freight is classified by how it is tendered to a carrier, either
full container load (FCL), or less than container load (LCL).
shipments are tendered to the ocean carrier as a full 20 foot
or 40 foot load. The container moves intact from origin to
destination point. Since the entire container is handled as
a single unit from origin to destination, there is less chance
for loss or damage to the freight. Highway and steamship safety
regulations impose maximum weight that can be loaded into
shipments are tendered by shippers who don't have enough freight
to fill a full container load. Carriers consolidate multiple shipments
in the 20 or 40 foot containers at their container freight stations
Ocean freight is usually shipped in containers, containerization
makes handling more efficient and reduces damage. The ocean container
is reusable, weather tight and are designed for intermodal travel,
they can be hauled by trucks or trains, as well as by ships.
two most common container lengths used in ocean freight are 20-foot
and 40 foot, the width of most ocean containers is 8 foot. The most
common container type is the dry cargo container, this is a weather
tight metal box. There are also refrigerated, also called reefer,
open top and flat bed type containers.
foot dry cube
foot dry cube
foot dry cube
foot dry cube
The maximum capacity assumes that all space is used, the standard
load ability is closer to the actual capacity given the unused space
between pieces of freight.
Sometimes it is not possible to load freight into a container. There
are two basic types of non-containerized ocean freight:
This is used for oversized, bulky freight in very high quantities
or high volume. This freight will travel loose in areas of a steamship
designed to accommodate it. Common break bulk freight includes oil,
wheat, sugar, meat products, livestock, plywood, and steel.
on/Roll off (RO/RO)
This freight includes anything on wheels such as automobiles, trucks,
boats, farm machinery, etc. The vehicles are driven onto the ship,
a RO/RO ship looks like a floating, multi-level parking garage.
The loading doors can be as high as 20 feet, and as wide as 40 feet.
The ocean shipping industry is populated by steamship lines, NVOCC's,
ocean forwarders, customs brokers, and other specialized companies
Steamship lines own and operate cargo ships. Steamship lines sail
regular routes on regular schedules. Shippers, forwarders, and NVOCC's
must accomadate their schedules to steamship schedules.
Non Vessel Operating Common Carrier, also known as NVO's. NVOCC's
are "steamship lines without steamships," the act as a
carrier and provider of ocean freight services. An NVOCC issues
its own through bills of lading, makes agreements with one or more
steamship lines that it will ship a certain number of containers
with the line within an agreed amount of time. NVOCC's can carry
FCL or LCL shipments, their strength is in the LCL as they can obtain
rates that an LCL customer could never obtain direct from a steamship
line. The NVOCC operate container freight stations (CFS) for consolidating
freight, can also advance charges such as inland freight, cartage
and forwarding fees, this enables the NVOCC to accept responsibility
for shipments going from an inland origin to an inland destination.
They offer flexibility that steamship companies cannot offer. NVOCC's
can send freight with many lines, often finding more direct routes
and better prices than a single steamship line can offer.
The ocean forwarder can quote ocean, truck, rail and other freight
rates for shipments moving to a port, arrange truck, rail and ocean
shipping, prepare documents for export, but cannot issue a bill
of lading. An NVOCC or steamship line can only prepare documents
for destination to which they ship.
Customs brokers are licensed by the government of the countries
in which they operate. The customs broker's role for ocean shipping
is to complete import paperwork on behalf of importers, and assist
the importer in clearing the shipment through customs. Customs brokers
are not involved in export shipments. The broker can act as a consultant
to the consignee advising as to how to declare goods to minimize
and Non-conference Steamship Lines
A conference is two or more steamship companies that agree on pricing
and schedules between specific geographic regions of the world.
Conferences are a bit like monopolies, but they are allowed by international
law. Conferences can set prices as a group without being subject
to anti-trust laws. Conferences file joint tariffs for specific
lanes and for a specific commodities within those lanes. A conference
legally controls much of the freight on particular lanes. Conferences
provide customers, NVOCC's, and forwarders with advantages such
More available space
The capacity of the member lines is combined so the conference can
offer greater tonnage in the lanes it serves.
