Post on 05-Apr-2018
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INCREASING OPPORTUNITIESIN INTERNATIONAL TRADE
- ARE YOU RISK COVERED ??
Anoma Ranasinghe
General Manager Documentation
Mitsui OSK Lines Lanka (Pvt.) Ltd.
Shipping Risks Making theRight Choice
SELECT THE BEST METHOD OF
TRANSPORT APPLICABLE FORYOUR TRADE..
All transportation methods haveadvantages & disadvantages
Main transportation methods are :
Maritime transportation
Air transportation
Road transportation
Rail transportation
Maritime Transportation
- Slow. Cheap.Not the best method whentransporting perishable goods of a highvalue or if it s an ur ent deliver .
Air Transportation
Secure and very fast method. Usuallyneeds little packaging, has low cost of
,most expensive method..
Road Transportation
- Normally faster & safe. Allows direct
transportation from the suppliers to theuyer s ware ouse. ssures grea esdegree of flexibility.
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Rail Transportation
Slow & flexible. Requires certainnumber of containers before shipping.
,large quantities of cargo at relativelyinexpensive rates.
International Shipping
The most demanded transportationindustry is: international shipping
which is responsible for the carriage of90% world trade and is the life blood of
e g o a economy.
Half the world would starve and theother half would freeze !!!!!!
International Shipping
Ships are technically sophisticatedhigh value assets (larger hi-tech vesselscan cost over USD 150 million to build),
and the operation of merchant shipsgenerates an estimated annual incomeof over USD 380 billion in freight rates,
representing about 5% of the total globaleconomy .
Different Shipping Markets
Liner
Involves regularservices, provided by
shipping cos., between
Tramps
Call at any port ,to pickup whatever the cargoes;
sc e u e , a vert seports of loading &discharging & freightrates based on co.tariffs.
manufactured or partlymanufactured goods
Bulk Dry Bulk liquid
R/M &semi R/M crude oil
Freight rates arenegotiated
TRANSPORT PROVIDER - SHOULDIT BE A FREIGHT FORWARDER OR
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WHO IS A FREIGHT FORWARDER ?
Agents who arrange land, sea and airtransportation of goods.
They complete all procedural anddocumentation formalities involved in
ustom an ort c earance on e a othe shipper, and
arrange for warehousing of cargobefore shipment of export cargo.
Any danger in hiring a Freight
Forwarder who is not an owner or anagent of the carrier to transport your
goo s o ore gn uyers.
Advantages of aFreight Forwarder
Acts on behalf of exporters in arrangingtransportation Services.
Facilitates the international movement of,
administrative and physical services to theexporter.
Specialists in multi-modal transportation;therefore well placed to select the method
of transportation best suited for the type ofproduct and at the lowest cost.
Selecting a Freight Forwarder :- Not too difficult
Is the Freight Forwarder a member of the
Forwarders Association ?
Obtain recommendations from otherexporting firms & trade associations.
Speak with several Forwarders beforedeciding which one to use.
Consider companys references.
Check on the credit rating.
NVOC OPERATOR
NVOC operations are a particularfeature of containerized transport.
Freight Forwarders and others contractto carry even though owning no ships
or an means of carria e. The NVOCOperator will issue his own bill of
lading in which he features ascontracting carrier.
What is the advantage inselecting a regular liner for
transport of goods ???
Regular liners are ordinarily referredto as Main Lines . Liner shipping consists
companies or ship operators wherebycargo carrying ships are operated
between scheduled advertised ports ofloading and discharging on a regular
basis. The freight rates which are chargedare based on the tariffs. Companies
offering such services are known as linercompanies.
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Advantages in loading with amain line
Space is protected.
Special rates could be negotiated.
Financial stabilit .
Early settlement of cargo claims.
Ability to track cargo until delivered.
In depth market knowledge.
Could obtain better cut offs.
