only to the named person – not used for commercial cargo.

Eg. Personnel effects, Headquarters to a branch office - Non negotiable B/L to Order B/L to Bearer – Not commonly used in business.

Contd.Contd.According to Voyages

Direct Bill of Lading Through Bill of Lading – Has 2 characteristics

distinguishing direct B/L

1. Clause containing right to transship

2. Contains statement that cargo will be transshipped at a particular port

MULTIMODAL TRANSPORTMULTIMODAL TRANSPORT

INTERMODAL/MULTIMODAL INTERMODAL/MULTIMODAL TRANSPORTTRANSPORT

The United Nations Convention on International Multimodal Transport of goods (the MT Convention) defines multimodal transport as:

 “…….the carriage of goods by least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country “

WHO IS A MM TRANSPORT WHO IS A MM TRANSPORT OPERATOROPERATOR

According to the definition in the MT Convention, a Multimodal Transport Operator (MTO) is :

  “….any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract”.

ContdContd

This is the strict legal meaning under the MT Convention, but there is a wider, more liberal definition that says that any one who undertakes to arrange a door-to-door transport using more than one mode of transport and who issues one transport document for the entire transport is a MTO.

ADVANTAGES OF MM ADVANTAGES OF MM TRANSPORTTRANSPORT

Minimizes time loss at the trans –shipment points.

Provides faster transit of goodsReduces burden of documentation and

formalitiesSave costEstablishes only one agency to deal with Reduces cost of exports 

DIFFERENT TYPES OF MM DIFFERENT TYPES OF MM OPERATIONSOPERATIONS

VESSEL OPERATING MM TRANSPORT OPERATORS – VO- MTO’S :

  They do not own/operate means of transport of goods by Road, Rail of Air but arrange for these types of transport by subcontracting with such carriers. However this is rapidly changing.

Contd Contd

NON VESSEL OPERATING MM TRANSPORT OPERATORS – NVO – MTO’s

They will not themselves own or operate the vessels which perform the ocean voyage. For this reason they are known as “non-vessel operating MTO’s or “Non –vessel operating common carriers (NVOCC’) Instead of subcontracting the inland or air legs of the transport they may instead subcontract the ocean voyage.

ContdContd

OTHER TYPE OF NVO- MTO’s 1. Do not own any means of transport. They may

own some type of transport such as trucks , air crafts etc. They may sublet the inland or air leg..

2. Company’s who provide exclusive multimodal transport – They do not own vessel themselves.

3. Freight forwarder who act as carriers and assumes

full responsibility for execution of transport contract

Contd Contd

a) Fully fledged MM transport operators controlling different modes of transport through door to door movements under one MM documents – FBL

b) NVO – NV operators arranging port to port ocean transport under HBL or OBL who may also cover land transport..

ContdContd

c. NVOCC – NVO common carriers who advertise regular sailing and arrange consolidation or MM transport under HBL,or FIATA B/L

1. Sea /Air - This combines in itself the economic of sea transport and speed of air transport. Very popular in international trade routes like far east- Europe. This method favours high value items like electronics and electrical goods as well as high seasonal demand goods such as fashion ware and toys.

DIFFERENT TYPES OF DIFFERENT TYPES OF OPERATIONSOPERATIONS

Contd Contd

2. Air/Road – Popular in USA and Europe.

3 Rail/Road/Inland waterways – Sea- rail/road/ inland water ways. – Commonly used when goods have to be moved by sea from one country to another and one or more inland modes of transport moving the goods from inland center to sea port in the country of origin or from the sea port to inland center to the country of destination.

MINI- BRIDGEMINI- BRIDGEInvolves the movement of containers, under a through bill of lading issued by an ocean carrier, by a vessel from a port in one country to a port in another country and then in the second port city.

The mini- bridge offers the consignor a through container rate inclusive of rail freight up to the final port city in the country of destination. The railways are paid a flat rate per container by the ocean carrier for the rail transit.

MTO’s RESPONSIBILITY & MTO’s RESPONSIBILITY & LIABILITYLIABILITY

1. The intermodal transport operator is responsible for the satisfactory performance of the combined transport operation including all services, which are necessary for the operation.

2. He is responsible for the delivery of the goods to the consignee at the destination in the same condition in which he took them into his charge from the consignor. 

Contd Contd

3. He is responsible for the acts and omissions of his agents or servants or any other person whose services he makes use of for the performance of the intermodal transport contract

4. He becomes liable for loss of the goods or damage to them occurring between the time of taking them into his charge and the time of delivery at the destination. He also becomes liable for any delay in the delivery of the goods at destination.

ContdContd

5.When the stage at which the loss or damage occurred is known his liability is determined by the provisions of any international convention or national law applicable to that stage.

RESPONSIBILITY OF THE RESPONSIBILITY OF THE SHIPPERSHIPPER

Since MM transport operator may not have the reasonable means of checking the general nature of the goods marks and Nos. weight etc, the shipper of the goods is under obligation to guarantee to the MM transport operator about the accuracy of such information.

