Passenger aircraft: With the passenger traffic (main source of revenue) of the aircraft the airlines are increasingly including transporting cargo in the belly of passenger airplanes.
Containers or ULDs (Unit Load Devices) are normally owned by the airlines, and each ULD has an identification number assigned to it.
Each identification number has three parts: the type of ULD, its serial number, and the name of the airline that owns it. This allows for easier identification for aircraft loading and unloading purposes, and tracking of ULDs as they move around the world on flights, to/from other airlines, and to/from freight forwarders and shippers. This is an example of an LD3, which is identified as AVE1234DB.
ULDs (Unit Load Devices)
Pallet
Pallets are flat sheets of aluminium that can hold stacked shipments. A net is usually used to cover each pallet to secure the stacked shipments from falling off the pallet.
In order to calculate the transportation charges by Airlines to be paid by the shipper or to be collected at point of destination from the consignee, the following three factors must be taken into consideration:
The chargeable weight
The applicable rates and charges
The declared value for carriage.
The amount of cargo that can be loaded onto an aircraft is limited by both weight and volume.
Heavy and small loads will tend to reach the weight limitation of the aircraft before the volume limitation is reached, thus resulting in unsold volume capacity.
On the other hand, light but bulky loads will reach the volume limitation of the aircraft before the weight limitation is reached, thus resulting in unsold weight capacity.
It is, therefore, logical to establish the chargeable weight of a shipment on its actual gross weight if it is small and heavy, or on its volume weight if it is light and bulky to compensate for unsold capacity.
The actual gross weight is the weight of the shipment including packing materials.
The actual gross weight is used as the chargeable weight in the case of cargo that is heavy in relation to its volume. Examples of such cargo are gold, certain machinery, metal parts, etc.
High-density cargo (cargo that weighs MORE than):
1 kg/6,000 cm3.
1 kg/366 in3.
Volume Weight (for low-density cargo)
In the case of cargo that is bulky in relation to its weight, such as hats, woollen sweaters, etc., the chargeable weight will be established based on volume rather than on actual gross weight.
The “volume weight” will be calculated and used as the chargeable weight.
Low-density cargo (cargo that weighs LESS than):
1 kg/6,000 cm3.
1 kg/366 in3.
Establishing the Chargeable Weight for the Charges by Airlines
We have to bear in mind the rule that the chargeable weight is based on the HIGHER of the actual gross weight or the volume weight, it follows that both must be determined and compared.
This is in order to establish which of the two is to be used as the chargeable weight.
Dimensions in centimeters = weight in kilograms: L x W x H ÷ 6,000
Dimensions in inches = weight in kilograms: L x W x H ÷ 366
Let us see an example of how to establish a Chargeable weight and Freight charge:
Number of pieces: 1 wooden crate
Dimensions: Length 90 cm x width 60 cm x height 60 cm
Weight: 250 kg
Step 1: Calculate the actual weight
Multiply the number of pieces in the shipment by the weight of each piece.
1 piece x 250 kg = 250 kg
The actual weight of this shipment is 250 kg.
Step 2: Calculate the volume weight
Calculate the cubic centimetres of the shipment
Multiply the number of pieces in the shipment by their length, width, and height (in centimetres).
1 piece x 90 cm x 60 cm x 60 cm = 324,000 cm3
Calculate the volume weight
All air rates are based on the IATA ratio of 1 kg = 6,000 cm3. So divide the cubic centimetres by 6,000 kg/cm3
324,000 cm3 ÷ 6,000 = 54 kg
The volume weight of this shipment is 54 kg.
Step 3: Determine the chargeable weight
The chargeable weight is the HIGHER of the actual weight or volume weight.
The actual weight is 250 kg and the volume weight is 54 kg.
The chargeable weight of this shipment is 250 kg (which was the actual weight).
This chargeable weight (250 kg) will be used to determine the freight charge.
Step 4: Calculate the freight charge Multiply the chargeable weight by the applicable air cargo rate. 250 kg x $2.55 (an example of an air cargo rate) = $637.50
Therefore, the freight charge for this shipment is CAD $637.50.
How Air Freight Rates and Charges are Determined?
