Exam Questions Flashcards

Question

What are multimodal transport integrators?

Answer 1

**Definition**: Multimodal Transport Integrators are entities that manage and integrate multiple transport modes under a single contract to provide seamless logistics solutions. Core Activities: * Coordinating end-to-end transport chains. * Ensuring efficient cargo handoffs between modes (e.g., sea, air, rail, road). * Negotiating contracts with service providers across modes. Types of Services Offered: * Door-to-Door Logistics: Comprehensive transport solutions across multiple modes. * Supply Chain Optimization: Minimizing costs and transit times. * Technology Integration: Offering visibility through tracking and digital tools.

Answer 2

**Definition**: An airline is a company that provides air transport services for passengers or freight, connecting global markets through air routes. Core Activities: * Managing air cargo fleets and logistics. * Ensuring compliance with international aviation regulations. * Handling specialized cargo like perishable goods or hazardous materials. Types of Services Offered: * Express Freight: High-speed delivery for time-sensitive goods. * Specialized Cargo: Transportation of temperature-controlled or dangerous goods. * Customs Handling: Assisting with air freight customs clearance.

Answer 3

**Definition**: Hauliers are entities that operate trucks or fleets to transport goods overland, typically handling the road leg of multimodal transport chains. Core Activities: * Transporting goods from ports, warehouses, or manufacturing units to destinations. * Managing vehicle fleets and driver logistics. * Ensuring compliance with road transport regulations. Types of Services Offered: * Long-Haul Transport: Interstate or cross-country delivery. * Short-Haul Transport: Local or regional distribution. * Specialized Transport: Handling oversized or temperature-sensitive cargo.

Answer 4

**Definition**: Rail operators are companies providing freight transport services using national or regional railway networks, often forming a key component of multimodal transport. Core Activities: * Operating trains for cargo transport. * Managing terminals for container handling. * Coordinating with other modes for seamless cargo movement. Types of Services Offered: * Bulk Freight Services: Transporting raw materials like coal, steel, or grain. * Container Services: Moving intermodal containers efficiently across distances. * Time-Sensitive Freight: Express rail services for faster deliveries.

Answer 5

**Definition**: Express parcel or courier services specialize in the rapid transport of small shipments, documents, and parcels, often providing door-to-door delivery. Core Activities: * Sorting, labeling, and distributing parcels across networks. * Ensuring time-definite deliveries for domestic and international shipments. * Using technology for tracking and customer communication. Types of Services Offered: * Same-Day Delivery: Rapid transport for urgent shipments. * International Courier Services: Handling cross-border shipments with customs clearance. * E-commerce Logistics: Supporting online retailers with last-mile delivery solutions.

Answer 6

**Physical** * Nature of cargo for instance, if it is classified as dangerous under the IMDG Code, a reefer cargo, perishable cargo, out-of-gauge cargo or project cargo. * Shipment weight, volume, density, stowability, ease of handling, liability. * If it requires special equipment, for instance a reefer container or a high cube. * Shipping mode FCL vs LCL or FTL vs LTL. * Consolidation and cross docking activities. * Any instructions leading to accessorial fees, for instance security. **Geographical** * Balanced vs unbalanced (thin) trade. * Distance freight travels; regional vs international. * Besides distance, the points origin and destination areas of cargo, as well as ports of loading and discharging can also affect freight rates. * Delivery speed, Fuel fluctuations. * Interfaces operation costs including ports, dry ports, airports, and canal transits. * Direct call vs hub & spoke (feeder costs). * Geopolitical issues * Number of transport modes involved * Regulatory aspects at custom levels

Answer 7

* Cargo reception. * Sorting. * Unpacking, packing, and repacking. * Storage. Reference can be made to FIFO and LIFO inventory management methods. * Retrieval or picking. Reference can be made to the types of picking for instance, single order picking, batch picking, multi-batch order picking, wave picking, zone picking, cluster picking. * Accumulation or consolidation. * Outward delivery.

Answer 8

* Contributes to an optimised and efficient warehouse space utilisation. Results in more storage * Allows better inventory management, inventory flow, stores more inventory without costly expansions. * Allows improved productivity; increased speed of warehouse throughput * Determines the equipment being used. * Flexibility at stock level because of seasonality. * Better segregation. * Keeps employees safe, Complies with regulations. * Improves order fulfilment rates, minimises travel times, provide easy access to stored goods. * Reduces errors, stock losses. * Faster order processing and increased productivity, ultimately helping you meet customer demands more efficiently. * Better tracking and tracing of goods.

Answer 9

* Conventions relating to carrige of cargo * Relating to nature of cargo * Relating to safety and security

Answer 10

* Hague Rules 1924 * Hague-Visby Rules 1968 and Protocols * Hamburg Rules (The United Nations Convention on the Carriage of Goods by Sea 1978) * Rotterdam Rules * Convention on the Contract for the International Carriage of Goods by Road (CMR) * Uniform Rules concerning Contracts for International Carriage of Goods by Rail (CIM) (Appendix B of COTIF) * Warsaw Convention of 1929 and Protocols. * United Nations Conference on a Convention on International Multimodal Transport

Answer 11

* International Maritime Dangerous Goods Code (IMDG Code) * European agreement relating to the international transport of dangerous goods by road (ADR) * Regulations concerning the International Carriage of Dangerous. Goods by Rail (RID). * Carriage of perishable goods - the ATP Convention

Answer 12

* International Convention for Safe Containers (CSC) * The SOLAS Container weight verification requirement * International Ship and Port Facility Security Code (ISPS Code)

Answer 13

* £100 per package or unit. * time limit on legal action one year.

Answer 14

* 666.67 SDRs per package or unit or 2 SDRs per kg, whichever amount is higher. * time limit on legal action 1 year but by mutual consent this may be extended.

Answer 15

* 835 SDRs per package or 2.5 SDRs per kg. * In the case of delay in delivery of the goods, the compensation is limited to an amount equivalent to two and a half times the freight payable for the goods delayed, but not exceeding the total freight payable under the contract of carriage of goods by sea. * time limit on legal action 2 years.

Answer 16

* 8.33 SRDs per Kg. * In the case of delay if the claimant proves that damage has resulted therefrom the carrier shall pay compensation for such damage not exceeding the carriage charges. * time limit on legal action 1 year extended to three years if willful misconduct is alleged.

Answer 17

* 17.00 SRDs per Kg. * If loss or damage results from the transit period being exceeded, the carrier must pay compensation not exceeding four times the carriage charge. * In case of partial loss of the goods, the compensation provided shall not exceed four times (initially three times) the carriage charge in respect of that part of the consignment which has not been lost. * time limit on legal action 1 year extended to two years if wilful misconduct is alleged against the railway.

Answer 18

* Originally 17.00 SDRs; 19.00 SDRs (2009); 22.00 SRDs (2019) per Kg * In the case of destruction, 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. * Time limit on legal action 2 years.

Answer 19

* Full Form: International Ship and Port Facility Security (ISPS) Code. * Purpose: Established under the International Maritime Organization (IMO) to enhance security in the maritime sector. It aims to prevent security threats like terrorism, smuggling, and piracy. * Scope: Provides a standardized framework for evaluating and mitigating risks to ships, ports, and maritime infrastructure. * Legal Basis: Introduced in 2004 as an amendment to the Safety of Life at Sea (SOLAS) Convention, Chapter XI-2.

Answer 20

**Ships**: * Passenger ships, including high-speed craft. * Cargo ships of 500 GT and above, including high-speed craft. * Mobile offshore drilling units. **Port Facilities**: Facilities serving ships involved in international voyages. **Shipping Companies**: Entities responsible for ship operations and compliance with safety regulations.

Answer 21

**Implementation and Oversight:** * Designate a national authority to oversee ISPS compliance. * Conduct security assessments for ships and port facilities. **Approval and Certification:** * Approve Ship Security Plans (SSPs) and Port Facility Security Plans (PFSPs). * Issue International Ship Security Certificates (ISSCs) to compliant ships. **Security Infrastructure:** Ensure port facilities have adequate security measures. **Monitoring and Auditing:** Conduct periodic inspections and audits to maintain compliance.

Answer 22

**Shipping Companies:** * Appoint a Company Security Officer (CSO) to manage security compliance. * Develop, implement, and maintain Ship Security Plans (SSPs). * Ensure crew members receive appropriate security training and drills. **Ships**: * Appoint a Ship Security Officer (SSO) responsible for implementing the SSP on board. * Maintain and operate security equipment such as alarms and surveillance systems. * Comply with security level requirements, including enhanced procedures at higher security levels. * Cooperate with port facilities and relevant authorities during inspections.

Answer 23

**Port Facility Security Officer** (PFSO): Appointed to oversee and implement security measures in port facilities. **Port Facility Security Plan** (PFSP): Develop and maintain a PFSP tailored to the port's specific risks and operational profile. **Access Control**: Regulate and monitor access to restricted areas within the port. **Interface Security**: Ensure secure interaction between ships and port facilities. **Communication**: Maintain coordination with national authorities, ships, and shipping companies regarding security incidents or threats.

Answer 24

The ISPS Code defines three security levels that dictate the measures to be implemented: **Security Level 1 (Normal):** Standard security measures in place for routine operations. Minimum security posture to address identified risks. **Security Level 2 (Heightened)**: Enhanced security measures due to a higher risk of security incidents. Examples: Increased patrols, restricted access, and additional inspections. **Security Level 3 (Exceptional)**: Maximum security measures in response to a probable or imminent security threat. Examples: Full lockdown, evacuation, and coordinated action with national security forces.

Answer 25

Operators are expected to consider with the following the key factors in service planning: i Owning versus leasing equipment ii Owning or leasing ships, aircrafts, containers, trucks iii Chartering ships, aircrafts iv Equipment utilisation v Service triangulation vi Direct vs. Indirect Services (feeder services | relay services | interlining services) vii Distribution patterns viii Provision and operation of containers ix Container lifecycle x Container service life cycle xi Size of container fleet xii Owning vs leasing containers xiii Inland transport xiv Rail operations | Block trains xv Road operations xvi Inland waterways (quite often is considered part of inland transport)

Answer 26

Advantages of retaining In House * Direct employment and control of staff involved * Direct communications between logistics staff and all other functions in the company * Ensures common targets and objectives across the whole business * A single IT platform can cover logistics as well as production, sales etc. * Direct negotiations with carriers on rates/services – can get best deal particularly for large exporters/importers * Individual services can be sub-contracted if required Disadvantages of retaining In House * Managing logistics is a distraction from core business * May not have sufficient scale to get best freight rates * May not have sufficient scale to attract best logistics staff * Additional HR tasks to recruit, train and manage specialist staff for logistics functions * Need to devote resources (including capital) to IT systems, warehousing facilities etc.

Answer 27

Advantages of Outsourcing * Easy availability of specialist expertise and systems, including sophisticated pipeline tracking, inventory management, documentary processing etc. * Major logistics providers have worldwide capability – instant support in new markets * Logistics providers have strong purchasing power * No requirement to allocated scarce capital resources for investment in warehouses, transport facilities etc. Disadvantages of Outsourcing * Arms length relationship with management of the logistics provider * Can be difficult to remove/change third party providers * Longer communication chain * Provider may subcontract, so further loss of control * Risk of loss of secure information/business secrets * A profit element goes to the third party * Goals of the provider may be different from your own

Answer 28

* Infrastructure - sufficient land area with required surface + load bearing strength both for the transfer activity, and to store cargo/units between arrival/departure; additionally ports will require adequate berths and depth of water * Equipment for transfer and for storage areas e.g. cranes/lifting equipment, transfer vehicles * Fencing/gate control areas/lighting – security and safety requirements * Rail sidings if rail connected * Weighbridge/weighing equipment * Maintenance and repair facilities for equipment * Customs/Health inspection facilities (if the area is used for statutory clearances) * Electric plug in points for refrigerated cargo * Office Buildings for staff employed at the transfer point, and possibly agents’ offices

Answer 29

* Skilled operators for the equipment used * Staff to plan/control/manage the operation It is important to stress the importance of education and training, employment standards, health and safety, communication, 24/7 operations requiring shift work

Answer 30

* System to track units from arrival to departure at the transfer point, including an accurate record of location, and when moved * System to record cargo details/weight/hazardous/reefer etc. * If the transfer point is a port or other customs controlled facility, it will also need systems to manage customs status/clearance etc. * Planning systems, e.g. container terminals will require a vessel stowage system; rail terminals will require train load planning system * System to communicate/exchange information with lines/agents/hauliers etc. * Billing systems

Answer 31

* Shortage of physical assets e.g. berths, yard space, gate capacity, equipment to lift/move cargo/containers * Labour shortages * Peaks in arrival of ships/trains/trucks * Failure of IT systems, equipment breakdown * Adverse weather * Delays due to regulatory authorities e.g. customs

Answer 32

The point at which the goods are transferred from one method of transport to another

Answer 33

* Providing/managing door to door transport (including different modes as required) * Documentation/Customs clearance etc. * Shipment Tracking – IT systems to plan and manage the inventory from supplier through to point of use/sale * Calling forward and/or consolidating cargo at/near point of supply * Providing and operating warehouse facility(ies) for client; * Labelling and Packaging * Local distribution/Last mile delivery * Management of returns (return to warehouse or supplier, including repackaging or recycling)

Answer 34

* Regular, reliable and frequent services enable products to be sourced from almost anywhere globally * Containerisation, together with proper packaging and handling ensure goods are protected from damage/pilfering and arrive in good condition for sale/use at destination * IT systems provide vital visibility on the supply chain, e.g. stock management, in transit and at warehouse – information in real time; exception reports so that corrective action can be initiated quickly in case of delays * Providing confidence to the customer that goods will arrive as scheduled, and managing any delays, and consequences of delays * Supply chain management can reduce overall costs, so making it cost effective to source goods from cheaper suppliers, even if they are further away * Logistics can combine different modes of transport to give an optimum balance between speed and cost, and manage supplies from different sources, providing resilience in the supply chain * Managing communications with all parties in the supply chain

Answer 35

* Differences in supply vs demand on the different trade legs * Different dominant vs non dominant legs in many trades * Availability of capacity (vessel or aircraft space) * Differences in the level of competition on the different legs * Container availability (surpluses/deficits)

Answer 36

* Longer transit time for transhipment service (not always the case) * Perceived risk of delay/short shipment with transhipment service * Costs of the two services will differ; while the transhipment service will have the added cost of transhipment handling and feeding the cargo, a line may offer the transhipment service instead of a direct service to reduce its costs by gaining economies of scale on the main leg of the journey * Competitive factors – number of direct vs transhipment services offered by competitors * In different circumstances, a transhipment service may be cheaper or more expensive than a direct service

Answer 37

**Direct Port-to-Port Shipment** **Definition**: * A direct port-to-port shipment involves transporting goods from the origin port to the destination port on a single vessel, without stopping at intermediate ports for cargo transfer. **Key Characteristics**: * Route Simplicity: Cargo travels directly from one port to another. * Reduced Handling: No intermediate unloading and reloading. * Faster Transit Times: As there are no stops for transshipment, delivery times are quicker. * Lower Risk: Minimal handling reduces the risk of cargo damage or delays. **Typical Usage**: * Frequently used for major trade routes with high cargo volumes between two large ports. **Transshipment Service** **Definition**: * A transshipment service involves transferring cargo from one vessel to another at an intermediate port (transshipment hub) before reaching the final destination. **Key Characteristics**: * Intermediate Stops: Cargo is unloaded from one vessel and reloaded onto another for onward transport. * Longer Transit Times: Additional handling and waiting time at the hub can increase total shipping time. * Increased Handling Risk: More handling increases the potential for damage or misplacement of cargo. * Cost Variability: Often more economical for routes where direct service isn't feasible but may include additional handling fees. **Typical Usage:** * Used for less frequent trade lanes or smaller ports not serviced directly. * Common in hub-and-spoke logistics models where regional ports rely on larger hubs for connectivity.

