G u id e s to In te rn a tio n a l L ogistics

T he P ra c titio n e r's
D e fin itiv e G u id e
Seafreight
4 th e d itio n Forwarding
T h e S in g a p o r e Logistics A s s o c ia tio n
w ith R a c h e l H e n w o o d
in c o n s u lta tio n w ith Tan Tee H w a

Straits Times Press

REFERENCE
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A u th o r The S ingapore Logistics A ssociation w ith

Rachel Henwood, in co n su ltatio n w ith Tan Tee Hwa

S traits T im es Press

Executive D ire ctor S hirley H ew

Publishing M an a g e r Shova Loh
D esigner Katherine L u m berio Chuaheyia
M a rke tin g & O pérations Clara W ong

© 2010, 2014 S ingapore Logistics A ssociation & Straits Tim es Press Pte Ltd

A ll r ig h t s r e s e r v e d . N o p a r t o f t h is p u b lic a t io n m a y b e r e p r o d u c e d ,
s to re d in a r e trie v a l syste m , o r tr a n s m itte d , in a n y fo rm o r by a n y m e a n s,
e le c t r o n ic , m e c h a n ic a l, p h o to c o p y in g , r e c o r d in g o r o t h e r w is e w it h o u t
the p rio r w ritte n perm ission of the publishers.

W hile every e ffo rt has been m ade to co n ta ct the relevant p a rtie s fo r perm ission to
use in fo rm a tio n a n d /o r im ages in this book, it has not always been possible to do so.
Please d ire c t any e n quiries to Straits Times Press.

Printed in S ingapore

N a tio n al Library B oard [S in g a p o re ] C a talo g u in g in P u b lic a tio n D a ta

Henwood, Rachel.
S eafreight fo rw a rd in g : the p ra c titio n e r’s defin itive g u id e / the Singapore Logistics
A ssociation w ith Rachel H enw ood in co n su lta tio n w ith Tan Tee Hwa. - 3rd ed. -
Singapore : Straits Times Press Reference, C2010.
p. cm. - [G uides to in te rn a tio n a l lo g istics]
Includes index.

IS B N -13 : 978-981-4266-61-1

1. S h ip p in g . 2. Ships - Cargo. 3. M a ritim e law. 4. Freight and fre ig h ta g e -

M anagem ent. 5. Shipping - Security m easures. I. Tan, Tee Hwa. II. Singapore Logistics
Association. III. Title. IV. Series: G uides to international logistics.

HE571
387.544 - dc22 O CN609939956
Acknowledgements

The author wishes to acknowledge the following organisations for their contributions
and assistance to the development of this book.

• Maersk Line Singapore, for kindly providing the image of the ULCC (Ultra Large
Container Carrier) on page 64 and the sample of a bill of lading on page 117.

• PSA Corporation Ltd, for providing the PORTNET" diagram on page 140, and for
their kind permission to use the images of the endless fibre rope on page 98. and
the fibre rope net sling and wire rope net sling on page 99.
4

Message from the SLA

Since the launch of the association’s publication series on Guides to International Logistics
in 2005, it now has an impressive collection of seven titles under The Practitioner’s
Definitive Guides, namely Airfreight Forwarding, Seafreight Forwarding, M ultim odal
Transport, Warehouse Practices, Safety & Security, Process-Driven Warehouse Operations
and Land Transport. The publications are well-received by industry practitioners and
tertiary institutions. The overwhelming response endorses the association’s efforts to
document industry practices, and recognises the objective of making the SLA Guides
a useful reference to various levels of staff in the logistics industry.

The container world is being challenged by dynamic changes in the global economy.
The shipping consortia have now aligned themselves and formed big groupings in
response to a weak global economy and depressed freight market. Shipping lines
are making adjustment in capacity and combining their consortia arrangements into
network-sharing agreements. These developments have largely influenced shipping
businesses worldwide and international trade routes.

The release of the fourth edition of Seafreight Forwarding is timely to document all these
dynamic changes. The industry contributor and one of the SLA’s pioneer lecturers, M r
Tan Tee Hwa, has done a great job to summarise and simplify the complexities of these
shipping developments in layman’s terms. The association is grateful to M r Tan Tee
Hwa. who shares the association’s vision in promoting professionalism and excellence
through training. M r Tan’s extensive experiences in shipping and knowledge in seafreight
forwarding practices are evident in this seafreight publication.

M r Stanley Lim
Chairm an
Singapore Logistics Association
2014
 5

Message from the PSA

From its humble beginnings at the mouth of the Singapore River, the Port of Singapore
has grown to become the w orld’s largest transhipment hub, and a global brand name
in terminal operations.

In 2005, the Port of Singapore was the w orld’s second busiest port, handling an
astounding 21.3 million TEUs (tw enty-foot equivalent units). Out of these, PSA moved
20.6 million tw enty-foot containers through its terminals, and registered a record year
in terms of throughput.

The maritime industry is gaining importance in the Singapore economy. This industry,
which contributes about seven percent to Singapore’s GDP, is set to grow steadily with
the government’s efforts in promoting Singapore as an international maritime centre.
With globalisation, there is an increasing need for better management of supply chain
activities, which now span the world. Using its excellent infrastructure as a base,
Singapore is in a good position to capture a slice of this growing market. To do so, we
would have to elevate the level of management expertise in our seafreight industry in
order to stand out.

The SLA's move to publish The Practitioner's Definitive Guide: Seafreight Forwarding is a
good step in this direction. It provides excellent insight into the exciting and important
elements of the maritime logistics industry, and also serves as a practical and up-to-
date reference for many practitioners in this industry. The SLA’s effort to promote this
industry is to be lauded.

This comprehensive and useful guide will facilitate a better appreciation of the important
role that seafreight plays in making Singapore a maritime nation.

M s Grace Fu
CEO South East Asia & Japan
PSA International
6

About SLA

Established in 1973, the Singapore Logistics Association (SLA] champions the causes
of the logistics and freight forwarding industry in Singapore. Its vision is to be a major
contributor to promote Singapore as a world-class hub. Its mission is to promote
professionalism and excellence of the logistics industry. The association, in close
collaboration and consultation with government agencies, trade organisations, logistics
professionals, academia and international organisations, crafted its objects to:

• promote, protect and develop a sound logistics industry;

• develop, promote and enhance Singapore as a premier regional and international

logistics hub with a reputation for reliability, integrity and high standards in logistics
practice and management; and

• represent, protect and promote the general interests of members.

SLA has a membership of more than 510 companies. These are corporations that are
drawn from a wide spectrum of the freight forwarding and logistics fraternity ranging
from major global companies to local smaller service providers. Membership is voluntary.
Ordinary membership is for Singapore incorporated companies actively engaged in
the provision of logistics services for a period of not less than two years. Associate
membership is open to incorporated or registered organisations that are actively
engaged in the provision of logistics and/or ancillary services.

SLA is one of the five industry associations that has been successfully awarded the
Local Enterprise and Association Development [LEAD) funding in 2007.

For SLA, LEAD also encapsulates the key characteristics of the initiatives: Leadership,
Excellence, Advancement and Dynamism. SLA will be implementing 11 projects over
the next three years. These projects support the association's four strategic thrusts,
namely Industry Branding and Benchmarking; Education and Training; Resource and
Competence Development; and Business Facilitation and Development. SLA’s initiatives
will promote the growth of the logistics industry and help Singapore to maintain its
leadership position as a regional logistics hub.
 7

Under the Resource and Competence Development, one of the projects identified is
the adoption of best practices. Through the development and publishing of a set of
comprehensive books on best practices in logistics, the association endeavours to help
logistics companies upgrade their process capabilities through a cost-effective medium.

The Practitioner's Definitive Guide: Land Transport is the fourth publication launched
under the LEAD project, following The Practitioner’s Definitive Guide: Process Driven
Warehouse Operations, The Practitioner's Definitive Guide: Safety & Security and The
Practitioner’s Definitive Guide: Warehouse Practices.

These publications add to the association’s publication series of Guides to International

Logistics, namely The P ra ctitio n e r’s D efinitive Guide: A irfre ig h t Forwarding, The
Practitioner’s Definitive Guide: Sea freight Forwarding and The Practitioner’s Definitive
Guide: M ultim odal Transport.
Preface

Considering that seafreight accounts for 90% of all transportation worldwide, it is now
w ithout doubt one of the most exciting, challenging and complex areas of the logistics
industry. The Practitioner's Definitive Guide: Seafreight Forwarding offers a comprehensive
catalogue of knowledge. It covers current, practical field applications, and contains
information relevant to a broad spectrum of personnel in the seafreight industry.

This book is a clear and concise guide to seafreight forw arding; it explains and
underlines its importance and its role in transportation today. It discusses many of the
rules, legislations and laws that govern the industry, and includes images and material
from freight and shipping companies practising today. It also offers in-depth coverage
of a wide range of topics, making it informative reading suitable for those already in the
industry and those who are just setting out learning the ropes. For readers not directly
involved in seafreight, but who perhaps require a greater understanding of the industry,
they will find that the topics covered are interesting and easy to read and understand.

• This book explores how and why the 150 freight or shipping conferences around the
world govern, control and regulate the shipping lines that operate on all international
trade routes. It explains differences between the conferences, the tariffs that have
been implemented, and the alternatives that are available to the shipping industry.
With an evolving marketplace and the increased popularity of intermodal transport,
conferences are also evolving, with organisational restructuring to meet the new
and constantly changing demands of their clients.

• Since the 1950s, containerisation has grown rapidly, and dominated the shipping
industry and facilitated international trade. With the rise of trade around the world,
particularly in Asia, this demand for containers looks set to continue. Seafreight
Forwarding looks at the different types of containers used to transport a range of
different goods, from clothes to coffee to crude oil. It details container materials,
maintenance issues and the equipment required to load, store and move each
container at each stage of transportation. It also looks at the new vocabulary that
has been created to describe the construction and use of containers.
 • Documentation is an integral part of the transportation process, and is essential to
ensure the smooth running of freight forwarding, from collection and packing through
to final delivery. It also serves to protect the legal rights of the carrier, shipper and
consignee, and sets out the full extent of each party’s responsibilities and liabilities.
It is therefore imperative that the documentation is fully understood and completed
correctly to avoid complications, delays and added charges. This book provides
breakdowns and illustrated explanations of more commonly used documents.

• To unify the transport industry so that each nation works in accordance to the same
legal system, a series of conventions and rules have been established to create a
fair and equal system. These are set out and explained in the book.

In all, eleven crucial topics have been mapped out.

C h ap ter One: This chapter highlights the im portance of transport geography in

conjunction with international transportation and logistics, including a discussion of
latitude and longitude and the use of time zones and the International Dateline. It also
details the major shipping routes, canals and ports around the world.

Chapter Two: This chapter presents the differences between the two types of freight
conferences, and explores how these conferences and the Ocean Shipping Reform
A ct of 1998, have affected the shipping industry. It also covers recent changes in the
shipping scene, notably the dissolution of the Far Eastern Freight Conference CFEFC),
the transfer of responsibilities from the European Liner Affairs Association (ELAA)
to the World Shipping Council, repeal of BER for the Liner Shipping, and adoption of
consortiums and global alliances.

C h ap ter Three: The chapter examines the roles of carriers and ports, shipping
companies, liner agents and non-vessel operating common carriers CNVOCCs), and
how and why these roles have changed in recent years.

Chapter Four: This chapter explains the different types and specifications of ships
that are used for transportation, with profiles and commonly used terms. There is also
a discussion of the registration and classification process.

C hapter Five: This chapter sets out the history of containers and containerisation. It
looks at how they have facilitated international trade, their economic importance and
w hat the future holds. It also covers container language and terms, the different types of
containers used today, their specifications and markings, and how they are constructed
and maintained.
C hapter Six: This chapter details the cargo gears and handling equipm ent found on
board ships and on land, to enable the safe and effective loading and storing of goods.
It explains Ihe key objectives of materials handling, and the use and benefits of pallets
as compared to loose cargo.

Chapter Seven: This chapter discusses the conditions that can affect cargo during
transportation and the importance of following the correct procedures in packing and
stowage. It outlines precautions against damage from movement, adverse weather
conditions, infestation and condensation.

C hapter Eight: The importance of documentation - including bills of lading (B/Ls)

and sea waybills (SWBs) - is covered in this chapter, along with the benefits of recent
advances in technology that improve logistics services, such as PORTNEP, the worldwide
computer system network.

Chapter Nine: Here, we look at security issues - the measures that have been put
in place since the 9/11 attacks, and their implications. These include the Container
Security Initiative (CSI), Customs-Trade Partnership Against Terrorism (C-TPAT) and
the Automated Manifest System [AMS).

Chapter Ten: This chapter covers freight ta riff systems, including CY/CY terms, House/
House terms, BAF/FAF, CAF, THC, EHC or LO/LO and DDC - all these terms are explained
in the chapter.

It also explains and illustrates the structure of freight quotations and job costing, and the
methods used to calculate them. It also covers how to deal with payment, from invoicing
to understanding clients’ requirements and expectations.

C h ap ter Eleven: This final chapter covers international transport conventions. It

discusses the Hague and Hague-Visby Rules CSea Transport), the CMR Convention
CRoad Transport) and the C lM/COTIF Convention CRail Transport), highlighting the scope
of application and the obligations, rights and liabilities of all parties involved.

I would like to express my sincere thanks to M r Tan Tee Hwa for his invaluable help and
advice, and to my family for the tireless support and understanding that they gave me
whilst this book was being written.

Rachel Henwood
12

Contents

P a rt O n e
INTRODUCTION TO SHIPPING

Introduction The role of the freight forwarder 16

The 3PL concept 17
C hapter One Transport Geography 19
Why is transport geography so important? 19
Using an atlas 19
Understanding latitude and longitude 21
Time zones 21
The International Dateline 21
The Suez Canal and the Panama Canal 23
Major shipping routes and ports of the world 25
C hapter Two Freight Conferences 35
What is a freight conference? 35
Types of freight conferences 35
Far Eastern Freight Conference (FEFC) 36
• Far East Europe Trade 36
European Liner Affairs Association (ELAA) 37
World Shipping Council (WSC) 38
The container world 38
Consortia/Global Alliances 38
Consortia of mega carriers currently involved
in the Far East Europe Trade 41
Network Sharing Agreements 41
The USA trade 42
• The Federal Maritime Commission (FMC) 42
Mini-Landbridge CMLB) vs All-Water Service (AWS) 43
MCB or IPI (M ic ro -B rid g e or Inland Point Intermodal) 44
Ocean Shipping Reform Act of 1998 (OSRA) 44
Significant changes to the OSRA 46
Impact of the OSRA on USA trade 48
C hapter Three Roles of Carriers and Ports 50
How and why the roles of carriers and ports have changed 50
What is a carrier? 51
What is a liner shipping company? 51
How a liner service is run 51
What is a liner agent? 52
The role of the NVOCC (Non-Vessel Operating Common Carrier) 54
How to start an NVOCC operation in the USA 55
The role of ports 55
Increasing market share and profits 56
 13

P a rt T w o
SHIP TYPES, SHIPPING ORGANISATIONS AND
DOCUMENTATION

C hapter Four Ships and Specifications 58

Registration of a ship 58
Classification of ships 59
The Plimsoll Mark 59
The profile of a ship and commonly used terms 61
Speed and how to calculate it 62
Types of ships 63
C hapter Five Containers 69
The history of containers and containerisation 69
What is containerisation? 70
Container language 70
• Full Container Load (FCL) 70
• Less than Container Load CLCL) 71
• Container Yard (CY) 71
• Container Freight Station (CFS) 71
• Liner Terms 72
• FIO (Free In/Out) Terms 72
• Transhipment 72
What is a container? 73
How are containers constructed? 73
Standard container specifications 75
Types of containers 77
Container markings and what they mean 84
How the container has facilitated international trade 86
The future of containerisation 88
The importance of inland container depots 89
Container leasing 90
• One-way lease 91
• Round trip lease 91
• Short lease 91
• Long lease 91
• Master lease 91
Leasing companies 92
The economic importance of containers 92
C hapter Six Cargo Gears and Handling Equipment 94
Principles of materials handling 94
Materials handling equipment 96
Cargo handling gears 97
• Lashing of containers on board the ship 97
• Cargo gears for conventional ship operations 98
• Pallets 100
14

Benefits of palletised loads vs loose cargo 101

Tractor-trailer vs forklift truck and pallet 102
C hapter Seven Cargo Packing and D am age 103
Conditions that affect cargo during transportation 103
Visual inspection of the container prior to packing 103
Stowage planning 105
Infestation 110
• Prevention of infestation: fumigation 111
Condensation 111
• Main causes of condensation 113
• Preventing condensation 114
Chapter Eight Bills of Lading and D ocum entation 116
The importance of documentation 116
The different types of bills of lading (B/Ls) 116
• What is a B/L? 116
• Combined Transport B/L 118
• Multimodal B/L 118
• Port-to-Port B/L 119
• Non-negotiable B/L 119
• Memo B/L - a second carrier 119
• Shipped on Board B/L 120
• Received for Shipment B/L 120
• Multiple/Split B/Ls 121
• Switch B/L 123
• Duplicate/second set of original B/Ls 123
Standard B/L clauses 123
Additional B/L clauses 125
Terms of shipment/Container load type 128
Commonly used terms 135
Sea waybills (SWBs] 139
PORTNET* 140
C hapter Nine Security Issues 142
Container Security Initiative (CSI] 142
Customs-Trade Partnership Against Terrorism (C-TPAT) 142
Automated Manifest System CAMS) 143
C hapter Ten Freight Tariff Systems 147
Logic and practice 147
Concepts/practices 148
Freight quotation, job costing & payment 152
 15

P art T h re e
IN T E R N A T IO N A L C O N V E N T IO N S

C hapter Eleven Significance of International Transport Conventions 161

The Hague and Hague-Visby Rules 162
• Exhibit 1: The Hague-Visby Rules 162
• Scope of application 171
• Deck cargo and live animals 172
• Documentary requirements 172
• Shipper’s obligations 173
• Carrier’s rights 174
• Carrier's liabilities 174
• Significance of unseaworthiness in relation to liability 175
• Excepted perils 175
• Compensation limits 178
• SDR (Special Drawing Rights] 178
• Loss of rights to limit liability 179
• Case Studies involving the Hague-Visby Rules 179
The CMR Convention - road transport 179
• Documentary requirements 180
• Sender’s obligations 181
• Carrier’s liabilities 182
The CIM/COTIF Convention - rail transport 184
• Documentary requirements 184
• Carriage charges 185
• Customs documents 185
• Customer’s obligations 185
• Carrier’s liabilities 186
Comparative chart of liability limits and time limits of different liability
regimes 186
The Rotterdam Rules 189

Glossary 190
Abbreviations 195
Index 196
16

PART ONE
INTRODUCTION TO SHIPPING

Shipping is the most popular method of transporting goods today, with around
9 0 % of all freight now being transported by different types of vessels across
the w orld’s oceans and through m an-m ade waterways.

The m ain benefit of w a te rb o rn e tran sp ortation is th a t large q u an tities of

freight can be safely stored and moved in one go; this is m ade even easier
by containerisation. When transporting a large am ount of goods over long
distances, moving them in bulk is the only viable and cost-effective w ay to
operate. Although transit tim e in shipping can be considerably longer, road
and air transportation are both far more limited by constraints of space and
weight. There are also other problems, such as growing congestion on roads
and highways and the high cost of air travel. R ather than being seen as a
threat to other modes of transport, shipping can be used within the transport
chain to enhance and support other modes and in doing so, benefit all parties
involved.

To m eet and sustain this increase in the movement of world trade, the shipping
industry has been developing steadily over recent years. For one thing, bigger and
better vessels which can handle the growing volume of freight are being built.
Ports are improving in term s of operational size and handling capabilities, with
s ta te -o f-th e -a rt equipm ent, and by keeping up to date with new technology.

T h e ro le o f t h e f r e i g h t f o r w a r d e r
Freight forwarders are persons or companies that act as “ brokers” or “ middlemen",
organising and handling the shipment of goods according to customers’ individual needs.
They act as contracting carriers for port-to-port shipments and assume liability on behalf
of those carriers involved in the chain of transport, both at sea and on land.
 PART 1 Introduction

Seafreight forwarders often do not own the ships used for the transportation; neither do
they perform the actual transportation. Their services include managing and overseeing
the entire transportation process - getting land transportation for the goods to and
from the port, organising shipment details through common carriers, arranging space
for shipments on behalf of shippers, completing all relevant documentation, and finally
arranging for the clearance of the goods through Customs.

The freight forwarder may also perform other related activities and services, such as
assembling and consolidating smaller shipments into a larger one, arranging for goods
to be packed into shipping containers, reserving space and equipment, warehousing,
delivery, clearance, banking and insurance services, and agency services. It is important
that freight forwarders understand and keep abreast of current market trends, insurance
requirements and transport alternatives.

With all the components involved, many exporters today - even larger companies that
have their own in-house export departments - are enlisting the help of freight forwarders
to facilitate the smooth transition of their goods across the globe. This has led to a surge
in demand; the freight forwarder’s role and influence in the transport supply chain and
world trade is now even more important.

The 3PL concept

The term 3PL (third party logistics] first became widely used in the second half of the
1980s, to describe the process of companies subcontracting certain logistics services
to other service providers.

With their buying power and ability to consolidate shipments and inventory from multiple
customers, 3PLs can offer customers much more cost-effective transportation and
warehousing rates. The latest, most sophisticated logistics systems are used, giving the
customer the full scope of capabilities and services, from warehousing, transportation
and distribution, to tracking, tracing, inventory control and purchase order management.
In short, they offer the expertise for total supply chain management. This in turn gives
the freight forwarders more overall control of the transportation process, allowing them
to ensure excellent customer service.

Although research suggests that it is currently the larger, more established companies that
are choosing to work with 3PL providers, it is the small- and medium-sized enterprises
(SMEs] that stand to benefit the most. By leveraging on a 3PL partner’s expertise and
understanding of local business culture and conditions, SMEs can often make up for
what they lack in this area, and flourish in new markets.
Guides to International Logistics Seafreight Forwarding

With the growing globalisation of trade, and the added pressures of supply chain security
and tougher restrictions on border crossings, all companies, including SMEs, will be
forced to focus increasingly on what value-added services they can offer their customers:
this will ensure that the trend towards 3PL outsourcing will continue to grow. With this
rise in demand, many traditional freight forwarding companies have been transforming
themselves into 3PLs, so that they can offer total supply chain solutions and stay on a
level playing field with the biggest players in the logistics industry.
 19

Transport Geography

W h y is t r a n s p o r t g e o g r a p h y so im p o r t a n t ?
The importance of transport geography and the role that it plays in international transport
logistics can often be overlooked. This could in fact be due to the success that the
transportation industry has achieved, in developing such a strategic infrastructure. It
runs with such a level of efficiency that it has become all but invisible, even to those
individuals, institutions and corporations who depend on it in their day-to-day lives.

The fundamental purpose and goal of transportation is to fulfil the demand for mobility
of passengers, freight or information between different geographical locations, with the
greatest convenience. As globalisation and networking increase in the logistics industry,
transport systems have to constantly improve to meet these demands. Transportation is a
multidimensional service, which plays an important role in the ever-changing advances
that affect regional, national and global markets. It is both a factor and a consequence
of economic activities, and an indispensable component of the global economy.

The development of transport is in fact linked to. and reflects, a country’s economic
progress. It creates industrial and urban expansion, direct and indirect employment, and
is an economic factor in the production and value of goods and services.

Throughout history, transport has not only played a part in the development and defence
of great civilisations, but also in social, political and economic structures. Transport has
undoubtedly had the biggest impact on nation-building, linking every corner of the globe
by rail, road, air and sea; it has brought about global unity, from users and suppliers to
entrepreneurs and governments, who invest in new developments and technology, and
decide on the laws and rules regulating the industry.

U s in g a n a tla s
A good world atlas showing major ports of call, shipping lines plying major routes, inland
places and out ports is an essential tool for all service providers. It shows the nearest
railway, waterway or port to which the cargo will need to be sent for shipment in ex-factory
and door-to-door deliveries, and for goods from an inland cargo consolidation centre.
20 Guides to International Logistics Seafreight Forwarding

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 PART 1 Transport Geography

U n d e r s t a n d i n g la t it u d e a n d lo n g it u d e
When locating a specific place on a map, it is necessary to use the precise geographical
grid coordinates, made up of the meridians of longitude and parallels of latitude that
are used in all shipping references. All countries follow one system where longitude
stretches 180° E and 180° W from 0° at Greenwich, England. Latitude runs 90° N and
90° S from the 0° parallel - the equator.

Using these measurements, any point on any map can be accurately defined by stating
the latitude and the longitude in degrees, minutes and seconds: 1 degree equals 60
minutes and 1 minute equals 60 seconds.

Besides the equator, there are two additional latitudes: the Tropic of Cancer, 23° 27’ N
of the equator, and the Tropic of Capricorn, 23° 27’ S of the equator.

T im e z o n e s
Due to the earth’s eastward rotation on its axis, and revolution around the sun, the world
is divided into 24 time zones. The width of each zone is approximately 15" longitude,
and the time difference between adjacent zones is one hour. That is, countries in a
particular zone share the same local time, while those in adjacent zones are either one
hour ahead or behind. In places such as Newfoundland and South Australia, however,
the difference is a half-hour.

Time zones are defined with reference to the time at the Greenwich Meridian, known as
Greenwich Mean Time (GMT), or Universal Time Coordinated (UTC). Countries east of
Greenwich have to add hours to GMT, while countries to the west have to subtract hours.

Knowing and understanding the different time zones is imperative to a logistics service
provider when dealing with cargo and clients from around the world. He must take into
account time differences, and utilise new developments in travel and technology, such
as video conferencing, which allows effective communication.

T h e In t e r n a t i o n a l D a t e l i n e
The International Dateline is an imaginary line that crosses the earth’s surface, separating
two consecutive calendar days. If you are travelling around the world, the date in the
eastern hemisphere, on one side of the line, is always one day behind the date in the
western hemisphere, on the other side of the line. It has been recognised as a matter of
convenience and has no force in international law.

The International Dateline could actually be anywhere on the globe, but for convenience,
it is almost directly opposite the Greenwich Meridian.
Guides to International Logistics Seafreight Forwarding

However, it does not follow the 180° meridian exactly. It curves around the eastern tip
of Siberia, west around the Aleutian Islands, and east again around island groups in the
South Pacific. This is considered the most ideal course, which takes it across the middle of
the Pacific Ocean, away from land, so that there is no time change in populated areas.
 PART 1 Transport Geography

T h e S u ez C an al and th e P an am a C anal
The Suez Canal was constructed in 1869, and remains one of the greatest modern
engineering feats to date. It stretches more than 100 miles (160km), from Port Said to
Port Tawfiq in Egypt, cutting through Lake Manzala, Lake Timsah and the Bitter Lakes,
connecting the Mediterranean Sea to the Gulf of Suez, and then the Red Sea.

With a surface width of 60 metres and a depth of 8 metres, the canal can accommodate
ships of up to 100,000 gross register tonnes (GT). It has become a crucial shipping
route for the many vessels that make the fourteen-hour journey through Egypt every
day. Ships move single-file, as there is only one lane for traffic along most of the length
of the canal, though there are a handful of passing bays. Each vessel pays a transit toll
for using the canal; this is an im portant source of income for the Egyptian government.

The Suez Canal has changed the face of the maritime world and become one of the most
im portant sea-links, connecting Europe with a direct passage through to Asia. Today,
ships can sail via the Mediterranean Sea instead of around the Cape of Good Hope,
reducing the journey from the UK to India by as much as 8,000km.

In 1914 the Panama Canal was opened, linking the Pacific Ocean to the Atlantic Ocean,
and creating another important world trade route. The 82-kilometre long canal meant
that ships no longer needed to make the long trip around South America, shortening
the trip from New York to San Francisco by as much as 9,800km. Transit time through
the canal was slashed to 8-10 hours, even allowing for the three-lock system (which
allows vessels to go through the canal by harnessing the varying water levels caused
by the mountainous terrain). This not only cut the amount of time that cargo spent at
sea, but also substantially reduced transport costs.

Despite the canal being widened in 1969 to permit two-way traffic, the maximum limits
of the canal are 294.13 metres length overall (LOA), 32.3 metres beam length (breadth of
the ship) and 12.04 metres draught (vertical distance from the bottom of the ship’s keel
to the waterline). This means that only Panamax-sized vessels of up to 75,000 tonnes
deadweight (DWT) can pass through the canal.

In October 2006, the Panama Government approved the widening of the Canal to
accommodate vessels of 366 metres length, 49 metres width and 15 metres draught.
Construction began in late 2007 with the new post-panamax lock systems being built at
both the Atlantic and Pacific side adjacent to existing locks. It is expected to be completed
in early 2016 after several construction delays due to disputes with contractors and
strikes by workers.
2 4 Guides to International Logistics Seafreight Forwarding

NORTH
A T L A N T IC
OCEAN

ASIA
SUEZ
CANAL

I N D I A N
SOUTH OC E A N
ATLANTIC 19,800 km
OCEAN 12,300 miles
 PART I a Transport Geography 25

GENERAL IN F O R M A T IO N ON THE N EW LOCKS

E X IS T IN G L O C K S N E W LO CKS
Mai mumcapacityof transitingvessels 4,400 TEU Matimum capacity o( aan sitn q vessels

13,000-14,000 TEU

L<xk wail
height 50m

Operating
water depth

The n e w rolling gates are

easier to service.
Operating water depth

M a j o r s h ip p in g r o u t e s a n d p o r ts o f t h e
w o r ld
For an industry that relies so much on the knowledge of transport geography, it is essential
for all those who play a part in it to have a thorough knowledge of the different trade
routes and major ports of the world, and a good understanding of how im portant these
are in the seafreight and logistics industry.

The major shipping routes around the world include:

• Far East to Europe

• trans-Atlantic

• trans-Pacific

• Far East to Mediterranean

The two routes that are considered the most im portant by the major shipping lines are
the Far East-Europe and the USA trade routes.
2 6 Guides to International Logistics ■ Seafreight Forwarding

Europe/Mediterranean

Le Havre, Antwerp, Rotterdam, Hamburg, Bremerhaven, Felixstowe, Southampton,

Helsinki, Gothenburg, Oslo, Copenhagen, Aarhus. Gdynia, Bilbao. Lisbon, Odessa,
Marseilles, Barcelona, Genoa, Trieste, Gioia Tauro, Livorno, La Spezia, Malta, Piraeus

Barents Sea

ICELAND

N orw egian Sea

FINLAND
«¡J FAROE SWEDEI
§ ISI A N D S
J Lake
IORWAY Liulogs
ATLANTIC OCEAN SH ETLA N D W ^ D 10 RUSSIAN
IS LA N D S
Orkney Es t o n ia f e d e r a t io n

BRITISH. 2 IS LA N D S PART OF R U S S IA N
ISLLSJ! Gothenl
FE D ER A TIO N
N o r th t
Sea fit fß a /tic l
Aarhus * r^Sea
Nl l a n DENMARK - t - i Dpenhagen ,

NETHERLANDS BELARUS
Bremfertetfeii * Hamburg
¡towe. POLAND
Rotterdam
Antwerp GERMANY UKRAINE
J BELGIUM
CZECH
Le Havre 'j .
r e p u b l ic SL0VAK)A
LUXEMBOURG MOLDOVA
Odessa ;

FRANCE AUSTRIA HUNGARY

SWITZERLAND ROMANIA
SLOVENE \B h ck
CROATIA i Son
YUGOSLAVIA
vGenoa _____ BULGARIA'
Bilbao
Livomi jOSNIA-HERZEGOVINA
^VvlAC ED O N IA --^
Barcelon;
PpTiTUGAL ALBANIA ± URKEY
SPAIN
Le Lisbon

<?
liALCARIC IS LA N D S
• ..r*.Gioia Tauro
¿iciivf S e a

M A I TA
 PART 1 B Transport Geography

Middle East

Port Said, Haifa, Alexandria, Jeddah. Aden, Bahrain, Doha, Muscat, Dubai, Abu Dhabi,
Bandar Abbas. Izmir, Mersin

\ZAKHSTAN
ROMANIA RUSSIAN
FEDERATION
BULGARIA UZBEKISTAN

GEORGIA

A R M E NIA''' TURKMENISTAN
Izm ir TURKEY

CYPF^rj^T SYRIA IRAQ

M e d i t e r r a n e a n Sea IRAN
LEBANON
ISRAEL

JORDAN

PAKISTAN
EGYPT ndar Abbas
BAHRAIN

SAUDI ARABIA
Muscat
QATAR

UNITED ARAB
Jeddah EMIRATES

OMAN

SUDAN

ERITREA' YEMEN

S O C O TR A

Ade|1 Arabian Sea

DJIBOUTI

SOMALIA
ETHIOPIA
28 Guides to International Logistics ■ Seafreight Forwarding

Africa

Mombasa, Zanzibar, Toamasina. Maputo, Durban, Port Elizabeth, Cape Town, Douala,
Abidjan, Lagos, Dakar

B lack Sea

ATLANTIC
OCEAN
IROCC.O
TUNISIA

WESTERN
ALGERIA
SAHARA LIBYA
EGYPT

J MAURITANIA
MALI NIGER
CHAD ERITREA
s f e G U H r f f c A -
BISSAU BURKINA SUDAN
/ V H JIN EA ra a u BENIN
COTE NIGERIA \ ý ETHIOPIA
S ltiR R A N , D'IVOIRE / _>_«-Lagos CENTRAL
IEONE II \ CAMEROON AFRICAN REP.
SOM-
LIBERIA GHAN a TOGO '- * J ftD o u a K >
EQUATORIAL——/_ I / UGANDA
GUINEA RWANDA
;A B O ,f O NG O
DEM. REP. OF I Mombasa
THE CONGO BURUNDI
Zanzibar
TANZANIA

ANGOLA

Toamasiria
ZIMBABWE
NAMIBIA
BOTSWANA

■Ỉ M aputo
f SWAZILAND
SOUTH lurban
AFRICA
LESOTHO I N D I A N
Cape Town irt Elizabeth
O C E A N
 PART 1 Transport Geography

Indian Sub-continent

Karachi, Mumbai, Kochi, Chennai, Kolkata, Colombo, Chittagong, Khulna, Tutticorin

UZBEKISTAN
TURKMENISTAN

KYR

TAJIKISTAN

IRAN AFGHANISTAN CHINA

(C hinese administrative recion

PAKISTAN

A R U N A C H A lP R A D E S H
NEPAL (Cl AIMED BY CHINA!
Karachi

BANGLADESH
INDIA
Kolkata • • Khulna

M YANM AR
G u lf ó
K I ln m b h M
Mumbai

Bay o f Bengal

Chennai
ANDAM AN JJ
IS L A N D S (('•.

Kochi * Tuttic 0

NICOBAR
IS L A N D S

MALDIVES

I N D I A N
O C E A N
3 0 Guides to International Logistics Seafreight Forwarding

Southeast Asia

Yangon, Bangkok, Laem Chabang Port On Chon Buri). Songkhla, Singapore, Port Klang
(in Selangor), Penang, Kuantan, Tanjung Priok Port On Jakarta), Surabaya, Semarang,
Belawan On Medan), Manila, Cebu, Ho Chi Minh, Hanoi. Kämpöng Saöm

INDIA
CHINA
A IW A N

M YANM AR
LAOS Luzoq S tra it
fWJNAN <.,
ISLAM)
South China
Æ'• Sea
THAILAND
VIETNAM
PHILIPPINES
jfl Laem Cha^ ani fE^ry\MBouiA
U .. V
Chi Minh 1‘ / 1 A*
Gull o l
Andaman Thailand *- * ¿S Sulu
St
’ * Sea ' >' * * s
mgkhla

[uantan Celebes « -

;INGAP( Sea : &

EA ST M A L A Y S IA PAPUA NtVI/
(B O R N E O A N D G U IN E A
S AR A W AK ) *
Ç ~ *■

Java Sea [J
Taiyung-Pnok seT 1 ' 8w"J j ‘
«2SÎÎË ^Äirabaya
A ra fu tn
E S I A _ j y '

Timor
Sea

I N D I A N
O C E A N

AUSTRALIA
 PART 1 i Transport Geography

Australia/New Zealand

Frem antle, A delaide, Sydney. M elbo u rn e, Burnie, Brisbane, D arw in, A u ckla n d ,
Christchurch

P A C I F I C
O C E A N
Guides to International Logistics i Seafreight Forwarding

China/Far East

Haikou, Hong Kong, Guangzhou, Xiamen, Shanghai, Xingang On Tianjin), Qingdao, Dalian,
Fuzhou, Kaohsiung, Keelung, Pusan, Gwangyang, Incheon, Osaka. Kobe, Yokohama,
Tokyo. Nagoya, Shimizu On Shizuoka)
 PART 1 ;i Transport Geography 33

U S A /C a n a d a

W est Coast: Long Beach, Oakland, San Francisco, Los Angeles, Portland, Seattle,
Tacoma, Vancouver

East Coast: Houston, New Orleans, Miami, Jacksonville, Savannah, Charleston, Norfolk,
Baltimore, Philadelphia, Wilmington, New York, Halifax

Labrador
Sea

CANADA

UNITED STATES OF AMERICA

San Francisco^Oakland
ATLANTIC
O C E A N
Long B e a ^ 0 SA n g e 'es
. BERM UDA

Houstoi
Sargasso Sea
O
MEXICO E^lVvMAS
P A C I F I C DOMINICAN
O C E A N SITI REPUBLIC

JAMAICA^ (^PUEÇIOKICÜ
3 4 Guides to International Logistics Seafreight Forwarding

South America

East Coast: Santos, Paranagua, Rio Grande, Montevideo, Buenos Aires

West Coast: Buenaventura, Guayaquil, Lima, Arica. Valparaiso, Coronel

VENEZUELA

Buenaventui
COLOMBIA

iCUADOl
Guayaqi

PERU BRAZIL

BOLIVIA

PARAGUAY

Valparai

Grande
URUGUAY.
Paranagua SOUTH
levideo
Buenos Aires ATLANT! C
Coronel ARGENTINA
OCEAN
 35

2 Freight Conferences

W h a t is a f r e i g h t c o n f e r e n c e ?
Freight or shipping conferences, of which there are currently around 150 around the
world, are made up of affiliations of ship owners. Their job is to enforce guidelines for
the associations of lines that cover the various international trade routes, and to make
sure that all shipping lines agree to a conference tariff system. The most basic guideline
is that all member lines must charge merchants the same rates.

A typical conference tariff system comprises:

• the name of the conference;

• the names of participating lines;

• the geographical area [scope) covered by the conference;

• freight conditions and regulations;

• a list of all commodities and freight rates;

• the surcharges imposed; and

• rules regarding container transport in the main ports.

Types of fre ig h t c o n fe re n c e s
There are basically two types of conferences - open and closed - and two main
conference systems, one that operates between Europe and the Far East and the other
that operates in the United States.

The entry requirem ents for a closed conference are far stricter than for an open
conference, and a new line can only become a member if all the existing members give
their consent. This restriction helps prevent overtonnaging in the trade, where the number
of ships available outstrips the volume of cargo to be shipped, forcing shipping lines to
3 6 Guides to International Logistics Seafreight Forwarding

start competing for too little business. The Far Eastern Freight Conference CFEFC) was
a good example of a closed conference, as most of its members are national lines.

An open conference, on the other hand, is “open" to any carrier, as long as it meets
certain tonnage, financial standards and service plans. As United States anti-trust laws
stipulate that any line seeking membership to a conference shall be admitted, providing
they satisfy the criteria, open conferences exist mainly in the US.

Each conference is run by a secretariat, who. among other duties:

• issues the tariff;

• arranges the meetings;

• issues notices and circulars to members;

• collects conference data and statistics of member lines’ lifting; and

• reports on non-conference activities.

F a r E a s te rn F re ig h t C o n f e r e n c e CFEFC} -
f r o m 1 8 7 9 to 2 0 0 8
The first Far Eastern Conference (FEC) was founded in 1879 by John Samuel Swire with
a total of nine signatories - eight from Great Britain and one from France. Six of these
were actually operating in the trade, while the remaining three were shipbrokers. In 1941,
the FEC was renamed the Far Eastern Freight Conference (FEFC) and it began operating
with eight allied conferences. Over the years, the membership of the FEFC shrunk from
about 40 members to 16 members in 2008. The falling membership was attributed to the
tough conditions in the shipping industry, which resulted in bankruptcies, acquisitions,
and mergers. The intense competition from non-conference operators also affected the
market share of the FEFC. The repeal of the block exemption regulation for liner shipping
(BER 4056/86) in August 2008 by the European Union was the last straw, leading to the
dissolution of the FEFC.

Far East Europe Trade

After 131 years of existence, the FEFC was disbanded on 18 October 2008. However. FEFC
must be credited for the formulation of a tariff system and introduction of comprehensive
surcharges to take into account the changing circumstances in global trade such as
high fuel prices and currency fluctuations, peak seasons, congestion, and canal tolls,
which allowed shipping lines to recover some of their operational costs.

The EU action put an end to the possibility of liner carriers meeting in conferences, fix
prices, surcharges and regulate capacities as of 18 October 2008.
 PART 1 I Freight Conferences

E u r o p e a n L in e r A ff a ir s A s s o c ia t io n CELAAJ
The European Liner Affairs Association (ELAA) has taken over data compiling function
of the FEFC. ELAA was established in 2003 and comprises most of the world's main liner
shipping companies. Its members are among the w orld’s main providers of containerised
liner tra n sp o rt services and hence fa cilita te the m aintenance and expansion of
international trade on a global scale. The transportation services provided by Association
members are efficient, reliable and low cost.

It represents the interest of some 24 major shipping lines (but notably 3 major Japanese
carriers i.e. NYK Line, K Line and Mitsui OSK are not members) and runs an information
exchange system for its members and publishes reports on the various trades and
forecasts on supply and demand, as well as information on bunker costs and currency
conversions.

The Commission has concluded that a repeal of the block exemption will bring about
substantial benefits to EU industry and consumers, in particular with regards to transport
prices, reliability of liner shipping services, competitiveness of the EU liner shipping
industry and small EU liner carriers.

