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Category Archives: Maritime Law

What is OOG or Out of Gauge Cargo?

If your cargo is extremely large or has unwieldy booms and protrusions that do not fit into standard shipping containers then you have an out of gauge cargo on hand, shortened to OOG cargo.

The list of OOG cargo is long. Some examples are very large automobiles such as luxury coaches, automobile trailers, aircraft parts, parts of wind turbines, construction machinery, abnormally large parts of machinery used in electricity generation, etc.

Also referred to as AILs (Abnormally shaped Indivisible Loads), such out of gauge cargo exceed standard container dimensions and maybe extraordinarily heavy to be accommodated in rectangular shipping containers such as a twenty feet container (TEU) or a forty feet container (FEU).

The sheer dimensions and weight of such odd-shaped and odd-sized cargo require specialized heavy-duty equipment to handle them for transport by sea.

Unless they are handled with care and precision, such cargo can easily get damaged during transport.

Cost of Transporting Out of Gauge Cargo

Transporting out of gauge cargo can be a costly affair as it involves additional costs. The out of shape cargo eats into space that could have been used for other cargo.

When an OOG cargo is loaded on the deck or below-deck of a cargo carrier, neither can another container be placed and secured to the twist-locks on the adjacent sides of it nor can containers be placed on top of the OOG cargo, as in flat racks and platform containers.

Hence, the shipping and transport companies charge extra to make up for this wasted space. Space thus wasted is also referred to as ‘lost slots’.

Planning and Execution

An out of gauge cargo, if not secured or lashed properly to their containers can damage other cargo that is kept near it. Besides, when out of gauge cargo is placed onboard a vessel, its location has to be planned carefully as there will be other cargo that will have to be unloaded before the OOG cargo.

It is not only the sea voyage of the OOG cargo that has to be planned and executed correctly but also the overland transport from the manufacturing plant or its storage location to the port of loading.

Since some out of gauge cargo may have abnormal protrusions or could be extremely heavy, the type of trailer truck to be used for moving it and the appropriate gantry crane have to be chosen carefully and arranged. Next, the road route to be taken from the OOG cargo storage location to the port, up to the loading point, has to be planned.

The route to the seaport should be planned in such a way that busy roads and peak hours are avoided. There should be enough clearance on either side of the road and on top (over bridges, arches, etc.) for the OOG cargo to pass safely and also not to damage property.

Equipment

The most common options available for the transport of out of gauge cargo is flat racks or open-top containers.

A flat rack container usually has collapsible walls at either end of the container. The sides of the container are open and do not have walls.

Out of gauge cargo can be loaded in such containers from the sides or the top. When loading is from the side, it is normally done using heavy-duty forklifts.

If the cargo is loaded from the top, it is done using cranes. The cargo is usually placed in the centre of the container for optimal weight distribution.

Unlike a flat rack, the open-top container has rigid walls along its length and doors on one of its ends, like the conventional containers. However, the top is open or it may have a removable hard roof. The hard roof can be removed using a crane. Sideloading is not possible in open-top containers as they have rigid walls along the sides. Hence it is done through the door using a heavy-duty forklift or from the top using a crane.

In some type of open-top containers, the beam atop the door can be dismantled to facilitate the loading of gauge cargo through the door.

To help the movement of heavy-duty forklifts into the container some of the doors can be swivelled outward.

Once the out of gauge cargo is loaded, the cargo may be lashed to the floor of the container securely using straps. The open-top is then covered with a sturdy sheet such as tarpaulin or with the container roof.

Tarpaulin is a heavy-duty, flexible material that is commonly used to cover such containers or the out of gauge cargo. It is usually made of canvas coated with polyurethane or polyethene or other such water-proof plastics. It is quite versatile and will also conform to the shape of the out of gauge cargo. Plastic or canvas sheets can also be used to cover the container or cargo.

Most flat racks have pad-eyes or lashing-rings on their floor for lashing the out of gauge cargo or for tying the tarpaulin cover.

Flat racks and open top containers used in the transport of out of gauge cargo are mostly of the standard sizes of 20 feet and 40 feet. This is so that they fit on standard trailers and can be handled by the standard loading/unloading equipment at ports and warehouses easily.

Most of these containers have floors made of hardwood.

