FREIGHT FORWARDING &

TRANSPORTATION
Before the era of containerization there
were only two modes of transportation:
1. Air
2. Sea
After the era of containerization:
1. Air
2. Sea
3. Sea/Air
4. Road
5. Inland waterway

WHO IS A FREIGHT
FORWARDER
He

is a logistic partner providing

part or total functions of the supply
chain with a view of reducing cost
and increasing customer service.

SERVICES OF FREIGHT
FORWARDER
1.

Adviser/Consultant
Packing Choice and type of packing
Routing - Choice of itinerary and mean of
transport
Insurance Type of coverage
Custom regulation- In/Out bound
LC Banking requirements

2. Organizer for

Import/export transit consignments.

Consolidation Groupage shipments
Breaking bulk of consolidation
Special and Heavy transport Project
cargo

3 Imports :

Unloading of Cargo
Breaking bulk of consolidation
Custom clearance.

4. Export
Pick

up
Packing and Marking
Freight space booking
Delivery to carrier
Issue of transport documents
Supervising Departure
Dispatch Advise to customer
Custom Clearance

5. Imports
Custom

Clearance
Unloading of cargo
Transporting of cargo
Breaking bulk of consolidation

6. Transit
Re

packing
Storage in bound
Re forwarding

FREIGHT FORWARDERS
RELATIONSHIP WITH VARIOUS
PARTIES
Port

Consignee/
Consignor
Cargo Insurers

Imp/Exp Control
& Trade Control
F Exchange Control
Health Control
Counsular
FF

Customs

Carriers &
All operators

PERFORMANCE OF
CONTRACT
Customer
Instruction

Forwarder
Accepts
Transportation in
a Most suitable
manner

ETA Not Guaranteed

LIABILITY OF FREIGHT
FORWARDER
Liable only for his/employees
faults.Acts of omissions or
commissions by 3rd party not liable
provided due diligence is exercised
in selecting the carrier.

EXTEND OF LIABILITY &

LIMITATION AMOUNT
Limited

to .
per kg or
PKG, cannot exceed the MKT value
of goods at the time of acceptance by
Freight Forwarder

Not

responsible for consequential

losses

FREIGHT FORWARDERS
LIEN & DETENTION
Right

to hold & detain any goods or other

securities for all debts present and previous
outstanding
Time limit Time bared - six months.
Period starts - Date of delivery of goods

CONSOLIDATION
Assembling

of small parcels of cargo from

several consigns at one point of origin,
intended for several consigners at another
port of destination dispatching the parcels
as one consolidated consignment to the
consolidators agent at the destination and
delivering them to the respective
consigners.

Contd.

DOCUMENTATION
House B/L
2. Forwarders Cargo receipts
3. Forwarders certificate of transport
(CT)
4. FBL/FIATA B/L (International
Federation of FF association)
1.

Contd

SHIPPING MANIFEST
This

gives the details of the clients and his cargo

in the container. This is important to the agent in
the receiving country to report to customs and also
to have an idea of the type of cargo, volumes of
cargo etc.
B/L No

Con/ No

Size

Shipp

M/No

Qty

Nature

Volume

Wt

Contd

LIABILITY OF
CONSOLIDATORS
By

issuing his own B/L FF assumes role of

the carrier.
Responsible for entire transport
Responsible for loss or damage even the
when the cargo is in the custody of the
carrier.
Responsible for delay in delivery.

Contd

ADVANTAGE OF
CONSOLIDATION
Low

Freight rate
Wide range of destination
Door to door delivery

INCO TERMS
It

is a 3 letter code identifying the liability

and the responsibility of an Importer and
Exporter.

There

14 terms available. Eg.

EXW,FOB,CFR,CIF ,DDU,DDP etc.

OCEAN BILLS OF LADING

1.
2.
3.
4.
5.

Is it negotiable?
Document of title
Transferable
Contract
Is it a Receipt

Yes/No
Yes/No
Yes/No
Yes/No
Yes/No

AIRWAY BILL
Equivalent

document of ocean B/L

Is

it Negotiable?

If

Yes - Why ?

If

No

- Why ?

KINDS OF B/L
Classification I
Shipped on B/L Cargo on Board the
vessel
Received

for shipment B/L Shipping

company confirms receipt of goods for
shipment on vessel mentioned.

Contd.

Classification II According to beneficiaries

To a named person Name and address of the
consignee is given.Hence delivery only to the
named person not used for commercial cargo.
Eg. Personnel effects, Headquarters to a
branch office - Non negotiable
B/L to Order
B/L to Bearer Not commonly used in business.

Contd.