The Commission’s main findings of the potential economic impact of repealing the
conference block exemption are:

• transport prices for liner shipping services w ill decline

• service reliability on deep sea and short sea trades is expected to improve

• service quality will either be unaffected or will improve

• there will be either a positive impact or no impact on the competitiveness of EU liner

shipping firms

• small liner shipping carriers will not experience particular problems and

• no negative impact or even a positive impact on EU ports, employment, trade and/

or developing countries

Reference: Competition: repeal of block exemption for liner shipping conferences - frequently asked questions - memo 06/344

On 17 March 2010 ELAA members decided to close ELAA and transfer its responsibilities
to the World Shipping Council (WSC) with effect from 1 July 2010. The ELAA was set
up in 2003 to discuss with the EU’s Directorate General for Competition (DG Comp)
the replacem ent of the Liner Conference regime in the EU. This was completed
3 8 Guides to International Logistics Seafreight Forwarding

with the publication of the M aritime Transport Guidelines in 2008. The ELAA's work
was later extended to encompass the forthcom ing revision of the Consortia Block
Exemption Regulation. The ELAA members believe that there are unlikely to be any new
regulatory issues for the industry before the renewal of the EU’s Guidelines, due to take
place in 2013.

W o r ld S h ip p in g C o u n c il CW SC}
The WSC is a Washington. D.C.-based association whose 29 carrier members transport
more than 90% of the w orld’s containerised trade. It focuses on issues affecting the
liner shipping industry. Most recently, it has been focusing on ways to improve maritime
security and to support the establishment of global environmental standards for the
shipping industry.

However, the WSC’s responsibilities will not be extended to the ELAA database, which
was set up to report on European trades, following the abolition of the conference system
in Europe. The ELAA members agreed that this system, organised by ELAA subsidiary
CTS, should now be extended to non-European trades. This will be implemented over
the next year and will result in the liner industry being supplied - for the first time - with
an accurate volume and rate database.

T h e C o n t a i n e r W o r ld
The box revolution that started in the 1960s has seen many changes in vessel designs, with
bigger capacity of 13,000 teus, more efficient engines with low carbon emissions, state
of the art technology in navigation and communication equipment. On the commercial
side, more and more container operators are diversifying into intermodal transport (d o o r-

to-door deliveries) to provide a one-stop service to their customers. Containers move

through geographical areas by direct service or via feeders and connecting carriers.
The mega carriers are increasingly using major ports as hub centres and rely on feeder
network to distribute the containers as the operating costs of the big vessels are high
and they can ill afford to call too many ports.

C o n s o r t i a / G l o b a l A llia n c e s
A consortium is a group of shipping lines which combine their vessels in a joint schedule
for a specific route with common ports of call. Member lines will swop slots on the vessels
in proportion to the numbers of vessels they put into the consortium.

Global Alliance allows vessel sharing and slot swapping/purchase and covers a wider
geographical scope, which includes more than one major trade route.
 PART 1 Freight Conferences

The concept of consortium and global alliance has been adopted by major shipping lines
as a solution to the volatility in the liner shipping. The viability of maritime transport is
very much dependent on the world economy, and consortia and global alliances allow
shipping lines to make adjustments to schedules and capacity among member lines.
The advantages of a consortium arrangement can be summarised as follows:

1. M em ber lines build big capacity vessels to achieve economy of scale and exchange
slots on individual vessels in proportion to the total slot com m itted by each
member.

2. Member lines save on capital investment by not building as many vessels as they
would have if they were operating independently. Instead they build enough vessels
to jointly operate in the consortium with like-m inded partners to achieve high
frequency of sailings and deploy bigger capacity vessels.

3. Other benefits include allowing member lines to free use their containers to reduce
the empty positioning costs.

4. Member lines can react quickly by withdrawing capacity when there is a recession
and likewise, increasing capacity when there is recovery in the world trade.

It has been reported at the time of writing that the European Commission has revised
and extended the BER Consortia 823/2000 until 2015 after hearing submissions from
interested parties including the ELAA. This means consortia and global alliances will still
be allowed to exist as they are viewed essentially as operational agreements between
shipping lines whilst at the same time, separate sales and marketing functions are being
retained by individual member lines in the consortia.

With the repeal of the BER for Liner Shipping, we summarise on the next page the Do’s
and Don’ts of EC Competition Law on trades to and from Europe.

The financial crisis in late 2008 and 2009 plunged the world into a global recession and
the maritime industry was adversely affected. Most of the major shipping lines had to
react quickly to this slowdown in trade. Some of the actions taken by the shipping lines
were:

1. Reducing capacity in major trade routes by withdrawing vessels and laying them
up in safe anchorages

2. Cancelling or deferring order books for newbuildings of modern and big capacity
container vessels
Guides to International Logistics Seafreight Forwarding

Activity P re-18 October 2 0 0 8 Post-18 October 2 0 0 8

Conferences Yes No
Trade Association Yes Yes

Conference agreed
Yes No
business plan
Conference agreed
surcharges and ancillary Yes No
charges - CAF, BAF & THC
Individual carrier
surcharges & ancillary Yes Yes
charges - CAF, BAF & THC
Individual carrier set
Yes Yes
freight rates
Aggregated volume data Yes (if released with 4 weeks
Yes, but only conference delay and subject to safety
mechanism)
Aggregated price index Yes Of released with 3 months
Yes delay and subject to safety
mechanism)
Individual volume/price Yes Of re le a se d w ith 12
data Yes months delay and subject to
special rules for consortia)
Supply forecast Yes (if based on p u b lic ly
Yes
available sources)
Demand forecast Yes Yes

Reports Yes (if based on p u b lic ly

available sources and
Yes aggregated data respecting
th e minimum delay as
above)
Trade Association Yes (As a safeguard these will
Meetings be in the presence of lawyers
to ensure compliance with EC
Yes
competition law;
Meeting m i n u t e s t o be
publicly available)
(Source: European Liner Affairs Association)
 PART 1 Freight Conferences

3. Reducing the speed of the vessels to save on bunker consumption

4. Relooking at current routes and rescheduling their services

5. Co-operating with competitors to run joint schedules on some routes

C o n s o r t ia o f m e g a c a r r ie r s c u r r e n t ly
in v o lv e d in t h e F a r E a s t E u r o p e T r a d e

Nam e of Consortium Carriers

Grand Alliance Hapag-Lloyd AG

Nippon Yusen Kaisha CNYK)
Orient Overseas Container Line COOCL)
New World Alliance Hyundai Merchant Marine Co.Ltd
M itsui O.S.K. Lines Ltd
APL Co. (Pte) Ltd
CYKH Alliance Cosco
Yangming Marine Transport Corporation
Kawasaki Kisen Kaisha Ltd (“ K” Line)
Hanjin Shipping

N e t w o r k S h a r in g A g r e e m e n t s
2M - Maersk Line and Mediterranean Shipping Corporation
G6 - APL, M itsui O.S.K. Lines, Hyundai M erchant Marine, Hapag-Lloyd, Nippo Yusen
Kaisha, Orient Overseas Container Line
CYKH+E - Cosco, Yangming Marine Transport Corporation, Kawasaki Kisen Kaisha.
Hanjin Shipping and Evergreen Shipping
The shipping consortia have aligned themselves and formed big groupings such as
2M, G6, CYKH+E because of the weak global economy affecting most of the trading
routes and depressed freight markets. Shipping is undergoing a consolidation
phase with shipping lines adjusting carrying capacity and combining their consortia
arrangements into network sharing agreements based on size, number of vessels
deployed, operational characteristics in the transpacific, transatlantic. Europe/Asia
and Mediterranean trade routes.
42 Guides to International Logistics Seafreight Forwarding

As of June 2014, the top 20 shipping lines in the container world are shown below:

Rank Operator
1 APM -M aersk
2 Mediterranean Shg Co
3 CMA CGM Group
4 Evergreen Line
5 COSCO Container L.
6 Hapag-Lloyd
7 CSCL
8 APL
9 Hanjin Shipping
10 MOL
11 OOCL
12 Hamburg Süd Group
13 NYK Line
14 Yang Ming Marine Transport Corp.
15 Hyundai M.M.
16 PIL [Pacific Int. Line)
17 K Line
18 Zim
19 UASC
20 CSAV Group
(Reference: www.alphaliner.com)

T h e U S A trad e
The Federal Maritime Commission CFMC3

The FMC was established in 1961 to act as an independent government agency that
would be responsible for regulating ocean shipping in the United States’ foreign trade,
and to ensure that nothing holds back the best interests of US foreign commerce. To
this end, the Commission takes measures to correct and impose penalties on carriers
or foreign governments whose unfavourable shipping conditions adversely affect US
foreign commerce, or make access for US vessels difficult between foreign ports.

In addition to monitoring relationships among and between carriers and marine terminal
operators, the Commission also ensures that individual carriers and MTOs treat shippers
and other members of the shipping public fairly.

The Ocean Shipping Reform Act (OSRA) of 1998 replaced the Shipping A ct of 1984.
 PART 1 Freight Conferences

The FMC’s role was slightly changed, since it was no longer compulsory to file rates with
the organisation. Instead, carriers in the US trade must now submit tariffs electronically
so that they are easily accessible by all merchants. These tariffs must be regularly
monitored to ensure that they are correctly applied to commodities. Any deviation from
the published tariff will result in the FMC imposing a fine on the carrier. Heavy fines will
also be meted out by the FMC to any carriers who try to abuse the system - for example,
by offering rebates or benefits in return for other services, such as free trucking.

The FMC’s main functions can be summarised as follows:

• protecting shippers, carriers and others engaged in the foreign commerce of the
US from the restrictive rules of foreign governments:

• investigating co m plaints made against carriers fo r discrim inatory, u n fa ir or

unreasonable rates, charges and practices;

• receiving and monitoring agreements among common carriers or terminal operators,

to make sure that they are not substantially anti-competitive;

• regulating rates, charges, rules and regulations in the tariffs of any carrier controlled
by a foreign government;

• licensing US-based ocean transport intermediaries (OTIs), which include non-vessel

operating common carriers (NVOCCs) - parties which undertake the carriage of
goods and which issue relevant B/Ls, but do not have their own means of transport
- and freight forwarders; and

• requiring the bonds of NVOCCs.

M i n i - L a n d b r i d g e C M L B } vs A l l - W a t e r
S e r v ic e CAW S}
All carriers operate either as a m ini-landbridge system CMLB) or an all-water service
system CAWS).

MLB

An MLB is a railway network that spans the USA from coast to coast, connecting major
ports on the west coast to major ports on the east coast, including ports in the Gulf of
Mexico.

An example of a shipment transported from Singapore to New York via an MLB network
would proceed as follows.

• A 40' container is loaded in Singapore and travels on a feeder vessel to Hong Kong.

• On arrival in Hong Kong, it is transhipped onto the main carrier.

Guides to International Logistics i Seafreight Forwarding

• It is discharged at Los Angeles, on the west coast of the USA.

• Finally, it is transferred by rail to New York on the US east coast, through the MLB
service.

AWS

An AWS service links the US west coast and east coast via the Panama Canal. It is
called an all-water service, as carriers are able to transport the containers on water for
the duration of the trip, w ithout having to switch to land transportation. However, there
are limitations on the use of the AWS system, because of size restrictions on vessels
that can pass through the Panama Canal. Also, transit time for the AWS is considerably
longer than by the MLB system; it can take up to ten days more.

Another AWS service links Asia to the US east coast via the Suez Canal.

M C B o r IP I C M ic r o - B r id g e o r In la n d P o in t
In t e r m o d a O
Besides the MLB system, there is another system known either as the MCB or IPI system,
which describes the movement by train or truck from a coastal bridge to an inland point.
The IPI point is an inland point served by carriers that use coastal ports. As the ocean
carriers have to pay an out-of-pocket charge for MCB/IPI services [as with the MLB),
the freight rate to the shipper is adjusted with an additional I PI rate to reflect this service,
and to cover the carrier’s own costs.

O c e a n S h ip p in g R e f o r m A c t o f 1 9 9 8
COS R A3
The Shipping Act of 1984 was amended to become the OSRA of 1998, which came into
effect on 1 May 1999.

From then on, both the FMC’s role and the requirements for the shipping environment
underwent some changes, although the FMC still maintains authority over the same
policies that were based on the 1984 Shipping Act.

Tariffs

Ocean carriers are no longer required to file their rates with FMC, but must instead
publish their rates electronically, making them available to the public. The only exception
to this rule are “exempt” ' commodities, such as bulk cargo, wastepaper, forest products,
recycled scrap metal, and newly assembled motor vehicles. Rates for these items are
not listed in the tariffs for public viewing.
 P AR Tl i Freight Conferences 45

Service contracts

A service contract is, by definition, a written contract (separate to a B/L or a receipt)

between one or more shippers ( in c lu d in g shippers’ associations or a group of unassisted
shippers) and an individual common carrier; it can also be an agreement between or
among common carriers. The contract states that the shipper has made a commitment
to provide a certain volume or portion of cargo over a predetermined period, and the
carrier in return commits to either a set rate or rate schedule and an agreed level of
service - guaranteed cargo space, transit time and port rotation. The contract may also
specify the consequences in the event of either party not fulfilling the agreement; breach
of a service contract can mean litigation.

A confidential service contract allows a carrier and shipper to keep their deal confidential
from the competition. However, even though all service contracts must be filed with the
FMC. rates always remain confidential and are not open to the public.

Every service contract that is filed with FMC must include:

• port ranges;

• intermodal points;

• commodities;

• minimum volumes;

• rates;

• duration;

• service commitment descriptions; and

• liquidated damages for shortfall.

The public will only have access to:

• port range/scope;

• commodities;

• minimum quantity commitment; and

• duration.
4 6 Guides to International Logistics Seafreight Forwarding

S i g n i f ic a n t c h a n g e s to t h e O S R A
Licensing

Under the 1984 Shipping Act, the FMC required freight forwarders to carry a license,
while there were no such requirements for NVOCCs.

However, with the implementation of the OSRA 1998, freight forwarders and NVOCCs
are now referred to collectively as ocean transport intermediaries COTIs), and all OTIs
operating in the US must be licensed.

Bond requirements

Before 1998, freight forwarders had to post a bond of $30,000, with another $10,000 for
each additional office. NVOCCs were required to pay $50,000, and group associations
$1,000,000.

Under the OSRA 1998, the bond structure for OTIs has been modified.

OTIs acting as forwarders must pay $50,000, plus $10,000 for each additional office,
while the bond for those acting as NVOCCs is $75,000, plus $10,000 for each additional
office. All OTIs operating outside the United States have to pay $150,000, and groups or
associations must post bond of $3,000,000.

Forwarder compensation

Previously, only US freight forwarders who were Customs house brokers benefited from
the 1.25% minimum level of compensation to be paid by conferences and the right of
independent action.

The amendments in the OSRA 1998 state that a conference or agreement of carriers
cannot pay an OTI acting as a freight forwarder in the US compensation which is less
than 1.25% of the aggregate of all charges assessed against the cargo. Also, they cannot
deny a member the right to take independent action on such compensation.

Service contracts

Prior to the OSRA, confidential items Crates, terms and conditions) in service agreements
were published and accessible to the public, whereas today, all items pertaining to
contracts with carriers are not published - they remain strictly confidential.

The 1984 statute required conferences and carriers to make their terms of agreement
available to other similarly situated shippers for a period of 30 days - this was known as
the “ me-too" provision - but this is no longer necessary with the OSRA in place.
 PART 1 Freight Conferences

Also, while only individual shippers and conferences were permitted to enter into service
contracts before, the OSRA now allows all agreements to do so.

The Shipping Act did not permit NVOCCs to offer service contracts, and this remains
unchanged under the OSRA. However, the 1984 Act did allow shipping lines to offer
contracts for specific minimum volumes; the OSRA now states that contracts may be
for a specific minimum volume, or percentage of cargo.

Regulation of service contracts

The Shipping Act did not permit NVOCCs to offer service contracts. However after
representations to the FMC, it was agreed that NVOCCs can offer NVOCC Service
Arrangements CNSAs) to shipper/customers, which are similar to the service contract
between the Carrier and the shipper.

Tariffs

The Shipping Act stated that all tariffs had to be filed with the FMC, detailing rates,
terms and charges.

The OSRA 1998 no longer requires tariffs to be filed with the FMC, but all common
carriers and conferences must still maintain that information in an automated system
that is accessible any time to any person.

Independent action for tariffs

Independent action is a special rate request to the FMC by shipping lines for a specific
purpose w ithin a prescribed period of time, if they wish to use their empty unused
containers to transport cargo from the US to the Far East under a special freight rate.

Under the old Act, conference members had the right to take independent action OA)
on tariffs, giving no more than ten days' notice. However, conferences could restrict or
prohibit the exercise for exempt commodities.

With the OSRA, members have the right to take independent action on no more than
five days’ notice, and this right extends to exempt commodities.

Act exemptions

M otor vehicles were non-exempt commodities as specified by the Shipping Act, but
were added to the list of commodities which are exempt from ta riff and contract filing
by the OSRA.
Guides to International Logistics i Seafreight Forwarding

Prohibited acts

There was no clear discrimination protection for associations or NVOCCs in the 1984
Act, but the OSRA specifically states that a carrier cannot discriminate against, or refuse
to deal or negotiate with, ports, locality, or persons due to their status as an association
or NVOCC.

Joint carrier negotiations

Carriers were previously prohibited from joint negotiations with trucking companies,
railroads, or airlines for arrangement of transportation within the US, but are now allowed
to do so under the OSRA.

I m p a c t o f t h e O S R A on U S A t r a d e
The OSRA has had a dramatic impact on both US and international trade, putting the
focus on the need to create more effective partnerships with a greater level of reliability,
flexibility, and accountability. In so doing, it has changed the thinking and planning of
those involved in US ocean commerce. By helping shippers and carriers to become more
aware of each other’s needs and advantages, the OSRA has increased the efficiency
of ocean transportation.

• Rate agreements such as the Asia North America Eastbound Rate Agreement
(AN ERA) and the Transpacific Westbound Rate Agreement (JWRA) have been
disbanded, so that shipping lines are no longer forced to collectively agree on service
contract rates before signing contracts, but are now allowed to sign one-to-one
service contracts with shippers.

• Shipping lines have formed informal discussion groups, like the Transpacific
Stabilization Agreement (TSA), to discuss a variety of topics, including market rates.
These meetings are not intended to be binding, but for shipping lines to exchange
information on trade demands so as to adjust their rates and tonnage capacities,
taking into account the seasonality of the trade.

• Shipping lines have been given the flexibility to sign global service contracts with
shippers so that they can cover trade both to and from the US.

• Shippers' associations and NVOCCs can negotiate their deals directly with shipping
lines and sign service contracts.

• Small- and medium-sized shippers can now form associations or rely on NVOCCs
to obtain up-to-date competitive rates from shipping lines.
 PART 1 ; Freight Conferences

Shipping lines can now take independent action on no more than five days’ notice,
as compared to the old rule of no more than ten days’ notice.

If the FMC finds that a foreign vessel has a pricing policy that is unfavourable to
shipping in foreign trade, then it is authorised to take action against the owners,
operators, agents or masters of that vessel.
5 0

3 Roles of Carriers and Ports

H o w a n d w h y t h e ro le s o f c a r r ie r s a n d
p o r ts h a v e c h a n g e d
As we enter the new millennium and the world becomes more and more technologically
advanced, the idea of “one world" has been further embraced. This has made international
trade one of the w orld’s most crucial and successful industries.

Trade has always played an important role in the progression of our society and culture,
dating back to when the early Chinese first swapped shells as currency, and when Marco
Polo travelled on the Silk Road. The supply and demand chain - facilitated when one
country has a supply of some commodity or merchandise that is in demand by another
- is generated by several factors.

These include the availability of certain products in particular regions and the variation in
prices, such as cheap toys from Korea and electronics from Japan. This in turn contributes
to the cachet, or image, that some products have, for example, French champagne,
German beer and Egyptian cotton.

As countries develop socially, economically and politically, their import and export markets
need to grow to meet and fulfil the demand that has been created for certain goods. This
has prompted some very dynamic changes in the shipping industry, primarily in terms
of the reinvention and development of vessels and ports, which have had to not only
expand to retain or increase market share, but also to keep up with new developments
in technology that allows new standards and boundaries to be reached.

Apart from being necessary for sustaining increased consumerism, international trade
is big business these days. In the US. the w orld’s largest market, imports are worth
more than $870 billion each year, while exports to more than 226 countries total $349
billion. The US’ top ten trading partners, with respect to import and export dollars, are
Canada, Japan, Mexico, United Kingdom, Germany, China, Taiwan, France. South Korea
and Singapore.
 PART 1 i Roles of Carriers and Ports

W h a t is a c a r r ie r ?
A carrier can be defined as any contractor who undertakes the transportation of goods,
whether by sea, road, rail, waterway or air. In this chapter, a carrier is the owner or
operator of the vessel that transports goods for the shipper. The term “carrier” can also
refer to the vessel used.

W h a t is a lin e r s h ip p in g c o m p a n y ?
A liner service (d e riv e d from the term “ line traffic”) is defined as one that operates to
a regular sailing schedule, transporting goods along a definite route, to fixed ports of
call. A liner, therefore, is a vessel that is engaged in this kind of transportation; they are
generally of a similar capacity.

Most container operators offer container yard to container yard (CY/CY) services. This
means that the shipping line is responsible for the

• safe handling of the container after it has been delivered into the export container
yard of the load port;

• transportation of the container by the vessel; and

• safe delivery of the container into the im port container yard of the destination
port.

H o w a lin e r s e r v ic e is ru n
A liner service is a complex and highly competitive business, in an industry where a
downturn in the world economy can lead to a depressed freight market. It is imperative
that every effort is made to keep costs as low as possible and to run an efficient and
reliable operation, from the top of the company right through the ranks.

It is common for a shipping line to divide its head office into different departments, so
that each can be headed and handled separately, ensuring maximum effectiveness with
a minimum of costly mistakes.

Liner Planning Division - responsible for the planning of new trade routes and fleet
expansion.

Ship Management Division - responsible for the overall running of vessels, from upkeep
and maintenance to the monitoring of provisions and overseeing of crews.

Liner Division - planning and logistics responsibilities for services, vessel schedules,
container equipment planning, overseas offices and agencies, documentation and data
communications, and handling of claims and insurance.
Guides to International Logistics Seafreight Forwarding

Finance Division - responsible for the com pany’s financial results, auditing and
performing treasury functions.

IT/EDI Division - responsible for com puter systems [control and processing of
administrative paperwork and documentation), and data interchange with suppliers
and contractors.

Human Resource Division - responsible for manpower planning [including recruitment

of new crew), staff benefits, and all industrial relations.

W h a t is a lin e r a g e n t ?
Many countries on world trade routes serve shipping lines that have either a commercial
interest in each region, or vessels that stop there. If the shipping line does not have its own
offices in those places, then it will appoint an agent. A liner agent is a person or company
that acts on the shipping line's behalf and carries out their business while the vessel
remains in the agent’s jurisdiction. The agent is in fact the responsible representative,
and is empowered to make decisions and sign necessary documents on behalf of the
shipping line he represents.

Most shipping lines now opt to maintain their own offices in the major ports of call
where their vessels operate, as this enables more effective management of the business
and costs.

A basic organisation structure for a shipping agent would look like this:

Senior Management

M arketing/ Finance/ Information

Documentation Operations T
Sales Administration Technology

The main functions and duties of a liner agent are listed below.

Operations

• Arranging port clearance for the vessel when entering or leaving the port

• Booking of berth

• Giving the owner relevant and timely information regarding arrival and departure
times, bunkers on board, etc
 PART 1 Roles of Carriers and Ports 53

• M aking arrangements for bunkers

• Organising stevedores and marshalling equipment and cargo

• Liaising with the ship's chief officer for stowage, cargo readiness, lashing, etc

• Obtaining the stowage plan from the vessel and relaying relevant information to the
ship owner and the agents at subsequent ports about sailing time, bunker position
on board and estimated time of arrival (ETA) at the next port

• Attending to crew changes, medical treatm ent of crew, etc.

• Bringing mail on board

• Arranging for repairs and dry docking

• Arranging for spare parts, stores and provisions

Documentation

• Processing the booking of export cargo

• Issuing the B/L

• Preparing the freight and cargo manifest

• Collecting the freight

• Issuing arrival notices

• Issuing the delivery order for import cargo

• Updating tariffs

• Processing claims

Marketing/Sales

• Planning sales calls

• M aking sales visits to shippers and consignees

• Sending sales leads to other agents

• Following up on leads from other agents

• Receiving bookings and arranging allocation of space

Accounts

• Preparing freight disbursement and accounts for the ship owner for each voyage

• Completing the remittance of freight for the ship owner

Guides to International Logistics i Seafreight Forwarding

T h e role o f t h e N V O C C C N o n - V e s s e l
O p e r a tin g C o m m o n C arrier}
An NVOCC is a common carrier that consolidates smaller shipments from different
sources which are consigned to the same destination, and then packs them together into
a single container for shipment overseas. It arranges for and performs several functions at
the p o rt but does not operate the vessels providing the ocean transportation. By issuing
its own house B/L, an NVOCC works in the same way as a shipping line. However, in its
relationship with the shipping line, the NVOCC is treated as a shipper and is therefore
shown as a shipper in the shipping line’s B/L.

An NVOCC also offers very similar services to that of a shipping agency, although it
places a much stronger emphasis on having the infrastructure with which to receive and
store LCL cargo in a warehouse for cargo consolidation. This service is the mainstay of
an NVOCC's business. By providing a broad array of other services, such as trucking,
storage, Customs brokerage, cargo insurance and consolidation, the NVOCC is a one-
stop shop. As the role of the NVOCC has gradually expanded over the years, it has
assumed the role of a total logistics provider. This has made such a big impact on the
shipping business that even shipping lines are now establishing their own in-house
NVOCC services, to try and compete in the market.

The benefits of NVOCCs are:

• As the B/L states that the NVOCC holds full responsibility for the entire journey,
from the time the goods leave the factory until they reach the final receiver, several
different contractors can be engaged to undertake each segment of the journey.
Customers can then be offered an intermodal service on a door-to-door basis.

• As an NVOCC works within a large agency network, both regionally and globally,
better rates based on total volume of cargo organised regionally or globally can be
negotiated on service contracts with shipping lines. These cost savings are then
passed on to customers.

• Shipm ents can be tracked and traced through the internet, at any stage of
transportation. Not only is this a value-added service for the customer, but a great
time and money saver for the NVOCC.

• By offering LCL services, the NVOCC can consolidate cargo from small shippers
and stuff them together in one container at his own warehouse.

M ajor NVOCCs are increasingly looking towards modern technology, especially the
internet, to help them reduce both order cycle times and handling and shipment costs
for their customers.
 PART 1 Roles o f Carriers and Ports

By reorganising their existing systems and incorporating information technology, NVOCCs

can provide customers with even better total logistics services, now commonly known
as supply chain management.

H o w t o s t a r t a n N V O C C o p e r a t i o n in t h e
USA
To set up an NVOCC operation, you must

• obtain an FMC licence as an OTI (not applicable to foreign-based NVOCCS who

do not have a presence in the US);

• secure a surety bond;

• produce an Ocean B/L with terms and conditions;

• post a ta riff on the internet; and

• have a minimum of three years’ experience in the ocean transportation intermediary

business in the US.

T h e ro le o f p o r t s
Shipping has long been part of our history and ports have always played a key role.
Whenever towns and cities have been built near water, craft such as boats, ships,
rafts and barges have been required to move both people and goods, and to facilitate
trade. This in turn has led to the need for the docks, floats, piers, gangways and other
conveniences, which allow these vessels to be properly utilised, and to accommodate
the flow of watercraft traffic.

Today, the size and efficiency of a port is an indication of how successful the surrounding
regions are. With the volume of world trade on the sea, ports (the gateways for import
and export of cargo) are vital components in the shipping business. They act as physical
interchanges for the trading community, and as middle grounds between buyers and
sellers. Cargo is delivered and loaded, or received and discharged in ports.

With so many factors relying on this stage of the transportation process, it is crucial
that ports are run and controlled as efficient organisations. Generally, they are either
privately managed or run by government agencies. Inefficiencies of the port will result
in costly delays for ship owners, who can ill afford it, when the daily costs of running a
big container ship are so high.

In this era of mega-carriers, it is even more im portant that a port is equipped with the
most modern cargo handling facilities, to keep productivity at an optimum level. This
is measured by vessel turnaround time (the length of time that a vessel remains in the
5 6 Guides to International Logistics Seafreight Forwarding

port while it is being loaded or unloaded}, which is dependent on crane productivity,

and how many containers the gantry crane can handle.

Other requirements for an efficient port are:

• a well-organised container yard, for both storage and handling of containers;

• an efficient, accurate and well-organised ship planning department, to ensure proper

stowage;

• immediate availability of fresh water and bunker supplies for vessels alongside Cat
berth);

• a high-end computerised system to control the smooth delivery of cargo to and from
the port, to avoid any congestion and delays;

• a good, highly trained and qualified workforce working 24/7;

• a good rail/road/barge network to facilitate delivery;

• an efficient Customs clearance system;

• foresight and forward planning to ensure that there are always enough berths
available, to handle larger and faster container ships;

• a computer system that allows the automation of routine operations in the ports,
that can be handled by a remote control device; and

• making the port as customer-oriented as possible, and having a user-friendly ta riff

system.

I n c r e a s i n g m a r k e t s h a r e a n d p ro fits
Shipping lines

• Promoting the idea that larger scale equals lower prices. If. in container operations,
more shipping consortium and alliances were formed, then this would enable even
larger container vessels to be built at a lower unit cost.

• Pooling and sharing of larger and co stlie r equipm ent between consortium
members.

• Negotiating with ports for lower charges, based on volume discount proposals.

• Undertaking more long-term service contracts with bigger shippers, to ensure a

regular income from base cargo support.

• Promoting more advanced container services to those parts of the world that still
employ traditional shipping practices.
 PART 1 Roles of Carriers and Ports

• Cross slot chartering (operational agreements) among carriers.

• Formation of discussion groups, resulting in the reduction of shipping tonnage among

member lines, and the voluntary withdrawal of vessels from service on a rotational
basis.

NVOCCs

• Upgrading the level of services offered, including enhancing the information systems
available on the internet, allowing customers easy access to information at any
time.

• Providing custom ers w ith more com prehensive interm odal and m ultim odal
services.

• Reducing operating costs through mergers and acquisitions.

• Utilising the new supply chain management system and playing a more active role
in the transportation chain.

• Pooling resources in services such as cargo consolidation, storage and trucking,

and reducing handling costs per unit.

• Chartering a fixed number of slots from shipping lines, which would result in much
more competitive rates for customers.

Ports

• Increasing productivity of gantry cranes, by improving on both speed and span.

• Developing a more efficient system to distribute the containers to the outlying regions,
using a feeder service network, which will then reduce the operation costs for the
ship owner.

• O ffering volume discounts on cargo fo r both sh ort- and long-term term inal
contracts.

• Leasing out the terminal for the exclusive use of the shipping line and ensuring
long-term financial commitment, which would then justify further capital investment
in port development.

• Updating the computer system to increase the automation and efficiency of the
container terminal.

• Encourage the establishment and enlargement of bonded/free trade zone boundaries

as part of the port jurisdiction to attract more value-added services w ithin the port
vicinity.

• Develop ports as elements in the supply chain system.

5 8

PART TWO
SHIP TYPES, SHIPPING
ORGANISATIONS AND
DOCUMENTATION

A Ships and Specifications

It is estimated that almost 90°/o of all global trade today is transported by sea.
It is therefore fundamentally important that a logistics service provider must
have a complete knowledge and understanding of the various types of vessels
available in the freight market, the different functions of each type of vessel,
and how they are operated.

R e g i s t r a t i o n o f a s h ip
Just as cars need to be registered before they are allowed on the road, so too do ships
need to be officially registered. Each vessel is given a unique code, which is used for
radio communications and as identification on all documentation. Ships do not have
to be registered in the country that they are built or based in, so owners are likely to
register their vessels in those countries that offer the best financial benefits - lower tax
rates or tax-free status - which add up to substantial cost reductions.

A complete list of calling codes of every vessel around the world is kept on a central
record at Lloyd’s Register of Shipping in London, along with records of their movements
and last reported position.

One of the most important documents on board any vessel is the logbook. Officers must
keep a daily record of each and every event that takes place on board the ship. Typical
entries would include the ship’s current position, the ship’s course, all ports of call,
weather conditions, and any other special events, such as the handling of claims.
 PART 2 Ships and Specifications 59

C l a s s i f i c a t i o n o f s h ip s
Every four years (although one year’s grace is normally given), the class certificate for
a particular ship expires. It is immobilised for several days, while a series of extensive
checks are conducted by a classification society to ensure that the vessel is in satisfactory
condition to be carrying its cargo and crew. If the ship meets the requirements, it is re­
classified according to the standard of its construction and on-board equipment.

This process not only deems a ship seaworthy, but also determines the cost of insurance
for both the ship and the cargo it carries - a ship with a higher classification fetches a
lower insurance premium than one with a lower classification; it is therefore advantageous
for owners to maintain their ships to the highest standard.

Apart from these surveys to maintain classification, ships also undergo annual checks,
to make sure that the general condition of the ship, including its anchors and cables, is
satisfactory. A load-line survey is also done at the same time.

Some major international classification societies are:

C o m p a n y /N a tio n a lity S ym bol

Lloyd’s Register of Shipping, London/UK LR

American Bureau of Shipping, New York/USA AB

Bureau Veritas, Paris/France BV

Germanischer Lloyd, Berlin/Germany GL

Det Norske Veritas/Norway NV

Nippon Kaiji Kyokai/Japan NK

Registro Italian Navale/ltaly RL

T h e P lim s oll M a r k
In 1836, public concern grew over the number of ships and crew lost at sea. The British
Parliament appointed a committee to investigate, and legislation was passed in 1850 to
create the Marine Department of the Board of Trade. Its role was to enforce the application
of laws governing manning, crew competence, and operation of merchant vessels. Ini 870,
Samuel Plimsoll, a merchant and shipping reformer, created a safety limit: a “ load-line".
In the M erchant Shipping Act of 1875, this line (known as the Plimsoll Mark) became
an internationally accepted reference to lim it the w eight of cargo loaded aboard ships.
How low a boat is able to safely sit in the water can be measured by its d ra ug ht which
is the vertical distance from the bottom of the keel to the waterline.
6 0 Guides to International Logistics Seafreight Forwarding

Some factors for determining the Plimsoll Mark include:

• structural strength;

• compartmentalisation;

• deck height;

• transverse stability;

• hull form;

• length of the ship;

• type of vessel;

• cargo on board; and

• season and zone.

In addition to having this line permanently marked on both sides of the hull, each
vessel must carry a load line certificate, issued by a classification society, stipulating the
distances and draughts required for that particular vessel.
y —

-e -
 PART 2 Ships and Specifications

T h e p r o f i l e o f a s h ip a n d c o m m o n l y u s e d
term s
Length Overall (LOA)

The greatest length of the ship, from fore to aft. This length is im portant when docking
the vessel.

Beam

The greatest breadth of the ship, from port to starboard.

Draught

The distance from the bottom of the keel to the waterline.

Freeboard

The distance from the waterline to the top of the deck plating at the side of the deck
amidships.

Displacement

The weight of the ship and all that it contains - cargo, fuel, water, stores, crew and
effects. A ship can have different displacements at different draughts.

Lightweight

The w eight of a ship when empty of stores, fuel, water, crew or their effects.

Deadweight [DWT]

The difference between the displacement and the lightweight.

The Gross Register Tonne (GT)

The total cubic measurements of the ship [including engine room, bunker tanks for fuel
and water, seamen's accommodation).

The Net Register Tonne (NT)

The NT is the available cubic capacity for cargo.

1 register tonne = 100 ft3 (2.8316 m3)

The register tonne is a cubic measure and not a w eight indication. Other descriptions of
the ship's cubic capacity are grain (its capacity to hold bulk cargo) and bale (its capacity
to hold packed cargo).
62 Guides to International Logistics Seafreight Forwarding

S p e e d a n d h o w to c a l c u l a t e it
A ship’s speed is measured in knots, which can be expressed in nautical miles per
hour.

1 nautical mile = 1’ [m inute] of the earth’s surface at the equator = 1,852 m.

Since 1° = 60' 1° = 60 nautical miles.

By formula:

Speed (knots) = Distance (nautical miles) Time (hours)

Therefore, if the distance and time travelled are known, then the ship’s speed can be
calculated. Likewise, if the speed and the distance between two ports are known, then
the transit time can be calculated.
 PART 2 Ships and Specifications

The term “ knot" originates from the time of the sailing ship, when a rope tied with knots
at regular intervals of 48 feet C8 fathoms) was thrown into the sea behind the ship in
order to find its speed. The number of knots that passed through the hand of the seaman
holding the rope per 28 seconds, as measured by an hourglass, told roughly how fast
the ship was going.

T y p e s o f s h ip s
Liner vessel

Liner vessels w ork to a fixed schedule;

they sa il on s p e c ific d ate s betw e en
predetermined groups of ports, irrespective
of whether they have a full load of cargo.
It is imperative that these vessels keep
to their sailing schedule, to maintain the
reputation of the shipping company that
owns them. A majority of container ship
owners today operate liner services on
most of the world trading routes. However,
some conventional or break bulk vessels
also still operate liner services in certain parts of the world where the nature and the
volume of cargo and the port conditions warrant the use of such vessels.

Tramp vessel

Tramp vessels sail only when

there is a sufficient quantity
of cargo on board; they do
not operate on a fixed sailing
s c h e d u le . T h e se v e s s e ls
generally carry cargo in bulk,
such as coal, grain, tim ber,
sugar, ore, fertiliser, cem ent
clinke r, copra, bauxite and
phosphates. As many of these
types of cargo are seasonal,
it w o u ld o n ly be v ia b le to
transport them a shipload at
a tim e. M any tram p vessel
ope ra to rs w o rk on a much
sm aller scale than their liner counterparts, and must therefore have an intimate
knowledge of market conditions and their business demands.
64 Guides to International Logistics Seafreight Forwarding

Container ship

A container ship is especially constructed and fitted to handle and transport containerised
cargo. Most container ships have no loading gear, so the containers are handled and
loaded by large gantry quay cranes while the ships are in the ports.

The concept of using containers in the transport industry was introduced in 1956 by an
American trucker called Malcolm McLean. He initiated “container traffic" as it is known
today, moving cargo between the US coasts via the Panama Canal. In doing so, he began
competing with other truckers and railways. Since its beginning, containerisation has
grown into a massive business and it is today the main mode of sea transport around
the world. To accommodate the increasing amount of cargo being moved on a daily
basis and the growing demand for shorter delivery times, container ships have grown to
a carrying capacity of 10,000 to 14,000 TEUs. In this industry, it is im portant to be able
to predict supply and demand; the new generation of 18,000-TEU vessels has been in
service since 2013, with more such vessels being built in the next two years.
 PART 2 Ships and Specifications

Conventional or break bulk ship

Break bulk ships are characterised by large open hatches, and are fitted with boom-
and-winch gears or deck cranes. Loading and unloading of these ships is done by
either the port’s shore cranes or by the ship’s derricks - shipside operations are carried
out manually by stevedores. As much manpower is needed to facilitate the running of
break bulk ships, they are now primarily used at ports where labour is cheap. These
ports lack modern facilities or inland rail/highway connections, which are required to
support efficient container ship operations. Although break bulk ships were extensively
used up until the middle of the 1960s, they are no longer commercially viable, and fewer
of these ships are being built each year.

RO/RO (Roll On/Roll Off) ship

RO/RO ships are designed to carry automobiles and heavy trucks as their primary cargo.
These vehicles are driven or towed on and off the ship, using either the ship’s own ramps
or shore-based ramps: thus the name Roll On/Roll Off.

These ships can also load break bulk goods, heavy cargo and containers, but because
they are not designed specifically to accommodate cargo which can be stacked in a
uniform manner, the space below decks cannot be utilised as efficiently as on a container
ship. This other cargo is loaded onto a low-bed trailer and trucked over a ramp into the
ship's hold.

LASH ship

The Lighter Aboard Ship CLASH) was introduced in 1969. It is a single-decked vessel
with large hatches, wing tank arrangements, and clear access to the stern.

LASH barges are deployed to smaller ports to collect and drop off cargo, after which
they are towed to a marshalling point out at sea, and subsequently loaded onto the
LASH ship. A typical lash barge has dimensions 18.75m x 9.5m x 3.96m, cubic capacity
of 555m3 and an average deadweight of 385 tonnes.

A LASH ship has the capacity for 64-89 barges. They are used to transport large
amounts of inexpensive cargo, and operate in regions with extensive inland waterways
and shallow ports. As on-board cranes are used to hoist the barges off and lower them
into the water, no special docks or terminals are required.
Guides to International Logistics a Seafreight Forwarding

Bulk carrier

Bulk carriers are normally tramp vessels which are chartered for a single voyage, or for
transporting seasonal cargo such as grain, ore and coal. These vessels resemble tankers,
but have no loading gears and can vary in size. Some of the biggest bulk carriers are
about 75,000 DWT, or Panamax - the term used to describe the maximum size of a vessel
that can pass through the Panama Canal.

Oil tanker

Oil tankers are the largest of all ocean-going transport vessels, with sizes varying from
50,000 DWT to 360,000 DWT. There are two categories of these super tankers: the VLCCs
(Very Large Crude Carriers), with a size of 280,000 DWT, and the ULCCs (Ultra Large
Crude Carriers), with a size of 360,000 DWT and above.

When the Suez Canal was temporarily closed in 1976, these tankers were forced to take
a much longer journey around the Cape of Good Hope, which had a direct bearing on
costs and delivery times. Tanker tonnage therefore had to increase to over 360, 000 DWT,
drawing over 20 metres draught, to meet market demands.
 PART 2 Ships and Specifications

However, the use of the ULCC has diminished due to several factors. Recent oil spills
and the resultant damage to the environment has made them a potential hazard. They
are also extremely costly to maintain, and the discovery of new sources of oil that are
geographically closer to importing countries means that it is no longer necessary or
financially viable to transport oil using such large vessels.