Flat Rack Containers

Flat racks are normally found in lengths of 40 feet and 20 feet. Out of gauge cargo can be loaded on to them from the sides using heavy-duty forklifts or placed on the floor from the top using a crane. They are therefore suitable for cargo such as abnormally-shaped machinery, boats, long tubular structures, etc.

A typical 40 feet flat rack container has dimensions of 40’ x 8’ x 8’ 6” (height of the end walls) and they carry a payload of approximately 25 tons. When the cargo is very long or too broad and does not fit on a single flat rack, two or more than two flat racks are connected to hold the cargo.

A 20 feet flat rack container has dimensions of 20’ x 8’ x 8’ 6” (height of the end walls) and they carry a payload of approximately 22 tons.

One advantage of flat rack containers is that empty flat racks can be stacked one on top of the other during storage to save space.

Open Top Containers

Open top containers also come in sizes of 40 feet and 20 feet, though custom-made containers are also available for special cargo. In such containers, cargo is usually loaded from the top using a crane or through the door using a heavy-duty forklift.

A 40 feet open top container has dimensions of 40’ x 8’ x 8’ 6”. These containers can carry a weight of up to 26 tons.

A 20 feet open top has dimensions of 20’ x 8’ x 8’ 6” (height of the end walls) and they carry a payload of approximately 28 tons.

The dimensions and payload capacity change between different makes of containers and container series.

Flatbeds or Platform Containers

Flatbeds or platform containers are also used to transport out of gauge cargo. As the name implies, they do not have any walls or a roof and hence the only restriction to follow is the weight of the OOG cargo.

A 20 feet flatbed with a floor-length of 19.88 feet has a payload of 31 tons. 40 feet flatbeds come in lengths of 39.99 feet each, with a payload capacity of 39 tons.

Like flat rack containers, flatbed containers can also be stacked one on top of the other during storage or transport of empties.

Payload

Why is the payload capacity between 20 feet and 40 feet containers disproportionate? If a 20 feet open top container can hold 28 tons, shouldn’t the 40 feet hold 56 tons?

This anomaly in payload between the two sizes of containers is because of the container design and weight restrictions of these designs. Carrying excess weight than what is prescribed by the container manufacturer can result in “container sagging’.

The container can crack under the excess weight causing damage to the cargo and other accidents.

Different countries may have different limits on container payloads. Since some out of gauge cargo weigh more than the prescribed limit, it is often disassembled and transported as parts and then later reassembled after reaching its destination.

Most of the containers that are used for carrying cargo have Safety Approval Plates in accordance with the CSC 1972 (Convention for Safe Containers 1972). This plate that is fixed on the container shows all the details of the container design and most importantly its gross weight. The gross weight is shown in both kilograms as well as pounds.

Gross weight is the total weight of the container and the payload it can carry. According to the CSC 1972, containers should undergo inspection at the container depot by certified inspectors within 5 years of the date of its manufacture and after that, once every 30 months to ascertain and certify their sea and road-worthiness.

Convention for Safe Containers 1972 (CSC 1972)

The International Maritime Organization (IMO) and the United Nations (UN) jointly promulgated a set of procedures for the handling of containers to ensure human safety during the transport of such containers. It set uniform international safety regulations to avoid confusion caused by the various regulations of different countries.

While the CSC 1972 applies to most transport containers, it, however, covers only containers of a prescribed minimum size. Containers that are covered under the CSC 1972 should be fitted with the Safety Approval Plate showing all the technical data pertaining to the container and its gross weight.

Over the last few decades, various amendments have been introduced to the original set of rules of CSC 1972 to incorporate additional safety and security measures.

Types of Cargo

Carriers transport cargo packed in containers, as dry bulk (mineral ores, grains, etc.), break-bulk (out of gauge cargo, oil drums, etc.), liquid bulk (crude oil, edible oil, etc.), and RO-RO or ROLL-ON/ROLL-OFF (normally automobiles that are driven into the carrier’s hold for transport and driven out of it upon reaching the destination).

The dimensions or weight of some out of gauge cargo may exceed the limits that normal equipment such as flat racks, open tops, or platform containers can handle.