According to Voyages

Direct Bill of Lading

Through Bill of Lading Has 2 characteristics
distinguishing direct B/L
1. Clause containing right to transship
2. Contains statement that cargo will be
transshipped at a particular port

MULTIMODAL TRANSPORT

INTERMODAL/MULTIMODAL
TRANSPORT
The

United
Nations
Convention
on
International Multimodal Transport of goods
(the MT Convention) defines multimodal
transport as:
.the carriage of goods by least two
different modes of transport on the
basis of a multimodal transport
contract from a place in one country at
which the goods are taken in charge
by the multimodal transport operator
to a place designated for delivery
situated in a different country

WHO IS A MM TRANSPORT
OPERATOR
According

to the definition in the MT Convention, a

Multimodal Transport Operator (MTO) is :

.any person who on his own behalf or

through another person acting on his behalf
concludes a multimodal transport contract
and who acts as a principal, not as an agent
or on behalf of the consignor or of the
carriers participating in the multimodal
transport operations, and who assumes
responsibility for the performance of the
contract.

Contd

This

is the strict legal meaning

under the MT Convention, but there
is a wider, more liberal definition
that says that any one who
undertakes to arrange a door-todoor transport using more than one
mode of transport and who issues
one transport document for the
entire transport is a MTO.

ADVANTAGES OF MM
TRANSPORT
Minimizes

time loss at the trans shipment

points.
Provides faster transit of goods
Reduces burden of documentation and
formalities
Save cost
Establishes only one agency to deal with
Reduces cost of exports

DIFFERENT TYPES OF MM
OPERATIONS
VESSEL

OPERATING MM
OPERATORS VO- MTOS :

TRANSPORT

They do not own/operate means of transport of goods

by Road, Rail of Air but arrange for these types of
transport by subcontracting with such carriers.
However this is rapidly changing.

Contd

NON

VESSEL
OPERATING
MM
TRANSPORT OPERATORS NVO MTOs

They will not themselves own or operate the

vessels which perform the ocean voyage.
For this reason they are known as nonvessel operating MTOs or Non vessel
operating common carriers (NVOCC)
Instead of subcontracting the inland or air
legs of the transport they may instead
subcontract
the
ocean
voyage.

Contd

OTHER TYPE OF NVO- MTOs

1.

Do not own any means of transport. They may

own some type of transport such as trucks , air
crafts etc. They may sublet the inland or air leg..

2.

Companys who provide exclusive multimodal

transport They do not own vessel themselves.

3.

Freight forwarder who act as carriers and assumes

full responsibility for execution of transport
contract

Contd

a) Fully

fledged MM transport operators

controlling different modes of transport
through door to door movements under one
MM documents FBL

b) NVO NV operators arranging port to port

ocean transport under HBL or OBL who
may also cover land transport..

Contd

c.

NVOCC NVO common carriers who

advertise regular sailing and arrange
consolidation or MM transport under
HBL,or FIATA B/L

DIFFERENT TYPES OF
OPERATIONS
1.

Sea /Air - This combines in itself the

economic of sea transport and speed of air
transport. Very popular in international
trade routes like far east- Europe. This
method favours high value items like
electronics and electrical goods as well as
high seasonal demand goods such as
fashion ware and toys.

Contd

2.

Air/Road Popular in USA and Europe .

Rail/Road/Inland waterways Searail/road/ inland water ways.

Commonly used when goods have to be
moved by sea from one country to another
and one or more inland modes of transport
moving the goods from inland center to
sea port in the country of origin or from
the sea port to inland center to the country

MINI- BRIDGE
Involves the movement of containers, under a
through bill of lading issued by an ocean carrier, by
a vessel from a port in one country to a port in
another country and then in the second port city.
The mini- bridge offers the consignor a through
container rate inclusive of rail freight up to the final
port city in the country of destination. The railways
are paid a flat rate per container by the ocean carrier
for the rail transit.

MTOs RESPONSIBILITY &

LIABILITY
The intermodal transport operator is
responsible
for
the
satisfactory
performance of the combined transport
operation including all services, which are
necessary for the operation.
2. He is responsible for the delivery of the
goods to the consignee at the destination
in the same condition in which he took
them into his charge from the consignor.
1.

Contd

3. He is responsible for the acts and omissions

of his agents or servants or any other

person whose services he makes use of for
the performance of the intermodal
transport contract
4. He becomes liable for loss of the goods or
damage to them occurring between the
time of taking them into his charge and the
time of delivery at the destination. He also
becomes liable for any delay in the
delivery of the goods at destination.

Contd

5.When the stage at which the loss or

damage occurred is known his liability
is determined by the provisions of any
international convention or national
law applicable to that stage.

RESPONSIBILITY OF THE
SHIPPER
Since MM transport operator may
not have the reasonable means of
checking the general nature of the
goods marks and Nos. weight etc,
the shipper of the goods is under
obligation to guarantee to the MM
transport
operator
about
the
accuracy of such information.