The freight rates and charges applicable to movement by air are governed by various market conditions.
Competition in the lane segment
Uplift demand during peak season(s)
Competing means of transportation
Type and quantity of goods shipped
Regularity of traffic
Value of goods
Special needs for certain types of goods, etc.
To note some important points:
The rates are quoted from airport to airport and apply in the direction to be flown
The airport-to-airport rates do not include additional charges such as for pick-up, export and import clearance, delivery, storage charges, security, fuel surcharge
Sea, Air or Overland: Best Transport to Choose, Once all of the relevant information regarding an export shipment has been obtained from the client (it can be supplier or buyer), it is then necessary for a freight forwarder to review the various modes of transportation available to transport the goods and to make a selection of the best mode or combination of modes to meet that client’s needs.
So who is this freight forwarder and why an exporter or importer needs them in transportation of their goods from origin to the destination?
Let us go with the Wikipedia definition first and then go into details.
A freight forwarder, or forwarding agent, is a person or company that organizes export shipments for individuals or corporations (exporter and importer) to get goods from the manufacturer or producer to a market, customer or final point of distribution. Forwarders contract with a carrier or often multiple carriers (can be shipping line, airlines, rail or trucks) to move the goods from one country to another.
A forwarder acts as an expert in the logistics network. The freight forwarder can use a variety of shipping modes, including ships, airplanes, trucks, and railroads, and often use multiple modes for a single shipment. For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck, flown to the destination city and then moved from the airport to a customer’s building by another truck.
A freight forwarder is a firm specializing in the arrangement of cargo movement on behalf of shippers. An exporter or importer is not specialized in transportation of their goods and the documents and rules and regulations need to be followed in the export transportation process.
A freight forwarder being an expert firm provides this service to smoothly transport the goods from origin to the destination. The lists of services a freight forwarder can provide are:
Ocean, air, rail or road freight transportation
Inland transportation from origin and/or to destination
Preparation of documentation
Warehousing and storage services
Consolidation and deconsolidation
Cargo insurance and customs compliance
An exporter may be unaware of details of the transportation like:
Safety and security requirements for the cargo
Reasonable transportation costs
Scheduled delivery of cargo at destination.
A freight forwarder being an expert needs to work for the shipper taking into account:
The cargo itself
The packaging of the goods
The mode of transport
The urgency of the shipment
The value of the goods
The perishability of the cargo
Whether the cargo is hazardous or not, etc.
The price for the service the shipper is willing to pay
Let us see the features, advantages and disadvantages of different modes of transport and when to choose the alternatives from one mode to another
Ocean Freight
Ocean freight is used for the movement of goods that are heavy and voluminous and do not require fast transit times. Generally speaking, water movement is less expensive on a per-unit basis than land movement and air movement.
Ocean movement does have some downsides. It is comparatively slow. Arrival times are approximate.
Goods are exposed to more risks than in other modes of transport. Damage and loss risk is greater.
Ocean carriers have a very limited liability. Heavy packing and careful stowage are required.
Sensitive electronic equipment or computers can ill stand the rolling and swaying of a three-week sea voyage, the bumping in a railcar, or the stop and go of a long truck trip. Even if the cargo is relatively bulky or heavy, the client may still opt for air freight. The high per-unit value of the goods can more easily bear the costlier air freight.
A broken-down machine may bring an entire production line to a halt. A replacement must be flown in regardless of cost; for the cost of a day’s lost production is almost certainly a multiple of the air freight cost.
The high per-unit cost is air freight’s chief drawback, but it isn’t always as bad as it may sound.
There are advantages of using air transportation that, in many cases, are not readily obvious:
Less costly packaging
Lower insurance rates
Less likelihood of damage; the quicker the goods reach the buyer, the quicker the seller gets paid; and low inventories and warehousing – the buyer keeps a limited supply of goods on hand and can replenish them quickly by using air freight.
Overland by Rail or Truck
A whole freight train might move as much as 400 TEUs with little personnel cost and over a readily available, traffic-free roadbed.
In this scenario if we imagine the number of trucks needed to move the equivalent volume, and the cost to do so. Add the restrictions imposed on trucks: licensing in each province traversed, weight limitations, mandatory rest periods for drivers, restrictions in some towns on night driving.
