Sea Air Freight and Customs Procedure by ravi311.pptx

INTERNATIONAL
SHIPPING (air & sea)
DOCUMENTATION
and
CUSTOMS
PROCEDURES
Trainers:
Vikram & Ravi

PROGRAM OUTLINE
Role of freight
forwarding in trade
transactions
Trade transactions –
Incoterms – fulfilment
objectives
Critical touch points
Air Freight forwarding
Types of air freight
shipments
Applications and usage
of air freight
Forwarding operations
Sea Freight forwarding
Types of sea freight
shipments
of sea freight
Customs Clearance
process
HS codes
Inspections –
verifications – Customs
audit
EDI process
Role of Customs process
in global trade
Embargo – restrictions –
IP protection
Certificate of Origin –
content – Excise
controls
AWB – Certificate of
Origin – Shipping
Guarantee
BL – Packing List –
Proforma Invoice
Import Export process –
Transhipment – Customs
process - air/sea clearing
Insurance – claims -
exclusions
Ravi Vik Ravi Vik Ravi

Trainers
Vikram:
 Retired.
 Previous Project Manager (Siemens)
 General Manager (Ontime Logistics)
 International Trainer (OUM)
 Industry coach

Trainers
Ravi:
 General Manager (IAL Group, Dubai)
 Director (IAL Malaysia & Singapore)
 International Trainer (OUM)
 Industry coach

Tell us about you
What’s your job profile?
What are your daily stress points?
What do you wish to learn from this training?

Role of freight
forwarding in trade
transactions
objectives
shipments
of air freight
shipments
of sea freight
Customs Clearance
process
HS codes
Inspections –
audit
EDI process
Role of Customs
process in global trade
Embargo – restrictions
– IP protection
content – Excise
controls
PROGRAM OUTLINE
Origin – Shipping
Guarantee
Proforma Invoice
exclusions

Trade transactions
SELLER BUYER GOODS

Trade transactions
SELLER BUYER GOODS
CONTRACT
for sale and purchase of goods
DELIVERY
for fulfilment of contract
+

Trade transactions
SELLER BUYER GOODS
CONTRACT
for sale and purchase of goods
DELIVERY
for fulfilment of contract
“INCOTERMS” “LOGISTICS SERVICE”
+

What is “INCOTERMS”?
 “Incoterms” = International Commercial Terms
 Incoterms defines the obligations on delivery, risks
and costs involved in fulfilling the commercial
transaction between the seller and buyer.

Range of 11 INCOTERMS
Image courtesy of OGP Freight Pte Ltd

Example (2):
FOB = Freight on Board

Example (3):
DAP = Delivered at Place

Agreed
specification
Agreed packaging
Handling &
stowage
Promised delivery
time
Risks of damage Risks of delay

CRITICAL TOUCH POINTS
“Trust but verify”
AGREED
SPECIFICATION
AGREED PACKAGING HANDLING &
STOWAGE
PROMISED DELIVERY
TIME
RISKS OF DAMAGE RISKS OF DELAY
 Third party inspection
 Quality Certification
 Sampling
 Handling
standards
 Stowage plan
 Temperature
 Moisture
 Delivery
deadline
 LC expiry
 Cargo expiry
 Insurance on
cargo
 Third party
liability
 Public liability
 Liquidated
damages
 Penalties

WHY DO WE
NEED
LOGISTICS?
Nature’s supply chain process


Activities to fulfil the international buyer-
seller transaction
TRANSPORT THE GOODS CROSS TO ANOTHER DELIVER TO BUYER

Activities to fulfil the buyer-seller
transaction
TRANSPORT THE
GOODS
CROSS TO ANOTHER
COUNTRY
DELIVER TO BUYER
Air / sea freight / land
transport
Air / sea freight /
land transport
Customs clearance
(origin)
Customs clearance
(destination)
Warehousing Warehousing
Services required 

Today’s focus
Air Freight
Sea Freight
Customs process TRANSPORT THE
GOODS
CROSS TO ANOTHER
COUNTRY
DELIVER TO BUYER
Air / sea freight /
land transport
Air / sea freight /
land transport
Customs clearance
(origin)
Customs clearance
(destination)
Warehousing Warehousing

Role of freight
forwarding in trade
transactions
objectives
shipments
of air freight
shipments
of sea freight
Customs Clearance
process
HS codes
Inspections –
audit
EDI process
Role of Customs process
in global trade
Embargo – restrictions –
IP protection
content – Excise
controls
PROGRAM OUTLINE
Origin – Shipping
Guarantee
Proforma Invoice
exclusions

 Types of air freight
shipments
 Applications and usage of
air freight
 Forwarding operations
 AWB details, clauses and
important points
 Certificate of Origin and
its usage
WHAT ARE WE GOING TO LEARN?
This Photo by Unknown Author is licensed under CC BY-SA

Air freight operations
Types of aircraft Cargo loading Operations
process

Types of air
shipments
Brainstorm  What are the
types of cargo shipped by
air?

