Chapter 4 transport strategies

As a receipt from carriers:Type of goods  Quality  Quantity As evidence of the contract of carriage  Between carrier and shipper holder of B/L  Transport conditions  Delivery of go

Chapter 4:

Transport strategies

PRESENTED BY: BICH HOAI, MSc.

HO CHI MINH CITY UNIVERSITY OF TRANSPORT

• Purchase and sale of freight (Carrier strategy and Shipper strategy)

• Freight documents (including Fiata from)

• Freight claim

Transportation Planning

Mode Selection

• Decision must achieve best fit and balance between:

• Modal service capabilities (Accessibility, capacity, transit time, reliability, safety)

• Product characteristics – size, durability, value

• Supply chain requirements for speed, service, cost

• Decision must also align with corporate strategy, control risk and provide

required level of customer service

=> Selected mode is one has minimum logistics cost (both on route and at

stations)

Table 3-4

Transportation Planning

Carrier Selection

• Decision based on best fit and balance between:

• Geographic coverage

• Average transit time and reliability

• Reliability of on-time pickup and delivery

• Technical capabilities, ability to share information

• Equipment availability and capacity

• Product protection/carrier’s freight damage experience

• Carrier’s financial stability and freight rates

• Service factors tend to outweigh cost

Transportation Planning

Carrier Selection

• Carrier selection strategy

• Leverage transportation dollars by using a limited number of carriers

• Build relationships with service providers

• Monitor carrier performance, rates, and financial stability

• Have contingency plan with back-up carriers

• Differs from mode selection decision

• Many more options to choose from

• Decision made more frequently but not for each move

Transportation Planning

Route Planning

• Carriers primarily responsible for routing

• However, shippers should have input to ensure proper consideration given to:

• Customer satisfaction and supply chain performance

• Efficiency and product safety during transit

• Routing decisions should be

• Coordinated with mode and carrier selection

• Aligned with global sourcing, inventory, demand fulfillment strategies

Area of selection decision

• Must connect all defined points

• Transportation costs must associated with other service fees: inventory, handling

• Count the costs arising related to the mode of transportation (eg.TG transport: safety stock)

=> The cheapest mode of transportation does not often make the

lowest logistics cost

• Purchase and sale of freight

Transport strategy

Company strategy

Purchase and sale of freight

The effective transportation manager must have negotiating skills

• Negotiation factors

• Carrier negotiations

• Shipper negotiations

Negotiation factors

determined by market force and regulatory constraints

and antitrust law

- Can not below the carrier’s cost (reasonable)

- Must be available to all shippers of the same commodity between same origin and destination (nondiscriminatory)

- Can not be an attempt to reduce competition or create a monopoly for

shipper or carrier (antitrust)

• Defining Objectives of negotiation:

• A specific and definitive statement about negotiation objectives is a

prerequisite to effective negotiating.

• Written statement is developed and provide to all negotiating member => keep all team member on the same track

Rates and Services

• (1) Discount ( for shippers that ship small shipments);

• (2) Commodity rate (for TL shipment that move in large volume on regular basis): 10T/ day, 7 days/ week;

• (3) Contract rate (for very large volumes of freight): 50,000 T/ year

Negotiation factors

• Services: depends on needs of shipper and consignee

• Stopping in transit : stop at intermediate points to pickup/ delivery => makes individual shipment => cheaper

• Scheduled pickup and delivery : to reduce waiting time and improve driver and equipment utilization

• Deferred delivery (often used in air transport): allow carrier to send a

shipment on later flight instead of on next scheduled flight => improve fleet utilization=> slower service, lower rate

• Inside delivery : delivery to office, warehouse… => extra fees for inside delivery (rate and time frame are negotiable)

• Specified transit times : negotiate maximum transit time for a shipment and penalty rate for noncompliance

Negotiation factors

Carrier negotiations

Rate reductions:

Carrier negotiations

Service improvement:

• What level of services is desired by our customers?

• What level of services is provided by our competitors?

• What service improvement will lower our cost?

• What service changes are necessary to provide the proposed logistics source?

