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An Overview of Ocean Transportation. Section 1Profile of a ShipmentFinancial InstrumentsSelling TermsBill of LadingEquipment Types. Section 2. Equipment
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1. Guam Chamber of CommerceSmall Business Focus & Development Committee presents: Shipping A-ZOctober 30, 2009Phillip Santos – Matson NavigationPaje Butler – DGX Ocean/Air Freight Lynwood Baker – JL Baker & Sons
2. An Overview of Ocean Transportation Section 1
Profile of a Shipment
Financial Instruments
Selling Terms
Bill of Lading
Equipment Types
3. Section 2 Equipment – Packing and Stowing
Calculating shipment size
Cargo Flow
US Trucking
Regulatory Agencies
Section 3
Air Cargo
Q & A
4. Profile of a Shipment – Export Profile Shipper
Book shipments
Marks cargo plainly
Prepares B/L for movement of cargo to terminal
Make arrangements with Trucker
Motor Carrier or Trucker
Accepts cargo for transit to Port
Forwarder (if applicable)
Provides Dock Receipt and special permits, if any to delivering motor carrier
5. Profile of a Shipment Terminal operator
Ingates container against booking number
Steamship company
Issues Ocean Bill of Lading to shipper or agent
6. Profile of a Shipment – Import Process Steamship Company
Notifies consignee prior to ship’s arrival
Consignee or Broker
Obtains customs release, freight release, Dept. of Agriculture clearances before contacting trucker
Motor Carrier or Trucker
Obtains container(s)
Terminal Operator
Verifies cleared documents and issues container
7. Financial Instruments Terms of SaleBuyer’s and Seller’s division of cost and risk
Responsibilities
Who will arrange and pay for carriage of the goods from one point to another?
Who will bear the risk if these operations cannot be carried out?
Who will bear the risk of loss of or damage to the goods in transit?
Frequently used Terms of Sale
Free on Board (FOB)
Cost and Freight (C&F)
Cost, Insurance and Freight (CIF)
8. Selling Terms (Seller/Buyer Responsibility)
9. CFR (Cost and Freight): It is the shippers/seller’s
responsibility to get the goods from their door to the port
Of destination. “Delivery” is accomplished at this time. It is buyers
responsibility to cover insurance from port of origin to buyers door.
Given that the shipper is responsible for transportation, the shipper
also chooses the carrier.
CIF (Cost, Insurance and Freight): The shipper/ seller will
insure the merchandise. The seller usually chooses the carrier.
“Delivery” as with CFR, is accomplished at port of destination.
DDP (Delivered Duty Paid): The shippers/seller is responsible for
dealing with all the tasks involved in moving goods from the
manufacturer, warehouse, or shippers door to buyer/consignee’s
door. It is the shippers responsibility to insure the goods and absorb
all costs and risks including the payment of duties, fees and taxes.
DDU (Delivered Duty Unpaid): This arrangement is basically the
same as DDP, except for the fact that the buyer is responsible for the
duties, fees and taxes.
10. Financial Instruments Terms of PaymentHow will the seller get paid?
Cash in Advance
Letter of Credit
Documentary payments
Open Account
11. Letter of CreditIssued by a bank at the buyer’s request in favor of the seller.
It provides the issuing bank’s promise to pay a specified amount of money upon receipt by the bank of certain documents within a specified time.
Financial Instruments
12. Bill of Lading B/L Functions:Roles and Uses
Legal Tool
Transportation document
13. Bill of Lading – Legal Tool
14. Bill of Lading – Financial Proviso
15. Bill of Lading – Transportation Document
16. Equipment Types
17. Section 2 Equipment – Packing and Stowing
Calculating shipment size
Cargo Flow
US Trucking
Regulatory Agencies
18. Equipment – Packing and Stowing Packing of goods
19. Stowing loads Equipment – Packing and Stowing
20. Equipment – Stowing Loads
21. Reefer packaging requirements
22. Equipment – Packing and Stowing Reefer stowage requirements
23. Equipment – Packing and Stowing Securing load
24. How to compute the size of your shipment
25. Helpful hints in computing cubic feet When taking your dimensions, round up to the next highest inch. Example: 11 ˝" = 12".
Total cubic feet should always be rounded up. Example: 10.45 cubic feet = 11 cubic feet.
With multiple pieces of the same dimensions, multiply the total number of pieces along with the dimension. For example, 10 pieces at 12 x 12 x12 would be computed as follows:
10 PCs X 12" X 12" X 12" = 17280 / 1728 = 10 cubic feet
26. To compute density cubic feet, divide the weight of shipment by 45 to ensure that the 45 lb. density rule cube does not exceed the actual cube. If it exceeds the actual cubic feet, you will be charged based on density.
The formulas used to convert weight and cube into metric for international shipment pricing are as follows:
International "less than container-load" (LCL) rates are quoted on a weight/measurements (w/m) -- revenue ton basis.
A revenue ton is defined as 1 cbm (m3) and/or 1000 kg. The basis for the calculation is whatever yields the greater revenue.
