freight forwarding

Committed To ExcellenceFCL Concepts

Stuffing Categories

Factory Stuffing

Dock Stuffing (CFS)

Basic Origin Charges

Ocean Freight

BAF / CAF / ISPS

OTHC

Documentation Fees

Shipment Categories

CY / CY

CFS / CY

CY / CFS

CFS / CFS

Basic Destination Charges

DTHC

Port Dues

Documentation Fees FCL Jargon - Demystified

THC = Terminal Handling Charges

BAF = Bunker Adjustment Factor [To absorb oil price shocks]

CAF = Currency Adjustment Factor [To absorb currency fluctuations]

ISPS

CFS = Container Freight Station

CY = Container Yard

O = Origin

D = DestinationFCL Jargon - Demystified

Tare Weight = Weight of Empty Container

Gross Weight = Weight of Empty Container + Weight of Cargo

Payload= Weight of Cargo that can be carried

CBM= Volume in Cubic MetresContainer Types 20 Dry

L :20

W:8

H:86

Tare:2.1 MT

Vol:33 CBMContainer Types 40 Dry

L :40W:8H:86Tare:3 MTVol:67 CBM

Container Types 45 High Cube

L :45

W:8

H:96

Tare:4 MT

Vol:76 CBM

45 Containers are ALWAYS High CubesContainer Types 20 Flat Rack

L :20

8

86

Tare:2.3 MT

Payload: 22 MTContainer Types 40 Flat Rack

L :40

8

86

Tare:5 MT

Payload: 25 MTContainer Types 40 Flat Bed

L :40

8

Tare:5 MT

Payload: 39 MTContainer Types 20 Open Top

L :20

8

86

Tare:5 MT

Payload: 25 MTContainer Types 40 Open Top

L :40

8

86

Tare:5 MT

Payload: 25 MTContainer Types 20 Reefer

L :20

W:8

H:86

Tare:3 MT

Payload: 21 MT

Reefers need to have 3 parameters set always

Temperature

Humidity

Ventilation

Container Types 40 Reefer

L :40

W:8

H:86

Tare:3 MT

Payload: 28 MTContainer Types 45 Reefer

L :45

W:8

H:96

Tare:4 MT

Payload: 36 MTContainer Types 20 Tanker

L :45

W:8

H:86

Tare:3 MTFCL Drivers Commercial Geography

LudhianaHosiery and TextilesBasmati RiceSports GoodsEngineering Components

NCRAuto ComponentsApparelFootwearHandicrafts

Himachal PradeshApplesPharmaceuticals

These are all Export orientedFCL Drivers Commercial Geography

RajasthanGranites and MarblesHandicrafts

GujaratMachinery and AncillariesChemicalsPharmaceuticalsFCL Drivers Commercial Geography

Madhya PradeshSoyabeans and DerivativesAutomotive ComponentsMachine Components

Vidharbha RegionIron & Steel MaterialsOrangesFCL Drivers Commercial Geography

RajasthanGranites and MarblesHandicrafts

GujaratMachinery and AncillariesChemicalsPharmaceuticalsFCL Drivers Commercial Geography

MaharashtraAutomobiles / AncillariesMachinery / ComponentsSugarApparelPharmaceuticalsChemicals

GoaCashewPharmaceuticalsFCL Drivers Commercial Geography

Andhra PradeshGranites / Marbles / CeramicsPharmaceuticalsGherkins

KarnatakaMining OresGherkinsAuto-componentsPharmaceuticalsCoffeeFCL Drivers Commercial Geography

Tamil NaduGarments / HosieryAutomobiles / AncillariesCoffee / TeaSpices

KeralaRiceSpicesTea / CoffeeRubberFCL Drivers Commercial Geography

Indian ImportsNewsprint / Waste PaperMetal Scrap

Electronics / Consumer DurablesMachineryChemicalsWheatPlastic ConsumablesFCL Drivers Commercial Geography

Indian ImportsCommercial Geography is a key driver in freight pricingSeasonality of Demand / Supply of CustomersSeasonality of Demand / Supply of products in other geographiesAvailability of Equipment