Answer 38

Direct Port-to-Port: * Time-sensitive shipments. * Cargo moving between major ports with high demand. Transshipment: * Cargo destined for smaller or remote ports. * Cost-sensitive shipments where additional time is acceptable.

Answer 39

* Different volumes of cargo * Contract or spot business * Different shippers may have a different importance as a customer to the carrier (e.g. multi-trade support) * Regularity/reliability of shipments * Prices offered by competition

Answer 40

* A location for keeping stock, strategically placed for delivery to the point of sale/consumption * Warehousing activities to ensure safe and secure storage of stock including records at SKU level, and access to stock as required * Used for assembly of loads of goods from different origins for delivery to final location (e.g. retail outlet), optimising load sizes/types of product to individual destinations * Labelling/pricing/retail packaging for the specific destination market(s) * Management of returns, environmentally appropriate disposal of packaging, unusable stock etc. * Ensure stock availability at short notice to deal with variable/unexpected demand

Answer 41

Advantages of a single centre: * Reduces total stock holding/warehousing costs (capital, systems, overheads etc.) due to economies of scale * Stock can be diverted to different retail outlets to respond to short term changes in demand * Requirements for retail packaging, pricing etc. can be centralised at a single location * Returns can be handled through a standard processing centre * Multiple centres increase overall costs/complexities of operation Advantages of multiple centres: * Orders can be responded to more swiftly as DCs are closer to end user * Shorter distances for retail delivery – may reduce overall transport costs * Individual centres being smaller will be more customer focused/designed to meet specific requirements * In case of operational problems with a single centre all deliveries are affected; with multiple centres there are alternatives in case of problems with one of the centres

Answer 42

* Lead time for supply (use of different modes) * Reliability of supply, including alternative/emergency sources of supply * Variability in demand (what factors affect consumer demand) * Quality of forecasting * Perishability

Answer 43

A bill of lading is a formal transport document that serves three main functions: it acts as a receipt for goods, evidence of a contract of carriage, and a document of title. As a document of title, it allows ownership of the goods to be transferred by endorsement, making it negotiable. Delivery of the goods requires the presentation of the original bill of lading, ensuring control over the cargo. This document is commonly used in international trade, particularly in transactions involving letters of credit or when the goods may be resold during transit. However, its reliance on the original document can lead to delays if the bill is not available at the destination. A waybill, in contrast, is a simpler, non-negotiable document that also serves as a receipt and evidence of a contract of carriage but does not act as a document of title. Ownership of the goods cannot be transferred via a waybill, and delivery is made directly to the named consignee without needing the original document. This makes waybills ideal for straightforward shipments where the consignee is fixed, payment has already been secured, or quick delivery is essential. While a waybill reduces the risk of delays, it offers less security for trade finance or ownership transfer.

Answer 44

A straight bill of lading is a non-negotiable document where goods are consigned to a specific named party (the consignee) and cannot be transferred to another party. Delivery is made only to the named consignee upon proof of identity. This type of bill is commonly used when payment has already been made or for internal shipments, as it involves no transfer of ownership. On the document, the consignee box is completed with the consignee’s name, and the "to order" field remains blank. A ‘to order’ bill of lading, on the other hand, is negotiable, allowing the transfer of ownership through endorsement. It is typically used in international trade when goods may be resold during transit or when payment is secured through a letter of credit. The consignee is listed as "To Order" or "To Order of [Named Party]," and delivery requires the presentation of the endorsed original bill at the destination. Endorsement can be blank (transferable to the bearer) or specific (transferable to a named party). This flexibility makes ‘to order’ bills ideal for trade finance but carries a higher risk if mishandled or stolen.

Answer 45

A through transport bill of lading is a document used for shipping goods across multiple modes of transport but under a single contract. While it provides the convenience of a unified contract for the entire journey, the carrier issuing the bill takes responsibility only for the segment of the transport it directly operates. For the other legs of the journey, the carrier acts as an intermediary, arranging transport with other parties. This type of bill is typically used when the carrier is not equipped to handle the full multimodal logistics chain but coordinates the movement on behalf of the shipper. A combined transport bill of lading, on the other hand, covers the shipment across multiple modes of transport under a single contract and makes the carrier responsible for the entire journey from origin to destination, regardless of whether it operates all the transport modes directly. The issuing carrier takes on a multimodal transport operator (MTO) role, bearing liability for the entire transit process. This type of bill is commonly used in multimodal transport systems where seamless integration and accountability across different legs of the journey are critical for efficient delivery and customer assurance. While both documents facilitate multimodal transport, the key difference lies in the liability: a through transport bill limits the carrier's responsibility to its operated segment, whereas a combined transport bill holds the carrier liable for the entire transportation chain.

Answer 46

Introduction and Role of the ICC: Incoterms (International Commercial Terms) were first introduced in 1936 by the International Chamber of Commerce (ICC). Their purpose was to create a standardized set of terms for international trade to avoid misunderstandings arising from the varying interpretations of shipping practices across different countries. The ICC, as a global trade body, developed these terms to promote clarity and uniformity in global commerce. Regular Updates: To keep pace with the evolving nature of international trade, the ICC regularly updates Incoterms to reflect changes in transportation practices, technologies, and trade agreements. The most recent versions include Incoterms 2010 and the newly updated Incoterms 2020, which incorporate adjustments to align with current trading realities. These revisions ensure the terms remain relevant and practical for global use.

Answer 47

Purpose and Scope: Incoterms serve as a universally recognized set of rules that define the responsibilities of buyers and sellers in international transactions. They clarify key aspects of a contract of sale, including the division of costs, risks, and responsibilities related to the delivery of goods. By standardizing these terms, Incoterms reduce disputes and misunderstandings in cross-border trade. Parts of the Contract Covered by Incoterms: Delivery Point: When and where the seller’s obligations are fulfilled. Risk Transfer: The point at which the risk of loss or damage transfers from seller to buyer. Cost Allocation: Who is responsible for various expenses such as transport, insurance, and customs duties. Parts Not Covered by Incoterms: Price or payment terms. Ownership or title transfer of goods. Breach of contract or remedies. Specific details of insurance (unless specified in terms like CIF or CIP).

Answer 48

**Incorporation into Contracts**: * Incoterms are not automatically applied to contracts. For them to be effective, the specific term must be explicitly mentioned in the contract, e.g., "CIF Shanghai Incoterms 2020." * There is no regulatory requirement to use Incoterms, but they are widely adopted as a best practice. **Classification of Incoterms:** Incoterms are categorized into four groups based on the delivery point and division of responsibilities: * E Terms (Departure): e.g., EXW (Ex Works) – Seller fulfills obligations at the seller's premises. * F Terms (Main Carriage Unpaid): e.g., FCA, FAS, FOB – Buyer arranges main transport. * C Terms (Main Carriage Paid): e.g., CIF, CIP, CFR – Seller arranges and pays for main transport but risk passes earlier. * D Terms (Arrival): e.g., DAP, DDP – Seller bears most responsibilities until delivery at the destination. Certain terms like FAS (Free Alongside Ship), FOB (Free on Board), CFR (Cost and Freight), and CIF (Cost, Insurance, and Freight) are specific to maritime transport.

Answer 49

**EXW (Ex Works)** **Definition**: The seller makes the goods available at their premises. The buyer is responsible for all costs and risks involved in transporting the goods. **Responsibility**: * **Seller**: Makes goods available at a designated location (e.g., factory, warehouse). * **Buyer**: Organizes and pays for all transport stages, including loading, export/import clearance, and duties. **Export/Import Clearance**: Buyer is responsible for both export and import clearance and duties. **Risk Transfer**: Passes from the seller to the buyer when goods are made available at the seller’s premises. **Insurance Obligations**: No obligation on either party to insure the goods.

Answer 50

**FCA (Free Carrier)** **Definition**: The seller delivers the goods to a carrier or another nominated party at a specified place. **Responsibility**: * **Seller**: Responsible for transport to the specified delivery point and export clearance. * **Buyer**: Pays for main carriage, import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when goods are delivered to the carrier or nominated party at the agreed location. **Insurance Obligations**: No obligation, but either party may choose to insure.

Answer 51

**FOB (Free On Board) – Maritime Only** **Definition**: The seller delivers the goods on board the ship at the port of shipment. **Responsibility**: * Seller: Pays for transport to the port of shipment and loading onto the vessel; handles export clearance. * Buyer: Pays for ocean freight, import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when the goods are loaded onto the vessel. **Insurance Obligations**: No obligation, but the buyer often chooses to insure.

Answer 52

**CIF (Cost, Insurance, and Freight) – Maritime Only** **Definition**: The seller arranges and pays for transport to the destination port, including insurance. **Responsibility**: * Seller: Pays for ocean freight, insurance, and loading at the port of shipment. * Buyer: Pays for import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when the goods are loaded onto the vessel at the port of shipment. **Insurance Obligations**: Seller must provide insurance covering the buyer's risk to the destination port.

Answer 53

**CFR (Cost and Freight) – Maritime Only** **Definition**: The seller arranges and pays for transport to the destination port but does not provide insurance. **Responsibility**: * Seller: Pays for ocean freight and loading at the port of shipment. * Buyer: Pays for import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when the goods are loaded onto the vessel at the port of shipment. **Insurance Obligations**: No obligation on the seller; the buyer should insure the goods.

Answer 54

**DAP (Delivered at Place)** **Definition**: The seller delivers the goods to the buyer at a named destination, ready for unloading. **Responsibility**: * Seller: Responsible for transport to the named destination, including export clearance. * Buyer: Pays for unloading, import clearance, and duties. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when the goods are made available at the named destination, ready for unloading. **Insurance Obligations:** No obligation on either party, but either may choose to insure.

Answer 55

**DDP (Delivered Duty Paid)** **Definition**: The seller delivers the goods to the buyer at a named destination, with all costs, risks, and duties paid. **Responsibility**: * Seller: Responsible for all transport costs to the destination, including duties, taxes, and import clearance. * Buyer: Pays for unloading at the final destination. **Export/Import Clearance**: Seller handles both export and import clearance and pays duties. **Risk Transfer**: Passes when the goods are made available at the named destination, ready for unloading. **Insurance Obligations**: No obligation on either party, but the seller may choose to insure.

Answer 56

**CPT (Carriage Paid To)** **Definition**: The seller arranges and pays for transport to a named place, but the buyer bears the risk once the goods are handed over to the first carrier. **Responsibility**: * Seller: Pays for transport to the named destination and export clearance. * Buyer: Pays for import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer**: Passes when the goods are handed to the first carrier, not at the destination. **Insurance Obligations**: No obligation on the seller; the buyer should insure the goods.

Answer 57

**CIP (Carriage and Insurance Paid To)** **Definition**: Similar to CPT, but the seller also provides insurance for the goods to the named destination. **Responsibility**: * Seller: Pays for transport, insurance, and export clearance. * Buyer: Pays for import clearance, duties, and onward delivery. **Export/Import Clearance**: Seller handles export clearance; buyer handles import clearance and duties. **Risk Transfer:** Passes when the goods are handed to the first carrier. **Insurance Obligations**: Seller must provide insurance covering the buyer's risk to the named destination.

Answer 58

* Standard terms for use in contracts of sale, produced by ICC * 2020 is latest version (replaced INCOTERMS 2010 on 1.1.2021, but older version(s) can still be used) * Identify buyer’s and seller’s responsibilities for organisation and cost of transport (and insurance) and when risk passes from seller to buyer * Need to incorporate explicitly in the contract – and to state which version * Split into 4 groups; E, F, C and D * Updates from 2010; DPU replacces DAT, broader insurance requirements for CIP, enhanced flexibility for FCA, clarifty on transit modes and costs, inclusion of security obligations * Used extensively in contracts of sale for multimodal shipments

Answer 59

DPU replaces DAT. * New Term: DPU (Delivered at Place Unloaded) replaces the 2010 term DAT (Delivered at Terminal). * Key Difference: DPU allows delivery at any location, not just a terminal, provided the seller unloads the goods. Broader insurance requirements for CIF and CIP. * CIF (Cost, Insurance, and Freight): Insurance requirements remain the same (minimum cover). * CIP (Carriage and Insurance Paid To): The 2020 rules require broader insurance coverage (Institute Cargo Clauses A) unless otherwise agreed. Enhanced flexibility for FCA with on-board bills of lading. * New Option: Under FCA, sellers can request an on-board bill of lading from the carrier, even though the goods are delivered to the carrier before loading onto the vessel. This aligns better with trade financing practices, such as letters of credit. More clarity on transport modes and costs. * Incoterms 2020 provide clearer guidance on their application across all modes of transport or specific to maritime transport, improving usability for multimodal logistics. * Each term in Incoterms 2020 includes detailed guidance on costs, risks, and responsibilities, making them easier to understand and apply. Explicit mention of security obligations. * Incoterms 2020 explicitly address security-related responsibilities for buyers and sellers, reflecting the increasing importance of supply chain security.

Answer 60

An NVOCC (Non-Vessel Operating Common Carrier) is an entity that provides ocean freight services without operating its own vessels. Instead, it acts as a principal in the supply chain, contracting with ocean carriers to arrange the transport of goods. NVOCCs issue their own bills of lading to customers and assume the role of a carrier for the shipment, even though they do not physically move the goods by sea. In multimodal transport, NVOCCs play a critical role by coordinating the movement of goods across multiple transport modes (ocean, road, rail) and managing logistics from origin to destination. They ensure seamless through-transport by integrating different legs of the supply chain.

Answer 61

**Acting as a Principal:** * NVOCCs negotiate directly with ocean carriers, securing favorable freight rates and space allocations. They then sell these services to their customers, effectively becoming the "carrier" in the transaction. * The relationship with ocean carriers is contractual, where NVOCCs act as customers purchasing capacity in bulk to offer flexible solutions to shippers. **Contrast with Forwarding Agents:** * Forwarding agents act as intermediaries or brokers, arranging transportation services on behalf of the shipper. They do not issue their own bills of lading or assume carrier responsibility. * NVOCCs, in contrast, take on liability for the goods and issue their own transport documents, offering greater control and flexibility.

Answer 62

**LCL** (Less than Container Load)/Groupage Services: Consolidating multiple smaller shipments from different shippers into a single container. Efficient use of container space reduces costs for small and medium-sized exporters/importers. **FCL** (Full Container Load): Arranging transport for full container loads for customers with larger cargo volumes. **Calling Forward and Consolidation**: Coordinating the movement of goods to consolidation hubs for efficient containerization. Helps streamline shipping schedules and reduce costs. **Documentation**: Issuing NVOCC bills of lading. Managing shipping instructions, customs clearance, and regulatory compliance. **Value-Added Services**: Cargo tracking, insurance arrangements, packaging, and labeling. Assisting with customs clearance and warehousing. **Supply Chain Management**: Offering end-to-end logistics solutions, integrating transport, warehousing, and distribution. Optimizing supply chains to reduce costs and transit times.