Shipper negotiations

• Competition

• Similar product

• Increase the volume of goods

• Large volume of goods

• Due to existing of significant differences in tariffs => different

measures to be applied

Show the desire to change the carrier => the carrier is willing to reduce the profit to keep clients

Shipper negotiations, competition

Negotiating rate applicable to our products based on similar ones:

Shipper negotiations, Similar product

• Promise total profit from shipping increases

Applied when the position of enterprises in the market increased

Shipper negotiations, Increase the volume of goods

• One of the most persuasive elements in price negotiation

=> Use service negotiating (stopping in transit) to make larger volume

Shipper negotiations, large volume of goods

Negotiation game

Professional transportation

OUR SERVICE, YOUR PROFIT

Transport document issues

• The most important transport document

• Non-transferable

• No original bill of lading is required

• Just prove that the consignee is the one named in the bill of lading

• Transferable

• Endorsement

Freight Documentation

Central documents in sea transport

Main document for the regulation of the relationship between shippers, carriers and consignees.

Filled in by shippers or forwarding agents

 Signed by representatives of carriers

BILL OF LADING DEVELOPMENT

As a receipt from carriers:

Type of goods

 Quality

 Quantity

As evidence of the contract of carriage

 Between carrier and shipper (holder of B/L)

 Transport conditions

 Delivery of goods

Document of title

 Transfer the right to obtain goods from seller to buyer

FUNCTIONS OF BILL OF LADING

Negotiable B/L (quasi negotiable

instrument) -> Transferable of B/L in terms

of rights and obligations

Non -negotiable B/L -> not transferable

Endorsement

BILL OF LADING CLASSIFICATION

Based on cargo loading and unloading status

• Shipped on board B/L: a B/L issued only after the goods have actuallybeen shipped on board the vessel;

• Received for shipment B/L: a B/L issued to acknowledge receipt ofshipment before cargo loading or before official original bill of lading isissued

Based on the comment on the transport

Clean B/L: a B/L in which there is no indication of damage to the goods andpackaging;

Unclean B/L: a B/L in which there is indication of damage to the goods orpackaging

BILL OF LADING CLASSIFICATION

• Based on the legality of the bill of lading

Original B / L: with a hand signature, may or may not have the

"Original“ stamp and can be trade, transferable

Copy B / L: often marked "Copy" and non-negotiable, non-transferable

• Negotiable B/L & Non-negotiable B/L

Negotiable B/L: A negotiable bill of lading instructs the carrier to

deliver goods to anyone in possession of the original endorsed

negotiable bill, which itself represents title to and control of the goods.Non-negotiable B/L: A non-negotiable bill of lading sets out a specific consignee to whom the goods are to be shipped, and does not itself represent ownership of the goods

BILL OF LADING CLASSIFICATION

• Based on ownership

Straight B/L: a non-transferable B/L which indicates the carrier will deliver the goods to the named consignee

Open B/L (Blank B/L; To bearer B/L): a B/L which indicates no specific

consignee and the goods will be delivered to anyone who holds the B/L; Order B/L: a title document to the goods, issued "to the order of" a party whose endorsement is required to effect the negotiation

- To order of a named person

- To order of a issuing bank

- To order of Shipper

BILL OF LADING CLASSIFICATION

Based on the transport itinerary

• Direct B/L: issued when goods are shipped from the port of loading directly to the port of discharge without transshipment;

• Through B/L: the carriage of goods from the port of loading to the place of destination are taken by two or more than two carriers, and the bill of lading to cover the entire carriage is issued by the first carrier.

• Multimodal B/L: is a bill of lading issued for the carriage of goods by the "door to door" mode FIATA B/L

Master B/L & House B/L

• Master B/L: A Master Bill of Lading (MBL) is issued by the Shipping Line (Carrier) to the NVOCC Operator, or Freight Forwarder.

• House B/L: A House Bill of Lading (HBL) is issued by an NVOCC Operator, or Freight

BILL OF LADING CLASSIFICATION

HBL – HOUSE BILL OF LADING

BILL OF LADING CLASSIFICATION

FUNCTIONS OF AIRWAY BILL

• Air waybill has 2 extremely

important functions:

• Delivery receipt for the carrier,

• Proof of shipping contract

• AWB is not a transferable

document

AWB – AIRWAY BILL

• A bill of lading issued by a

consolidator to individual shippers

when they receive goods from them

so that shippers have bill of lading to

pick up goods at the destination

HAWB – HOUSE AIRWAY BILL

Freight Documentation

Some B/L quote freight but it is normally stated on an independent document

A freight bill, which also is referred to as a bill of lading, is a legal contract

between the shipper and the carrier The freight bill includes the necessary

details of the transaction and typically is signed by the shipper and the carrier.

