Understanding Terms and Conditions of International Transport.Transport is a strategic element which gives an edge to competitively to the seller. The exporting companies choose their mode of transport according to cost, time involved and safety and security. The other criteria such as nature of the product, quality and importing country will determine the choice of the principal mode of transport. The exporters often entrust these operations to an outside partner such as the forwarder, who is going to organise the contractual services of logistics. Hence, the forwarder can play different roles. He can replace the exporter in respect of dealings with administrations,(example Custom Dept.).
He can negotiate the means of transport ( Agent ) and finally he can bring together the dispatches of merchandise, having one or several shippers, to the address of one or more importers. Thus, transport cost shall be shared with several clients ( Grouping Function ). The forwarders have a lighter task of management and are for a large part equipped with systems which allow speeding up of the passage of merchandise through the custom and supervision of their further dispatch. The means of transport are, for the most part, maritime and land transport ( Highways, Trains ). The air transport represents only 2% of total transport. The rest belongs to postal agency and river transport.
Air transportThe advantage of air transport lies in its speed and security. On the other hand, its cost is higher but the speed allows frequent deliveries.
Organisation
The agencies involved in air transport are as follows :
- Air freight agent who organises the main transport,
- Forwarder, commission agent, who are in charge of operations related to shipment
Two types of aeroplanes participate in the international transport of merchandise :
- Mixed aeroplanes : they transport at one and same time passengers and goods : this type of aeroplane is not suitable for dangerous products and can cause delays because the dispatch has general priorities status.
- Cargo aeroplanes which transport only merchandise.
Transport contract
The Air Transport contract is signed between the transporter (air company) and the loader who can be a forwarding agent. The contract is given concrete shape by Air Transport letter (LTA=AIR WAY BILL). The Air Transport letter or LTA can be prepared by Air company, shipper or by the receiver. The LTA is at one and the same time : proof of transport contract, proof of complete charge of goods and basis of prices. The commitment of the transporter implies the following responsibilities :
- The merchandise is in the custody of the transporter right from the point of its loading up to the time of unloading. In case of missing items, the receiver is under obligation to raise objections regarding the weight and the number of packages but not on the number of articles.
- In case of damages resulting due to delay, the transporter is responsible for the damage except if he raises objections. As for the losses and damages, one has to send a registered letter within 14 days from the date of reception of goods. But in the case of delay, one has to send a registered letter within 21 days from the date of disposal of the goods.
In order to guard oneself against an eventual delay ( case of urgent shipments ) you can agree to a delay with the company and with a guarantee of embarkation or mention objections on the LTA, to be jointly signed with the transporter.
Pricing
The basis of tariff making is the relation between weight and volume while taking note of the fact that one tonne is equal to 6 cubic metres. Hence, the real volume is divided by 6 for retaining the fictitious weight which serves as the basis for tariff making.
- The IATA tariff which is obligatory in principle, can be subjected to reductions according to the volume. This is a tariff for each range of weights which is rapidly regressive and which changes from one country to another. A minimum of taxation is provided for small shipments. The air companies apply the rule of " paying for " which consists in paying for the weight which is higher than the real weight, taking into account the strongly regressive character of the tariff.
-The ULD tariff (Unit Load Device= Unité payante). In this case, each unit of loading has a minimum price. The ULD tariff is a contractual charge agreed to for certain journeys. To this contract corresponds what is called the " pivot weight ". If the weight exceeds the contractual weight, the additional kilos will be taxed at a very favorable tariff ( an advantageous tariff to the extent to which the contents / containers such as pallets / wooden crates or containers are not taxed ).
- Special tariffs = specific commodity rates = Co-rates. These are the preferential tariffs calculated on the basis of the category of the merchandise shipped at the minimum in 100 kg. and in 300 kg unit or 500 kg. unit for others.
Maritime Transport
Maritime transport has a special place of its own in international trade. This is the most onerous means of transport and the delays are longer.Organisation
Maritime transport counts two distinct agencies which participate in the transport contract : the loader and the ship owner.
The loader represents the merchandise. This can be the real shipper or a representative of the same (like forwarding agents) or the receiver of merchandise.
The ship owner (maritime company) is generally represented by an agent.