Answer 63

**Cost Efficiency:** Bulk negotiations with carriers allow NVOCCs to offer competitive freight rates. **Flexibility**: LCL services and consolidation options make NVOCCs ideal for businesses of all sizes. **Global Reach:** Strong networks with carriers and local agents ensure access to diverse routes and services. **Simplified Logistics**: Comprehensive solutions reduce the complexity of managing multimodal shipments. **Liability Coverage**: Customers benefit from the NVOCC’s carrier liability, offering security and accountability.

Answer 64

**Kuehne + Nagel:** * Specializes in comprehensive logistics and supply chain management. * Known for advanced digital platforms, global reach, and expertise in industries like pharmaceuticals, automotive, and consumer goods. **Expeditors**: * Focuses on tailored logistics solutions with strong expertise in customs brokerage. * Excels in high-value, time-sensitive shipments, and multimodal transport coordination. **C.H. Robinson**: * Offers robust multimodal transport and supply chain services, including advanced freight consolidation. * Specializes in leveraging technology for real-time tracking and cost optimization. **Flexport**: * A tech-driven NVOCC focusing on transparency and visibility in supply chains. * Specializes in integrating data analytics and digital platforms for efficient logistics management. **Damco** (Maersk’s NVOCC Arm): * Expertise in end-to-end supply chain solutions and multimodal transport. * Strong focus on flexibility and global logistics network integration, backed by Maersk's resources. **Sinotrans**: * China-based NVOCC with a focus on large-scale consolidation and Asia-Europe trade routes. * Specializes in managing high-volume freight and providing cost-effective solutions for exporters and importers.

Answer 65

The hub and spoke model is a logistics and transportation framework where a central hub serves as the primary transshipment point for cargo, which is then redistributed to smaller destinations (spokes) via feeder services. This system optimizes scale and efficiency by concentrating large cargo volumes at hubs, using larger vessels or transport modes for long-haul routes, and smaller ones for regional or local distribution.

Answer 66

**Direct Port-to-Port: ** Cargo is transported directly from the origin port to the destination port without intermediate stops. It is faster but requires high cargo volumes between the two ports to remain cost-effective. **Hub and Spoke: ** Ideal when cargo volumes between two points are insufficient for direct services. It consolidates shipments at a hub, enabling cost-effective large-scale transport over long distances. Circumstances Favoring Hub and Spoke: * Trade routes with dispersed demand across multiple smaller ports or regions. * Situations requiring efficient use of large vessels for long-haul routes and flexible redistribution. * Ports or regions with limited direct service availability.

Answer 67

**Geographic Location:** * Hubs are typically located near major trade routes or regions with high cargo demand. * Proximity to inland transport networks (road, rail, and air) is critical for seamless intermodal operations. **Facilities Provided**: * Large container terminals with advanced handling equipment (e.g., cranes for large vessels). * Ample storage areas for containers awaiting transshipment or delivery. * Robust customs, security, and inspection services to streamline operations. * Connectivity to inland transportation for efficient onward distribution. **Key Factors for Effective Hubs**: * Deep-water ports to accommodate large vessels. * Advanced technology for cargo tracking and coordination. * Efficient turnaround times and minimal congestion.

Answer 68

**Cost Efficiency**: Reduces per-unit transport costs by consolidating shipments. **Resource Optimization**: Large vessels and transport modes are used effectively for long-haul routes. **Scalability**: Easily accommodates fluctuating demand by adjusting feeder services. **Improved Connectivity**: Links smaller regions or ports to global trade routes through hubs.

Answer 69

* Stands for Uniform Customs and Practice for Document Credits * Set of rules issued by ICC for Documentary Credits (aka LCs) * UCP600 is latest version (applicable as of 1.1.2007) * Needs to be stipulated in contracts * Contains 39 articles * Used extensively for multimodal shipments on letters of credit

Answer 70

1. **Irrevocable Nature of Credits** All credits issued under UCP600 are irrevocable unless explicitly stated otherwise. This means the issuing bank guarantees payment to the beneficiary, provided the terms and conditions of the credit are strictly met. 2. **Types of Documents Covered** UCP600 governs the handling of various trade-related documents, including: * Commercial Invoice: Proof of sale, must conform to the terms of the credit. * Transport Documents: Includes bills of lading, air waybills, rail or road consignment notes, and courier receipts. * Insurance Documents: Policies or certificates showing adequate coverage. * Certificates: Includes inspection certificates, origin certificates, weight certificates, etc. * Packing List: Details the contents and arrangement of the shipment. 3. **Principle of Strict Compliance** Banks examine documents strictly against the terms and conditions of the credit. Any discrepancies, even minor ones, can lead to rejection of the documents. 4. **Role of Banks** Issuing Bank: Undertakes to pay the beneficiary upon presentation of complying documents. Advising Bank: Notifies the beneficiary of the credit's issuance but assumes no payment liability unless acting as a confirming bank. Confirming Bank: Adds its payment guarantee, ensuring payment even if the issuing bank defaults. 5. **Presentation and Examination of Documents** Documents must be presented within the time specified in the credit (maximum of 21 days after shipment unless stated otherwise). Banks have a maximum of five banking days to examine the documents for compliance. 6. **Partial Shipments and Transshipments** Partial Shipments: Allowed unless explicitly prohibited by the terms of the credit. Transshipments: Permitted unless the credit specifies otherwise, with allowances for containerized goods. 7. **Standard for Letter of Credit (L/C) Terminology** UCP600 establishes standardized terms and conditions for letters of credit to minimize ambiguity. 8. **Use of Electronic Records** Recognizes the possibility of electronic presentations under specific conditions agreed by all parties. 9. **Banks’ Liability and Responsibility** Banks deal with documents, not goods, services, or performance of the underlying contracts. They are not liable for the quality or value of goods/services, only for verifying the compliance of presented documents. 10. **Independence Principle** The letter of credit is independent of the underlying sales or service contract, and banks are not concerned with disputes between the buyer and seller.

Answer 71

* Federal Maritime Commission * USA Regulatory Body set up in 1961 to oversee overseas shipping * Enforcement of provisions of the various US Shipping Acts, such as the shipping act of 1984, ocean shipping reform act 1998, foreign shipping practices act 1998, jones act * Objective is fair and efficient shipping for benefit of US exporters/importers and consumers; protection from unfair competition * Scrutinises agreements between shipping lines, which need to be filed with and approved by FMC (mainly conference, VSA and Alliance agreements) * Monitors shipping tariffs, and confidential service contracts which have to be filed with the FMC * Key regulator for multimodal operators with services to/from USA

Answer 72

The CMR (**Convention on the Contract for the International Carriage of Goods by Road**), adopted by the **UNECE in 1956** and in force since 1961, standardizes the rules for international road transport. It applies to commercial road transport between countries where at least one is a contracting party and can govern the road leg of multimodal transport under a single contract. The convention requires a **CMR consignment note**, detailing the parties, goods, and delivery instructions, though the contract remains valid without it. The carrier is liable for loss, damage, or delay during their custody, with compensation capped at **8.33 SDR per kilogram**, but is exempt in cases like force majeure, inherent defects in goods, or shipper negligence. The CMR provides a harmonized legal framework that facilitates cross-border trade and logistics.

Answer 73

SDR (Special Drawing Rights) is an international monetary unit created by the International Monetary Fund (IMF) to serve as a supplementary reserve asset and a standard of value in international agreements. In the context of conventions for the carriage of goods, SDR is used as a basis for calculating compensation for loss, damage, or delay of goods. Definition: It represents a basket of major currencies, including the U.S. Dollar, Euro, Chinese Yuan, Japanese Yen, and British Pound, ensuring stability against fluctuations in any single currency. Application : Compensation for loss or damage is typically limited to X SDR per kilogram of gross weight of the lost or damaged goods. Compensation for delays is capped at the freight charge, also calculated using SDR. Why Use SDR? It provides a consistent and fair standard of value across multiple countries, avoiding complications from currency fluctuations in international trade and transport agreements. Conversion to Local Currency: The value of SDR is published daily by the IMF and can be converted into the local currency of the involved countries at the time of claim settlement. Using SDR ensures that liability limits remain equitable and universally applicable, regardless of the specific currencies used in the transport contract.

Answer 74

A Just-in-Time (JIT) supply chain is a logistics and production strategy designed to minimize inventory levels by synchronizing the delivery of materials and goods with their immediate need in production or sale. The goal is to have products or components arrive "just in time" for use, reducing storage costs, waste, and tied-up working capital. Minimized Inventory: * Materials, components, and finished goods are only produced or delivered as required, keeping inventory levels low. Demand-Driven Production: * Operates based on actual demand rather than forecasts, reducing overproduction and obsolescence. Streamlined Processes: * Efficient coordination between suppliers, manufacturers, and distributors to ensure smooth operations and precise timing. High Dependence on Reliability: * Relies on dependable suppliers, accurate forecasting, and robust logistics to prevent disruptions. Short Lead Times: * Focuses on reducing the time between ordering, delivery, and use.

Answer 75

Advantages * Minimises ‘wasted’ inventory holding costs, including capital/financing cost of stock, and costs of providing/operating warehousing space * Avoids risk of damage to and loss of warehoused stock * Avoids risk of obsolescence; in the context of car assembly it avoids holding stocks of parts for many different models, where customer preferences may change rapidly Disadvantages * Risk of running out of stock – financial and reputational consequences * Consequences of unforeseen demand change – explain the importance of forecasting * Consequences of delays in supply chain and at point of manufacture – and the need to have alternative plans, including alternative suppliers, alternative modes/routes (resilience in the supply chain)

Answer 76

Key service factors: * Speed * Frequency * Reliability * Transparency of data on cargo movement (including appropriate routine and exception reports to the customer) Additional factors: * Global coverage (of markets important to the manufacturer) * To what extent the operator owns/controls the key parts of the supply chain * Expert assistance/advice with cargo transport and related issues * Timeliness/Quality of documentation * Range/quality of E Commerce products (ease of access to information/time saving) * Guaranteed space availability per sailing * Environmental credentials (e.g. demonstrating approach to minimising pollution, carbon emissions etc.)

Answer 77

* Ensuring the operator has a fleet of containers (of different sizes and types) to meet its business needs * Determining and procuring the optimum mix of owned and leased containers * Tracking the location and status of all its containers to ensure proper records of the company’s assets, and to provide a ‘real time’ database of its fleet for forward planning purposes; this should also provide information on containers delayed bycustomers so that detention/demurrage charges can be calculated * Managing the leased containers in its fleet in accordance with the terms of the lease agreements, including the correct payment of daily hire rates, and that pick up and drop off of containers comply with the terms of the agreement * Managing the maintenance and repair of containers in accordance with regulatory requirements (CSC Convention and national laws) and company standards, including scrapping/selling containers as required * Planning the level of container stocks at every location in order to meet customer requirements, including the use of forecasting and planning techniques * Implementation of plans to deal with surpluses/deficits of containers, through leasing in/out, cabotage, imbalance movements, container type substitution, commercial incentives etc.

Answer 78

Advantages of Ownership in the Public Sector * Public sector can take a long term view of investment in strategic national assets, which includes ports * Objectives will be aligned to national interests (e.g. facilitating the country’s trading activity, which promotes growth/prosperity), and the well being of the people, rather than pursuing profits * Governments may have more ready access to capital for development of infrastructure (though this is not always the case) * Public sector can set prices as a ‘fair’ level, and ensure equal access for all users * Profits generated can be reinvested Disadvantages of Ownership in the Public Sector * Competition for scarce financial resources with other government investment – transport sector is often a low priority * Decisions can be politically influenced, and not in the best interest of trade/transport * With no ‘profit’ objective or viable competition, public sector organisations can be highly inefficient, and poorly managed * In some countries, public sector organisations are associated with corruption

Answer 79

Advantages of Ownership in the Private Sector * Ready access to sources of capital (particularly with large multinationals) * High quality management and best practice (both nationally and where relevant internationally) * Competition in the private sector drives efficiency, and therefore better service/prices for customers * Business customers can usually negotiate a tailored package to meet their requirements Disadvantages of Ownership in the Private Sector * Private sector often has short term objectives rather than long term vision * Private sector ownership of ports/terminals where there is no competition creates a monopoly operator, which can increase prices unreasonably, and hide inefficiencies (in these circumstances, there may be a need for a government authority which regulates prices) * Financial benefits go disproportionately to the shareholders, rather than national interests, or to customers

Answer 80

- Reducing unit costs per container carried - Staying competitive with other lines which have already bought larger ships - Catering for trade growth

Answer 81

- There are few trades on which ship of this size can be employed, bearing in mind trade volumes, and port/terminal infrastructure - Where they cannot be deployed in suitable trades, they finish up in trades for which they are not really suited - When there are problems in filling these ships, there is a need to call at more ports and/or use more feeding of cargo, which increases costs - Few ports/terminals can handle these ships, so there is a risk of congestion at those ports

Answer 82

In favour of larger ships: - Trade will continue to grow - The cost economies from operating even bigger ships will give lines which order them a competitive advantage - More ports will invest to be able to handle big ships Against larger ships: - Ships of larger size can only be deployed in a very few trades (possible only the Asia/N Europe trade), which are already dominated by large ships - Cost economies of scale diminish with increasing size, so additional cost economies from a further increase in vessel size may be small - More problems of congestion in ports/terminals, with a larger peak of boxes to discharge/load - It may be unwise to be the first line to invest in bigger ships, and therefore, be the first to deal with problems caused by the larger size

Answer 83

**Definition – a multimodal route which includes an extensive overland sector** * Landbridge routes compete with all water routes * Examples include USWC/USEC, Silk Road China/North Europe * Developed in a trade off between higher costs for faster transit with a shorter route via all-water * Important in providing supply chain route choices for users of multi-modal transport services * Potential for new landbridges exist in a trans-arctic land bridge (linking N America, Europe and Aisa via arctic railroad) and the North South Corridor (Russia, Iran, India)

Answer 84

* The clause in a BL that gives protection to servants of the carrier (including employees and agents) * It extends all liability protections avalible to the carrier via cargo liability conventions to third parties * Named after the SS Himalaya following the Adler v Dickson case in 1954 * In multi-modal BLs, it offers protection for agents and subcontractors as well as the ship's crew * It is uniform across all modes of transport, even when liability conventions aren't

Answer 85

Cargo liability conventions, such as the Hague-Visby Rules, establish a standardized framework to govern the rights, responsibilities, and liabilities of carriers and shippers in international sea transport. These conventions aim to: **Protect Shippers**: Ensure carriers are held accountable for the safe and timely delivery of goods. **Protect Carriers**: Limit the carrier’s liability to avoid excessive financial exposure while setting clear guidelines for when liability arises. **Facilitate Trade**: Promote uniformity and reduce disputes by providing consistent rules for international shipping contracts.

Answer 86

* The Hague Rules (adopted in 1924) were the first international convention to regulate the carriage of goods by sea. However, they became outdated due to advancements in shipping and changes in trade practices. * The Hague-Visby Rules were adopted in 1968 to modernize the Hague Rules, addressing their inadequacies and incorporating new provisions for fairer and clearer liability standards. **Key reasons for evolution:** * Address the growing complexity of maritime trade. * Update the monetary limits of liability to reflect inflation and economic realities. * Provide more precise guidelines for multimodal shipments.

