Ocean Cargo

 

 

Sea freight accounts 85 % of the global trade, it’s the main shipping method for global import/export businesses.

Ocean cargo is considered as the best solution for large sized cargoes. Most of the time the size and volume of goods doesn’t fit in any other mode of transportation or is economically unviable to move by other modes of transportation than the ocean.

The main benefit of ocean freight is the low prices comparing to air or rail transportation. Another benefit of ocean freight is size and weight that may involve issues for air transportation.

In case of LCL load, it is possible that other shipments sharing the same container may cause a delay. Perhaps the cargo’s owner is missing paperwork or not delivered on time.

 

Ocean freight is preferred mode of transport for large goods (high weight and volume) and heavy cargo such as metals, minerals, iron, and bulk products such as crude oil and petroleum.

Environmental impact is Another factor to take into consideration. We are all taking care of the planet we live on. It seems that sea freight is gaining this category. CO2 emissions are much higher in air travel than ocean freight. This leads to the fact that the transport of goods by air has a much larger carbon footprint than the transport of goods by sea which are considered much greener transportation mode with a higher carrying capacity.

 

Key benefits of ocean freights:

 

• Greater flexibility in the material that can be transported and for certain items, it can be the only economical choice.
• Sea transport allows the shipping of greater quantity of materials due to its large storage capacity.
• Most eco- friendly among other mode of transportation
• Economical
• Multiple carrier options for the shipper
• Extensive coverage around the world

 

Air freight

 

 

Air freight is a critical mode of transportation to meet the demand for growth, world air cargo shows an average growth of 4.2 percent per year.

High value goods are more likely to be shipped by air freight, like laptops, mobile phones because the shorter transit time decreases the risk of damage or theft. It takes less time to move goods from an airplane to another, more security cameras to keep an eye on the goods.

Air freight is a more expensive option and can be up to 6 times as expensive as ocean freight. However, air freight is much quicker than ocean freight.

Key benefits of air transport:

 

• Fast transition
• Less manipulation
• Less documentation
• Reliable arrival and departure
• Increased security of your shipment

 

A key element in business “time is money”. So, does the cost of delivery by air increase by increasing speed? technology is constantly accelerating ocean delivery. This is done through better vessels, faster management resources and more accurate communication.

 

Rail Cargo

 

 

Another “green” mode of transport is rail cargo, train consume less fuel per ton mile than trucks, also it requires only one driver for 100 wagons. Rail cargo is considered as a cheap mode of transportation. However, some additional costs are incurred in a rail journey. The additional costs consist of a road delivery and lift costs to transfer the goods from the road vehicle to the container.

Trains are able to carry a large number of containers from the delivery ports. Trains are also used to transport steel, wood and coal.

On average trains are used to transport large amounts of goods, and most of the time they have direct destinations which helps to avoid  problems like accidents, and road congestion.

By providing the right circumstances, Rail cargo is less expensive than trucking and energy efficient.

 Key benefits of rail freight: 

 

• Reliable transit times and schedules
• Railways are the most efficient of land transportation. A train can carry the equivalent of more than 400 trucks.
• Fast and economical delivery over long distances. Generally more than 500 miles
• Rail transportation is traditionally very safe.
• Helps reducing road congestion.

Cardo packaging or freight packaging is one of the most important factors when it comes to shipping of the goods.

In every import/ export process there are two major challenges that faces shippers, it’s the satisfaction of both customer and shipper. The customer requires a secure and reliable method of carriage, so he can receive non-damaged goods, on the other hand the shipper requires that the space on his cargo is fully utilized in order to make maximum profit.

The main function of the packaging is to protect and preserve the goods during storage and transit. However, protection is not only required against the loss, damage and pilferage of the goods, but also depending on:

• the nature of the contents, against moisture entering or leaving the package.
• High or low temperatures
• light,
• gases,
• insect infestation,
• contamination and other natural hazards.
• The dry cargoes embrace raw materials, semi-finished or finished goods. They do not require the same containment as gases and liquids

Most common cargo packing type:

 

Card board Boxes (Fiber board boxes):

 

The most common economical container for shipping continues to be the cardboard box. This is understandable as shippers seek efficient, but inexpensive and lightweight packaging. However, the usage of card board boxes is limited by:

• the weight that it can withhold,
• the incompatibility with common lifting equipment,
• Extreme weather conditions that can damages card boards
• Transport type
• Regulations of the country of origin or destination

 

There are 3 different carton packaging:

 

1. Corrugated carton:

It’s popular for their strength, durability, lightness, recyclability and cheap prices.  Due to the quality and safety of packaging items in corrugated boxes, they are commonly used in the food industry, clothes, books, plastic and other unbreakable goods.