Please note that the same commercial geography logic applies for Rail, Road transportation modes as well

Successful Logistics Managers are adept at estimating constraints posed by Commercial Geography!!!LCL Concepts

Basic Origin Charges

Ocean Freight

(Weight / Volume higher)

OTHC

(Weight / Volume higher)

Documentation Fees

Basic Destination Charges

DTHC

Port Dues

De-stuffing Charges

Fuel Surcharge

Cargo Handling

Documentation Fees

LCL can only by done by Logistics companies and not Shipping Lines!!!LCL Concepts - Profitability

Buying Price Factors

Freight [FCL] i.e. all payments done for 1 Container and 1 B/L with FCL concepts

Selling Price Factors

All components charged on LCL basis with additional documents [Typically 1 container has 5 to 7 documents] for individual shippers

So the sum of revenues is far higher than the buying prices

The most common pitfall made by many logistics personnel is to compare thefreight line item in FCL / LCL model and arrive at a costing figure

One should always look at the Total Cost Element in either scenario

The typical breakeven point for deciding between FCL / LCL is about 10 CBMHazardous Goods Ocean transport

Class 1 : Explosives

Class 2 : Gases

Class 3 : Inflammable Liquids

Class 4 : Inflammable Solids

Class 5 : Oxidizing substances & organic peroxides

Class 6 : Poisonous & infectious substances

Class 7 : Radioactive Substances

Class 8 : Corrosives

Class 9 : Miscellaneous Hazardous Goods Class1 (Explosives)

Division 1.1 - Mass Explosion Hazard ( TNT - Trinitrotoluene)

Division 1.2 - Projection Hazard, but not a mass explosion (Detonating Fuses)

Division 1.3 - Fire Hazard and Minor Blast or projection (Signal Cartridges)

Division 1.4 - No Significant Hazard (Fireworks)

Division 1.5 - Very intensive with mass explosion

Division 1.6 - Extremely intensive, but not a mass explosion Hazardous Goods Class2 (Gases)

Division 2.1 - Flammable gases (Butane)

Division 2.2 - Non-flammable non-toxic gases (Refrigerants)

Division 2.3 - Toxic gases (Carbon Monoxide) Hazardous Goods Class3 (Flammable Liquids)

Flammable liquid - liquids which give off flammable vapor at or below 61 degree Celsius

Liquid Desensitized Explosive - liquids which form a homogeneous

Liquid mixture to suppress their explosive properties.

For example: UN1204, UN2059, UN3064, UN3343

Packing Group I - Low initial boiling point, 35C and below.

Packing Group II - Flashpoint below 23'C and boiling point above 35C

Packing Group III - Flashpoint between 23'C and 61'C, and boiling point above

35C Hazardous Goods Class4 (Flammable Solids)

Division 4.1 - Flammable solids e.g. Hay, Cotton & Self-reactive substances e.g. Azodicarbonamide

Division 4.2 - Pyrophoric substance (solid or liquid), which ignite within 5 minutes of coming into contact with air e.g. Phosphorus or self-heating substances e.g. Fishmeal

Division 4.3 - Substances which, in contact with water, emit flammable gases. Materials, such as Calcium Carbide, Sodium that are "Dangerous When Wet" because they tend to become spontaneously flammable or give off dangerous vapors when exposed to water or moisture. (Obviously, using water on a blaze involving Division 4.3 materials may actually "add fuel to the fire Hazardous Goods Class5 (Oxidizing Agents)

Division 5.1 - Refers to materials known as "oxidizing agent", which give off oxygen, causing or contributing to the burning of other materials. E.g. Calcium Hypochlorite

Division 5.2 - Indicates materials called "organic peroxides", some of which have characteristics similar to explosives or burn intensely. Hazardous Goods Class6 (Oxidizing Agents)

Division 6.1 - Refers to solids or liquids that are poisonous to humans E.g. Arsenic and Tear Gas.

