The future of Sino Shipping Logistics and Supply Chain in China

Summary

1/ THE INTERNET OF THINGS (IOT) AND BIG DATA

2/ ROBOTS AND AUTOMATION

3/ DRONES AND SELF-DRIVING SYSTEMS

4/ 3D PRINTING

5/ QUANTUM COMPUTING

6/ BLOCKCHAIN

 

INTRODUCTION

 

Logistics and supply chain management have been defined by traditional methods and the slow adoption of new technology. But refining existing tech has reached its practical limit, and the demands of global businesses and changing customer expectations are pushing change.

 

Customers are asking for shorter lead times, lower prices, and more frequent, smaller deliveries. And the costs of mistakes, inefficiencies, and missed deadlines is growing as competition increases. To meet these evolving expectations and challenges, logistics will soon adopt a slew of innovative, disruptive technologies, transforming the industry forever.

 

The move to digital supply chain management, leveraging the power of the Internet of Things to ‘smarten’ logistics, will redefine what it means to keep an eye on a delivery. Big data will allow a level of optimisation unheralded by the past, and the new, smart automation of warehouses will vastly improve efficiency while lowering overheads.

 

By investing in drones, selfdriving systems, and 3D printing, the way products are delivered will undergo transformative change. And quantum processing and Blockchain offer new, exciting opportunities for supply chain management. In short, the future of logistics is hightech, defined by a new array of smart advances that offer a profound break with the past.

 

1/ THE INTERNET OF THINGS AND BIG DATA

 

“In my specific area, we’re just starting to see Internet of Things (IoT) technology really take hold because this industry is… a bit medieval in terms of adopting leading-edge technology. Logistics companies tend to be slow followers, in most cases, except perhaps for the UPSes and the FedExes of the world.” –

John Maley, global leader for freight logistics at IBM

 

The Internet of Things (IoT) is the connectivity that allows smart devices to talk to one another, and it’s at the foundation of the supply chain management of the future. By gathering and sharing information from and between connected devices, the IoT is the beating heart of big data and the nervous system at the centre of the supply chain. Without it, supply chain management is essentially blind.

 

“These are industries which, despite the constant chatter about optimisation, streamlining and technology, remain bloated and inefficient.” –

Finbarr Bermingham, Global Trade Review

 

For instance, end-to-end visibility is critical for ensuring delivery, increasing efficiency, and avoiding loss, spoilage, and unnecessary duplication. By harnessing the power of sensors, and enabling these sensing devices to communicate, the logistics services of the future can guarantee the kind of visibility that will allow them to stand out. But when we speak of sensors, we mean far more than RFID badges or GPS tracking for cargo containers.

 

The future of sensors is sophistication and complex information gathering. For instance, sensors embedded on pallets of perishable goods can alert you to temperature fluctuations that might damage items in transit, letting you know about an emerging problem before cargo is spoiled. Smart sensors in your trucks can tell you when they’ll need maintenance before they break down in transit.

 

And cargo containers that know when they’re open, delivery trucks that signal when they’ve been idling for unusual periods, and wearable smart badges that track the location of your delivery men in the field, can help you lower costs by ensuring that your deliveries arrive as promised.

 

Think of this as a process that begins with the IoT, moves through data collection to analysis, resulting in improved customer service. The IoT is the glue binding a process of refinement and analysis that improves the quality of your service. Smart sensors are a company’s eyes in the field, generating data about the strength of its logistics chain. This data isn’t just information about where shipments are – that’s the old way. Instead, think of the wealth of new information they provide: average idling times for delivery trucks, temperature averages and extremes in transit, and the frequencies of various problems. By analysing this data, the companies of the future will refine their service and enhance customer satisfaction.

 

“…Big data logistics can be used to optimise routing, to streamline factory functions, and to give transparency to the entire supply chain, for the benefit of both logistics and shipping companies alike.”