2. Double- walled corrugated carton:

It’s commonly used to crating. In case of moving furniture or other larger items, use quality styrofoam and bubble wrap around these areas, box items securely so there is no movement inside, palletize and use strapping to hold in place to ensure protection.

3. Double carton:

This method of packaging is more often used for fragile items such as: glass, porcelain and smaller items that require special care. These items must be separately packaged by hand in a commercial bubble wrap. Then, these items are placed in an inner shipping box, which will then go into an actual shipping box of about 2 to 3 inches or more.

 

Bagged cargo:

The product itself must be durable to withstand external pressure and compression, because the bags will only hold the contents in one place and not protect against external damage. These products can usually be fertilizers, cereals (rice, corn, wheat), seeds, dried fruits, sugar, coconut, coffee, fresh vegetables, flour, copra, small items such as shells, raisins.

 

Wooden cases:

They have stood the test of time and their main advantage is that they have the strength of a wall to withstand imposed loads. They are more expensive than cardboard packaging because of the cost of wood. Wooden boxes are particularly suitable when the goods are transported by conventional methods and when they are sensitive to heat, humidity, etc. types of wooden crates, including plywood, increasingly used by exporters.

 

Wooden crates:

They are suitable for wooden packaging embedded in the skeleton. An open box can be used when the contents are elastic enough to require minimal packaging to facilitate handling and stacking. It is sometimes used as an outer packaging to consolidate cartons or to enhance the protection of cartons. The skeleton box is often used to transport large machines.

 

Steel drums:

New steel drums are generally excellent for export and delivery. Used drums, if not carefully restored and tested, can be a bad choice. Fatigue caused by thorn bumps and damage from previous closures, which makes your load vulnerable.

 

Bales:

A well-processed bullet is well developed in most export operations and shipments. However, all bullets can be subject to snagging holes and water damage. They are not recommended for high value products.

 

Palletizing Cargo:

Many products or commodities can be economically palletized to facilitate their handling, stowage, and protection. Packing cost may be significantly reduced by palletizing or unitizing.

There are six standard pallets that accommodate the various and/or intermodal containers presently used in international commerce. The normal sizes (in inches) of these six standard pallets are:

 

• 1016 x 1219 mm (40″ x 48″) North America
• 1000 x 1200 mm Europe, Asia
• 1165 x 1165 mm Australia
• 1067 x 1067 mm (42″ x 42″) Worldwide
• 1100 x 1100 mm (43″ x 43″) Asia
• 800 x 1200 mm Europe

 

Standard pallets are rated for 40 “x 48”, and the goods must not exceed the pallet or exceed a height of 8 feet. Special pallets must be made for items larger than 40 “x 48”. For loads over 7 feet, a loader is required to unload the load. If your cargo weighs less than 150 pounds, and your company does not have a docking station, the loading may be broken and unloaded manually.

 

Packaging dangerous goods:

Learning to pack dangerous goods requires a lot of attention to detail and diligence. Many dangerous goods have extremely detailed specifications regarding the type or method of packaging to be used to ensure the safety of the goods during transport. And these packaging requirements can also vary considerably depending on the mode of transport used to ship the goods.

3 questions you should ask yourself before shipping dangerous goods:

• What type of packaging is suitable for this shipment?

It is always necessary to use USOT approved packaging for each shipment of dangerous goods. Compliance with the DOT rules will ensure the safety of the packaging of dangerous goods. concerning the packaging process, this will largely depend on the class of dangerous goods you work with.

• Are the dangerous goods being transported safely?

For all transport of dangerous goods by sea, air and land, rules govern the standard safety methods for efficient transport. All dangerous goods carriers must provide comprehensive training to all employees handling, packing or transporting dangerous goods.

• Is the company in compliance with all relevant regulations?

Transportation of the hazardous materials industry is based on DOT, the International Air Transport Association (IATA) and other international organizations to establish regulatory standards and ensure the safety of everyone involved in this industry. Your company should be aware of all applicable rules in order to remain in full compliance with these examples. If you do not do this, your staff is at risk and may result in fines.

Insurance in general is the “Protection against future loss”. insurance is available to ships, boats and most importantly the cargo that is being carried into any mode of transportation.