WHEN DO WE USE AIR FREIGHT?
 Inaccessible by road or
waterways –eg. aboriginal
villages, mountain camps,
military camps
 Fast delivery needs – eg. quick
delivery of spares for high value
manufacturing, emergency
supplies, documents, personal
gifts

 High security items – military
items, electronic data
 Perishables – flowers, some food
materials, solid CO2
 Live animals

On time delivery – F1 car parts,
football team accessories etc

 A unit load device (ULD), is a
pallet por container used to
load luggage, freight and mail
on passanger aircraft or cargo
aircraft.
 Since this leads to fewer units
prevent delayed flights. Each
ULD has its own packing list
(or manifest) so that its
contents can be tracked.
CARGO HJANDLING
ULD=UNIT LOAD DEVICE

CARGO LOADING
ULD = UNIT LOAD DEVICE

CARGO LOADING
BULK CARGO LOADING

AIR CARGO
LOADING
https://www.youtube.com/watch?v=UFW-M1Xbx0U

Concept of costing in air
freight:
 Volume or weight
whichever greater
 M3 … or MT
COSTING IN AIR FREIGHT
This Photo by Unknown Author is licensed under CC BY-NC

Receive AWB, commercial invoice and
HAWB from consignee
Confirm flight arrival status from airline
Confirm payment to MAS Cargo on :
Storage
Prepaid or charges collect status
Cargo handling charges to terminal
operator
Prepare K 1 or K 3,Import permit
Arrange for Customs examination (if
required)
Pay Customs duty
Arrange for transport,Deliver to importer
CARGO CLEARANCE IMPORT (AIR)

Receive order from exporter
Confirm cargo space reservation
Organize the following documents for
submission to Customs:
K 2,AWB,Export permit (if any)
Cargo collection (confirm cut off time)
Obtain Customs clearance
Submit following documents to TO for
cargo acceptance
K 2, AWB
Weight note Cargo acceptance stamp
endorsed by forwarding agent
Release cargo to TO for loading into
aircraft
Obtain all endorsed documents from TO
CARGO CLEARANCE EXPORT AIR

Air freight operations process
Shipper
Airline (or
GSA)
Consignee

Air freight operations process
Shipper
Airline (or
GSA)
Consignee
 Packing list
 Invoice
 Shipping Instructions
 Certificate of Origin
 MSDS data sheet
 AWB  Pre-alert
 AWB copy (via email)
 Flight details

Documentation *(at shipper)
 Packing list
 Invoice
 MSDS data sheet
 AWB  Pre-alert
 Flight details

Documentation *(at shipper)
CERTIFICATE OF ORIGIN AND ITS USAGE
Certification of the country of origin where the product concerned is made.
A certificate which identifies the country of origin is typically required for international shipments.
Certain countries may entirely bar shipments from certain other countries. In select countries, a notarized
certificate of the country of origin may significantly lower the taxes levied. Certain nations require a signed
statement as to the origin of the export item.
Such certificates are usually obtained through a organization such as a local Chamber or Commerce.
A certificate may be required even though the commercial invoice contains the information.

Documentation *(at airlines)
 Packing list
 Invoice
 MSDS data sheet
 AWB = Airway Bill  Pre-alert
 Flight details

Documentation *(at airlines)
 How an Air Waybill Works
 An air waybill (AWB) serves as a receipt of goods by an airline (the carrier), as well as a contract of
carriage between the shipper and the carrier.
 The AWB will also contain the shipper's name and address, consignee's name and address, three letter
origin airport code, three letter destination airport code, declared shipment value for customs, number of
pieces, gross weight, a description of the goods and any special instructions (e.g., "perishable").
 It also contains the conditions of the contract that describe the carrier's terms and conditions, such as its
liability limits and claims procedures, a description of the goods, and applicable charges.
 Important: An airway bill is a standard form distributed by the IATA.
 IATA stands for the International Air Transport Association

Documentation *(at consignee)
 Packing list
 Invoice
 MSDS data sheet
 AWB
 Pre-alert
 AWB copy
(via email)
 Flight details

Sea Freight:
Broad process flow
Shipper provides cargo Forwarder transports Consignee receives cargo
Consignee pays for cargo …
when and how?
How does consignee ensure
correct cargo?
Who pays for the transport?
How does cargo cross the
country borders?
Does shipper pack the
cargo?
Does shipper provide
insurance?
How does shipper ensure
payment?