– Mona Lebied, Datapine

 

Maersk Line has adopted the IoT to manage its colossal fleet of refrigerated containers. By equipping each unit with connected sensors, they’re aware of problems as they happen, know precisely where the problem is, and can provide the resources necessary to fix it in real-time. UPS is also an early adopter in the industry, using smart devices to track its delivery men on urban routes, where the last mile problem is the most pressing due to issues like parking and long walks to the final destination. ‘Big Brown’ is a perfect example of how to use the IoT for analysis. As they gathered information about these deliveries, they realised the need for micro-hubs, streamlining the process and improving their bottom line.

Indeed, the savings of IoT optimisation can be enormous. As Finnbarr Bermingham reports for Global Trade Review:

Lasse Eriksson, vice-president of digitisation at Finnish company Cargotec, said that in the cargo trade, using smart devices to monitor and control vessel fuel consumption, to conduct requisite maintenance and repairs and to manage and co-ordinate the fleet correctly could save US$350,000 per vessel per year. With more than 90,000 ships currently sailing the world, that is a colossal US$32bn industry saving each year.

 

2/ ROBOTS AND AUTOMATION

 

“Robotics have been around for more than 50 years, but they have become dramatically more dynamic in the last five. They are no longer stationary, blind, expensive and unintelligent but can work alongside people and learn as jobs change.” – Paul Dittmann, executive director of the Global Supply Chain Institute

 

Robotics is revolutionising warehouses, and the future of warehouse logistics is a smart mix of humans and machines. This was a disruption that was slow in the making, as the last generation of robotics was simply to clumsy, strong, and stupid to improve warehousing. Moreover, until recently, the cost of machines exceeded the price of human labour.

 

But both concerns are falling to the new automation. Amazon, perhaps the most forward thinking company when it comes to warehouse robotics, went all-in in 2012, purchasing the robotics company, Kiva, to supply its growing need for logistical automation. Over the last three years, it’s added no less than 15,000 robots a year, quickling building to a present total of 45,000

https://www.youtube.com/watch?v=cLVCGEmkJs0

These tiny robots, just 40 centimetres tall, move in collaborative order, lifting entire shelves of stock and bringing them to their human coworkers for processing. The people stay put, working at centralised fulfillment stations; the robots do the moving, and their precision, speed, and organisation means that more items can move through a warehouse than ever before

 

Locus Robotics, building on an $8 million venture capital foundation, has developed the LocusBot, an alternative to Amazon’s system. It’s now selling these warehouse robots to clients including DHL at an estimated price of about $30,000 per robot. The LocusBots, too, work with humans – they find an item on the shelf, while people patrol allocated ‘zones’ of the warehouse, meeting the robot at the item. The human then logs the item on a robot-mounted touch screen and drops it in the LocusBot’s basket for shipping. Again, this system minimises the distances people move, relying on tireless, efficient, precise robots to do the heavy lifting.

 

“With Sawyer able to undertake a range of repetitive tasks on a variety of products, its up-and-down-scalable nature helps us fulfil e-commerce orders more efficiently.” –

Mark Parsons, Chief Customer Officer, DHL Supply Chain

 

Traditionally, automation meant powerful, dangerous equipment, demanding its own workspace, carefully separated from human beings. But a new generation of robotic coworkers – designed with collaboration in mind – are altering how warehousing works. Such ‘cobots’ are equipped with sophisticated sensors that alert them to the presence of their human partners, and they have a range of safety features that allow them to work alongside people without risking injury

 

Rethink Robotic’s Sawyer is a great example. Their first design, Baxter, took the manufacturing world by storm because of its low cost, high flexibility, and impressive safety. Sawyer is a more compact version of the same tech, and both cobots have various ways of ensuring worker safety: they operate at human speeds, sense contact and stop or slow automatically. They also have ‘force limit’, so that any contact that might occur is below a force capable of causing injury.

 

Additionally, both cobots have ‘faces’ with digital eyes that signal the cobot’s intent, telling coworkers where they plan to move next. Sawyer is a small design, ideal for warehouse packaging. Because cobots can work with people, tirelessly repeating the same task, they are ideal for packing containers, loading palettes, and shipping stock. This cobot has already been employed packing “pet food, confectionery, aerosols and canned drinks,” and the range of items that Sawyer can manipulate is essentially unlimited

 

3/ DRONES AND SELF-DRIVING SYSTEMS

 

“Right now, we’re at a point where conventional technology is already at such a high standard, there’s not much more room for improvement. As a result, companies are looking for new technologies they can use.”