LNG/LPG tanker

LNG (Liquefied Natural Gas) and LPG (Liquefied Petroleum Gas) tankers are used solely
for the transportation of liquefied gas and are therefore specially constructed to carry
them in special pressurised tanks. Most contracts for LNG tankers are taken out on a
COA (Contract of Affreightm ent) basis, and they are therefore chartered out long-term.

C o a s te r

Coaster vessels are used in those parts of the world where the volume of cargo is relatively
small, for example, the coastal trade between West and East Malaysia.
6 8 Guides to International Logistics Seafreight Forwarding

Feeder ship

As container vessels grow up to a capacity of 8.000 TEUs to meet increasing demand

through all shipping routes, only a few major transhipment ports around the world are
large enough and adequately equipped to handle them. Feeder vessels are therefore
used to ferry the containers from the ships into the smaller, shallower ports surrounding
a major transhipment port. These feeder ships have a carrying capacity from 100 TEUs
to 2,000 TEUs.

Other special types of ships

• Heavy Lift Carriers

• Livestock Carriers

• Oil Rig Supply Boats

• Reefer/Fruit Carriers

• Car Carriers

• Tug Boats
 69

5 Containers
T h e h is to r y o f c o n t a i n e r s a n d
c on tainerisation
The idea of using containers for transporting goods is not a recent one. In fact, there
are records of containers being used as early as the 1830s, for the transportation of
ore, limestone and coal, in the pre-railway tramways of England, Silesia and America.
They were, however, much smaller than modern containers; most had a capacity of only
5-10 tonnes.

The marine containers used today were first introduced in the second half of the 1950s,
the brainchild of Malcolm McLean, the "father of containerisation”. During the course
of his working life, he went from being a trucker to a trucking service operator to a
trucking magnate. He then sold everything and switched to shipping in 1955, when he
bought the Pan-Atlantic Steamship Corporation, which he renamed Sea-Land. (Pan-
Atlantic was established by the Waterman Steamship Company, the rest of which McLean
subsequently bought.)

Nearly 20 years earlier, in the late 1930s, McLean had come up with the brainwave of
using containers to transport goods after watching loose cargo being hoisted onto ships
from the trucks at the dockside.

He started using containers on his Sea-Land tanker ships in a series of trials. In 1956, a
tanker called the Id ea lX sailed from Port Newark to Houston, carrying 58 x 35' containers
as well as normal liquid cargo. This success led to the conversion of six other cargo ships
into "trailer ships", which were equipped with on-board handling cranes and the capacity
to hold 226 x 35' containers. In 1960, another container ship sailed from New York to
Venezuela, marking the container's entrance into the international trade market.

Other steamship companies quickly moved into the container trade, as did railroad
companies, which started offering piggyback services, carrying containers on flatcars
(COFC). In response to this new development, the Port of New York Authority constructed
the first terminal exclusively for containers: the Port Elizabeth Marine Terminal.
Guides to International Logistics ■ Seafreight Forwarding

Breaking into the European market was McLean's next hurdle. In 1966, Europe's first
container port was constructed in Rotterdam. Scepticism was high at the outset, until
the first trans-Atlantic service shocked the shipping industry by delivering cargo to its
destination four weeks earlier than expected. The concept of containerisation as we know
it today was finally accepted by the shipping world as a viable form of transportation.

W h a t is c o n t a i n e r i s a t i o n ?
Every once in a while, a relatively simple idea is put into practice, that not only
revolutionises an industry, but in the process also has a profound effect on commerce,
society and the global economy. Containerised shipping is one such technology that has
come along and proved that not all advances need to be complex to be revolutionary.

Containerisation is the technique or practice of stowing freight in reusable containers

so that they are suitable for transportation. Although goods may come in a variety of
quantities and odd shapes, when stowed and shipped in containers of uniform size and
shape, they can be handled as one single shipment, making it far easier to transport. This
not only reduces time and cost, but helps protect the goods from damage and theft.

Containerisation also facilitates intermodal transport It is far easier to transport cargo from
origin to destination using different modes of transport - roadways, railways, shipping
or airlines - provided they are all equipped to handle and stow a series of containers
that conform to the same standards.

C o n ta in e r la n g u ag e
Full Container Load CFCL)

This term is most often misunderstood to mean that a shipper has enough cargo to fill
up a container to its full capacity. It would seem to make sense that a shipper would take
an empty container from the shipping line and stuff it exclusively with his own goods
before returning the container to the carrier as a FCL shipment. However, contrary to
popular belief, the container does not have to be full to be classified as a FCL. If the
shipper only has 10 m3 of goods and the container is less than half-filled, but he wants
the box exclusively for his own goods, this is still considered a FCL.

This is because one criterion for a FCL shipment is that the packing must not be done by
the carrier or a contractor of the carrier, but by the shipper, hauler or freight forwarder.
Strictly speaking, it is irrelevant to the carrier whether the FCL box is only quarter or half
full, or whether it is totally full of cargo.

To further emphasise and clarify this condition, the B/L issued for a FCL is usually claused
"Shipper's Load, Stow and Count".
 PART 2 Containers

It is also im portant to remember that a freight forwarder who consolidates various small
shipments into a container is regarded as a FCL shipper by the ship operator. As for port
container terminals, they consider whether or not the container enters the gateway in a
completely laden condition, ready for loading onto the vessel. If a ship operator were to
pack or consolidate its LCL shipments at a private depot outside the port, that particular
container would still be regarded as FCL by the port authority, even though the ship
operator and the various LCL shippers may be considered otherwise.

L e s s t h a n C o n t a in e r L o a d ( L C L )

If a shipper has 27 m3 of goods which will fit neatly into a 1 x 20' container, but for some
reason prefers the ship operator to pack all his goods into a container exclusively with
his own cargo, then it would be considered a LCL shipment.

The criterion is. once again, who packed the container. If it was the ship operator, then
the shipment is considered LCL, regardless of its size, or whether or not the container is
shared with other shippers. Even if the ship operator were to charge the shipper a FCL
box rate but still undertake the packing, the status of the box is nevertheless LCL.

The importance to the carrier whether a container is FCL or LCL lies in the carrier's
responsibility for the cargo: it is much greater for a LCL shipment. As the carrier has
already issued a clean LCL B/L, it may be held liable to the receiver, if the goods are
found to be damaged upon arrival and unpacking at the port of discharge.

Container Yard (CY)

The container yard is the area within the terminal where containers are stored, pending
either arrival of the vessel fo r loading, or pending arrival of the hauler for inward
delivery.

B/Ls issued by ship operators are normally claused "CY/CY” for FCL shipments, stating
which container yard the shipment has come from, and the point where the ship operator
takes over the container from the exporter. It also states the port of discharge, where
the ship operators deliver the containers to the importer. Letters of Credit (T-/Cs) which
call for the delivery at, say, “CY Singapore” or "CY Port” have the same meaning.

Container Freight Station (CFS)

The container freight station is the warehouse where LCL shipments are received by the
ship operator, while waiting to be either packed into containers for export or unstuffed
from containers for import.

B/Ls are normally claused “ CFS/CFS” for LCL shipments. This clause names the container
freight station of origin, where the ship operator takes over the LCL goods from the
Guides to International Logistics Seafreight Forwarding

shipper, and the corresponding port of discharge when the ship operator hands the
goods back to the importer.

Liner Terms

Liner Terms means that the freight costs (either paid by the seller or payable by the
buyer) is all-inclusive, incorporating all expenses in relation to the loading, carriage and
discharge of goods.

Shippers must clarify with the shipping line whether the freight quoted is liner or not,
especially in conventional shipping to the more relatively remote destinations. Generally
when dealing with containerised shipments on the major shipping routes, liner terms
will apply.

FIO (Free In/Out) Terms

When the freight rate is quoted as FIO, it means that the merchant (either the seller or
buyer, or both) has to, in addition to paying for the freight, cover all costs incurred by
the shipping company for the loading and discharge of the goods. A FIO quotation is
common in a charter party, when the ship owner is unfamiliar with or uncertain of the
operational port used and the stevedorage costs involved. It would also apply in barge
operations, where the barge owner does not want to incur the cost of hiring a shore
crane for loading or discharge.

In certain countries, such as Indonesia, it is common for B/Ls indicating the destination
as “an Indonesian port” to be claused “ Free Out”. This means that the shipping line will not
only collect the freight, but also bill the cargo receiver for the cost of the discharge.

Transhipment

Transhipment refers to the transfer and reloading of goods during transport from initial
point of loading to final destination. It includes transferring onto either the same mode
of transport or another mode of transport.

The most common problem faced by the liner agent is when the transhipment status of
an inward shipment is not declared to the port, so that the agent cannot benefit from
transhipment concessions. This is sometimes an oversight on the part of the international
freight forwarder or the trader, who is looking to reship the goods.

Although transhipment means the transfer of goods from vessel to vessel, with the
port serving as an interim storage centre, the main concern is: which party will be
responsible for arranging the transhipment, and ensuring that expenses incurred are
kept to a minimum? In general, the local agent of the ship operator, who has issued the
Through Bill of Lading (TBL), should do the coordinating and arranging. In the case of
 PART 2 Containers

the shipment being on a House TBL, then the agent of the NVOCC has to coordinate
the transfer from one ship operator to another, while ensuring that he still enjoys the
port's transhipment concessions.

W h a t is a c o n t a i n e r ?
Ocean freight containers are used in international freight movement. Containers include
bags, boxes, buckets, barrels. ISO containers, crates, trunks and others, which are for
transporting materials. General-purpose containers are large, enclosed rectangular or
square box-type cases (also called cube containers).

A standard container can carry up to 20 US tonnes when it is fully loaded. It can keep
shipments together while protecting the cargo from damage - due to the elements or
handling - and theft. They open on one side, allowing easy access for loading, stacking
and stowing of cargo. Many different types of shipping containers are available in
various durable materials, depending on their purpose. Their structures must be strong
enough to withstand the continuous rough handling that occurs throughout the entire
transportation process.

To suit individual requirements of the large variety of goods transported, most major
shipping companies offer a wide range of containers and even tailor-made containers, to
accommodate any cargo, from refrigerated goods to vehicles, dry bulk to liquid cargo.

H o w are c o n ta in e rs co n s tru c ted ?

Three main types of containers are used today: steel, aluminium and plywood or
fibreglass.

Steel

Steel containers consist of a steel framework with an all-steel cladding. They are sturdy
and fire resistant, but the steel’s brittleness means that these containers are susceptible
to tension damage. Also, with continual exposure to water and damp, they rust quickly
and require a general overhaul every five years.

Characteristics:

• Low material cost

• Easy to repair around the world

• High tare weight

• Susceptible to corrosion

• D ifficult to clean, owing to corrugated walls

Guides to International Logistics i ■ Seafreight Forwarding

Aluminium

Aluminium containers have a steel frame with an aluminium cladding. These containers
have a better tensile strength, as aluminium is lighter and more elastic. However, as
aluminium does not rust, any damage to the steel framework from exposure to salt water
is not always easily detectable, and this might result in the container being no longer
watertight, even w ithout any obvious signs of damage.

Characteristics:

• Low tare weight

• High material costs

• Easily deformed, very quickly dented

Plywood/Fibreglass

Plywood/fibreglass containers have a steel framework with the walls, doors and top
made of plywood, and an added waterproof coating of fibreglass. This not only gives
the container a greater tensile strength and elasticity, but also minimises condensation
and increases insulation of the box. On the downside, these containers are expensive
to produce and difficult to repair.

Characteristics:

• Easy to clean owing to smooth surfaces

• Strong and resilient, does not dent

• Moderate material costs

• Moderate tare weight

Container floors

The floors of containers are generally made of wood, either planking or plywood. This is
initially expensive, but has the following benefits and characteristics:

• Strong and resilient

• Does not dent

• Easily replaced during repairs

• Adequate coefficient of friction (im portant for securing cargo)

 PART 2 Containers

To comply with quarantine regulations and to obtain a phytosanitary certificate, required

by some importing countries, those parts of a container that are made from wood need
to be protected against insect infestation.

All containers used in international movements also need to conform to the International
Standards Organisation (ISO) norm, to ensure that its construction, fitting and dimensions
are guaranteed to be of the highest standard, regardless of where the container was
made or shipped from.

In addition, just as all ships must be registered, containers must also be registered
(usually Lloyd’s, Bureau Veritas, etc) to ensure that they comply with ISO and Container
Safety Convention (CSC) regulations.

S ta n d a rd c o n ta in e r specificatio ns
When considering shipping containers, their specifications have to be taken into account:
volume capacity, w eight capacity, tare weight, diameter, length, width and height.

Overall dimensions and corner castings are standardised, and minimum requirements
are laid down for internal dimensions, gross weight and the capacity of a container floor
to be able to carry a fork-life during the cargo handling.

According to ISO 668, containers may be utilised up to the following gross weights:

• 20' containers: 20,320 kg (44,800 lbs) - only valid for some container series;

• 20' containers: 24,000 kg (52,910 lbs) - according to the latest issue of ISO 668, valid
for most container series;

• 20' containers: 30,480 kg (67,200 lbs)

• 40' containers: 30,480kg (67,200 lbs)

The table on the following page gives the basic specifications of regular, non-specialised
containers in current use, but several factors need to be remembered:

• When calculating the volume for stowage, shell thickness must also be taken into
consideration.

• In general, it is possible to stow 25-30 m3 of cargo in a 20' container, 55-60 m3 in a

40' container, and 68-70 m3 in a 40' high-cube container.

• Whereas the outer dimensions of the container must conform to the ISO standard,
depending on the type of construction, the interior dimensions may vary. It is therefore
very important to obtain the exact measurements of the container before booking,
especially when transporting items where the dimensions are critical.
Guides to International Logistics c: Seafreight Forwarding

20' DRY FREIGHT CONTAINER 20' REEFER CONTAINER

L20' x W8' x H8'6" L20' x W8' x H8’6"
Interior: L5.919mm x W2,340mm x H2,380mm Interior: L5,428mm x W2,266mm x H2,240mm
Door Opening: W2,286mm x H2,278mm Door Opening: W2,286mm x H2.188mm
Tare Weight: 4.189 lbs/1.900 kg Tare Weight: 6,482 lbs/2,940 kg
Cubic Capacity: 1,165 ft3/33.0 m2 Cubic Capacity: 971 ft3/275 m3
Pay Load: 48.721 lbs/22.100 kg Pay Load: 53,043 lbs/24.060 kg

20' OPEN-TOP CONTAINER 20 OPEN-TOP/OPEN-SIDE CONTAINER

L20' x W8’ x H8'6" (with removable door header) L20' x W8' x H8'6" (with removable tarpaulin)
Interior: L5,919mm x W2.340mm x H2.286mm Interior L5,928mm x W2.318mm x H2.359mm
Door Opening: W2,286mm x H2.251mm Door Opening: W2,238mm x H2.278mm
Top Opening: L5.425mm x W2.222mrn Top Opening: L5.352mm x W2,118mm
Tare Weight: 4,799 lbs/2.174 kg Tare Weight: 5.118 lbs/2.775 kg
Cubic Capacity: 1,116 ftJ/31.6 m3 Cubic Capacity: 1,095 ftV31.0 m3
Pay Load: 48,117 lbs/21,826 kg Pay Load: 46,792 lbs/21,225 kg

20' FLATRACK CONTAINER 40 FLATRACK CONTAINER

L20' x W8' x H8'6" (high bed) L40' x W8' x H8'6"
Interior: L5.662mm x W2,438mm x H2,327mm Interior: Ll2.080mm x W2.438mm x H2,103mm
Tare Weight: 5,578 lbs/2,350 kg Tare Weight: 12,081 lbs/5,480 kg
Pay Load: 47,333 lbs/21.470 kg Pay Load: 55,115 lbs/25.000 kg

40’ DRY FREIGHT CONTAINER 40' DRY H IG H -C U B E CONTAINER

L40' x W8' x H8'6" L40' x W8' x H9'6"
Interior: LI2,045mm x W2,309mm x H2,379mm Interior: LI2.056mm x W2,347mm x H2,684mm
Door Opening: W2,289mm x H2,278mm Door Opening: W2,340mm x H2,585mm
Tare Weight: 6,799 lbs/3,048 kg Tare Weight: 6,393 lbs/2,900 kg
Cubic Capacity: 2,377 ft3/67.3 m3 Cubic Capacity: 2,684 ft3/76.0 m3
Pay Load: 60,397 lbs/27,396 kg Pay Load: 65,256 lbs/29.600 kg

40' OPEN-TOP CONTAINER 45' H IG H -CU B E DRY CONTAINER

L40' x W8' x H8'6" (with removable door header) L45' x W8' x H9’6"
Interior: Ll2,043mm x W2,340mm x H2,272mm Interior: L 13,582mm x W2,347mm x H2,690mm
Door Opening: W2,279mm x H2,278mm Door Opening: W2.340mm x H2,585mm
Top Opening: 1.11.585mm xW2.162mm Tare Weight: 8.598 lbs/3,900 kg
Tare Weight: 9,480 lbs/4.300 kg Cubic Capacity: 3.026 ft3/85.7 m3
Cubic Capacity: 2,260 ft3/64.o m3 Pay Load: 63,052 lbs/28.600 kg
Pay Load: 57.720 lbs/26.181 kg

40’ H IG H -C U B E REEFER CONTAINER 45' H IG H -C U BE REEFER CONTAINER

L40' x W8' x H9'6" L45' x W8' x H9'6"
Interior: L i 1,628mm x W2,294mm x H2.509mm Interior: L13,102mm x W2,294mm x H2,509mm
Door Opening: W2,290mm x H2,535mm Door Opening: W2,290mm x H2,535mm
Tare Weight: 9,766 lbs/4,430 kg Tare Weight: 11,464 lbs/5,200 kg
Cubic Capacity: 2,363 ft3/66.9 m3 Cubic Capacity: 2.663 ft3/75.4 m3
Pay Load: 61,883 lbs/28,070 kg Pay Load: 60,186 lbs/27,300 kg

40' COLLAPSIBLE FLATRACK CONTAINER 20' COLLAPSIBLE FLATRACK CONTAINER

L20' x W8' x H8'6" (with 4 foldable corner posts) L20' x W8' x H8'6"
Interior: L i 2,080mm x W2,126mm x H2,043mm Interior: L5,946mm x W2,126mm x H2,233mm
Tare Weight: 12,787 lbs/5,800 kg Tare Weight: 6,393 lbs/2,900 kg
Pay Load: 64.375 ibs/29.200 kg Pay Load: 59,746 lbs/27,100 kg
 PART 2 i Containers

Types of C o n ta in ers
Standard or box container CGP container)

Standard containers are also known as general purpose (GP) containers and are used for
all types of general (dry) cargo. They are closed containers; that is, they are closed on all
sides. Distinctions may be drawn
between standard containers with:

• doors at one or both ends;

• doors at one or both ends and

doors over the entire length of
one or both sides; and

• doors at one or both ends and

doors on one or both sides.

In addition, the containers also

differ in dimensions and weight,
resulting in a wide range of sizes,
though 20' and 40' containers are
the most common.

There are two-hinged doors on one end of the container through which the cargo is
loaded and unloaded, and the containers may be additionally equipped with the following
optional extras:

• Forklift pockets allow handling of empty containers with forklift trucks (packed
containers must not be picked up in this way unless specifically permitted), and
are installed in the bottom side rails of 20' containers, parallel to the centre of the
container. Forty-foot containers do not have forklift pockets, as the pockets are
relatively close together, and would make the containers more difficult to balance.

• Many 40' containers have a gooseneck tunnel (a recess in the floor at the front end
of the container), which serves to centre the containers on the gooseneck chassis.
These recesses enable the containers to lie lower, and be constructed higher.

• Generally, containers are handled by top spreaders that make use of corner fittings
or corner castings, but some containers have grappler pockets for handling by
grapplers.

• For transporting garments (especially in the East Asian import trade), special lashing
rings can be attached to the top side rail, to accommodate clothes rails on which
these garments can be hung. Additional lashing rings can also be installed on the
bottom side rail and corner posts.
Guides to International Logistics Seafreight Forwarding

• Plastic liners or inlets like bulk bags or liquid bulk bags may be suspended in standard
containers for transporting bulk cargo, such as malt, or for holding non-hazardous
liquids.

High-cube container

High-cube containers are used for the transportation of all types of general [dry) cargo,
but they are particularly suitable for lightweight, voluminous and over-height cargo, of
up to 2.7 m tall.

H igh -cu be co nta ine rs are sim ila r in

structure to standard containers, only
taller. In contrast to standard containers,
w h ic h have a m axim um h e ig h t of
2,591 mm (8'6"), high-cube containers
are 2,896 mm (9'6") tall, and are for the
most part 40' long, although they can
sometimes be as long as 45'.

A number of lashing rings, capable of bearing loads of at most 1,000 kg, are mounted
on the front top end rail and bottom cross member and the corner posts.

Many of the 40' containers have a recess in the floor at the front end, which serves to
centre the containers on the gooseneck chassis. These recesses enable the containers
to lie lower and therefore be constructed higher.

Hard-top container

Hard-top containers are used for all types of general [dry) cargo and are used primarily
for transporting heavy or over-height cargo. They are 20' or 40' long, and their structure
is usually made out of corrugated
steel, while the floor is made of
wood.

They have two typical distinguishing

s tru c tu ra l features. The firs t is
th a t th e ir steel roofs, w eig hing
approximately 450 kg C990 lbs), can
be lifted off by a forklift truck. In the
case of over-height cargo, the roof
can then be fastened to a side wall
on the inside of the container and
 PART 2 Containers

stored vertically, so that it occupies very little stowage space. But although the roof can
be removed, the head top cover keeps the inside weatherproof.

In addition, the door header may also be swivelled out, and these two structural features
greatly simplify the process of packing and unpacking the container, either from above
using a crane, or through the doors with overhead tackles.

The lashing rings to which cargo may be secured are found on the side rails, corner
posts and side walls. Those on the side rails and corner posts can take loads of up to
2,000 kg, while those on the side walls can take loads of up to 500 kg, provided that
the roof is closed.

Open-top container

Open-top containers are used for

all types of general [dry) cargo and
are used primarily for transporting
machinery, sheet glass, and other
heavy, bulky or long objects.

They are similar in construction to

the hard-top version, with walls that
are generally made of corrugated
steel, a wooden floor, dimensions
of 20' and 40' and a door header
th a t can be sw ivelled out. The
difference is that, instead of a rigid
roof, open-top containers have a
movable or removable cover made of tarpaulins, canvas, plastic or reinforced plastic
material, supported on movable or removable roof bows. These materials make the
inside weatherproof.

The roof bows do not solely support the roof, but also help to make the container more
stable. Flatracks (flat containers) are therefore more suitable for over-height cargo.

Both these structural features simplify the process of packing and unpacking the
container from above or through the doors by either crane or crab, when the roof is
open and the door header is swivelled out.

Lashing rings are installed in the upper and lower side rails and the corner posts, and
can take loads of up to 1,000 kg.
Guides to International Logistics Seafreight Forwarding

Flat container (Flatrack)

Flat containers or flatracks are

mainly used to transport heavy-
lifts and over-height or over-width
cargo, for example, project cargo.

They consist of a floor structure

w ith a high lo a d in g ca pa city,
com posed o f a steel fram e, a
softwood floor and two end walls,
and are available in 20' and 40'
sizes. The end walls can be raised
or folded down flat, and are stable
e n o u g h to a llo w ca rg o to be
secured to them. Several flat containers can also be stacked on top of one another.

Lashing rings are installed in the side rails, the corner posts and the floor. They can take
loads of up to 2,000 kg in 20' flatracks, or up to 4,000 kg in 40' flatracks.

Some types of 20' flatracks have forklift pockets, and the 40' flatracks have gooseneck
tunnels at each end. They are also sometimes equipped with lashing winches, with
lashing belts capable of withstanding loads of 2 tonnes. These containers may be fitted
with stanchions for transportation of certain goods.

Platform container CPIaO

P la tfo rm c o n ta in e rs are used

p r in c ip a lly fo r tr a n s p o r tin g
oversized and very heavy cargo.

The platform container is not so

much a container, as a platform
that heavy cargo can be lashed
to. It consists of a steel frame and
a wooden floor structure, and is
available in 20' and 40' sizes. It is
similar to the flat container, except that it does not have any side or end walls. The floor
structure has an extremely high loading capacity, which makes it possible to concentrate
very heavy weights on a small area.

The fittings on the top and bottom corners allow support, stacking, handling and securing
of the container. When platform containers are stowed alongside one another on vessels,
 PART 2 Containers

they form an “Artificial Tween deck”, and this large surface space is used for the stowage
of lumber or large machines, such as bulldozers.

Lashing rings are installed in the side rails and can take loads of up to 3,000 kg. The 40'
platforms also have a gooseneck tunnel at each end.

Ventilated container

Ventilated containers are used especially

for cargo that require ventilation during
transit, such as hides, w hich cannot
w ith s ta n d excessive m o istu re . One
of th e m ost com m on c o m m o d itie s
transported is green coffee beans, hence
its alternative name: coffee container. It
is also known as a passive (naturally)
ventilated container.

Generally, ventilated containers are 20' long, and are similar to dry cargo containers,
except that they are specially designed to allow natural or mechanical (forced) ventilation.
Although openings in the top and bottom longitudinal rails facilitate natural ventilation,
they are constructed such that they do not let in any rain or spray, so the container
remains weatherproof and the cargo does not deteriorate.

If active ventilation is required - that is, containers with adjustable ventilation - then
“ porthole” containers may be used, which simultaneously act as insulated or refrigerated
containers.

Lashing rings are installed in the upper and lower side rails and the corner posts, which
can take loads of up to 1,000 kg.

Bulk container

B u lk c o n ta in e rs may be used fo r
general cargo, but in particular they are
used for transporting bulk cargo, such
as malt, grain, foodstuff and spices.

These containers have three loading

hatches (manholes) in the roof, each
a b o u t 455 mm (1% ') in d ia m e te r,
spaced 1.83 m (6’) apart, measured
centre to centre. On the door itself.
Guides to International Logistics ■ Seafreight Forwarding

there are two discharge hatches which can be installed on demand, with short discharge
tubes for guiding the bulk cargo. Alternatively, two unloading hatches can be mounted
in the doorways, for emptying the containers.

Lashing rings are mounted in the topside rails for securing the cargo. Some bulk
containers are equipped with forklift pockets, which allow handling by forklift trucks.

Plastic liner bags or inlets can be suspended inside the containers for transporting of
bulk cargo.

Tank container

T an k c o n ta in e r s are u sed fo r
transporting liquid cargo that needs
to be kept at a constant temperature.

• Chemicals or hazardous materials,

such as fuels, toxic substances,
corrosion protection agents; and

• Foodstuff or potable liquids, such

as fruit juices, spirits and sweet
oils

Tank containers must be filled to least

80% capacity, to prevent any dangerous surging of the liquids while in transit. As a rule,
however, the liquids must not exceed 95% capacity, or there will not be sufficient space
for possible heat expansion.

Certain containers must be used for different types of liquids. Those containers intended
for all foodstuff must be labelled "PotatDle Liquids only", and some hazardous materials
must be transported in tanks w ithout inlets or outlets below the surface of the liquid.

Containers w ithout openings at the bottom are equipped for top discharge and can
only be used for pressurised discharges. They are generally designed for an operating
pressure of up to 3 bars above atmospheric, and the test pressure used is 4.5 bars above
atmospheric.

If the cargo requires the transportation to be temperature-controlled, then the tank

containers can be equipped with insulation or heating where the temperature of the
cargo can be precisely controlled via temperature sensors.

Due to the nature of the cargo, all containers must be cleaned before they are returned
to their owners.
 PART 2 Containers

Insulated container

In s u la te d c o n ta in e rs are fo r
transporting goods that must be
kept at a constant tem perature:
fruit, vegetables, meat and dairy
products [for example, butter and
cheese). They are classifie d as
either chilled goods or frozen goods,
depending on whether the transport
temperature required is above or
below freezing point.

The walls of insulated containers are made of polyurethane foam, in a “ sandwich

construction". The containers are available in 20' and 40' lengths. Although they are very
similar to refrigerated containers, they have no integral refrigeration unit, which frees
up extra space for more cargo. However, whatever external refrigeration capacity there
is must be able to compensate for the doors gradually losing their seal, which would
result in damaged goods due to water leakage or ice formation.

When insulated containers are stored on board, the interior of each container is supplied
with cold air via the ship’s central cooling plant. To ensure airflow, the cargo must be
stowed properly, allowing adequate space in the container. On the wall opposite the door,
there are air ducts on the floor and ceiling. Cold air is blown into the lower aperture and
circulated within the container, aided by the grating on the floor, the additional spaces
between the pallets and the corrugated container walls. The “warm ” air is then drawn
off from the inside of the container via the upper aperture, cooled in the refrigeration
unit, and recycled back into the container as cold air.

In the port, the container temperature is controlled by the refrigeration system of the
ship or terminal. Otherwise, as the insulated containers do not have their own integral
temperature display, the temperature can be controlled by “clip-on units”. The temperature
in the 20’ containers can range from +12°C to -25°C (+54°F to -8°F), and in the 40’
container from +13°C to -22°C (+57°F to -8°F), depending on the specifications of the
cooling device used.

Refrigerated ( R e e f e r } container

Refrigerated containers are essentially insulated containers, carrying similar cargo,

although apart from foodstuff and other perishables [such as vaccines), reefer containers
are also used to transport hazardous chemicals which need to be kept cool for safety.
Guides to International Logistics ■ Seafreight Forwarding

Airflow in a reefer container circulates

the same w ay as in an insulated
c o n ta in e r, b u t the re e fe r has an
integral refrigeration unit to control the
temperature. This bulky unit takes up
valuable space, causing loss of internal
volume and payload. It must also be
connected to the sh ip ’s o n-bo ard
power supply, so the number of reefers
that can be transported is determined
by the capacity of the ship’s power
supply system.

Power packs may also be used, but they run on large diesel generators and therefore not
only need to satisfy ISO requirements with regards to the dimensions of a 20' container,
but also take up precious cargo space. At the terminal, the containers can be connected
to the terminal's power supply system.

In the refrigeration units, the temperatures of the incoming and outgoing air are measured
and regulated. A controlled exchange of fresh air can be performed to remove metabolic
products such as carbon dioxide and ethylene, if transporting fruit. Digital or analogue
recorders can be placed in the container to monitor temperatures, and this data can be
displayed on the outside of the unit.

Refrigerated containers may be stowed above or below deck. The advantage of being
kept above deck is that they are kept cooler; however, they are exposed to strong solar
radiation, which can increase refrigeration capacity requirements.

C o n ta in e r m a rk in g s and w h a t th e y m e a n
Apart from the logo of the steamship line or leasing company that owns the container,
each container bears a series of numbers, markings and codes, which are needed to
distinguish them from one another, and ensure that they are delivered to the correct
destination.

The container number

The most important identifier is the “Container Number”, which is not only painted on
the outside of the container, but also engraved in a corner casting. It consists of various
parts, as described below.

For example; USLU 411308-7

 PART 2 Containers 85

The first three letters refer to the owner of the container - in this case, USL indicates
US Line. The fourth letter, U, denotes an ocean-going container. Following the prefix in
most cases is a six-digit number and a check digit.

Country of origin of the container

This code is found immediately beneath the container number.

For example: BER 2210

The first three letters denote the container’s country of registration. In this instance,
BER stands for Bermuda. The digits after the letter registration give the size and type of
container - 2210 would denote a 20’ x 8’ x 8’6” container.

Under the new ISO coding system, the four digits will be replaced by two digits followed
by two letters. The numbers will start with either 2 or 4, denoting the length of the
container. The letters denote the type of container.

For example:

Size Type Old C ode N e w C ode

20’ x 8' x 8’6” Open-top container 2251 22 OT

40’ x 8’ x 8’6" General purpose container 4300 43 GE

Railways registration number for Europe

The railway registration number is painted on the side of the container; it denotes the
registration of the container for certain railways in Europe. For example, in the code ICB7,
1C stands for Immatriculation Chemin de Fer, while B7 stands for France.

I C

B7

Customs approval

The Customs Approval mark shows that the container is watertight and sealed with the
appropriate locking devices, and has been approved by Customs.

APPROVED FOR TRANSPORT

UNDER CUSTOMS SEAL
I XT R/70-9508/76 I
TYPE M anufacturers No.
| 2210 | j 1 0 -5 0 7 /7 6 |
8 6 Guides to International Logistics Seafreight Forwarding

A u s t r a lia n s e a l fo r p ly w o o d c o n t a in e r

The Australian Seal confirms that the wood used in the construction of the container
conforms to Australian health regulations - that is, it has been treated to withstand
insect infestation.

DECLARATION OF WOOD TREATMENT

ALL EXPOSED TIMBER COMPONENTS IN
THIS CONTAINER HAVE BEEN IMMUNISED
IN AC C O R D AN C E WITH A U S TR A LIA N
HEALTH DEPARTMENT REQUIREMENTS.

serial no.

serial 110 .

owner code

country code v
classification
society
gross weight
tare weight
nett weight
cubic capacity

CSC plate

check digit
customs
approval piale
size/type code
owners piales
Container markings

H o w th e c o n ta in e r has facilitated
international tra d e
In the 1960s, when many seaports around the world relied on conventional (break
bulk) vessels for exporting shipments, cargo handling was a lot trickier. It needed to be
loaded onto a truck piece by piece and driven to a port. Then, at dockside, each piece
would be individually unloaded from the truck and transferred onto the ship. This was a
cumbersome, time-consuming process. Ships often needed to stay in port for as many as
10 days, just for loading and unloading. These long spells caused dockside bottlenecks,
slow turnaround times for the ships and delayed shipments.

All this, of course, resulted in high costs to the shipping companies and ports, and in
turn, the customers.
 PART 2 n Containers

With the advent of containers, shippers began stuffing their goods into these regular
shaped boxes and delivering them to the port container yard, where they could easily
be stored and loaded onto vessels, ready for shipment. The vessels could set sail again
w ithin a day or two, depending on the number of boxes that had to be handled.

As the use of containers in intercontinental traffic increased, congestion was decentralised

and shipping times decreased. But as one problem was solved, another was inevitably
introduced, so much so that not everyone has welcomed the container revolution. While
congestion on the docks and piers has been lessened, container freight stations and
terminals are finding that they can be hard pressed to deal with the huge volume of
cargo that is now being shipped. This problem is even more apparent in the smaller,
less equipped ports, where some operators have been resisting the call to invest in new
but expensive equipment, which is required to hoist containers on and off ships. Also
affected are those whose jobs have been threatened by the new technology, such as
the longshoremen who previously handled the cargo.

But despite efforts to stall progress, the advantages of containerisation were too powerful
to resist, and containers are now used in most seaports around the world. It is estimated
that a massive 90% of the w orld’s trade today is transported in containers, meaning that
over 100 million container loads crisscross the w orld’s oceans each year, in over 5,000
container ships.

It can be said that the rise of trade between the US and Asia is a direct result of
containerisation, which has reduced costs and transit times. Today, for example, a
standard shipment of goods takes just 17 days to travel from Hong Kong to New York,
as opposed to 50 or so days in 1970.

The rise in the use of the container has also had a considerable impact on the multimodal
and airfreight transport industries, as further explained in the other two books from this
series. The Practitioner’s Definitive Guide: Airfreight Forwarding and The Practitioner's
Definitive Guide: Multimodal Transport.

While the movement of ocean freight cargo by container has revolutionised international
trade, certain criteria must be met to sustain this mode of transportation, and to ensure
that it is utilised to its full potential.

• To meet ISO regulations for all containers used worldwide, to enable container traffic
to be handled intermodally, so that it can function as smoothly as possible.

• Where possible, maintaining an even container flow to try and avoid bottlenecks in
some parts of the world and empty thoroughfares in others.

• Avoiding where possible the movement of empty containers.

8 8 Guides to International Logistics Seafreight Forwarding

• Ensuring that those ports where container ships call at are fully equipped with all
equipment required for handling containers of all kinds, for example, cranes.

• Because container shipping is most beneficial in multimodal movement, there

must be an adequate and readily available supply of vehicles that are suitable for
transporting various kinds of containers, at the entry and exit points.

• Since the contents of a container cannot be visually checked, their use has
necessitated a worldwide information network that disseminates transportation
details: the type and number of the container and its contents, exit and entry ports,
particulars of the owner, who is responsible for planning the movement and the
route that the container takes. The importance of the freight forwarder’s role becomes
crucial and more obvious at this point.

T h e futu re of c on tainerisation
It is estimated that container traffic around the world will continue to grow at an average
of 5°/o per annum over the next 10 years.This has to be, in many ways, attributed to the
huge growth of many Asian countries, the most notable being China, Japan, Korea and
Malaysia. As China leads the way with a boom in exports, Asian trade looks to continue
rising steadily. In addition, the Latin American economy has become stronger; a further
growth of the container trade looks inevitable.

These positive signs are encouraging many lines to push forward with massive expansion
plans, not only with the number of vessels that are being built, but also with improvements
and increases in their size and the specifications, to meet industry demand.

Of course, to accommodate these larger ships, ports will also have to engage in some
massive expansion plans of their own. Singapore, already one of the busiest and best-
equipped ports in the world, is said to be looking to increase its draught to 21 metres,
which will only add to the competition that exists already between Singapore and Hong
Kong, the world’s other leading port.

To stay competitive, ports must meet the requirements of the Suez Max and Malacca
Max vessels. This calls for not only a much deeper channel than presently found in most
ports, but also demands much higher levels of productivity, technologically advanced
information and communication systems, and improved handling equipm ent such as
larger cranes with a reach of more than 25 TEUs.

While the current productivity level required to keep a 6,000-TEU vessel on schedule
is around 75-100 TEUs per hour, leading ports are set to start increasing productivity
levels to 200 moves per hour - this is necessary to turn around a 8000 TEU vessel in
less than 24 hours.
 PART 2 Containers 89

The container world is being challenged by the following:

• Paradigm shifts and structural shocks in the world economy.

• D ifficulty in assessing freight transportation due to changing m acro-econom ic

conditions of the global economy.

• Growth in GDP, industrial output and external trade are commonly featured as
explanatory variables in forecasting models on maritime container flows.

• Comparative advantages re shifting rapidly leading to de-industrialisation in North

America and Europe, relocation and re-industrialisation of Pacific Asia.

• Global re-organisation of production, distribution and consumption are taking

place and the relation between economic growth and growth of containerisation is
increasingly dislocated.

• Container transport system is intertwined with distribution patterns of value added

creation within the logistics network.

T h e i m p o r t a n c e o f i n la n d c o n t a i n e r d e p o t s
In the early days of containerisation, the continual stream of empty containers being
moved back and forth between shipments wasted both valuable time and money. Empty
containers had to be transported from the port to factories inland, to be loaded with
export shipments, while empty imported containers had to be returned to the ocean
port, once they had been unloaded at their final destination.

To avoid this constant movement of empty boxes, and to save unnecessary costs, inland
container depots were established, to act as “agents" for steamship lines or leasing
companies, which own the containers. With advances in technology, inland container
depots have now assumed an even more im portant role in the transportation process.
They carry out the following tasks:

Checking

When an empty container initially enters the depot, it is given a thorough inspection to
check for any existing damage or contamination.

Reporting

The container owner is informed of the container’s arrival in the depot. This is done by
telex, fax, email or by special interchange forms, depending on the company involved.
The codes and numbers on the container make it possible to accurately log, track and
deliver each container.

Any damage or contamination that has occurred during transit will also be reported to
the owner.
9 0 Guides to International Logistics Seafreight Forwarding

Repairs

Repairs to the containers must conform to rigid criteria, to ensure that Customs approval
standards are met; these standards are governed by international regulations.

General maintenance

All containers require maintenance, to make sure that they remain in a suitable condition
to withstand rough handling. Reefer (refrigerated] containers, in particular, require
constant maintenance - the cooling systems must be regularly checked, the diesel tanks
refilled, the gas cylinders changed and the batteries recharged or replaced. Should any
of these checks not be carried out correctly, it could result in damage to goods.

It is also the depot's responsibility to make sure that every container undergoes regular
CSC tests every two years.

Storage

The empty containers remain in storage in the inland depot until they are required.

Disposition

The depot may also undertake the responsibility of stuffing and de-stuffing of the
containers, if requested by the line or forwarder. The depot is also responsible for
providing a railcar or truck to move the container to the port.

Other responsibilities

The depot acts in an advisory capacity on all technical matters relating to the containers
that it stores.

C o n t a i n e r le a s in g
M any containers are needed to facilitate the enorm ous am ount of cargo that is
transported around the world every year. For example, liner operators that use the trans-
Atlantic trade route must own at least three sets of containers for each of its vessels:
one for operations in Europe, one for North America and one for the high seas. With
the high cost of each container, this can be costly for those steamship lines and larger
forwarding organisations that own their containers outright.

To solve this problem, some companies lease out “no-name" containers for set periods
(short- or long-term), to ship owners and forwarders, or directly to shippers.

NVOCCs that operate on the Trans-Siberian routes work almost exclusively with leased
equipment; many lines - often newly established, independent lines - prefer to lease all
their equipment instead of owning their own containers.
 PART 2 Containers

The advantages of leasing are:

• Containers may be leased out immediately, as soon as a shortage becomes apparent;

• Containers may be returned once a line can again cover its needs with its own
equipment; and

• A line does not need to tie up too much of its capital, or invest heavily in buying its
own equipment.

One-way lease

A one-way lease from Vancouver to Yokohama would involve the container being
originally leased from a depot in Vancouver, and then being returned to the lessee’s
leasing depot in Yokohama.

Round trip lease

The container would be returned to the depot from which it was originally leased, as
in the case of the Europe/Canada/Europe movement. This type of lease is the only one
that can be used for those routes where there is no return depot at the container's final
destination.

Short lease

The leasing of a container for 60 to 90 days.

Long lease

The leasing of a container for two to three years, or more.