Sale & Carriage Relationship
SELLER CONTRACT OF SALE BUYER
( Also call ed Shipper or ( May also be named
Consignee may employ consignee indor seeForwarding Agent or of the Bill of LadingFreight forwarder to and / or receiver ofMake contract wit h the cargo ).Carrier ).
Makes a cont ract No expressof carriage contract.
Carriercontract s wit h the Shipperand issues Bill of Lading.
Functions of a bill of lading Receipt for goods Functions of a bill of lading
Evidence of a contract of carriage
regarded as the best evidence of a
contract of carriage
Functions of a bill of lading
Document of title
* it enables the holder of the bill of
the port of discharge.
* It permits the holder of the bill oflading to transfer the title of the goodsduring transit by endorsement.
* It can be used as security forpayment.
Transport Documents
Marine/Ocean Bill of Lading
Non- Negotiable Sea Waybill
Charter Party Bill of Lading
Air Transport Document - Air Waybill
Road, Rail or Inland Waterway TransportDocument
Courier & Post Receipts
House Bill of Lading issued by FreightForwarders
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Shipping risks - Maritime frauds
Shipping business, depends on high
degree of trust. Taking this advantage ;it isthe perfect vehicle for a number of
.
Shipping risks - Maritime frauds
Documentary frauds
a) Bills of Lading :pre dating or post dating
/submission of forged bills of lading.
b) False Certificates
c) Back Letters/indemnities
Maritime frauds
Insurance frauds
a) exaggerate damage for cargo
b) scuttling - deliberately sinking aship by allowing water to flow in to the hull
celebrity case salem
Maritime frauds
Cargo frauds
a) under declare the measurement
b) shipping of cargo which does not complywith the re uirement . .
i.e steel rusty/drums secondhand/dented or leaking
c ) not declaring dangerous & hazardous
d) claiming from ship owners or insurerswhen cargo is not actually damaged.
Maritime frauds
Other criminal activities
a) smuggling
b) Illegal immigrantsc) piracy
Detecting /avoid fraud
Criminals will take protection indifferent jurisdiction where freedomof information is restricted. .
a Education & trainin are owerfulweapons.
b) IMB/BIMCO/Insurance cos./Banks
c) customs/police /revenue authorities
d) anti piracy centre in Kuala Lumpur.
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RELEASE OF CARGOES AGAINSTORIGINAL BILL OF LADING
most important functions performed by a shipagent..
The following checklists are designed :-* Is it consigned to the order of the shipper or
* Is it a sea waybill ?* Is it a straight/non negotiable bill of lading ?* Did it arrive care of the master in the shipsbag ?
* Is it an NVOC/house bill of lading ?
Cargo release without taking an originalbill of lading.
There will be situations where the agent is instructed
to deliver cargo without taking the original bill oflading.
* Great care is needed. .* breach of the bill of lading contract .* the legal holder of the bill of lading can sue the
ship owner, the carrier or the party who haswrongfully delivered the cargo.
(The legal holder of the bill oflading could be the shipper, the receiver, a bank or
another party to whom the bill of lading has beennegotiated.)
Cargo release..
CAN THE SHIPPING LINES DELIVER GOODS
WITHOUT THE ORIGINAL BILL OF LADINGDESPITE HAVING STIPULATED IN IT
RELEASE IS POSSIBLE?
couple of shipping lines have changed thewordings on the face of their Bills of Lading,which deals with delivery of cargo
Cargo release..
Traditional wordings are on the followinglines:
In witness whereof the number of
tenor and date ,have been signed ,oneof which being accomplished ,theothers to stand void.
MAERSK SEALAND B/L
Where the bill of lading is non-negotiable theCarrier may give delivery of the Goods to thenamed consignee upon reasonable proof ofidentity and without requiring of an original bill oflading.
Where the bill of ladin is ne otiable theCarrier will be entitled to give delivery of theGoods against what he reasonably believes tobe a genuine original bill of lading. Delivery asaforesaid is authorized and shall constitute duedelivery hereunder and the Merchant shall haveno claim for loss or non-delivery.