– Arne Viehmeister-Kerner, MULTIROTOR

 

Drones are small, unmanned aerial vehicles. They typically use four propellers to provide lift, thrust, and control for a centralised, lightweight chassis. They’re fast, nimble, and strong, and depending on their size, they can carry significant payloads. Industry insiders like Aren ViehmeisterKerner think that the explosion in drone tech is driven by the exhaustion of capacity in logistics. With consistent double-digit growth in online shopping, for instance, logistic chains are reaching the limits of traditional tech. And improvements in materials, design, flight control, and battery life have led to these tiny workhorses to make the transition from expensive toys to cheap helpmates for industry.

 

Unsurprisingly, Amazon is leading the way here, too. Given its tremendous investment in automation, this was the next logical step for the online retail giant. In March, it unveiled its first automated delivery, four pounds of sunscreen ferried by drone to a crowd at an outdoor conference.

 

But the reality is still a few years from deployment. The US Federal Aviation Authority needs to set guidelines for drone delivery, and that won’t happen overnight. But we have a good sense of what the service will look like when it’s operational. Amazon doesn’t intend to use the drones for regular delivery; they’re an emergency option for super-fast, one hour delivery. They’ll cruise at about 90 metres at a touch more than 95 kilometres per hour, dodging birds and obstacles with automated sensors. You’ll need an Amazon landing pad for the drones to recognise from the air, and when they see it, they’ll hover, slowly descending to deliver your package before returning to base for a recharging. Realistically, you’ll need to live close to a distribution centre – the drones won’t be crossing China to make deliveries

We think drones will revolutionise the last mile problem for hard to reach customers and urgent deliveries, and as the tech improves even more, drone-ferried packages may end up being more cost effective than current methods.

 

Self-driving systems, however, are poised to transform logistics. They use sophisticated sensors, radar, and LIDAR to detect obstacles, see their position relative other objects, and steer clear of hazards. And they’ve already proven themselves more than roadworthy.

 

Freightliner developed the Highway Pilot program, leading to the licensing (in Nevada) of its first autonomous truck. Its advanced sensors and smart driving algorithms allow it to navigate roads better than a human driver can. As Antuan Goodwin reports for CNET, “The truck can steer to stay between lane markers and adjust its speed and braking to maintain a safe following distance behind other cars on the road, all while the driver is free to do other things.” The human driver, however, is still an integral part of this delivery system. He’s needed to negotiate inclement weather, interchanges and exits, and to drive surface roads and back the trailer in for deliveries. For its part, the self-driving system handles the long-haul cruising

 

If you think this is farfetched, consider that Anheuser-Busch has already put autonomous delivery into action. It unveiled its own self-driving platform powered by Otto, a subsidiary of Uber. It completed a 193-kilometre autonomous delivery run in Colorado, paving the way for self-driving systems to assist or replace professional drivers for the 450 billion kilometres per year they log in the US alone.

 

But even bigger disruptions are coming. Europe’s Maritime Unmanned Navigation through Intelligence in Networks (MUNIN) project seeks to automate ship traffic, the medium of 90 percent of the world’s goods. Fully automated ships would radically alter the calculus of maritime logistics. Ørnulf Jan Rødseth, a scientist with the MUNIN project, insists that this is “an idea that opens up entirely new possibilities in terms of new business models.You cannot underestimate how important it is.”

 

4/ 3D PRINTING

 

Major delivery players like UPS are exploring the power of 3D printing to replace delivery for a variety of goods. 3D printing is a form of additive manufacturing in which a high precision nozzle extrudes material in layers, quickly building the desired shape. These printers are small, often only slightly larger than a water cooler, and they can be installed anywhere. As the cost of this technology has continued to drop, we anticipate a shift in logistics from centralised hubs to decentralised printing stations, changing the way products are delivered to customers.