Master lease

M ost steamship lines have a master lease contract w ith a leasing company. The
difference between a one-time lease contract and a master lease is that a master lease
is a continuing arrangement, where more containers can be added to the lease contract
when needed, simply by both parties executing a new contract

Following the completion of a leasing contract, and upon the containers’ return to the
leasing company, the leasing company will make a report, known as the EIR [Equipment
Interchange Receipt], in which the following information is given:

• Date/place of pick-up

• Lessee

• Descriptions of contents

• Condition of container
9 2 Guides to International Logistics Seafreight Forwarding

Leasing c o m p a n ie s
Leasing companies have in many ways become pioneers. They have played an enormous
role in the progression of container services, particularly in developing countries,

The following leasing companies are the leaders in their sector and are all members of
the Institute of International Container Lessors, which own 90% of the leasing market.

Beacon Intermodal Leasing, LLC BEACON vwvw.beaconintermodal.com

CAI International, Inc. CAI www.capps.com

Cronos Ltd CRONOS www.cronos.com

Direct ChassisLink Inc. DCLI www.chassislink.com/default.aspx

Dong Fang International Asset Management Ltd DONG FANG www.dongfang.com.hk

Flexi-Van Leasing. Inc. FLEXI-VAN www.flexi-van.com

Florens Container Services Company Ltd FLORENS www.florens.com

Seaco SEACO www.seacoglobal.com

SeaCube Containers LLC SEACUBE www.seacubecontainers.com

TAL International Container Corporation TAL www.talinternational.com

Textainer Equipment Management (IJ.S.) Ltd TEXTAINER www.textainer.com

TOUAX Container Services TOUAX www.touax-container.com

TRAC Intermodal TRAC www.tracintermodal.com

Triton Container International Limited TRITON www.tritoncontainer.com

To manage the imbalance in the companies’ container supply, the leasing companies
include drop-off and pick-up charges in their leasing agreements.

A Damage Protection Plan CDPP) is also taken out on most leased containers, to cover
damage caused while in transportation. However, the cost of repairs caused by damage
from normal wear and tear [rust holes, etc) need not be borne by the lessee.

Th e e c o n o m ic im p o rta n c e of con tainers

For the merchant

The use of secure containers has meant that goods are far less likely to be either damaged
or stolen en route, as compared to if they were stored loose. The merchant also saves on
packing costs, and can expect a fast door-to-door transit time. Several disadvantages
of using these containers are the restrictions on the storage size for bulky or irregularly
shaped cargo, and the difficulty in not being able to fill the container to full capacity.
 PART 2 Containers 93

For the freight forwarder

Containerisation has enabled the freight forwarder to consolidate cargo and act as an
NVOCC, although ship owners now wish to arrange their own land transport, which was
previously the forwarder’s domain.

For the ports

Newer and more efficient cranes are now being used as container handling equipment
in the ports, in place of more conventional handling methods. This has made it possible
to achieve much faster turnaround times for loading and unloading of vessels. Ports
are able to handle a far greater volume of cargo, with greater efficiency in the use of
manpower. This is especially apparent in the ports of more industrialised nations, where
the scale and volume of imports are noticeably higher.

For the shipping lines

Containerisation has cut dramatically the length of time taken for cargo to be discharged
and loaded in the port, resulting in a much faster rotation time. Ship owners gain a much
higher financial return on this “down time". On the negative side, it has meant high capital
investment, few balanced trades, much costlier land transport solutions and difficulties
in controlling, tracing and maintaining the large number of containers.

For example, the ship owner would have invested a huge amount of money, broken
down roughly as follows:

The vessel (3rd generation) = US$50 million plus

5,000-7,000 TEUs @ US$3,000 = US$15 to 21 million

Plus additional chassis, special containers and handling equipment, etc.

To deal with these high costs involved, the traditional liner operators have formed groups,
or consortia.

For the railways

With the enormous investments required, many railways have converted from the old
conventional dispatch methods to containerisation, by setting up new container terminals
and buying modern (double stack) container railcars and road vehicles for combined
transport movements.
94

6 CargoGears and Handling

Equipment

The handling equipment used in ports, ships and warehouses is designed to

deal with specific and specialised operations. However, the basic principles
of materials handling must still be applied, to ensure that safety measures
are always enforced, to guarantee total efficiency at every stage and in every
department.

P r in c ip l e s o f m a t e r i a l s h a n d l i n g
Everyone involved, from the ship’s officer and the terminal manager, to the operations
executives and the stevedore, should be aware of the following principles, and adhere
to them.

Equipment terminal time

The equipment needed to handle the shipments is a costly investment for the owner,
and is only profitable when it is actually being used to move cargo. The shorter the
length of time taken for loading or unloading, the greater the efficiency of the materials
handling equipment.

Unitisation

The bigger the unit to be handled, the more efficient the materials handling becomes.
Dealing with a large barge, pallet load or container is easier for the equipment than
smaller, separate, or oddly shaped cargo.

Improved flow - the straight line

This idea follows the basic law that the shortest distance between any two points is
always a straight line. While motion is money, the most economical flow for materials is
for it to be moved in a straight line. Efficiency is therefore increased by the elimination
of switchbacks and vertical movement.
 PART 2 Cargo Gears and Handling Equipment

A switchback occurs when the wrong cargo has to be moved back to the warehouse
from the stuffing point to be substituted with the correct cargo, often due to oversight
when reading the labels for identical cargo.

Vertical movement occurs when the crane operator has to remove containers in a
particular stack, in order to retrieve a container at the bottom. This would be a result
of the truck being loaded in the wrong sequence when the containers were collected
from the yard.

These are consequences of poor planning in materials handling, and can easily be avoided
with more care and proper attention throughout the entire handling process.

Safety

It is a challenge to integrate high productivity with economy, and safety can sometimes
become less than the number one concern. But while it is agreed throughout the industry
that safety awareness is necessary, too many people fail to observe safety guidelines,
even when using potentially dangerous materials handling equipment.

Guidelines such as no smoking in the terminal or warehouse, and always using safety
gear - helmets and special protective eye glasses, especially for hot works - are there
to prevent serious accidents, and it is imperative that they are adhered to.

When using any type of heavy handling equipment, there are five basic guidelines that
employees must always follow to ensure safety:

• Know how to properly operate the equipment you are using.

• Do not use heavy machinery when you are drowsy, intoxicated, or taking prescription
medication that may affect your performance.

• Use only equipment that is appropriate for the work to be done.

• Inspect your equipm ent to ensure that it is in good w orking condition before
beginning a job. In addition, ensure that regular inspections and maintenance are
conducted as appropriate.

• Do not stress or overload your equipment.

Mechanical equipment

Machines are the most economical and efficient way to handle large and heavy units,
which obviously requires working against the laws of gravity. Mechanisation not only
speeds up the process, which saves time and money, but also reduces the strain on
workers.
9 6 Guides to International Logistics Seafreight Forwarding

Standardisation

After many years and much experimentation, the conclusion is that it is more cost-
effective for all ports to use the same handling methods and standardised equipment.

Repair and maintenance costs could be reduced, as fewer spare parts would need
to be held in stock, and the training of workers to handle the equipment would therefore
become easier and less expensive. This would lead to ports being able to handle all types
of cargo far more quickly and efficiently, reducing problems with identified bottlenecks,
and saving money for all involved.

Maintenance and repair

It is actually cheaper to carry out regular maintenance on machines and equipment, and
anticipate the need for repairs and replacements, than to wait for them to break down,
which would prove far more costly in lost working hours and long delays.

Coordination of handling and movement

The most effective way of saving and making money is realised only when the handling
and movement of materials is fully coordinated.

If the handling or transportation process is not carried out correctly, or the handling and
movement of materials are not fully coordinated, then costly delays will occur.

For example, if a ship arrives at port and is unable to berth in time due to the port being
congested, then costs will increase significantly for all parties affected. Similarly, if a truck
is waiting at the warehouse, but the cargo is still in the stack waiting for the forklift driver
to deliver the cargo to the truck, this delay will increase costs. This can be avoided if the
cargo is ready at the loading point before the truck even arrives at the warehouse.

Making the organisation handling-conscious

To ensure full cooperation from all staff involved in the handling process, they must
totally understand the philosophy of materials handling. They have to realise that the
less the materials are handled, the better the system works - extra or excessive handling
of goods has a negative effect. Above all, motion is always money.

M a te ria ls h an d ling e q u ip m e n t
Port Equipment

Each of the various types of equipment required in the handling process plays a key role.
For optimum efficiency, all this equipment needs to work together. The most common
lifting gear today is the gantry quay crane, which forms the bulk of the handling equipment
 PART 2 Cargo Gears and Handling Equipment

found in modern container terminals. In the PSA Corporation terminals in Singapore, for
example, there are about 200 gantry quay cranes in operation.

To support the quay cranes, tractors, forklifts and yard cranes or transtainers are deployed
in the container yard. The yard cranes lift the containers off the trucks and place them
in the stacking yard. Tractors transport the containers between the yard and quay crane.
Forklifts - otherwise known as high stackers - are deployed for the stacking of the empty
containers at the yard.

With the building of mega-sized container ships (post-Pan a max vessels - meaning
that they cannot cross the Panama Canal], ports around the world have been forced to
upgrade. Gantry cranes need to be bigger in order to handle larger vessels, and harbours
themselves have to be dredged up to 13 metres deep, to accommodate berthing vessels.
Yard cranes will also have to be upgraded or replaced by container bridge gantries,
which can handle a much bigger volume of materials at higher speeds.

Vessel’s handling equipment

Modern container ships are virtually gearless. When it comes to container handling,
they depend largely on port gantry cranes for all loading and discharge operations.
Semi-containerised ships still need to use their on-board derricks to load and unload
containers, although this takes much longer as compared to when port gantry cranes
are used.

In the area of break bulk cargo, a large variety of cargo gears are used for handling
different types of goods.

C arg o h an d ling gears

Lashing of containers on board the ship

Container ships often have to withstand bad weather out at sea. so it is imperative that the
owners ensure that the containers on deck are securely fastened down for the duration
of the voyage. Given the nature of these container ships and the way the containers
are stacked up on deck, how well the containers are secured is the most crucial part of
the whole loading process. With this in mind, manufacturers of container-securing and
lashing systems have been making great improvements.

The most common systems are the locking and lashing systems.

The locking system is suitable for relatively lightly loaded containers that are stacked no
more than two high. The locking is achieved through fittings such as tw ist-lock stackers
and stacking cones.
9 8 Guides to International Logistics Seafreight Forwarding

The lashing system, which can work with wire rope, rigid rods or chains, or a combination
of all three, is used in conjunction with various tensioning devices, such as turnbuckles.
Diagonal lashing is usually preferable to vertical lashing, as it provides a greater anti-
racking strength - prevention of sideways movement.

Cargo gears for conventional ship operations

The most important materials handling equipment on the quayside is the sling, a device
that is attached to the cargo or its container for the purpose of hoisting it on board the
ship. There are many different types of slings; some are "general" and can be used on
many different types of cargo, while others are “special” slings and can only be used
for handling specific types of cargo. When choosing which sling to use, several factors
need to be taken into consideration. The main objective should be moving the cargo,
while ensuring the maximum level of safety to all those involved. However, one must also
consider which sling will cause the minimum amount of delay both on the ship and on
the dock, and which will cause the least amount of damage to the cargo.

Endless fibre rope

One of the more commonly used slings is the

endless fibre rope sling, which is made of sisal
or manila material. It is most suitable for the
handling of bagged cargo, such as coffee or raw
sugar, but should not be used for moving bags
of refined commodities, such as refined sugar,
flour or bags of cement. This is because certain
goods are unable to withstand the pressure that
is exerted on them by the sling; a bag of cement
lifted by an endless fibre rope sling would inevitably split and spill its contents. These
slings should also not be used to hoist small cases or cartons, or any steel products.

Platform or pallet sling

The platform or pallet sling is the most

widely used sling in those ports where
forklift trucks handle pallets. It consists
of a steel platform on which the pallets
are stacked. The four chains from the
spreader keep the sling from putting
pressure on the cargo which is piled on
the platform. Platform or pallet slings
are suitable for almost all types of cargo.
 PART 2 Cargo Gears and Handling Equipment 99

including cartons, crates, cases, bagged goods, cylinders, barrels, drums, furniture and
short lengths of lumber or pipe.

Cant or chime hooks

Cant or chime hooks are used exclusively for hoisting drums or cask-type containers,
several at a time. They consist of two flat hooks that run freely on a wire or chain sling.
The hooks are put under the chime of casks and the weight - which prevents unhooking
- is sustained by the chain sling or wire.

Fibre rope net sling

The fibre rope net sling is used for the handling and
loading of bagged goods, mail, single cases and heavy-
duty drums, among other cargo. They can also be used
for loading bulk products, such as Brazil nuts or fertiliser,
if they have first been lined with canvas. However, they
should not be used for the general handling of crates
and cases; the excessive pressure exerted on the sling
will eventually cause damage to both the sling and the
cargo it holds. This type of sling is also not suitable for
moving lightweight drums - some degree of leakage is
almost certain.

Wire rope net sling

The wire rope net sling is most commonly used

for the handling of rubber bales, but also has
some other special uses, including the handling
of bagged cargo such as pepper, cocoa, spices
and resins.

Chain slings

Chain slings are used for the handling of steel plates,

and project cargo. When the plates are extremely
long and limber, more than one pair of chain slings
should be used.
100 Guides to International Logistics Seafreight Forwarding

Pallets

A pallet is a raised platform, normally made of wood, on which supplies are loaded and
transported, often stacked in units. They are specially designed for use with the forklift
truck fbut are also used with cranes and other transporting equipment}, and have
become a very important piece of material handling equipment. They were developed
after the appearance of the platform skid, but as they are lighter and shorter than the
platform skid - which is used for terminal work - they are better suited to being quickly
and easily tiered w ithout the use of dunnage.

“ Dunnage” applies to any material used for protecting cargo, or holding it in place, during
shipping by any type of carrier. Materials used include wood blocks, timbers, separating
forms, bulkheads, double floors, or any other type of brace or support structure.

There are four types of pallets used in shipping:

The stevedoring pallet

The stevedoring pallet needs to be made out of heavy and durable material, such as steel
or aluminium. They are used to handle cargo on marine terminals, and therefore must
be able to withstand a good deal of rough treatment and exposure to the elements. With
the many different types of cargo that can be found in marine terminals, a number of
different pallet sizes are used, to ensure that all commodities can be accommodated.

The 4' x 6' pallet is preferred for larger and bulkier packages, such as furniture and
general household goods, while the 4' x 4' pallet is generally used for smaller packages.
As pallets are fairly expensive, it is important that they are all individually marked with
the name of the stevedoring company, and accounted for after the operation is over.

The shipping pallet

To maximise space and m inimise w eight, the storage space needed to fit in the
shipping pallet in connecting carriers, and the stowage in the ship, have to be taken
into consideration. The shipping pallet is not loaded, unloaded or handled as much as the
stevedoring pallet, and can be made with smaller scantlings throughout. These restrictions
have led to the creation of a few standard sizes, the most economical size being either
the 4' x 4' or the 40" x 48" type, both of which are smaller than the stevedoring pallet.

The warehouse pallet

The warehouse pallet is used to receive and store commodities in a warehouse for long
periods: anything from a couple of months up to several years. The pallets need to be
 PART 2 ■ Cargo Gears and Handling Equipment 1

made of strong and durable material, as they are left in storage and usually stacked
three high.

The factory pallet

The factory pallet is used for handling large volumes of special materials such as
photocopiers, TV screens, drums or bags of special chemicals. Most of the cargo is
strapped to the pallet and shrink wrapped.

While the pallet can be used during the actual manufacturing work on some of the
materials, a study must be carried out in every case, to ensure that the most suitable
pallet is used for the entire procedure.

B e n e f i t s o f p a l l e t i s e d lo a d s vs lo o s e c a r g o
Studies have shown that it can take nearly three times as many man-hours when handling
loose cargo as compared to handling palletised cargo. The uniform shapes and sizes of
the pallets also make them easier to move, lift and store than irregularly shaped items.

The benefits of palletisation are felt by the shipper, ship owner and the consignee, and
also by the stevedore. The stevedore should share some of the costs, which might be
done by reducing the charges to the ship owner and the shipper. The cargo insurer or
the underwriter would certainly benefit from palletisation, as it reduces the likelihood
or opportunity for theft or damage to the individual containers.

Advantages of Palletised Loads

• Less manual labour and fewer working hours are required in the handling of palletised
materials at all terminals.

• Pilferage and dam age to ind ivid ua l co nta ine rs is less likely to o ccur w ith
palletisation.

• Money can be saved on packaging for some materials - if the products are palletised
properly, packaging may be eliminated.

• Labelling costs are greatly reduced; on some palletised loads, only one or two labels
or stencils are required for identification. This is often overlooked and may not be
counted as being part of the shipping cost, because a shipping clerk applies the
labels.

• Working with pallet loads not only requires less men than are needed when working
with loose cargo, but also ensures a much safer operation. There are fewer accidents
in the workplace, resulting in savings on insurance premiums.
102 Guides to International Logistics Seafreight Forwarding

T r a c t o r - t r a i l e r vs f o r k l i f t t r u c k a n d p a l l e t
The two main combinations of materials handling equipment best suited for hauling
and handling are the tractor-trailer combination and the forklift-pallet combination. The
former is essentially intended for a hauling operation, whereas the latter is a handling
combination.

Studies have shown that it does not make economical sense for a forklift truck to make
a run of 1,000 feet when carrying only one pallet load: a tractor can haul four to six such
loads, as the forklift truck loads other trailers simultaneously.

The forklift truck

The forklift truck is the most commonly used piece of handling equipment. It is extremely
flexible, handling loads on either skids or pallets, for which it is best adapted. The loaded
pallet is supported on a pair of parallel bars or forks, which are thin and slightly bevelled.
These are attached to the truck with a sturdy frame, making them protrude in front of
the truck body itself. The forklift truck can be modified to handle some commodities,
such as rolls of paper, bales and lumber, even w ithout the use of a pallet.

It may be powered with electricity, gasoline, or a diesel or LPG engine.

The capacity of the forklift truck

The capacity of a forklift truck may be stated as a given weight, with the centre of gravity
a given distance from the heel of the forks.

For example, if it is 4 tonnes at 0.5 metres, the truck will be able to carry a maximum
load of 4 tonnes with the centre of gravity no more than 0.5 metres in front of the heel
of the forks.
 103

7 Cargo Packing and Damage

C o n d it io n s t h a t a f f e c t c a r g o d u r in g
tra n s p o rta tio n
There are many guidelines outlined by the International Maritime Organization [IM O] and
the International Labor Organization OLO] that must be adhered to when considering
the packing and storage of cargo for transportation by sea.

These vessels have to endure strain ranging from gentle pitching and rolling to heaving,
surging and swaying brought on by heavy storms. The long-term effects of all these
combined forces exerted on the ship and its cargo are far greater than any external
pressures that would ever be borne by the cargo while being offloaded.

Unpredictable weather and stormy seas are not the only scenarios that need to be taken
into consideration when the cargo is being packed and secured. When vessels undertake
long journeys that will take them through different climates, the temperature variance
can affect the internal conditions of the container.

In the southern hemisphere, the vessel would be confronted with extreme winter weather
conditions, which would place additional stress on the structure of the ship.

In the case of hot and humid areas, they can cause condensation and sweating of the
cargo or the internal surfaces of the container. This can damage the cargo, particularly
perishable food products, which therefore require specialised packing techniques.

V is u a l in s p e c tio n o f t h e c o n t a i n e r p r io r to
p a c k in g
The first step to ensuring that cargo arrives in the best possible condition is making sure
that the container is well-m aintained and structurally sound.

Inspecting a container for structural damage requires a trained and competent eye, but
a certain amount of common sense and discretion are useful when checking the general
104 Guides to International Logistics - Seafreight Forwarding

cleanliness and acceptability of the container. Whether it is a FCL or LCL shipment, it

is a good idea to carry out a thorough inspection of both the container’s interior and
exterior, before stuffing and after unstuffing.

The following may be used as a guide to inspecting a container before packing, which
can help to minimise cargo damage.

Checking the exterior of a container

The structural strengths of a container depend largely on its main framework, comprising
the corner posts and fittings, the main longitudinals and the top and bottom end transverse
members, which form the end frame. If there is evidence that any of these components
are faulty and are weakening the container, then it should no longer be used.

The walls, floor and roof of the container should be in good condition and not significantly
distorted. These can become damaged or torn if the cargo is badly packed and shifts
during handling, storing or transportation.

The container doors should be in good working order, with no broken or distorted door
hinges or locks. They should be capable of being securely locked and sealed in the
closed position. The closed-door gaskets and weather strips, which act as a secure seal
to protect the contents of the containers, must be good condition and regularly checked
for wear and tear. The driver who delivers the stuffed container checks this by closing
the container door to ensure that it can be securely locked, before taking delivery of
the container from the depot.

All containers should bear a current, valid Safety Approval Plate from the International
Convention for Safe Containers (CSC).

Any irrelevant labels or placards on the outside of the container referring to the previous
cargo should be removed.

Where containers are fitted with removable roof tilts or canvas covers, they need to be
equipped with tilt wires and regularly checked to ensure that they have no tears in the
fabric and that they are in a satisfactory condition, and are capable of being secured.

Open-top containers must have all roof bows (supports) in place. If the roof is retractable,
these bows must be checked to ensure that they slide smoothly to the ends of the
container.

Checking the interior of a container

The container must be thoroughly cleaned out between trips, leaving no traces of
sweepings, dust, grease or liquid. It must be dry and free of sweat or frost.
 PART 2 Cargo Packing and Damage 105

The container must be free from major damage, including broken moorings or protrusions
such as nails, bolts, special fittings, etc. These could damage the cargo, and could also
injure people involved in stuffing or unstuffing the container.

The interior of the container must be 100% weatherproof against wind and water, to
prevent the cargo from damage. Previous patches or repairs should be carefully checked
for possible leakages. In addition, potential points of leakage in the walls, roof and floor
can be best checked by closing both doors of the container and looking for spots of
sunlight entering; if light can enter, so can water. Of course, care must be taken while
doing this check, to ensure that no one gets locked inside the container.

The container must be free from residue and persistent bad odours, which may be left by
previous cargo; this could taint delicate goods that are later packed into the container. It
is best to carry out this inspection immediately upon opening the doors, when lingering
smells are at their strongest. Containers with debris shall be swept clean, while dirty
containers shall either be washed with water or chemicals.

The container must be checked to ensure that there is no infestation or any evidence
of pests, insects or rodents, which could possibly lead to contamination of cargo and
cause problems, especially if the shipment is being delivered to a country with strict
import regulations.

Cargo tie-downs, cleats or rings provided in the container should be in good condition
and well anchored.

Any recommendations or instructions posted inside the container must be observed

and followed.

S t o w a g e p la n n i n g
Before packing the container

It is important to prepare a pre-stow plan before commencing stuffing, so that the

order of packing and the positioning of all items to be included can be agreed upon
beforehand. That way, it is possible to produce a tight or secured stow, which prevents
movement that could damage the cargo or the container. The compatibility and nature
of all items of cargo with the types and strengths of packages or packaging need to be
taken into account, and the possibility of cross-contamination by odour or dust, as well
as physical or chemical compatibility, should be considered.

A container that is ready to be packed should be rested on firm, level ground or on a

railcar or trailer, to ensure that it is balanced and does not tip over with the additional
w eight of the cargo. When the cargo is loaded on a trailer, especially if a forklift truck is
106 Guides to International Logistics t Seafreight Forwarding

used, extra care should be taken to ensure

the trailer cannot tip during loading. It is
advisable to prop up the trailer and make
sure that the brakes are securely applied,
and that the wheels are choked.

The final total weight of the packed cargo

must not exceed the allowed payload on
the container, which will be marked on
the container itself. This ensures that the
permitted maximum gross w eight [which
includes the payload) for the container -
stated on the CSC Safety Approval Plate
- will never be exceeded.

Besides adhering to the load limitations

on a container, as m entioned above,
when planning a projected route that
the container will follow, it is im portant
to take into account and com ply w ith
any limitations that may be dictated by
regulations or other circumstances.

For example, there may be weight or size limitations for the lifting and handling equipment
used, and roads may have certain restrictions on the height and w eight of vehicles. This
limit may be considerably less than the permitted gross weight - concerns should always
be discussed with the container operator ahead of time.

Containers are generally designed with the assumption that the cargo, and therefore
its combined weight, will be evenly distributed over the entire floor area. If the cargo
or packaging calls for a substantial deviation from this uniform style of packing, then
specialist advice must always be sought.

When transporting a heavy indivisible load in a container or a vehicle, the localised weight
bearing capability of the container must be considered. If it is deemed necessary to spread
the w eight over a larger area than the actual bearing surface of the load, then timber
bulks can be used to secure the cargo. In this case, forward planning has to be done
ahead of the actual packing itself, so that the necessary preparations can be made.

If transporting cargo in an open-topped or open-sided container, where the actual size

of the goods is larger than that allowed by the container’s overall dimensions, special
arrangements must be made on how the cargo will be packed and secured safely.
 PART 2 • Cargo Packing and Damage 10 7

When heavy cargo is to be shipped, the container operator should be consulted if it is

impracticable to have the centre of gravity in or near the centre of the horizontal plane
of the container, or if the cargo will be above the half-height. If the centre of gravity of
the packed cargo is higher than recommended, then the stability of the container will
be greatly reduced, which could potentially result in accidents and damaged goods.

Consideration should be given to any potential problems which may be created and
have to be dealt with by those who will unpack it upon delivery. Cargo in the container
should be stowed and choked properly, as bad weather conditions may have caused
stored items to shift and become loose during the sea voyage, a potential hazard to
those unpacking. In the case of cargo that is packed horizontally in rolls, such as paper
rolls, pipes and carpet materials, extra care must be taken to reinforce the front end of
the container with cross bars. These would prevent the cargo from collapsing when the
container door is opened at the destination.

Packing and securing

Any vehicle, cargo unit, or non-standardised cargo can only be effectively secured
during packing if there are a sufficient number of persons carrying out the task, and if
these personnel have been properly trained in the use of equipment and know the most
effective methods of securing required for each type of cargo.

Those persons involved in packing and unpacking should never smoke in the vicinity
of the container or cargo. This would create a potential hazard to the goods and
container.

It is essential to make sure that the cargo in a container or vehicle is secure against
any reasonably foreseeable movement, such as during lifting, loading or stowing of the
container or vehicle. At the same time, while it must be safe, the methods used to secure
the cargo must not cause damage or deterioration to the cargo, container or vehicle.
Clamps or other locking devices should not be used unless the goods can withstand
them.

Regular-shaped goods can be packed in tightly „ . , . . . .

Goods of a regular shape and size
can be packed in tightly, w ith no
gaps, so that they fill the container
from wall to wall, lessening chances
of damage from movement. If the
goods are irregularly shaped and
some empty space between them
is unavoidable, then this can be
to le ra te d if th e fric tio n a l e ffe c t
10 8 Guides to International Logistics Seafreight Forwarding

between adjacent packages

is e n o u g h to ke ep th e
goods from moving. If there
proves to be an inefficient
fric tio n a l effe ct, or if the
spaces between packages
are too large, then the stow
sh ou ld be co m p le te d via
other suitable means: filling
in the gaps with dunnage,
folded cardboard, or airbags.
It is im p o rta n t not to use
material that is incompatible
with the cargo. Packing a container

When airbags are used, it is crucial to observe and follow strictly the manufacturer’s
instructions regarding filling pressure and safety requirements. While airbags can be
used between packages, they must never be used to fill up empty space in the container
doorway, unless precautions have been taken to ensure that the sudden filling of the bags
will not cause the door to be opened violently when the door’s locking bars are released.

The internal temperature of the container may rise from the time of packing; this must
also be taken into consideration. Any miscalculations might cause the airbags to expand
and burst, rendering them useless.

The cargo w eight should be evenly distributed over the floor of a container or vehicle -
heavy items should never be stowed in one section, with light items in another. So, for
example, when a container or vehicle is packed with items of varying weights, or where
a container or vehicle is not full (either due to inefficient cargo or because the maximum
allowed w eight will be reached before the container or vehicle is full), then the stow
should be arranged and secured so that the approximate centre of gravity of the cargo
is close to the m id-length of the container or vehicle. Under no circumstances should
more than 60% of the load be concentrated in less than half the length of a container,
when measured from one end.

Heavy goods should never be placed on top of lighter goods. Likewise, liquids should
never be placed on top of solids. Wherever possible, when dealing with mixed loads,
liquid cargo should be placed on the bottom tiers with the dry goods on top. The centre
of gravity should always be below the half-height of a container.
 PART 2 Cargo Packing and Damage 109

Odorous goods should not be stowed close to any sensitive merchandise. When shipping
obnoxious cargo, such as hides and carbon black, cargo liners should be used.

In order to avoid potential damage from exposure to moisture, cargo that is wet,
inherently moist or liable to leakage should never be packed with dry goods, which can
be susceptible to such damage. This also applies to dunnage, pallets or packaging, which
must always be checked to ensure that they are not wet. If there is a risk of damage to
the equipm ent and/or cargo, then protective material such as polythene sheeting can
help overcome this problem.

Already damaged packages should not be packed into the container or vehicle, unless
precautions have been taken to protect them against further harm or damage.

Goods with sharp corners should be kept separate from softer merchandise during
stowage, and appropriate dividers and separating material should be used.

It is especially im portant to follow the rules concerning the packing of hazardous cargo;
appropriate signs and labels to identify containers loaded with dangerous goods must be
prominently displayed. Hazardous cargo should be stowed near the container door.

M ost containers have some sort of built-in securing equipment, and this should be
utilised wherever necessary, to prevent the cargo from moving.

Particular care must be taken with open-side vehicles, to ensure that the cargo is secure
enough to withstand movement during shipping. Check all side battens to ensure that
they are fitted correctly, and ensure that all other adequate precautions are taken.

Special packing instructions, whether given prior to packing or stated on the packages,
should be followed. Goods marked "Protect From Frost” should be packed away from the
walls of a container, while those marked "This Side Up” should be packed accordingly.
Goods marked "Do Not Drop” should be handled with special care. Also, a record of the
seal number and the container number need to be added to all shipping documents,
and all necessary documentation must be included when packing.

On completion of packing a container

During the final stages of packing, it is im portant to m onitor the process to ensure that
the goods are arranged and secured to withstand normal stress and strain. Particular care
should be taken to ensure that the doorway cargo cannot move, as far is practicable, by
building a secure face of the cargo. This would reduce the chances of a “ fallout” when
the doors are opened. If there is any doubt regarding the security of the cargo, strapping
can be weaved between sectoring points, or tim ber placed between the rear posts.
110 Guides to International Logistics ■ Seafreight Forwarding

Two points to remember are that:

• a container transported on a trailer will usually incline towards the door; and

• jolting is likely to move the packed cargo against the doors during transit.

If a container is being shipped to a country that has strict quarantine regulations, such as
on treated wood, then care should be taken to ensure that all the wood in the container,
packaging and cargo complies with regulations. It would save considerable time if a copy
of the wood treatment certificate was left in a conspicuous place in the container.

Likewise, to help with Customs inspections, if more than one type of article is stuffed in
the container, it would save a great deal of time and money if a sample of each article
is positioned near the door.

When the doors are shut, it is important to ensure that all closures are properly engaged
and secure. All securing lugs must be properly engaged, forcing the door seals into
compression. Make sure that the sealing procedures are carried out correctly, and that
the company’s seal of approval is fitted in the correct position on the right hand door.
This seal number should be written on the appropriate transport documents/receipts
before the container leaves the premises.

Remove any labels on the outside of the container that state what the contents are, as
they could attract thieves.

Dangerous goods labels should be placed on the container in recommended positions.

Take care not to obscure the number of the container or other distinguishing marks.

In f e s t a t io n
It is important to make sure that the goods being transported are protected against all
types of infestation, especially when perishables or wooden products are involved, or
when the destination country has very strict import regulations.

Common pests or vermin include rats (ships must carry a “de-rat" certificate), beetles,
moths, mites, lice, termites (white ants), cockroaches, Sirex wood wasps, maggots.
Tropical Warehouse Moths, weevils. Copra beetles, the Black Mould parasite. Sitophilus
zeamais and Tribolium castaneum, which can cause:

• boring and nibbling of the goods, and contamination with webbing and excreta;

• loss in weight of the goods, and heat in the container;

• water damage; and

• depreciation of value.
 PART 2 Cargo Packing and Damage 1

Prevention of infestation: fumigation

Fumigation is the recognised means of combating infestation. It involves the application

of fumes to disinfect or purify the container and its cargo. There are several substances
used for fumigation, which include:

• methyl bromide Cbromomethane);

• phosphine:

• sulphuryl fluoride (vikane);

• ethylene oxide; and

• ethylene dibromide (EDB).

When a container, or its contents, has been fumigated and is to be shipped under
fumigation, a warning label should be placed on the outside of the doors, so that it is
clearly visible to anyone operating them. This label should state the method of fumigation,
and the date and time on which it took place.

As containers offered for shipment under fumigation may require special precautions,
they should only be accepted with the agreement of the carrier, and these fumigated
containers should be identified to him prior to loading. However, this does not apply to
containers fumigated or ventilated after loading, and which have been certified safe.

Different countries have different laws on fumigation, and it is best to check with the
relevant authorities.

C o n d e n s a tio n
It is essential to have a good understanding of condensation. This occurs when moisture
in the air becomes water droplets on contact with surfaces that are at a lower temperature
than the surrounding air.

The main factors leading to condensation inside a container are:

• A source of water vapour [moisture) inside the container which, depending on

ambient temperature conditions, will affect the moisture content of the atmosphere
in the container, and provide a pathway for it to move.

• A difference between the air temperature within the container and the temperature
of either the cargo or the inner surfaces of the container itself.

• Changes in the temperature of the container’s outer surface, which would affect the
two factors above.
112 Guides to International Logistics Seafreight Forwarding

T he c o n d it io n s d e s c r ib e d
above can lead to two types of
condensation - “cargo sweat" and
"container sweat”. Both can occur
during transportation or when the
container is opened for discharge.

• Cargo sweat occurs when the

surface of the cargo becomes
cooler than the dew p oint
Condensation on the container ceiling
of the air in the container,
resulting in droplets of water forming on the cargo.

• Container sweat occurs on the inside surfaces of a container, when the container’s
outside surface cools to a lower temperature than the dew point of the air in the
container. This results in water droplets forming on the interior roof and side panels,
then dripping onto the cargo, leading to mould and water damage.

If not dealt with correctly, condensation can be one of the leading causes of damage to
cargo during transportation. As vessels pass through different climatic zones, goods on
board are exposed to changes in temperature and humidity, particularly cyclic changes
in the course of the day. All this would result in condensation, that may lead to damage
such as rust, discoloration, dislodging of labels, collapse of packages (especially those
made of fibreboard) or mould formation.

Damage to cardboard boxes due to condensation

The goods most at risk from condensation are hygroscopic commodities that readily
absorb moisture, including from the atmosphere - timber, coffee, cocoa and most
materials of organic origin come under this category. They are more permeable to water,
and retain moisture under certain conditions, making container sweat a problem.
 PART 2 Cargo Packing and Damage 1

Main causes of condensation

Radiation

Containers are exposed to a lot of solar radiation during transportation, which causes
drastic temperature changes. During the day, the radiation causes air temperature at
the inner surface of the container to become significantly higher than the external air
temperature; at night, the temperature in the container can fall to well below the external
air temperature. These effects can result in a range of day and night cyclic temperature
variations in the air adjacent to the inner surfaces of a container, which is greater than
the corresponding temperature range just outside the container.

When the air in the container heats up, it absorbs moisture from the packaging for the
goods, or any other source. When the air is cooled to below its dew point, this causes
condensation - the dew point is the temperature where air saturated with moisture at
atmospheric pressure will start to shed moisture by condensation. Warm air has more
capacity to support water vapour than cold air.

Humidity

Changes in climate and air temperature can also bring about changes in relative humidity.
This is the ratio of water vapour in a given sample of air to the level of saturation, and
is expressed as a percentage. So. if the relative humidity CRH) were 100%, then the air
sample would be very saturated.

If the outside of a container is cooled after the hum idity level inside it has risen
dramatically, then the temperature of the container’s outside surface may fall below the
dew point of the air inside.

If this happens, then condensation will form on the inner surfaces of the containers.
If it forms on the roof, then the water droplets may fall onto the cargo below. Cyclical
repetition of the cargo and container sweat phenomena can result in greater damage.

Goods stowed closest to the walls or roof will be far more affected by these temperature
variations than those packed in the centre of a container. A good understanding of the
possible magnitude of these temperature variations and the full impact it m ight have on
the cargo is very important. If unsure, advice should be obtained.

If the outside air is relatively cool, but the air inside the container is very humid,
condensation can also occur in the container immediately after the doors are opened. This
temperature change can cause mist, and even precipitation, but as it usually occurs only
once, as the doors are opened, it seldom causes any serious damage to the cargo.
114 Guides lo International Logistics Seafreight Forwarding

Preventing condensation

Packaging

Using the best and most suitable packaging for each commodity can be one of the most
im portant preventive measures against damage by condensation.

Bagged cargo. The kind of bag to use is determined by the type of goods, including their
moisture content and how sensitive they are to contamination. Types of bags include:

• paper (single or multi-ply), sewn or glued together;

• plastic (which may be airtight);

• woven polypropylene [optional inner sealed bag made of polythene); and

• jute or hessian (traditional materials) - these are the most likely to be re-used.

Bales and bundles. The outer cladding for bundles is usually made of hessian or a
similar material; the inside is lined with plastic packaging. Baled cargo such as straw
and hay is left uncovered.

Cases, crates and cartons. Cases and crates are made of either plywood or heavy
timber. The wood must always be checked for excessive moisture, which would damage
the cargo. Cartons need to be made of good quality multi-wall fibreboard to prevent
goods from getting crushed. They can also be layered with wax to resist moisture.

De-humidifiers

De-humidifiers are used in special circumstances, to create controlled conditions for

the goods and packaging while in the container.

Insulation

Insulation blankets are generally used to line the inside of steel containers, to reduce the
extreme temperature gradients between the inside and outside of the container, and to
provide temporary insulation for cargo such as red wine and liqueurs.

Desiccants and absorbent materials

Desiccants absorb moisture in humid environments. While very effective for cargo such as
steel reels, cars and items packed in cartons, they are only a part solution for hygroscopic
commodities, as they can extract too little or too much moisture.
 PART 2 Cargo Packing and Damage 1

For sensitive and expensive cargo, such as pepper - which is susceptible to sw eating- it
is advisable to have some form of drying agent in the container, fo r example water
retaining poles.

An absorbent polymer sheeting or a porous paint can be applied to the container ceiling
to absorb moisture. However, both materials do require maintenance, and may also
absorb dirt and contamination, in addition to moisture.

A combination of desiccants with Kraft paper or fibreboard lining the container can be
used for less sensitive cargo. This amounts to effectively parcelling the cargo so that it
avoids any contact with the steel container. Desiccant bags can be placed on top of the
stow to absorb moisture in the header space.

Ventilation

Ventilation and the need to bring equilibrium between the air inside and outside
the container is paramount, especially in cases of extreme container sweat in steel
containers.

Vent-Containers have vent ducts along the side panels at the top and bottom rails, to
achieve the required convection effect. “ Fantainers” - containers in which an extraction
fan draws air through - are used successfully to carry some food products.

Many of the above requirements associated with the packing of containers for sea
transport also apply when packing freight for multimodal and air transport. There are,
of course, different ways to deal with the various regulations and restrictions on weight,
space, altitude, transit time, etc. This is further explained in the other two books from
this series, The Practitioner’s Definitive Guide: Airfreight Forwarding and The Practitioner’s
Definitive Guide: M ultim odal Transport.
116 Guides to International Logistics Seafreight Forwarding

8 Bills
of Lading and
Documentation

T h e im p o rta n c e o f d o c u m e n ta tio n
Documentation is a vital component in the seafreight and logistics industry. Throughout
the shipping process, documents like the bill of lading (B/L} play an important role. They
ensure that all arrangements are correctly taken care of, from determining how the
goods are to be packed and transported, to collection of cargo at the place of receipt,
right through to the safe arrival at the place of delivery. Many rules and clauses have to
be adhered to, so that all eventualities are covered.

Each stage of the transportation must be thoroughly documented, so that when multiple
modes of transport are employed, the cargo is protected and all parties involved know
the extent of their responsibility and liability. The documents also act as a legal safety
net for the consignor, carrier and consignee.

T h e d i f f e r e n t t y p e s o f bills o f la d in g C B /Ls)
W h a t is a B / L ?

The B/L is the main document used in international maritime transport. It establishes
the terms of contract between a shipper and a transportation company, and serves as a
document of title, a contract of carriage and a receipt; it can also be used for combined
transport or p ort-to-port shipments.

Its functions are:

Evidence of the contract of affreightment

The B/L is documentary evidence of the transport agreement. It indicates the transport
service that is to be provided for the cargo, the extent of the carrier's responsibility and
a description of the goods to be shipped, among other things. It is therefore extremely
 PART 2 Bills of Lading and Docum entation 117

Sample of a bill of lading

8 Guides to international Logistics i Seafreight Forwarding

important that the utmost care is taken to insert the correct details, descriptions and,
in particular, the dues to be recovered from the consignor.

Document of title (title of ownership)

A "document of title” states the ownership of the goods being shipped; it defines that the
holder of the document is considered the owner of the goods. When someone collects
the goods upon delivery, the B/L is the only proof that they are the rightful owner of the
goods and have paid for them.

Confirmation of shipment

The B/L is also a confirmation that the named vessel has shipped the cargo.

Note: Although in most cases the transport agreement is the result of a sales agreement
between two parties, the terms of sale CCost, Insurance & Freight, Free on Board, etc
- see Airfreight for more details) as well as the other terms of agreement between the
merchants Cor their banks) in the sales contract do not concern the carrier.

Combined Transport B/L

When issuing a B/L for combined transport, the place of receipt and the place of delivery
must be filled in. The carrier is always responsible towards the consignor, for the cargo
that has been stated in the B/L.

This responsibility extends from the point of taking charge of the goods at the place of
receipt up until the time of delivery at the destination, regardless of the mode of transport
Cship, rail, truck) and whether or not any part of the transport has been sub-contracted
to a third party.