Contd Contd

The shipper shall indemnify the MM operator resulting from inaccuracy or in adequacy or particulars furnished to MM operators. But such indemnifications by the shipper cannot absolve the MM transport operator from his liability under MM transport contract to any person other than the consignee. i.e. 3rd Party

LIMITS OF LIABILITY OF MM LIMITS OF LIABILITY OF MM TRANSPORT OPERATORTRANSPORT OPERATOR

1.    Loss of Cargo 2.    Late delivery of Cargo 1) Late Delivery of Cargo -

  If the goods are not delivered within 90 consecutive days following the date of expected delivery the claimant for the goods can treat the goods as lost and claim compensation.

ContdContd Amount of liability for loss and damage

defers for various modes of transport and even for MM transport under different rules.

a) Hague Rules – 100/-pound sterling per package

b) Hague Visby Rule - francs 10,000/Package

or 666.67 SDR

    c) Hamburg Rules – 835/- SDRs or 2.5 per KG of gross weight whichever is high.

ContdContd

d) ICC rule – 2 SDRs per Kg.

e)  MM convention 920 SDRs or 2.75 SDRs per

kilos whichever is high.  Presently ICC rules are widely accepted

internationally for delay in delivery of goods 2 ½ times the freight paid or payable under the Hamburg rules and MM convention. Under ICC 2 time the freight payable.

2. Exoneration of MM transporter’s 2. Exoneration of MM transporter’s liabilityliability

Act of omission by consignor or consignee or their agents or by insufficient defective packing or by inherent wise of the goods strikes, lockouts where MM operator has no control.

3. Special Provisions for DC goods  Consignor should inform the MTO the exact nature of the goods

and precaution to be taken while transporting. If not informed the consignor is liable to the MTO for loss resulting from carriage of such goods and the MTO may destroy, unload such goods without having to pay any compensationProvision for Notice of Damage or Delay 

According to MM convention when loss or damage is apparent the consignor/ consignee is required to give notice in writing to the operator not later than the working day after the day when the goods were handed over to the consignee.

Under ICC rule notice is required at the time of the removal of the goods by the consignee.

When the nature of loss or damage is not apparent the consignor/consignee can give such notice within 6 consecutive days under MM convention. But under ICC rule 7 days after the goods were handed over to the consignee.

For loss resulting from delay in delivery consignor/consignee is under obligation to give notice within 60 consecutive days after the day when the goods were delivered.

4. Period of Limitation of action4. Period of Limitation of actionAccording to MM convention – 2

years after the date of delivery of goods or the date goods should have been delivered or the date on which goods can be treated as loss because of delay.

 Under ICC rule – 9 months.  Under Hague rule - 1 year

REQUIREMENT OF MTO TO BE REQUIREMENT OF MTO TO BE SUCCESSFUL IN THE TRADESUCCESSFUL IN THE TRADE

Insurance for those parts of the transportation for which he has limited or no recourse

MTO should analyze the various modes of transport, which will be used from one place to another and where sub contractors are involved. He should consider. 

ContdContd

a. Recourse action available against sub- contractors.

b. The burden of proof required. c. How to obtain evidence in order to

support recourse action d.  Which jurisdiction should apply.

Contd Contd

   MTO should aim to harmonize as far as possible the terms and conditions of carriage under which the goods are to be carried in order to minimize the risk of cargo interest perusing a claim against him whilst maximizing MTO’s prospects of successfully perusing a recourse action. Hence, he should take special interest on the following.

 a.    B/L taken by MTO from sub carriers should be on same terms of B/L he has issued to the cargo owners.

ContdContd

b.  Should be aware of demise clauses in the sub carrier’s contract.

Should consider using standard terms such as ICC rules or more recent UNCTAD/ICC rules

MULTIMODAL TRANSPORT MULTIMODAL TRANSPORT HUBSHUBS

The location of Sea /Air transit hub is important in that it must lie upon international trade route. It should be positioned such that neither the initial sea leg nor the air journey is so short has to be little advantage over conventional transportation.

Dubai, is located half way between Asia (Producer Market) and Europe/America (Consumer Market).

ContdContd

Dubai, has more than 50 sea - air agents handling in excess of more than about 600 tons per month

Any sea- air transit points must have frequent sea and air services in order to provide a real

  a)     Efficient cargo handling service

b)      Maximum No. of air services daily to all destinations of the world.

c)     Good international communication.

 Sea –air MM transport service differ from most MM transport service in that cargo is not normally delivered to the consignee in the containers which they are stuffed at the point of origin.

QUALIFICATION REQUIRED QUALIFICATION REQUIRED FOR MMFOR MM

 1. Experience or Expertise      Latest situation in the market Regulations    Procedures & Practices for trade and transport      Rate levels, Cost structure.

 2. International Network

3 Financial Capabilities

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