Better equipment availability
Joining forces allows conference lines to pool containers and other
Non-conference, or independent, steamship lines cannot provide the
schedules that conference members can. Since non-conference lines
usually stop at many more ports than conference lines, customers receive
less direct and slower service to most ports served. The non-conference
lines offer rate and pricing advantages over conferences. Independents
often have better prices than conferences, but more importantly, they
have more flexibility to set rates than conference lines do. Independents
do not have to have their rates reviewed and approved by other lines.
Ocean rates are applied to individual shipments based on either
the weight or volume measurements of the freight. Ocean shipments
are always calculated using the metric system, the rates are commodity-specific
as well as lane-specific, ocean prices are most often determined
using the volume of the freight. It is essential to know both the
weight and the number of cubic meters for a shipment to determine
whether with or volume will be used.
"1000 kilos or 1 cubic meter, whichever produces the greater
by the exporter. Used to Determine duty And tax payable in destination
country. Shows priceThe importer must pay for the goods being
shipped.Must show terms of sales, and be issued in accordance
with the letter of credit. Must be on company letter head.
show: description, quantity, weight, and volume of The goods
show; description, weight, dimensions of commodity, vessel and
date of voyage; exact destination; name and
Telephone number of destination contact; what type of
Service (door-to-door, door-to-port etc.); terms of payment;Value
of shipment; export license number.
by the U.S. Customs Service to monitor the flow of commodities
to other countries. Contains informationSimilar to the commercial
invoice. Must include EIN Number and signatures
from the USwith a value of $2500 ormore.
form that contains information similar to a billOf lading.
requested by Importer(special Certificates of origin are required
for goods shipped To destination countries With special agreementsWith
origin countries. (e.g. NAFTA)
by the freight forwarder for the exporter(or by the customs
broker for the importer). Policies Can cover total or partial
loss. They can cover freight
From door-to-door, or on the main vessel only.
requested by exporter or importer
of Credit L/C
credit line opened by a bank and debited when the Buyer show
the carrier-endorsed bill of lading to theBank. When letter
of credit is used, the banks take thePlace of the importer and
exporter in exchanging Shipment documents and money
international transactions where it is necessary to ensure that
both shippers and consignees fulfill their obligations for promptShipment
issued by the importer's bank to the exporter.
international transactions Where some level of rotection
Is needed for the buyer and Shipper, but not as much as in a
Letter of credit transaction.
matter what the mode of transportation is, the bill of lading (B/L)
serves as the basic contract between the shipper and the carrier.
There can be one or more bills of lading used for a single ocean
shipment. An ocean shipment is often passed from a domestic inland
carrier to a steamship company, and then to a foreign inland carrier.
Each carrier will require a bill of lading. An NVOCC will issue
a combined bill of lading to cover the shipment on all parts of
its trip. The combined bill of lading eliminated redundant paper.
Even if the shipment is only moving port-to-port a combined bill
of lading can be used. A freight forwarder does not issue a combined
bill of lading. The customer will receive copies of the inland carrier's
bill of lading and the ocean carrier's bill of lading.
of lading Type
Bill of Lading,
movement of the LCL ocean shipment from the
bill of lading, truck bill of lading
door to the consolidation center.
domestic bill of lading
or Steamship bill of lading
movement of the shipment by steamship from the origin port to
the destination port.
