Shipping Industry & Logistics Procedures

By - Saahil Supekar

History Commercial Shipping began with Phoenician merchants transporting goods in

the Mediterranean.

Practices were adopted by ancient Greeks and Romans.

1600 to 1650 – DUTCH – First in Shipping Activity.

CARGO – in Cartons and Pallets.

In 1930, CONTAINERS were invented by Malcolm Mclean, modifying the bodies of Trucks to create Containers.

On 26th April, IDEAL-X, 1st Container Ship, sailed from Port Newark, NJ to Houston, Texas.

SEA or Water Logistics (Shipping Industry)

KEY Reasons – Trading Internationally

Price – Goods can be purchased elsewhere for LESS.

Volume – Unable to meet demand for certain commodities.

Quality – Imported Good may be of Higher Quality.

Availability – Goods may not be available in Home Country.

FACTS of Shipping Industry

(1) Maersk Mc-Kinney Moller, Worlds largest Container Ship.Five times the size of an Airbus A380.Length of 400m, Weighing 52,859 tonnes, carrying capacity of 18000 TEU’s.

(2) Since 72% of the earth is covered by Water, almost 90% of International Trade is by SEA.

(3) 99% OF Overseas trade in Volume terms, 62% IN Value terms.

BENEFITS of Containerization

(1) Cost Effective.(2) Less Theft / Pilferage / damage.(3) Labour Saving.(4) More Protection as handling eliminated.(5) Flexibility to Transport.(6) Reduced Insurance.

FACTORS affecting the Shipping IndustryDue to its cyclic nature, it is affected by a large number of factors like :

(1) Global Economic Conditions.(2) Consumption pattern of Buyers.(3) Political Events.(4) Government Regulations.(5) Age of Existing Vessels / New vessel delivery schedule.(6) Availability of ship building slots with ship yards.(7) Natural Disasters.

TOP Exporting & Importing Countries of Containerized Cargo (2012)

TOP PORTS for Containerized Cargo (2012)

Shipping Services Types

Tramp Shipping – Vessels carrying Bulk/Break bulk (Individual cargo pieces) to ports in the World.

Industrial Services – Owned by large corporations, required for manufacturing & distribution activities like Steel, refineries.

Tanker Operations – Operated by Private Contract Carriers, transporting Petroleum products like Gasoline, Kerosene and Lubricant oils.

Liner Trade – Shipping Operations on fixed SEA routes. Majority of Ships allocated to this Service, transporting Cargo in Containers.

Transhipment

An Act of off-loading a container from one ship & loading into another ship.

Since no shipping line can cover all the ports around the world on a single service, services are segregated into trade lanes.

Examples of Major Transhipment Ports of the World :

(1) Singapore (Singapore) – 82% of Transhipments

(2) Hong Kong (China) – 30% of Transhipments

(3) Shanghai (China) – 43% of Transhipments

(4) Kaohsiung (Taiwan) – 52% of Transhipments

(5) Busan (South Korea) – 42% of Transhipments

Major Shipping Companies

PORTSA port is a harbour with piers or docks where ships can load & unload their cargo.

It also provide additional facilities like shelter, storage space, provisions, maintenance facilities for vehicles & other support services.

Types of PORTS

Base Port – Large Ports from which ships operate, irrespective of where they are registered (homeport). E.g. Hong Kong, Felixstowe.

Feeder Ports – Smaller Ports that do not accommodate large vessels. Used by feeder vessels to transport goods to & from larger vessels / central ports. E.g. Kandla, Vishakhapatnam.

Hub Ports – Ports where containers are transhipped from one vessel to another. Hub ports can be either a base port or a feeder port.

CONTAINER Types

STAKEHOLDERS IN THE SHIPPING INDUSTRY(1) Shipper/Consignor/Exporter/Seller

(2) Receiver/Consignee/Importer/Buyer

(3) Banks

(4) Carrier/Shipping Line

(5) Freight Forwarders & NVOCC

(6) CHA

(7) Government Authorities

(8) Truckers/Railway

(9) Terminal Operators

(10) Depot Operators

(11) Talley – Man

Shipping Cycle – EXPORT Process

Booking 1) Via Email/Telephone/Fax/Internet2) Shipment Details Noted3) Vessel Space availability checked & confirmed4) Shipment accepted

Dispatch 1) Empty Container Allotted2) Shipper loads container in Customs presence & sends to CY

Receipt at CY / POL 1) Container Receipt confirmation by Liner

2) Container documents & shipping instructions provided by Shipper to Liner

Invoice Preparation 1) Liner prepares Documentation2) Prepaid charges paid by Shipper3) Container loaded on Vessel

Vessel Manifest 1) Documents & containers loading plan submitted to Customs

Vessel Departure 1) Container loaded on ship2) Shipped on board (SOB) BL released to Shipper

Shipping Cycle – IMPORT Process

Vessel Manifest 1) Prepared by Agent at POD & SEND TO Customs prior Ship's Arrival2) Info related to all types of Cargo on board3) Shipper & Consignee Details

Arrival Notice 1) Send via email / fax to consignee2) Details of Vessel name & voyage, BL no. & details, ETA, Container no., Seal no. & Invoice Details

Container Discharge 1) Vessel enters inner anchorage2) Container discharge from vessel3) Surveyor prepares the Container List4) Segregation of Cargo / Containers

Invoice - CHARGES Collected 1) Payment collected by Shipping Line before release of Shipment

Custom Clearance 1) Customs releases Cargo2) BL submitted by Consignee to Shipping Line

Cargo Release 1) Delivery Order Issued2) Gate pass given by depot3) Container released for Delivery

Container return 1) Empty container returned to Shipping Line

SHIPMENT Flow ProcessQUOTATION Shipper & Sales Team / person

BOOKING Vessel Status , ETD , ETA

CONTAINER PACKAGING Dock Stuffing , Factory Stuffing , Transportation

EXPORT CUSTOM CLEARANCE Role of CHA

CONTAINER LOADING & VESSEL DEPARTURE

Shipping Documents Handover , Container Gate-In

RELEASE OF BL Liner/NVOCC/Freight Forwarder (HBL / MBL)

IMPORT CUSTOM CLEARANCE Role of CHA

ARRIVAL OF VESSEL & CONTAINER OFFLOADING

Informing Consignee , Demurrage , Detention charges

RELEASE OF EQUIPMENT TO CONSIGNEE Return of Empty Container to Yard

INCO Terms

The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC)

They are widely used in International commercial transactions and trades.

Bill of Lading & Service Types

CY / CY Service or FCL Service

CY / CFS Service

CFS / CY Service

CFS / CFS Service or LCL Service

Where,

CY = Container YardCFS = Container Freight StationFCL = Full Container LoadedLCL = Less than Full Container Loaded