 

The idea, says Tim Gohoc, managing director of UPS Philippines, is to move to ‘zero inventory’ warehousing. The ultimate idea is to deliver goods to a consumer instantly, and have them print the item in their homes or factories.“ On-demand manufacturing allows certain goods to be transported digitally to their location before taking shape as a physical product,” he explains.

 

This instant delivery is a big sell with customers who need spare parts to continue production, for instance. With virtually no lead time, companies that leverage the power of 3D printing as part of their logistical chain can quickly corner the market on this emerging tech

 

5/ QUANTUM COMPUTING

 

Logisticians nearly always have to consider the optimal route between varying points. This sounds like a simple problem, but the number of variables induce calculations beyond the capacity of even the fastest computers. To get around this problem, software engineers are forced to take shortcuts and divide these mammoth calculations into smaller problems.

 

But the advent of quantum computing will end this, allowing computers ‘to swallow complexity whole.’ Quantum computing takes advantage of the strange properties of tiny particles. In some ways, they bend the laws of physics, allowing some very interesting advances in computing. Normal computers depend on upon standard binary – a bit can be encoded with either a 1 or a 0. But one of the strange properties at the quantum level is that quantum bits, or qubits, can be more than one thing – representing both a 1 and a 0 at the same time. This property is called quantum superposition. Moreover, and perhaps even stranger, quantum particles are linked to each other in sometimes mysterious ways, entangled in such a way that more than one qubit immediately shares information, across space. This allows the state of one qubit to depend on another, instantly. This is called quantum entanglement.

 

The combination of these two quantum properties means that quantum processing is to conventional computing as counting on your fingers is to your iPhone 7. A quantum processor can handle enormously complicated calculations, finishing a process in hours that would take even the fastest supercomputers decades to do. And while quantum processing is not better at every task than conventional processing, for logistical calculations it will unlock answers that will transform supply chain management. They’ll be able to plan routes, order supply chains, and streamline logistics to a level that has been simply unattainable with existing tech.

 

Until recently, however, the promise of quantum computing was thought to be decades from commercial application. But a first step was recently taken by D-Wave Systems, who sell a ‘quantum chip’ that’s very good at optimisation problems. Scientists don’t think that the D-Wave’s chip is truly quantum – it relies on quantum annealing – rather than the real thing, but it’s already available and solving complex problems.

 

But the real thing is almost here. IBM is developing a true quantum computer with 50 qubits of processing power, a large, expensive, unwieldy device the size of a refrigerator. They plan to sell this behemoth in the next few years, and it promises to truly revolutionise… well, everything.

 

6/ BLOCKCHAIN

 

“…This is a world premiere and a huge achievement considering the transaction involved actual physical goods being traded across borders.” – Aurélien Menant, the founder and CEO of Gatecoin

 

You’re probably familiar with Blockchain as the software undergirding Bitcoin. Blockchain can do this well because it provides a secure, diffuse, transparent system to record transactions. Here’s how it works. Information is embedded in a time-stamped block. This block is then placed between two others, forming a chain. The chain is stored on every computer running Blockchain, ensuring that there’s never an outage. Moreover, these chains are publicly accessible – guaranteeing transparency – and virtually unhackable. To alter one block, you need to hack them all.

 

But the power of Blockchain is useful for more than cryptocurrency. Because it can record any transactional information, it’s being considered for storing medical records, as it would allow physicians to see a patient’s medical history over time. This is promising a new era in patient information record keeping.

Similarly, Blockchain can do wonders for supply chain management.

By joining Blockchain to the IoT and smart contracts, it’s possible to make shipments and payments automatic and transparent, providing immediate payment when the conditions of a contract are filled. The Commonwealth Bank of Australia (CBA), Wells Fargo and Brighann Cotton are experimenting with an international shipment of 88 bales of cotton from the supplier in Texas to the customer in China. Using a digital smart contract and a distributed ledger system like Blockchain, they’re doing away with the paperwork and uncertainty.

 

We think this is the future of supply chain management. Forget paperwork, signatures, and labour intensive manual processing. Distributed ledger systems, smart contracts, and the IoT will enable a new era of autonomous logistical management.