Order" (negotiable) Bills of Lading
Ocean bills are usually consigned "to order of the shipper"
when letters of credit or sight drafts are used. When a bill of
lading is consigned in this way it becomes a negotiable bill of
lading. A negotiable bill of lading serves as the actual title to
the goods, at least as far as the steamship line is concerned. In
other words, whoever holds the original copy of the negotiable bill
of lading is the owner of the goods. The bill of lading will often
be held temporarily by an agent or bank. The shipper will give up
his or her right to the bill of lading only after having been paid.
an ocean shipment is a direct sale (prepaid or collect), the bill
of lading is usually consigned to the consignee. The bill of lading
for such shipments is non-negotiable and is often referred to as
an express bill of lading.
of lading for Letters of Credit
Letters of credit and sight drafts are used in both international
air and ocean shipments. But in ocean shipping, special bills of
lading are used for letter of credit and sight draft transactions.
of Sale (Incoterms)
When goods are shipped, the seller and buyer of the goods agree
on terms of sale. The terms of sale determine which party will be
responsible for the goods at each particular stage of transit. While
terms of sale are important for the buyer and the seller, they are
also important for the carrier.
The four most common incoterms used in
- Ex Works
FOB - Free On Board
CFR - Cost and Freight (also called C&F)
CIF - Cost, Insurance and Freight
The term Ex Works refers to the days when places of business were
known as "works"- the blacksmith's works, the iron works,
the goldsmith's works. When this term of sale is agreed to, it means
that the exporter's price for the goods includes making the goods
available at the named point (the "works"), ready for
shipment. The importer is responsible for getting the goods from
the exporter's works to the destination.
Free on Board (FOB)
When FOB is the agreed term of sale, the exporter's price includes
the cost of the merchandise and all shipping costs to the named
point, including loading on board the carrier and forwarder's fees.
The importer is responsible for getting the goods from the origin
Cost and Freight (CFR)
The exporter's price includes the cost of the merchandise and all
shipping costs to the named point. The exporter is responsible for
getting the goods from the exporter's works to the destination port.
Insurance and Freight (CIF) The exporter's price includes the cost of the merchandise, all shipping
costs to the named point and insurance.
of Credit/Sight Drafts
A letter of credit is a credit line opened by a bank and debited
when the buyer shows the carrier-endorsed bill of lading to the
bank. Letters of credit are sometimes used in international ocean
transactions, and help to ensure that both shippers and consignees
fulfill their obligations for prompt shipment and payment.
a letter of credit is used, the banks take the place of the importer
and exporter in exchanging shipment documents and money.
letter of credit process protects both the buyer and the seller.
Once a letter of credit is issued, neither party can pull out of
the transaction without the other's agreement. The exporter is confident
he will be paid-the money is already set aside before the goods
are shipped. The importer is confident that the goods will be shipped,
because the exporter cannot get his money until the goods are shipped.
draft is a check issued by the importer's bank to the exporter.
A sight draft is also called "cash against documents."
When a sight draft is used, it is like a letter of credit transaction,
but without the letter of credit itself. There is not the level
of protection for the exporter that there is with a letter of credit,
but there is some. The exporter does not have to give up his goods
if he is not paid.
as port-to-port shipments are those shipments that travel from a
shipping terminal in one inland city to a shipping terminal in another
inland city. A more accurate name for such a service level is point-to-point.
These shipments can still travel under an ocean bill of lading.
origin inland phase
The ocean phase
The destination phase
Trucking to the consolidation warehouse
Loading the shipment in containers with other LCL shipments
Moving the LCL container load to the deep water port.
Loading the container on the vessel
Sailing to the destination port
Unloading the container from the vessel
Destination Inland Phase
Moving the shipment to a bonded deconsolidation warehouse
Clearing the shipment through Customs
Moving the shipment from the warehouse to destination via truck
In ocean shipping, documents move separately from the freight itself.
The original bill of lading as well as the shipping instructions,
commercial invoice, and other required export documents are flown,
or sent electronically, to the destination. Getting the documents
to the destination will ahead of the freight allows the consignee's
customs broker to begin the process of clearing the freight through
The consignee's customs broker handles most of the documents related
to the international shipment. Before an international shipment
can be released and delivered, the customs broker must:
Prepare the inland transit document which allow freight to be
moved from the port before clearing customs
Contact the inland carrier
Obtain all customs and freight releases
Forward original copies of ocean bill of lading and delivery orders
to authorize pickup of freight at the port