Long distance overland transportation is best with rail.
For shorter distances, trucks are definitely the better choice. They serve more communities and can go into remote places; they offer door-to-door delivery; they are flexible, and in many cases, they offer better rates.
Factors Determining the Transportation Mode and Routing of the Shipmentin Best Transport to Choose
Let us explain the SEA/AIR transportation by an example.
To transport from the Far East to Europe through North America. Goods are brought by fast container ocean vessels to a West Coast port and then reloaded into a Europe-bound aircraft and air-freighted from those airports.
Transit time is about 14–16 days as compared with about 30 days or so by the all-water route. Cost is about halfway between the all-air and the all-water route, and thus represents a perfect alternative between cost and speed requirements.
Sea/Air combination transportation reduces the transit time but not increasing the cost as high as all-air shipment.
Packaging and labeling of goods is needed in import and export trade because of 2 basic reasons: Marketing and distribution of the goods. The function of marketing is, the packager provides information to the customer about the product, and promotes the product through the use of color, graphics and product quality benefits and description. The distribution function, keeps the product free from damage as it is transported and stored.
If we talk about the optimal packaging, we can say it is the one that meets requirements related to service, cost, and convenience.
The package should be designed to provide the most efficient stowage of the product for transportation and storage. Good packaging affects materials handling in terms of load stability and compatibility with different means of mechanization and automation, and it satisfies warehousing needs for stack ability and efficient storage.
The cost of materials and production is of prime importance too. One has to measure warehousing, transportation, and handling costs against packaging costs and all of these against product protection and marketing effectiveness.
To sum up the main factors involved in the design of an export package are transportation handling, climate, pilferage, freight rates, durability, and, most important of all, the requirements of the consignee.
The greater number of times goods are handled or transshipped, the greater is the risk of damage or pilferage.
It is also very important to note that, the export packer must take into consideration the inherent characteristics of the cargo itself. Fragility, shape, temperature withstanding and other inherent characteristics needs to be considered of the cargo.
Let us see some common forms of Export Packaging
Fiberboard Boxes (Cardboard Boxes)
The most common economical packaging is cardboard boxing.
In the packaging shippers seek efficient but inexpensive and lightweight packaging.
The cardboard carton comes closest to fitting the description of the ideal packaging material; it is light in weight and of low cost but able to withstand normal transportation hazards and to protect contents against loss or damage.
Now, how does an exporter decide whether to select cardboard boxes or any other material made boxes?
The shipper should keep in mind the item’s vulnerability, as well as the handling and transportation hazards to be encountered in the export process and whether the cardboard boxes withheld that vulnerability.
The factors the shipper can take into consideration while choosing the quality of the cardboard boxes can be:
Resistance to compression
Resistance to puncture
Strength of the material
Resistance to moisture absorption
Nailed Wooden Boxes
The nailed wooden box is mostly used for transportation of moderately heavy commodities in international trade.
Let us see some of the advantages of using nailed wooden boxes:
Its ability to support high loads
Its ability to take difficult loads without undue distortion or breaking open
The protection it affords the contents from damage due to puncture, breakage, or crushing
Crates
Crates are mostly used to carry small machineries. There are 2 types of crates:
Open or skeleton crate
Fully sheathed or closed crate
Wire-Bound Boxes and Crates
Wire-bound boxes and crates are great use for a large variety of products not affected by minor distortions of the container.
Cleated Plywood Boxes
Cleated plywood panel boxes have many uses in foreign trade. Their lightness and comparative strength particularly recommend them for air freight shipments.
Fiberboard drums used mostly used to carry bulk-purchase food.
Multiwall Shipping Sacks
Multiwall shipping sacks or bags are used for the packaging of powdered, granular and lump materials, particularly dry chemicals.
The Need of Shipping Marks and Symbols in the Packaging and Labeling of Goods
Shipping Marks and symbols are important for the identification of the goods inside the package and also for the identification of the seller and buyer of the goods. On the outside of shipping packages all the details are mentioned that enable the carrier to move it to its ultimate consignee in a safe and responsible manner.