 

CONCLUSION

 

We promised that the future of logistics and supply chain management would constitute a radical break from the past, and it’s clear we believe that to be true. From the data supplied by the IoT to self-driving systems, from advanced automation to Blockchain, the next decades of logistics and supply chain management will enable faster, more efficient, more precise delivery, allowing tomorrow’s companies to meet the growing needs of their customers.

?How data helps to grow your import export business with China ?

An Industry in Transition

 

The Digitization of Supply and Demand

From cloud computing in supply chain management to smartphones ever-present in shoppers’ hands, the supply and demand equation is under constant pressure. Businesses now need to be able to make things happen at a far more accelerated rate. Those trying to get ahead can’t afford to be mired in the complexity of global shipping — especially when consumers expect faster fulfillment times. Case in point: A PwC survey recently showed that 88 percent of consumers are willing to pay for same-day or faster delivery.

Enterprises have had to restructure supply chains in response, making more choices available; shipping product more frequently, and in smaller batches, to more customer touch points; and holding stock in warehouses nearer to markets, among other adjustments. Supply chain management has grown more strategic out of necessity, introducing even more complexity.

Meanwhile, new political tensions in international trade have complicated sourcing decisions and customs compliance. Trade agreements are being dismantled and protectionism is growing in the forms of new tariffs and trade restrictions. All of this amounts to the potential for higher costs and more difficulty – sending up a flare for things to change.

Yet, due to its scale, complexity, and the difficulty of replacing legacy systems, the freight forwarding industry continues to be a “black box” for businesses. Not to mention a drag on the supply chain. Traditional processes have left businesses with limited visibility and insight into the status of their critical and time-sensitive shipments as they travel from origin to destination. Additionally, freight transit times are typically unpredictable, and costs can easily spiral out of control. It’s a frustrating and sometimes costly process.

 

With Data Comes Change

 

The McKinsey Global Institute estimates that new logistics technologies could cut shipping and customs processing times by 16 to 28 percent.2 Businesses seeking to optimize their operations are using these technologies — along with logistics infrastructure and supply chain expertise — and seeing transformative results.

This paper will explore the emergence of digital transformation in freight forwarding. In support of that, we’ll outline how businesses successfully leverage technologies such as Sino Shipping digital platform, which creates an Operating System for Global Trade, to deliver greater visibility for everyone in the process. And, we’ll cover how organizations can enable greater agility and growth by using data and analytics to revolutionize their supply chain management.

 

The Legacy of International Trade: Complexity and Uncertainty

 

The hard reality is that legacy freight forwarding remains opaque to businesses trying to get their goods from Point A to Point B. As forwarders coordinate across as many as 15 different organizations, shipments are documented and tracked using disconnected systems, primitive data interfaces, email, spreadsheets, and even paper.

Adding to the chaotic picture, there are literally countless nonstandard documents in circulation worldwide. For instance, nearly every factory in the world uses a different format for its commercial invoice. And, when it comes to trade finance, the story can be even uglier. The end-to-end journey of a single letter of credit can involve 20-plus individuals and more than 100 pages, across 10 to 20 documents!

Not only that, much of the information is duplicated and transmitted multiple times, according to the Boston Consulting Group (BCG).3 It’s also not uncommon for there to be related but separate streams of emails filled with unstructured data that can’t be readily shared, stored, or analyzed.

Other layers of complexity: Customs requirements vary from country to country and product to product. And, that’s happening both before shipping and at the border – sometimes involving multiple government agencies.

All of this creates opportunities for error at each leg of a shipment. The simplest details about a booking, price quote, or product in transit risk going awry, introducing mistakes and delays. Once that happens, the entire supply chain can become compromised, leaving business plans suspended, inventory stranded, working capital idle, and customer expectations dashed.

 

A Sea Change in Freight Forwarding: Transparency and Efficiency

 

Addressing today’s freight forwarding challenges relies on making use of the myriad data that already exist as part of the shipping process. Essentially, walls need to come down. The greater the transparency, the better the data – which leads to faster and more informed decision making.

But for that to happen, freight forwarding needs to embrace technology. By creating transparency in the process, unforeseen events, such as customs delays or other issues, can become collaborative opportunities. Not only that, the structured data that is captured within the platform can allow for richer analysis and better business planning.