Expanded
process [Shipper] provide
shipment details
[Forwarder] book
space on vessel
[Shipping Line] issue
booking
confirmation
[Shipping line]
release container for
stuffing
[Shipper] stuff
container and notify
[Shipping line]
pickup and move
container to port
[Shipper] provide
packing list +
proforma invoice
[Shipper] provide
COO +
phytosanitary
certificate etc
[Forwarder] submit
Customs documents
[Shipping line] issue
draft BL
[Shipper] check
limitations and
procure insurance
[Shipper] confirm BL
[Shipping line]
confirm load list
[Shipping line] load
cargo on board +
issue manifest
[Shipping line] issue
Bill of Lading

Sea Freight:
Documentation
 Consignee pays
for cargo … when
and how?
 How does
consignee ensure
correct cargo?
 Booking confirmation
 Bill of Lading –
master, house,
multimodal
 Customs documents
 Load plan &
Lashing plan
 Proforma Invoice
 Packing List
 Certificate of Analysis
Shipper provides cargo Forwarder transports Consignee receives cargo

PACKING LIST
What is it used
for?

PROFORMA
INVOICE
What is it used
for?

BILL OF LADING
What is it used
for?
Why it is
important for the
details to be
accurate?
What to check
before confirming a
BL?

BILL OF LADING
Types of BL
MASTER BILL OF LADING –
issued by carrier (shipping line)
 Things to check
 Limitations
 Shipper/Consignee “represented” by
forwarder
 Package description
HOUSE BILL OF LADING – issued
by forwarder 
 Match with Master BL
 Limitations to be highlighted
 Time bar to be checked
 Container return time, free days

BILL OF LADING
Types of BL
MULTIMODAL BILL OF LADING – issued by 3PL forwarder
 Variable risks with variety of transport
 Hand over process from point to point
 Overall insurance (and leg-wise insurance)
 Things to check
 Limitations
 Shipper/Consignee “represented” by forwarder
 Package description

BILL OF LADING
Have you
seen the
clauses at
the back?
Key points and
critical clauses

SHIPPER-CONSIGNEE ACTIONS
 Shutout
 Rollover
 Delinquent at origin
 Delinquent at destination
 Wrong cargo declarations (DG,
Haz)
 Overweight
 Mis-labelling
SOME INHERENT RISKS

Condensation – and how to
mitigate
Humidifying &
dehumidifying
Leakage & seepage
Pests
Temperature fluctuation
Vaporisation
SOME INHERENT RISKS

 Certificate of Chemical Analysis - It is required to ensure the
quality and grade of certain items such as metallic ores,
pigments, etc.
 Certificate of Inspection – It is a type of document describing the
condition of goods and confirming that they have been inspected.
 Certificate of Shipment - It signifies that a certain lot of goods
have been shipped.
OTHER DOCUMENTS

 Certified Invoice - It is required when the exporter needs to certify
on the invoice that the goods are of a particular origin or
manufactured/ packed at a particular place and in accordance
with specific contract.
 Commercial Invoice - Issued by the exporter for the full realisable
amount of goods as per trade term.
OTHER DOCUMENTS

 Consular Invoice - Mainly needed for the countries like Kenya,
Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Australia,
Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the
prescribed format and is signed/ certified by the counsel of the
importing country located in the country of export.
 Customs Invoice - Mainly needed for the countries like USA, Canada,
etc. It is prepared on a special form being presented by the Customs
authorities of the importing country. It facilitates entry of goods in
the importing country at preferential tariff rate
OTHER DOCUMENTS

 Health/ Veterinary/ Sanitary Certification - Required for export of
foodstuffs, marine products, hides, livestock etc.
 Legalised / Visaed Invoice - This shows the seller's genuineness
before the appropriate consulate or chamber or commerce/
embassy.
 Manufacturer's Certificate - It is required in addition to the
Certificate of Origin for few countries to show that the goods shipped
have actually been manufactured and is available.
OTHER DOCUMENTS

What types of
cargo are sent
by sea?