Answer 87

* The Hague-Visby Rules are currently the most widely used liability framework for international sea transport, covering the majority of multimodal movements involving sea carriage. * They provide a consistent standard for contracts of carriage under bills of lading, ensuring a reliable legal basis for carriers and shippers globally. * While alternative conventions like the Hamburg Rules (1978) and Rotterdam Rules (2008) exist, the Hague-Visby Rules remain dominant due to their widespread adoption and compatibility with existing trade practices.

Answer 88

**Purpose**: Modernize liability standards in international sea transport; update of 1924 Hague Rules. **Adoption**: Adopted in 1968, effective in 1977; SDR protocol added in 1979 (effective 1984). **Liability Limits**: 666.67 SDR per package or 2 SDR per kilogram, whichever is higher. **Key Updates:** Covers containerized cargo with clear liability for items inside containers. Introduced SDR for compensation limits (replacing the outdated gold standard). Defines carrier liability during the tackle-to-tackle period (loading to discharge). **Obligations:** Carriers: Exercise due diligence for seaworthiness and care of goods. Shippers: Provide accurate cargo documentation. **Time Limit: **Claims must be filed within 1 year of delivery or expected delivery. **Dominance**: Most widely used framework for maritime and multimodal transport. **Alternatives**: Hamburg Rules (1978) and Rotterdam Rules (2008) exist but are less widely adopted.

Answer 89

* Logistics and distribution services based in or close to the port of import, usually including warehousing and efficient inland transport links * An alternative to inland depots and centrally located national distribution centres. * Store shipments at the port and decrease the number of handling events in the storage and distribution process * Can save costs, time and environmental impact for multimodal transport users * However may not be the optimal solution for specific supply chains – alternative of one centrally located distribution centre, or several located closer to the point of consumption

Answer 90

* International ship and Port Facility Security code * Amendment to SOLAS, came into force in 2004 in response to 2001 terrorist attacks * Also relevant to stowaways and piracy * Sets out principles for both ports and ships * 3 security levels; normal, heightened, and exceptional * Security of ships and terminals is important to multimodal shipping, particularly to avoid delays

Answer 91

- Regulation covering sulphur emissions from ships (SOx) - Part of Marpol Convention (Annex VI) - Limits on sulphur content of bunkers – from 1.1.20 global limit 0.5%, ECA limit 0.1% - Alternative routes to compliance include scrubbers and the use of LNG as alternative fuel - Plays a key role in improving the environmental performance of the supply chain

Answer 92

* **Purpose**: Support shipowners/operators in financing environmentally compliant vessels or retrofitting ships to meet MARPOL standards. * **Key Support:** Loans, guarantees, or insurance for investments in technologies like scrubbers, ballast water treatment systems, or LNG-powered ships. * **Example**: Norwegian Export Credit (Eksfin) finances green shipping projects that comply with MARPOL emission limits. * **Impact**: Helps reduce the financial burden of compliance and promotes sustainable practices in maritime transport.

Answer 93

- Generally the largest trades (e.g Asia - Europe, Asia- Middle East, Transpacific) - Several trades are heavily imbalanced - Dominated by Alliances, and the main global lines, though a few smaller niche operators have recently started services - Hub and spoke services are used extensively to widen geographic coverage - Largest vessels operated on these trades (up to 24,000 teu) - Consumer goods ex Asia; low value/raw materials/scrap etc. in return direction

Answer 94

- Usually Asia/Europe/North America to Africa/Oceania/Latin America - Generally smaller volumes than east west trades - Southbound - consumer goods (particularly ex Asia) - Northbound: agricultural commodities/raw materials, also reefer cargoes from Latin America and Oceania - Strong seasonality in some trades, particularly northbound - Lines operate in trade specific Vessel Sharing Agreements – these trades are not covered by Alliances - Fewer lines operate in these trades, and there are specialist niche carriers in some north south trades (give examples) - Vessel sizes up to 15,000 teu, but in general they are much smaller than this, due to lower volumes and port limitations (important to give examples of vessel sizes in individual trades)

Answer 95

- e.g. Intra-Asia, Baltic Sea, Intra Gulf - Generally these have smaller volumes, but Intra-Asia one of the largest trades globally - Often there are smaller specialist short sea operators, although some global carriers also operate short sea services (e.g. Maersk uses Sealand as its short sea brand) - Small vessels, to achieve frequency and fast turnround in ports - Lo-lo and ro-ro services; also compete with overland services in some areas (e.g. Europe) - Wide range of commodities, but will include consumer goods, foodstuffs, reefer, semi-finished goods/parts

Answer 96

**Ship-to-Shore Interface** * Involves the movement of containers between the ship and the terminal yard. * Containers are unloaded from or loaded onto vessels using ship-to-shore cranes. **Infrastructure**: Deep-water berths; Bollards and fenders for secure mooring; Sufficient quay length to handle multiple vessels. **Equipment**: Ship-to-Shore Cranes (STS), Quay Tractors/Trailers, Terminal Operating System (TOS) for crane scheduling and container tracking. **Yard Operation** (Full and Empty Containers) * Containers are stored, sorted, and moved within the terminal yard, awaiting further transport or vessel loading. * Segregated areas are maintained for full and empty containers for efficient management. **Infrastructure**: Large storage yards; Lanes and access roads **Equipment**: Rubber-Tired Gantry Cranes (RTGs); Reach Stackers; Forklifts: Dedicated for empty containers and smaller operations; TOS for inventory management, yard allocation, and movement planning. **Landside Operation** * Land * Handles the transfer of containers between trucks and the terminal yard. **Infrastructure**: Dedicated truck gates; inspection areas for customs and safety checks. **Equipment**: Truck Positioning Cranes; Gate Automation Systems: RFID, Optical Character Recognition (OCR) for truck/container identification. * Rail Sidings * Facilitates intermodal transport by transferring containers between the terminal and rail carriers. **Infrastructure**: On-terminal rail sidings with adequate length to accommodate container trains; connections to national or regional rail networks. **Equipment**: RMGs or RTGs: For lifting containers between trains and the terminal yard; Shunting Locomotives: For positioning railcars within the siding. **Control Systems**: Rail planning systems for scheduling and container tracking. * Barge Berths * Enables waterborne transfer of containers to/from inland terminals or regional ports. **Infrastructure**: Berths with sufficient depth for barges; access roads for integration with yard operations. **Equipment**: Mobile Cranes or STS Cranes; Yard Tractors/Trailers: For moving containers to/from the yard. **Control Systems**: TOS to coordinate barge schedules and container inventory. Control and Management Systems **Across all operations, the Terminal Operating System (TOS) plays a crucial role in:** Planning vessel operations. Allocating yard space efficiently. Scheduling landside transport operations. Tracking container movements in real time.

Answer 97

Delays may occur in a number of parts of the operation, including problems on the landside interface due to peaks in volumes, insufficient road lanes/rail sidings etc Delays on the ship to shore operation may be due to slow movement between crane and stack, lack of equipment, poor ship planning (all container moves bunched in a single part of the ship)

Answer 98

- Reduce service speed (slow steaming); this will reduce the carrier's overall capacity (which can be mitigated by introducing an extra vessel on a loop) and increase transit time - Larger vessels bring economies of scale, which can reduce fuel cost per unit carried - Improve vessel utilisation – this can be achieved in a number of ways, and reduces fuel cost per unit carried; however higher vessel utilisation may result in less choice of sailing for customers and/or roll over of cargo - Invest in new technology for ships/vehicles etc. – more fuel efficient, alternative fuels etc.

Answer 99

- Switch from road to rail or barge (more energy efficient mode) – may be slower, though rail/barge can be more reliable - Reduce deadheading of vehicles – better planning/load matching – no negative impact on customers, though load matching might involve some rescheduling of jobs - Smart route planning (avoid congestion) - Improved maintenance of vehicles can reduce fuel costs - Invest in new technology for ships/vehicles etc. – more fuel efficient, alternative fuels etc.

Answer 100

- Plan container stocks, so as to minimise the movement of empty containers (reduces fuel costs of moving empties) - Improve supply chain efficiency – optimise routes, consolidate loads etc.

Answer 101

- shared/transparent information - real time/global information availability - 24/7 access - speed/accuracy of transfer of data - smart systems - ability to test multiple alternative solutions to logistics challenges.

Answer 102

On line/automated booking or rate-quoting systems * *Freightos - A platform that allows users to compare freight rates, book shipments, and receive instant quotes for international logistics services.* On line/automated shipping instructions * *Maersk’s Shipping Instructions Portal – Enables shippers to submit detailed instructions for cargo handling and transport electronically, streamlining the documentation process.* Remote printing of B/Ls and invoices * *INTTRA eBL – An electronic bill of lading service that allows users to generate and remotely print B/Ls and invoices directly from the platform.* Track and Trace access for individual consignments * *UPS My Choice – Provides real-time tracking of parcels, offering customers visibility into the status and location of their shipments.* Exception reports against an agreed delivery plan * *SAP Logistics Business Network – Monitors logistics processes and generates exception reports when shipments deviate from planned timelines or delivery milestones* Stock control systems/logistics planning systems * *Oracle NetSuite Inventory Management – Offers tools to manage stock levels, forecast demand, and plan logistics to optimize inventory control in supply chains.*

Answer 103

Type E * Minimal responsibility on the seller (only providing goods at a site) * All transport costs and risks are the buyer's * Risk transfers at the seller's premisis Type F * Seller is responsible for exporting and delivery of goods to the carrier or port * Buyer is responsible for the cost of main carriage, import clearance and final delivery * Risk transfers upon delivery to carrier or port Type C * The seller pays main carriage, but risk is passed earlier * The buyer is responsible for import clearance and onward delivery * Risk transfers when handed to carrier Type D * The seller is responsible for all costs and risks to the destination * The buyer's only responsibility is unloading/import duties under DAP/DPU * Risk transfers at named place of destination

Answer 104

E Terms: Departure Example: EXW (Ex Works). Key Features: Seller’s responsibility ends when goods are made available at their premises. Buyer is responsible for all transport, risk, and costs from the seller’s location to the final destination. Minimal obligation on the seller; buyer handles export clearance.

Answer 105

F Terms: Main Carriage Unpaid Examples: FCA (Free Carrier), FAS (Free Alongside Ship), FOB (Free on Board). Key Features: Seller delivers the goods to a carrier or port as specified, without paying for the main transport. Buyer assumes responsibility for the main carriage, import duties, and onward delivery. Seller handles export clearance but does not pay for transport beyond the point of delivery.

Answer 106

C Terms: Main Carriage Paid Examples: CIF (Cost, Insurance, and Freight), CFR (Cost and Freight), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To). Key Features: Seller pays for the main carriage to the named destination but transfers risk to the buyer once goods are handed over to the carrier. CIF and CIP include insurance arranged by the seller; CFR and CPT do not include insurance. Buyer is responsible for import clearance, duties, and onward delivery from the destination.

Answer 107

D Terms: Arrival Examples: DAP (Delivered at Place), DPU (Delivered at Place Unloaded), DDP (Delivered Duty Paid). Key Features: Seller bears all costs and risks to deliver goods to the named destination. DAP: Seller delivers to the buyer’s premises without unloading. DPU: Seller delivers and unloads the goods at the named location. DDP: Seller covers all duties, taxes, and import clearance, providing a fully delivered service.

Answer 108

 Establish the physical requirements for the cargo (e.g. container type, loading/unloading requirements)  Route from origin to destination (including exit/entry port, mode of transport, and any transhipment required)  Identifying who is the carrier for the various legs (an NVOCC may use its own transport for inland legs, or contract with the carrier, or with a third party)  Establish costs for each leg (need to know validity and whether subject to surcharges etc.)  Consider competitors’ quotes and service parameters in comparison to your own  Decide on final quote, based on above, and including contractual terms (e.g. period of validity, notice period for changes, volume guarantee or volume rebate etc.)

Answer 109

When slow steaming is applied to container services, it's more complex than just reducing the speed of a ship/lengthening the duration of round voyages to reduce freight capacity - The majority of container services operate on weekly fixed schedules, meaning that additional ships will be required to continue operating that schedule whilst slow steaming. This means that slow steaming is *only* an exercise in cost reduction rather than capacity reduction, and was first implimented in the 2008 recession when lines had surplus vessels which could be employed this way - the benefit of any bunker cost savings has to offset the cost of any additional vessels to make economic sense Summary of advantages/disadvantages - * Network cost savings * Utilising otherwise surplus vessels – helps supply/demand balance * Environmental benefits (reduces CO2 emissions) * Improves reliability – with a reserve of speed, vessels can speed up to meet terminal berthing windows * The cost of providing containers increases, as containers are used for a longer time on each trip * If bunker prices reduce dramatically, the short term network cost savings from slow steaming may vanish

Answer 110

- The lines’ cost savings are generally passed on to customers in lower freight rates - Environmental benefits (note is generally claimed by both lines and customers) - Improved schedule reliability provides supply chain benefits, however - Longer transit times may have negative supply chain implications (more stock in transit, later arrival dates for cargo)

Answer 111

**Proof of Shipment**: Confirms the goods have been shipped as per the agreed terms. **Document of Title**: Allows the holder to claim ownership and delivery of goods. **Condition Verification**: Ensures the goods meet agreed conditions (e.g., clean vs. claused B/L). **Bank Requirement**: A key document in the letter of credit process; banks rely on it to verify compliance with credit terms before releasing funds.

Answer 112

**Payment Security**: Guarantees payment to the seller if all terms are met, reducing risk for both parties. **Risk Mitigation**: Protects the buyer, as payment is only made upon presentation of compliant documents proving shipment. **Facilitates Trust**: Ensures confidence in transactions between parties unfamiliar with each other or operating in different countries. **Compliance with Trade Agreements**: Frequently required in international trade contracts, especially when financed by banks.

Answer 113

Purpose: To establish fairer and more modern liability standards in maritime trade, addressing the imbalances perceived in earlier conventions like the Hague and Hague-Visby Rules. Focus: Offers greater protection to shippers by imposing broader liability on carriers and extending coverage to address multimodal and containerized transport.

Answer 114

**Adoption**: Adopted on March 31, 1978, under the auspices of the United Nations. **Entry into Force:** Came into effect on November 1, 1992 after achieving the required number of ratifications. **Reason for Development**: * Criticism of the Hague and Hague-Visby Rules for favoring carriers over shippers. * Need to modernize liability provisions to reflect developments in containerization and multimodal transport. * Desire to provide a uniform liability regime with clearer terms and broader coverage.

Answer 115

**Carrier Liability:** * Carrier is liable for loss, damage, or delay unless they prove the cause was outside their control (e.g., force majeure). * Liability extends to periods when goods are in the carrier’s custody, including time spent in port (not just tackle-to-tackle). **Compensation Limits:** 2.5 SDR per kilogram or 835 SDR per package, offering higher compensation compared to the Hague-Visby Rules. **Delay Liability:** Recognizes compensation for delays, a provision not addressed in earlier conventions. **Multimodal Transport:** Explicitly includes multimodal carriage, providing coverage for the entire logistics chain where the sea leg is significant.