Being able to tap into the disparate pools of critical information across the shipping ecosystem can offer many advantages. For instance, if that intelligence were available to businesses, alongside invoices, packing lists, bills of lading, and other relevant documents essential to a smooth shipping process, the entire import and export business could be completely transformed.

Recognizing this need – and the opportunity for greater efficiencies – Sino Shipping has created a cloud-based Operating System for Global Trade that utilizes an online platform and dashboards to pull in data from each party involved in the process. All documentation and key management tools are housed in one platform along with graphical presentations of the real-time location of inventory in motion, at each step of its journey. Within the platform, importers, exporters, trucking companies, ocean carriers, airlines, customs agencies, and port terminals are all connected. As a result, they’re able to access up-to-the-minute updates and alerts allowing for just-in-time adjustments to keep logistics, commercial, and customer expectations on track.

For instance, through Sino Shipping platform, products can be identified within multi-ton containers (down to the stock number or SKU). They can be efficiently consolidated, reprioritized for shipment based on market demand or inclement weather, switched from ocean to air, rerouted through fewer ports, or sent to different warehouses. Shippers can better manage operations and plan across all business units, with integration into enterprise resource planning and supply chain management systems.

By bringing importers and exporters together onto a single digital platform with the logistics companies that serve them, huge efficiencies in time and cost open up. As a result, the entire shipping and logistics process becomes, faster, less costly, and safer for all concerned.

Augmenting its technology, Sino Shipping has built extensive infrastructure through a vast network of carriers, and transport and distribution facilities. The freight forwarding firm has also hired in-house logistics, operations, and customs experts who are assigned to teams called “Squads.” Unique to Sino Shipping, as each new customer is onboarded that business is assigned a dedicated Squad that works with it to ensure every shipping experience goes smoothly, from quoting to delivery.

 

How Data Transparency Translates to Success

 

The upshot: Importers and exporters can gain better control over some of the most critical aspects of their business – from procurement, inventory, cash flow and customer relations, to customs compliance and tax planning.

That control is something that can be critical in the midst of trying to coordinate dozens of suppliers and other supply chain partners. For instance, Ridenun, a manufacturer of high-performance electric car for kids, was facing challenges managing its procurement and manufacturing timelines. With more than 100 suppliers worldwide, launch schedules and other critical interlock points were sometimes tricky to address.

“We used to have to email our forwarder for an update on a shipment, and then wait for their response,” explains Hubert, Buyer for Ridenfun. “It wasn’t in real time and it didn’t fit the speed in which we were moving.” One of the greatest benefits of centralized collaboration has been less confusion between teams. “If a shipment is delayed, instead of waiting for an update for us, our warehouse team receives an alert in real time so they update their schedules. Those time-critical notifications make a huge difference.”

In addition, the cars maker has been able to dive deeper into its supply chain. “We’ve started using Sino Shipping reporting and analytics feature to pull historical data such as landed cost per SKU and container utilization to make more strategic decisions,” says Jensen.

Reporting and analytics are not just nice-to-haves. In a competitive environment, they can have a notable impact on the balance sheet. For Mobalpa, a 100-year-old leading wholesale producer of kitchen and restaurant ware, legacy systems created obstacles in managing in-transit inventory and measuring total product cost. By digitally transforming its processes, it was able to introduce greater visibility and real-time notifications that helped it assess the financial health of its supply chain. As a result, it reduced stock-outs by 10 percent.

For companies sourcing and manufacturing globally, predictability and reliability are also important factors — especially when trying to manage the supply chain of a company dedicated to environmental concerns and sustainable business practices. As a leading producer of BPA-free reusable bottles, cups, and canisters, Nicolas Wang wanted a way to monitor and manage environmental impacts of its supply chain. With headquarters in Boston, USA, and manufacturing in Shenzhen, the company needed greater visibility and access to reliable data.

Working with Sino Shipping, Nicolas was able to manage the entire supply chain from one centralized place while creating better linkages with teams across its organization. And, Sino Shipping data — along with the expertise of the Sino Shipping Squad assigned to Nicolas— meant easier and smarter decision making. “Sino Shipping helps us to plan better, and strategize to avoid air shipments whenever possible. That control makes all the difference in the world,” notes Senior Supply Chain Manager Claude Fossat.