Types of sea
cargo &
shipments
 Containerised cargo
 Bulk cargo – solid, liquid and
gas
 Oversized cargo – on flat rack,
on deck, towed
 Roro cargo
 Livestock
 Pets
 Art and antiques

SEA FREIGHT OPERATIONS
Some relevant terms and elements:
Container yard > Container Freight Station > Shipping line’s
port stack
Transhipment > Transfer of ownership
Container return > Survey for damages > ISO standard
repairs > detention & demurrage

Types of
shipping
vessels for
sea
transport

Types of
shipping
vessels for
sea
transport
 Container vessel
 Bulk carrier
 Tanker vessel
 LNG tanker
 Reefer (bulk) vessel
 Livestock carrier
 RORO vessel
 Heavy Lift carriers

20´ = 6,058 m
Container
units …
TEU =
twenty
foot
equivalent
units
TEU

About 7 x the
length of the
largest aircraft
– Airbus 380
EMMA
MAERSK

Bulk carriers
carry dry
cargoes in huge
cavernous holds,
such as coal,
iron ore, grain,
sulphur, scrap
metal.
BULK
CARRIER

Tankers are
designed to
carry liquid
cargoes (not just
oil).
TANKER
VESSELS

TANKER VESSEL
CONSTRUCTION
& SIZES

What are the cargo you have handled
in the last 5 years?
What are the destinations (export)
you have managed in last 5 years?
What are origins (import) you have
managed in last 5 years?
QUICK REVIEW

LNG is a gas, so
to transport it, it
needs to be kept
as a liquefied
state by
reducing the
temperature to
approximately
MINUS 160
degrees C
LNG
TANKERS

Bulk carrier
with
temperature
control feature
REEFER
VESSELS

Transport live
animals around
the world is
performed by
specialist
vessels, designed
to transport large
numbers of
cattle and sheep
LIVESTOCK
CARRIERS

LIVESTOCK
CARRIERS
One
modern
vessel may
carry up to
125,000
sheep

Normally in
rectangular
design, is
purpose built to
carry large
numbers of
cars
RORO VESSELS
Car Equivalent Units
(CEU)
… or RT units
*based on 1966 Toyota Corolla

Built in 2016
8,500 CEU
HÖEGH TRACER

Also used in
military for
transporting
tanks and other
vehicles
RORO VESSELS

AIRCRAFT
CARRIERS
FLY-IN FLY-OFF
VESSELS?

Heavy lift vessels
are built to load,
carry and
discharge large,
unusual shaped
cargoes that will
simply not fit
inside the holds
of conventional
vessels.
HEAVY LIFT
VESSELS

FLOAT-ON
FLOAT-OFF
HEAVY LIFT
VESSELS

THE
DANGERS
AT SEA
Ship accidents causes heavy
losses to cargo and the ship
itself

Export – FCL
(Port Klang)
This Photo by Unknown Author is licensed under CC BY-SA-
NC
Reference from: Ministry of International Trade & Industry

Import – FCL
(Port Klang)
This Photo by Unknown Author is
licensed under CC BY-SA
Reference from: Ministry of International Trade & Industry

OTHER ASPECTS OF CUSTOMS CLEARANCE
HS codes
Customs Inspections
Customs verifications of
cargo
EDI process
Shipping guarantee This Photo by Unknown Author is licensed under CC BY

HARMONISED SYSTEM (HS CODE)
HS Code
• Harmonized Commodity
Description and Coding System
• WCO (world custom org)
• HQ – Brussels , Belgium
• HS Code used by 180
countries as a basis
• Code updated regularly

HS CODE STRUCTURE
1. Sections (21 sections)
2. Chapters (01 – 99)
3. Headings
4. Sub Headings
Anything can be classified
Raw Material to semi finished
to finished products

HS CODE STRUCTURE
• 1st 4 digits - Heading
• 1st 6 digits - Sub Headings
• Cannot be altered
• Individual countries may
extend HS to 8 – 10 digits
(Country Code)
CHAPTER
 84: Nuclear Reactors, mechanical
boilers, machinery and appliances and
 parts thereof:
 84.25: Heading (identify grouping
within chapter) Pulley, tackle and hoist
other than ship hoist, winches and
capstans, jacks
 84.25.11: Sub Heading (more
specific)
 Powered by electric motor
 84.25.11.100: Hoist
 84.25.11.900: Others

 Classification
 Valuation
These functions will determine:
1. the rate and amount of duty to be paid
2. whether the goods are subject to any
prohibition order
3. whether the goods are eligible for
preferential rates of duty
CUSTOMS DECLARATION

K1 – declaration of goods imported
K2 – declaration of goods to be exported
K3 – application / permit to transport goods within the
federation
K8 – application / permit to tranship / remove goods
K9 – requisition /permit to remove goods from customs control
APPLICATION PROCESS OF VARIOUS CUSTOM FORMS.

