air freight

Airfreight forwarding

Outline

I. Introduction to airfreight forwarding1. Introduction2. Infrastructures

II. International Air Cargo Operations1. International Associations2. Legal Issues3. Documentation4. Rates and Charges5. Extend of carrier’s liability6. Claims and actions

III. Air Cargo Operations in Vietnam

I. Introduction to airfreight forwarding

1.1. Advantages 1.2. Disadvantages

- High speed

- Quick service

- Easy Access

- No physical barrier

- Natural Route

- National Defense

- Risky- Very costly- Small Carrying Capacity- Huge Investment

I. Introduction to airfreight forwarding

2. Infrastructure

2.1. Airport: an airfield equipped with control tower and hangers as well as accommodations for passengers and cargo

2.2. Aircraft: a vehicle that can fly- Passenger aircraft- All cargo aircraft- Combined aircraft

2.3. Loading/ Unloading Equipments

II. International Air Cargo Operations

1. International Associations1.1. International Civil Aviation Organization (ICAO)ICAO’s objective are to:- Ensure the safety and orderly growth of worldwide civil aviation;- Enhance the arts of aircraft design and its operations, for peaceful

purposes;- Encourage the development of airways, airport and air navigation

facilities;- Cater to the needs of passengers and operators for safe,

frequent, efficient and economical air transport;- Ensure that the rights of countries are fully respected to avoid

discrimination, allowing every country equal opportunities to operate international airlines;

- Eliminate unfair competition and practices; and- Promote flight safely and further developments in international

civil aviation.

1. International Associations

1.2. International Air Transport Association (IATA)

Some of IATA’s interest, in relation to its members, are:

- Safety and security;- Industry viability and recognition;- Products and services;- Standards and procedures; and- Industry support

1. International Associations

1.3. International Federation of Freight Forwarders Associations (FIATA)

FIATA’s objectives are to:- Unite the freight forwarding industry around the world- Represent, promote and protect the interest of the freight forwarding

industry by acting as advisor or expert in dealings with international transport companies;

- Familiarize people with the services of freight forwarders through the dissemination of information and distribution of publications;

- Introduce measures to enhance the quality of service rendered by freight forwarding companies, by developing and promoting uniform forwarding documentation, standard trading conditions and so on; and

- Improve the speed and efficiency of freight transportation by providing industrial or vocational training for the employees of freight forwarders, solving liability insurance problems, and distributing e-commerce information tools like barcodes, radio frequency scanners and electric data interchange software.

1. International Associations

1.4. ASEAN Federation of Forwarders Associations (AFFA)AFFA’s objectives are to:- Unify all freight forwarders in the ASEAN region through

national forwarders associations;- Foster, promote, develop and maintain close cooperation

between and among freight forwarders in ASEAN;- Represent members in their collective interests in

relation to freight forwarding matters peculiar to the ASEAN region; and

- Pursue all measures to improve the quality, standard and professionalism of freight forwarders in the ASEAN region.

2. Legal Issues

- Convention for the unification of certain rules relating to international carriage by air, 1929/ Warsaw Convention

- Protocols to amend the convention for the certain rules relating to international carriage by air:- The Hague Protocol 1955- Guadalajara Convention 1961- Montreal Agreement 1966- Guatemala Protocol 1971- Montreal Protocol 1975 No 1, 2, 3, 4

3. Documents

3.1. Air Way Bill (AWB)

3.1.1. Air Waybill (AWB) or air consignment note refers to a receipt issued by an international carrier company for goods and an evidence of the contract of carriage.

- AWB is not a document of title to the goods. Hence, it is non-negotiable.

- AWB is always a received for shipment document.

3.1. Air Way Bill (AWB)

3.1.2. Different types

• Base on issuer: – Air line airway bill– Neutral airway bill

• Base on consolidation services– House airway bill– Master airway bill

3.1. Air Way Bill (AWB)

3.1.3. Functions– Evidence of the contract of affreightment– Confirmation of shipment– Freight Bill– Insurance Certificate– Custom declaration– The guide to the air staffs

3.1. Air Way Bill (AWB)

3.1.4. Contents of AWB• First side:

– AWB number– Name and address of the issuer– Airport of departure– References to originals– References to conditions of contract– Shipper– Consignee– Charge Code– Issuing carrier’s agent

3.1. Air Way Bill (AWB)

• First side:– Accounting information– Currency– Routing– Declared value for carriage– Declared value for customs– Insurance Amount– Handling information– Other fees and charges– Number of Pieces

3.1. Air Way Bill (AWB)

• Second side (only in 3 originals):– Information about carrier’s liabilities– Terms and condition of contract of carriage

3.1. Air Way Bill (AWB)

• 3.1.5. Allocation• Original 1: for carrier, signing by shipper• Original 2: for consignee, signing by shipper and

issuing carrier• Original 3: for shipper, signing by issuing carrier• No 4: for final destination• No 5: for final airport• No 6, 7, 8: for the 3rd, 2nd and 1st carrier• No 9: for carrier’s agent

3.2. Other documents

- Commercial invoice- Packing list- Cargo manifest- Shipper’s letter of instruction- Certificate of quality, quantity, live animals,

dangerous goods- Custom declarations

4. Freight and Charges

4.1. Freight rate: the rate declared in air freight tariff on the AWB issuing day.

4.2. Basis for calculation- Quantity- Volume/ measurement- Value Total freight = freight rate X number of units Freight in Air transport is regulated in the unified freight

tariff of IATA: TACT rules (The Air Cargo Tariff): rules to calculate freight TACT freight rate:

Freight rate for North American area Freight rate for other areas

4. Freight and Charges

4.3. Different types- General Cargo Rate (GCR): the normal rate applied for

normal general cargo carried between two airport.- GCR- N (normal): for goods with quantity < 45kg- GCR- Q (quantity) for goods with quantity ≥ 45kg (45kg, 45-100,

100-250, 250- 500, 500- 1000, >1000)- Minimum rate: the rate to guarantee profit for airlines- Special Commodity rate (SCR): the rate applied for

special commodities in a certain routes.- Class Rate/ Commodity Box Rate (CBR): freight rate

classified by commodity (live animals: 150% GCR, high value commodities: 200% GCR, books, journals, magazines, luggage, mortal remains/ ashes: 50% GCR)

4. Freight and Charges4.3. Different types- Freight All Kinds (FAK): single freight that is charged irrespective of

the commodity- ULD rate: the rate that is charged when the goods are consolidated

in unit load devices- Delayed shipment charge- Fast shipment charge: the rate applied for cargo sending within 3

hours- Unified Cargo rate: single freight that is charges irrespective of the

section- Group rate: the rate that is applied for forwarders or airlines’ agents,

who usually send goods in containers, pallets or other transport articles

- Subscribed rate: the rate that is charged when charter an entire aircraft to carry the goods

5. Extend of carrier’s liability to the goods

5.1. Warsaw Coventions• Period of liability

– The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, or of the delay in the carriage, to any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.

– The carriage by air comprises the period during which the goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or in the case of a landing outside an aerodrome, in any places whatsoever.

=> “from airport to airport”

5. Extend of carrier’s liability to the goods

5.1. Warsaw Conventions• Basic of liability:

– Loss, damage, and delay in carriage– Exceptions:

• the carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that was impossible for him or them to take such measures

• In the carriage of goods the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respect, he and his agents have taken all necessary measures to avoid the damage.

5. Extend of carrier’s liability to the goods

5.1. Warsaw Conventions

* Limitation of liability

• Passengers: 125,000 francs

• Registered luggage or goods: 250 francs/kg

• Private luggage: 5,000 francs

• Franc unit consisting of 65.5 milligrams gold of millesimal fineness 900

5. Extend of carrier’s liability to the goods

5.2. Hague protocol 1955

- Deleting the second exception for the carrier

- Adding one more exception: inherent vice, latent vice, or natural nature of goods

- Increasing the limits of liability to passenger to 250,000 francs

5. Extend of carrier’s liability to the goods

5.3. Guadalajara Convention- Contracting carrier: means a person who as a principal

makes an agreement for carriage governed by the Warsaw Convention with a passenger or shipper or with a person acting on behalf of the passenger or shipper

- Actual carrier: means a person other than the contracting carrier, who, by virtue of authority from the contracting carrier, performs the whole or part of the carriage contemplated in paragraph (b) but who is not with respect to such part a successive carrier within the meaning of the Warsaw Convention. Such authority is presumed in the absence of proof to the contrary.

5. Extend of carrier’s liability to the goods

5.4. Guatemala Protocol 1971

- In the case of loss, damage or delay of part of the cargo, or of any object contained therein, the weight to be taken into consideration in determining the amount to which the carrier's liability is limited shall be only the total weight of the package or packages concerned.

5. Extend of carrier’s liability to the goods

5.5. Montreal protocol 1975- No. 1, 2, 3, 4- No. 1 & No. 2:

- Registered luggage and goods: 17 SDR or 250 francs/kg- Private luggage: 332 SDR or 5000 francs

- No 3: - Registered luggage and goods: 17 SDR or 250 francs/kg- Private luggage: 1000 SDR or 15,000 francs- Exceptions:

- Damages caused by latent vice, inherent vice, or natural nature of goods

- Defects of wrapping not caused by carrier or his agents- War or armed conflict- Actions of government regarding import- export or transit

procedures

6.Claims and Actions

6.1. ClaimsLimitation of claims:• Warsaw Convention:

– Loss, damages: within 7 days from the day of receiving the goods

– Delay: within 14 days from the day of receiving the goods or the goods should have been at the disposal of consignee.

• Hague Protocol:– Loss, damages: within 14 days from the day of receiving the

goods– Delay: within 21 days from the day of receiving the goods or the

goods should have been at the disposal of consignee.

6.Claims and Actions

6.1. ClaimsClaims documents:- Application- AWB- Cargo documents- Documents of damages- Report on compensations (consisting of

indemnity and other fees and charges)

6.Claims and Actions

6.2. Actions- Claimer: cargo owner- Defendant:

- 1st carrier- Last carrier- segmental carrier (damages of goods happened in his

stage)- Limitation of actions: 2 years from the time

airplane has arrived/should has been arrived destination point or transportation process has been stopped.

III. Air Cargo Operations in Vietnam

1. Air transportation organizations in Vietnam

- Vietnam Airlines- Pacific Airlines- VASCO (Vietnam Air Service Company)- SFC (Service Flight Corporation of Vietnam)

2. Legal Issues

• Civil Air Law 1991

• Civil Air Law 2006

• Regulations of international air cargo operations 1993

3. Extend of carrier’s liability to the goods

3.1. Period of liability: from airport to airport3.2. Basis of liability: losses, damages,

delays in delivery• Exceptions:

– Inherent vice, latent vice– Coercive actions of governments– Wars, armed conflicts– Fault of shippers, consignees, escorts

3.3. Limitation of liability: 17SDR/kg

4. Claims and actions

4.1. Limitations of claims- Shortage, damage of goods: 14 days from the

day of receiving goods- Loss: 21 days from the day goods should have

been delivered- Delays: 21 days from the day goods should have

been delivered4.2. Limitations of actions: 1 years from the time

airplane has arrived/should has been arrived destination point or transportation process has been stopped.