Answer 116

**Extended Coverage**: Applies from the time the carrier takes custody of the goods until delivery, unlike the tackle-to-tackle approach of Hague-Visby. **Shipper Protection**: Shifts the burden of proof more favorably toward the shipper in disputes. **Higher Compensation**: Liability calculated per kilogram is more relevant for containerized cargo and offers better financial protection. **Delay Claims**: Allows claims for economic loss due to delays, which Hague-Visby omits.

Answer 117

**Limited Ratification**: Only a small number of countries, mainly developing nations, have adopted the Hamburg Rules. **Resistance from Developed Countries**: * Concerns from carrier-friendly states and major shipping nations over the stricter liability provisions and increased costs for carriers. * Preference for established conventions like Hague-Visby, which are widely used and accepted. **Conflict with Existing Conventions**: Lack of universal adoption creates legal uncertainty, as different regimes apply depending on the ratifying country.

Answer 118

**Relevance to Multimodal Shipping**: Covers the entire period of transport, including time in port and inland legs, providing better alignment with multimodal logistics chains. **Support for Containerized Cargo**: Compensation based on weight (kilograms) is more relevant for modern containerized shipping. **Shipper-Friendly Approach:** Offers better legal protection to shippers in multimodal and container transport, addressing the realities of global supply chains.

Answer 119

* Adopted by ICAO member states in 1999 * Modernised/replaced the Warsaw Convention * Some states still apply Warsaw Convention + Hague Protocol * Covers passengers, baggage and cargo on international commercial flights * Liability limit for cargo loss/damage/delay – originally set at SDR17 per kilo * Limit updated periodically by ICAO – latest revision was to SDR 22 per kilo from 28.12.19 * Importance for multimodal shipments by air; * Recognizes the interconnected nature of modern logistics, particularly multimodal transport involving air and other modes. * Ensures that air shipments in multimodal transport chains are covered consistently under a single liability regime for the air leg.

Answer 120

**Verified Gross Mass (VGM)**: The total weight of a packed container, including cargo, dunnage, and the tare weight of the container. * Part of SOLAS Convention: Mandatory under the Safety of Life at Sea (SOLAS) Convention, effective 1 July 2016. * Reason for Implementation: Developed after incidents caused by incorrect container weight declarations (e.g., MSC Napoli disaster). * Shipper's Responsibility: Shippers must provide the VGM to the carrier before the container is loaded onto the ship. * 2 methods for determining VGM; either weighing the packed container, or weigh the cargo and dunnage separately and add the tare weight of container Non compliance * Containers without a VGM declaration will not be loaded * Terminals may weigh containers on behalf of shippers at additional cost Significance * Ensures the safe execution of the maritime leg in multimodal transport by preventing accidents due to misdeclared weights. * Enhances the efficiency and stability of vessel operations.

Answer 121

* International Maritime Dangerous Goods Code * Produced by IMO, and applied by law in all states which are signatories to SOLAS Convention * Ensures safe door to door transport of hazardous cargo, as defined in the code * Provides a grouping/classification of all dangerous goods, based on their hazard (nine classes) * Defines packaging, labelling and documentation requirements * Sets out the principles of where cargo of different hazards may be stowed on ships * Provides advice on emergency response

Answer 122

**Third-Party Logistics Provider**: A company that offers outsourced logistics services to manage part or all of a shipper’s supply chain. * Unlike freight forwarders or NVOCCs, which primarily arrange transport, 3PLs provide a wider range of logistics services, including warehousing, inventory management, and distribution. * Operate as an integrated logistics partner, often managing multiple aspects of the supply chain.

Answer 123

* Cost Efficiency: Reduces overhead by outsourcing logistics operations. * Expertise: Access to specialized knowledge, networks, and advanced technology. * Scalability: Flexible solutions that adapt to seasonal demand or growth. * Focus on Core Business: Allows shippers to concentrate on production and sales. * Improved Efficiency: Streamlined supply chains with better connectivity between modes. * Risk Mitigation: Professional handling reduces errors and delays. * Enhanced Customer Satisfaction: Faster, more reliable delivery to end-users.

Answer 124

* Transportation Management: Optimizing and coordinating freight movement. * Warehousing and Distribution: Storage, inventory management, and order fulfillment. * Value-Added Services: Packaging, labeling, and kitting. * Customs Brokerage: Managing import/export documentation and compliance. * IT Solutions: Real-time tracking, inventory visibility, and data analytics.

Answer 125

**Inland Clearance Depot (ICD):** An inland facility where containers are handled, processed, and cleared for customs, acting as an extension of seaports into the hinterland **Role in Multimodal Shipping**: * Customs Clearance Away from Ports: Allows import/export goods to be cleared or released at inland locations, reducing congestion at seaports. * Staging Point for Inland Movements: Acts as a transfer hub for cargo moving between ports and inland destinations. * Connection Between Rail and Road: Facilitates seamless intermodal transfers, integrating rail and road transport for efficient cargo movement. * Container Management: Offers storage for empty containers and services for packing, unpacking, maintenance, and repairs. * Decongestion of Ports: Diverts cargo activities from seaports to inland locations, improving port efficiency.

Answer 126

For Operators: * Improved Efficiency: Facilitates the smooth transfer of cargo between modes of transport. * Cost Savings: Reduces congestion and delays at seaports. * Asset Management: Provides central hubs for container storage, repair, and repositioning. For Customers: * Convenience: Customs clearance closer to their business locations saves time. * Cost Efficiency: Lower storage and transport costs compared to port-side operations. * Reliability: Better coordination and tracking of cargo throughout the supply chain.

Answer 127

Infrastructure: * Large storage yards for full and empty containers. * Rail sidings for intermodal connectivity. * Access roads for truck transport. Equipment: * Rail-mounted gantry cranes (RMG), rubber-tired gantry cranes (RTG), and forklifts/reach stackers. * Weighbridges for accurate weight measurements. * IT systems for inventory and container tracking. Support Facilities: * Packing/unpacking areas. * Container repair and maintenance workshops. * Dedicated customs offices for processing and clearance.

Answer 128

**Air Transport** Description: * Fastest mode of transport, ideal for high-value, time-sensitive cargo like electronics and pharmaceuticals. * Operates via direct flights or hub-and-spoke systems through major hubs like Frankfurt or Amsterdam. **Transit Time**: Typically 1–3 days. **Cost**: Highest among all modes due to speed and capacity limitations. **Sea Transport** **Description**: * Most economical mode for large volumes of cargo, such as raw materials, machinery, and consumer goods. * Ships use major trade routes like those through the Suez Canal, linking ports like Shanghai and Rotterdam. **Transit Time**: Typically 30–40 days. **Cost**: Lowest per unit, but slower. **Sea/Air Transport** **Description**: Combines the cost-efficiency of sea freight with the speed of air freight. Containers are shipped by sea to a hub (e.g., Dubai), then transferred to air cargo for faster delivery to Europe. **Transit Time**: Typically 15–20 days. **Cost**: Mid-range, balancing speed and affordability. **Rail Transport** **Description**: * A growing alternative under China’s Belt and Road Initiative, connecting key cities like Chengdu in China to Duisburg in Germany. * Ideal for mid-value goods requiring faster delivery than sea and lower cost than air. **Transit Time**: Typically 15–20 days. **Cost**: Cheaper than air but higher than sea, offering a balance between speed and cost.

Answer 129

* Door to door cost (may depend on exact origin/destination) * Type of goods (e.g. weight/hazard/perishability) * Quantity of goods * Value of goods/urgency * Supply chain requirements for speed, reliability, frequency

Answer 130

- Schedules offered (reliability/frequency/transit time/direct or transhipment) - Space and container availability - Freight Rate (price and other terms) - Customer Service levels - E Commerce systems (e.g. on line quotes/bookings/track and trace etc.) - Inland operations (cost, modal choice, inland pick-up and delivery points)

Answer 131

Logistics involves managing the flow of goods, services, and information from origin to destination efficiently. Beyond transportation, it includes activities like warehousing, packaging, inventory management, and supply chain coordination. Logistics ensures seamless operations, balancing costs, speed, and reliability to meet customer needs. Key points to mention: * Broader than just the transportation of goods * Covers management and information services to support a supply chain * Physical activities extend to warehousing, packing etc

Answer 132

* Regular, reliable and frequent services enable products to be sourced from almost anywhere globally * Adequate capacity on individual routes to ensure regular supply * Containerisation, and proper packaging and handling to ensure goods are protected from damage/pilfering ensure arrival in good condition for sale/use at destination * Information systems providing vital visibility on the supply chain, e.g. stock management, in transit and at warehouse – information in real time; exception reports so that corrective action can be initiated quickly in case of delays * Providing confidence to the customer that goods will arrive as scheduled, and managing any delays, and consequences of delays, including clear and timely communications with all parties involved * Warehousing/cross docking/distribution services available to support required inventory and ensure continuity of supply * Other value added services as needed (forwarding, documentation customs clearing, calling forward cargo, consolidation etc) to ensure unforeseen costs are minimised and no delays. * Supply chain management to reduce overall costs, so making it cost effective (relative to the value of the goods) to source from cheaper suppliers, even if they are further away * Logistics can combine different modes of transport to give an optimum balance between speed and cost, and manage supplies from different sources, providing resilience in the supply chain

Answer 133

Speed * Importance: Enables faster delivery of goods, critical for time-sensitive products like perishables, pharmaceuticals, or high-demand consumer goods. * Why Pay More: Shippers value reduced transit times to meet tight deadlines, maintain competitiveness, and minimize inventory holding costs. Frequency * Importance: Regular services provide flexibility and convenience for shippers to plan shipments according to production schedules. * Why Pay More: Frequent departures minimize delays and help shippers avoid storage and demurrage costs, ensuring timely delivery. Reliability * Importance: Ensures goods arrive on time and in good condition, reducing risks of lost sales or supply chain disruptions. * Why Pay More: Reliable services build trust and ensure consistent supply chain performance, which is especially critical for just-in-time operations. Transparency of data on cargo movement * Importance: Real-time tracking and updates help shippers monitor the progress of their shipments and respond quickly to disruptions. * Why Pay More: Shippers value visibility to reduce uncertainty, enhance customer satisfaction, and optimize inventory and logistics planning. Speed/accuracy of documentation * Importance: Proper documentation ensures smooth customs clearance and compliance with international regulations. * Why Pay More: Errors in documentation can lead to delays, fines, or rejected shipments; accurate processing reduces risks and costs. Expert assistance or advice with transport related issues * Importance: Expertise helps navigate complex regulatory, logistical, or operational challenges in multimodal transport. * Why Pay More: Shippers are willing to invest in guidance to avoid costly mistakes, optimize routes, and handle unexpected issues efficiently. Range and quality of ecommerce products (ease of access to information/time saving) * Importance: Online tools simplify processes like booking, tracking, and documentation, saving time and effort. * Why Pay More: Ease of access to accurate, real-time information improves decision-making and operational efficiency for shippers. Guarantees of available space per sailing * Importance: Secured space ensures goods are shipped as planned, avoiding delays during peak seasons or capacity shortages. * Why Pay More: Shippers are willing to pay a premium to guarantee space, ensuring supply chain continuity and avoiding costly disruptions.

Answer 134

Advantages of Owning: * Owning is cheaper in the long run, as it avoids paying a price which includes a profit element for the leasing company * Containers can be built to the operator’s specification, and the operator also controls the standards for maintenance and repair * Containers will have the operator’s colours/logo which increases brand awareness * Containers from the owned fleet will always be available, rather than being dependent on short term availability in the leasing market Disadvantages of Owning * Capital has to be committed to the purchase, or the money borrowed, which may be expensive and/or stretch the operator’s financial resources * If demand reduces unexpectedly, it may be hard to dispose of surplus owned containers (which have a life of up to 18 years) and if newer containers are sold, there is likely to be a financial loss

Answer 135

Advantages of Leasing * It is easier to adjust the fleet size in response to fluctuating demand for containers * No requirement for capital financing * Some types of leases allow pick up at one location, and drop off at a different location, which can be used to reduce imbalance costs Disadvantages of Leasing * In general, leasing is more expensive than owning containers * If relying on the pick up of leased containers to meet customers’ bookings, there is a risk that business will be lost if containers are unavailable * Leasing companies may impose high charges to repair damage (even if only fair wear and tear) when containers are off hired at the end of the lease

Answer 136

* Using leased containers which can be picked up at origin and dropped off at destination on the dominant leg * Lease surplus containers out to third party for a one way trip (sometimes referred to as ‘cabotage’) * Offer low freight rates (based on marginal pricing) to secure more cargo moving from surplus to deficit locations * Offer alternative container types (if others are readily available) * Delay the booking until containers are available * Ensure that control systems are effective to ensure that container stocks are used to best advantage (including possibly reducing safety stocks of containers at shortage locations in the short term)

Answer 137

- Shipper - Consignee - Notify Party - Place of receipt/delivery - Port of Loading/Discharge - Cargo details – if FCL as declared by shipper; any endorsement by carrier - Freight payable details - Vessel/voyage - Shipped on Board (date, port) - Identification of carrier and signature (carrier/master/agent) - Date/Place of Issue + number of originals

Answer 138

Definition: The party who dispatches the goods. Importance: Identifies the seller or exporter in the transaction. Critical for the carrier and consignee to establish the origin of goods and validate ownership.

Answer 139

Definition: The party to whom the goods are delivered. Importance: Usually the buyer or their agent. The consignee must present the bill of lading to claim the goods at the destination, ensuring legal delivery.

Answer 140

Definition: The party to be informed upon the arrival of goods. Importance: Ensures timely notification to the relevant party (e.g., freight forwarder, customs agent, or ultimate receiver) for prompt clearance and delivery.

Answer 141

Definition: Locations where the carrier assumes and relinquishes responsibility for the goods. Importance: Provides clarity on the multimodal transport scope and identifies the start and end points of the carrier’s liability.

Answer 142

Definition: Seaports where goods are loaded onto or discharged from the vessel. Importance: Crucial for determining transshipment points, freight calculations, and customs clearance processes at both ends.

Answer 143

Definition: Includes description, quantity, weight, and volume of the goods. Importance: * Serves as a record of goods received by the carrier. * Checked by banks for compliance in letter-of-credit shipments. * Any endorsements for damage or discrepancies by the carrier indicate non-compliance with the declared condition.

Answer 144

Definition: Indicates whether freight charges are prepaid or payable at the destination. Importance: Specifies the financial terms, helping the shipper and consignee plan cash flows and ensuring payment accountability.

Answer 145

Definition: The ship name and voyage number used for transporting the goods. Importance: Enables tracking and ensures that the goods are shipped on the intended vessel, which is critical for planning and insurance coverage.

Answer 146

Definition: Confirms the date and location the goods were loaded onto the vessel. Importance: Vital for calculating transit times, validating shipment timelines under contracts, and confirming compliance with letter-of-credit terms.

Answer 147

Definition: Indicates the name of the carrier and signature by their representative, master, or agent. Importance: Establishes the contractual relationship between the shipper and carrier, ensuring legal enforceability of the bill of lading.

Answer 148

Definition: The date and place where the bill is issued and the total number of original copies. Importance: * The date validates the contract and shipment timeline. * The number of originals ensures secure transfer of ownership, as the consignee must present at least one endorsed original to claim the goods.