In such cases, it is sometimes secured to the vessel directly, after taking into consideration the safety of the cargo, the vessel, and other cargo that are kept near the OOG cargo.

Monitoring Out of Gauge Cargo Onboard Ships

The deck officers of a cargo vessel are normally in charge of overseeing the loading and unloading of cargo. They work according to a loading/unloading plan which is prepared carefully. Slots to be left vacant adjacent to the out of gauge cargo must be planned.

For below-deck storage, the hatch cover clearance must be considered to avoid any damage to the cargo or the vessel. An even load onboard the vessel and an even discharge plan prevent the listing of the vessel especially when very heavy out of gauge cargo is present onboard the ship.

Good knowledge of the ballast operations and associated instruments help deck officers in their job. They have to ensure that OOG cargo is fixed to the twist-locks and lashed properly to the deck.

Rough seas can often cause these to come loose and therefore the deck officers must conduct periodic supervision during the sailing.

Out of Gauge Rate

Shipping companies usually require the following information from the shipper to provide them with a rate for transport of the out of gauge cargo.

  • Description of the out of gauge cargo.
  • Dimensions (longest length x broadest width x tallest height).
  • Weight of the OOG cargo in kilograms.
  • Point of loading.
  • Point of discharge.
  • Photos or drawings (front, side, and top views) showing the centre of gravity.
  • Lifting points of the OOG cargo.
  • Special instructions, if any.

Transferring and transporting out of gauge cargo requires a team of experts who can plan and execute the handling and transport of such cargo from its point of origin to the destination.

Most leading shipping and transport companies have separate teams to handle OOG cargo consignments.

Source: Marine Insight

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Damaged Shipping Containers – Causes And Types

The modern – day shipping container is undoubtedly one of the most useful inventions of our time. From the days of hand-loading and unloading cargo boxes and items of different sizes and shapes, we have come a long way. From ordinary corrugated steel containers of the 1950s – 70s, today, we use containers made of high-quality Corten steel.

These heavy-duty containers are tough enough to withstand the knocks and bumps while being moved from one location to another by the different modes of transport – rail, truck, or ship. They can also withstand harsh weather conditions and are corrosion-resistant. They provide safety and security to the products within.

A well-maintained shipping container is watertight as well as airtight. These qualities make them ideal for transporting goods by sea, especially perishable goods.

But however tough they may be and as nature dictates, all elements are subject to ‘wear and tear and the efflux of time’.

Now, the question is, ‘Are such tough shipping containers prone to damage?’.

The simple answer is yes; shipping containers may get damaged when they are handled carelessly or due to natural disasters.

They may be damaged in the following situations:

  • While in storage at the container yard
  • During the handling and movement of the empty container
  • While loading cargo at the shipper’s premises
  • During the movement of the laden container by overland transport
  • While sailing onboard a ship
  • Unloading of the container at the port
  • While unloading cargo at the consignee’s premises
  • Returning the empty container

Causes of Container Damage

Careless Handling

A multimodal container is normally transported from one location to another by overland transport, such as rail or road, before it reaches the quayside for loading onboard a ship. In the process, it is lifted and moved several times, changing its position. Unless handled carefully, the container can get damaged easily.

Careless or inexperienced MHE operators can cause containers to hit against each other and result in extensive damage.

Heavy-duty cranes and forklifts have to be used carefully to avoid collisions with parked containers. Similarly, when containers, either laden or unladen, are not stacked properly, it can cause them to shift and collapse, causing damage to adjacent containers or property.

Lack of Training

Pallets have to be loaded correctly. Overloading of cargo or uneven weight distribution can cause it to topple over and, in turn, upset the container balance.

Loading and unloading staff have to ensure that pallets are stacked evenly and on a level surface. Overloading of cargo inside a container can cause the floorboard to sag and eventually crack.

Similarly, uneven weight distribution within a container can damage the container floor or cause it to topple from the trailer bed. In many cases, poor container yard conditions are also to blame for container damage.

Improper locking of the container to the trailer bed is a major cause of accidents while being transported over land. Besides ensuring that the container truck and trailer bed are in good condition, the driver of the truck has to ensure that the twist locks are engaged properly and the container secured. Reckless driving of container trucks can result in serious accidents.