By adopting the Sino Shipping platform, Nicolas not only shaved off 8 hours per week of back and forth communications with freight forwarders, it also reduced annual air shipments by 66 percent — delivering greater cost efficiency and reduced environmental impact. In the process, Nicolas estimates that it saved 207 tons of CO2 emissions. Says Claude, “Our bottom line is about more than just profit. Sino Shipping gives us the ability to make hard trade-offs, and hold ourselves accountable. It helps us walk the walk in terms of sustainability.

 

The New Way Forward

Much of the world has gone from an old economy to a digital economy; but the supply chain hasn’t kept up. Consumers were once fine with a three-week delivery window, but now they’re in control and want their goods in days (or even hours). Businesses can’t manage a new economy supply chain by email and spreadsheets, yet that’s still the standard in freight forwarding.

Sino Shipping unique combination of technology, infrastructure, and inperson expertise has ushered in a new way of working in the freight forwarding industry. The Operating System for Global Trade gives businesses more visibility and control over their inventory in motion and historical shipping data than ever before – allowing them to better match supply and demand, reducing working capital, enabling greater business agility, and helping drive growth.

 

shipping cargoes by ocean, air, or Rail freight ?

cargo types- containers

 

 

What is cargo (e.g freight) ?

 

Cargo consists of goods, materials, merchandise carried onboard of an aircraft, ship, train, or truck. Generally, it consists of goods for commercial gain on which an air waybill, or bill of lading or any other receipt is issued by carrier.

Shipments from point A to point B requires a lot of planning, the mode of transportation is considered as a key factor for successful planning. However, to determine the mode of transportation and the costs of shipment some elements must be taken into consideration:

  • Value of the goods
  • Weight and volume of the goods

Ocean Cargo

 

sea freight 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 cargo- shipping option

 

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

 

shipping by Rail- 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.

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CARGO PACKAGING

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.

  1. 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.

  1. 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.

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MARINE INSURANCE FOR CHINA AND GLOBAL FREIGHT

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

  1.  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

  1. 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.

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??Incoterms 2020 when importing goods from China

Incoterms 2010- premium guide- 11 terms description

Incoterms – Importing from China

 

Incoterms are rules that allows buyers and sellers to identify the responsibility of each one. It allows the parties to identify a point where the costs and risks of transportation are precisely divided between both of them.

Incoterms e.g (International commercial terms) Has a set of 11 international standard trade terms which last version is Incoterms 2010.

Incoterms also coordinate responsibilities for Customs clearance/ duties between the parties.

In other words, incoterms Are essential in every import/ export process, it’s a tool used by freight forwarders to facilitate the shipping process.  It defines who will arrange for carriage, who will pay for the carriage, who will break risk of loss or damage to goods.

Incoterms are associated with freight charges, they are used as a convenient way of confirming the role of each party ( who will pay the various charges during international transport). They are frequently used by freight forwarders and carrier when issuing freight quotations or clarifying who should pay the fees. However, incoterms cover a much wider range of responsibilities and obligations for sellers and buyers. Each incoterm has its proper rules and responsibilities that defines the role of each party.

The chart below demonstrates the exact responsibilities and charges of the buyer and seller according to incoterm 2010. The chart defines the following information:

  • Obligations of the buyer and the seller
  • Which party handles insurance, permits, and permissions
  • At which point costs and risks are transferred from the seller to the buyer

Incoterms 2010 by the international chamber of commerce

 

 These rules Are identified by the ICC ( international chamber of commerce, which is the source for any freight forwarder and in case of any issue the ICC should be your first resource for information

 

The eleven terms – Premium Guide

 

Everyone who works in import/export should know all the incoterms; (International commercial terms). It’s subject that helps not only traders but more importantly lawyers, Transporters, and insurers.