Division 6.2 - Identifies "infectious substances, which may cause severe or fatal disease. Hazardous Goods Class7 (Radioactive Materials)

Substances that give off radiation spontaneously. Fissile radioactive materials, including nuclear reactor fuel, are the most dangerous kind of radioactive material. On the other hand, some radioactive materials or instruments (such as certain clocks or electronic devices) give off little radiation. Hazardous Goods Class8 (Corrosives)

Solids or liquids that destroy or severely damage skin or cause rapid corrosion of steel or aluminum. Many acids, such as Sulfuric Acid, are corrosive to skin or metal, or to both. Hazardous Goods Class9 (Miscellaneous)

Materials which may be hazardous in transportation but do not fall into any of the above Classes. Included in Class 9 are certain materials, such as "white asbestos", which threaten the health or comfort of operating personnel. Also included are environmentally hazardous substances and wastes, as well as marine pollutants. Hazardous Goods Packing / Marking

Packaging:

Packing group

Packaging details

Marking, Labeling & Placarding:

Purpose - Easy identification of cargo in emergency, so that appropriate action can be taken

Unless otherwise approved by the IMDG Code

The Container must be placarded in accordance with IMO requirement. i.e. IMO Label, Marine Pollutant Mark, Fumigation Warning Sign

For specialists in Hazardous Cargo, Hazmat course is mandatoryHazardous Goods Stowage

Away from (min 3 meters projected vertically).

Separated from (min 6 meters, vertical separation).

Separated by a hold, or minimum 12 meters on deck.

Separated longitudinally by an intervening hold, or minimum 24 m. Putting It Together

Operations are critical for logistics excellence

The concepts are common for logistics departments, logistics service

providers, shipping lines and terminalsKey Operations Metrics Logistics Service Providers

Container Freight Stations [CFS]

Export Warehouse

Import Warehouse

Buffer Yard

Reefer Section

Yard StuffingKey Operations Metrics Logistics Service Providers

CFS Export Warehouse

Cargo Receiving Time

Volume / Hour

Trucks / Hour

Cargo Stuffing Time

TEUs / Hour

Container Placement Moves / Stuffing

Broken StowageKey Operations Metrics Logistics Service Providers

Empty Containers Area

Moves /Placement

TEUs / Hour

Cargo Stuffing Bays

Cargo Storage Area

Volume / Hour

Trucks / Hour

Cargo Receipt AreaKey Operations Metrics Logistics Service Providers

CFS Export Warehouse

Cargo Storage Area

Cargo Mix [Dense / Heavy Cargo; Bales, Cartons, Pallets etc]

Cargo Dwell Time

Quantity AccuacyKey Operations Metrics Logistics Service Providers

CFS Import Warehouse

Cargo Receiving Time

TEUs / Hour

Trailers / Hour

Cargo De-Stuffing Time

TEUs / Hour

Cargo Storage Area

Dwell TimeKey Operations Metrics Logistics Service Providers

CFS Buffer Yard

Export Bound

TEUs / Hour

Trailers / Hour

Import Bound

TEUs / Hour

Trailers / Hour

Container Storage Area

Dwell Time

Key Operations Metrics Logistics Service Providers

LCL Operations (Freight Forwarding)

LCL Export

Number of TEUs / Week

Volume Utilization / TEU

Documents / TEUKey Operations Metrics Shipping Lines

Shipping Operations

Export

Number of TEUs / Week [Sorted by Trade Lanes]

On-Time Loading Percentage

Accurate Routing Percentage

Vessel Utilization

Turnaround Time / TEUKey Operations Metrics Port Operations

Port Operations

Vessel Loading / Unloading Operations

Number of TEUs / Hour

Moves / Hour [Measured separately for trailers and

gantry cranes]

Turnaround Time / VesselIncoterms

CIF

Cost, Insurance & Freight

All costs upto the point where container will be offloaded at the port of discharge to be paid by Seller

Risk / Liability of damages until the container lands at final port of discharge is that of Seller

CFRCost & Freight

All costs (except insurance) upto the point where container will be offloaded at the port of discharge to be paid by Seller