During sailing, rough seas and harsh and inclement weather conditions may cause containers to break out of their lashings and get washed away into the sea. This may be the case, especially when a container is not secured properly onto the ship’s deck.

Some of them sink quickly to the ocean floor, while others may float for some time before sinking to the bottom. Containers that get knocked around on the deck or the ship’s hold can cause extensive damage to the ship as well as other containers on board, besides the goods inside getting damaged.

Dangerous Goods

Certain highly inflammable materials, like chemicals, can cause fire within the container while being transported if they are not packed properly following the manufacturer’s instructions.

Force Majeure

Natural disasters can cause damage and destruction to shipping containers or cargo. While most such disasters are completely unavoidable, steps can be put into place to minimise damages and loss.

In all cases, the cargo that a container carries must not deteriorate in quality and should reach its destination safely. A compromised cargo container can result in damage to the cargo within. Once damaged, certain types of goods may be dangerous for the port staff or other material handling equipment (MHE) to handle. It may result in grievous injuries or even fatalities.

Training and Best Practices

MHE operators, container truck drivers, and all those staff involved in the loading, unloading, and transportation of cargo have to be educated and trained properly on best practices to prevent accidents and damages.

Types of Container Damages

Container damages are generally classified as follows:

Damages to Container Door

The container door is made up of several parts, making it vulnerable to damage. Besides the Corten steel body of the door, it consists of the locks, the lock rods, hinges, and the rubber gasket. A shipping container with a door that does not close and seal properly is considered a damaged container. Also, an intact CSC plate issued by the relevant authorities, fixed on the container door, is mandatory for all international container cargo movements.

Dents

A dent is a local depression on the container wall that is normally caused by an impact.

Bulges

Bulges are normally smooth depressions that protrude outward or inward from the container wall.

Scratches

Scratches are caused by a sharp object, such as the forks of a heavy-duty forklift, when it hits and drags along the surface of the container without piercing it completely.

Fractures and Cracks

These are breaks on the container surface, normally in the form of a line, that may or may not have penetrated the steel wall of the container.

Tears

When the container wall is penetrated, and the two sides are pulled apart, we have a tear.

Holes

When a sharp object penetrates the container wall, it can cause a hole. Holes on a damaged shipping container can also be in the form of a perforation.

Dents, bulges, and scratches may or may not have damaged the goods that are stored in that particular area of the container.

Claiming Compensation for Damage

What are the steps to follow in case a shipping container is received in damaged condition?

The first step would be to take clear photographs of the damage, showing the container number and CSC plate. The next would be to inform the cargo carrier, your insurance company, and the shipper of the damage and the value of the damage if it can be worked out at that time.

The necessary shipping documents have to be provided to these parties to claim compensation. They are:

  • Statement of claim showing details of the loss
  • Bill of lading
  • Proof of delivery of goods
  • Insurance papers
  • The invoice showing the quantity and value of goods
  • Photographs of the damage

Following this, the insurance company will conduct a survey to ascertain the damage and its cause. Sometimes, the shipper, as well as the consignee’s insurance companies, will conduct a joint survey.

Once the surveyors agree on the cause and decide on who has to compensate and the amount to be paid to the consignee, the mode of disposing of the damaged goods is agreed upon and executed at an agreed date.

Certification of Shipping Containers

Who confirms the seaworthiness of a shipping container? Every country that is party to the CSC (Container Safety Convention 1972) has an Administration department that is in charge of issuing the CSC plates to seaworthy containers.

Upon request, certified third-party container inspectors will conduct a thorough inspection of a container to certify to the Administration of the respective country that the container is up to specifications and seaworthy. The Administration will then issue a CSC plate that is affixed to the container door.

Certified Third-party Container Inspectors

Such an inspection by certified third-party container inspectors covers the material of the container, the outside including the underside of the container, the doors, the inside, the ceiling, walls, and vents, if any. The exact dimensions of the container, as well as any repair work carried out on the container, are also taken into account during this inspection.

What Happens to Damaged Shipping Containers?

Generally, a container is made up of doors, corner castings, cross beams, the ceiling, walls, and the floor.

Sometimes, depending on the type of damage to a container, it may be repaired and used again for the transport of cargo. Or, it may be cut up, melted, and recycled for other uses. Damaged containers may be repaired and used as permanent storage containers or as cabins, living quarters, etc.

