Introduction to Freight Forwarding Services International Air - - PowerPoint PPT Presentation

Introduction to Freight Forwarding Services

International Air Freight International Ocean Freight Customs Clearance Wharf & Container Transport Warehousing and Distribution

1.

Introduction to Freight Forwarding and their role.

2.

What are INCO Terms and how do they affect shipments.

3.

Air, LCL and FCL Shipping Services - the Basics.

4.

What you can expect to pay to ship goods.

5.

Brief History of Ocean Freight Rates from China to Australia.

6.

Cotaie eights, oad estitios ad the e ‘ules fo Chai of ‘esposiilit.

7.

The Role of the Australian Customs and Border Protection Service.

8.

The Role of the Australian Taxation Office and GST

9.

The Role of DAFF and Biosecurity Risk.

• 10. Customs and DAFF Documentation Requirements.
• 11. Critical Milestones and Early Documents.
• 12. Timeline for Import Processing and Milestones.
• 13. “hippig o Pallets s “hippig Loose Cartons
• 14. Insurance and Packaging.
• 15. Q & A Time.

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Introduction to Freight Forwarding Services

 Co-ordinate all the functions involved in a door to door movement into 1 seamless transaction.  Manage the transitions between multi-modes of transport and complete each milestones on time.  Provide Air and Ocean Freight Services  Arrange Customs Clearance and Quarantine Formalities  Provide Wharf and Container Transport Services to Door  Container Packing and Unpacking options.  Short and Long Term Storage  Warehousing and Distribution Services, including National Transport  Non Principles - Do not own ships or aircraft and offer a range of service and price point options based on Importers and Exporters Needs.

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First Steps

 Chosen your product  Sourced a supplier  Time to negotiate price and discuss INCOTERMS.

( International Commercial Terms)

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EXW – Ex Works (named place of delivery) The Seller makes the goods available at his/her premises. The buyer is then responsible for all costs through to their final Destination. FCA - Free Carrier (named place of delivery) The seller deliver goods to a named airport, terminal, or other place where the carrier operates. Costs for transportation and risk of loss transfer to the buyer after delivery to the carrier. FAS – Free Alongside Ship (named port of shipment) The seller delivers when the goods are placed alongside the buyer's vessel at the named port of shipment. The buyer is then responsible for all costs through to their final Destination FOB – Free on Board (named port of shipment) The seller is responsible for all costs to load the goods onto a aircraft or vessel. The buyer is then responsible for all costs through to their final Destination . CFR – Cost and Freight (named port of destination) Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Insurance for the goods is NOT included. This term is formerly known as CNF (C&F, or C+F). CIF – Cost, Insurance and Freight (named port of destination) Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only. CPT – Carriage Paid To (named place of destination)The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier at place of shipment in the country

• f Export. The buyer is then responsible for all costs through to their final Destination.

CIP – Carriage and Insurance Paid to (named place of destination) The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first

• carrier. CIP is used for Air Mode & CIF is used for Sea Mode..

DAT – Delivered at Terminal (named terminal at port or place of destination) This term means that the seller covers all the costs of transport (export fees, carriage, insurance, and destination port charges) and assumes all risk until after the goods are unloaded at the terminal.[3] “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.[4] The buyer covers the cost of transporting the goods from the terminal or port to final destination and pays the import duty/taxes/customs costs. DAP – Delivered at Place (named place of destination)Can be used for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage and for delivering the goods, ready for unloading from the arriving conveyance, at the named place. Duties are not paid under this term (An important difference from Delivered At Terminal DAT, where the seller is responsible for unloading.) DDU – Delivered Duty Unpaid (named place of destination) This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The seller pays all costs to the buyers door excluding Duties, Taxes and other Customs and DAFF Expenses. DDP – Delivered Duty Paid (named place of destination) This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The seller pays all costs to the buyers door including Duties, Taxes and other Customs and DAFF Expenses. This term is often used in place of the non-Incoterm "Free In Store (FIS)".

INCOTERMS of Trade for International Transactions

Incoterm 2014 Export customs declaration Carriage to port of export Unloading of truck in port

• f export

Loading on vessel in port of export Carriage (Sea/Air) to port of import Insurance Unloading in port of import Loading on truck in port

• f import

Carriage to place of destination Import customs clearance Import taxes EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer CPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CFR Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer CIP Seller Seller Seller Seller Seller Seller Buyer/Seller Buyer/Seller Buyer Buyer Buyer DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Responsibilities of the Buyer & Seller under agreed INCOTERMS

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The purpose of INCOTERMS is to clearly define the individual responsibilities of the Buyer and the Seller. This is particularly important when referring to insurance claims for loss, damage and pilferage of goods, defining where the event occurred and who is the responsible party.