Multimodal B/L

Occasionally, a shipper will request certain amendments and/or new clauses to the
carrier’s Combined Transport B/L, to obtain an ICC M ultim odal B/L. For example:

“ Carriage subject to ICC publication No. 481 CUNCTAD/ICC Rules for M ultim odal
documentation)’’.

Although the Combined Transport B/L and Multimodal B/L appear to be one and the
same, the ICC M ultim odal B/L is not governed by the Hague-Visby Rules, which gives
carriers a higher level of liability. In particular, Article IV Rule 2 of the Hague-Visby Rules
is excluded: this means that under an ICC Multimodal B/L, a carrier extends its liability
to include that of a multimodal carrier, which is not desirable.
 PART 2 Bills of Lading and Docum entation 1

Port-to-Port B/L

Due to letter of credit CL/C) restrictions on p ort-to-port shipments, shippers may request
a Port-to-Port B/L COcean B/L, Marine B/L) instead of a Combined Transport B/L. As
the carrier’s standard format can be used for either a Combined Transport or a Port-to-
Port shipment, the following points must be satisfied on the documentation, to obtain
a Port-to-Port B/L:

• the place of receipt and the place of delivery must be crossed out; and

• the load port and the discharge port must also be stated in the appropriate boxes.

Scope of the carrier’s liability

The carrier is responsible for the cargo stated on the Port-to Port B/L from the time at
which charge is taken of the goods at the Port of Loading CCY or CFS) up until the time
at which the goods are delivered at the Port of Discharge CCY or CFS).

Copy of B /L

Once the original set of B/Ls has been issued, whether Combined Transport or Port-to-
Port, non-negotiable copy-bills may also be issued, showing identical data and clauses,
as per the carrier’s format.

Non-negotiable B/L

The Combined Transport B/L and the Port-to-Port B/L can be non-negotiable, if they
are either stamped “ not negotiable”, or attributed to a named consignee.

Under English law, a non-transferable B/L made out directly to a nominated consignee
will always be regarded as a document of title, and therefore must be surrendered in
exchange for the goods. This works much like the principle of a cloakroom ticket, where
“ no ticket = no coat".

However, US law permits the release of the cargo to a named consignee who can identify
himself, even if he cannot produce the B/L.

Memo B/L —a second carrier

When a principal carrier takes charge of cargo, it has to issue a B/L to the owner of the
goods. If the principal carrier then subcontracts the ocean transportation of this cargo to
another line, then this second line must in turn issue a Memo B/L back to the principal
carrier. This is so that the principal carrier, who has taken initial responsibility for the
goods, is covered for the period where the cargo is in custody of the second line. This
120 Guides to International Logistics Seafreight Forwarding

Memo B/L must clearly state the terms and conditions of the second line, which are
printed on the back of the Memo B/L.

An exception can be made with the second carrier’s approval and proper instruction,
where there is a Connecting Carrier Agreement (commonly referred to as a CCA) between
the principal carrier and the second line. It can be stated that the second line’s Memo
B/L is deemed issued for all containers on the second line’s confirmed load list.

Issuance of the Memo B/L

The standard B/L issued by the second line can also be used as a Memo B/L. It must be
claused as non-negotiable and the principal carrier, or its load/discharge port agents,
should be named as the shipper and consignee respectively. It is im portant to avoid
endorsements on the Memo B/L stipulating that the cargo is only to be delivered against
the principal carrier’s B/L, as the second line’s agents will always collect a Line’s B/L (if
issued) before releasing the cargo. Delivery of cargo can be done with an original B/L
at the discharge port, or surrendering the full set of original B/L at the load port.

Only one Memo B/L must be issued by the second carrier, for the load and discharge
ports, to cover all the principal carrier’s containers shipping between those ports. This
is because the second line and its agents will be solely dealing with the principal carrier
Cor its agents) but not with the consignor or consignee.

Shipped on Board B/L

A Shipped on Board B/L evidences the date on which the cargo is loaded onto the ship.
The date on the B/L must correspond with the date of loading of the cargo; it must not be
dated earlier or later. The date of issuance is deemed to be the loading date. Otherwise,
the B/L should be claused “shipped on board on (date)”.

Received for Shipment B/L

The carrier’s B/L is an "onboard" B/L. Received for Shipment B/Ls or endorsements must
not be issued w ithout written approval from the carrier. If the issuance of a Received
for Shipment B/L has been permitted, it must not be dated before the goods are in the
carrier’s custody.

However, unless otherwise stipulated in the L/C, the UCP 600 CUniform Customs and
Practice for Documentary Credit) no longer requires Shipped on Board endorsements
to be signed or authenticated. This means that it is possible for someone trying to forge
documentation to ask for Received for Shipment B/Ls, then add their own Shipped on
Board endorsement with counterfeit stamps.
 PART 2 Bills of Lading and D ocum entation 1

Multiple/Split B/Ls

If there are several separate sets of cargo in one container, each set of cargo must have
its own B/L. The full series of B/Ls that covers all cargo in the container is known as
m ultiple B/Ls. They can be straight B/Ls (as described above), or “to order” B/Ls.

Separate B/Ls must always be issued for FCL and LCL shipments and on no account
are they ever to be combined onto the same B/L.

FCL/FCL shipments

Each set of multiple B/Ls must show the same shipper, consignee, place of receipt and
place of delivery.

If all the part cargoes are consigned only "to order”, the shipping line will not accept the
multiple B/Ls, as there may be disputes among the receivers as to which party should
take delivery of the FCL unit into his warehouse, for final delivery to the other receivers
of their part cargo.

It sometimes occurs that the same receiver is shown as the consignee on a straight
B/L and as the notify party on another “to order” B/L. The shipper on the “to order” B/L
usually endorses it to the notify party, so that the receiver Cthe consignee on the straight
B/L, and the notify party on the "to order” B/L) can take delivery of all his part cargoes
in the FCL container.

However, the “to order” B/L may be endorsed to a party other than the notify party, so
that two different receivers can claim delivery of their part cargoes, being in the same
FCL container. The shipper therefore has to provide a bank guarantee and Letter of
Indemnity before issuing the multiple B/Ls, to cover additional costs incurred, such
as LCL charges, third party claims and Customs penalties in respect of shortlanded or
overcarried cargo, etc.

“ Endorsing the B/L” means that the shipper signs and puts his company stamp behind the
original B/L and sends it to the notify party. The holder of the B/L is the consignee.

If more than one consignee is declared, the contents of the containers) will be regarded
as FCL/LCL cargo (see below).

In the case of consolidated cargo of forwarding agents, if the forwarding agent is also
the shipper on the B/Ls, then he must remain the only contact between the consignor
and the carrier. If he is regarded as the sole shipper, he must be responsible for booking
the container and arranging for the loading and packing.
122 Guides to International Logistics Seafreight Forwarding

The B/L must reflect information under the following clauses:

• “Shipper's load, stow and count” ;

• "Said to contain” ; and

• “One of (X) part cargoes in this container” - the number of part cargoes must
correspond with the number of sets of B/Ls issued for the whole container.

Freight for all B/Ls in a multiple set is usually prepaid, unless otherwise agreed to by
the carrier; collect charges are also allowed.

FCL/LCL shipments

Each set of multiple B/Ls must show the same shipper, place of receipt and place of
delivery.

If there is one shipper but more than one consignee and/or notify party for consolidated
cargo, the shipper must provide a bank guarantee and Letter of Indemnity prior to the
issuance of multiple B/Ls (one set per consignee).

Each set of multiple B/Ls must contain the following clauses:

• “Shipper's load, stow and count";

• “Said to contain";

• “One of (X) part cargoes in this container” - the number of part cargoes must
correspond with the number of B/Ls issued for the whole container.

• “The Goods detailed herein are said to comprise part of the contents of the container
indicated. If the Carrier is required to deliver the Goods to more than one M erchant
and if all or part of the total cargo within the container consists of bulk goods or
unappreciated goods or is or become mixed or unmarked or unidentifiable, the
holders of Bill of Lading relating to goods within the container shall take delivery
thereof (including any damaged portion thereof) and bear any shortage thereof in
such proportions as the Carrier shall in his absolute discretion determine and such
delivery shall constitute due delivery hereunder."

Unless the carrier has otherwise agreed, freight for all B/Ls in a multiple set must be
prepaid. Also, the holder of each B/L will pay LCL service charges separately, when they
apply to the place of delivery.
 PART 2 Bills of Lading and Docum entation 123

Switch B/L

Occasionally, the shipper, consignee or third party, who are the lawful holders of a duly
endorsed original B/L, will surrender a full set of original B/Ls to an agent [not necessarily
a load or discharge port agent) and request a “switch" or replacement B/L.

Duplicate/second set of original B/Ls

If a consignor requests a duplicate set of B/Ls from the agent, and alleges that the
original set has been misplaced or lost, then it can only be issued against:

• a 1st class bank guarantee provided by the consignor, for 150% of the Cl F value and
valid for 2 years, or until the original B/L has been found: or

• a Letter of Indemnity jointly signed by the consignor and the bank involved.

This is necessary because if a second set of B/Ls is issued, there would be two legal
documents, each representing the full value of the goods: but only one consignment.
Therefore, if two bona fide consignees each have one set of B/Ls, both consignees
would be legally entitled to take delivery of the entire consignment. However, the agent
only has one consignment to release, so one of the consignees will only receive the
cargo value, which is the guarantee for 150% of the CIF value - this is set to also cover
additional expenses, such as legal costs.

When issuing a duplicate/second set of B/Ls, the agent must immediately instruct the
agent at the discharge port that he is to release the cargo only against an original B/L
from the second set. Each original B/L of the second set must also be claused:

“This is the second set. The first set of the Bill of Lading number [X) is to be considered
null and void.”

S t a n d a r d B / L c la u s e s
The carrier’s standard clauses are found on the reverse of each original B/L. Agents
should be familiar with these clauses: the following clauses are particularly important.

Changing standard B/L terms

No agent is entitled to waive or vary any standard clause, unless the carrier has given
written authorisation.

Below decks stowage

Containers may be stowed either on deck or below decks at the carrier’s discretion. The
carrier must first approve any request made by the shipper for an “ under deck stowage”
clause to be inserted on the B/L.
124 Guides to International Logistics i Seafreight Forwarding

Carrier’s right to tranship

Containers may always be relayed from one vessel to another at the carrier's discretion,
provided that the cargo is carried in containers and the entire transport is covered by
a single B/L.

With reference to the UCP 600 [Uniform Customs and Practice for Documentary Credits)
which contains the basic rules for issuing L/Cs, the transfer of containers covered by
only one B/L from one vessel to another is not considered transhipment.

However, Article 20 of the UCP 600 states that even if the L/C prohibits transhipment,
banks will accept a B/L which:

• indicates that the transhipment will take place as long as the cargo is shipped in
containers, trailers and/or LASH-barges as stated on the B/L, and provided that the
entire ocean carriage is covered by one and the same B/L; and/or

• incorporates clauses stating that the carrier reserves the right to tranship.

Delayed cargo arrival

The carrier does not guarantee that the cargo/containers shall have a specific arrival
time at the destination.

Consignee’s obligation to take delivery

The consignee shall take delivery of their cargo at the destination, within the designated
time, as per the carrier’s terms and conditions.

Carrier’s lien on cargo

The carrier has a lien (a legal right or interest) on the cargo and is therefore entitled
to retain the goods at the destination until all collect freight charges that are due have
been paid by the consignee.

However, there are exceptions to this clause.

• The carrier has no lien on a particular shipment that is consigned to a receiver who
has already paid all collect freight charges for it, even if he still has an outstanding
payment for an earlier shipment, where the agent did not exercise the carrier’s
lien.

• The carrier has no lien on cargo when the freight and/or the charges are prepaid.

• In the case of a dispute between the shipper and consignee, the carrier cannot retain
the goods on the shipper’s behalf once the consignee has presented an original
 PART 2 Bills of Lading and D ocum entation 125

B/L that is duly endorsed to him. In such a case, the shipper must obtain a court
order at the discharge port Cor place of delivery), which will instruct the carrier not
to release the goods to the consignee.

The shipping company will not release the goods until the cargo owner has provided
an appropriate general average security. This consists of a general average bond and
either a cash deposit or an underwriter’s guarantee, which is given to the general
average adjuster, to replace the vessel owner's maritime lien on the cargo for its share
of general average.

Detention clause

When the carrier gives a container to the shipper, there is usually a time by which the
shipper has to fill it and send it off to the consignee, so as to optimise container usage.
However, sometimes shippers retain containers for long periods w ithout loading them.
To prevent a shortage of containers because of this, carriers have a detention clause
on their B/Ls, stating how long shippers are allowed to retain the containers w ithout
charge (free time), and the detention fees for any extra time taken.

Although shippers do occasionally wish to delete the detention clause to comply with
L/C requirements, the carrier is not allowed to delete it and it must remain on the B/L.
Otherwise, the discharge port agents will not be able to collect the relative charges from
consignees. This is illustrated by the Egyptian regulations issued on 3 January 1996:

“To secure container demurrage collections and transfer out of Egypt no import cargo
to be released w ithout the original Bill of Lading. All original Bills of Lading should bear
the official demurrage clause."

A d d i t io n a l B / L c la u s e s
Apart from all clauses that must be inserted to meet the carrier’s special documentary
requirements in compliance with local laws and regulations in certain regions, shippers
sometimes request for additional clauses to be added on the face of the B/L, in order
to match commercial or bank CL/C) requirements.

“Said to contain” and “Shipper’s load, stow and count”

If a B/L includes the clause "FCL/FCL”. it must also include “Said to contain" and
"Shipper's load, stow and count". Both are required; one alone would not be su fficient

If the cargo particulars were declared by the shipper Cwho was responsible for the stuffing
and sealing of the FCL container), but the B/L was only claused "FCL/FCL", then the
description of the goods is taken in good faith and deemed to be correct.
126 Guides to International Logistics Seafreight Forwarding

If that were the case, then the carrier may argue that he was not aware of the contents
of the shipper’s packed and sealed containers and therefore, cannot be held responsible
for any missing or damaged cargo.

The carrier would only be entitled to check the contents of the cargo and prove anything
to the contrary if the clause "Said to contain" and “Shipper's load, stow and count” are
additionally shown on the B/L.

No cargo samples

The B/L for all shipments of perishable goods should state that no cargo samples are
to be taken before an original B/L has been surrendered to the carrier.

Seaworthiness

Generally, all vessels chartered or operated by reputable main lines undergo regular
checks by an approved classification society, in accordance with international maritime
and safety regulations. They are categorised in classes, depending on their condition.

Seaworthiness is a legal term, and the seaworthiness clause is there to ensure that each
ship is well maintained, and that its overall condition is of an acceptable standard. All
systems - pumps, valves, boilers, engines and generators, etc - need to be thoroughly
checked, as do all equipment with up-to-date sea charts, notices to mariners and
adequate reliable navigation devices (such as radar sets), to ensure that they are still in
adequate working order and running efficiently.

The seaworthiness clause also extends to the ship’s master, officers and crew, to make
sure that there are sufficient numbers to man the vessel, and that they are all properly
trained and qualified to handle and operate it. Operational diagrams and directions
must be displayed prominently around the ship, and all equipment must be properly
labelled. Additional instruction manuals and all other necessary instructions must be
made available to the crew.

Shippers can request that an agent insert a seaworthy clause on the B/L, or sign a
Certificate of Seaworthiness, but this is not advisable.

• The carrier is not liable if a ship remains unseaworthy, despite due care being
taken to ensure its seaworthiness. As stated in Article IV Rule I of the Hague-Visby
Rules, “The Carrier shall not be liable for loss of damage arising or resulting from
un-seaworthiness, unless caused by want of due diligence.”
 PART 2 L Bills of Lading and D ocum entation 127

• As some ships that are operating are chartered vessels, then neither the carrier’s
operator nor its service partners can guarantee that the owners exercise due care
to maintain their vessel’s seaworthiness.

Goods in transit

Shippers can request to add a "Goods in transit to ...“ clause to the B/L, when the cargo
is to be on-carried by the shipper's haulage to meet the cargo receivers who are in
hinterland places (remote or undeveloped areas), or in neighbouring countries.

When a port of discharge or place of delivery that falls within the limits of the carrier’s
service is inserted on the B/L, then the carrier’s responsibility and liability for the goods
ends at this point.

However, where a problem may arise for the carrier is when they have not covered the
on-carriage to the final hinterland destination, but the shipper has already arranged on-
carriage with the additional “ Goods in transit to ..." clause. The carrier or box company
(the leasing company which rents out the boxes to the shipper) is then faced with the
question of how to recoup the demurrage (the penalty for exceeding the free time allowed
for the use of the equipment and container) for the equipment and/or the container.
The carrier or box company would have to initiate legal proceedings (based on local
law) against the cargo receivers.. This is, however, a very costly and often unsuccessful
course of action.

To prevent this situation, the containers should not be released out of the control of
the discharge port agent unless an indemnity, bank guarantee, deposit or some other
financial security has been provided by the shipper to match the equipment value and
the container demurrage.

Regardless of any instruction given by the box company, shippers need to provide
security, at a value denoted by the box company, in the form of:

• a first class bank guarantee or a letter of indemnity, jointly signed by both the shipper
and the bank; and/or

• a deposit; and/or

• a cheque (confirmed by the bank); and/or

• an insurance policy that covers the box company's risks in which the carrier and/or
box company are named as the beneficiaries on the insurance cover note.
128 Guides to International Logistics Seafreight Forwarding

No transhipment

Shippers can request for a no transhipment clause to be inserted on the B/L, to comply
with the basic rules for issuing L/Cs , as stated in the UCP 600. This clause means that
the relaying from one vessel to another of containers that are covered by a single B/L
is not considered transhipment.

As mentioned before. Article 20 of the UCP 600 states that even if the L/C prohibits
transhipment, banks will accept a B/L where it indicates that that the transhipment will
take place while the cargo is shipped in the containers), trailer(s) and/or LASH barge(s)
as stated on the B/L, as long as the entire ocean carriage is covered by a single B/L,
and/or when it incorporates clauses stating that the carrier reserves the right to tranship.

If the above requirements are met. then even if containers are relayed from one vessel
to another, the "no transhipment” clause may be inserted on the B/L.

Although many aspects of the B/L used in sea transportation are similar for those used for
multimodal and air transport, there are differences in the wording, terms and conditions,
which are further explained in the other two books from this series.

T e rm s o f s h i p m e n t / C o n t a i n e r lo a d t y p e
At receipt and at delivery, a shipment is either FCL (Full Container Load) or LCL [Less
than Container Load)

F C L /F C L

It is the shipper’s responsibility to arrange and pay for the stuffing and unstuffing of
the container, the lashing and securing inside the container, and the tally. Each full
ISO-standard container is then received by the carrier and delivered to the consignee
as one package. Unless otherwise specified, it is the carrier’s responsibility to provide
the shipper with the container.

Special B/L clauses for FCL/LCL cargo are:

• “Shipper's load, stow and count” ; and

• “Said to contain”.

The carrier is responsible for the cargo throughout the transportation, from the container
yard at the load port to delivery at the container yard at the discharge port. They are not,
however, responsible for either the condition or the quantity of goods that are inside the
container, and a reference is made to the clause "Shipper’s load stow and count”.
 PART 2 Bills of Lading and Docum entation 1

LCL/LCL

It is the carrier's responsibility to undertake the stuffing and unstuffing, lashing and
securing and the tally for the packages that he accepts and takes receipt of. These costs
are normally included in the freight charges.

Upon receipt of the LCL cargo, it is essential to check that the packing is suitable. The
numbers and marks on the packages are recorded on the B/L where applicable. If the
packing is deemed unsuitable for transportation - that is, if it might damage other cargo
or the container - it should be rejected. The load port CFS should be held responsible
for shortlanded cargo.

For LCL/LCL shipments, each set of multiple B/Ls must be claused:

“ One of (X) part cargoes in this container" - the number of part cargoes referred to and
indicated must correspond with the number of sets of B/Ls that have been issued for
the whole container.

FCL/LCL

If one shipper stuffs a full container load for more than one consignee, the carrier is
responsible for the unstuffing of the container. The acceptance of such a shipment is
subject to the carrier’s approval.

Special B/L clauses for FCL/LCL shipments are:

• “Shipper’s load, stow and count” ;

• “Said to contain” ;

• “ C ontainer handling charges as per Line’s ta riff at destination on account of

Consignee” ;

• “One of (X) part cargoes in this container” - the number of part cargoes referred
to and indicated must correspond with the number of sets of B/Ls that have been
issued for the whole container.

• “The Goods detailed herein are said to comprise part of the contents of the container
indicated. It the Carrier is required to deliver the Goods to more than one Merchant
and if all or part of the total cargo within the container consists of bulk goods or
inappropriate goods or becomes mixed or unmarked or unidentifiable, the holder of
the Bill of Lading relating to goods within the container shall take delivery thereof
(including any damaged portion thereof] and bear any shortage thereof in such
proportions as the Carrier shall in his absolute discretion determine, and such delivery
shall constitute due delivery hereunder.”
130 Guides to International Logistics Seafreight Forwarding

L C L /F C L

Although this term of transportation covers the consignment from more than one shipper
consolidated for one consignee, the charges for the stuffing of the containers at the load
port are to be paid by the individual shippers.

The extent of the carrier’s liability here is the overall responsibility for the stuffing of
the full container and then delivering it to either the discharge port or the place of
delivery. A fter delivery, the responsibility is passed to the consignee, who is in charge
of unstuffing the container.

Special care must be taken when the container is being stuffed with the various
consignments, to ensure that the quantity and condition of the goods remains intact.
This is to be supervised by either an independent surveyor or a tally clerk, and the B/L
is to be claused accordingly.

As it is likely that each shipper would require an individual B/L, a special clause should
be added:

“This consignment one of ‘X’ consignments in container number ‘YV’

House-to-House or Door-to-Door

This is the movement of goods from the place of receipt to the place of delivery,
encompassing all of the stages of transportation in between.

When collecting or delivering goods to or from a house, the time that the mode of
transport [truck, rail, etc] is allowed to wait for the stuffing or unstuffing of the goods
by the consignor is to be stipulated in the B/L.

Special clauses for House/House shipments are:

• “Shippers load, stow or count” ;

• "Said to contain” ;

• "C ontainer handling charges as per Line’s ta riff at destination on account of

Consignee” (if applicable]; and

• “Waiting time for trucks for stuffing/unstuffing limited to (X) hours; any overtime at
the rate of [X] per hour”.

The carrier’s liability begins when the cargo has been collected and taken charge of
from the shipper's premises ("House''] and ends when the cargo is delivered to the
consignee at his premises (“ House”]. As the carrier is responsible for the goods over
 PART 2 Bills of Lading and Docum entation 1

the entire house-to-house transportation, they are also liable while the goods are on
the hauler’s truck during pre-carriage or on-carriage. It is therefore im portant and in
the best interest of the carrier, to only contract out this work to those companies with
a suitable insurance cover.

Container prefix and number

The container prefix and number must be indicated, for FCL and LCL cargo.

Container seals

A container seal is a “ padlock”, placed on the container after stuffing, to ensure that the
contents remain secure during transportation.

Each carrier has its own seal, so any container that is to be transported under a carrier’s
B/L must carry its seal. If another seal needs to be used, such as for special commodities
and/or in specific ports, written permission will have to be obtained from the carrier.

For all FCL containers, the shipper can affix the seal on the container before it is delivered
to the carrier. The correct seal number is written on all documentation, particularly on
the B/L and the manifests.

Missing and/or broken container seals

Single-use seals, which can only be removed with the aid of a bolt cutter, make tampering
with the container readily apparent and help prevent pilferage. It is crucial that the
container’s original seal remains unbroken until delivery to the consignee. If it has
been broken, the consignee can claim compensation from the carrier for any missing
or damaged cargo.

In the case of a container seal being tampered with or going missing:

• A new carrier’s seal must be affixed to the container before delivery.

• If the contents of the container have been tampered with or disturbed, the cargo must
be immediately inspected for evaluation by a representative of either the carrier or
agent or, if the goods involved are of a high value, by an independent cargo survey.
The container must be resealed after.

• When the container arrives at its destination and is unstuffed, a join t survey must
be arranged so that all parties can note any damaged or missing goods. This would
also prevent any future false claims from the consignee.

• The incident should be reported to the carrier’s principals.

132 Guides to International Logistics Seafreight Forwarding

Cargo description, weight and measurement

The description, weight and measurements of the cargo for each container or consignment
must be entered on the B/L, the details of which are to be supplied by the shipper.

FCL shipments

A description of the cargo and its weight and measurements are required for each
container or consignment. However, even after a description has been provided, the
carrier reserves the right to open any container so that the contents can be further
inspected to confirm the details given.

LCL shipments

A detailed description must be given on the B/L, clearly stating the contents of each
package. The container number in which the LCL consignment is stuffed must also be
mentioned on the B/L.

If a B/L has been claused “ FCL/FCL", it must also contain the clauses “Said to contain"
and “Shipper’s load, stow and count”. All are required because if the description of the
cargo was declared by the shipper when he stuffed and sealed the FCL container, but the
B/L was only claused “ FCL/FCL”, then the description of the goods is still only deemed
correct to a third party consignee who is acting in good faith.

Unless the “Said to contain" and the “Shipper's load, stow and count” clauses are
shown on the B/L, the carrier would not be entitled to prove inaccuracy of information.
With those clauses, the carrier could argue that he was unaware of the contents of the
containers that were packed and sealed by the shipper; the carrier cannot be held liable
if any goods are missing or damaged.

Weight of containers

The accurate gross w eight of the cargo must be declared by the shipper, and the
combined w eight of the container and its contents must not exceed the permitted gross
w eight indicated on the container.

If the FCL container does exceed this weight limit, the carrier reserves the right to repack
the contents in one or more containers w ithout prior notice - all additional charges and
expenses will have to be met by the consignor. The risk is also entirely the consignor’s,
and the carrier is not responsible for any damage to the goods.
 PART 2 s Bills of Lading and Docum entation 13 3

Corrections to the B/L

Once the B/L has been completed and issued to the shipper, the only way to amend it is
to have the full set of original B/Ls returned to the carrier’s agent so that they can alter
all relevant documentation involved. Changes should be dealt with as early as possible,
so as to avoid the penalties imposed by the authorities for discrepancies between the
original manifest and the corrected B/L. An exception is that the description of the cargo
contents must not be altered in any way.

However, be aware of possible fraud when changes to B/Ls are requested. If a shipper
wishes to change details that he has already declared, the agent should carefully
check the reason for this request and ask for an explanation if necessary, especially if
corrections would increase the number of packages or improve the quality of goods.
Due care should be taken: to a third party consignee acting in good faith, the cargo
description on the B/L is deemed correct, and any problems that arise - missing cargo,
delivery of the wrong goods - will be the carrier’s responsibility.

Cargo value on B/Ls, ad valorem B/L

The total value of the cargo must be stated on the B/L. Ad valorem, meaning “according
to value”, is a duty rate or charge, worked out as a certain percentage of the value of the
goods. It is not a specific, predetermined sum based on a given quantity.

The cargo value may only be stated on the B/L, or shipments accepted ad valorem if the
carrier’s written approval has been first obtained on the following conditions:

• Ad valorem freight is to be applied.

• Separate insurance cover - the premium rate in January 1996 is about 5% of the
cargo value - must be arranged by the carrier’s principal, at the shipper's cost.

This is necessary because if the cargo value is stated on the B/L, the carrier cannot limit
the amount of compensation and overall liability due to the shipper, as per the Hague-
Visby Rules, which are printed on the B/L. The carrier would then fully reimburse any
claim made against them.

Since shipments made under an ad valorem B/L are always excluded by the carrier’s
liability insurance, a separate cover is required.

Dating B/Ls

The date entered on the B/L is the date of loading/shipment. The date of issuance is
generally taken to be the date of loading. This only changes if the clause "Shipped on
board on (date)” is added to the B/L.
13 4 Guides to International Logistics I Seafreight Forwarding

Under no circumstances should a B/L ever be either backdated or postdated - this would
be construed as fraudulent misrepresentation.

Court Decision ( “The Saudi Crown” [1986] 1 Lloyd’s Rep.261)

"This issuing of an ante- or post-dated Bill of Lading is a misrepresentation and

constitutes fraud upon the banks and/or endorsees or third parties as bona fide
(acting in good faith) holders of the original Bill of Lading or those who are otherwise
involved in negotiating the bill or property in the cargo.”

The carrier’s agent will be held responsible for all liabilities resulting from the issuance
of B/Ls that are backdated or postdated. Such a mistake would be costly, as it would
not be covered by the carrier’s insurance.

In most cases, shippers can be advised to approach their banks, who can grant a
time extension beyond the original expiry date of the L/C.

Attached lists to B/Ls

All details concerning the cargo and shipment must be stated on the actual B/L, as some
carriers will not accept any additional attached lists.

The documentation procedure for shipping cargo

• The importer places the order and a contract is agreed upon.

• An export licence is obtained where necessary.

• The shipping instructions are issued to the shipping and forwarding agents, or the
freight forwarders when employed. Shipping space is reserved, either by telephone,
fax or email.

• The certificates of origin and value are prepared, and translated when necessary.

• An export shipping bill is prepared for Customs, where duty is to be claimed.

Arrangements should be made to have the goods inspected at the factory by
Customs, before they are packed.

• The certificate of insurance is prepared.

• The shipping notes are prepared, including the copies that are to be used as the
mate’s receipts, etc.

• The initial draft of the B/L is prepared by the exporter and submitted to the shipping
company, so the final set of B/Ls can be produced.

• The shipping line prepares the ship’s manifest.

 PART 2 E Bills of Lading and Docum entation 1

• The stevedoring company sends out a copy of the shipping note to the shipping
company when the cargo has actually been loaded.

A t this point, provided that the freight has already been paid for, the shipping
company will then sign the B/Ls on receiving the above information. The B/Ls are
issued as negotiable copies, meaning in sets of one or more signed copies. This is so
that the separate negotiable copies can be sent out to the consignee by alternative
routes, reducing the risk of loss en route, and guaranteeing that at least one copy
will arrive on time and therefore prevent the delay of the shipment. A number of non-
negotiable copies (unsigned) are also issued for general administrative purposes.

• The full set of B/Ls is then released to the exporter.

• If an original B/L is lost or delayed in transit, the company will accept a bank
guarantee or a Letter of Indemnity that will enable the cargo to be released to the
consignee.

• When advising a consignee or an agent on the impending arrival of a container or

consignment, the shipping line/freight carrier needs to complete an arrival notice.
The consignee has to submit the appropriate documents for Customs clearance.

C o m m o n ly used te rm s
A good understanding of terms and abbreviations used in the documentation is important;
most wording is technical and legal in nature. Here are some widely used terms.

Carrier

The carrier is the company that transports the freight - XYZ Container Line - also referred
to as “the Line" in this book.

• The carrier's name is always pre-printed on the standard B/L format.

• The carrier's B/L is only to be used for services provided by the carrier.

Shipper

The shipper is an individual or a business that purchases transportation services for

their goods or commodities; they are the party to the contract of carriage. The shipper
may be different to the party booking the transport.

• The shipper’s name, full style and address should be inserted on the B/L.

• The shipper should collect his B/Ls at the carrier’s office; alternatively, the B/Ls may
be sent to him, or to the booking party at the shipper’s cost and risk.
136 Guides to International Logistics Seafreight Forwarding

• The carrier will regard the shipper as the owner of the goods if there is no evidence
of the transfer of cargo ownership, until the consignee presents one original B/L to
show ownership.

Consignee

The consignee is the person or company to whom the cargo is being shipped, and is
officially the legal owner of the cargo.

The B/L may be consigned to either a named consignee or marked “to order”.

Named Consignee

• The consignee's name, full style and contact address, including telephone, fax and
telex numbers, are to be inserted on the B/L.

• If a B/L is consigned to a named Consignee, it is not negotiable.

To order

• The B/L can be endorsed to a third party by a foreign consignee, or endorsed by

the shipper either to the bearer of the B/L or to a named consignee.

• Either “to order of [a named Consignee)" or “to order" must be inserted.

• If a B/L is only consigned “to order", then the shipper also becomes the consignee,
and delivery of the goods must be made in accordance with his instructions. These
instructions may be given by specific endorsement on the B/L, for example “ Delivery
to ABC Ltd”, along with the shipper’s stamp and signature.

• A set of authorised delivery instructions on the shipper’s letterhead - a delivery order

from shipper to consignee - must be attached.

• A blank endorsement on the B/L where only the shipper’s stamp and signature
appear, with no further instructions, makes the shipper the lawful holder of the B/L.
This B/L is a bearer document, so the carrier must effectively deliver the goods to
whoever has presented i t unless he has reason to suspect fraud.

Once the consignee, either named on the B/L or who the B/L is endorsed to, has an
original B/L, he is considered the rightful owner of the goods, and becomes party to the
contract of carriage. The following relationship between consignee and carrier is then
governed by the terms and conditions stated on the B/L.

Legally, the consignee is regarded as a third party who is acting in good faith.
 PART 2 ; Bills of Lading and Docum entation 13 7

• The descriptions of the cargo given by the carrier are deemed to be true and taken
on good faith, even if it is the shipper who has provided the particulars - except
when the carrier adds an appropriate remark on the B/L, such as “Said to contain”
or "Shipper’s load, stow and count”.

• This same principle also applies to the freight prepaid charges, which is deemed to
be prepaid, and therefore cannot be obtained from the consignee.

Notify party

The notify party, as the name suggests, should be informed or notified of the arrival of
the goods at the discharge port or at the place of delivery. He is not a legal party to the
contract of carriage, unless the B/L has been duly endorsed to him, which would then
make him the consignee.

• The name, full style and contact information, including address and telephone, fax
and telex numbers, are to be inserted on the B/L.

• If the consignee and notify party are one and the same, then “same as consignee”
must be inserted in the appropriate field on the B/L.

B/L number

This is a unique reference number that is assigned by the carrier to each B/L.

Pre-carriage by

Pre-carriage is the carriage of goods by any mode of transport from the point of receipt
to the point of loading onto an ocean vessel. The type and voyage number of the pre­
carrying vehicle is to be inserted where applicable.

Vessel

This refers to the name of the vessel on which the cargo has physically been loaded in
the port of loading.

Feeder vessels

If the cargo is being transferred via a feeder vessel, from a load port to an operational
loading port where the main vessel calls, as per the carrier’s list of approved ports, the
name of this feeder vessel is to be entered:

• in the “ Pre-carriage by” box, either as the pre-carrying vessel and showing the
intended main line vessel as the “vessel” ; or
138 Guides to International Logistics Seafreight Forwarding

• as the “vessel" name. In this case, the voyage number and code of the intended
main line vessel goes into the "Voyage Number/Carrier’s Reference” box.

For example, if the cargo is loaded in Helsinki onto feeder vessel Laurel, then relayed onto
Asean Explorer CVoy: 0501-01) in Hamburg, then the B/L can be issued as follows:

Vessel: Laurel, Voyage No/Carrier’s Ref No: 0501-01: Port of Loading: Helsinki.

Voyage number/Carrier’s reference number

The voyage number is a unique number allocated by the carrier to the vessel named on
the B/L as the “vessel”, and is inserted with the vessel’s code.

For example, if the cargo has been loaded onto Asean Explorer (Voy: 0501-01) in
Felixstowe, then the B/L is filled up as follows:

Vessel: Asean Explorer. Voyage N o /C a rrie r’s Ref No: 0501-01; Port of Loading:
Felixstowe

The voyage number and code of the intended main vessel - as they appear on the
carrier's schedule - are to be inserted, as long as it is a main line vessel.

If the cargo has been loaded in Helsinki onto the feeder vessel Laurel (Voyage 20S) then
relayed onto National Express (Voyage 0501-01) in Felixstowe, the B/L may be issued
as follows:

• Pre-carriage by: Laurel\/.20S; Vessel: National Express', Voyage No/Carrier's Ref No:
NE 0501-01; Port of Loading: Helsinki

• Pre-carriage by: XXX; Vessel: Laurel, Voyage No/Carrier’s Ref No: NE 0501-01; Port
of Loading: Helsinki

• Pre-carriage by: Laurel V.20S/N ational Express: Voyage N o/C arrier's Ref No:
NE 0501-01; Port of Loading: Helsinki

Place of receipt

The place of receipt is the destination to which the goods are delivered into the carrier’s
custody. This is where the carrier’s responsibility for the combined transport begins. This
box must not be left blank. For port-to-port shipments, the load port details (CV/CFS)
must be copied into this box; otherwise the box is crossed out.

Place of delivery

This is where the goods are delivered into the consignee's custody, and where the
carrier’s responsibility for the combined transport ends. This box must not be left blank.
 PART 2 - Bills of Lading and D ocum entation 139

For p ort-to-po rt shipments, the discharge port (CY/CFS) must be copied into this box;
otherwise the box is to be crossed out.

Port of loading

This is where the goods are loaded onto the vessel; the carrier’s responsibility for the
sea transport begins here.

Port of discharge

The goods are taken off the vessel at this point, and the carrier’s responsibility for the
sea transport ends.

S e a w a y b ills CSWBs}
Although a sea waybill (SWB) does have many similarities to a B/L. it is not a document
of title, and it is non-transferable. An SWB may be also be forwarded as an electronic
file, using EDI (Electronic Data Interchange) standards, or as a printed document, unlike
a B/L, which always comes in the form of printed documentation.

They have to be handled differently:

• As SWBs are non-negotiable, they cannot be issued "to order” or “to order of”.

• The shipper’s signature is required on the SWB for endorsement of the transport
agreement, so that he cannot later refute the document.

• The lawful consignee has to be clearly identified, so that the carrier knows when a
consignee becomes the lawful owner of the goods. This can become problematic,
as with an SWB, the transfer of ownership, including the liabilities of the owner, has
to be arranged through other means.

The goods will only be delivered to the consignee upon presentation of proper
id e n tifica tio n , not ju st w ith the presentation of the origin al SWB. To avoid
complications and misdelivery, it is essential that the consignee’s name and address
is entered in full on the SWB. and that the consignee must provide a valid proof of his
identity. This can be an identity card, if the consignee is an individual, or a letter of
authorisation, if the consignee is collecting the goods on behalf of his company.

This letter must be written on the consignee’s company letterhead and signed by
an authorised officer of his company, and filed by the agent at the destination. If the
agent or carrier has any doubts as to the letter’s authenticity or the bearer's identity,
a check can be run with the authorised officer. This procedure is allowed under US
law. but remains in contention under British law.

The presentation of an SWB is not proof of identification.

140 Guides to International Logistics Seafreight Forwarding

• The carrier’s SWBs refer to the conditions printed on the back of the carrier’s B/L,
which include limitations on the carrier’s liability under the Hague-Visby Rules.

Although the consignee does not have to present the original SWB issued by the load port
agent, the consignee is entitled to claim against the carrier under British law (Carriage
of Goods by Sea Act 1992), provided he can identify himself as the lawful consignee.

PORTNET®
Advances in technology have brought many beneficial changes to the shipping industry
and its customers. Worldwide shipping communities are now linked up via the computer
systems in ports. In Singapore, this is done through PORTNET'8, which is linked to the
national trade EDI network, TradeNet.

PORTNET" facilitates submission of inward, outward and transhipment declarations to

the various governing trade agencies and authorities. This network allows port users to
place orders and make enquiries from the comfort of their own office, and at the same
time, keep track of cargo movements with a 24-hour online real-time information supply.
It also means that documentation is now not only paperless, but can also be processed
almost instantaneously, reducing lead time for submission of documents.

Shipping Lines

Shippers &
Forwarders

Truckers
 PART 2 Bills of Lading and Docum entation 141

BANK G U A R A N T Y

U N D E R T A K IN G F O R D E L IV E R Y O F C A R G O
W IT H O U T S U R R E N D E R O F B IL L S O F L A D IN G

T O A M E R IC A N PR ESID EN T LIN ES, LTD.

O W N E R S. C H A R T E R E R S A N D /O R A G ENTS O F TH E

s s : ___________________ V ovage : ______________ Bill o f Lading N um ber : _______ Dated

S hipper : _______________________________________ C onsignee : __________________________

Port o f Loading : _____________ Port o f D ischarge : ____________ U ltim ate D estination :

Invoice V alue o f G oods : ________________________ D escription o f G oods : ------------------

W e desire and request that the above-described shipm ent be delivered to the undersigned Indem nitor o r to its
ord er, w ithout surrender o f the relevant bill(s) o f lading due to the non-arrival, o r loss thereof.

In consideration o f yo u r making such delivery, we each hereby request and w arrant, with the know ledge and
intention that such delivery be made in reliance thereon, that (a) the undersigned Indem nitor is entitled to the
possession o f the goods and to delivery thereof and no other person, firm o r corporation is so entitled, (b) we
have a financial interest in having the above shipm ent delivered as requested, and (c) we have full pow er and
authority to m ake and issue this U ndertaking, have duly authorised the persons executing the sam e on ou r behalf
to execute and deliver it to you. and the bank signatory hereto is not prohibited by law, by its articles or
certificate o f incorporation, o r otherw ise, from m aking and issuing the same.

F urther, to induce you to deliver said goods, and in consideration thereof, we hereby jointly and severally
undertake and agree as follow s :

1. T o use o u r best efforts to locate and produce said bill(s) o f lading and thereupon prom ptly to deliver and
surrender the same to you, properly endorsed; and

2. To pay you on demand all freight, general average an d /o r other charges due on the above-described shipm ent
w ithout prejudice to o r release o f any liens thereon by virtue o f this U ndertaking o r o f such delivery; and

3. To indem nify and hold you, the vessel, her ow ners, charterers, operators, m aster and agents harm less from
all dem ands, claim s, liabilities, actions and expenses, including legal expenses and attorneys fees, w hich may
grow out o f or be connected w ith such delivery, and to pay all lossess and expenses, including legal expenses
& attorneys fees, which may result from any breach o f any representation, w arranty or agreem ent herein
contained; and

4 . Prom ptly on your dem and, to enter o u r general appearance in any suit filed bv, o r by another against, you
o r anv party protected by this U ndertaking as a result o f o r pertaining to the delivery o f the goods herein
requested, hereby w aiving anv objection to the ju risd ictio n o r venue o f the court in which such suit is filed,
and to defend, at our expense, any such suit filed by another.