Some very badly damaged containers are left to rust on land or used to form artificial reefs.

These methods of disposal also apply to shipping containers that are retired or past their useful life of 20 – 25 years.

Any asbestos, lead, or other toxic components on the container are first removed before disposal by the above methods. Asbestos, which is highly resistant to corrosion and heat, is sometimes used in the insulation of shipping containers.

Prolonged exposure to asbestos can cause asbestosis, lung cancer, and other diseases. The marine paint used to protect heavy-duty Corten steel containers from rust and corrosion is usually high in lead and other harmful chromates.

It is estimated that much less than 1% of the total shipping containers in circulation globally are damaged or lost at sea each year.

Source: Marine Insight

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How Port and Terminal Operators Can Control Emissions?

While the maritime industry has, in the past few years, been the subject of intense scrutiny for its GHG emissions, most of the regulatory focus has been on the shipping sector.

While this is not unusual given that it is the maritime transport leg of the supply chain that accounts for the bulk of emissions (primarily through its bunker consumption), there are other stakeholders that also contribute to emissions (albeit not of the same magnitude as shipping).

This set of stakeholders includes Maritime Ports and Terminal operators, who act as the link between sea and land transport, facilitating EXIM movement by functioning as gateways for vessels to berth at and discharge cargo.

Ports and terminals are capital-intensive assets, requiring significant investments for the acquisition of land, development of facilities, and purchasing of container handling equipment, all of which entail extensive construction activity.

Once constructed and operational, regular container/ cargo handling activity at the port and various ancillary activities also generate emissions.

These ongoing operational activities include the use of cranes and vehicles for moving cargo/ containers within the port premises, fuel consumed by cranes of various types, reach stackers, trucks, and other vehicles, administrative activities, etc., all of which are critical to the smooth functioning of the port.

Thus, the construction and operations of ports and terminals give rise to emissions right from the onset, attributable to the various activities that fall under the port’s scope.

Besides this, the port is considered to be indirectly responsible for emissions emanating from the activities of other entities operating from or using their premises and facilities.

Therefore, while designing and constructing the port and terminals therein, it is advisable to bear in mind the UN’s Sustainable Development Goals (SDGs), an internationally agreed-upon set of goals ratified in 2015 as part of the United Nations 2030 Agenda for Sustainable Development.

Whether setting up a greenfield port, evaluating a port expansion project, or setting daily operational processes, it is essential to consider the impact on the SDGs.

To illustrate this point with specific examples, when conducting feasibility studies for a greenfield port, it is crucial to gauge the impact on the ecology and local society in the region.

Likewise, if the port doesn’t have a natural deep draught, dredging will have to be undertaken at frequent intervals, which will also impact the environment.

Once commissioned, the port can generate significant amounts of waste, which will have to be disposed of responsibly, for which appropriate arrangements will need to be made while designing and constructing the port.

As with all other industries, emissions from ports are categorised into:

  1. Scope 1: emissions directly emanating from the port’s operations
  2. Scope 2: the port’s indirect emissions from power generation
  3. Scope 3: Other indirect emissions

Given their unique position at the intersection of the sea and land legs, ports can not only regulate their own emissions but also help other stakeholders such as Carriers and Truckers in reducing their emissions.

There are certain measures that port authorities and terminal operators can undertake to reduce direct and indirect emissions, which are explained below:

1. Minimising or optimising energy consumption

Since port activities involve the consumption of extensive amounts of energy, it is essential that energy usage be minimised or optimised. This can be done by designing efficient processes that minimise movements and thus help reduce the consumption of energy.

For example, this would entail minimising housekeeping moves, where storage of containers in the port premises is planned such that each container can be easily accessed without the need to move other containers.

2. Green/ renewable energy sources

Given the sizeable energy requirements at ports and terminals, an increasing number of port authorities and terminal operators are looking at replacing conventional fuel-based energy sources with green or renewable energy. The objective is to use energy from clean sources, which will reduce the quantity of emissions and thus reduce pollution.

One such source is solar energy, which involves upfront investment in installation of solar panels, but thereafter generates benefits in the form of lower consumption of conventional energy, lower electricity costs, and reduced emissions.