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CF‘ s FOB Tes – Which works best ?

CFR - Cost & Freight FOB – Free on Board



Seller pays all origin charges and Taxes.



The Seller arranges the freight to named destination port.



The goods are not insured.



The Buyer is responsible for providing a complete set of documentation for Customs Clearance and DAFF Assessment



The Buyer has no control over the vessel service and routing.



The Buyer has no control over the destination charges incurred.



THE SELLERS JOB IS COMPLETED ONCE THE SHIPMENT HAS BEEN DELIVERED TO THE FORWARDER ( LCL ) or PORT (FCL )



Seller pays all origin charges and Taxes to the port or origin



The Buyer is responsible for all costs to the final destination.



The buyer uses the freight forwarder of their choice, retaining control over the routing and destination costs.



The freight forwarder arranges all shipping documentation , Customs and DAFF compliance.



Shipment Status and Critical Dates should be communicated to the Buyer Daily.



YOUR FREIGHT FORWARDERS JOB IS COMPLETED ONCE THE GOODS ARE DELIVERED TO YOUR DOOR. Logistics Solutions that save you time and money.

 All Charges are based on a Chargeable Kilo of Freight  Volumetric Conversion for Airfreight

1m3 = 167 kilograms

 A much faster form of Transport with lower damage

rates : 3 – 5 working days door to door ( not the same time as the flight takes )

 Expensive when compared to LCL and FCL shipments  Best suited to Manufacturing Plant Spares, Mining

Equipment, Perishable Cargo, High Value Cargoes and Samples

 Direct and Deferred services available at different

price points.

Air Freight

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Ocean Freight - LCL

 All Charges are based on Per 1000 kgs or 1M3, whichever is

higher.

 Volumetric Conversion for LCL – 1000kgs = 1M3

( 1m x 1m x 1m )

 Suitable for small shipments from < 1 M3 up to 15 M3.  3 – 4 Weeks Door to Door depending on the Load and

Destination Ports ( Actual time on the water 9 – 22 Days ).

 Less Cost effective than FCL Shipments  Suits all Non-Perishable, Non-Time Sensitive Cargoes.  Goods must be well packaged to avoid damage as cartons

can be handled up to 20 times before being reaching their final destination.

 LCL shipments are loaded into FAK ( Freight All Kinds )

containers with a wide range of other products.

 Containers are generally loaded at a CFS ( Container Freight

Station ), then carted to the Origin Wharf once packed. Logistics Solutions that save you time and money.

Ocean Freight - FCL

 All Charges are based on per Container, regardless of

the volume of cargo.

 FCL shipments are the most cost-effective form of

International Transport for In Gauge Cargoes.

 Also ko as ad GPs, TEUs, FEUs, ‘eefes

ad NO‘s.

 3 – 4 Weeks Door to Door depending on the Load and

Destination Ports ( Actual time on the water 9 – 22 Days ).

 Suits all in gauge cargoes.  Containers are generally loaded at suppliers premises

then transported directly to the origin wharf.

 Forwarders can load consolidations of multiple

suppliers into a single container for 1 consignee. This depends on Regional Export Duty Rules in China.

 Direct and Transhipment services are available from

most points at different price points Logistics Solutions that save you time and money.

Common river barge ( Feeder Vessel ) used to transport containers down river systems to connect with Mother Vessels at main ports.

Mother vessel from main China port bound for the Australian Coast.

Idiatie piig fo Ai, LCL ad FCL s Chia to Austalia

Mode Air Ocean – LCL Ocean - FCL Weight 100 kgs 900 kgs 12000 kgs Volume 0.5 M3 1.0 M3 25M3 Chargeable 100 kgs 1.0 m3 FCL Freight in US $ $ 350.00 $ 25.00 $ 600.00 Caie Fees / “uhages i AUDs $ 185.00 $ 295.00 $ 650.00 Foades Fees $ 15.00 $ 75.00 $ 75.00 Customs Clearance $ 215.20 $ 230.00 $ 248.00 Delivery $ 49.95 $ 77.70 $ 550.00 Total Cost AUDs $ 858.41 $ 705.79 $ 2197.16 Cost per unit $ 8.58/kg $ 705.79/m3 $ 87.89/m3

Notes: The above costs are based on FOB purchases, exclude any Duties and Taxes, are based on non-hazardous goods, shipments under A$ 10,000 in value, and assume exchange rate from USD – AUD @ 0.8900.