Marine insurance is very important because among the four mode of transportation ( road, rail, air and water) ocean cargo is more likely to cause a lot of concerns to carriers, not only because there are natural phenomena that can affect the cargo and the ship, but also other incidents and signs that can cause significant damage to the carrier and the transport company.

The main advantage of marine insurance is that the carrier may choose an insurance plan depending on the size of the vessel, routes taken by the vessel for the carriage of cargo and many other secondary points that can significantly affect the carrier in general.

In addition, since various plans and policies indicate not only covering the cargo, but also the vessel. the carrier can choose and use the policy that suits him and his business.

China is leading the maritime insurance:

 

The rapid growth of China’s maritime trade has led to the development of its insurance sector, in which significant steps have been taken in recent years to raise standards.

China is currently the largest cargo insurance market and the second largest home insurance market, mainly due to China’s strong economic growth since the country was added to the organization. world trade.

 

Why you should purchase cargo insurance:

 

Many are trying to save money by not insuring their cargo, but here’s five of the many reasons why you should take insurance into consideration.

• Reduce exposure to financial loss

If you are an exporter who has not been paid for the goods at the time of shipment or an importer who has paid for all or part of the goods before they are received, you risk a financial loss if the goods are lost or damaged during transit.

• General average – Expedite the release of your cargo

You may need to send a security deposit and / or cash deposit in order to receive an average release of your cargo, even if there is no loss or damage to your property. By taking out insurance, your insurance company takes responsibility for this and speeds up the clearance of your shipment. The overall average value is the generally accepted international principle that if a ship has certain types of accidents, all parties share the loss equally.

• Contractual requirement

In your sales contract, you may need to purchase marine insurance to protect the interests of the buyer or their bank. This is especially true when selling CIP or CIF products. Failure to comply with this requirement may result in financial loss if the product is lost or damaged. However, failure to comply with the terms of your contract with the buyer can lead to loss of sales and legal problems.

• Coverage for limited carrier liability

Under the law, carriers are not responsible for many common causes of loss occurring during transit (eg natural disasters, common features, etc.). And, even if they are responsible, the carriers’ liability for loss is limited – either by contract in the bill of lading or by law. In most cases, you will only recover cents from the carrier.

• Have more control over insuring terms

Reliance on the insurance of the buyer or seller may be a viable option, but you must be sure that the insurance was purchased, and that the conditions, cost and insurance limits provided by each insurer for each dispatch meet your needs. And, if the requirement is for a foreign insurance company, perhaps in a different language, it can take a lot of time and disappoint. If there is a problem with claims, you often deal with foreign courts.

CIF + 10%

 

(Commercial invoice value + insurance costs + freight= CIF value x 110% (10% for any unforeseen costs or charges))

This type of insurance covers your shipping costs too in the case of damage or loss where the repair or replacement must be done somewhere other than the consignee’s location. Recoverable freight charges may be prorated based on the portion of the shipment damaged in the case of partial loss/damage.

If there is damage and the repair occurs at the final destination of the goods (consignee’s facility), no freight charges are refundable.

Practical demonstration:

 

For most destinations and commodities PWS sells insurance for $0.60/$100.00 insured value with a $12.00 minimum.

Sample insurance of goods + freight charges:

Commercial Invoice value = $10,000.00

Insurance Cost = $60.00

Freight Cost: $500.00

Total CIF Value = $10,560.00 x 110% = $11,616.00 = Amount to Insure

 

 

What does the cargo insurance covers?

 

1. Perils of the sea:

– natural disaster

– Accidental accidents

2.  Ocean Losses and costs 

– ocean Loss

– Ocean cost

– Sue and labor costs

– Rescue costs

– The degree of loss of property can be divided into total losses and partial loss.

– By the nature of the loss of goods it can be divided into general average and particular average

–  Determination of the total average and average

– General Average Conditions

–  The difference between a general average and a particular average: the cause and the responsibility are different.

– Total average contribution

3. Exclusion of an insurance company

– Intentional actions or loss of policyholder’s negligence

– Responsibility for losses is borne by the shipper

– Loss of poor quality or small assets before insurance liability is valid.

–  Losses of the insured property, natural losses or defects, characteristics and reduction of the market price, losses and costs caused by delayed transportation.

 

Important to know !

 

There are five exceptions that a motor carrier can use to deny liability for freight claims. The burden of proof is on the motor carrier to prove that one of these five conditions was met and that cargo damage was not due to their negligence.