Risk / Liability of damages until the container lands at final port of discharge is that of Seller

Insurance is on Buyers AccountIncoterms

FOB

Free On Board

Seller responsible for costs upto the loading point at the port of loading

Risk / Liability of damages passes to buyer after the container is loaded at the port of loading

FCA

Free Carrier Area(Carrier Designated Area)

Seller responsible for costs to handover cargo at the designated area specified by the carrier

Risk / Liability of damages passes on to buyer after the cargo has been handed over at the carriers designated areaIncoterms

Ex-Works

Buyer responsible for all costs from sellers premises

Risk / Liability of damages passes to buyer after the goods have been put away and seller intimates the carrier about the sameIncoterms

DDU

Delivery Duty Unpaid

Seller responsible for all costs upto the cargo reaches the buyers designated area except customs clearance at destination, duty, demurrage at destination

DDP

Delivery Duty Paid

Seller responsible for all costs upto the cargo reaches the buyers designated area except customs clearance at destination, demurrage at destinationDDU / DDP Modalities

Mandatory Document Requirements

Importer on Record Bond (Buyer in case of DDU & Seller in case of DDP)

Power of Attorney to the Logistics Service Provider

(To be given by Buyer in case of DDU & Seller in case of DDP)

In case of a duty free product, the relevant GSP Certificate (To be given by Buyer in case of DDU & Seller in case of DDP)

[GSP Generalized System of Preferences]

In case of food products, pharmaceuticals, chemicals, the necessary FDA documentsDDU / DDP Destination Charge Check-List

Mandatory Port Dues

Carrier Documentation Charges

Carrier THC

Customs House Brokerage Charges

Merchandising Fees

Inland Haulage

Fuel Surcharge

FDA Charges (If applicable)

Any Other Local Charge

Demurrage & Detention Tariff Airfreight Concepts

Direct express service

Next flight direct

Subject to routing availability

Airport to airport transportation

Door to door transportation

Time definite service

Money back guarantee

Subject to carriers service availability Charter service

Charters can be offered as:

Full plane charter

Partial plane charter

Service and rates will be described in contract

Additional services:

-Import clearance

-Pick-up

-Delivery

-Special Handling, e.g. packing, dangerous goods, etc. -Documentation Management -Export clearance

-StorageULD Categories

ULD = Unit Loading Device [equivalent of container in ocean transport]

A320/A321-Container

Type:A320/A321-Container

Code:AKH

Base Dimensions156 x 153 cm

outside:

Height outside:114 cm

Usable volume:3.5 m

Dimensions inside:146 x 144 x 111 cm

Acceptable for:A300, A310, A320, A321, A340, B747-200F, B747-

400, MD11F

ULD Categories

LD3-Container AKE/AVE

Type:

Code:

Base Dimensions outside:

Height outside:

Usable volume:

Dimensions inside:

Acceptable for: LD3-Container

AKE, AVE

156 x 153 cm

163 cm

3.8 m

146 x 144 x 160 cm

A300, A310, A330, A340, B747-200F, B747-400, B767(DE), MD11F

LD = Lower DeckULD Categories

Container AMP

Type:Container AMP

Code:AMP


outside:


Usable volume:10.5 m

Dimensions305 x 223 x 154 cm

inside:

Acceptable for:A300, A310, A330, A340, B747-200F, B747-

400, MD11F

ULD Categories

Container AMP

Type:Container AMP

Code:AMP


outside:


Usable volume:10.5 m

Dimensions305 x 223 x 154 cm

inside:

Acceptable for:A300, A310, A330, A340, B747-200F, B747-

400, MD11F

ULD Categories

Valuable Cargo Container (AKW)

Type:

Code:

Base Dimensions outside:

Height outside:

Usable volume:

Dimensions inside:

Acceptable for: Wertfracht-Container

AKW

156 x 153 cm

114 cm

3.5 m

146 x 144 x 111 cm

A300, A320, A321, A330, A340, B747-200F, B747-400, MD11FULD Categories

Triple Horse Container (HMJ)

Type:

Dreier-Pferde-Container*

Code:

HMJ, HMA**

Base Dimensions

318 x 244 cm

outside:

Height outside:

235 cm

Usable volume:

3.5 m

Dimensions inside:

234 x 188 x 232 cm

Acceptable for:

B747-200F, MD11F

NOTE:

Closed, with space for attendant.

loadable on B747-200F only ULD Categories

10-ft-Container (AMH, AMJ) c

Type:10-ft-Container

Code:AMH, AMJ


outside:


Usable volume:15 m


Acceptable for:B747-200F (nur Maindeck), MD11F (nur Maindeck)

ULD Categories

10-ft-Container (AMH, AMJ) c

Type:10-ft-Container

Code:AMH, AMJ


outside:


Usable volume:15 m


Acceptable for:B747-200F (nur Maindeck), MD11F (nur Maindeck)

ULD Categories

CAPACITY : 8 CBM MAX LOAD : 4536KGULD Categories

PALLETP1

CAPACITY: 10.3 CBMMAX LOAD: 4585 KGS.Aircraft Capacities

Data Source: www.quantas.com/au/freightCargo Operations - Stowage

Stowage is a Critical Success Factor for Logistics Operations Trucking / Sea Freight / Air Freight

Stowage format determines safety and optimal utilization of space and tonnage in Truck Loads

Bad stowage can lead to transit damage of cargo

Bad stowage can result in damage to cargo / occupational hazard

to labor at destination

Non-optimal stowage leads to higher costs / revenue leakagesCargo Operations - Stowage

Stowage Determinants

Trucking

Routing of Truck

Number of Transit and Loading / Unloading Halts

Product MixCargo Operations - Stowage


Sea Freight (Logistics Service Provider Perspective)

Product Mix

Packaging Mix [Pallets / Cartons / Bales etc]

Most LCL / Consolidators now take advantage of software that simulates a loading plan based on cargo / container dimensionsCargo Operations - Stowage


Sea Freight (Shipping Line Perspective)

Container Mix [20 / 40 etc]

Vessel Routing

Number of Loading / Unloading Points

Container Vessel Stowage operations are done with the help of IT as the complexity of vessel operations is too large to be done manuallyCargo Operations - Stowage


Air Freight (Airline Perspective)

Product Mix

Onward Routing from Hub stationsLogistical Operations - Contraints

Logistics operations have a lot of constraints and need a lot of planning

Suppose that you have cargo for a 20 FCL in Talegaon, Maharashtra to be shipped to

London, UK and you estimate that the cargo will be ready on 5th October 2012

[assume that the container will be stuffed in your factory]

When should you book the container from the shipping line?Logistical Operations - Contraints

Constraints / Operational Challenges

Transit Time for 20 Empty Container from Shipping Yard to factory = 1 Day

Loading Time = 0.5 Days

Transit Time for 20 Full Container from Talegaon to Nhava Sheva [nearest terminal] = 1 Day

Customs Clearance Time = 1 Day [assuming proper documentation]

Terminal Entry / Carrier Formalities = 1 Day

Weekly Sailing for Europe is every Saturday

Hence the container should be booked at least 8 days in advance!!! Logistical Operations - Contraints

Suppose that you have cargo for South Korea and Japan [assume cargo is auto-

components] in Germany. You have a reservation for 10 tons of cargo from your

airline with a transit point in Singapore.

Identify the operational challenges for planning the loads in your warehouseLogistical Operations - Contraints

Constraints / Operational Challenges

Transit Time Warehouse to Airport = 1 Day

Customs Clearance = 0.5 Days

Transit Time Germany Hub to Singapore = 1 Day

Connection Time

Onward Singapore Japan = 4 hours

Onward Singapore Korea = 2 hours

Onward Singapore Japan => Split into 3 passenger aircrafts Lower Decks ONLY!Logistical Operations - Contraints

The challenges in logistics are almost identical to those of operations at a minimum

and much more most often than not

The more the number of intermediate steps in a logistical operation, greater the

chances of errors and greater the number of contraints