Available to FIATA members only

• FIATA FCR - Forwarders Certificate Of Receipt

• FIATA FCT Forwarders Certificate of Transport

• FBL – Negotiable FIATA Combined Transport Bill of Lading

• FIATA SDT Shippers Declaration for the Transport of Dangerous Goods

• FIATA FFI – FIATA Forwarding Instructions

FIATA’S DOCUMENT

• FCR - FORWARDERS CERTIFICATE OF RECEIPT FIATA FCT FORWARDERS CERTIFICATE OF TRANSPORT

FIATA’S DOCUMENT

FBL – NEGOTIABLE FIATA COMBINED

TRANSPORT BILL OF LADING

FIATA’S DOCUMENT

FWR FIATA WAREHOUSE RECEIPT

FIATA’S DOCUMENT

FIATA SDT SHIPPERS DECLARATION FOR THE

TRANSPORT OF DANGEROUS GOODS

FCR - FORWARDERS CERTIFICATE OF RECEIPT

document, which was prepared by FIATA

for general use in international

shipments

where Ex Works (EXW) trade term is

selected by the parties

FIATA’S DOCUMENT

FIATA FCT FORWARDERS CERTIFICATE OF

TRANSPORT

• Issued by Forwarder to consignor

FIATA’S DOCUMENT

FBL – NEGOTIABLE FIATA COMBINED TRANSPORT

BILL OF LADING

is a carrier-type transport document set up by

FIATA for the use by freight forwarders acting

as multimodal transport operators (MTO)

FIATA’S DOCUMENT

FWR FIATA WAREHOUSE RECEIPT

freight forwarders’ warehousing

country which standard trading conditions

are to be applied to the FIATA warehouse

receipt

FIATA’S DOCUMENT

FIATA SDT SHIPPERS DECLARATION FOR THE

TRANSPORT OF DANGEROUS GOODS

FIATA’S DOCUMENT

• FFI – FIATA FORWARDING INSTRUCTIONS

FIATA’S DOCUMENT

FCR - FORWARDERS CERTIFICATE OF RECEIPT

DOCUMENTS

HBL – HOUSE BILL OF LADING

AWB – AIRWAY BILL

Freight Claim

• Freight claim:

• Delay, loss or damage claims:

• The carrier is not liable for loss or damage under "reasonable" conditions => liability

is limited to the bill of lading

• But, responsible for unreasonable delays, devaluation due to delays

• Freight overcharge claim due to:

• Applying rate of the wrong items

• Apply wrong rates

Freight claim:

• Present to the carrier to claim for loss, delay or freight over charged

• Claim in writing within 12 months ( for loss)- (Article 97 of the 2005 Maritime

Code)./ article 169 of the VN maritime code 2015)

• Damage can be seen or invisible

• Any claim must pay claim fee => only claim when compensation > fees

Claim process

Claim accept

Freight Documentation, International

Export documents

•Khai báo XK- export declaration

•L/C- letter of credit

•Hóa đơn thương mại (C/I)- commercial invoice

•Chứng nhận xuất xứ (C/O)- certificate of origin

Consular Invoice

country

• Certify that exporters not dumping

(Chứng nhận nhà xuất khẩu đã không bán phá giá hàng hóa)

• Provide information about the taxable goods group

(Cung cấp thông tin về nhóm hàng phải chịu thuế là như thế nào)

• Can be used as a replacement of C / O

(Có tác dụng thay thế cho giấy chứng nhận xuất xứ)

Import documents

• Thông báo hàng đến – Arrival notice

• Thông quan NK – customs entries

• Lệnh giao hàng (D/O)- Delivery order

• Chứng nhận thanh toán cước – Freight release

• Hóa đơn HQ đặc biệt- Special customs invoice ( America customs)

Customs Invoice

• Description of goods, quantity, weight, size

• Selling price, freight, insurance

• Packaging costs

• Conditions of delivery, payment