 

Act of God:

 

Act of god defense is applied when the carrier can prove that the damage was caused by a physical phenomenon or a natural disaster that he cannot control. Some examples: the wind blows on a trailer, a tornado or a flood, or a driver has a heart attack.

All weather conditions are not considered “Act of god” in accordance with the Carmack Law. The violation must be of such unexpected strength and seriousness that the carrier could not take protective measures against it.

As stated in Standard Brands, Inc. c. Nippon Yusen, the carrier may be liable for any transport claims arising.

 

The “public enemy” or the “act of war”:

If the damage is caused by hostile acts of the armed forces that are enemies of the government, the carrier cannot be held responsible for cargo claims. War crimes fall under this exception, but organized crime does not exist. Terrorism may be part of this exception, but there is currently no case law to determine how the Carmack amendment will be applied in such situations.

 

Act of public authority:

The Carmack Amendment is another exclusion of carrier’s liability if the government (“public authority”) damages the transportation. Under this exemption, policies such as quarantine, road closures, product recalls or trade embargoes are applied.

 

Inherent vice:

A good with an “inherent vice” is that it is naturally subject to defects, disease or degradation, which can worsen over time. Examples of such products include fruits and vegetables, cheese and tobacco.

 

It is incumbent on the carrier to demonstrate that the damage was caused solely by the “inherent vice” in the goods and not by their own negligence, for example, failure to comply with the shipper’s instructions for processing.

 

Act of shipper:

Act of shippers are mostly associated with improper loading or packaging. However, the general principle is that the shipper’s error may not be obvious under normal observation; if so, the carrier is obliged to refuse shipment.

 

 Importing to USA: “Importer Security Filing” ISF 10+2

Before merchandise can be imported into the United states the importer security filing (ISF) also called customs broker must submit electronically the 10+2 data elements to Customs at Border protection (CBP) no later than 24 hours prior to the cargo being loaded.

ISF required Elements (10+2 data Elements)

Who provides what?

 

• 10 elements must be submitted electronically by ISF Importers, or their agent no later than 24 hours before the cargo is shipped to the US.
• 2 elements must be submitted electronically by the carrier.

 

List of the 10 Elements required by the Importer

1.Seller (Name & Address)	6.Importer of record NO (EIN or SSN)
2.  Consolidator (Name & Address)	7. Ultimate consignee NO (EIN or SSN)
3. container stuffing location ( Schedule & Address)	8. Manufacturer (Name & Address)
4. Buyer ( Schedule & Address)	9. HTS Number
5.Ship to ( Name & Address)	10. Country of origin

 

Below you will find Details regarding the 10 elements

1. Seller Info

ISF filer must provide the complete name, address, city, state, zip code, telephone, fax number, and email address of the seller.

2. Consolidator/ stuffer

ISF filer must provide the complete name, address, city, state or province, postal code, telephone and fax number of the person or company that loaded the imported cargo into the container.

 

 

3. Container stuffing location

ISF filer needs to provide the complete name, address, city, state or province, postal code, telephone and fax, number of the person or company that loaded the container.

 

 

4. Buyer

Name and address of the last known entity to whom the goods are sold or agreed to be sold.

5. Ship to

ISF filer needs to provide the complete name, address, city, state, zip code, telephone and fax number of the first person or company that will be receiving the imported cargo imported to the united states.

 

 

 

6. Importer of record No. (IOR)

IOR is the person or organization that is responsible for all  paperwork and other formal documents required to enter imported goods to the USA.

It consists on providing the appropriate entry documents for clearance through Customs Border Protection (CBP) at US ports, payment of any duties, levies or fines, product classification and certification and any other obligation.

7. Ultimate consignee

Full name, address, employer identification number or CBP assigned number and social security number of the party on whose account the goods are being shipped.

8. Manufacturer

Name and address of the manufacturer that assembles, produces or grows the commodity. Or the name and address of the supplier of the finished goods in the country from which they are leaving.

9. (HTS-US) code “Harmonized Tariff Schedule of the United states code”

HTS code Is a specific 10- digit import classification system to the United states. HTS codes, also called HTS numbers are administrated by the US international trade commission (ITC).

 

 

10. Country of origin

Origin of the products, where they were produced, manufactured or grown.

 +2 data elements which are entirely the responsibility of the carrier:

1. Vessel stow plan
2. Container status messages

 

 

ISF facts:

 

The consequences of non- compliance with the ISF 10+2

 

There are four types of non-compliance:

• Not making the declaration.
• Making a mistake or submitting an incomplete declaration.
• Submitting a declaration after the deadline.
• Not cancelling a declaration in case, the cargo changes destination or it is abandoned

 

 

such as:

• The percentage of incorrect declaration.
• Measures taken by the importer to rectify the non-compliance.
• Circumstances beyond the control of those making the declaration
• Incorrect information having been supplied by someone in the logistics chain.