Answer 149

The main points of congestion are at **modal interfaces** – ports (where congestion can occur at various pinch points for both ships and cargo); also ICDs and railheads. Congestion can also occur on road/rail systems, at canals waiting for transits, etc. There are a number of causes of congestion, including: - Shortage of equipment (e.g. cranes at terminals) - Shortage of land (e.g. yard space, shortage of berths) - Lack of capacity (roads, rail systems, canal transits) - Problems of peaks, for example due to ship/container arrivals at certain times/days - Shortage of labour - Bad weather

Answer 150

- Operational consequences, for example delays to ships, cargo etc. There are also knock on effects – if a ship is delayed on a port call, there may be delays at later ports, or on the next round voyage, or port calls get omitted in order to regain the schedule - Increased costs to both providers and users, either as a direct consequence (e.g. congestion surcharges, hiring in more equipment), or an indirect consequence (e.g. airfreighting goods to avoid running out of stock) - Ongoing impact on the business, where reputation suffers, due to reduced reliability etc., so that financial losses go beyond the congestion event itself

Answer 151

In the short term, actions may be limited, e.g. securing extra resources – hiring in extra labour or equipment if available; better operational planning can also help reduce congestion e.g. vehicle booking systems at container terminals can reduce vehicle queues with little extra resource needed, or longer gate opening hours. On a longer timescale, investment in more infrastructure or equipment may be required, or focusing on particular business sectors/activities which are more productive (e.g. store empty containers away from the container terminal, rather than use up valuable yard space). From the user’s perspective, it may be wise to review the supply chain, and look for alternative routes/modes, as well as having ‘back up options’ available.

Answer 152

**Meaning**: A cargo liability convention governing international carriage of goods by sea and multimodal transport. **Context/Origin:** Developed in 2008 by UNCITRAL as a successor to Hague-Visby and Hamburg Rules. **Represents**: A modernized framework addressing gaps in previous conventions. Significance in Multimodal Transport: * Extends coverage to the entire transport chain, not just the sea leg. * Introduces electronic transport documents and multimodal liability provisions. * Changes from Previous Conventions: Covers multimodal transport, longer liability period, and modernized limits of liability. * Current Status: Ratified by a limited number of countries; not yet in force

Answer 153

**Terminal Handling Charge** **Meaning**: A fee covering the handling of containers at a terminal (loading/unloading, storage, movements within terminal). **Context/Origin**: Charged by carriers or terminals; previously set by conferences. **Represents**: A significant cost component in shipping contracts. Significance in Multimodal Transport: * Paid by the customer, often in local currency per container. * Can vary by location or container size/type. * Directly affects the cost and revenue of multimodal shipments. * Sometimes charged by terminals directly to carriers.

Answer 154

**Meaning**: A bank guarantee ensuring payment to the seller under a sales contract. **Context/Origin**: Facilitates international trade, governed by UCP 600 rules. **Represents**: Payment security for sellers and assurance of goods for buyers. Significance in Multimodal Transport: * Relies on transport documents (e.g., bill of lading) to prove shipment compliance. * Types include irrevocable and confirmed letters of credit. * Critical in managing risk for long-distance and multimodal trade.

Answer 155

World Trade Organization **Meaning**: Intergovernmental organization supporting global trade and multimodal transport. **Context/Origin**: Established in 1995 in Geneva, succeeding GATT. **Represents**: A forum for negotiating trade agreements and resolving disputes. Significance in Multimodal Transport: * Encourages seamless trade, often requiring multimodal logistics. * Supports developing countries with technical assistance and trade data. * Oversees agreements that influence tariffs and logistics

Answer 156

Just in Time **Meaning**: A supply chain system ensuring goods arrive exactly when needed, minimizing inventory. **Context/Origin**: Widely used in industries like automotive and manufacturing. **Represents**: An efficiency-focused approach to reduce costs and optimize resources. Significance in Multimodal Transport: * Relies on fast, reliable logistics and real-time IT systems. * Reduces holding costs for inventory, warehousing, and financing. * Enhances global supply chain efficiency by leveraging multimodal transport.

Answer 157

**Meaning**: A transport document acting as a contract and receipt but not as a document of title. **Context/Origin**: Commonly used in air and sea transport. **Represents**: Simplified documentation for short transits or urgent shipments. Significance in Multimodal Transport: * Non-negotiable and doesn’t require surrender for goods collection, reducing delays. * Preferred in trades where time-sensitive deliveries are crucial. * Suitable for short transit trades and multimodal operations where conventional documentation could delay cargo

Answer 158

- Maximum liability for loss/damage = £100 per package - Increased by UK Gold Clause Agreement to £200 in 1950, then to £400 - English Courts in The Rosa S [1988] stated it should the equivalent to the gold value of £100 in 1924 – which is substantially higher - No liability for delay

Answer 159

- Maximum liability for loss/damage = SDR666.67 per package or SDR2 per kilo, whichever is the higher - Special Drawing Rights - an international monetary unit created by the IMF to standardize liability limits across currencies. It ensures fair compensation calculations, with its value based on a basket of major global currencies - In the 1968 Brussels Protocol, the limits were set in Poincare Francs but changed to SDR by 1979 Protocol, which is applied by most countries which signed up to the Hague-Visby Rules - No liability for delay

Answer 160

- Maximum liability for loss/damage = SDR835 per package or SDR2.5 per kilo, whichever is the higher - Special Drawing Rights - an international monetary unit created by the IMF to standardize liability limits across currencies. It ensures fair compensation calculations, with its value based on a basket of major global currencies - Carrier is liable for loss due to delay in delivery up to 2.5 times the freight paid for the goods delayed (bot not exceeding the total freight paid under the contract of carriage) - Time limit for delivery to be agreed, but in absence of agreement, the test is a ‘reasonable period of time’.

Answer 161

- The Warsaw Convention has been replaced by the Montreal Convention (1999) though some countries still apply the Warsaw Convention - Warsaw Convention – maximum liability for loss/damage = Poincare Francs250 per kilo, or SDR19 per kilo - Montreal Convention maximum liability for loss/damage is updated periodically by ICAO - initially set at SDR17 per kilo, but increased to SDR19 per kilo in 2009, and to SDR22 per kilo in 2019 - No liability for delay - Special Drawing Rights - an international monetary unit created by the IMF to standardize liability limits across currencies. It ensures fair compensation calculations, with its value based on a basket of major global currencies

Answer 162

- Max for loss/damage = SDR8.33 per kilo - Liability for loss due to delay in delivery up to the total freight paid - Time limit for delivery to be agreed, but in absence of agreement, a ‘reasonable period of time’

Answer 163

* Hague * Hague-Visby * Hamburg * Warsaw/Montreal * CMR Rotterdam = not relevant as not yet in force anywhere

Answer 164

* Sea Freight (also Feeder Additionals) * Surcharges (example – CAF, BAF Congestion, Peak Season) * Terminal Handling Charges * Inland Transport (also drop off, pick up, ‘turn in’ charges) * Demurrage/Detention * Documentation/Bill of Lading Fee - Customs clearance charges

Answer 165

Contract Rate - Applicable to specific cargo/commodity from a named shipper - Valid for a fixed period of time and/or for a defined volume of cargo - May include space guarantee by the carrier and/or penalties for the shipper if the contracted volume is not shipped - Provides for a fixed/known freight rate for the duration of contract (though may be subject to changes in surcharges, and non sea freight items) Spot Rate - Applies to a specific movement of cargo – normally on a defined voyage, or for a short period of time with clear expiry date - Generally does not provide any guarantee of space, until actual booking made - Price will be defined, including applicable surcharges - Price is likely to be frequently changed by the carrier in response to variations in supply/demand; spot rates will therefore generally have a short validity period for acceptance

Answer 166

- Contract rate is suitable if the shipper has definite requirement for cargo movement over an extended period of time, and has reasonably certain cargo volumes - Shipper may need forward guarantee of space which will only be available with a contract - Spot rates are suitable for ad hoc movements, where the shipper has no forward plan for cargo movements - Shipper may have a view on whether freight rate will go up or down; if expecting a fall, then use spot rates to benefit from lower rates for later shipments; if expecting rates to rise, then a fixed contract rate will provide protection from increases.

Answer 167

**Core services: Loading and Discharging Vessels**: * Use of specialized cranes (e.g., ship-to-shore gantry cranes) to load and unload containers efficiently. * Enables seamless transfer of goods between sea and landside transport modes. **Transfer to Landside Transport:** * Road: Terminals facilitate direct loading of containers onto trucks for inland delivery. * Rail: Integrated rail sidings for efficient transfer to intermodal trains. * Barge: Inland waterways connected to terminals allow for barge transport to regional hubs. **Additional services:** **Transshipment Hubs:** Ports act as transfer points for cargo between vessels for onward sea transport, consolidating global trade routes. Examples: Singapore and Rotterdam. **Statutory Clearance of Cargo**: Ports provide facilities for customs clearance, health inspections, and regulatory compliance, ensuring goods meet import/export requirements. **Freeport Areas**: Designated zones within ports where goods can be stored, processed, or re-exported without immediate customs duties. Encourages trade by offering cost advantages and logistical flexibility. **Distribution Centers and Warehousing**: Ports house storage and distribution facilities for cargo handling, sorting, and processing, supporting supply chain efficiency. **Container Maintenance and Storage**: Facilities for container cleaning, repair, and storage (both full and empty containers) to optimize logistics resources. **Logistics and Value-Added Services**: Includes packaging, labeling, and cargo consolidation, supporting customer-specific requirements and supply chain customization.

Answer 168

* **Connectivity**: Ports act as critical nodes connecting maritime and inland transport systems. * **Efficiency**: Streamlined operations reduce delays and enhance supply chain performance. * **Trade Facilitation**: Freeports and customs clearance processes simplify international trade. * **Flexibility**: Multimodal integration (road, rail, barge) provides shippers with cost-effective and diverse transport options.

Answer 169

For the lines: - 24 hour access to the port (adequate draught etc.) - Berth availability - High productivity and reliability (sufficient cranes/yard area etc.) - Competitive handling rates (particularly for transhipment cargo) - Free storage for empty containers - Bunkering facilities (competitive bunker price) - Efficient processing and inspection facilities for statutory clearances - Reefer plugs where needed For shippers: - Community port system to facilitate clearances and cargo release - Warehousing facilities nearby (port centric distribution) - Adequate gate capacity to avoid congestion/delays – vehicle booking system if needed - 24 hour landside access - Optional service to meet requirement to provide VGM (Verified Gross Mass) - Rail linkage to ICDs with daily trains

Answer 170

Physical assets - Transport vehicles/systems - ships/planes/trains + rail systems/road transport - Means of unitisation – e.g. containers, pallets, trailers - Modal transfer – e.g. ports, ICDs, cranes, fork lifts, other equipment - Means of storage – e.g. warehouses + handling/storage equipment Human Resources - Office staff (give examples of different functions) and port/terminal/sea staff - Planning and Management functions - High importance of education and training, employment standards, health and safety, communication, international nature of employment, 24/7 operations requiring shift work Data management - Systems to control through transport movement (documentation, operations, statutory requirements) - Global systems (value of internet) – information systems (schedules, quotations etc.) - Planning systems - Decision making tools.

Answer 171

The main details in a contract of sales are - - Defining the parties (buyer and seller) - Full description of the goods - The amount to be paid (cost/currency) - How and when payment is to be made (mention methods of payment, including Letters of Credit) - Who pays for the different stages of the through transport movement - When does property pass from seller to buyer - When does risk of damage/loss pass, and are there any obligations to provide insurance - Applicable law/procedure for resolving disputes Several of these terms which are required for such a contract are covered by specifying an applicable INCOTERM.

Answer 172

Purpose is to define the terms of the agreement between carrier and shipper for the transportation of goods from place of acceptance to place of delivery. It specifically covers: * The parties (shipper, consignee, other interested parties) * Goods being transported (and condition on receipt) * Places of receipt and of delivery * Freight to be paid/by whom/when * Rights, duties and liabilities of the parties (including any applicable international convention) * Negotiability of the document

Answer 173

An INCOTERM provides standard terms in a contract of sale which are generally known/accepted, and therefore gives a high degree of legal certainty in their interpretation. The following specific terms of a contract of sale are described by reference to an Incoterm: - Which party is responsibility for organising and paying for each leg of the transport movement - Which party is responsible for export/import clearance and customs duties - When the risk of damage/loss passes from seller to buyer - In certain Incoterms, the responsibility for the seller to take out insurance for the benefit of the buyer

Answer 174

- Cost - Impact on Transit Time (incl. connectivity with deep sea carrier at port) - Reliability (incl. effect of congestion) - Capacity availability (e.g. shortage of drivers) - Environmental impact (e.g. carbon footprint) - Restrictions for various cargo types (e.g. heavy/out of gauge/hazardous cargo)

Answer 175

Non-Vessel Operating (Common) Carrier (NVOCC): * A logistics provider that acts as a carrier but does not own or operate vessels. * Issues its own bill of lading (NVOCC B/L) and assumes responsibility for cargo as a principal in the supply chain. Role in Logistics and Multimodal Transport: Space Purchases from Liner Operators: Buys space on vessels from shipping lines (liner operators) and resells it to shippers. Allows flexibility and cost-efficiency for shippers without requiring direct contracts with carriers. Door-to-Door Multimodal Services: Acts as a principal, coordinating the end-to-end movement of goods across multiple transport modes (sea, road, rail). Distinct from forwarding agents, which act as intermediaries rather than principals. Service Offerings: FCL (Full Container Load): Arranges full container shipments for large cargo volumes. LCL (Less than Container Load): Provides groupage services by consolidating smaller shipments from multiple shippers into a single container. Value-Added Services: Offers services such as documentation, customs clearance, cargo insurance, and inventory management. Many NVOCCs now manage complete supply chains, providing integrated logistics solutions.

Answer 176

**Growth of Global Trade**: Increased demand for cost-effective and flexible shipping solutions in international logistics. **Complex Supply Chains:** Need for integrated services that combine transportation, warehousing, and supply chain management. **Containerization**: Expansion of containerized shipping made consolidation and groupage services more practical and efficient. **Digital Transformation**: Advanced IT systems have enabled NVOCCs to offer real-time tracking, supply chain visibility, and improved customer service.