In the UK, the Portsmouth International Port was the first in the country to utilise solar canopies to power its operations. In the US, the port of Corpus Christi, Texas, is another example of a port exploring solar energy.

3. Sensor-activated / Smart lighting systems:

Given the inherently hazardous nature of work in ports and the potential dangers involved, ports need to have adequate lighting to ensure visibility at all times so that employees and workers avoid accidents due to lack of visibility/ poor light. This obviously implies the consumption of large amounts of electricity.

A growing number of ports are, therefore, replacing standard lighting systems with smart lighting systems that are equipped with activity sensors, where lights switch on automatically when they sense movement and switch off when there is no movement. This helps ports reduce energy consumption, helping strike the right balance between safety and electricity consumption.

4. Cold ironing at Ports

Also known as Alternative Maritime Power or Shoreside Supply, cold ironing involves vessels utilising shore-based power while berthed at the port. The port makes arrangements for the vessel to use power from non/ less-polluting sources (potentially solar power, in the best-case scenario). The vessel is, therefore, able to avoid using bunkers, thus helping reduce emissions.

Cold ironing has been popular in North American and European ports, and China is also now focussing on this by including it in its 5-year plans.

5. Increasing port productivity and efficiency levels

A direct correlation exists between the productivity and efficiency levels at ports and emission levels. As ports and terminals strive to increase their productivity and overall efficiency, their activity levels reduce, thus resulting in lower emissions.

With faster handling of containers on board vessels, loading and unloading of cargo is finished quickly, reducing the vessel’s time at berth or port premises, resulting in lower emissions.

Also, if time is saved at the port, the vessel can subsequently sail at lower speeds and still maintain schedule reliability. Sailing at lower speeds reduces bunker consumption, which in turn lowers emissions.

Sharing data on time and as relevant also enables freight forwarders, onward transport providers, and consignees to proactively plan cargo movement as per timelines provided, which ensures prompt and timely evacuation of containers and also helps reduce waiting and idle time for trucks – all of which help reduce emissions.

6. Use of technology

The key to boosting efficiency and facilitating proactive planning is to utilise technological solutions to assist in operations management.

The market is replete with logtech solutions of varying functionalities and aimed at either the holistic supply chain or specific aspects thereof. Depending on requirements and the relative criticality of each activity, Terminal operators can select software that best meets their requirements.

Using technology can help optimise container and vehicle movements, as well as storage of containers, which reduces fuel consumption.

Likewise, using RFID tracking can help provide visibility to container status and location, which makes it easier to locate and move the container promptly.

In these and other ways, technology can assist in better planning and vessel and container handling, thus reducing wasteful movement, accelerating cargo movement, and generally reducing associated emissions.

7. Green corridors

Green corridors are an innovative concept intended to make the transit between 2 ports more eco-friendly and less polluting. A green shipping corridor connects 2 ports such that it facilitates lower (or zero) emissions by creating an entire ecosystem that is geared towards emission control, encompassing regulatory measures, ensuring the availability of green fuel along the route, and financial incentives.

Given their relative novelty and the extent of work involved, the idea is still catching on, with initially only the biggest ports evaluating its feasibility in connecting to their biggest destinations (such as on the Asia-Europe trade lane).

Source: Marine Insight

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What is an Open Top Container? Your complete guide [20′ & 40′]

An open top container is perfect for your out-of-gauge cargo needs. Read this blog to find out all about the benefits and uses of this container type. Plus, learn how to find open top containers at the best price on Container xChange.

Open top containers are special shipping containers that come without a fixed roof. They’re designed for the transport of tall, oddly-shaped or extra-large cargo. Thanks to the open top, a lot of industries are able to transport tricky cargo hassle free.

If this container type sounds perfect for your shipping needs, your first problem is out of the way. Next on the list? As open tops are rarer in the market, you might be wondering where to find them from reliable suppliers at the best prices.

Browse open top containers in various sizes by simply entering your location, the container type and the condition you’d prefer. You’ll get a list of offers that fit your budget in no time at all. So go ahead and try it out today.

What is an Open Top container?

Open top containers are similar to standard dry containers but come without a fixed roof. This container type is ideal for cargo that’s large, bulky or can’t be loaded through standard container doors. So goods can be loaded from the top using cranes or other heavy-duty lifting equipment. Additionally, you can get open top containers with doors on both ends as well as the open top.