In the packaging marks and symbols, Consignee (identification) marks and port marks showing destination and transfer points should be large, clear, and applied by stencil with waterproof ink.
They should be applied on three faces of the packing container, preferably side, ends and top.
If commodities require special handling or stowage, the packaging should be so marked. Any cautionary markings must be permanent and easy to read.
For the benefit of cargo handlers, the internationally recognized pictographs depicted below should be used.
Palletizing Cargo for Export Shipments
Palletizing is the assembly of one or more packages on a pallet base and the securing of the load to it.
If we palletized packages in export shipments, the benefits we get are enormous in distribution of cargo, handling, stowage, and protection of the products and commodities.
Pallet loads have lots of advantages:
Packing and handling cost are significantly reduced.
The use of mechanical handling equipment, reduces the manual handling damage hazard
Pallet and unit loads eliminate the multiple handling of individual items, further reducing possible damage from manual handling
Reduce the opportunity for pilferage and theft and permit the early detection of tampering
Speeds up the loading and unloading of boxcars, trailers, intermodal containers, barges, ships, and aircraft
Facilitate the application of waterproofing protection to the load; the overwrap applied accompanies the load for the entire journey
Reduce the incidence of lost or stray items; and facilitate checking and inventory of shipment.
So How do we Palletize the Goods?
We should assemble the individual unit packages on the pallet base without an overhang.
We insert spacers between the rows or layers of irregularly shaped items. Adhesives can be used between cartons in a uniform load.
Secure the load tightly and firmly by using horizontal and vertical strapping. Plastic shrink-wrap may be used to stabilize and protect palletized loads.
Provide stacking protection to the top of the pallet by using a lumber, plywood, or fiberboard cap.
Loads that are susceptible to compression must be supported with vertical framing.
Good packaging makes the distribution of the products in the international trade safe to carry and prevents damage of the goods. The products getting lost is also minimized in the ports and transshipment port because of the good labeling.
From the practical scenario, it is seen that because of poor packaging the goods that are exported when reached to the importer was completely damaged and in no condition to use. For example: once we have seen an exporter exporting ripe tomatoes to Dubai. But when the tomatoes reached the destination port of Dubai, the tomatoes were not in the shape of tomatoes rather it got bruised and smashed to the point of becoming ketchup.
So, it should be kept in mind of the exporter that good and reliable packaging is a must in the international trade. No excuse and discount should be taken for the packaging.
The goal is very clear. In the international trade the end result is exporting an intact product from the exporter end to the final destination.
Speed: when goods need to move quickly, air freight, being the fastest shipping method, is the best solution.
Customer service: being able to deliver products faster enables exporters to serve customers better. This translates into happy customers, leading to repeat business.
Stock reduction: delivering faster also means customers have less stock in transit and reduced inventories, leading to improved financial performance.
Reliability: air transport provides reliable departure and arrival times.
Financing: delivering to customers faster usually translates into faster payments, thus improving the financing costs of doing business overseas.
Convenience: due to the large network of destinations covered, one can send cargo by air to almost anywhere in the world.
Handling: having generally less-rough handling than ocean freight and faster transit times reduces the risks of cargo damage.
Packaging: since the cargo will be subject to less-rough handling and faster transit, it needs less packaging, meaning savings on packaging costs.
Security: the high level of security provided by airports reduces the risks of theft.
Visibility: being able to track and trace cargo reliably and 24/7 leads to improved visibility, reduction of bottlenecks and improved customer service.
Disadvantages of Moving Cargo by Airlines
Cost: air freight is much more expensive than other modes of transport.
Payment security mechanism: one cannot hold on to original shipping documents in order to get paid before the goods are released to the consignee.
Limited quantities: due to the inherent limited space and capacity of aircraft, one can ship only small or reasonable quantities, particularly on passenger flights.
Lack of cargo flights: for larger shipments, there are not many cargo flights out there.
The air waybill and other required documents for transport should be accurately completed, including weight, number of pieces, dimensions and all reporting numbers
Known or unknown security status must be
Freight must be customs cleared for export
When applicable, complete HAWB information must be available for manual input or electronic transmission to the airline.