Loading of merchandise can be done on two types of ships:
Ships specialised in a certain type of merchandise : bulk handlers, petrol tankers or silos for grains, multi-thermal ships meant for transporting perishables etc.
Ships that are not specialised such as : conventional cargo ships which have at their disposal their own means of cargo handling, ports, containers adapted to the volume of containers, rolling ships equipped with a rear ramp that helps handling of all types of merchandise (this technique of rolling is also called RORO (roll on-roll off)), mixed types of ships such as RORO + container combining the interest of the container with that of rolling, the barge-floats intended for transporting a combination of riverine and maritime goods transport.
As for containerisation, it is considered as a special case. The container is a technical solution that is most appropriate in many cases, for, it allows you to keep cost at the lowest possible level in spite of some constraints.
There are four types of shipments of container ships:-FCL/FCL(FCL=Full Container Load=Conteneur complet)
The company itself puts on board its merchandise in container, under seal and it is delivered directly to the client without opening it (except for custom control).
-LCL/LCL (LCL= Less than a container load = grouping inside in a container)
If the dispatches of goods are insufficient for filling the container, the company delivers its merchandise at a container load centre. They are containerised with other items going to the same port where they are de-segregated and handed over to the client.-FCL/LCL
Several lots are provided and sent to the same destination. It is the company which loads them in a single container ship which is full of containers and which is carried to the port of loading. Once it arrives at the port of unloading, they proceed to desegregate the goods which are put at the disposal of different receivers/agents.-LCL/FCL
After importing, the company can have deliveries of different origins. The suppliers deliver them at the same container load centre and afterwards they are transported together to the domicile of the client.Transport contract
Sea transport can form part of the framework of two types of contract :
Either a transport contract, that is to say, the loader is under obligation to pay a certain freight and the transporter is committed to carry the merchandise from one port to the other.
Or, a freight contract by which the contracting parties agree on location of the ship for a pre-determined period of time.
Regarding the parties to the contract :
The loader must bring his merchandise in time and at a fixed place. Transferring the ownership is very important since it marks the beginning of the contractual period covered by the rules of transport. The ship owner takes in his charge the goods for onward transportation. The ship owner is nearly always represented by his agent. The transporter delivers the shipping transport documents : Connaissement Maritime = Bill of Lading.
The Bill of Lading is considered as proof of the contract signed between the loader and the transporter. It is a basic legal document representing the goods.
Within the framework of credit document the real name of the shipper must be clearly mentioned and the date of issue may become essential. The words "on board" are compulsory as a proof of loading. The Bill of Lading must further be signed by the transporter. The word "clean" is appreciated and the same certifies acceptance of the goods without any reservations.
Pricing
The shipping conferences (which are nothing but agreements between maritime companies) fix the rules of making tariff.Basic freight : the basic freight depends on the class of merchandise or the mass or volume with indication of equivalence : 1 ton = 1 m3. A minimum charge is provided for shipments and special regulations are applied to certain types of merchandise. The maritime freight is fixed in terms of units of payment (UP). This unit of payment is either ton or volume, whichever is more advantageous to the transporter.
Road transport
Organisation
Transporters are private transport companies and truck drivers. They are classified according to the distance of their itineraries . In the case of very heavy tonnage, an authorisation is required. Road transport uses 3 types of vehicles:
One-piece vehicle (trucks)
Articulated vehicles (tractor + tug)
Articulated road trains (truck + tug)
As for the international agreements, the Geneva Convention called " CMR Convention " (Convention of Merchandise by Road) lays down the conditions of transport and the responsibilities of transporter; as for the TIR/IRT Convention (International Road Transport), it is applied to the goods originating or delivered in a country outside the European Union but which has ratified the convention.
Transport contract
Road transport contract takes shape after signing off the letter of vehicle called CMR. The signature of the transporter imposes a certain responsibility in the case of loss or damages. In the case of objections raised by the transporter, those objections must be counter-signed by the shipper/sender.
Tariff making
Tariff making takes into account weight, nature of merchandise and the distance to be covered. The weight / volume ratio = 1 ton = 3 m3. The road tariff requires that one must present the weight of merchandise rounded to 100 kgs and above.
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