27. To calculate the cubic meters:
Follow steps to get cubic feet, divide cubic feet by 35.314 to determine cubic meters.
To determine weight in kilos divide gross weight by 2.2046. Every 1000 kilos is considered a one CBM. The higher of actual measurement of the cargo or 1 CBM for each thousand kilos is used to determine the CBM for billing purposes.
Shipments are always measured as tendered by the shipper, with the outer most dimensions inclusive of pallet, crating, banding or bundling to calculate volume.
28. U.S. Trucking Trucking rates in the United Sates (also known as inland service) are based on Class Code, origin and destination.
Class codes are determined by the NMFC. Commodities are grouped into one of 18 classes—from a low of class 50 to a high of class 500—based on an evaluation of four transportation characteristics: density, stowability, handling and liability. Together, these characteristics establish a commodity’s “transportability.”
Trucking rates are given at a per 100 lb rate (cwt) basis.
Class 50 items are lower in cost to transport, then class 500 items.
29. Example A shipment of bricks Class 50 at 1000 lbs which is very heavy, small in size and low value. The rate may be around $4.00 per 100 lbs. You would pay $40.00
1000 lbs divided by 100 lbs = 10 10 times $4.00 = $40.00
A shipment of appliances Class 300 at 1000 lbs which can be very light, large in size and high value. The rate may be around $24.00 per 100 lbs. You would pay $240.00.
1000 lbs divided by 100 lbs = 10 10 times $24.00 = $240.00
30. Cargo Flow - Discharge
31. Cargo Flow – Port of Guam Terminal
32. Cargo Flow – Container Availability Port Free Time
Demurrage
Carrier Free Time
Detention
33. Regulatory Agencies US Customs and Border Protection
10 + 2 Program (for export from Guam to US)
US Department of Treasury/Office of Foreign Assets Control
US Coast Guard
Port Authority of Guam
Department of Transportation/DMV
Other
The Adherence Group (TAG)
Long Beach Clean Truck Program
34. What Customs wants from you?
1) Commercial invoice listing seller, buyer, commodity, quantity and cost of goods, with a total invoice dollar amount in US$.
2) A current valid Guam Business license.
3) A BOL or freight bill.
4) Their fees.
Will Customs hold up your shipment?
1) Shipments will be held if a Use Tax is due when arriving through the port authority of Guam. Air freight shipments will not be held, but the Use Tax must be paid to the Treasurer of Guam with in 14 days.
2) Shipments will be held for a satellite inspection or physical inspection.
3) Shipments will be held if specialized documents are requested. WPC, NOA, EPA release and quarantine inspection.
35. Section 3AIR CARGOIntroduction into Shipping by Air
36. Types of products shipped by Air High Value Products
High-Tech ie. Microsoft, Hp, Dell, IBM etc.
Significant inventory carrying costs
Time Sensitive Shipments
Laptops, cell phones, periodicals, etc.
Medical Supplies
Critical Parts
37. Types of Air Services Express (2-3 Days)
Deferred (3-7 Days)
Consolidated Services
Direct Service or Direct IATA
Charter Service
38. Types of Air Services - Continued EXPRESS
Serviced by Express Companies ie. UPS, DHL, FEDEX, TNT
Express Companies usually more aggressive when it comes to guarantees
Traditional Freight Forwarders, who use regularly scheduled commercial carriers do not always guarantee
Express is the highest priced air service
DEFERRED
Consolidated Services (Consolidation)
Shipments from different shippers are grouped together and tendered to the airline as one shipment
The forwarder gets a much lower price because of the higher volume
Airport to Airport
Door to Airport
Door to Door
39. Types of Air Services – Cont’d DEFERRED
Direct IATA Service
When no consolidation service is available
Sometimes used for DG where contract rates are not available
This method is more expensive than consolidation but offers speedier service
CHARTER
Many times a forwarder will help a customer charter an entire aircraft
The aircraft is completely at the customers disposal
All charges are normally paid in advance
40. Moving Goods by Air AIRFREIGHT RATES
Basic cost of Airfreight
Charged per Kilogram (kg) Weight or Volume, whichever is greater, known as Chargeable Wt (dimensional weight)
Rates apply for movements from the airport of origin to the airport of destination. Pre-departure and post-arrival expenses are additional to the airfreight cost
Other additional expenses
41. AIRFREIGHT
DOCUMENTATION
Air Waybills
Provides evidence of a contract of carriage between exporter and forwarder/carrier
Proof of receipt of goods for shipment
Unlike the ocean Bill of Lading, the AWB isn’t, when in your possession, a title to the goods
42. Customs Invoice
Commercial Invoice -Used in International Trade
Used as Customs Declaration provided by the shipper
No specific format BUT must include Shipper, Consignee, Qty, Description, Unit Price and Total Price
43. PACKAGING Will your product withstand damage if other, heavier packages are stacked on top of your en route
Stabilize your goods within the packaging – use filling material, ie bubble wrap, peanuts
Pallets and wood packaging from foreign countries require treatment for infestation and marked to this effect
Size of package – Narrow body aircraft vs Wide body aircraft