How is cargo kept safe and secure during shipping?

In order to protect goods from wind and rain, a durable tarpaulin can be placed over the open top during shipping. The cover and doors can also be locked and sealed at customs to keep shipments from being tampered with or damaged.

As the tarpaulin is more tricky to lock than doors, it’s usually fitted with clamps that can only be unlocked with a special device. Additionally, open top containers are monitored throughout the shipping process in order to prevent theft and vandalism.

Due to the open top, oddly-shaped and extra-height cargo is able to protrude safely from the container if needs be, whilst still being covered by the tarpaulin. While open tops can be stacked if cargo is horizontal, this is not possible if cargo protrudes. In these cases, the open tops are usually kept separate to prevent damage. Cargo is then secured using lashing rings to keep it from shifting or sliding during shipping.

Capacity of an open top container

Open top containers come in two main sizes: 20ft and 40ft. Choosing the correct size for your cargo will depend on the dimensions and weight of your shipments. It’s important to calculate this before making any decisions on which container size to purchase.

The 20ft open top container has a capacity of 32.7 m3 / 1,155 cu ft, and the 40ft has a capacity of 66.7 m3 / 2,356 cu ft. We’ll get into more detail on the dimensions of each size later on in this piece.

Common uses of open top containers

As we mentioned above, open top containers are ideal for cargo that exceeds the height or width restrictions of standard containers, as well as goods that are too big to be loaded through standard container doors.

If you’re moving the following types of goods, consider using open top containers:

  • Large/oddly-shaped machinery
  • Pipes
  • Long steel bars
  • Spools of wire
  • Scrap material
  • Bulk coal
  • Trees
  • Construction materials
  • Glass slabs
  • Wood logs or timbre

20ft open top container dimensions

The 20ft open top container is one of the most commonly used container sizes. It’s lightweight and perfect for smaller shipments of bulky or out-of-gauge cargo. Let’s take a look at the dimensions of the 20ft open top container now.

Measure 20ft open top container
External length 6.058m / 19.8ft
External width 2.438m / 7.9ft
External height 2.591m / 8.5ft
Internal length 5.89m / 19.4ft
Internal width 2.35m / 7.8ft
Internal height 2.35m / 7.8ft
Tare weight 2,260kg / 5,982 lbs
Payload capacity 28,220 kg / 62,214 lbs
Cubic capacity 32.7 m3 / 1,155 cu ft

40ft open top container size

While we’re at it, let’s take a quick look at the dimensions and specifications of the 40ft open top container too. If you’ve got larger shipments of bulky cargo, this size is ideal.

Measure 40ft open top container
External length 12.192m / 40ft
External width 2.438m / 7.9ft
External height 2.591m / 8.5ft
Internal length 12.03m / 39.5ft
Internal width 2.4m / 7.9ft
Internal height 2.34m / 7.8ft
Tare weight 3,980kg / 8,774 lbs
Payload capacity 26,500kg / 58,422 lbs
Cubic capacity 66.7 m3 / 2,356 cu ft

How much does an open top shipping container cost?

Now that you know all about the uses and dimensions of open top containers, we’re sure you’re curious about the prices too. It’s important to note that the cost of shipping containers fluctuates constantly and depend on factors such as:

  • Container type
  • Container condition (Brand new, cargo-worthy, WWT, As-Is)
  • Location
  • Current supply and demand of the container type
  • Container size

Check out how much 20ft and 40ft open top containers cost in various locations around the world now.

Location 20ft open top 40ft open top
USA US $3,244 US $7,116
China US $2,765 US $5,124
India US $5,142 No data
Europe US $3,033 US $5,688

Source: xChange Container

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DDP & DDU Shipping Terms Explained

DDP & DDU Shipping Terms Explained. In international commercial transactions, the terms Delivery Duty Paid (DDP) and Delivery Duty Unpaid (DDU) are used to indicate two different types of sales and shipping transactions.

The former is the sale and delivery of goods to the buyer after payment of customs duties – Delivery Duty Paid (DDP) and the latter is the delivery of goods to the buyer at the port of destination without payment of customs duties or taxes.