Contd

The shipper shall indemnify the MM

operator resulting from inaccuracy
or in adequacy or particulars
furnished to MM operators. But such
indemnifications by the shipper
cannot absolve the MM transport
operator from his liability under MM
transport contract to any person
other than the consignee. i.e. 3rd
Party

LIMITS OF LIABILITY OF MM
TRANSPORT OPERATOR
1.

Loss of Cargo
2. Late delivery of Cargo
1) Late Delivery of Cargo If the goods are not delivered within 90
consecutive days following the date of
expected delivery the claimant for the
goods can treat the goods as lost and
claim compensation.

Contd

Amount of liability for loss and damage defers

for various modes of transport and even for
MM transport under different rules.
a) Hague Rules 100/-pound sterling per
package
b) Hague Visby Rule - francs 10,000/Package
or 666.67 SDR
c) Hamburg Rules 835/- SDRs or 2.5 per KG
of gross weight whichever is high.

Contd

d) ICC rule 2 SDRs per Kg.

e) MM convention 920 SDRs or 2.75 SDRs
per
kilos whichever is high.

Presently

ICC rules are widely accepted

internationally for delay in delivery of goods
2 times the freight paid or payable under
the Hamburg rules and MM convention.
Under ICC 2 time the freight payable.

2. Exoneration of MM transporters
liability

Act of omission by consignor or consignee or their agents or by

insufficient defective packing or by inherent wise of the goods
strikes, lockouts where MM operator has no control.

3.Special Provisions for DC goods

Consignor should inform the MTO the exact nature of the goods
and precaution to be taken while transporting. If not informed the
consignor is liable to the MTO for loss resulting from carriage of
such goods and the MTO may destroy, unload such goods without
having
to
pay
any
compensation
Provision

for

Notice

of

Damage

or

Delay

According

to MM convention when loss or damage is apparent the

consignor/ consignee is required to give notice in writing to the
operator not later than the working day after the day when the
goods were handed over to the consignee.

Under

ICC rule notice is required at the time of the removal of the

goods by the consignee.

 When

the nature of loss or damage is not

apparent the consignor/consignee can
give such notice within 6 consecutive
days under MM convention. But under
ICC rule 7 days after the goods were
handed over to the consignee.

For

loss resulting from delay in delivery

consignor/consignee is under obligation
to give notice within 60 consecutive days
after the day when the goods were
delivered.

4. Period of Limitation of action

According

to MM convention 2
years after the date of delivery of
goods or the date goods should
have been delivered or the date on
which goods can be treated as loss
because of delay.

Under

ICC rule 9 months.

Under

Hague rule - 1 year

REQUIREMENT OF MTO TO BE
SUCCESSFUL IN THE TRADE
for those parts of the
transportation for which he has limited or
no recourse

Insurance

MTO

should analyze the various modes of

transport, which will be used from one
place to another and where sub
contractors are involved. He should
consider.

Contd

a. Recourse action available against

subcontractors.
b. The burden of proof required.

c. How to obtain evidence in order to

support recourse action

d. Which jurisdiction should apply.

Contd

MTO should aim to harmonize as far as

possible the terms and conditions of
carriage under which the goods are to be
carried in order to minimize the risk of cargo
interest perusing a claim against him whilst
maximizing MTOs prospects of successfully
perusing a recourse action. Hence, he
should take special interest on the following.

a. B/L taken by MTO from sub carriers

should be on same terms of B/L he has
issued to the cargo owners.

Contd

b.

Should be aware of demise

clauses in
the sub carriers contract.
Should consider using standard
terms such as ICC rules or more
recent UNCTAD/ICC rules

MULTIMODAL TRANSPORT
HUBS
The

location of Sea /Air transit hub is

important in that it must lie upon
international trade route. It should be
positioned such that neither the initial
sea leg nor the air journey is so short has
to be little advantage over conventional
transportation.

Dubai,

is located half way between Asia

(Producer Market) and Europe/America
(Consumer Market).

Contd

Dubai,

has more than 50 sea - air

agents handling in excess of more
than about 600 tons per month
Any sea- air transit points must have
frequent sea and air services in
order to provide a real

a)
service

Efficient cargo handling

b)

c)

Maximum No. of air services daily

to all destinations of the world.
Good international communication.

Sea air MM transport service differ from

most MM transport service in that
cargo is not normally delivered to the
consignee in the containers which they
are stuffed at the point of origin.

QUALIFICATION REQUIRED
FOR MM
1.

Experience or Expertise
Latest situation in the market Regulations
Procedures & Practices for trade and
transport
Rate levels, Cost structure.

2. International Network
3 Financial Capabilities

END