Answer 177

- NVOCC acts as a principal - Flexibility – NVOCCs have contracts with many ocean carriers but are not tied down with assets. It means they can offer more sailings a week on a given trade than ocean carriers - Consolidate volumes from different customers to offer highly competitive freight rates - Experience and strength in handling LCL consignments for which ocean carriers no longer provide a comprehensive service. - Offer full range of integrated door-to-door services, including value-added storage, consolidation and stripping activities, documentation - Can offer range of logistics solutions to their customers – important as increasing number of beneficial cargo owners have downsized their transport and logistics divisions - Generally NVOCCs have better IT and customer service and support systems - Single documentation for the whole move

Answer 178

- Generally NVOCCs do not own container equipment, which could be a problem in tight supply chain situations. - Ocean carriers are less likely to offer space to NVOCCs if they are busy with their own clients (though this is less of a problem than it used to be) - Ocean carriers offer better rates/terms for BCOs shipping large volumes/service contracts - Consolidation and rationalisation have led to individual carriers shrinking their networks - less choice for shippers/consignees - NVOCCs will take their own profit margin, so may be more expensive than dealing with the carrier direct - Dealing with a ‘middle man’ is not always efficient – can be better from a service perspective to deal with the carrier direct - If NVOCC becomes bankrupt, there is a risk that your cargo will be held by the actual carrier as security for freight

Answer 179

* A location for keeping stock, strategically placed for delivery to the point of sale/consumption * Warehousing activities to ensure safe and secure storage of stock including records at SKU level, and access to stock as required * Used for assembly of loads of goods from different origins for delivery to final location (e.g. retail outlet), optimising load sizes/types of product to individual destinations * Labelling/pricing/retail packaging for the specific destination market(s) * Management of returns, environmentally appropriate disposal of packaging, unusable stock etc. * Ensure stock availability at short notice to deal with variable/unexpected demand

Answer 180

* Reduces total stock holding/warehousing costs (capital, systems, overheads etc.) due to economies of scale * Stock can be diverted to different retail outlets to respond to short term changes in demand * Requirements for retail packaging, pricing etc. can be centralised at a single location * Returns can be handled through a standard processing centre * Multiple centres increase overall costs/complexities of operation

Answer 181

* Orders can be responded to more swiftly as DCs are closer to end user * Shorter distances for retail delivery – reduce overall transport costs * Individual centres being smaller will be more customer focused/designed to meet specific requirements * In case of operational problems with a single centre all deliveries are affected; with multiple centres there are alternatives in case of problems with one of the centres

Answer 182

* Federal Maritime Commission * USA Regulatory Body set up in 1961 to oversee overseas shipping * Enforcement of provisions of the various US Shipping Acts * Objective is fair and efficient shipping for benefit of US exporters/importers and consumers; protection from unfair competition * Scrutinises agreements between shipping lines, which need to be filed with and approved by FMC (mainly conference, VSA and Alliance agreements) * Monitors shipping tariffs, and confidential service contracts which have to be filed with the FMC * Key regulator for multimodal operators with services to/from USA

Answer 183

* European Agreement concerning the International Carriage of Dangerous Goods by Road * Produced by UNECE (United Nations Economic Commission for Europe) in 1957, entered into force 1968 * Allows the international carriage by road of almost all dangerous goods, so facilitating multimodal services * Annex A covers the classification of dangerous goods, documentary and packaging requirements * Annex B covers the construction and operation of vehicles to transport hazardous cargoes (including crew and equipment requirements) * ADR is consistent with regulations for international carriage of hazardous cargo by sea (IMDG Code), air and rail * Classes as per IMDG Code (9 total)

Answer 184

* Stands for Uniform Customs and Practice for Document Credits * Set of rules for Documentary Credits issued by ICC * UCP600 is latest version (applicable 1.1.2007) * Needs to be stipulated in contracts * Contains 39 articles * List some key provisions of UCP600 (types of documents covered, credit must be irrevocable etc.) * Used extensively for multimodal shipments on letters of credit –important that operators understand how these rules impact on bills of lading (clean/dirty etc)

Answer 185

Non-Vessel Operating Common Carriers **Role in Supply Chain**: NVOCCs facilitate door-to-door multimodal transport by purchasing vessel space from ocean carriers and providing seamless logistics services to shippers. Principal, Not Agent: Operate as carriers under their own bill of lading, taking full responsibility for cargo, unlike forwarding agents who act as intermediaries. Main Services: Include LCL/Groupage (consolidating smaller shipments), FCL, cargo documentation, supply chain management, and value-added services like tracking and insurance. Benefits to Customers: Cost-effective, flexible, reliable logistics solutions with single-point accountability and enhanced supply chain visibility. Examples: Kuehne + Nagel, Expeditors International, Flexport, Sinotrans, C.H. Robinson.

Answer 186

**Purpose**: Establishes liability standards for carriers and shippers, balancing responsibilities and ensuring compensation for cargo loss or damage. **Evolution from Hague Rules**: Updated in 1968 to address inflation, containerization, and modern trade practices. **Key Provisions**: Higher liability limits (666.67 SDR per package or 2 SDR per kilogram). Clarifies liability for containerized goods. Covers cargo from loading to unloading (tackle-to-tackle). **Adoption**: Effective in 1977, with the SDR Protocol added in 1984. **Significance**: The most widely used convention for multimodal sea transport, ensuring consistency and reliability in global trade.

Answer 187

Convention on the Contract for the International Carriage of Goods by Road **Development**: Established by the UNECE in 1956 to standardize international road transport rules; entered into force in 1961. **Journeys Covered**: Applies to cross-border road transport where at least one country is a contracting party; relevant for the road leg of multimodal transport. **Consignment Note**: Required to document key details like shipper, consignee, cargo description, and delivery terms; absence does not invalidate the contract. **Liabilities and Exclusions**: Carrier liable for loss, damage, or delay, with limits of 8.33 SDR per kilogram; exclusions include force majeure, inherent cargo defects, or shipper negligence.

Answer 188

Main differences * Bill of lading is a document of title, while a waybill is not * A Waybill cannot be a negotiable document * Bill of Lading has to be presented to secure release of cargo, while cargo under a waybill will be released to the named consignee with only proof of identity required * Under a waybill, the shipper cannot stop the release of the cargo to the named consignee * Cargo liability conventions may not apply automatically to a waybill (but can be specifically incorporated). Examples of use: * A bill of lading is likely to be required if a letter of credit is involved * A bill of lading is required if goods are to be sold while in transit and the document negotiated to the buyer * Waybill is suited for short transit trades (avoids delay to cargo awaiting documents) * Waybill suited for ‘in house’ shipments or when there is a high degree of trust between seller and buyer (e.g. open account business) * Although both documents can be used for any mode, waybills are more commonly used for non maritime modes e.g. air freight

Answer 189

Main differences * A straight bill of lading has a named consignee and usually no notify party * A ‘to order’ bill of lading will state ‘to order’ or ‘to order of (named party) on the face of the bill of lading * A straight b/l cannot be negotiated – but is still a document of title, and requires to be surrendered at destination * A to order b/l can be negotiated Examples of use: * A straight bill of lading is suitable when the consignee is known, and there is no requirement to be able to sell the goods by transfer of documents while the goods are in transit * A ‘to order’ bill of lading is required when the goods are likely to be traded, and/or the seller wishes to keep their options open to sell the goods after shipment

Answer 190

Main differences: * A CT bill of lading requires the carrier to take responsibility/liability as principal from place of acceptance to place of delivery, even if the actual carrier is different for some part of the through transport; in that case the actual carrier is a sub contractor of the contractual carrier * A through transport bill of lading is issued when the ocean carrier arranges the pre or oncarriage on behalf of the shipper as agent only * Under a CT bill of lading, the shipper only deals with the issuer of the bill of lading in the event of a claim; under a TT bill of lading, the shipper will have to deal with the actual carrier for the pre or on-carriage Examples of use: * A carrier will issue a CT bill of lading when it is confident that it is able to control the complete movement even if it does not undertake the full door to door transport itself; it is more likely to issue a TT bill of lading when for example the control of the shipment is handed to a second carrier for the oncarriage * A shipper is likely to prefer a CT bill of lading so it only has to deal with one contracting party; it may however accept a TT bill of lading to avoid the need to make its own separate arrangements with different carriers

Answer 191

**Origin**: First introduced by the International Chamber of Commerce (ICC) in 1936 to standardize trade terms globally. **Updates**: Regularly revised to reflect trade changes; the latest version is Incoterms 2020. **Purpose**: Provide globally accepted terms defining responsibilities for delivery, risk, and costs in international contracts of sale. **Scope**: Covers delivery obligations, risk transfer, and cost allocation but does not address payment terms, ownership, or breach of contract. **Incorporation**: Must be explicitly included in the contract to apply. **Structure**: Comprises 11 terms divided into four groups: E, F, C, D; some terms (e.g., FOB, CIF) are specific to maritime transport.

Answer 192

* Door to door cost * Door to door transit time * Frequency of service * Reliability, and the reasons for potential delays * Weight/volume of goods * Urgency of the shipment * Environmental impact (particularly CO2 footprint)

Answer 193

Advantages of Ownership in Public Sector * Public sector can take a long term view of investment in strategic assets (e.g. ports) * Objectives will be aligned to national interests (e.g. facilitating the country’s trading activity, which promotes growth/prosperity), and the well being of the people, rather than pursuing profits * Governments may have more ready access to capital for development of infrastructure (though this is not always the case) * Public sector can set prices as a ‘fair’ level, and ensure equal access for all users * Profits generated can be reinvested Disadvantages of Ownership in the Public Sector * Competition for scarce financial resources with other government investment – transport sector is often a low priority * Decisions can be politically influenced, and not in the best interest of trade/transport * With no ‘profit’ objective or viable competition, public sector organisations can be highly inefficient, and poorly managed * In some countries, public sector organisations are associated with corruption

Answer 194

Advantages of Ownership in Private Sector * Ready access to sources of capital (particularly with large multinationals) * High quality management and best practice (both nationally and where relevant internationally) * Competition in the private sector drives efficiency, and therefore better service/prices for customers * Business customers can usually negotiate a tailored package to meet their requirements Disadvantages of Ownership in Private Sector * Private sector often has short term objectives rather than long term vision * Private sector ownership in an activity where there is no competition creates a monopoly operator, which can increase prices unreasonably, and hide inefficiencies (in these circumstances, there may be a need for a government authority which regulates prices) * Financial benefits go disproportionately to the shareholders, rather than national interests, or to customers

Answer 195

The main business functions associated with managing a fleet of containers are: * Ensuring the operator has a fleet of containers (of different sizes and types) to meet its business needs * Determining and procuring the optimum mix of owned and leased containers * Tracking the location and status of all its containers to ensure proper records of the company’s assets, and to provide a ‘real time’ database of its fleet for forward planning purposes; this should also provide information on containers delayed by customers so that detention/demurrage charges can be calculated * Managing the leased containers in its fleet in accordance with the terms of the lease agreements, including the correct payment of daily hire rates, and that pick up and drop off of containers comply with the terms of the agreement * Managing the maintenance and repair of containers in accordance with regulatory requirements (CSC Convention and national laws) and company standards, including scrapping/selling containers as required * Planning the level of container stocks at every location in order to meet customer requirements, and implementing plans to adjust empty container stocks as needed, through leasing, cabotage, imbalance movements etc.

Answer 196

* Differences in supply vs demand on the different trade legs * Dominant vs non dominant legs in many trades * Availability of capacity (vessel or aircraft space) * Differences in the level of competition on the different legs * Container availability (surpluses/deficits)

Answer 197

* Longer transit time for transhipment service (not always the case) * Perceived risk of delay/short shipment with transhipment service * Costs of the two services will differ; while the transhipment service will have the added cost of transhipment handling and feeding the cargo, a line may offer the transhipment service instead of a direct service to reduce its costs by gaining economies of scale on the main leg of the journey * Competitive factors – number of direct vs transhipment services offered by competitors

Answer 198

* Different volumes of cargo * Contract or spot business * Different shippers may have a different importance as a customer to the carrier(e.g. multi-trade support) * Regularity/reliability of shipments * Prices offered by competition

Answer 199

Transshipment Service **Definition**: Involves transferring cargo at an intermediate port (hub) before reaching the final destination. Containers are unloaded from one vessel and reloaded onto another, often smaller, vessel for onward transport. **Purpose**: Allows carriers to optimize vessel utilization, reduce costs, and service ports not directly accessible by larger ships. Direct Port-to-Port Service **Definition**: Ships cargo directly from the port of origin to the destination without intermediate stops or transfers. **Purpose**: Provides faster transit times for routes where direct connections are feasible. Key Differences: Transshipment Service: **Route**: Involves an intermediate hub port where cargo is transferred between vessels. **Transit Time**: Generally longer due to additional handling and transfer delays. **Cost**: Can be lower as it leverages shared resources and economies of scale. **Port Access**: Ideal for servicing smaller or less accessible ports that lack direct connections. Direct Port-to-Port Service: **Route**: Ships cargo directly from the port of origin to the destination without intermediate stops. **Transit Time**: Usually faster, as no intermediate transfers are required. **Cost**: May be higher due to the direct nature of the service. **Port Access**: Limited to ports with established direct connections.

Answer 200

Advantages for Container Line - Economies of scale from larger vessels with a clear explanation of how the savings are generated, including: - Reduced vessel ownership/charter costs per TEU - Reduced bunker costs per TEU - Opportunities to maximise volumes carried from customers Disadvantages for Container Line - Limited number of trades on which they can operate - The need to operate in alliances to be able to fill capacity/avoid overtonnaging - Limited number of ports/terminals that can handle them - Risk of port/landside congestion due to peak arrival volumes

Answer 201

Advantages for Port/Terminal Operator - If a port/terminal operator invests to handle large ships, they can gain competitive advantage as other terminals may not be able to handle these vessels – so generating extra volumes/revenue - Secure an ongoing relationship with the major global lines and alliances Disadvantages for Port/Terminal Operator - Large capital investment needed to handle bigger ships (elaborate on different areas where investment is needed) - Peak arrivals impose extra costs on e.g. yard/gate capacity - Fewer services and fewer lines/alliances mean risk to business if services are lost to competitor ports/terminals

Answer 202

Advantages for customer of container line - Lower costs passed on in reduced freight rates - For large shippers, may be easier to secure large allocations on a single ship Disadvantages for customers of container line - Fewer service choices as a result of larger ships - May be more hub and spoke and less direct services (though this is not always the case) - Risk of congestion due to peak container arrivals at the terminal delaying the flow of goods to the importer

Answer 203

Advantages of retaining In House - Direct employment and control of staff involved - Direct communications between logistics staff and all other functions in the company - Ensures common targets and objectives across the whole business - A single IT platform can cover logistics as well as production, sales etc. - Direct negotiations with carriers etc. on rates/services – can get best deal particularly for large exporters/importers - Individual services can be sub-contracted if required Disadvantages of retaining In House - Managing logistics is a distraction from core business - May not have sufficient scale to get best freight rates - May not have sufficient scale to attract best logistics staff - Additional HR tasks to recruit, train and manage specialist staff for logistics functions - Need to devote resources (including capital) to IT systems, warehousing facilities etc.

Answer 204

Advantages of Outsourcing - Easy availability of specialist expertise and systems, including sophisticated pipeline tracking, inventory management, documentary processing etc. - Major logistics providers have worldwide capability – instant support in new markets - Logistics providers have strong purchasing power - No requirement to allocated scarce capital resources for investment in warehouses, transport facilities etc. Disadvantages of Outsourcing - Arms length relationship with management of the logistics provider - Can be difficult to remove/change third party providers - Longer communication chain - Provider may subcontract, so further loss of control - Risk of loss of secure information/business secrets - A profit element goes to the third party – goals of the provider may be different from your own

Answer 205

- Risk and consequence of congestion at transfer points; bunching of arrivals/departures at port and ICDs etc. - Delays – problems of missed connections - Insufficient handling equipment at the transfer point and/or equipment breakdown - Labour shortages, or insufficient skills - Risk of misrouting/loss of consignments - Delays caused by documentary problems (though these may not be directly related to the modal transfer)

Answer 206

- Although transit points are susceptible to delay, so is transport itself (road congestion, bad weather, technical breakdown, late changes to schedules) - Transfer points can add value e.g. hub/spoke, relay services increase opportunities for the shipper; inland transfer points provide opportunity for rail/road multimodal routing, and for handling customs formalities away from the port - Shippers can use transfer points as an opportunity in their supply chain, for example to temporarily store cargo, to set up distribution hubs, amend the final destination for the cargo etc.