5. That the statem ents herein relating to the contents, quality, w eight, num ber, marks and/or value o f the goods
are representations made by us to you and shall in no way lim it o u r liability hereunder.

Executed this _________________ day o f ____________1 9 __________ at _________________________________

B y:
P A R T Y C LA IM IN G R IG H T O F D E L IV E R Y S IG N A T U R E

W E. T H E U N D ER SIG N E D , HEREBY JOIN IN T H E ABOVE IN D EM N IT Y A N D JO IN TLY AND

SEV ERA LLY G U A R A N T EE D U E PE R FO R M A N C E O F TH E A BOVE C O N T R A C T AN D A C C E PT A LL
TH E LIABILITIES EX PRESSED TH EREIN .
by :

61 M odule 3
Sample of a Letter of Guarantee
142

9 Security Issues

The tragic events of September 11, 2001 sparked off a number of important
changes for containers and ships calling at US ports.

C o n t a i n e r S e c u r it y In itia tiv e CCSQ

In January 2002, the US Customs launched the Container Security Initiative (CSI) to
protect containerised shipping in the USA from terrorists, including weapons of mass
destruction. Under the CSI, the US enters into partnerships with other governments to
target and screen high-risk sea containers in foreign ports before they are shipped to
or through the US. The CSI is designed to address four core issues:

• establishing security criteria to identify high-risk containers;

• catching high-risk containers before they arrive at US ports;

• using technology to quickly pre-screen or inspect high-risk containers; and

• developing and using smart and secure containers.

C u s t o m s - T r a d e P a r t n e r s h ip A g a i n s t
T e r ro ris m CC-TPAT)
C-TPAT is a voluntary programme sponsored by the US Customs. It serves to increase
total supply chain security. The programme was first introduced to importers in April
2002 and was made available to sea carriers in July 2002. By reviewing existing security
procedures and implementing enhanced security arrangements, companies will be able to
be certified by Customs as C-TPAT members. Benefits to participating companies are:

• fewer cargo inspections;

• an assigned account manager for each company;

• access to the C-TPAT membership list; and

• more emphasis on self-policing, as opposed to Customs verifications.

 PART 2 Security Issues 14 3

A u t o m a t e d M a n i f e s t S y s te m C A M S }
The new 24-hour Advanced M anifest Rule CAMS) is an essential element of the CSI,
as it allows the US Customs to have early access to vessel cargo manifest information
prior to loading. This will allow US Customs officers posted at the foreign seaports to
identify high-risk containers before they are shipped to the US.

The basic workings of the 24-hour rule are that:

• the rule includes cargo destined for the US, as well as Foreign Remain On Board
CFROB) cargo. FROB cargo is cargo loaded onto vessels bound for destinations
other than the US, which make intermediary calls in US ports;

• carriers will have to transmit cargo declarations to US Customs at least 24 hours

prior to commencement of loading operations at the port of loading;

• carriers will establish advanced documentation cut-off deadlines of 48 hours to 72

hours of vessel arrival;

• Customs will notify carriers only for those shipments which do not have permission to
load. Carriers who load w ithout submitting documentation 24 hours prior to loading
will face fines and risk delays, including denial of permission to unload;

• shipments placed on hold by Customs w ill be inspected expeditiously to avoid

unnecessary delay; and

• cargo descriptions must be precise. US Customs will not accept general descriptions
such as “ FAK" or “ Machinery".

NVOCC-related issues

Under the new rule, the NVOCC must declare the details of all B/Ls within the container
to the US Customs, including the actual shipper and consignee. The NVOCC has three
options by which to comply, viz:

• become an AM S partner;

• hire a third party or utilise a port system; or

• provide the house level information to the carrier who will subm it to US Customs.

The NVOCC now has the option to apply for Customs bonding and file manifests
electronically with US Customs. When the NVOCC chooses this option, it is required
that the ocean carrier be nominated as the second notify party.

In the event an NVOCC accepts a booking with a second NVOCC, it must provide the
ocean carrier with the second NVOCC's house level detail, for filing with US Customs.
14 4 Guides to International Logistics Seafreight Forwarding

Once an NVOCC is bonded and approved to file through the AMS directly, the NVOCC
must always do so. It can no longer do so through the ocean carrier.

To avoid unnecessary delays or confusion, the NVOCC should at the time of booking
advise the ocean carrier what option the NVOCC is taking to file with US Customs.

Data requirements

The following information is required to be submitted to US Customs 24 hours prior to

loading the vessel bound for the US. It includes cargo discharging at the US, and any
FROB cargo laden on vessels calling at US ports.

• The last foreign port before the vessel departs for the US.

• The carrier SCAC (Standard Carrier Alpha Code) - a unique code is assigned for
each carrier.

• The carrier-assigned voyage number.

• The date the vessel is scheduled to arrive at the first US port in Customs territory.

• The number and quantities from the carrier’s ocean B/L, either master or house,
as applicable. This means that the carrier must transmit the quantity of the lowest
external packaging unit; containers and pallets are not acceptable manifested
quantities. For example, a container containing 15 pallets with 300 cartons should
be manifested as 300 cartons.

• The first foreign port where the carrier takes possession of the cargo destined to
the US.

• A precise description - or Harmonised Tariff Schedule (HTS) number; the 6-digit

level under which the cargo is classified, if that information is received from the
shipper - and w eight of the cargo. Or, for a sealed container, the shipper’s declared
description and weight of the cargo. Generic descriptions, such as “ FAK", “general
cargo” and “STC (Said To Contain)” are not acceptable.

• The shipper’s complete name and address, or identification number, from all B/Ls.
The identification number will be a unique number assigned by US Customs upon
the implementation of the Automated Commercial Environment (ACE), which is being
developed in phases beginning in early 2004 and scheduled for completion in 2006.
ACE will provide the technology foundation for all modernisation programmes and
deliver enhanced support of the cargo processing and enforcement operations. ACE’s
major business functions are the Customs Border Protection (CBP) User Friendly
Portal, account management, cargo processing and electronic release (e-Release).
and border security and enforcement.
 PART 2 Security Issues 145

• The com plete name and address of the consignee, or the ow ner or owner's
representative, or identification number, from all B/Ls.

• The vessel name, country of documentation, and official vessel number. The vessel
number is the International M aritime Organisation number assigned to the vessel.

• The foreign port where the cargo is laden on board.

• Internationally recognised hazardous material code when such materials are being
shipped.

• Container numbers (for containerised shipments).

• Seal numbers for all seals affixed to containers.

Implementation

The rule was implemented on 2 December 2002, and enforced on 2 February 2003.

The following terms and descriptions are meant as a guide. They are illustrative, not
exhaustive, examples of acceptable and unacceptable descriptions.

Not Acceptable Acceptable

A p p a re l/W e a rin g A p p a re l/
Clothing/Shoes/ Footwear
Ladies Apparel
Kitchen A p p lia n c e s /In d u s tria l A p p lia n c e s /H e a t
Appliances
Pump

Autoparts/Parts New Autoparts/Used Autoparts

Caps Baseball Caps/Blasting Caps/Bottle Caps/Hub Caps

Chemical name (not brand name) or UN Hazmat

Hazardous Chemicals
Code Identifier
C o m p u te rs/C o n su m e r E le c tro n ic s /T e le p h o n e s /
Electronic Goods Electronic Toys/Personal or Household Electronics
(PDA, VCR, TV)
Industrial Equipment/Oil Well Equipment/Automotive
Equipment
Equipment/Poultry Equipment
Wood Flooring/Plastic Flooring/Carpet/Ceramic Tiles/
Flooring
Marble Flooring
O ran g e s/P a cka g e d R ice/P acka ge d G ra in /B u lk
Foodstuff
Grain

Iron Iron Pipes/Steel Pipes/Iron Building Materials

Steel Steel Building Materials

146 Guides to International Logistics Seafreight Forwarding

Not Acceptable Acceptable

Leather Articles Saddles/Leather Handbags/Leather Jackets/Shoes

M e ta l W o rk in g M a c h in e ry /C ig a re tte M a k in g
Machinery
Machinery

Pipes Plastic Pipes/PVC Pipes/Steel Pipes/Copper Pipes

Plastic Kitchenw are/Plastic H ousew are/Industrial
Plastic Goods
Plastics/ Plastic Toys/New or Used Auto Parts

Polyurethane Polyurethane Threads/Polyurethane Medical Gloves

Personal Effects Household Goods

Rubber Articles Rubber Hoses/Tyres/Toys/Rubber Conveyor Belts

Rods Welding Rods/Rebar/Aluminium Rods/Iron Scrap

Scrap Plastic Scrap/Aluminium Scrap/Iron Scrap

Tiles Ceramic Tiles/Marble Tiles

Tools Hand Tools/Power Tools/Industrial Tools

Wires Electric W ires/Auto Harness/Coiled Wire

STC "General Cargo"

FAK “ No Description”

Implications of the Rule

This rule puts the onus on the carrier to provide information to Customs, when the source
of this data is the agreement between buyer and seller. It may be more accurate and timely
if information could be provided by the traders themselves. Not surprisingly, errors are
strictly dealt with. The rule states: “Any master who fails to provide manifest information
as required by this section, or who presents or transmits electronically, any document
required by this section that is forged, altered or false or who fails to present or transmit
the information required in a timely manner, may be liable for civil penalties. . ."

Shipping lines have been adopting the principle of "No Document, No Load" in shutting
out containers with no document/manifest details.

The US Customs mandatory requirements, especially the 24-hour rule, will pose new
challenges for scheduling movement of cargo. It will generate new demands along the
logistics chain. Given that the US is a major trading nation, the new security arrangements
are long-term; other regions and nations will eventually adopt similar policies. Transport
management systems will have to incorporate provisions for cargo security.
 147

lO Freight Tariff Systems

It is important for logistics service providers to have a good understanding of
the transportation charges imposed by carriers for various freight items, so that
they can pass on this information to the customer.

L o g ic a n d p r a c t ic e

Freight charges are not based on the size of the freight, but on the type of commodity.
This is despite the fact that the handling and vessel costs covered by a carrier for
transporting a container are actually the same for every container of the same dimensions,
regardless of its contents.

So why a commodity-based tariff?

Each commodity comes with a different market value. For example, a container load of
premium coffee beans will have a higher resale value than the same container load of
grain. It is only right, therefore, that commodities with a higher worth should be charged
accordingly.

Expensive or fragile commodities need special care and conditions to ensure they arrive
undamaged; they require more extensive handling, such as cargo separation and special
gears, and usually a larger area for stowage. This all leads to additional charges for the
handling costs and space, and a higher freight tariff.

Currently, shippers benefit from an over-tonnaging situation - where there are too many
ships in comparison with cargo volume - in most of the major shipping routes. This is
causing freight levels to slide and forcing many major shipping lines to restructure and
reduce operating costs. Carriers are:

• deploying newer and bigger container vessels with better economy of scale, energy
efficient engines and environmentally friendly systems;

• forming mega-carrier consortia and network sharing agreements;

8 Guides to International Logistics Seafreight Forwarding

• signing global contracts with shippers to capture a bigger piece of the market;

• upgrading customer services and introducing EDI and e-commerce to improve data
interchange between shippers and terminals;

• becoming involved in intermodal services so that they can offer d oor-to-door

services; and

• placing greater emphasis on providing just-in-tim e (JIT) services, to lower customers’

inventory costs.

C o n c e p ts /P ra c tic e s
Freight All Kinds CFAK}

As its name implies, the FAK system works by applying the same ta riff rate for an LCL
shipment, regardless of the commodity. Likewise, there is also a box rate with an FCL
shipment. With this across-the-board tariff, this system is obviously very simple to
implement.

While the FAK rate system used to be the domain of most non-conference and feeder
carriers, due to the present depressed market, it has been embraced by almost all
conference carriers, who do not want to miss out on the potential business generated.

Commodity rates

Conference carriers used to be limited by many rules and regulations, which made it hard
for members to react and adapt to changes in the freight market, and to implement any
rate changes. The need for change led to the formation of rate action groups, so that
immediate action could betaken to counter competition from the non-conference carriers,
which were already using a commodity box rate system. This led to the streamlining of
the existing tariff book.

The commodity box rates, also called the NT 90, were introduced in 1990 by the FEFC.
All commodities were now given different rates.

In the USA trade, a com m odity ta riff system was adopted by the FMC from the
beginning.

Rebates

As with any business trying to stay ahead in a competitive market, shipping companies
are also forced to try and retain existing customers and attract new business, more often
than not, by offering rebates. These can come in the form of loyalty rebates for those
who already have ties with the company, or they can be based on shipment size.
 PART 2 Freight Tariff Systems 149

Shipping lines offer two types of rebates.

Direct rebate

This is usually a direct discount on the freight for any shipper who is deemed a contract
shipper, meaning that the shipper will only be offered this discount as long as he continues
to transport his goods solely with a conference carrier.

Deferred rebate

This rebate is only given when a shipper has worked with the conference carrier for a
certain amount of time [usually six months). This privilege can be forfeited, however, if
during this period the shipper transports goods with a non-conference carrier.

Many major buying houses and NVOCCs operating w ithin the USA trade sign a time-
volume contract called a service contract, where they are offered substantially lower box
rates if they can guarantee the carriers that they will ship a specified minimum volume
over a 12-month period.

Consolidation rates

Consolidation rates are offered when there is more than one type of commodity in one
container, though some carriers require that at least three or more different commodities
have to be packed into the container.

Shipping lines give consolidation rates to freight forwarders or NVOCCs; this is obviously
ideal for them, when offering LCL services to shippers. The forwarders and NVOCCs
then make a profit: they collect the LCL freight charges from shippers and consignees,
and pay the carrier FCL charges.

CY/CY Terms: HOUSE/HOUSE Terms CUSA Trade}

Most container carriers offer a CY/CY (Container Yard/ Container Yard) quotation that is
equivalent to a "full liner terms” agreement. The shipping line takes full responsibility for
the shipment, from the loading of the container at the port, through to the carriage by sea
and the discharge upon delivery. The shipper, however, is responsible for delivering the
container into the CY at the load port, and the consignee is responsible for collecting the
container from the CY at the discharge port and delivering it to its final destination.

BAF/FAF CUSA Trade}

BAF (Bunker Adjustm ent Factor) is used in the FEFC, and FAF (Fuel Adjustm ent Factor)
is used in the USA trade.
15 0 Guides to International Logistics Seafreight Forwarding

In the 1970s, when the Suez Canal was temporarily closed, the price of fuel increased
drastically, which caused shipping costs to also rise. Due to the price fluctuations, it
was not possible to incorporate these changes into the normal freight rates, so several
conferences came together and decided to introduce an additional charge for the fuel
used by the vessel. This is calculated as a percentage of the freight charges, or as a
fixed amount per 1,000 kg or m3, though the current practice is to charge it on a per TEU
basis. The rate is adjusted to reflect the movement of fuel market prices and currency
exchange rates, especially the US dollar.

CAF: Currency Adjustment Factor

Currencies in the world exchange market can be very unstable, fluctuating to such a
degree that it is not feasible to use them to determine tariff rates. To get around this
problem, conferences have changed the currency denomination of their freight tariffs
to be that of the country owning the majority of the members’ vessels.

In those conferences that continue to use the US dollar, it has been deemed necessary to
introduce a special charge to equalise exchange rates. This additional charge is pegged
to current exchange rates, and are altered regularly, with updates and information issued
through the press by the conferences.

THC: Terminal Handling Charge

The THC is collected in the local currency of the port (both loading and unloading). It
is imposed by shipping lines to cover the handling costs of the containers while in the
port of loading and discharge, and the associated documentation.

EHC, LO/LO: Equipment Handling Charge, Lift-on/Lift-off

Some conference carriers will charge an additional equipment handling fee or lift-o n /
lift-o ff charge.

DDC: Destination Delivery Charge (LISA trade)

This is an operational charge based on container size; it covers the crane required to lift
the containers off the vessel, the drayage of the container within the terminal and the
gate fees at the terminal operation.

Carriers pay the port operators, though the carriers can recover these costs from
consignees (or sometimes shippers).
 PART 2 s Freight Tariff Systems 1

S u rc h a rg e s

Congestion surcharge

A congestion surcharge, normally expressed as a percentage of freight charges or on

a per TEU basis, is imposed by shipping lines when there are delays in the berthing
of their vessels due to congestion in the port. Shippers and receivers are informed in
advance of the congestion surcharge that will be imposed.

This charge protects the ship owner, as it is very im portant that all ports of call operate
as smoothly as possible. Delays disrupt the sailing schedule, and extra expenditure would
have to be incurred, to deploy more vessels to meet the schedule advertised.

Examples of port congestion that can cause delays include strikes by the dockworkers,
insufficient facilities at the port, slow delivery of cargo from the port, and poor transport
infrastructure. A congestion surcharge on a port can often have long-term benefits
for vessels, as it puts pressure on the port adm inistration to make the necessary
improvements.

War risks surcharge

A w ar risks surcharge, also known as an Extra Risks Insurance Surcharge (ERIS) is

imposed on any vessel passing through any region that is either involved in a war, or at
risk of warlike conditions. These additional risks are reflected in the sharp increases of
both the ship’s insurance premiums and the salaries of the crew - the difference in these
extra expenses will be covered by the war risks surcharge, which is usually calculated
as a percentage of the freight charges or on a per TEU basis.

Peak season surcharge

As its name implies, a peak season surcharge is imposed by carriers on vessels that
operate during the second half of the year. The volume of shipments in the year-end
festive periods tend to be higher, resulting in a higher demand for container space.

Canal toll fee

Any increase in canal toll paid by the vessels will be recovered through the canal toll
surcharge. For instance, the Suez authorities recently increased the toll for ships passing
through the Suez Canal; the rise in cost was recovered from shippers through the canal
toll surcharge.
152 Guides to International Logistics Seafreight Forwarding

Exchange rates

Generally, the freight charge is paid in the currency in which it is calculated, or the
currency of the country where the original shipping agreement was made. However,
when you consider that most liner companies carry cargo between countries, it would
obviously be difficult to collect all freight charges in one particular currency.

Shipping lines have rules in their tariffs with regards to exchange rates, though there are
differences between conferences on the application of the exchange rate. Some stipulate
10 or even 15 days after the date of the B/L, or after the date of shipment.

F r e ig h t q u o t a t io n , jo b c o s tin g & p a y m e n t
The freight quotation

Before providing the customer with a freight quotation, the logistics service provider
must first analyse the customer’s exact requirements, and conclude which services his
company can offer, and which he can outsource to subcontractors.

All costs, from the service provider himself, possible subcontractors and the carrier,
need to be taken into account before the quotation can be made. The final quote has
to be worked out properly, w ithout mistakes or miscalculations, before being given to
the customer.

Given the many terms and abbreviations used when laying out the basic structure of
an export cargo quotation, the service provider must have a good understanding of all
shipping terms used, to avoid confusion and mistakes in the quotation. It is also essential
for the service provider to have a good knowledge of the port tariffs, such as the charges
for direct delivery and stevedoring of containers, the surcharge for overweight containers,
restrictions on dangerous goods, etc.

A freight quotation from a NVOCC consists of two parts, which covers the entire
transportation process.

• Ocean freight and its associated charges.

• Local charges incurred in pre-carriage or on-carriage of the supply chain.

For a FCL quote, the pre-carriage could include:

• delivery of the empty container to the shipper’s premises; and

• transfer of the stuffed container to the port CY.

 PART 2 Freight Tariff Systems 153

For a LCL quote, the pre-carriage could include:

• collection of LCL cargo to the CFS for storage:

• handling charges, such as those for use of the forklift;

• labour charges, for the labeling or repacking of the container;

• charges for stuffing the container and trucking charges to the port;

• processing documentation and EDI charges incurred by the applicable export;

• charges for cargo insurance, if applicable; and

• charges for warehouse storage, if applicable.

The basic structure of an export cargo quotation would contain:

• ocean freight charges, usually in USD or - for LCL rates - in per revenue tonne
(weight tonne or m3, whichever is higher);

• BAF, if any;

• CAF, if any;

• THC;

• other surcharges, if any;

• exchange rate;

• storage charges, if any;

• trucking charges, if any;

• forklift charges, if any;

• EDI charges, such as Tradenet/Customs permit;

• documentation charge; and

• B /Lfee.

Providing a new quotation

Providing a new quotation can be the result of several factors.

154 Guides to international Logistics : Seafreight Forwarding

A market survey

A market survey involves looking at market movement, and how business is doing in
each geographical region. Forecasts can be made on what the major exports or imports
will be over the next few years for each region, based on the success of the market
and whether it is undergoing any significant changes, which could be due to a recent
disaster, such as a typhoon or an earthquake. Potential exporters and importers for the
region also need to be identified.

Changes in services and tariffs

Carriers can change the services they provide, and their rates as well. They can increase
or decrease the rates, or introduce new alternatives to current routes offered by shipping
lines.

Direct inquiries

Inquiries, especially unsolicited inquiries, from individuals or companies for shipping rates
or information on shipping possibilities, are a great way to generate new business.

Traffic problems and relief

Good networking and an awareness of what is happening within the industry will make it
possible for the service provider or carrier to pass on useful information to clients when
important changes are made, such as the lifting of certain restrictions or the ending of
a strike in a certain port. Clients would greatly appreciate any information that would
give them a competitive advantage.

Job costing

Job costing is an im portant process, as it must be worked out correctly if the operation is
to make a profit. This is again the responsibility of the logistics service provider, although
the finance department will undertake it after the job or project has been completed.

To make sure that an accurate computerised record is kept of all the costs throughout
the process, each function or service is given a code, and each job is given an order
number. Likewise, revenue codes can be assigned to each job, and later collated. Keeping
a record of costs and revenue would indicate whether each job makes a profit or loss.
It is a good idea to study those jobs that incur a high loss, to identify where the money
was lost and how it can be better avoided in the future.
 PART 2 Freight Tariff Systems 155

JOB: 1 x 2 0 ' P E R S O N A L EFFECTS: S IN G A P O R E -S Y D N E Y

IT E M C O ST P R IC E SELL P R IC E P R O FIT

Ocean freight 1.328 1,530 202

BAF 275 275 -

Peak season surcharge 350 350 -

LOCAL CHARGES - SINGAPORE

Permit 30 30 -

Transport - LCL 90 135 45

Labour 250 400 150

PSA wharfage 55 55 -

THC 182 182 -

ETC 20 20 -

PORTNET® fee 7 15 8

B/L fee 30 50 20

B/L surrender fee 30 50 20

Stuffing charges 150 350 200

Labelling and packing 650 950 300

Fumigation 100 200 100

Insurance 80 150 70

Destination charges 1.500 1,950 450

Total 5,127 6,692 1,565

15 6 Guides to International Logistics 1 Seafreight Forwarding

Working out the costing

To w ork out the net position for each job before giving an official quotation, the following
principle applies:

REVENUE - VARIABLE COST = NET PROFIT/LOSS

The NVOCC buys space at “wholesale price” and sells it at “retail price".

Areas of Revenue:

• Container freight charges

• Stuffing and unstuffing

• Local cartage

• Packaging, etc

Services to be charged:

• Preparation of documentation, e.g. packing lists, manifests, B/Ls

• Consular fees, import and export permits, import Customs invoices

• Handling/supervision fees

Potential Revenue:

• Marine insurance

• Warehousing

• Packaging

• Local cartage

• Customs brokerage

Expenses:

• Payment of container freight charges to the carrier

• Labour

direct costs for stuffing/unstuffing

documentation, administration and supervision

• Material costs - pallets, tim ber for cargo separation

 PART 2 Freight Tariff Systems 157

• Terminal and warehouse storage

• Cargo handling equipment

• Office equipm ent and overheads

• Communications

Costing tools:

• Official quotations from carriers w ith validity periods (using spreadsheets as

database)

• Local handling and warehousing tariffs

• Comparative quote from industry, being aware of false flow) prices given by
clients

• Offers made by other departments

• Hidden overheads, such as phone calls, faxes or general com m unication and
entertainment costs

• Database on client’s support to ascertain if business is increasing or decreasing

• Bad debts/slow payments

Invoicing

When an invoice is prepared for the customer, it must be done as quickly as possible,
and must also be laid out clearly. It is important that the customer can easily see where
each of the individual charges comes from, as the services that have been performed
and paid for will not normally have been witnessed by the client and can often seem
confusing. It is therefore very likely that the customer will query some of the charges,
and the service provider must be prepared to justify each charge, both with a verbal
explanation and with documented proof, such as a receipt, a previous quote or the
agreement that was originally made with the client.

The invoice must also be formatted correctly, to ensure that the service provider has
not given away any company information that is considered confidential. It has to be
double-checked to make sure that there are no errors in the total charges due. All
numbers pertaining to control, the container B/L, invoice and purchase order must also
be thoroughly checked, as the client will be required to match the service provider’s
invoice to that of the delivery receipt, before they authorise the payment.

Any mistakes at this stage can be costly, both in services that go unpaid and the time
that it will take to clear up any misunderstandings with clients.
158 Guides to International Logistics Seafreight Forwarding

When working out an invoice:

• Make it prompt and orderly.

• Double-check the invoice format, numbers and all calculations.

• Be prepared to justify and explain each charge to the client.

What customers want

When a customer approaches the service provider, they are looking to have the following
requirements fulfilled:

• safety and security of the cargo;

• reasonable transportation costs; and

• schedule delivery of cargo at the destination.

Here are some examples of how the customer's requirements can be met with alternative
solutions.

A shipper who needs to have his goods delivered as fast as possible, so as not to
disrupt the flow of his production line, might insist that he requires the “fastest possible
routing” for his shipment. But instead of focusing on the speed of the shipment, it is
more important to find a good carrier and work to a schedule where the transit time is
dependable. If the shipper can rely on the regular shipment, he can plan around this
transit time and start working with different order quantities and purchase lead times,
to ensure that the goods needed for manufacturing never run short.

If a company needs to transport expensive clothes by air from Europe, then savings can
be made simply by switching from flat pack cartons to hanging garments boxes. Although
the forwarder would be increasing the size of the cargo, and the freight charges, the
hanging garment boxes reduce the need for expensive unpacking, pressing and hanging
of all the garments, resulting in greater overall savings.

F r e ig h t p a y m e n t

Freight prepaid - export

When a B/L is marked as freight prepaid:

• The shipper named on the B/L is responsible for the freight.

• As far as the consignee is concerned, the B/L clearly states that the freight has
actually been paid by the shipper.
 PART 2 Freight Tariff Systems 159

However in liner shipping, it is the usual practice for credit to be granted even when
the B/L is marked freight prepaid, so there may be complications during the delivery of
the cargo, if the freight charge has not been paid by the shipper by the time the cargo
arrives at its destination. In this instance, the ship owner or the operator can demand
payment from the shipper, who initially entered into the agreement with the ship owner,
and is therefore responsible for the freight.

The liner company and ship owner are also entitled to withhold the goods upon delivery,
until the freight has been paid, though how long they can do this is stipulated by the
maritime laws of the country that they are in.

A B/L often also has a clause stating that the freight charge has been earned, whether
or not the ship and/or cargo arrives at its destination; the maritime law of some countries
stipulate that the cargo owner does not pay the freight charges if the cargo does not
arrive at its intended destination.

As can be seen, maritime law seeks to protect the cargo owner, whereas B/L clauses
seek to protect the ship owner.

Freight Collect - Export

When a B/L is marked as freight collect, the consignee, not the shipper, must pay the
freight charges, before the cargo can be released.

The following Incoterms apply to a freight collect B/L, where the consignee nominates
the shipping line for his shipment.

• EXW (Ex-Works): the seller’s obligation is fulfilled when he makes the goods available
at his premises.

• FCA (Free Carrier): the seller’s obligation is fulfilled when he has delivered the
export-cleared goods into the charge of the carrier named by the buyer at a named
location.

• FAS (Free Alongside Ship): the seller’s obligation is fulfilled when the goods are
placed alongside the vessel on the quay at a named port.

• FOB (Free on Board): the seller’s obligation is fulfilled when the goods are transferred
over the ship's rail at a named port.

As most carriers do accept freight collect or “freight payable destination" B/Ls, this does
not cause many problems.
160 Guides to International Logistics Seafreight Forwarding

Exceptions may occur when collect freight charges are not accepted by carriers, so that
they have to be prepaid. This is common in countries with strict foreign exchange control;
remittance of freight is difficult, and ship owners insist on prepaid freight charges for
all shipments.

Further exceptions include vulnerable cargo, such as:

• dangerous/hazardous cargo;

• deck cargo;

• household removals;

• livestock;

• personal effects;

• private cars; and

• refrigerated cargo.

In these cases, the carrier has to stipulate that the freight is prepaid, to guard itself against
future dispute over the freight amount, if damage or loss occurs. So, for instance, if cattle
are being shipped and a few die during the voyage, the carrier does not want to be held
responsible, nor if cargo stowed above deck was lost overboard in a storm.

Collect fee

If the freight is to be paid for upon delivery at the destination, it is common practice for
some carriers to charge a collect fee, roughly 2.5°/o of the total freight charges.

The rationale behind this is that the carrier has already extended credit for the duration of
the voyage, by not earning freight charges - it has incurred an interest loss for uncollected
freight. Flowever, in the face of stiff competition, carriers rarely impose this fee.

General rate increase CGRI)

When a general rate increase (GRI) is due, most conferences normally announce it in
the main newspapers, at least one month before it takes effect.

The effective date can either be the first day of the calendar month, or it can be based
on a vessel/voyage number listed in a liner schedule.
 161

PART THREE
INTERNATIONAL
CONVENTIONS

Significance of
International Transport
Conventions

Before the International Transport Convention (ITC) was devised, the growth
and development of international trade had been significantly impeded by the
many different legal systems in effect around the world. The important question
of liability among the shipping parties depended solely on the country in which
the freight was, and its legal system. Of course, this created confusion and
uncertainty over the rights of exporters and importers. The ITC was therefore
needed to bring some sort of uniformity and order to the transport industry, so
that all parties followed one set of rules, which would apply across the board.

After working out the principles and ground rules, with the support and backing
of the United Nations and other international organisations, the convention was
submitted for adoption by a diplomatic conference, and the ITC took effect as
an international law, binding all states which have ratified or acceded to it.

The three principal international surface transport conventions are the Hague
and Hague-Visby Rules to cover all forms of sea transport, the CMR Convention
for road transport and the C IM /C O TIF Convention for rail transport.
162 Guides to International Logistics ■ Seafreight Forwarding

T h e H a g u e a n d H a g u e -V is b y R ules
In the early stages of shipping. English common law did not come down fairly on the ship
owner. They were restricted by the same obligations and liabilities as those who dealt in
land transport, which was more common at the time. The very limited exceptions from
liability were: acts of God, acts of the King’s enemies, fault of the goods owner, inherent
vice of the goods, jettison in general average sacrifice, or fraud by the goods owner.
No account was taken of the far more potentially hazardous conditions faced at sea,
compared to on land. The ship owner also had to ensure that his vessel was seaworthy
at each stage of the journey.

These restrictions and legal boundaries meant that the ship owners were forced to
find ways to sidestep the law, and they began printing clauses on the back of the B/L,
excluding all their common law liabilities. By the early 1920s, this loophole meant that the
shipper and his freight were no longer fully protected, and the system no longer worked.
It was therefore necessary to resolve the situation before it reached a crisis point.

A conference was held at The Hague in 1924, attended by all conflicting parties, who
unanimously agreed that a compromise must be reached. An international convention
was set up to establish and regulate a set of terms: the Hague Rules, to be included
on all B/Ls.

The Hague Rules did favour ship owners rather than shippers, and the ship owners
would not have accepted any other system. With the emergence of containerisation
in the late 1960s, the Hague Rules were no longer sufficient to handle the developing
industry, and a revision of liability limits was called for. The amendments, known as the
Visby amendments, were agreed upon at a conference in North Germany, then signed
in Brussels on 23 February 1968.

As many countries have still not ratified the Visby amendments, both the Hague Rules and
the Hague-Visby Rules continue to be in force in different parts of the world today.

Exhibit 7: The Hague-Visby Ru/es

THE H A G U E R ULES AS A M E N D E D BY THE B R U SS E LS P R O TO C O L 1 9 6 8

A rtic le I: D efin itio n s

In these Rules the follow ing words are employed, w ith the meanings set out
below:

(a) “Carrier” includes the owner or the charterer who enters into a contract of
carriage with a shipper.
 PART 3 ■ Significance of International Transport Conventions 163

(to "Contract of carriage” applies only to contracts of carriage covered by a bill of

lading or any similar document of title, in so far as such document relates to the
carriage of goods by sea, including any bill of lading or any similar document as
aforesaid issued under or pursuant to a charter party from the moment at which
such bill of lading or similar document of title regulates the relations between a
carrier and a holder of the same.

(c) “ Goods” includes goods, wares, m erchandise, and articles o f every kind
whatsoever except live animals and cargo which by the contract of carriage is
stated as being carried on deck and is so carried.

(d) “Ship" means any vessel used for the carriage of goods by sea.

(e) “ Carriage of goods" covers the period from the time when the goods are loaded
on to the time they are discharged from the ship.

A rtic le II: Risks

Subject to the provisions of Article VI, under every contract of carriage of goods by
sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care
and discharge of such goods, shall be subject to the responsibilities and liabilities
and entitled to the rights and immunities hereinafter set forth.

A rtic le III: R espo n sib ilities and Liabilities

1. The carrier shall be bound before and at the beginning of the voyage to exercise
due diligence to

(a) make the ship seaworthy;

(b) properly man, equip and supply the ship;

(c) make the holds, refrigerating and cool chambers, and all other parts
of the ship in which goods are carried, fit and safe for their reception, carriage
and preservation.

2. Subject to the provisions of Article IV, the carrier shall properly and carefully
load, handle, stow, carry, keep, care for, and discharge the goods carried.

3. After receiving the goods into his charge the carrier or the master or agent of the
carrier shall, on demand of the shipper, issue to the shipper a bill of lading showing
among other things
164 Guides to International Logistics ■ Seafreight Forwarding

Ca) the leading marks necessary for identification of the goods as the same
are furnished in w riting by the shipper before the loading of such goods
starts, provided such marks are stamped or otherwise shown clearly upon
the goods if uncovered, or on the cases or coverings in which such goods
are contained, in such a m anner as should ordinarily remain legible until
the end of the voyage;

Cb) either the number of packages or pieces, or the quantity, or weight, as the
case may be, as furnished in writing by the shipper;

Cc) the apparent order and condition of the goods:

Provided that no carrier, master or agent of the carrier shall be bound to state or show
in the bill of lading any marks, number, quantity or weight which he has reasonable
ground for suspecting not accurately to represent the goods actually received, or
which he has had no reasonable means of checking.

4. Such a bill of lading shall be prima facie evidence of the receipt by the carrier of
the goods as therein described in accordance with paragraphs 3(a), Cb) and (c).

However, proof to the contrary shall not be admissible when the bill of lading has
been transferred to a third party acting in good faith.

5. The shipper shall be deemed to have guaranteed to the carrier the accuracy at
the time of shipment of the marks, number, quantity and weight, as furnished by him,
and the shipper shall indemnify the carrier against all loss, damages and expenses
arising or resulting from inaccuracies in such particulars. The right of the carrier to
such indemnity shall in no way limit his responsibility and liability under the contract
of carriage to any person other than the shipper.

6. Unless notice of loss or damage and the general nature of such loss or damage
be given in writing to the carrier or his agent at the port of discharge before or at the
time of the removal of the goods into the custody of the person entitled to delivery
thereof under the contract of carriage, or, if the loss or damage be not apparent
w ithin three days, such removal shall be prima facie evidence of the delivery by the
carrier of the goods as described in the bill of lading.

The notice in writing need not be given if the state of the goods has, at the time of
their receipt, been the subject of joint survey or inspection.

Subject to paragraph 6 / 7/s the carrier and the ship shall in any event be discharged
from all liability whatsoever in respect of the goods, unless suit is brought within
 PART 3 Significance of International Transport Conventions 165

one year of their delivery or of the date when they should have been delivered. This
period, may however, be extended if the parties so agree after the cause of action
has arisen.

In the case of any actual or apprehended loss or damage the carrier and the
receiver shall give all reasonable facilities to each other for inspecting and tallying
the goods.

6bis. An action for indemnity against a third person may be brought even after the
expiration of the year provided for in the preceding paragraph if brought within the
time allowed by the law of the Court seized of the case. However, the tim e allowed
shall be not less than three months, commencing from the day when the person
bringing such action for indemnity has settled the claim or has been served with
process in the action against himself.

7, After the goods are loaded the bill of lading to be issued by the carrier, master, or
agent of the carrier, to the shipper shall, if the shipper so demands be a "shipped" bill
of lading, provided that if the shipper shall have previously taken up any document of
title to such goods, he shall surrender the same as against the issue of the ‘shipped’
bill of lading, but at the option of the carrier such document of title may be noted
at the port of shipment by the carrier, master, or agent with the name or names of
the ship or ships upon which the goods have been shipped and the date or dates of
shipment, and when so noted, if it shows the particulars mentioned in paragraph 3
of Article III, shall for the purpose of this article be deemed to constitute a “ shipped”
bill of lading.

8. Any clause, covenant, or agreement in a contract of carriage relieving the carrier

or the ship from liability fo r loss or damage to, or in connection with, goods arising
from negligence, fault, or failure in the duties and obligations provided in this article
or lessening such liability otherwise than as provided in these Rules, shall be null
and void and of no effect. A benefit of insurance in favour of the carrier or similar
clause shall be deemed to be a clause relieving the carrier from liability.

A rtic le IV: R ights and Im m u n itie s

1. Neither the carrier nor the ship shall be liable for loss or damage arising or
resulting from unseaworthiness unless caused by want of due diligence on the part
of the carrier to make the ship seaworthy, and to secure that the ship is properly
manned, equipped and supplied, and to make the holds, refrigerating and cool
chambers and all other parts of the ship in which goods are carried fit and safe
166 Guides to International Logistics Seafreight Forwarding

for their reception, carriage and preservation in accordance with the provisions of
paragraph 1 of Article III.

Whenever loss or damage has resulted from unseaworthiness the burden of proving
the exercise of due diligence shall be on the carrier or other person claiming
exemption under this article.

2. Neither the carrier nor the ship shall be responsible for loss or damage arising
or resulting from

(a) act, neglect or default of the master, mariner, pilot, or the servants of the
carrier in the navigation or in the management of the ship:

Cb) fire, unless caused by the actual fault or privity of the carrier:

(c) perils, dangers and accidents of the sea or other navigable waters;

Cd) act of God;

Ce) act of war;

Cf) act of public enemies;

Cg) arrest or restraint of princes, rulers or people, or seizure under legal

process;

Ch) quarantine restrictions;

CO act or om ission of the sh ip pe r or ow ner of the goods, his agent or

representative;

Q) strikes or lockouts or stoppage or restraint of labour from whatever cause,

whether partial or general;

Ck) riots and civil commotions;

0) saving or attempting to save life or property at sea;

Cm) wastage in bulk of weight or any other loss or damage arising from inherent
defect, quality or vice of the goods;

Cn) insufficiency of packing;

 PART 3 ■ Significance of International Transport Conventions 167

Co) insufficiency or inadequacy of marks;

Cp) latent defects not discoverable by due diligence;

Cq) any other cause arising w ithout the actual fault or privity of the carrier, or
w ithout the fault or neglect of the agents or servants of the carrier, but the
burden of proof shall be on the person claiming the benefit of this exception
to show that neither the actual fault or privity of the carrier nor the fault or
neglect of the agents or servants of the carrier contributed to the loss or
damage.

3. The shipper shall not be responsible for loss or damage sustained by the carrier
or the ship arising or resulting from any cause w ithout the act, fault or neglect of
the shipper, his agents or his servants.

4. Any deviation in saving or attempting to save life or property at sea or any

reasonable deviation shall not be deemed to be an infringement or breach of these
Rules or of the contract of carriage, and the carrier shall not be liable for any loss
or damage resulting therefrom.

5. Ca) Unless the nature and value of such goods have been declared by the shipper
before shipment and inserted in the bill of lading, neither the carrier nor the ship
shall in any event be or become liable for any loss or damage to or in connection
with the goods in an amount exceeding the equivalent of 666.67 units of account
per package or unit or units of account per kilo of gross w eight of the goods
lost or damaged, whichever is the higher.

Cb) The total amount recoverable shall be calculated by reference to the value
of such goods at the place and time at which the goods are discharged from
the ship in accordance with the contract or should have been so discharged.

The value of the goods shall be fixed according to the commodity exchange
price, or, if there be no such price, according to the current market price, or, if
there be no commodity exchange price or current market price, by reference
to the normal value of goods of the same kind and quality.

Cc) Where a container, pallet or similar article of transport is used to consolidate

goods, the number of packages or units enumerated in the bill of lading as
packed in such article of transport shall be deemed the number of packages
or units for the purpose of this paragraph as far as these packages or units are
concerned. Except as aforesaid such article of transport shall be considered
the package or unit.
168 Guides to International Logistics Seafreight Forwarding

Cd) The unit of account mentioned in this Article is the special drawing right
as defined by the International Monetary Fund. The amounts mentioned in
sub-paragraph [a) of this paragraph shall be converted into national currency
on the basis of the value of that currency on a date to be determined by the
law of the Court seized of the case.

(e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation
of liability provided for in this paragraph if it is proved that the damage resulted
from an act or omission of the carrier done with intent to cause damage, or
recklessly and with knowledge that damage would probably result.

CO The declaration m entioned in sub-paragraph (a) of this paragraph, if

embodied in the bill of lading, shall be prima facie evidence, but shall not be
binding or conclusive on the carrier.

(g) By agreement between the carrier, master or agent of the carrier and the
shipper other maximum amounts than those mentioned in sub-paragraph (a)
of this paragraph may be fixed, provided that no maximum amount so fixed
shall be less than the a p p ro p ria te m axim um m en tion ed in th a t s u b -
paragraph.