Electronic Data Interchange
EDI is defined as the electronic
transfer from computer-to-
computer using commercial or
administrative transaction using
an agreed standard to structure
the transaction or message data.
 Electronic transfer from computer
to computer
 Commercial or administrative
purpose
 Agreed standard to structure the
transaction or message data
 Electronic interchange between 2
or more parties via available
hardware using standard format
of data
 Saves paper, manpower, time and
increases efficiency
UNDERSTANDING EDI PROCESSING

Shipping Guarantee is an indemnity given by the
customer, countersigned by the Bank, to a shipping
company or its agent to allow the shipping company to
release the goods to the customer (consignee named
in the Bill of Lading) without the presentation of the
original Bill of Lading.
SHIPPING GUARANTEE

 The product can help importers pick up the goods in time to
avoid port demurrage.
 1. Reduction of capital tied up . Pick up and resell goods in
advance with bank credit in order to speed up circulation of
capital and reduce capital tied up.
 2. Grasp market opportunities. It will assist importers in
obtaining documents of title to goods, picking up and
reselling goods in case of arrival of goods prior to
documents.
 3. Less financial expense. Importers can pick up goods in
time to avoid demurrage charge.
 It is applicable in the case of short shipping voyage and the
goods arriving prior to the documents.
BENEFITS OF SHIPPING GUARANTEE

Good checklist
for import
export process
BEST
PRACTICES

Source:
http://www.mpc.gov.my/wp-
content/uploads/2016/08/guidebookImp
ortExport.pdf
Good checklist
for import
export process
BEST
PRACTICES

KEYWORDS
FOR
DISCUSSION
This Photo by Unknown Author is licensed under CC BY-SA-NC

While there is
uncertainty all
around us?
CAN WE GIVE A FIRM GUARANTEE?

RISK OF DELAY
 On time
arrival
 On time
departure

YOU KNOW THAT THERE IS NO
GUARANTEE
So what do
you do when
dealing with
a shipment

STANDARD DRAWING RIGHTS
720 BAGS OF ANIMAL FEED IN ONE
CONTAINER = WHAT IS THE “UNIT”?
MAERSK 12 CONTAINERS OF TUNA =
SPAIN TO YOKOHAMA
TIME BAR

How do these affect your
documentation?
 Embargo and sanctions
 Border closures
 Confiscation
 “Ship did not touch blacklisted
countries”
 Special approval certificates
OTHER RISKS

INSURANCE
• 1601- marine insurance law in
English law were established
in England
• 1906 - the Marine Insurance Act
was passed
• One of the oldest forms of
insurance

INSURANCE
Particular
Average
General
Average
What is this?

Particular
Average
General
Average
In marine insurance, an
“average” is a partial
loss of vessel or cargo
INSURANCE

Particular Average
• Particular Average
Loss is a partial loss
damage to any
particular cargo
General
Average
INSURANCE

P
a
r
t
i
c
u
l
a
r
A
v
e
r
a
g
e
n
e
r
a
l
A
v
e
r
a
g
• I
f
t
h
e
INSURANCE

LET’S RECAP
WHAT WE
LEARNT
HOW ARE WE
DOING SO FAR?

Role of freight
forwarding in trade
transactions
objectives
shipments
of air freight
shipments
of sea freight
Customs Clearance
process
HS codes
Inspections –
audit
EDI process
Role of Customs
process in global trade
Embargo – restrictions
– IP protection
content – Excise
controls
RECAP OF TODAY’S SESSION
Origin – Shipping
Guarantee
Proforma Invoice
exclusions

INTERNATIONAL
SHIPPING (air &
sea)
DOCUMENTATION
and
CUSTOMS
PROCEDURES
ANY COMMENTS?
FEEDBACK? QUESTIONS?

Sea Air Freight and Customs Procedure by ravi311.pptx

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Sea Air Freight and Customs Procedure by ravi311.pptx