Bill of lading clause
clause includes wordings:
1) concerning the release of goods withoutnecessarily requiring surrender of an original
.
2) Where the b/l is non negotiable,whereby the carrier may deliver goods to the
named consignee upon reasonable proof ofidentity without surrender of an original b/l.
3) Delivery of goods against a b/l thecarrier reasonably believes to be genuine.
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Bill of lading clauses . These clauses have created confusion in
the banks and as a result some banks
have refused to accept this type of Bills ofLading while others continue accepting
.
International Chamber of Commerce hasalso objected to this type of clauses
appearing on the face of the b/l as theyfeel it dilutes the InternationalNegotiability of the B/l.
Comment NO PARTY IS ABLE TO COMMENT ON THE
RIGHTS OR WRONGS OF CARRIERSCHANGING THEIR B/L WORDING TO
FACILITATE THE RELEASE OF CARGO.SHIPPING LINES ARE OBVIOUSLYENTITLED TO CHANGE THE WORDINGS OFTHEIR BILLS OF LADING , AND BANKSHAVE A RIGHT TO ACCEPT OR REJECTTHOSE BILL OF LADING.WHETHER OR NOTTHE CHANGED WORDINGS WILL HAVE THEDESIRED EFFECT AND PROTECT THESHIPPING LINES FROM CLAIMS IS AQUESTION FOR COURTS OF LAW TODECIDE
Arrangements in the case ofaccident with B/L.
If the full set of original bills of Ladingis lost/misplaced or delivery inexchange of L/G is requested..
a Identification of ri htful art ..
* person requesting re-issue needs to beidentified as the rightful claimant.
* for identification - demand fordocumentary evidence.
i.e. sales contract, invoice, referring tothe L/C issuing bank.
Arrangements in the case ofaccident with B/L.
b) i. Re-issue of Bills of Lading
* in case; loss of some of the originals; re-issueshould not be done until remaining originals arerecovered.
* .of lading with a supplementary symbol.
* following clause to indicated on the face
this bill of lading is issued in exchange for aLetter of Guarantee as the original one has beenallegedly lost by the shipper
* office at the place of discharge or delivery to benotified of the re-issue.
Arrangements in the case of
accident with B/L.b) ii cargo delivery in exchange of Letter of
Guarantee
Shipping Agents are required to release shipmentsonly against the presentation of fully endorsed original
bill of ladin . Even where three or more originals have been
issued; submission of one original deemed sufficientto justify delivery of cargo.
In case of delay in arrival of the original bill of lading orloss of a bill of lading, cargo may be released againstthe submission of a letter of guarantee; guaranteedby a creditable bank for at least 300 % of the CIFvalue of the shipment. (shipping guarantee)
Arrangements in the case ofAccident with B/L.
c) Banks letter of joint guarantee, andrequirements thereon.
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Arrangements in the case ofaccident with B/L.
Signatory authorized representative of the
merchants organization.
Joint & several guarantee - by a creditable bank,
.
Duration of guarantee indefinite .
Limit of guarantee - no limit. Exceptional case300% of the CIF value will be accepted as a limit.
Security in lieu of joint guarantee depositing of
cash or establishment of the right of pledge on abank deposit is acceptable.
Arrangements in the case ofaccident with B/L.
d) Urging of bill of lading presentation. non production of the bill of ladingwithin one month of the submission of
e) Safekeeping of letter of guarantee - asper the legal requirement
Conclusion.
Shipping is a capital intensive industry.
The shipping markets are becomingincreasingly risky as fluctuations in freightrates and ship prices have increased
substantially. Every organization faces risk; and must balance
its attitude towards risk & reward.
Therefore it is very prudent for merchants ininternational trade to identify risks that theywould face in their day to day operations whenselecting a mode of transport for the movementof goods..