Security Filings
Before loading on the aircraft, the carrier is given “load” or “no load” messages from the governing bodies of the countries of destination.
The carrier relays the messages to the party who did the filing. In some cases, data needs to be corrected; in other cases, a shipment may be banned due to security restrictions.
Cut-Off Times
The cut-off time means the shipment must be “ready for carriage” at the cut-off time.
The Air Waybill
The Air Waybill must be accurate and complete in all respects, including the charges fields, weights, measurements, and description of the goods.
Documentation
All the necessary documents must be attached to the air waybill.
The set must contain documents required for export, import, or in-transit, which the carrier must present to customs or any other governmental body at origin and destination.
Once the cargo arrives at the airport of departure, it is offloaded from the delivery vehicle and kept in the cargo-handling warehouse, where it is checked.
ULDs are assembled and held until the plane is ready to receive the cargo, shortly before take-off.
Pre-Alert
A pre-alert is issued and all documents (air waybill copies, commercial invoice, packing list and other documents relevant to the shipment) are sent by the freight forwarder to the destination agent.
Loading cargo in airlines container and pallets (Cargo Stowage) in export and import is done through the process of calculating the loadability of cargo into a container, determining the optimum size of container and cargo load configuration to avoid unused space.
Determining the Optimum Number of Packages and Loading Configurationin Cargo Stowage
The length and width of the container is divided by the length and width of the packages, to determine the optimum number of packages and loading configuration. It may be that the length of a package is loaded along the length of the container or, alternatively, along the width of the container, whichever provides the best stow.
In some cases, alternating the length of one package with the width of the next package along the length of the container, in short a combination pattern, will achieve the optimal load configuration. This works well when all packages are homogenous.
Case in a Consolidation of the Loading Cargo in Airlines Container
In the case of a consolidation container, the variety of merchandise and cargo sizes makes such stow planning an art form, requiring that each of the types of packages be evaluated for both dimensions and weight distribution. In such cases, a container load plan will be required to calculate the optimum stow.
Container Loading Plan Calculation
In container load planning, we assume that packages must remain upright and, therefore, cannot be loaded on their sides (i.e., their length or width), thus the height value is usually not a variable. In order to determine the maximum number of packages that can be loaded, the user selects the maximum number, one from each column and multiples these to determine how many packages can be loaded.
Let us see the details with a comprehensive example:
Crates to be loaded onto an LD7 pallet:
Dimensions of each crate: Length 110 cm x width 75 cm x height 50 cm Weight of each crate: 100 kg
To determine how many crates can be loaded onto an LD7 lower deck pallet, divide the container dimensions by the crate dimensions: Container dimensions ÷ Crate dimensions:
Twelve crates of this size can be loaded onto the LD7 lower deck pallet. We can load them two crates in the length of the pallet, two crates in the width of the pallet, and three rows/layers of crates high.
Is there a more efficient way to load this pallet?
Using the above calculations, we were very close to having three crates in the length and three crates in the width.
By turning the crates as we load them, we may be able to load the pallet more efficiently. Now, the length becomes the width, and the width becomes the length.
Loading crates in this manner will allow us to load 24 onto the LD7 lower deck pallet.
We can load them four crates in the length of the pallet and two crates in the width, with three rows/layers of crates high.
So by doing a quick turn of the crates when planning the load, in this particular case, you can be more efficient in your loading.
Container Load Plan
Let us see a very simple example of a container load plan. Such a plan becomes much more useful when you are loading multiple shipments in multiple containers.
Container Type
Container Number
Container Max Volume
Container Max Net Wt
Shipment #1Pieces
Shipment#1Volume
Shipment #1Net Wt
LD7
PAP1234DB
10.76 m3
4,490 kg
36
10.395 m3
720 kg
We can see from the container loading plan that the capacity of the container is full (10.395 m3 vs. 10.76 m3), but since the packages are very light, we are not even close to the maximum net weight of the container (720 kg vs. 4,490 kg).
Ensure that you are keeping an accurate count of the number and type of pieces being loaded.
You must ensure the container’s maximum volume and maximum weights are NEVER exceeded!