Ch) Neither the carrier nor the ship shall be responsible in any event for loss or
damage to, or in connection with, goods if the nature or value thereof has been
knowingly mis-stated by the shipper in the bill of lading.

6. Goods of an inflammable, explosive or dangerous nature to the shipment whereof

the carrier, master or agent of the carrier has not consented with knowledge of their
nature and character, may at any time before discharge be landed at any place,
or destroyed or rendered innocuous by the carrier w ithout compensation and the
shipper of such goods shall be liable for all damages and expenses directly or
indirectly arising out of or resulting from such shipment. If any such goods shipped
with such knowledge and consent shall become a danger to the ship or cargo, they
may in like manner be landed at any place, or destroyed or rendered innocuous by
the carrier w ithout liability on the part of the carrier except to general average, if
any.

Article I Mbis: Application of Defences and Limits of Liability

1. The defences and limits of liability provided for in these Rules shall apply in any
action against the carrier in respect of loss or damage to goods covered by a contract
of carriage whether the action be founded in contract or in tort.
 PART 3 Significance of International Transport Conventions 169

2. If such an action is brought against a servant or agent of the carrier Csuch

servant or agent not being an independent contractor), such servant or agent shall
be entitled to avail himself of the defences and limits of liability which the carrier is
entitled to invoke under these Rules.

3. The aggregate of the amounts recoverable from the carrier, and such servants
and agents, shall in no case exceed the limit provided for in these Rules.

4. Nevertheless, a servant or agent of the carrier shall not be entitled to avail himself
of the provisions of this article, if it is proved that the damage resulted from an act
or omission of the servant or agent done with intent to cause damage or recklessly
and with knowledge that damage would probably result.

Article V: Surrender of Rights and Immunities, and Increase of Responsibilities

and Liabilities

A carrier shall be at liberty to surrender in whole or in part all or any of his rights
and immunities or to increase any of his responsibilities and obligations under
these Rules, provided such surrender or increase shall be embodied in the bill of
lading issued to the shipper. The provisions of these Rules shall not be applicable to
charter parties, but if bills of lading are issued in the case of a ship under a charter
party they shall comply with the terms of these Rules. Nothing in these Rules shall
be held to prevent the insertion in a bill of lading of any lawful provision regarding
general average.

Article VI: Special Conditions

Notwithstanding the provisions of the preceding articles, a carrier, master or agent

of the carrier and a shipper shall in regard to any particular goods be at liberty to
enter into any agreement in any terms as to the responsibility and liability of the
carrier for such goods, and as to the rights and immunities of the carrier in respect
of such goods, or his obligation as to seaworthiness, so far as this stipulation is not
contrary to public policy, or the care or diligence of his servants or agents in regard
to the loading, handling, stowage, carriage, custody, care and discharge of the
goods carried by sea, provided that in this case no bill of lading has been or shall
be issued and that the terms agreed shall be embodied in a receipt which shall be
a non-negotiable document and shall be marked as such.

An agreement so entered into shall have full legal effect.

Provided that this article shall not apply to ordinary commercial shipments made
in the ordinary course of trade, but only to other shipments where the character or
17 0 Guides to International Logistics ■ Seafreight Forwarding

condition of the property to be carried or the circumstances, terms and conditions

under which the carriage is to be performed are such as reasonably to justify a
special agreement.

A rtic le V II: Lim itatio ns on th e A p p lic a tio n o f th e Rules

Nothing herein contained shall prevent a carrier or a shipper from entering into any
agreement, stipulation, condition, reservation or exemption as to the responsibility
and liability of the carrier or the ship for the loss or damage to, or in connection with,
the custody and care and handling of goods prior to the loading on, and subsequent
to the discharge from, the ship on which the goods are carried by sea.

A rtic le V III: L im itatio n of Liability

The provisions of these Rules shall not affect the rights and obligations of the carrier
under any statute for the time being in force relating to the limitation of the liability
of owners of sea-going vessels.

A rtic le IX: Liability fo r N u c le a r D a m a g e

These Rules shall not affect the provisions of any international Convention or national
law governing liability for nuclear damage.

A rtic le X: A p p lica tio n

The provisions of these Rules shall apply to every bill of lading relating to the carriage
of goods between ports in two different States if

(a) the bill of lading is issued in a contracting State, or

Cb) the carriage is from a port in a contracting State, or

Cc) the contract contained in or evidenced by the bill of lading provides that
these Rules or legislation of any State giving effect to them are to govern the
contract,

whatever may be the nationality of the ship, the carrier, the shipper, the consignee,
or any other interested person.

CThe last two paragraphs of this Article are not reproduced. They require contracting
States to apply the Rules to bills of lading mentioned in the Article and authorise
them to apply the Rules to other bills of lading).
 PART 3 ■ Significance of International Transport Conventions 171

[Article 11 to 16 of the International Convention for the unification of certain rules

of law relating to bills of lading signed at Brussels on August 25, 1974 are not
reproduced. They deal with the coming into force of the Convention, procedure for
ratification, accession and denunciation and the right to call for a fresh conference
to consider amendments to the Rules contained in the Convention).

Scope of application

The following states are contracting parties to the Hague-Visby Rules, as of 11 July
1997:

Australia, Belgium, Denmark, Ecuador, Egypt, Finland, France, Georgia, Greece, Ireland,
Italy. Japan, Lebanon, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland,
Singapore, Spain, Sri Lanka, Sweden, Switzerland, Syria, Tonga, United Kingdom (including
the Isle of Man, Gibraltar, Bermuda and Hong Kong)

When the Rules apply

The Hague-Visby Rules apply to any B/L or similar document of title relating to the
carriage of goods, including the container itself, between ports of different states, if any
of the following are applicable:

• the B/L is issued in a contracting state;

• the carriage is from a port in a contracting state; or

• the contract contained in or evidenced by the B/L or a non-negotiable receipt

expressly provides that the Rules shall govern the contract.

The country in which the ship is registered or the nationality of the carrier or shipper
does not play any part in determining whether the Rules apply.

Example of the scope of the Rules

The Hague-Visby Rules apply to all outbound shipments from Singapore (it is one of the
contracting states), but not to the imports, unless

• the carriage is from another contracting state;

• the B/L was issued in a contracting state; or

• a principle clause in the carrier’s B/L terms applies the Rules.

172 Guides to International Logistics Seafreight Forwarding

The place of issue is often shown in the signature clause at the bottom of the B/L, and
a carrier-produced bill is then issued, where it is produced or signed.

Most principle clauses, however, do not apply to the Hague-Visby Rules but only to the
Hague Rules, as the former is more restrictive of the shipper’s interests.

If a B/L is issued in Switzerland, which is a contracting party, the shipment will be

governed by the Hague-Visby Rules, even though the shipment leaves from a port in
Lisbon in Portugal, which is not a contracting party.

Again, there is a tendency for ship owners to avoid issuing B/Ls, so that they are not
governed by the Rules.

The Hague and Hague-Visby Rules, unlike some other international unimodal conventions,
apply only to the time between the goods being loaded onto the ship and when they are
discharged from the ship. They do not govern or control any other modes of transportation
that might be involved at any other time. The carrier and shipper are free to agree on
the liability arrangement that will cover the time where the goods are being cared for
and handled prior to loading and after discharge; these terms are found either in the
B/L terms or in supplementary clauses.

An exception to this, where the Rules do not apply, is when goods are shipped and then
subsequently discharged and stored at an transitional port, prior to transhipment onto
another vessel. It is the first leg that determines whether or not the Rules apply.

Deck cargo and live animals

The Hague and Hague-Visby Rules do not apply to cargo which is reflected in the B/L
as being carried on deck, or for live animals.

Documentary requirements

At the request of the shipper, the carrier must issue a B/L with:

• marks and numbers for identification of the cargo;

• either the correct number of packages/pieces of cargo, or the quantity or weight of

the goods as stated in writing by the shipper; and

• the order and condition of the goods at the time of shipping.

Upon showing documentation stating the number of packages and the weight, the
Carrier will then be bound by the document, and a statement such as “said to weigh" may
constitute prima facie evidence of the weight. The "shipper’s load stowage and count”
 PART 3 Significance of International Transport Conventions 17 3

will also completely protect the carrier, but only where he cannot verify the information
provided by the shipper who stuffed and sealed the container.

A B/L that is clear of endorsements is prima facie evidence of the apparent order and
condition of the goods at the time of shipping, and if it is transferred to a third party
acting in good faith, it remains absolutely binding to the carrier. Once the goods have
been loaded on board the vessel, the shipper is entitled to a Shipped on Board B/L.

S h ip p e r ’s o b lig a tio n s

Accuracy of information

It is the shipper’s responsibility at the time of shipment, to record and guarantee the
accuracy of the marks and numbers on the container, and the quantity and weight
details that are passed to the carrier. The shipper is required to underwrite the carrier
against loss, damages and expenses that m ight arise or result from any inaccuracies
in these details.

Time limits for claims

When the shipper wishes to give notice of any apparent loss or damage to the goods,
he must do so in the form of a “ bad order” receipt, which is given to the carrier or his
agent at the port of discharge, either before or while the goods are collected by the
consignee.

If the condition of the goods on arrival warrants a join t survey or inspection, a notice
need not be written. However, if the loss or damage is not immediately apparent upon
collection, then a three-day w indow is allowed in which the notice can be submitted.
Failure to notify the carrier of damage within this time frame is prima facie evidence that
the goods were delivered in the same condition as stated in the B/L, unless the shipper
can prove they were damaged at the time of collection from the port of discharge. Should
there be an ongoing dispute, there is a time lim it of one year from the time of delivery
in which a legal claim can be brought against the carrier.

Accurate statement of value and nature of goods

Any information on the B/L regarding the general nature, condition or value of the goods
must always be 100% accurate. Neither the carrier nor the ship can be held responsible
for loss or damage to goods if these details have been wrongly recorded by the shipper
in the B/L. In the case of a commercial agreement between the shipper and carrier, the
carrier cannot later rely on this exemption from liability.
17 4 Guides to International Logistics Seafreight Forwarding

Carrier’s rights

Deviation

Under the Rules, the carrier has the right to deviate in an attempt to save life or property
w hilst at sea. They can also alter the course of the journey if there is a strike at the
destination.

C a r r i e r ’ s l i a b i li t ie s

Basis of the carrier’s liabilities

The carrier is responsible for and duty bound to carry out the careful loading, handling,
stowage (including a proper stowage plan) and general care and carrying of the goods
for the duration of the voyage, from the time they are delivered to the loading port, until
discharge at the port of delivery.

The carrier must be equipped to store and care for all types of cargo, making sure that
there is no cross-contamination between goods - such as dry cargo being damaged by
liquid goods - or goods becoming damaged as a result of being badly stacked or being
stowed with an inadequate ventilation system.

The carrier is expected to exercise due diligence before a voyage, to ensure that:

• the ship is seaworthy;

• the ship is properly manned, equipped and supplied for the trip; and

• all parts of the ship in which goods are to be carried, including the holds, refrigerating
and cool chambers, are ready to receive, transport and preserve the goods.

Should the goods be received in good condition but discharged in a lesser state, the
carrier will be held liable for loss or damage to the cargo caused by fault on his part.

When goods are packed by the shipper and not the carrier, especially in a container,
then the onus is on the shipper to prove the condition of the goods on loading, and the
carrier will have to prove:

• a reason for the loss or damage i.e. bad packing by the shipper;

• that the vessel and the holding facilities were seaworthy at the start of the voyage;

• that the carrier is within one of the exclusions from liability in Article IV on rights
and immunities; and

• a cause of loss.
 PART 3 m Significance of International Transport Conventions 17 5

If the carrier wants to deny liability for damage, then a reasonable balance of probabilities
must be given. It is not enough simply to state that the cause of loss was unidentified,
as the courts would view this as an attempt at concealment on the part of the carrier,
such as in the instance of damage being caused by the unexplained entry of salt water,
which would raise a presumption that the vessel was in fact not seaworthy.

Significance of unseaworthiness in relation to liability

The link between the state of the vessel and the liability of the carrier is very significant.
If the shipper can prove that his loss was directly caused by a failure to make the vessel
seaworthy, then the carrier will not be able to call on Article IV, on excepted perils.

"Seaworthiness" refers to the overall state and condition of a vessel and its equipment,
and the capabilities of a properly trained crew, as far as the cargo will be loaded, carried,
cared for and discharged properly and safely on the planned voyage.

The vessel must pass all checks to ensure that it is structurally and mechanically sound,
and equipped with the required navigational charts, although this does not always include
radar. All the holds must be correctly equipped and safe for cargo storage, and even minor
problems, such as a water pipe becoming covered in frost, can be taken as a sign of a
vessel being unseaworthy. All pipes should be protected during the w inter months.

Excepted perils

If the carrier can prove that the cause of the loss or damage to the goods was in no way
a result of the vessel being unseaworthy, the Rules specify an array of excepted perils,
some of which are discussed below Csee Article IV, paragraph 2 for the complete list).

A ct, n e g le c t or d e fa u lt of th e m aster, m a rin e r, p ilo t or th e servants of th e c a rrie r

in th e n avig a tio n or in th e m a n a g e m e n t of th e ship

This covers only the mismanagement of the ship itself, by the master or the crew. Errors
by the carrier, or resulting from mismanagement of cargo, are not included.

For example, if the master pushes his ship into a storm at an excessive speed in order
not to lose time, knowing that the cargo might be damaged while the ship is unlikely
to be harmed, the damage to the cargo would be considered due to lack of care of the
cargo, rather than an error in management of the ship.

Fire, unless cau sed by th e a c tu a l fa u lt o r privity o f th e c a rrie r

The carrier’s liability will only be reversed if the cause of the fire was not a direct result
of the vessel being found unseaworthy at the start of the voyage, for example, if it were
due to faulty electrics or by a light being left on in a hold that was loaded with grain.
17 6 Guides to International Logistics i Seafreight Forwarding

Perils, d angers and a c c id e n ts o f th e sea or o th e r n avig ab le w a te rs

The term "perils of the sea” is also used in marine insurance. However, under the Hague-
Visby Rules, it has a much more limited definition.

Any incident that could not have been expected in a particular area or the particular
time of year, and which could not have been predicted or prevented by the crew of the
vessel, would be classed as a peril of the sea. This exception should not come into play
if the vessel encountered heavy weather and consequently suffered loss or damage to
its cargo, if the weather was deemed normal for that area. In this case, the crew should
have anticipated it and made sure that the hatches were battened down and all lashings
thoroughly checked.

While bad weather might seem a cast-iron defence for damage to goods while at sea,
experts can be called upon to determine the extent of the bad weather, and say whether it
could have been foreseen. Damage caused by movement in the hold is more often caused
by the cargo not being stowed properly, as opposed to a result of a peril of the sea.

A c t of Public Enem ies

This would include pirates.

S trikes or lo cko u ts or s to p p a g e o r restrain t o f lab o u r from w h a te v e r cau se,

w h e th e r p a rtial or general

A carrier will be held liable for loss or damage if he deliberately docks into a port that
he previously knew to be strike-bound.

W a s ta g e in b ulk o r w e ig h t o r any o th e r loss or d a m a g e arising from in h e re n t

q u a lity or vice of th e goods

The wastage in bulk or weight refers to normal losses experienced by some cargo. When
transporting liquid, for example, the difference between the volume pumped into the
tank and the volume pumped out is known as normal or ordinary loss. As a rule, it is
about 0.25% of the original volume.

This loss has long been established for particular products, with an agreement between
the carriers and underwriters, and is therefore not recoverable from the carrier or any
insurance policy. However, although the carrier is not liable for this wastage, it does not
mean that they are entitled to deduct the cost of this loss from claims made.

The use of containers has helped to reduce losses, as they are a far safer method of
transporting cargo than individual packing. Bagged cement, for example, when packed
 PART 3 i Significance of International Transport Conventions 17 7

in a container, should not incur as much ordinary loss as when it is loaded and unloaded
with slings.

The term “inherent vice” means the natural propensity of certain goods - mainly perishable
- to be susceptible to some form of deterioration during shipment. For example:

• The carrier cannot be held liable for steel surfaces that rust slightly over the course
of the voyage, as this would be classed as inherent vice. This term, however, is only
open to a narrow interpretation under the Hague-Visby Rules, and if that same steel
surface showed signs of heavy pitting, then this would have to be explained under
some other heading if the carrier were to escape liability.

• If uncrated cars were seriously dented or scratched during shipping because they
had been stored too close to one another, and the ship owner then tried to plead
inherent vice as a defence, it would be held that there was neither inherent vice nor
inefficient packing. It is an accepted practice to ship cars w ithout packing, unless
packing had been prearranged, or an exception clause was contained in the B/L.
While minor scratches might fall within inherent vice, this is only the case if the ship
owner had taken adequate care with stowage.

• The shipper will not be liable to inherent vice by contamination, as long as the goods
were packed properly. Contamination will be considered a result of improper stowage
by the carrier. Even with a prima facie case of inherent vice, the shipper is allowed
to prove that the cargo was in good condition when loaded and that the damage
had to be caused by some other means.

In su fficie n cy of p ackin g

Goods must be packed so that they are adequately protected to withstand normal transit
conditions, but not extreme or unexpected situations. The container itself does not
provide enough protection for the goods, so any goods not given extra packing within
the container would be deemed to suffer from insufficiency of packing.

The carrier cannot be held liable for losses resulting from insufficient packing,; neither
can these losses be claimed under an insurance policy. But the carrier must be able to
prove the insufficiency of the packing, and under Article III Rule 4, if he has failed to
clause the B/L, when taking delivery of the goods, he will not be able to plead insufficient
packing if the B/L has been transferred to a third party who was acting in good faith.

In su ffic ien cy o r in a d e q u a c y o f m arks

This cannot be claimed against someone who is transferring the shipment, if there is
an unclaused B/L.
17 8 Guides to International Logistics Seafreight Forwarding

L aten t d e fec ts not d isco verab le by due d ilig e n c e

To be covered by this exception, the carrier must be able to prove that equipment had
undergone a through inspection (a visual inspection alone may not suffice), and that
the inspection had not revealed the defects at that time.

A ny o th e r cause arising w ith o u t th e actu al fau lt o r privity of th e C a rrie r or w ith o u t

th e fau lt or n e g le c t o f th e a g en ts o r servants of th e C a rrie r

This clause would not normally relieve the carrier of liability for theft or pilferage; the
fault of the carrier and its agents or servants must be proven.

If it was found that labourers employed by the stevedores had broken into cases of goods
shipped from London to a Mexican port, then the ship owner could plead this exception,
on the basis that there was no fault on the part of the carrier. However, he must also
show that his stevedore agent was not party to the theft, or responsible in any way.

Compensation limits

Even when individual goods are packed together in a single container, under Article IV
Rule 5(c) of the Hague-Visby Rules, each package or unit listed in the B/L as a separate
item will be treated as such for compensation purposes. As long as the items have all
been properly itemised in the B/L, the shipper has the right to opt for compensation on
a per kilo basis, or on a per package/unit basis.

SDR CSpecial Drawing Rights)

A protocol to the Hague-Visby Rules, introducing the SDR CSpecial Drawing Rights) for
calculating liability limits, was put into effect in the UK. on 4 February 1984.

The limits are 2 SDR per kilogram gross weight of the goods, or 666.67 SDRs per package
or unit. The per-package basis can give relatively higher compensation than the weight
basis when packages weigh less than 333.33 kilograms; for any package heavier than
that, the weight basis produces a higher figure of compensation.

Where the protocol does not apply - when the packages in a container are not recognised
as Hague-Visby packages - the limits are 30 gold francs per kilogram and 10,000 gold
francs per package. The gold franc is 65 milligrams of gold of millesimal fineness 900,
translated into national currency by whatever method is employed by the court in that
jurisdiction.

Article III Rule 5(g) states that the parties may agree a higher limit of liability if the value
of the goods is inserted in the B/L. The carrier requires a specific value to be declared,
 PART 3 Significance o f International Transport Conventions 17 9

so that there is no uncertainty. This clause is rarely used, however, as the ship owner
will seek disproportionately higher freight rates for any cargo that has been declared
of a higher value.

L o s s o f r ig h t s to lim it lia b ility

Under Article IV 5[e), the carrier loses the benefit of the liability limits if it is proven that
there was, or if the carrier admits to, due intent to cause damage, or w ilful misconduct
with the prior knowledge that damage would be a probable result.

If this is not the case, then the limits and excepted perils apply to all actions, and all
employees or agents (but not independent contractors] engaged by the carrier will
benefit from the same limits and defences available to the carrier.

Case studies involving the Hague-Visby Rules

Wah Yuen Marine Re Ltd vs Hai Yin Diesel Trading Pte Ltd

The vessel was detained by Chinese authorities and the cargo was treated as
smuggled goods and subsequently auctioned off.

The court upheld the owners’ defence of Article 4[2)Cg) of the Hague-Visby Rules,
exempting the owners from liability for loss or damage arising or resulting from
arrest or restraint of princes, rulers or people.

A Meredith Jones & Co. Ltd vs Vangemar Shipping Co. Ltd

The contract was for carriage of raw cotton for the plaintiff [the shipper) on board the
Apostolis from Greece to Brazil. A t the port of loading, the cargo caught fire and was
completely destroyed. Evidence showed that the fire was caused by welding to the
hatch cover after the cargo was loaded. This finding was important in determining
the liability of the carrier under Article 3 of the Hague-Visby Rules, which requires
the carrier to make the ship seaworthy at the start of the voyage.

The carrier is obliged to ensure that its holds are fit and safe for the “ reception,
carriage and preservation” of cargo. In this case, the carrier had failed to ensure that
its cargo hold was fit and safe for the storage of flammable cargo.

T h e C M R C o n v e n tio n - road tra n s p o rt

The end of World War II signalled a time of growth in the international movement of goods
by road, as countries across Europe concentrated on rebuilding cities and businesses,
which had suffered during the w ar years. This surge in transport led to calls for a
180 Guides to International Logistics Seafreight Forwarding

uniform liability regime in Europe, so that the legal position of the subcontractors from
all countries would be regulated, and there would also be a new level of confidence for
all parties involved in the transportation process, especially the consignor.

After discussion and deliberation between the International Institute for the Unification
of Private Law (UNIDROIT). the ICC and the International Road Transport Union (IRU).
a Convention on the Contract for the International Carriage of Goods by Road (CMR)
was drawn up and agreed on by the United Nations Economic Commission for Europe
(ECE) on 19 May 1956; it came into force on 2 July 1961. The contracting parties are:

Austria. 'Belarus, Belgium, ‘ Bosnia-Herzegovina, ’ Bulgaria, ‘ Croatia. ‘ Czech Republic,

Denmark, Estonia, Finland, France, Germany, Greece. Hungary, Ireland, Italy, ‘ Kazakhstan,
Latvia, Lithuania, Luxembourg, Macedonia, ‘ Moldova, ‘ Morocco, Netherlands, Norway,
‘ Poland, Portugal, Romania, ‘ Russian Federation, ‘ Slovakia, ‘ Slovenia, Spain. Sweden,
Switzerland, ‘ Tajikistan, Tunisia, Turkey, Turkmenistan, United Kingdom, Uzbekistan,
‘ Yugoslavia.

‘ These states do not apply the 8.33 SDR/kg limitation [pursuant to the CMR Protocol of
1978). They instead apply 25 gold francs per kilogram, weighing 10/31 of a gram and
being of millesimal fineness 900.

Documentary requirements

The consignment note

The contract should be confirmed by making out a consignment note. This is not, however,
a document of title. The following information should be entered:

• the date of the consignment note and the place at which it was issued;

• sender’s name and address;

• carrier’s name and address;

• the date and place where the goods were collected and the place of delivery;

• consignee’s name and address;

• a general description of the nature of the goods and how they were packed
- dangerous goods must be described accordingly;

• the number of packages and their identifying marks and numbers;

• the gross weight or the quantity of the goods;

• any charges relating to the carriage; and

• the required instructions and all formalities for Customs.

 PART 3 Significance of International Transport Conventions 1

Optional information can also be added where relevant, such as:

• a statement to say that transhipment is not allowed;

• the agreed tim e-lim it within which the carriage is to be carried out;

• a list of all documents handed to the carrier with the goods; and

• the amount of cash on delivery.

The carrier often makes out the consignment note, but it is best completed by the sender,
as he provides most of the information, and would be responsible for its accuracy.

Number of copies

Three original copies of the consignment note must all be signed by both the sender and
carrier. The first is for the sender; the second for the carrier, and the third accompanies
the goods during transportation. A separate consignment note can be issued to both the
sender and the carrier to cover each different type or lot of goods, or for each vehicle.

Reservations by the carrier

On taking delivery of the goods, the carrier should request the details of the contents
to be disclosed, and check:

• the accuracy of the statements and descriptions in the consignment note, regarding
the number of packages and their marks and numbers; and

• the visible condition of the goods and their packaging.

If the goods are already packed and sealed in a container upon delivery, then the carrier
has no reasonable means of checking these points. Reservations and concerns, and the
grounds on which they are based, must be noted on the consignment note. Otherwise,
it will be presumed, unless it can be proved to the contrary, that the goods and their
packaging were in good condition and all particulars were correct and corresponding
to the consignment note when they were first delivered to the carrier.

S e n d e r ’s o b lig a t io n s

Accuracy of particulars furnished

The sender will cover the carrier against all expenses, loss and damage, if the particulars
that were stated in the consignment note (other than those relating to the carrier) are
inadequate or inaccurate.
182 Guides to International Logistics i Seafreight Forwarding

Defective packing

The sender will be liable to the carrier for damage or injury to persons, equipment, goods
or expenses that are a direct result of the defective packing of the goods, carried out
by the sender. This indemnity is likely to be brought into effect in the case of a sealed
container, where the carrier has no opportunity to assess the packing.

The exception to this rule would be if the defect that caused the damage had been
obvious to the carrier on delivery of the goods, but no reservations had been entered
on the consignment note.

Customs formalities

It is the sender’s responsibility to attach any documents to the consignment note that
will be required for Customs purposes; he must also ensure that the carrier is not held
accountable for the absence, inadequacy or irregularity of any such documents.

Carrier’s liabilities

The carrier, including all employees, agents and subcontractors, are liable and responsible
for any loss, damage or delay that affects the goods, from the time at which they are
delivered into the carrier's care, up until they are delivered to their final destination.

Relief from liability

The carrier will be relieved from liability for loss, damage or delay to the goods, if it can
be proven that it was caused by;

• a wrongful act or neglect on the part of the claimant;

• due to the instructions given by the claim ant as opposed to the carrier’s own wrongful
act or neglect;

• the inherent vice of the goods; or

• when both the circumstances and the resulting consequences which lead to the
loss, damage or delay were unavoidable by the carrier. (This prevents the carrier
from pleading that the defective condition of the vehicle was the cause, as a way to
escape liability.)

If a collision resulted in the loss, damage or delay of the goods, but it occurred entirely
w ithout any fault on the part of the carrier, then the carrier could claim relief from liability.
This defence would not hold in the case of adverse weather conditions or theft, as these
situations could have been guarded against or prevented by the carrier.
 PART 3 Significance of International Transport Conventions 1

Further Defences

Some other defences in special circumstances are:

• the use of open unsheeted vehicles when their use has been expressly agreed and
specified in the consignment note - this does not apply if there is an excessive
shortage or loss of a package;

• inefficient or defective packing for those goods which, by their nature, are liable to
wastage or damage when not correctly packed;

• if the sender, consignee, or persons acting on behalf of the sender or consignee

were involved in the handling, loading, stowage or unloading of the goods;

• when the goods are, by nature, particularly likely to experience loss or damage
through breakage, rust, decay, desiccation, leakage, normal wastage or by action
of moths or vermin;

• if there are inaccurate or inadequate identification marks or numbers on the

packages; and

• in the case of transportation of livestock, although the carrier cannot deny liability
unless he can prove that he took all the steps expected of him and followed any
instructions that were given.

These special circumstances listed above are very significant to the carrier. If the loss
or damage can be attributed to one or more of them, it will be presumed that this was
the cause, except in the case of abnormal shortage or loss of any package, as in the
first point.

The burden of establishing the cause of loss, or disproving the carrier’s claim, rests with
the claimant.

Treating the Goods as Lost

If the goods have not been delivered within thirty days of an agreed time limit, or in any
other case within sixty days of the carrier taking delivery of the goods, then a claim can
be made against the carrier for compensation.

Cash on Delivery

If the carrier has agreed to collect the cash payment only upon the delivery of the
goods, then he will be liable if the payment is not made, up to the amount of the sum
that is due for collection. It is therefore not advisable for carriers to enter into this type
of agreement.
184 Guides to International Logistics Seafreight Forwarding

T h e C I M / C O T I F C o n v e n t i o n - rail t r a n s p o r t
In the 1850s, a move was started to draw up uniform rules of liability to govern the
transport of goods by rail in Europe.

In 1975, CIM (R è g le s Uniformes Concernant le Centrât de Transport International

Ferroviaire des Merchandises) was established. It was revised on l May 1985 as COTIF
(Convention Relative aux Transports International Ferroviaires).

Appendix B of the COTIF convention contains a revised version of those CIM Uniform
Rules concerning the contract for the international carriage of goods by rail, and
Annex III to the CIM Uniform Rules contains supplementary regulations concerning the
International Carriage of Containers by Rail, known as RICo.

There are many similarities between the CIM convention and the better known CMR
- the CMR provisions were largely modelled on the earlier versions of CIM.

The contracting countries to the COTIF convention are mainly based in Europe, where
many of the more extensive railway networks are found. It would be useful for Asian
logistics providers who use multimodal transport (including rail transport) to send
shipments to Europe to have an understanding of how the convention works.

D o c u m e n t a r y r e q u ir e m e n ts

Making a contract

A contract of carriage shall come into existence once the forwarding railway has:

• accepted delivery of the goods and accompanying consignment note; and

• stamped the consignment note with the stamp of the forwarding station (or the
accounting machine entry), to show the date of acceptance.

Once stamped, the consignment note is evidence of the particulars and contents of the
contract. If, however, the consignor has loaded the goods, then those particulars relating
to the weight of the cargo or the number of packages will be considered evidence thereof
if they have been verified and certified by the railway.

Consignment note

It is the consignor’s responsibility to make sure that the consignment note is completed,
as well as a separate note for each consignment or vehicle. The consignment note must
provide the following information:
 PART 3 . Significance of International Transport Conventions 185

• the name of the destination station;

• the name and address of the consignee;

• the description of the goods;

• the w eight of the goods;

• the number of packages and if applicable, a description of the packing;

• the number of the vehicle when loaded by the consignor;

• a detailed list of the necessary Customs documents attached; and

• the name and address of the consignor.

Carriage charges

If the consignor agrees to pay all or part of the carriage charges, then the consignment
note must be endorsed to that effect.

Customs documents

The required Customs documents must either be attached to the consignment note, or
the consignment note must indicate the station or Customs office where they will be
made available to the railway, and where the formalities must be completed.

Customer’s obligations

The consignor is responsible for:

• ensuring that all the particulars given are accurate;

• ensuring that the goods are packed in such a way as to protect them from total or
partial loss and from damage caused during transit, and to avoid the risk of injury or
damage to any persons, equipment or other goods, in accordance with any provisions
in force on the railway;

• the use of any seals on the goods, indicating in the consignment note their number
and description [whether or not the seals must be used depends on the railway
regulations); and

• endorsing of the consignment note with details of the carriage, and other charges
that the consignor has agreed to pay. Any charges that the consignor has not agreed
to pay shall be deemed to be payable by the consignee, unless the consignee fails
to take delivery of the goods.
186 Guides to International Logistics Seafreight Forwarding

Carrier’s liabilities

The carrier is responsible for the transportation of the goods for the entire journey, right up
until the delivery. While this would normally mean delivery of the goods to the destination
station, in this case, the goods can be handed over to the Customs authorities or deposited
for storage with the railway or forwarding agent, or in a public warehouse.

The railway will be liable for any loss, damage or delay to the goods between the time
that the goods were accepted until the time of delivery.

Exceptions to carrier’s liabilities

The carrier is not liable if loss or damage is caused by:

• a fault on the part of the claimant;

• an order given by the claimant, rather than as a result of fault by the railway;

• inherent vice of the goods; or

• if the circumstances that caused the loss or damage was unavoidable and could
not have been prevented by the railway.

The carrier is not liable in the following situations:

• The absence or inadequacy of the packing used for the goods.

• If either the loading or unloading was carried out by the consignee, or the operation
was not carried out properly.

• The completion of the Customs form alities carried out by the custom er or his
agent.

• Irregular, incorrect or incomplete description of the articles.

• Transport of live animals.

C o m p a r a t i v e c h a r t o f liability lim its a n d

t i m e lim its o f d i f f e r e n t lia bility r e g i m e s
The tables on the following pages summarise the liability limits and time limits for the
different liability regimes: Hague and Hague-Visby Rules, FIATA FBL, UNCTAD/ICC,
Warsaw Convention, CMR and CIM/COTIF.
 TIM E LIM IT LIM IT OF LIABILITY
LIABILITY TIM E
REGIM E BAR Consequential
Apparent damage Hidden Damage Delay Loss or Damage Delay
Loss
Hague and Hague- Before or at tim e of W ithin 3 working Not 1 year Hague £100 per package. No liability No liability
Visby Rules (Sea) removal o f goods. days. applicable
Hague-Visby 2 SDR/kg or
666.67 SDR per package,,
whichever is higher.

FIATA FBL Before or at time of W ithin 7 None 9 months In case of non-localised Up to twice the Up to tw ice the
(M ultim odal) removal of goods. consecutive days. stated damage: 666.67 SDR per freight charges freight charges
package; or 2 SDR/kg,
whichever is higher; or

8.33 SDR/kg if there is no

carriage by sea or inland
waterways; in case of localised
damage: limits of the applicable
international convention or
mandatory national law. Under
USA COG SA. not exceeding
US$500 per package.
UNCTAD/ICC Rules Before or at tim e of 6 consecutive None 9 months In case of non-localised Am ount not Up to the total
for multimodal collecting goods. days. stated damage: 666.67 SDR per exceeding the freight charges
transport package; or 2 SDR/kg. total freight payable
documents whichever is higher: or payable for the
goods under
8.33 SDR/kg if there is no the multimodal
carriage by sea or inland transport
waterways; in case of localised contract
damage: limits of the applicable
international convention or
mandatory national law. Under
USA COGSA. not exceeding
US$500 per package.
PART 3 s Significance of International Transport Conventions
187
 188

TIM E LIM IT LIM IT OF LIABILITY

LIA B ILITY
TIM E BAR
R EG IM E

Apparent damage Consequential

Hidden Damage Delay Loss or Damage Delay
Loss

M ontreal Before or at tim e of W ithin 7 days. W ithin 21 days. 2 years from 17 SDR per kg 17 SDR per kg No liability
Convention [Air) removal of goods. delivery
Guides to International Logistics

CMR [Road) Immediate notice at W ithin 7 days of W ithin 21 days 1 year 8.33 SDR per kg Up to amount Not dealt with
time of delivery, in delivery. of arrival of carriage specifically
w riting. 3 years if w ilful charges
Seafreight Forwarding

m isconduct

C lM/COT1F (Rail) Before acceptance W ithin 7 days. W ithin 30 days 1 year from 17 SDR per kg Less than 48 Not dealt with
of goods at from delivery delivery hours - 10% specifically
destination. of freight, up
2 years if w ilful to 17 SDR per
misconduct kg Cno proof
required)

More than
48 hours
- twice the
freight (proof
required)
 PART 3 Significance of International Transport Conventions 189

T h e R o tte r d a m R ules
(otherwise known as UN Conventions on contracts for
International Carriage of Goods wholly or partly by sea —
New York 2008

Adopted by the General Assembly on 11 December 2008, the Convention establishes

a uniform and modern legal regime governing the rights and obligations of shippers,
carriers and consignees under a contract for door-to-door carriage that includes an
international sea leg. The Convention builds upon, and provides a modern alternative to,
earlier conventions relating to the international carriage of goods by sea, in particular,
the International Convention for the Unification of Certain Rules of Law relating to
Bills of Lading [Brussels, 25 August 1924] [“ the Hague Rules”), and its Protocols ("the
Hague-Visby Rules”), and the United Nations Convention on the Carriage of Goods by
Sea (Hamburg, 31 March 1978) ("the Hamburg Rules”).

The Rotterdam Rules provide a legal fram ework that takes into account the many
technological and commercial developments that have occurred in maritime transport
since the adoption of those earlier conventions, including the growth of containerisation,
the desire for door-to-door carriage under a single contract, and the development of
electronic transport documents. The Convention provides shippers and carriers with a
binding and balanced universal regime to support the operation of maritime contracts
of carriage that may involve other modes of transport.

So far, the Rotterdam Rules have been signed by 25 countries and ratified by 3 countries
as at March 2014. The Rules will come into effect only after 20 countries have ratified it.

Briefly, the proposed Rotterdam Rules have made the follow ing am endm ents to
the existing conventions:
a) Provides for door-to-door carriage where the Hague-Visby rules provide for a
period of responsibility to govern the carriage of goods from loading on board until
discharge.
b) Maintains a fault-based regime where it comes to the carrier’s liability.
c) The error of navigation exemption has been excluded, which from a practical point
of view significantly weakens the defences available to the carrier, as it concerns
an exemption which is frequently relied upon by carriers in practice.
d) The limits of liability have been increased. Compared to the Hague-Visby rules, the
limit per kilogram has been increased from 2 up to 3 SDR, while the limit per package
has been increased up to 875 SDR.
e) For delay, the carrier is liable to pay 2.5 times the freight payable for the goods
delayed but not exceeding the limits of liability for loss or damage as in d) above.

(Ref: www.uncitral.org/pdf/english/.../rotterdam_rules/09-85608_Ebook.pdf)
190

GLOSSARY
ad valorem Latin term meaning, “according break bulk The process of assimilating many
to value”. small shipments into one large shipm ent at a
central point so that economies of scale may be
aft In, near, or toward the stern of the vessel.
achieved; to commence discharge of cargo.
agency tariff A tariff published by an agent on
break bulk vessel A general, multipurpose,
behalf of several carriers.
cargo ship that carries cargo of nonuniform sizes,
alongside Referring to the side of a ship. Goods often on pallets, resulting in labour-intensive
delivered “alongside" are to be placed on the loading and unloading: calls at various ports to
dock or barge within reach of the transport ship’s pick up different kinds of cargo.
tackle so that they can be loaded.
bulk c a rrie r Ship s p e cifica lly designed to
am idships Generally referring to the middle transport vast amounts of cargo such as sugar,
portion of a vessel. grain, wine, ore, chemicals, liquefied natural gas;
coal and oil.
astern A backward direction in the line of a
vessel's fore and aft line; behind. If a vessel B u n k e r A d ju s tm e n t F a c to r P e rce n ta g e
moves backwards it is said to move astern; surcharge used to partly cover the fluctuations
opposite to ahead. in bunker prices.