Before going into details, you have to know that the eleven terms can be divided into 4 parts:

  1. Departure
  2. Main carriage not paid by seller
  3. Main carriage paid by seller
  4. Arrival

 

Now let’s categories the 11 terms into these four groups:

  1. Departure:

 

EXW – EX works

Means that the seller fulfills his obligation to deliver when he has made the goods available at his premises to the buyer. In particular, he is not responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer. This term thus represents the minimum obligation for the seller.

 

  1. Main carriage not paid by seller:

FCA – Free Carrier

Means that the seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point.

If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated the parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

 

FAS- (Free Alongside ship)

Means that the seller fulfill his obligation to deliver when the goods have been placed alongside the vessel, the quay, or in the lighters at the named port of shipment.

The seller is required to clear the goods for export.

The buyer has to bear all costs and risks of loss or damage to the goods from that moment.  This term is only used for ocean transport only. FAS is applied for bulk cargo.

 

FOB – Free on board

Means that the seller fulfills his obligation when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.

The seller must clear the goods for export. This term can only be used for ocean transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

Incoterms 2010 rules advised to use FCA instead of FOB, because the containers are delivered regularly in the port’s container terminal and not loaded onto the ship. But in practical work, almost all the Chinese supplier will use FOB instead of FCA.

 

  1. Main carriage paid by seller:

 

CFR- cost and freight

Means that the seller must pay the costs and freight necessary to bring the goods to the named port of destination. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The CFR term requires the seller to clear the goods for export.

This term can only be used for sea and inland waterway transport.

 

CIF_ cost, insurance and freight

Means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover.

However, if the buyer wishes to have more insurance protection, he will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

 

CPT- carried payed to

Means that the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier.

“Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.

If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier.

The CPT term requires the seller to clear the goods for export.

This term may be used for any mode of transport including multimodal transport.

 

CIP- carriage and insurance paid to

This term is the same as CPT with the exception that the seller also has to procure insurance against the buyer’s risk of loss or damage to the goods during the carriage.

However, if the buyer wishes to have more insurance protection, he will need either to agree as much expressly with the seller or to make its own extra insurance arrangement This term may be used for any mode of transportation.

 

  1. Arrival:

 

DAT- Delivered at terminal

Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

 

DAP- Delivered at place

Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

 

DDP – Delivered duty paid

Means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation.

The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for importation.

Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.

The 11 terms can be also divided into 2 groups:

  • Waterway transport: FAS, FOB, CFR, CIF
  • Any mode of transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP

 

The five Most commonly used incoterms

 

FOB – Free On Board (named port of shipment)

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Buyer is responsible for cost and any loss or damage while in transit on the ocean carrier.

 

 EXW – Ex Works(named place)

the key thing to know about EXW? All charges incurred for transportation of the goods are the responsibility of the buyer and transfer of ownership happens as soon as the goods leave the floor of the seller’s facility.

Incidentally, this is the most common term encountered when importing goods from the EU and applies exclusively to containerized or multimodal transport as well as air, rail or road.

 

CFR – Cost and Freight (named port of destination)- ocean shipment

 

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Seller is responsible for cost but the Buyer is responsible for any loss or damage while in transit on the ocean carrier.

 

CIF – Cost, Insurance and Freight (named port of destination)- maritime or ocean shipments

 

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Seller is responsible for cost but the Buyer is responsible for any loss or damage while in transit on the ocean carrier.
  • Ideal for containerized shipments

 

DDP – Delivered Duty Paid (named place)

 

This term means the seller is responsible for all charges involved in bringing the goods from the sellers’ facility or point of loading to the final place of destination. This includes all charges associated with freight, customs clearance, duties and taxes.

 

Understanding and using Incoterms effectively is important, and every importer has unique requirements. Before concluding a sales contract, we recommend that you consult our complete list of incoterms and consult your lawyer. Remember that your freight forwarder must do more than just offer a good price.

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ALL YOU NEED TO KNOW ABOUT ISF – US IMPORTERS

 

 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.

  1. 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.

 

 

  1. 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.

 

 

  1. Buyer

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

  1. 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.

 

 

 

  1. 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.

  1. 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.

  1. 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.

  1. (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).

 

 

  1. 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.

 

 

  1. 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.

 

 

  1. 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
  2. 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.

 

  1. 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.

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