 

 

2. The safe port requires the department of Homeland security to collect the 10+2 information by an Automated Targeting System that helps customs to analyze shipment information that helps customs to decide which containers needs more examination and which can move on without additional Checks.

 

 

3. 10+2 elements must be submitted 24 hours at least prior to cargo loading at the port of lading. However, only two elements can be submitted while the vessel is still on the water, but no later than 24 hours prior to arrival. The container stuffing location and consolidator name and address
4. Liquidation penalty of $5000 per violation in case of an inaccurate or missing document, it’s the importer responsibility to ensure that the ISF is filed and accurate.

 

5. THE B/L should match your ISF to be approved. Such cargo shipment will be marked as non-compliance to ISF.

Most frequent Q&A

Q1: Can a Customs Broker be an agent for all of our ISF’s for a full year?

A: No. Each ISF is done on an individual basis. An ISF importer file the ISF themselves or hire an agent for each individual filing. There is no limit as to how many different agents an ISF Importer may use during the course of a year.

Q2: Does the ISF Filer need to be located in the US?

A: NO

Q3: Does the “filing agent” for the importer have to be a Licensed Customs Broker?  Can it be the foreign freight forwarder

A:  A filing agent does not have to be a customs broker except for the case of a “unified filing.”  A foreign freight forwarder can also be a filing agent.

Q4: When do we have to stop amending the ISF?

A: The Importer Security Filing must be amended if there is a change or more accurate information becomes available before the goods enter the limits of the port of first arrival in the United States.

However, if the flexible filing option (“FR”, “FT” or “FX”) is used, the ISF MUST be updated with the correct or more accurate information as soon as it is known, but in any event no later than 24 hours prior to arrival of the vessel in the first U.S. port. If better information does not become available and/or the original information is the best information, the ISF must still be completed using the “CT” amendment code

Q4: Are changes to the ISF after arrival at the port of discharge allowed or required?

A: Generally, the requirement to update an Importer Security Filing terminates when the vessel calls at the U.S. port of arrival.  However, CBP will not restrict updates outside of this window

Q5: What happens if I fire my ISF Agent, but still need to update my ISF?

A: If an ISF Importer needs to update its own ISF that was initially submitted by its agent, the ISF Importer must contact a CBP Client Representative to have the original filing cancelled.  After the original ISF has been cancelled by the CBP Client Representative, a new ISF may be submitted.

Q6: How will importers be able to amend the security filing if they don’t have access to the Importer Security Filing elements in CBP systems?

A: If the ISF Importer used an agent to perform the filing, the ISF Importer should contact its agent for assistance in amending the ISF.

Q7: How do I handle shipments sold on the water?

The ISF will need to be updated if the shipment is sold in transit.  At a minimum, the ISF Importer must notify CBP that the goods have been sold, and the party must update the Buyer (Owner) field and any other field that the party knows has changed as a result of the sale.  The ISF Importer remains liable for the timing and accuracy of the ISF filing.

Q8:  Can I amend the bill of lading number on the ISF?

Yes.  From a transactional standpoint, the system will allow an ISF Filer to update an existing ISF with a new bill of lading number.  However, the ISF Importer is ultimately responsible for the timely, accurate, and complete submission of the Importer Security Filing.

 

Withdrawals:

 

Q9: What happens if I enter an ISF and then the shipments do not ship?

A: Withdraw the ISF by deleting it.

Q10: Will you allow the entry to update the ISF?

No.  Stand-alone ISF transactions can only be updated by replace transactions.  Furthermore, unified entry transactions will only update the ISF if the entry is replaced along with an ISF replace transaction.

 

Codes:

 

Q11: CBP should create detailed amendment codes so changes to the ISF can be tracked more easily.

CBP agrees and will post a list of amendment codes, once they have been fully developed, in the next set of implementation guides.

 

Recommendations:

1. It’s very important to know what type of goods you are importing and to identify the proper HTS Numbers Before you import to the US.
2. For ISF you can choose who will transmit and send necessary documents to related party.
3. The process would be much easier if you keep communicating with your suppliers in China or any other country and with ISF filing agent or service provider.
4. In case of door to door service, we will oversee all the process. Our team will be available for any inquiry.