Answer 207

General - - Receipt for shipment - Evidence of contract - Document of Title/Negotiable document For shippers - - Evidence of quantity/condition of goods accepted by carrier (e.g. in case of a claim) as well as the contractual terms - Ability to sell goods to third party by negotiating the document - Can ensure title not passed to buyer until the goods have been paid for - Able to conduct transaction with buyer via documentary credit

Answer 208

General - - Receipt for shipment - Evidence of contract - Document of Title/Negotiable document For transport operators - - Provides detail of contractual terms, including limitation of liability and other protections for the carrier - Avoids dispute over quantity/condition of goods - Ensures goods released to correct party through surrender of B/L at destination

Answer 209

General - - Receipt for shipment - Evidence of contract - Document of Title/Negotiable document For confirming banks - Ensures that seller complies with the provisions of the letter of credit, including - Bill of lading description of goods - Condition of goods (clean bill of lading) - Dated shipped on board complies with letter of credit Provides some security in case funds not transferred by advising bank

Answer 210

**The three conventions:** * Hague Rules 1924 - the first international cargo liability convention which established basic rights and liabilities for carriers and shippers (including limiting carrier liability) * Hague-Visby Rules 1968 - Updated Hague rules, adressing inflation, modernised shipping practices and gaps in previous liability limits. It incorportaed SDR and adressed containerisation * Hamburg rules 1978 - Developed by the UN to address percieved pro-carrier bias in Hague-Visby. These focus on shipper protection and have multimodal applicability Factors leading to new conventions: **Liability Limits** * Hague rules used an outdated gold standard and inflation meant that liability limits became ineffective over time (initially the limit was 100 GBP per package/unit) * Hague-Visby updated this by introducing SDR (special drwing rights), making compensation more reflective of potential values lost * Hamburg increased liability limits, favouring greater compensation for shippers **Impact of containerisation** * Hague rules had no provisions for containerised goods, creating abiguity * Hague-Visby addressed containerisation by applying limits per container * Hamburg provides clearer guidance for containerised shipments, and is the only one that applies to all legs of multimodal shipemts rather than just the sea leg **Percieved Carrier Bias** * Hague rules - criticised for heavily favouring carriers with limited accountability * Hague-Visby - made modest adjustments (increasing liability limits) but is still consideredd to favour carriers * Hamburg - shifted favour to shippers by expanding carrier liability and simplifying burden of proof Current situation: Multiple conventions remain in force due to limited global consensus * Hague and Hague-Visby rules are favoured by developed/establised maritime nations * Hamburg rules have been adopted by fewer contries, and mostly developing nations Legal fragmentation persists, reflecting differing national interests and trade dynamics

Answer 211

Determining the applicable cargo liability convention depends on the document type, cargo nature, and trade route, with overlap and jurisdictional differences sometimes leading to legal complexity. Clear contract terms can help mitigate uncertainties. **Documentation type:** The applicable convention depends on the transport document used: * Bill of Lading (B/L): Conventions like Hague, Hague-Visby, and Hamburg Rules apply primarily to shipments governed by a B/L or similar document of title. * Non-Negotiable Documents (e.g., Waybills): May not be covered unless explicitly incorporated in the terms. **Type of cargo** - Hague and Hague-Visby Rules do not apply to certain types of cargo such as live animals or on-deck cargo, unless expressly agreed otherwise in the contract. - Hamburg Rules have a broader scope, covering live animals and deck cargo unless explicitly excluded in the contract. **Rules relating to cargo load, discharge and BL issuance** * Hague rules apply if the shipment involves a port in a Hage-contracting state where the BL is issued or delivery occurs (even if the other port is not in a contracting state) * Hague-Visby rules apply is the cargo is loaded in a contracting state, regardless of destination port * Hamburg rules apply if cargo is loaded or discharged in a Hamburg contracting state, or if the BL specifically applies Hamburg rules **Overlapping jurisdictions/jurisdiction shipping** - In cases where different countries have ratified different conventions, two conventions may potentially apply to the same shipment. e.g. a shipment loaded in a Hague-Visby state but discharged in a Hamburg Rules state could create ambiguity - Parties may engage in jurisdiction shopping, choosing favorable legal systems to resolve disputes. - Contract Clauses: Shippers and carriers may specify the governing convention in the contract to avoid conflicts.

Answer 212

Why was this thought neccesary? - The need for a more ‘balanced’ convention - Recognition of the need for a convention to cover door to door transport - Specific rules for electronic documents - The risk of regional conventions being developed by e.g. USA, EU Why are they not yet in use? - Lack of Ratification: Requires 20 ratifications to enter into force; only a few countries (e.g., Spain, Togo) have ratified so far. - Supporters: Supported by shippers, logistics operators, and some nations for its comprehensive scope and updated provisions. - Opposition: Opposed by shipowners and carrier lobbies due to increased liability and costs. - Political Stalemate: Despite initial support from nations like the U.S. and EU members, domestic lobbying and industry divisions have prevented further ratifications. - Current Status: The Rules remain in limbo, with insufficient ratifications and significant stakeholder disagreements.

Answer 213

**Customs Regulations/Clearance** **Reason**: Delays occur when goods fail to meet documentation or tariff classification requirements under customs laws. **Examples**: U.S. Importer Security Filing (ISF): Requires submission of cargo information 24 hours before shipment; non-compliance leads to penalties and delays. A shipment held at customs due to discrepancies in declared values or improper tariff classification can face extended inspection times. **Health or vetinary regulations** **Reason**: Goods like food, plants, or live animals must comply with strict health standards and may be quarantined for inspections. **Examples** of Specific Regulations: EU Animal Health Law (AHL): Requires veterinary checks on live animals entering the EU. A shipment of livestock may face delays if veterinary inspections reveal issues with documentation. **Security regulations** **Reason**: Heightened security protocols (e.g., scanning for contraband or verifying cargo origins) can slow down processing times. **Example**: A container flagged for additional screening at a port due to incomplete advance cargo information (e.g., under the U.S. 24-Hour Rule) may miss its scheduled transfer. U.S. 24-Hour Advance Cargo Manifest Rule: Cargo destined for the U.S. must submit detailed shipment data 24 hours before loading; delays occur for non-compliance. **Physical Checks on Cargo** **Reason**: Shipments may be inspected for compliance with hazardous cargo labeling, weight restrictions, or packaging standards. **Examples** of Specific Regulations: * IMDG Code (International Maritime Dangerous Goods Code): Delays arise if hazardous cargo lacks proper labeling or documentation. * SOLAS Verified Gross Mass (VGM) Rule: Requires accurate container weights to be provided before loading; incorrect declarations may result in weighing, repacking, or rejections.

Answer 214

- Providing/managing door to door transport (including different modes as required) - Documentation/Customs clearance etc. - Shipment Tracking – IT systems to plan and manage the inventory from supplier through to point of use/sale - Calling forward and/or consolidating cargo at/near point of supply - Providing and operating warehouse facility(ies) for client; - Labelling and Packaging - Local distribution/Last mile delivery - Management of returns (return to warehouse or supplier, including repackaging or recycling)

Answer 215

- Regular, reliable and frequent services enable products to be sourced from almost anywhere globally - Containerisation, and proper packaging and handling ensure goods are protected from damage/pilfering and arrive in good condition for sale/use at destination - IT systems provide vital visibility on the supply chain, e.g. stock management, in transit and at warehouse – information in real time; exception reports so that corrective action can be initiated quickly in case of delays - Providing confidence to the customer that goods will arrive as scheduled, and managing any delays, and consequences of delays - Supply chain management can reduce overall costs, so making it cost effective to source goods from cheaper suppliers, even if they are further away - Logistics can combine different modes of transport to give an optimum balance between speed and cost, and manage supplies from different sources, providing resilience in the supply chain - Managing communications with all parties in the supply chain

Answer 216

Advantages of Owning - Control over the assets for their lifetime - Equipment can be procured to owner’s specifications - Opportunities for displaying company branding - Cheaper in long term (as long as finance available at reasonable rate) Disadvantages of Owning - Limited opportunity to dispose of assets if they are no longer required (2nd hand values generally low) - Uses up borrowing capacity/capital - There may be a lead time to procure assets if generally built to order (e.g. containers, ships)

Answer 217

Advantages of Chartering/Leasing - Flexibility over the term for which they are procured - Subject to the terms of the lease, can be returned if no longer required - No upfront capital needed - Equipment may be available at short notice - Terms of lease may leave the responsibility for maintenance/repair with the owner - Some leases allow pick up and drop off of equipment at different locations Disadvantage of Chartering/Leasing - Likely to be more expensive, as the owner of equipment will expect a return on investment – short term leasing is especially expensive - No control over specification of equipment - Operator is dependent on equipment availability on the lease market – if none available, may lead to loss of business - Dependent on type of lease, may be dependent on others to operate/maintain the asset (e.g. a time charter) which could result in unplanned downtime

Answer 218

Advantages of Buying in Capacity - This has the least risk – capacity can be bought on short timescales (e.g. NVOCC purchasing space from carrier) - Capacity can be utilised from different sources – more flexibility, and may improve buying power, through competition - Greater flexibility to deal with peaks, short term requirements Disadvantages of Buying in Capacity - Likely to be the most expensive solution – the asset provider takes most of the risk - Capacity cannot be guaranteed at peak times - Lack of control over service levels – e.g. for NVOCC using liner services

Answer 219

- Reduce service speed (slow steaming); this may impact capacity (which can be mitigated by introducing an extra vessel on a loop) and impact on transit times - Larger vessels bring economies of scale, which can reduced fuel cost per unit carried - Improve vessel utilisation – this can be achieved in a number of ways, and reduces fuel cost per unit carried; however higher vessel utilisation may result in less choice of sailings for customers and/or roll over of cargo - Routing of vessels

Answer 220

- Switch from road to rail or barge (more energy efficient modes) – may be slower, though rail/barge can be more reliable - Reduce deadheading of vehicles – better planning/load matching – no negative impact on customers - Smart route planning (avoid congestion) - Improved maintenance can reduce fuel costs

Answer 221

- Plan container stocks, so as to minimise the movement of empty containers (reduces fuel costs of moving empties) - Improve supply chain efficiency – optimise routes, consolidate loads etc. - Invest in new technology for ships/vehicles. – more fuel efficient, use of alternative fuels

Answer 222

- shared/transparent information - real time/global information availability - 24/7 access - speed/accuracy of transfer of data - smart systems – the ability to test multiple alternative solutions to logistics challenges.

Answer 223

- On line/automated booking or rate-quoting systems - On line/automated shipping instructions - Remote printing of B/Ls/Invoices - Track and Trace access for individual consignments - Stock control systems/logistics planning systems etc.

Answer 224

- Transit times - Cost - Reliability – risks of delay - Capacity - Suitability for particular types of cargo/commercial requirements - Availability of premium services

Answer 225

- Establish the physical requirements for the cargo (e.g. container type, loading/unloading requirements) - Route from origin to destination (including exit/entry port, mode of transport, and any transhipment required) - Identifying the carrier for the various legs (An NVOCC may use its own transport for inland legs, or contract with the carrier, or with a third party) - Establish costs for each leg (need to know validity and whether subject to surcharges etc.) - Consider competitors’ quotes and service parameters in comparison to your own - Decide on the final quote, based on above, and including contractual terms (e.g. period of validity, notice period for changes, volume guarantee or volume rebate etc.) Alternative services to consider - - Using different carriers - Using different types of equipment - Using different modes for inland leg - Using different entry/exit ports and/or different routes - Offering value added services (documentation, customs clearance, cargo insurance etc.)

Answer 226

- Bills of lading can be used for shipments under letters of credit - A bill of lading is required if a shipper wants to be able to sell the cargo to third parties while in transit, or otherwise wishes to trade the goods - Even if no transfer of title involved, the shipper may wish to use a bill of lading so as to be able to control release of cargo at destination - Waybills are most suited to in house shipments, open account trading and/or where there is a high degree of trust between shipper and consignee - Waybills are particularly useful for short transits, where there is a serious risk that a bill of lading would not be available in time for release of the cargo at destination - Waybills are also used for non maritime shipments

Answer 227

JIT principles: - Logistics principles – right goods, at right place, right time and right cost - The need to manage inventory throughout supply chain – a continuous pipeline - Objective of minimising static inventory (in some cases, reducing it to zero) Advantages - Minimises ‘wasted’ inventory holding costs, including capital/financing cost of stock, and costs of providing/operating warehousing space - Avoids risk of damage to and loss of warehoused stock - Avoids risk of obsolescence; in the context of car assembly it avoids holding stocks of parts for many different models, where customer preferences may change rapidly Disadvantages - Risk of running out of stock – financial and reputational consequences - Consequences of unforeseen demand change – explain the importance of forecasting - Consequences of delays in supply chain and at point of manufacture – and the need to have alternative plans, including alternative suppliers, alternative modes/routes (resilience in the supply chain)

Answer 228

Main factors: - Speed - Frequency - Reliability - Transparency of data on cargo movement (including appropriate routine and exception reports to the customer) Secondary factors: - Global coverage (of markets important to the manufacturer) - To what extent the operator owns/controls the key parts of the supply chain - Expert assistance/advice with cargo transport and related issues - Timeliness/Quality of documentation - Range/quality of E Commerce products (ease of access to information/time saving) - Guaranteed space availability per sailing - Environmental credentials (e.g. demonstrating approach to minimising pollution, carbon emissions etc.)

Answer 229

Benefits of consolidation to users - Individual operators have more space to cater for large shippers - Individual operators have the scale to invest in extra services (e.g. IT/E commerce, value added services such as warehousing etc.) so improving service levels - Larger operators will offer a greater range of services (e.g. geographical coverage, more direct ports covered , increased frequency) - Greater economies of scale result in cost savings which are normally passed on to customers over time - Consolidation should produce more financially stable companies Disadvantages of consolidation to users - Less choice of carriers/operators - Carriers and NVOCCs with greater market power may be more successful in maintaining and increasing rates - Fewer carriers has led to fewer services offered (e.g. reduction from four to three Alliances) so reducing the choice of services available to the customer (even though there may be more than one line offering that service) - Reduced capacity may impact the customer’s supply chain (difficulty in obtaining bookings, risk of shut outs)

Answer 230

Advantages of global operators/Disadvantages of smaller/niche operators - Individual operators have greater route/port coverage, and more frequent services - Logistics providers have greater country coverage with more individual offices, depots, warehousing facilities etc. - One stop shopping - Greater range of value added services - Possibility of multi trade/volume discounts - Niche operators cannot offer these benefits, and may have higher cost structures, so unable to offer similar prices and levels of customer service Advantages of niche operators/Disadvantages of global operators - Niche carriers provide specialised services in particular trades – with expert market knowledge - Niche logistics providers can specialise in particular commodity supply chains as well as in particular trades (e.g. motor vehicles, uncontainerised/project cargo, refrigerated cargo, hanging garments etc.) - Better personal service from a small organisation - Tailor made packages which suit the customer, rather than just a ‘standard’ service

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