Rounding-off Numbers for Measurement of Volume and Weight in Cargo Stowage
Rounding-off numbers for measurement of Volume and Weight in Cargo Stowage is very important. Let us see how it is done:
To ensure a consistent method in the “rounding-off” of numbers, IATA has developed a set of standards.
Dimensions:
Round-off dimensions BEFORE any multiplication takes place.
Centimeters: Round-UP OR round-DOWN to the NEAREST WHOLE centimeter
15.01 cm = 15.0 cm
15.5 cm = 16.0 cm
15.81 cm = 16.0 cm
Example: 1 box @ 25.2 cm x 15.5 cm x 15.8 cm = 25 cm x 16 cm x 16 cm x 1 box
WEIGHTS Round-off weights AFTER any multiplication takes place.
Kilograms: Round-UP to the next HIGHER half or whole kilogram
10.01 kg = 10.5 kg
10.5 kg = 10.5 kg
10.71 kg = 11.0 kg
Example: 4 boxes @ 5.3 kg each = 5.3 kg x 4 boxes = 21.2 kg = 21.5 kg total actual weight
It is to note that: While rounding off to determine chargeable weight is acceptable, the shipping agent must determine if the goods can be accommodated on the planned aircraft PRIOR to rounding off the dimensions.
For example, a crate 64.2 in high will not fit in a 767 passenger aircraft, which can accommodate shipments 64 in high. Rounding off the 64.2 in height of the crate to 64 in will only cause delays and additional costs if the shipment is tendered to the airline.
The seven Incoterms (EXW, FCA, CPT, CIP, DAT, DAP and DDP) can be used even if there is no maritime transport and where a ship is used for part of the carriage.
The four Incoterms (FAS, FOB, CFR and CIF) have the point of delivery and the place to which the goods are carried to the buyer as ports; these are, therefore, rules for sea and inland waterway transportation.
Why the shipping incoterms are needed in the international trade?
Shipping incoterms are used between buyer and seller to clarify and define the responsibilities of the two parties in a contract of sale.
When trade terms are clear, such issues as risk of ownership, payment of freight charges, documentation requirements, etc. are also clear. When terms of trade are poorly defined, these same issues can become contentious between the buyer and the seller.
For a term of trade to be appropriate, it must address two important issues:
At what specific point of the transaction does the risk of ownership pass from seller to buyer
At what specific point in time do the responsibilities for payment of freight and other charges pass from seller to buyer
The Incoterms rules provide an important negotiating tool for buyers and sellers. International traders who understand the terms thoroughly can use them to negotiate a competitive advantage. The rules are simple and their purpose is evident.
The Incoterms rules are designed to:
Avoid uncertainties of different interpretations of terms in different countries and cultures
Eliminate any possibility of misunderstandings between buyers and sellers as to their rights and obligations
EXW (Ex Works)
“Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (e. g., works factory, warehouse, etc.).
The seller does not need to load the goods on any collecting vehicle, nor does he need to clear the goods for export, where such clearance is applicable.
FCA (Free Carrier)
“Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.
If the parties intend to deliver the goods to the seller’s premises, they should identify the address of those premises as the named place of delivery. If, on the other hand, the parties intend the goods to be delivered to another place, they must identify a different specific place of delivery.
CPT (Carriage Paid To)
“Carriage Paid To” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. When CPT, CIP, CFR, or CIF are used, the seller fulfills his/her obligation to deliver when it hands the goods over to the carrier and not when the goods reach the place of destination.
DAT (Delivered At Terminal)
“Delivered At Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination.
“Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.
The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.
DAP (Delivered At Place)
“Delivered At Place” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.
DDP (Delivered Duty Paid)
“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared of import on the arriving means of transport, ready for unloading at the named place of destination.
The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
DDP represents the maximum obligation for the seller.
Rules for sea and inland waterway transport
FAS (Free Alongside Ship)
“Free Alongside Ship” means that the seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.
FOB (Free On Board)
“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
CFR (Cost and Freight)
“Cost and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the goods are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
CIF (Cost, Insurance and Freight)
“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the goods are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
The exporter is responsible for determining the selling price, the product development, the distribution and the promotion to make the product demandable in the international market.