BAF see Bunker Adjustment Factor CAF see Currency Adjustment Factor

bagged cargo Commodities usually packed in cargo Freight loaded onto a ship.
sacks or in bags, such as sugar, cement, milk
c a rg o h a n d lin g The a c t o f lo a d in g and
powder, onion, grain, flour, etc.
discharging a cargo ship.
barge carriers Ships designed to carry either
carrier A member line of the FEFC and Allied
barges or co n ta in e rs exclusively, or some
Conferences, or an operating company formed
variab le num be r of barges and con tain ers
by one or more member lines.
simultaneously. Currently this class includes
two types of vessels, LASH and SEABEE. c a rr ie rs O w ners o r o p e ra to rs o f vessels
providing transportation to shippers. The term
beam Nautical term for the width of a ship. Also
is also used to refer to the vessels.
called breadth.
certificate of insurance A document containing
bill of lading A document by which the Master
certain terms of a full-length insurance policy.
of a ship acknow ledges having received in
Beneficiaries of open cargo or blanket insurance
good o rd e r and co n d itio n Cor the reverse)
p o licie s are au thorised to issue th e ir own
certain specified goods consigned to him by
certificates of insurance.
some particular shipper, and binds himself to
deliver them in sim ilar condition, unless the certificate of registry A document specifying
perils of the sea. fire or enemies prevent him. to the nation registry of the vessel.
the consignees of the shippers at the point of
CFS see Container Freight Station
destination on their paying him the stipulated
freight. A bill of lading specifies the name of CIF see Cost, Insurance and Freight
the master, the p o rt and destination of the
ship, the goods, the consignee, and the rate of classification society Worldwide experienced
freight. In popular terms, known as the “ key to and reputable societies w hich undertake to
the cargo". arrange inspections and advise on the hull and
machinery of a ship. A private organisation that
B /L see bill o f lading supervises vessels during their construction and
afterward, in respect to their seaworthiness, and
bow Front of a vessel.
the placing of vessels in grades or "classes"
breadth see beam a cc o rd in g to the so c ie ty 's ru le s fo r each
particular type. It is not compulsory by law that
 191

a ship owner have his vessel built according container yard An installation at which FCL and
to the rules of any classification society; but in empty containers are received from or delivered
practice, the difficulty in securing satisfactory to merchants by or on behalf of the carrier.
insurance rates for an un classed vessel makes
contract of affreightment An agreement by an
it a commercial obligation.
ocean carrier to provide cargo space on a vessel
Com bined Transport bill of lading A B/L at a specified time and for a specified price to
issued in connection w ith all the shipm ents accommodate an exporter or importer.
of cargo in containers which come under the
contract carrier Any person not a common
Container Service Tariff rules.
c a rrie r w ho, under in d iv id u a l co n tra c ts or
combo A “com bination” vessel that is able to agreements, transports passengers or property
carry both containers and break bulk cargo. for compensation.

co m m o d ity box ra te A rate a p p lie d per Cost, Insurance & Freight Export term in which
container for a single commodity FCL/LCL. FCL/ the price quoted by the exporter includes the
FCL and LCL/FCL shipments. costs of ocean transportation to the port of
destination and insurance coverage.
com m on carrier Holds himself out for hire to
the general public. M ust post rates and cannot CT B /L see Combined Transport Bill o f Lading
discriminate against customers whose cargo he
C u rren cy A d ju s tm e n t F acto r Percentage
is equipped to carry.
surcharge to offset the influence of the present
c o n fe re n c e An a ffilia tio n of sh ip ow ne rs fluctuating currencies in relation to the US dollar,
operating over the same routeCs) who agree on which conference tariffs are based.
on uniform rates and other terms of carriage. A
Customs broker A person or firm licensed by an
conference is "closed” if one can enter only by the
im porter’s government to enter and clear goods
consent of existing members of the conference. It
through Customs.
is “open" if anyone can enter by meeting certain
technical and financial standards. Conference CY see container yard
members are common carriers.
D D C see Destination Delivery Charge
c o n s ig n e e The person to w hom ca rg o is
consigned as stated on the bill of lading. deadw eight A common measure of capacity.
It reflects the number of tonnes of cargo, stores
consignor The person named in the bill of lading and bunkers that a vessel can transport. It is
as the one from whom the goods have been the difference between the number of tonnes of
received for shipm ent water a vessel displaces "lig h t” and the number
of tonnes it displaces when submerged to the
consolidation The packing of cargo into one
"deep load line”.
or more containers, organised by the shipping
company for a number of shippers who deliver d e m u rra g e A fee levied by the s h ip p in g
their LCL parcels to one CFS for delivery to one com pany upon the po rt or su p plier fo r not
consignee at one destination. loading or unloading the vessel by a specified
date agreed upon by contract. Usually, assessed
container A van, flatrack. open-top or other
upon a daily basis after the deadline.
similar trailer body on or into which cargo is
loaded and transported w ithout chassis aboard Destination Delivery Charge Fee based on
ocean vessels; a large rectangular or square container size, that is applied in many tariffs to
container/box of a strong structure that can cargo. It covers crane lifts off the vessel, drayage
withstand continuous rough handling from ship of the container within the terminal and gate fees
to shore and back. It opens from one side to at the terminal operation.
allow cargo to be stacked and stowed into it.
detention The charge the merchant pays for
co n tain e r freight station An installation at detaining Carriers’ containers / chassis beyond
which LCL traffic is received from the merchant the prescribed free time period.
by or on behalf of the carrier for packing into a
container and/or at which LCL traffic is delivered displacem ent Hie weight of the vessel and its
by or on behalf of the carrier to the merchant contents. Calculated by dividing the volume of
after unpacking from a container.
19 2

water displaced in cubic feet by 35. the average freight Refers to either the cargo carried or the
density of sea water. charges assessed for carriage of the cargo.
d rau g ht The vertica l distance between the Freight All Kinds Usually re fe rrin g to full
waterline and the keel, expressed in feet fin the container loads of mixed shipments.
US) or in metres.
freight forw arder A person that dispatches
dunnage A term applied to loose wood or other shipments via common carriers and books or
material used in a ship’s hold for the protection otherwise arranges space for shipments on behalf
of cargo. of shippers and processes the documentation
or performs related activities incident to those
duty The tax imposed by Customs on imported
shipments. Does not actually carry the cargo or
merchandise.
conduct business for the ship.
DW T see deadweight
freight prepaid An agreem ent between the
e x p o rt lic e n s e A p e rm it re q u ire d w hen seller and a buyer, stating that the seller will pay
exporting commodities. for the transportation charges before the goods
are delivered to the transportation carrier.
FAK see Freight A ll Kinds
Full Container Load A full container load of
FAS see Free Alongside Ship
goods, where the merchant is responsible for
FCL see Full Container Load the packing and unpacking of the containers at
his own premises.
F C L /F C L A co n ta in e r load of cargo, w ith
the m erchant responsible fo r packing and gross registered tonne Common measurement
unpacking the container. of the internal volume of a ship w ith certain
spaces excluded.
FC L /L C L A con tain er load of cargo where
the m erchant is responsible for packing the H agu e Rules Rules governing carriage of
con tain er and the carrier is responsible fo r goods by sea and identifying the rights and
unpacking it. responsibilities of carriers and cargo owners,
published in 1924.
fe e d e r vessel A s h o rt-s e a vessel w h ic h
transfers cargo between a central hub port and Hague-Visby Rules A set of amendments to
smaller "spoke" ports. the Hague Rules.

FIO see Free In/Out h a z a rd o u s goo d s A ll s u b s ta n c e s o f an

in fla m m a b le n a tu re w h ic h are lia b le to
FOB see Free On Board spontaneous combustion either in themselves
forward At or in the direction of the bow. Also or when stowed adjacent to other substances
the fore part of the ship. and, when mixed w ith air, are liable to generate
explosive gases or produce s u ffo c a tio n or
Free Alongside Ship Incoterni meaning that poisoning or tainting of foodstuffs.
the seller pays for transportation of goods to the
ILO see International Labor Organization
port of shipment, while the buyer pays loading
costs, freight, insurance, unloading costs and I M O see International M aritim e Organization:
transportation from the port of destination to his Formerly known as the Inter-G overnm ental
factory. Risk passes when the goods have been Maritime Consultative Organization QMCOX was
delivered to the quay at the port of shipment. established in 1958 through the United Nations
Free In/O ut Incoterm meaning that the cost of to coordinate international maritime safety and
related practices.
loading and unloading a vessel is borne by the
charterer/shipper. ind ep en d en t action Setting rates w ith in a
conference ta riff tha t is d iffe re n t from the
Free On Board Incoterm in which the price
rate[s) for the same items established by other
quoted by the exporter does not include the
conference members.
costs of ocean transportation, but does include
loading on board the vessel. International Labor O rganization Based in
Geneva, it is one of the oldest components of
 193

the UN system of specialised agencies and has the ta riff of that conference.
been involved over the years in appraising and
load line The line on a vessel indicating the
seeking to improve and regulate conditions for
maximum depth to which that vessel can sink
seafarers. In its unusual tripartite way, involving
when loaded with cargo.
official representatives of government, employer
and em ployee in te re sts, its jo in t M a ritim e m anifest A document containing a full list of the
Commission has moved on the em ployment ship's cargo, extracted from the bills of lading.
of foreign seafarers, and urged the application
of m in im u m la b o u r s ta n d a rd s , on c re w m e rc h a n t Any trade r or persons (shipper,
accommodation, accident prevention, medical consignee and in clud in g anyone acting on
examination and medical care, food and catering the m erch an t's behalf), o w nin g o r e n titled
to possession of the goods, or of the bill of
and officers’ competency.
lading.
In t e r n a t io n a l M a r it im e O r g a n iz a tio n
Formerly know n as the Inter-G overnm ental N et registered tonnes This represents the
M aritim e Consultative Organization (IMCO), the volum etric area available for cargo. It is often
organisation was established in 1958 through used by port and canal authorities as a basis
the United Nations to coordinate international for charges.
maritime safety and related practices. n on-conference line A shipping line which
LASH ship (Lighter Aboard Ship) This is a operates on a route served by a liner conference
specialised container ship carrying very large but which is not a member of that conference.
floating containers, or lighters. The ship carries N o n -vessel operating com m on ca rrie r A
its o w n c ra n e , w h ic h lo a d s a n d d is c h a rg e s th e ships ag en t conducts business for the ship but
containers over the stern. The lighters each have does not operate the vessel.
a capacity of 400 tonnes and are stowed in the
holds and on deck. While the ship is at sea with NT see net registered tonnes
one set of lighters, further sets can be made
N V O C C see Non-vessel operating com m on
ready. Loading and discharge are rapid at about
carrier
15 minutes per lighter, no port or dock facilities
are needed, and the lighters can be grouped for oil tan ker A ship designed for the carriage of oil
pushing by towboats along inland waterways. in bulk, her cargo space consisting of several or
many tanks. Tankers load their cargo by gravity
LCL see Less than Container Load
from the shore or by shore pumps and discharge
LCL/LCL Cargo in any quantity for carriage in using their own pumps.
a container, the carrier being responsible for
overtonnaging A situation where there are too
packing and unpacking.
many ships generally or in a particular trade for
LCL/FCL A shipment of cargo, which the carrier the level of available cargo.
is responsible for packing into the container and
pallet A flat tray on which goods (particularly
the merchant is responsible for unpacking.
those in boxes, cartons or bags) can be stacked.
Less than C ontainer Load Any quantity of Its purpose is to facilitate the movement of such
goods that are intended for transp ortin g in goods, mainly by the use of forklift trucks.
containers, where the Carrier is responsible for
Panamax Term describing a vessel designed
the packing and unpacking of the containers at
to be just small enough to transit the Panama
the Carrier’s premises.
Canal.
liner A cargo-carrying ship, which is operated
Plim soll M a rk A series of horizontal lines,
between scheduled, advertised ports of loading
corresponding to the seasons of the year in fresh
and discharge on a regular basis.
or saltwater, painted on the outside of a ship
lin e r s e rv ic e Vessels o p e ra tin g on fixed marking the level which must remain above the
itineraries or regular schedules and established surface of the water for the vessel’s stability.
rates available to all shippers. The freight rates
re e fe r (c o n ta in e r) An insulated sh ip p in g
are based on the shipping company's tariff, or if
container designed to carry cargoes requiring
the company is a member of a liner conference,
temperature control. It is fitted with a refrigeration
19 4

unit which is connected to the carrying ship’s tan ke r A bulk carrier designed to transport
electrical power supply. liquid cargo, most often petroleum products. Oil
tankers vary in size from small coastal vessels
reefer [ship) A vessel designed to carry goods
of 1,500 tonnes deadweight, to medium-sized
requiring refrigeration, such as meat and fruit. A
ships of 60,000 tonnes, to VLCCs (Very Large
reefer ship has insulated holds into which cold
Crude Carriers).
air is passed at the temperature appropriate to
the goods being carried. tariff A duty Cor tax) levied on goods when
they are transported from one Customs area
R O /RO ship Freight ship or ferry with facilities
to another. Tariffs raise the prices of imported
for vehicles to drive on and off (roll-on/roll-off):
goods, thus making them less competitive within
a system of loading and discharging a ship
the market of the importing country.
where cargo is driven on and off on ramps.
Equipped with large openings at bow and stern Terminal Handling Charge A fee payable by
and sometimes also in the side, the ship permits merchants for
rapid loading and discharge with hydraulically
Ca) the carrier receiving and storing export
operated ramps providing easy access. Fully
containerised cargo/cargo for containerisation
loaded trucks or trailers carrying containers are
at the terminal and presenting it to the vessel
accommodated on the deck.
for loading;
seaworthiness The sufficiency of a vessel in
Cb) the carrier receiving from the vessel, import
materials construction, equipment, crew and
containerised cargo and arranging its storage at
outfit for the trade in which it is employed. Any
the Terminal and movement from the Terminal;
sort of disrepair to the vessel by which the cargo
or
may suffer — overloading, untrained officers, etc.,
may render a vessel unseaworthy. (c) associated documentation arising from Ca)
and Cb) above.
C e rtificate of S eaw orthiness A certificate
issued by a cla s s ific a tio n society surveyor TEU C tw e n ty -fo o t e q u iv a le n t u n it ) A
allowing a vessel to proceed following a mishap measurement of cargo-carrying capacity on a
that may have affected her seaworthiness. It is container ship, referring to a common container
frequently issued after temporary repairs have size of 20 feet in length.
been effected, so that she can reach another port
where permanent repairs will be carried out. THC see Terminal Handling Charge

service contract As provided in the Shipping tra n s h ip m e n t Transfer o f goods from one
A ct of 1984, a contract between a shipper [or transportation line to another, or from one ship
a shipper’s association] and an ocean common to another.
carrier Cor conference) in w hich the shipper ULCCs (Ultra Large Crude Carriers) Tankers
m akes a co m m itm e n t to provide a certain larger than 300,000 DWT.
minimum quantity of cargo or freight revenue
over a fixed time period, and the ocean common VLCCs (Very Large Crude Carriers) Tankers
carrier or conference commits to a certain rate between 200,000 and 300,000 DWT.
or rate schedule as well as a defined service
level [such as assured space, transit time, port
rotation or similar service features). The contract
may also specify provisions in the event of non­
performance on the part of either party.

s h ip p e rs In d iv id u a ls o r b u sin e sse s w h o
purchase transportation services for their goods
or commodities.

stowage The placing of goods in a ship in such

a way as to ensure the safety and stability of the
ship not only on a sea or ocean passage but also
in between ports when parts of the cargo have
been loaded or discharged.
 195

ABBREVIATIONS
GENERAL LNG Liquefied natural gas
LO/LO Lift-on /Lift-off
3PL Third party logistics
LOA Length overall
ACE Automated Commercial Environment LPG liquefied petroleum gas
AM S Autom ated M anifest System MCB M icro-Bridge
AN ERA Asia North America Eastbound Rate
M LB M ini-landbridge
Agreement
NT Net register tonne
AWS A ll-w ater service
NVOCC Non-vessel operating common
B/L Bill of lading carrier
BAF Bunker Adjustment Factor OSRA Ocean Shipping Reform Act
BER Block Exemption Regulation OTIs Ocean transport intermediaries
CAF Currency Adjustment Factor SCAC Standard Carrier Alpha Code
CBP Customs Border Protection
SDR Special Drawing Rights
CCA Connecting Carrier Agreement
SMEs Small- and medium-sized
CIF Cost, Insurance & Freight
enterprises
CIM Regies Uniformes Concernant le
STC Said to contain
Centrat de Transport International
SWB Sea waybill
Ferroviaire des Merchandises
TBL Through Bill of Lading
CMR Convention on the Contract for the
THC Terminal Handling Charge
International Carriage of Goods by
TSA Transpacific Stabilization Agreement
Road TWFIA Transpacific Westbound Rate
COA Contract of Affreightm ent
Agreement
COFC Containers on flatcars
UCP 600 U niform Customs and Practice fo r
COTIF Convention Relative aux Transports
Documentary Credit
International Ferroviaires
UK United Kingdom
CSC Container Safety Convention
ULCC Ultra Large Crude Carrier
CSI Container Security Initiative
US United States
C-TPAT Customs-Trade Partnership Against
VLCC Very Large Crude Carrier
Terrorism
CY Container yard
DDC Destination Delivery Charge ORGANISATIONS
DPP Damage Protection Plan “ K" LineKawasaki Kisen Kaisha Ltd.
DWT Deadweight CAI Container Applications
EDB Ethylene dibromide International Inc.
EHC Equipment Handling Charge ECE United Nations Economic
EIR Equipment Interchange Receipt Commission for Europe
EXW Ex-works ELAA European Liner Affairs Association
FAF Fuel Adjustm ent Factor FEC Far Eastern Conference
FAK Freight All Kinds FEFC Far Eastern Freight Conference
FAS Free Alongside Ship FMC Federal M aritim e Commission
FCA Free Carrier ILO International Labor Organization
FCL Full Container Load IMO International Maritime
FIO Free In/Out Organization
FOB Free On Board IRU International Road Transport
FROB Foreign Remain On Board Union
GMT Greenwich Mean Time ISO International Standards
GRI General rate increase Organisation
GT Gross register tonne NYK Nippon Yusen Kaisha
HTS Harmonised Tariff Schedule OOCL Orient Overseas Container Line
IPI Inland Point Intermodal UN United Nations
ITC International Transport Convention UNIDROIT International Institute for the
JIT Just-in-tim e Unification of Private Law
L/C Letter of credit WSC World Shipping Council
LCL Less than container load
196

IN D E X
A Beacon Intermodal Leasing, LLC 92
A. Meredith Jones & Co. Ltd 179 Beam 23, 61
Aarhus 26 Beer 50
Abidjan 28 Beetles 110
Abu Dhabi 27 Belarus 26, 180
A ccuracy of inform ation 132, 146, 173, 181, Belawan 30
183, 185 Belgium 26, 171
ACE see Autom ated Commercial Environment BER see Block exemption regulation
Acquisitions 57 Bermuda 33, 85. 171
Adelaide 31 Bilbao 26
Aden 27 Bill of lading (B/L) 55, 116, 122, 125, 129
Aleutian Islands 22 ad valorem 133
Alexandria 27 additional clauses 125
Algeria 28 attached list 134
All-w ater service CAWS) 44 combined transport 116, 118-119
American Bureau of Shipping 59 corrections 133
AM S see Autom ated Manifest System date 120, 133-134, 152
AN ERA see Asia North America Eastbound Rate duplicate 119. 123
Agreement memo 119-120
AN L Container Lines Pty Ltd 38 multimodal 118
Antwerp 26 m ultiple/split 121-122
APL Co (Pte) Ltd. 38, 42 non-negotiable 119
APM -M aersk 42 po rt-to -p ort 119
Argentina 34 received for shipment 120
Arica 34 shipped on board 120
Armenia 27 standard clauses 123
Asia 20. 22-24, 30, 44, 77, 87-88, 184 switch 123
Asia North America Eastbound Rate Agreement Bitter Lakes. 23
CAÑERA) 48 Black M ould parasite 110
A tlantic Ocean 20, 23-26, 28, 33, 34. 70, 90 Block exemption regulation 36. 39
Auckland 31 Bolivia 34
Australia 20-22, 31. 86, 171 Bonded trade zone 57
Australian seal 86 Bosnia-Herzegovina 26, 180
Austria 26. 180 Brazil 34
Autom ated Com m ercial Environm ent (ACE) Brazil nuts 99
144 Bremerhaven 26
Automated M anifest System (AMS) 143-144 Brisbane 31
AWS see A ll-w ater service Bromomethane see Methyl bromide
Azerbaijan 27 Buenaventura 34
Buenos Aires 34
B Bulgaria 26-27. 180
B/L see Bill o f lading Bulk bag 78
BAF see Bunker Adjustment Factor Bulk cargo 45, 61. 78, 81-82
Bagged goods 99 Bunker Adjustm ent Factor (BAF) 149-150, 153,
Bahrain 27 155
Baltimore 33 Bureau Veritas 59, 75
Bandar Abbas 27 Burnie 31
Bangkok 30
Bank guarantee 121-123, 127, 135 C
Barcelona 26 C-TPAT see Customs-Trade Partnership Against
Bauxite 63 Terrorism
 197

CAI International. Inc. 92 Coal 63. 66. 69

CAF see Currency Adjustment Factor Cockroaches 110
Cant/chime hook 99 Cocoa 99, 112
Cape of Good Hope 23, 66 COFC see Containers on flatcars
Cape Town 28 Coffee 81, 98. 112, 147
Cargo declarations 140. 143 Colombia 34
Cargo description 91. 116, 118, 125. 132-133. Colombo 29
137. 143-146, 180-181. 185-186 Commodities 35, 43. 46, 50, 81. 99-100, 102.112.
Cargo handling 16. 51, 54-56, 69. 73. 75, 77. 80, 114, 131. 135, 147-148
82. 86. 88-89, 93-94, 96, 99-102, 174, 183 exempt 44, 47-48
Cargo sample 110, 126 rates 37-38, 41. 147-149
Cargo sweat 112 Compensation limits 178
Cargo value 19, 110, 123-124, 127, 131,133-134, Condensation 74, 103, 111-114
147, 173, 178-179 Congestion 16, 56, 87. 151
Carriage of Goods by Sea Act 140 Connecting Carrier Agreement (CCA) 120
C a rrie r's re s p o n s ib ility 127-133, 138-139, Consignee’s obligation 124
174-178 Consolidation 19, 54, 57
Carrier's liabilities 119, 126. 130, 132, 140, 174, rates 149
182-183, 186 Container freight station 42, 71, 87
Carrier’s lien 124 Container Safety Convention (CSC) 75
Carrier's right to tranship 124 Container seal 131
Cases 98-99, 114 Container Security Initiative (CSI) 142
CBP see Customs Border Protection Container sweat 112-113, 115
CCA see Connecting Carrier Agreement Container yard (CY) 51, 71. 87, 97, 128, 150,
Cebu 30 153
Cement 98 Containerisation 16, 64,69-70, 87-89, 92-93, 162
Cement clinker 63 Containers
Chain sling 99 aluminium 73-74
Champagne 50 bulk 81-82
Charleston 33 fibreglass 73-74
Chemicals 82-83, 101, 105, 145 flatrack 76, 79-80
Chennai 29 hard-top 78-79
Chile 34 high-cube 75-76, 78
China 29-30, 32, 50. 88 insulated 83-84
Chittagong 29 lashing and securing 97
Chon Buri 30 lashing system 98
Christchurch 31 locking system 97
CIF see Cost, Insurance & Freight leasing 90-91
CIM see Regies Uniformes Concernant le Centrat long 91
de Transport International Ferroviaire des master 91
Merchandises one-way 91
CIM/COTIF Convention 161. 184, 186, 188 round trip 91
Claims 51, 53, 58, 131, 133, 173, 176-177. 182- short 91
183, 186 markings 84, 86
time lim its 173 open-top 76, 79, 104, 106
Classification of ships 59-60, 126 platform 80
CM A CGM SA 42 plywood 73-74
CMR see Convention on the Contract for the refrigerated (reefer) 83-84
International Carriage o f Goods by Road standard 73, 77-78
CMR Convention 161, 179-180, 184, 186, 188 steel 73, 114-115
COA see Contract o f Affreightm ent tank 82
ventilated 81
19 8

Containers on flatcars CCOFC) 69 Deviation 174

Contamination 89, 105, 110, 114-115. 174, 177 Direct ChassisLink Inc. 92
Contract of Affreightm ent [COA) 67, 116 Displacement 61
Convention on the Contract for the International Documentation 51-53, 58, 109, 116-120, 131,
Carriage of Goods by Road (CMR) 180 133-135, 139-140, 143, 145, 150. 153. 156,
Convention Relative aux Transports International 172
Ferroviaires (COTIF) 184 Doha 27
Copenhagen 26 D o n g Fang In te rn a tio n a l A s s e t M a n a g e m e n t
Copra 63 Ltd 92
Copra beetles 110 D oor-to-door deliveries 19, 37, 54, 92, 130, 148
Coronel 34 Douala 28
Cost, Insurance & Freight (CIF) 1 18 DPP see Damage Protection Plan
COTIF see Convention Relative aux Transports Draught 23. 59-61, 67. 88
International Ferroviaires Drums 99
Cotton 50, 179 Dubai 27, 101
Croatia 26, 180 Durban 28
Cronos Ltd 92 DWT see Deadweight
Cross slot chartering 57
CSAV Norasia Liner Services 42 E
CSC see Container Safety Convention EC Competition Law 39
CSI see Container Security Initiative ECE see United Nations Economic Commission
Currency Adjustment Factor (CAF) 150, 153 for Europe
Customs 17, 46, 54, 56. 89, 110, 121, 134-135, Ecuador 34. 171
142-144, 146, 153, 156, 180, 182, 185-186 EDB see Ethylene dibromide
Customs Approval mark 85 Egypt 23, 27-28, 50, 125, 171
Customs Border Protection (CBP) User Friendly EHC see Equipment Handling Charge
Portal 144 EIR see Equipment Interchange Receipt
Customs-Trade Partnership Against Terrorism ELAA see European Liner Affairs Association
(C-TPAT) 142 Electronics 50, 145
CY see Container yard Endless fibre rope 98
CY/CY terms 149 England 21, 69
CYKH Alliance 41 Equator 21, 62
Cyprus 27 Equipment Handling Charge (EHC) 150
Czech Republic 26 Equipment Interchange Receipt (EIR) 91
Equipment terminal time 94
D e-Release 144
Dairy products 83 Estonia 26, 180
Dakar 28 Ethylene dibromide CEDB) 111
Dalian 32 Ethylene oxide 111
Damage Protection Plan (DPP) 92 Europe 20, 23-26, 35-36,38-39, 41. 70. 85. 90-91,
Dangerous goods 109-110, 152, 180 158, 179-180, 184
Darwin 31 European Liner Affairs Association 37-40
Data interchange 52 Excepted perils 175, 179
DDC see Destination Delivery Charge Exchange rates 150, 152-153
De-humidifiers 114 Ex-factory deliveries 19
Deadweight (DWT] 23, 61, 65 Export licence 134
Deck cargo 160, 172 EXW see Incoterms: Ex-works
Delays 55-56,86, 96,98, 124, 135, 143-144, 151, Evergreen Line 42
182, 186-188
Denmark 26, 171, 180 F
Desiccants 114-115 FAF see Fuel Adjustment Factor
Destination Delivery Charge (DDC) 150 FAK see Freight A ll Kinds
Det Norske Veritas 59 Fantainers 115
Detention clause 125 Far East 25, 32, 35, 42. 47
Far Eastern Conference fFEC) 36
 199

Far Eastern Freight Conference (FEFC) 36, 148 G

allied conferences 36 Gantry quay crane 64, 96-97
tariff [NT 90) 37-38, 148 Gdynia 26
FAS see Incoterms: Free Alongside Ship General rate increase (GRI) 160
FCA see Incoterms: Free Carrier Genoa 26
FCL see Full Container Load Georgia 27-28, 171
FEC see Far Eastern Conference Germanischer Lloyd 59
Federal M aritim e Commission (FMC) 42-46, Germany 26, 50, 59. 162, 180
49. 55, 148 Gibraltar 171
FEFC see Far Eastern Freight Conference Gioia Tauro 26
Felixstowe 26, 138 Global Alliance 38
Fertiliser 63. 99 Globalisation 19
Fibre rope net sling 99 GMT see Greenwich: Greenwich Mean Time
Fibreboard 112, 114-115 Goods in transit 127
Finland 26, 171, 180 Gooseneck tunnel 77, 80-81
FIO see Incoterms: Free In/Out Gothenburg 26
Flexi-Van Leasing. Inc. 92 Grain 61, 63, 66, 81, 145, 147, 175
Florens Container Services Company Ltd 92 Grand Alliance 42
Flour 98 Grappler pocket 77
FMC see Federal Maritime Commission Great Britain 26
FOB see Incoterms: Free On Board Greece 26-27, 171, 179-180
Foodstuff 81-83, 145 Greenwich 21
Foreign Remain On Roard (FROB) 143-144 Greenwich Mean Time (GMT) 21
Forest products 45 Greenwich Meridian 21
Forklift truck 77-78. 82, 97-98, 100, 102, 105, GRI see General rate increase
153 Gross register tonne (GT) 23, 61
France 26, 36, 50. 59. 85. 171, 180 GT see Gross register tonne
Freeboard 61 Guangzhou 32
Free trade zone 57 Guayaquil 34
Freight All Kinds (FAK) 143-144. 146, 148 Gulf of Aden 27-28
Freight charges 129. 147, 149-153, 156, 158- Gulf of Mexico 33, 44
160, 187 Gulf of Suez 23
Freight conferences 35 Gwangyang 32
closed 35
open 35-36 H
outsiders 36 Hague-Visby Rules 118, 126, 133,140, 162, 176-
Freight forwarders 43, 46, 70-72, 88, 92, 134, 179, 186-187, 189
149 scope 171-172
Freight payment 158 Hai Yin Diesel Trading Pte Ltd 179
collect 122, 124, 159-160 Haifa 27
prepaid 122, 124, 137, 158-160 Haikou 32
Freight quotation 72, 150, 152-153, 156-157 Halifax 33
Fremantle 31 Hamburg 26, 138, 189
FROB see Foreign Remain On Board Hanjin 41-42
Fruit 83-84 Hanoi 30
Fruit juice 82 Hapag-Lloyd AG 41-42
Fuel 61, 82. 150 Harmonised Tariff Schedule (HTS) 144
Fuel Adjustment Factor (FAF) 150 Hazardous materials 82-83, 109, 145, 160
Full container load [FCL) 70-71, 104, 121-122, Helsinki 26. 138
125, 128-129, 131-132. 148-149, 153 Hessian 114
FCL/FCL 121, 125, 128, 132 Ho Chi M inh 30
FCL/LCL 121-122, 128-129 Hong Kong 32. 37. 43, 87-88, 171
Fumigation 111. 155 Household goods 100. 146
Furniture 99-100 House-to-house deliveries 130-131
Fuzhou 32 Houston 33, 69
200

HTS see Harmonised Tariff Schedule Jeddah 27

Humidity 103, 112-114 JIT see Just-in-tim e
Hungary 26, 180 Just-in-tim e (JIT) services 148
Hyundai M erchant Marine Co. Ltd. 41 Jute 114

I K
Iceland 26 “ K" Line see Kawasaki Kisen Kaisha Ltd.
ILO see International Labor Organization Kampong Sa6m 30
Immatriculation Chemin de Fer 85 Kaohsiung 32
I MO see International Maritime Organization Karachi 29
Incheon 32 Kawasaki Kisen Kaisha Ltd. (“ K" Line) 37, 41
Incoterms 159 Kazakhstan 27, 32, 180
Ex-works (EXW) 159 Keelung 32
Free Alongside Ship (FAS) 159 Khulna 29
Free Carrier (FCA) 159 Kobe 32
Free In/Out (FIO) Terms 72 Kochi 29
Free On Board (FOB) 118. 159 Kolkata 29
Independent action 46-49 Korea, North 32-33
India 23. 29-30, 32 Korea, South 32. 50, 88
Indonesia 30. 72 Kraft paper 115
Infestation 75. 86, 105, 110-111 Kuantan 30
Information technology 55
Inherent vice 162, 177, 182, 186 L
Inland container depot 89 L/C see Letter o f credit
Inland Point Intermodal (IPI) 44 La Spezia 26
Insects 75, 86, 105 Laem Chabang Port 30
Insulation 74, 82. 114 Lagos 28
Insulation blankets 114 Lake Manzala 23
Insurance 17, 51, 54, 59. 101. 127, 131. 133-134. Lake Timsah 23
151, 153, 155-156. 176-177 Laos 32
International Dateline 21-22 Lashing ring 77-82
International Institute fo r the U n ificatio n of Latent defects 178
Private Law (UN I DROIT) 180 Latitude 21
International Labor Organization (ILO) 103 Latvia 26, 180
International M aritim e Organization (IMO) 103 LCL see Less than container load
International Road Transport Union (IRU) 180 Le Havre 26
International Standards Organisation (ISO) 73, Lebanon 27. 171
75. 84-85. 87. 128 Length overall (LOA) 23, 61
International Transport Convention (ITC) 1 61 Less than container load (LCL) 54, 71, 104,
Internet 54-55, 57 121-122, 128-129, 131-132. 148-149. 153,
Interpool, Inc. 92 155
Invoicing 156-158 LCL/FCL 130
I PI see Inland Point Intermodal LCL/LCL 129
Ireland 26, 171, 180 Letter of cred it (L/C) 71, 119-120, 124-125,
IRU see International Road Transport Union 128, 134
Isle of Man 171 Liability 161-162, 172-180, 182-184. 186-188
ISO see International Standards Organisation Libya 28
Italy 26, 59, 171. 180 Lice 110
ITC see International Transport Convention Lift-o n /L ift-o ff (LO/LO) 150
Izmir 27 Lightweight 61
Lima 34
J Limestone 69
Jacksonville 33 Liner agent 52, 72
Jakarta 30 Liner services 51. 63
Japan 32. 50. 59, 88. 171 Liner Terms 72, 150
 201

Liquefied Natural Gas see vessels:tankers:LNG M IS C see M alaysia: M alaysia In te rn a tio n a l

Liquefied Petroleum Gas see vessels.tankers: Shipping Corp
LPG M itsui O.S.K. Lines Ltd 37. 41
Liquid bulk bag 78 M LB see Mini-landbridge
Liquid cargo 108 Moldova 26, 180
non-hazardous 78 Mombasa 28
potable 82 Montevideo 34
Lisbon 26, 172 Morocco 180
Lithuania 26, 180 Moths 110, 183
Livorno 26 M otor vehicles 45, 48, 73, 103
Lloyd’s Register of Shipping 58-59 Multim odal transport 57. 87-88. 115, 118, 128,
LO/LO see L ift-o n /L ift-o ff 184, 187
LOA see Length overall Mumbai 24. 29
London 24, 58-59, 178 Muscat 27
Long Beach 33 Myanmar 29-30. 32
Longitude 21
Los Angeles 33, 44 N
Luxembourg 26, 171, 180 Nagoya 32
Net register tonne CNT) 61
M Netherlands 26. 171, 180
Macedonia 26, 180 Network Sharing Agreements 41
Maersk 42 Networking 19. 154
Maggots 110 New Orleans 33
Mail 53, 99 New World Alliance 42
Malacca Max 88 New York 23-24, 33, 44, 59, 69, 87
Malaysia 30, 67, 88 New Zealand 31. 171
M alt 78. 81 Newfoundland 21, 33
Malta 26 Nippon Kaiji Kyokai 59
Manifests 53. 131, 133-134, 143-144, 146, 156 Nippon Yusen Kaisha CNYK) 37, 41
Manila 30 Non-conference carriers 147-149
M anpower/recruitm ent 52, 93 N o n -v e s s e l o p e ra tin g co m m o n c a rrie rs
Maputo 28 (NVOCCs) 43, 46-48, 54-55, 57, 73, 90, 92,
M arco Polo 50 143-144, 149, 152, 156
M arine terminal operators 42 Norfolk 33
M arket survey 154-155 Norway 26, 59, 171, 180
Marseilles 26 Notify party 121-122, 137, 143
Materials handling 94-96 NT see Net register tonne
equipm ent 93-102 NVOCC see Non-vessel operating com m on
maintenance 96 carrier
standardisation 96 NYK see Nippon Yusen Kaisha
MCB see Micro-Bridge
Meat 83 O
Medan 30 Oakland 33
Meditteranean Sea 23, 27-28 Ocean Shipping Reform Act (OSRA) 42-48
Mediterranean Shg Co. 42 changes 46-48
Melbourne 31 Ocean transport intermediaries (OTIs) 43, 46,
Merchant Shipping Act 59 55
Mergers 57 Odessa 26
Mersin 27 Oil 67. 82
Messageries Maritimes of France 37 On-carriage 127, 131, 152
Methyl bromide Cbromomethane) 111 OOCL see Orient Overseas Container Line
Mexico 33, 44, 50, 171 Ore 63, 66, 69
Miami 33 Orient Overseas Container Line COOCL) 38, 42
M icro-Bridge fMCB) 44 Osaka 32
M ini-landbridge [M LB ] 44 Oslo 26
202

OSRA see Ocean Shipping Reform A ct Pre-carriage by 137-138

OTIs see Ocean transport intermediaries Project cargo 80, 99
Overtonnaging 35, 148 PSA Corporation 97, 155
Overweight container 152 Pusan 32

P Q
Pacific Ocean 20. 22-24. 30-31. 33 Qingdao 32
Packaging 101, 105-106,109-110. 113-114. 144.
156, 181 R
Packing instructions 109 Radiation 84, 113
Packing/securing 103-110 Railways registration number 85
Pallet 100 Rebates 43, 148-149
advantages 101 deferred 149
factory 101 direct 149
shipping 100 Red Sea 23, 27-28
stevedoring 100 Registration of ships 58
warehouse 100-101 Registro Italian Navale 59
Panama Canal 23-24, 44, 64, 66, 97 Regies Uniform es Concernant le C e ntia t de
Panamax 23, 66, 97 T ransport In te rn a tio n a l F erroviaire des
Pan-Atlantic Steamship Corporation 69 Merchandises [CIM ) 184
Paper 45. 102, 107 Resins 99
Paraguay 34 Rio Grande 34
Para nag ua 34 Rodents 105
Penang 30 Romania 26-27 180
Pepper 99. 115 Rotterdam 26. 70
Peru 34 Rotterdam Rules 189
Pests 105. 110 Rubber bale 99
Philadelphia 33 Russian Federation 26-27, 32, 180
Philippines 30
Phosphates 63 S
Phosphine 111 Sabah 30
Photocopier 101 Safety 59, 83. 94-95, 98, 108, 116, 126, 158
Piggyback 69 Safety Approval Plate 104, 106
Pilferage 101, 131, 178 Said to contain (STC) 122. 125-126, 128-130,
Piraeus 26 132. 137, 144. 146
Plastics 146 San Francisco 23-24, 33
Platform/pallet sling 98 Santos 34
Plimsoll Mark 59-60 Sarawak 30
Plimsoll, Samuel 59 Saudi Crown 134
Poland 26, 171, 180 Savannah 33
Port Elizabeth 28 SCAC see Standard Carrier Alpha Code
Port Elizabeth Marine Terminal 69 Scandinavia 41
Port Klang 30 Schedules 51, 63. 89. 138, 144. 151. 158, 160
Port Newark 69 Scrap metal 45
Port of New York Authority 69 SDR see Special Drawing Rights
Port Said 23, 27 Sea waybill (SWB) 139-140
Port Tawfiq 23 Sea-Land 69
Portland 33 Seaco 92
PortNet 140, 155 SeaCube Containers LLC 92
Ports 16, 19, 25, 35, 37. 39-41, 44. 48. 50-58. 62- Seattle 33
68. 87-89, 93-94. 96-98, 120, 131, 137, 140, Seaworthiness 126-127, 175
142-144, 151, 171 Certificate of Seaworthiness 126
Portugal 26. 172, 180 Selangor 30
Pre-carriage 131, 137, 152-153 Semarang 30
 2 0 3

Service contracts 45, 47-48, 54. 56. 149 T

Shanghai 32 3PL see Third party logistics
Shimizu 32 Tacoma 33
Shipper’s load, stow and count 70,122, 125-126, Taiwan 30, 32. 50
128-129, 132, 137 Tajikistan 29, 180
Shippers 17. 45, 47-49. 53-54, 56, 71-72, 87, 90, TAL International Container Corporation 92
119, 125-128, 130, 134, 148-149, 151-152, Tanjung Priok Port 30
162 Tariffs 45. 47-48, 53, 55-56
Shipping Act 42, 44-47 TBL see Through Bill o f Lading
Shizuoka 32 Terminal Handling Charge (JHC) 150, 153, 155
Siberia 22, 90 Termites 110
Silesia 69 Terms of shipment 128
Silk Road 50 Textainer Equipment Management CLJ.S.) Ltd 92
Singapore 30, 43. 50. 71, 88, 97. 140, 155, 171 Thailand 30, 32
Sirex wood wasps 110 THC see Terminal Handling Charge
Sitophilus zeamais 110 Third party logistics (3PL) 17-18
Slovakia 26, 180 Through Bill of Lading (TBL) 72
Slovenia 26, 180 House TBL 73
Small- and medium-sized enterprises CSMEs) Tianjin 32
17-18 Timber 63, 86, 100, 106, 109, 112, 114. 156
SMEs see Small- and medium-sized enterprises Time zones 21
Songkhla 30 Toamasina 28
South America 20, 23-24 Tokyo 32
South Pacific 22 Tonga 171
Southampton 26 TOUAX Container Services 92
Spain 26, 171, 180 Toxic substance 82
S p e cia l D ra w in g R ig h ts CSDR) 178, 180, Toys 50, 145-146
187-188 TRAC Intermodal 92
Spices 81, 99 Tractor-trailer 102
Spirits 82 TradeNet 140, 153
Spreaders 77, 98 Transhipment 68, 72-73. 124, 128, 140, 172,
Sri Lanka 29, 171 181
Standard Carrier Alpha Code CSCAC) 144 Transhipment concessions 73
STC see Said to contain Transit time 16, 23, 44-45, 62, 87. 92, 115. 158
Steel plates 99 Transpacific Stabilization Agreement (TSA) 48
Stowage planning 105-106 T ra n s p a c ific W e stb o u n d Rate A g re e m e n t
Suez Canal 23-24, 44, 66. 150. 151 (TWRA) 48
Suez Max 88 Transport geography 19, 25
Sugar 63, 98 Transtainer 97
Sulphuryl fluoride (vikane) 111 Tribolium castaneum 110
Supply chain management 17. 55, 57 Trieste 26
Surabaya 30 Triton Container International Limited 92
Surcharges 35. 151-153 Tropic of Cancer 21
Surcharges canal toll 151 Tropic of Capricorn 21
Surcharges congestion 151 Tropical Warehouse M oths 110
Surcharges peak season 151, 155 Trucking 43, 48, 54, 57, 69, 153
Surcharges war risks 151 TSA see Transpacific Stabilization Agreement
SWB see Sea waybill Tunisia 28, 180
Sweden 26, 171, 180 Turkey 26-27, 180
Swire, John Samuel 36 Turkmenistan 27, 29, 180
Switchback 94-95 Tutticorin 29
Switzerland 26, 171-172. 180 TV screens 101
Sydney 31. 155 TW R A see T ra n sp a cific W e s tb o u n d Rate
Syria 27. 171 Agreement
204

U conventional 65
UCP 600 see Uniform Customs and Practice for feeder 68
Documentary Credit heavy lift carrier 68
UK see United Kingdom LASH 65
Ukraine 26 liners 63
Ultra Large Container Carrier see vessels: tanker: livestock carrier 68
ULCCs oil rig supply boat 68
UN see United Nations reefer/fruit carrier 68
UNIDROIT see International Institute fo r the RO/RO 65
Unification o f Private Law tanker 66-67
Uniform Customs and Practice for Documentary LNG 67
Credit 120. 124, 128 LPG 67
United Kingdom CUK) 23. 50, 59, 171, 178, 180 ULCCs 66-67
United Nations CUN) 145, 161 VLCCs 66-67
U n ited N a tion s Econom ic C om m ission for tramp 63
Europe CECE) 180 tug boat 68
United States CUS) 25, 33. 35-36, 42, 46-48, 50. Vietnam 30. 32
55, 59, 64, 87. 92, 119, 139. 142-144, 146, Vikane see Sulphury I fluoride
148-150, 187
Unitisation 94 W
Uruguay 34 Wah Yuen Marine Pte Ltd 179
US see United States Waterman Steamship Company 69
Uzbekistan 27, 29, 180 Weevils 110
W ilmington 33
V Wire rope net sling 99
Vaccines 83 World Shipping Council 37
Valaparaiso 34 World War II 179
Vancouver 33. 91 Woven polypropylene 114
Vangemar Shipping Co. Ltd 179
Vegetables 83 X
Venezuela 34 Xiamen 32
Vent-Containers 115 Xingang 32
Ventilation 81, 111, 115, 174
Vertical movement 96-97 Y
Very Large Crude Carriers see vessels: tanker: Yangrning Marine Transport Corporation 41
VLCCs Yangon 30
Vessels Yard crane 97
bulk carrier 66 Yokohama 32, 93
car carrier 68 Yugoslavia 26. 180
coaster 68
combination Ccombo) 38 Z
container 64 Zanzibar 28