Q : Is it better to ship smaller shipments more often to save money on storage ......

……..o is it ette to ship lage shipets to sae oe o shippig, ad hold more stock in storage here?

• Physical Size of products.
• Value of Products.
• Stock Turnover.
• Fluctuating Demand.
• Geographic Spread of Customers.
• Cash Flow
• Yield and Margin
• JIT Stock Management

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Recent History of Container Pricing and lessons learnt from Black Monday 1987

Container Pricing from China to Australia 2001 - 2008

• The global economy was peaking year on year.
• Space was very difficult to obtain – especially during the peak season lead

up to Xmas

• Ocean Rates were non negotiable with Shipping Lines, space was the only

bargaining chip on the table.

• Vessels were booked in advance for 4 – 6 weeks.
• Freight rates were USD 2800 – U“D pe Cotaie, ad doule fo

s.

• “hippig Lies itodued uatel G‘Is Geeal ‘ate Ieases of

between USD300-U“D pe GPs ad doule fo s.

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Enter The GFC - 2008

• Between July 2008 and June 2009, International trade had slowed by 40%
• 15 Million Rural Chinese Migrant Workers were forced back to their

country regions.

• More than 200 Container Ships were anchored off Singapore due to lack of

cargo and forward bookings.

• Oea ates plueted fo > $ pe GP to < $ ..
• Space was plentiful and bookings could be made as little as 48 hours prior

to vessel sailings.

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Aeage FCL Piig Chia to Austalia

200 400 600 800 1000 1200

USD's

USD's

Container Weights and Cargo Capacity

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Maximum Legal Road Weight Limits

State Equipment Delivery Mode Gross Weight Container Weight Net Product Weight NSW GP Sideloader 24,500 kgs 2,200 kgs 22,300 kgs NSW GP Sideloader 24,500 kgs 3,900 kgs 20,600 kgs NSW GP Trailer 25,500 kgs 2,200 kgs 23,300 kgs NSW GP Trailer 27,500 kgs 3,900 kgs 23,600 kgs

Container Transport and Responsibilities

 The weakest link in Multimodal Transportation is the weight

restrictions on the roads.

 Each State has different rules  New Chain of Responsibility Laws now in affect in Australia  Weigh In Motion Bridges now active in Sydney and Brisbane Port

Facilities, soon to be introduced in all states.

 Overweight Containers cannot leave the port precinct without being

unloaded, with costs in excess of A$ 1000.00 per event.

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New Chain of responsibility Laws recently introduced place an emphasis on all stakeholders in the supply chain to ensure their loads are within legal road tares.

Sydney, June 2012

ACBPS and Customs Clearance in Australia



Australian Customs and Border Protection Service (ACBPS) manages the security and integrity of Australia's borders.



Responsible for managing and maintaining the Customs Tariff, including the collection of Duties.



The Tariff contains detailed product descriptions, Rates of Duty and concessions based on the Country of Origin of goods.



Duties generally protect local industry in Australia.



Where no local manufacturer for the same or a like product exists, Tariff Concessions can be applied for to reduce or negate the payment of duties.



Whee paet of duties has ee ade i eo, o TCs ae itodued, efuds a e arranged for up to 4 years prior to the refund application.



The ACBPS can conduct both random and targeted audits on both individual importers and industries from time to time, and do impose fines for incorrect payment of Duties.



Individuals can arrange their own customs clearance directly with the ACPBS.



Forwarders have direct access to the ICS via Digital Certificates , 99.97% of Customs Entries are completed electronically, prior to the goods arriving into Australia.

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The Australian Taxation Office and Goods Imported into Australia

 GST applies to most goods imported into Australia.  Calculated on the CIF Value plus Duty. ( Approx 12% )  Paid as part of your Customs Entry Assessment.  Immediately withdrawn from the forwarder bank account.  Generally payable prior to release of the goods  GST Deferred Scheme available with the ATO to assist with cash flow.  Also control LCT on imported vehicles.