As exporting companies create jobs, bring wealth into a country, and help with the balance of payments, all governments look favorably on exports and assist their exporters in the international trade.
The Importer
The role of the importer is to find goods and services that are needed or wanted by domestic consumers and industry, and bring them to market in good order.
There are three types of importers:
Those that provide finished industrial and consumer goods to individuals and to other wholesalers and retailers.
Those that provide intermediate (semi-finished) goods required to complete the manufacture of the finished product.
Those that provide raw materials used in either semi-finished or finished products.
The Freight Forwarder/Shipping Agent
If we see most international shipments, we can see it involve more than one mode of transport and it would be nearly impossible for an individual exporter or importer to arrange with the various carriers, to pick up, document, insure, transport, report to customs and deliver the goods to destination.
A freight forwarder acts as a single touch point and is capable of providing the exporter or importer with a single document covering the multiple modes of transportation that may be required to move the goods.
The freight forwarder takes all the responsibility of the transportation of the goods across borders allowing the importer and exporter to focus on the sales of the product and increase their core business.
Each shipment accepted for carriage by the carrier must be documented.
Only shipments that are properly packaged, packed, labeled and documented are accepted for shipment. For these reasons, carriers prefer to deal with international freight forwarders who ensure the goods are “ready for carriage.”
The Customs Broker
Customs brokers clear goods through customs, and account for shipments, assessing duty and taxes on behalf of their clients. The customs broker works on behalf of the importer and exporter in the release of goods and work with all customs procedures to release the goods.
Often the exporter does not want to commit the goods to shipment unless it has some guarantee that payment will be made. Equally, the importer would not wish to pay for the goods unless he/she receives some guarantee that the goods have actually been shipped.
This is where a third party, the bank, enters the picture to mitigate the risk.
Governments
Governments have a strong involvement in the international trade.
The government of the exporting country will have export-reporting requirements. If the goods travel through a third or fourth country on their journey from seller to buyer, the governments of each of those “transit” countries will have regulations that must be met and obliged.
Finally, the government of the importing nation has something to say about the types and quantities of goods that enter its country and the duties and taxes that must be paid, safety and security regulations that must be followed, data collection and delivery laws that must be obeyed.
To prevent damage and theft of cargo, we analyze the ways of how the sea and air cargo shipments get lost, damage and stolen in the origin port, transshipment port, destination port or in the process of transit.
We can summarize the reason of the sea and air cargo shipments getting lost, damage and stolen in the below 3 ways.
Handling and storage of the goods in a careless way for which the goods get lost.
Theft or pilferage of cargo
Water damage or damage of goods because of poor packaging
Let us analyze the ways of how can we prevent Loss, Damage and Theft of Sea & Air Cargo Export.
Usage of only new, well-constructed packing for the goods to export. Do not use flimsy or previously used fiberboard boxes, wood crates, or bags for the package. Good packaging will prevent theft and damage of the goods.
Usage of consolidation methods – i.e., larger boxes, crates, etc. – for smaller, multiple, or non-uniform parcels. Unitizing, palletizing, and containerization will help keep shipments together and discourage the thief and loss of the small items.
Use of cautionary markings in English and if necessary in the language of the country of destination is important. The use of international handling symbols provides added effectiveness.
Rain, high humidity, condensation, and seawater (separately or in combination) can reduce otherwise stable cargo into a ruin of soggy, stained, mildewed or rusty merchandise. We need to apply preservatives, corrosion inhibitors, or waterproof wrapping directly to the item being shipped to prevent the exported products from getting ruined.
Inspection of the container to ensure proper accommodation and protection of the cargo is important to prevent damage of the cargo.
The stowing (stuffing) and securing of goods in the container needs to be carefully done and also the unloading of the cargo need to be cautious to prevent damage to the goods in the unloading stage.
Need to have clear documentation of the cargo that is exported, to keep in track of the number of goods exported from the shipper to the buyer.
It is good to handle the cargo with mechanical handling equipment, as a result reducing exposure to the inherently rougher manual-handling techniques. So it is wise to unitize, palletize, or assemble cargo into the largest practical unit.