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DAFF ( Formally AQIS ) Requirements for Importing into Australia

 The Department of Agriculture, Fisheries and Forestry is responsible

fo potetig Austalias Plat ad Aial Idusties, ad fo managing Biosecurity risk.

 Risk management varies from product to product.  General Cargo risks include timber packaging and wooden pallets.

Wood can contain Infestations which can live for months inside untreated timber.

 Opt for plastic, ISPM 15 Compliant ( Treated ), MDF / Plywood or

Cardboard pallets.

 The inspection of foodstuffs and food related commodities,

including labelling compliance ( IFIS, formally IFIP ).

 The inspection of vehicles, plant and machinery commodities.  Random and Mandatory Inspections based on commodity or

targeted industry.

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Documents required for Customs and DAFF Compliance

General Commodities Food

• Bill of Lading ( Original or Express )
• Commercial Invoice
• Packing list ( Optional )
• Packing Declaration
• Free Trade Certificate
• Fumigation Certificates
• All from General Commodities plus :
• Phytosanitory Certificates.
• Manufacturers Statutory Declarations.
• Veteia Cetifiates.
• Dry goods weight Declarations.
• Ingredient Lists.
• Manufacturing Process Flowcharts.

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Get your Compliance Documents Early !

 Sea Cargo manifests must be posted within 48 Hours of a vessel arriving in

• port. Fines may apply for late reporting.

 Customs Manifests must be reported prior to Vessel arrival at port to guard

against possible X-ray Holds.

 X-rayed containers are not immune to wharf storage charges @ $ 300.00

per cont. per day, after last free day.

 The wharves give you 3 days ( including public holidays, weekends ) to pick

up containers, after which $ 300.00 per cont. per day.

 Must book times slots at the wharf a minimum of 3 days prior to your slot.

If the trucker misses the slot, Fines apply.

 Shipping Lines charge Detention after 7 – 10 Days from arrival at port,

afte hih the hage $ . / $ . pe / pe da.

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Timeline for Import Processing and Milestones

“hippig o Pallets Vs “hippig Loose

Palletised Freight Loose Freight



Lower Product Yield



Higher Shipping Cost per Unit



Ease of Handling by Forklift



Less Damage



Lower Unpack Costs at destination.



No extra Packaging Costs.



Majo DCs ill aept poidig pallet dims fit their criteria



Higher product yield



Lower shipping cost per unit



Utilise Cheap Overseas labour



Labour costs are high to unpack



Additional Pallet / Shrink wrap costs as destination.



“uitale fo delie diet to Custoes warehouse.



Majo DCs ill ot aept.

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Do I need Insurance ?

Marine Insurance

 Regular importers should assess the costs of Marine

Insurance Policies.

 Policies cover multi modal movements, ( air / sea / road /

rail ) and are based on commodity and value risk assessments.

 Airlines risk is limited to $ 20.00 per kg.  Shipping companies are all care, no responsibility. The

back of an Original Bill or Lading is an enlightening read.

 Isuae a also oe Geeal Aeage lais.

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General Average

 Dates back many

hundreds of years and still applicable to Maritime Law today.

 Cargo Owners would

spread their cargo over many small ships to minimise the risk of loss at sea by pirates, storms and poor workmanship.

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Insufficient packaging, cushioning or protection

Their Danish-flagged ship was in the Bay of Biscay last week as hurricane-force winds battered the Atlantic coast of Europe. Amid waves of 30 feet and winds of 60 knots, the Svendborg began losing containers off northern France. After the ship arrived in the Spanish port of Malaga this week, Maersk discovered that about 520 containers were unaccounted for. Stacks of others had collapsed. It's the biggest recorded loss of containers overboard in a single incident.

When should you start talking to a freight forwarder?

 Its wise to discuss the importation of any potential new product types with

your forwarder during the initial stage of your product research.

 Rates of Duty / Tariff Concessions  Import Permits and / or import restrictions.  Landed Costing Analysis  Packaging Requirements  Cost effective Shipment Quantities  Import Documentation including and Licenses

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Why should you talk to Lace Logistics ?

 Complete Logistics Provider.  Decades of Combined Experience.  Friendly and Helpful Staff.  Copetitie ‘ates ad “eie Fees  Big enough to compete globally, small enough to care.  We want to help you succeed and grow with us.