The abbreviation DDP and DDU come under Incoterms®, terms that are published periodically by the International Chamber of Commerce.

The International Chamber of Commerce (ICC) and Incoterms®

Trading terms known as Incoterms® or International Commercial Terms are used globally in the shipment of commercial cargo.

Where do these terms and abbreviations originate?

They are published by the International Chamber of Commerce (ICC), amended and updated from time to time. Such terms are intended to standardize terms, conditions, and make trade communications easy between different parties operating on a global level.

It helps do away with confusion arising out of different terminologies and usages in trade prevalent in different countries. As such, Incoterms® is recognized internationally by governments, lawyers, trade bodies, and trade councils.

Incoterms® fixes the responsibilities of the seller, the carriage agent, and the buyer. It avoids ambiguity in the wording of agreements.

The latest publication ‘Incoterms® 2020’ was published in 2019.

The abbreviation ‘Incoterms®’ is a registered trademark of the International Chamber of Commerce. Though it is not mandatory for businesses to use Incoterms® in their documents, the ICC has brought in the rule that with effect from January 1, 2020, when using Incoterms®, only Incoterms® 2020 should be used in sales and trading documents.

In case Incoterms® 2010 is used, then, that has to be specified in the concerned documents.

The Seven Rules of Incoterms® 2020

The Incoterms® 2020 has seven rules that cover all modes of transport. These seven rules are:

  • EXW – Ex Works (showing the place of delivery)
  • FCA – Free Carrier (showing the place of delivery)
  • CPT – Carriage Paid to (showing destination)
  • CIP – Carriage and Insurance Paid To (showing destination)
  • DAP – Delivered at Place (showing destination); replaces Delivered Duty Unpaid or DDU.
  • DPU – Delivered at Place Unloaded (showing destination); replaces Delivery at Terminal or DAT.
  • DDP – Delivered Duty Paid (showing destination)

Four Incoterms® are specific to water transport and cover sea and inland waterways. They are:

  • FAS – Free Alongside Ship (port of loading has to be mentioned)
  • FOB – Free on Board (port of loading to be mentioned)
  • CFR – Cost and Freight (show port of discharge)
  • CIF – Cost Insurance and Freight (port of discharge to be shown)

The ICC holds training and other familiarization events to identify, interpret, and explain the differences between Incoterms® 2010 and Incoterms® 2020. These events cover topics on the roles of the seller, carrier, and buyer in trade, the risks involved, and best practices to be followed.

Delivery Duty Paid (DDP)

In export, a seller enters into an agreement with the buyer to ship goods to the buyer’s location overseas. Such agreements would specify the terms and conditions of doing business especially, those who would bear what costs related to the export of cargo.

One very important point of the agreement would be who would be responsible to pay the customs duties and taxes at the destination port.

When it is agreed between the exporter and importer that the former would pay all the customs duties at the destination port, then the agreement of sale or purchase is said to be Delivered Duty Paid (DDP).

The seller undertakes to send goods and deliver to the buyer at an agreed-upon location that could also be the destination port, his warehouse, or premises bearing all expenses, customs duties, and taxes.

The risk on the cargo is usually transferred to the buyer once the goods reach the destination port. The crucial point here is that the buyer and the seller must agree on all points related to the payment and the place or location of delivery beforehand.

In DDP agreements, the seller usually has an agent at the destination port who arranges payment of duties and taxes, any inspection fees, etc. and clears and delivers the cargo as agreed between seller and buyer.

Customs clearance documents and formalities differ between countries and it requires an in-depth knowledge of these formalities, which the local clearing agents will have.

Having a local agent helps to avoid delays in the clearance of cargo on account of incomplete documentation or ignorance of government or customs procedures. When goods are shipped DDP, any damages or loss to the cargo during transit is the responsibility of the seller.

In Delivery Duty Paid, the buyer pays the seller a price that is inclusive of freight, insurance – if applicable, and all customs duties and taxes. It is a consolidated amount that makes it convenient for the buyer in the costing of his goods.

In DDP agreements, it is the seller who bears most of the risks. However, including such a term in the trade agreement could have some disadvantages as well.

Sellers usually include a mark-up on all the expenses that they meet under the heading ‘administrative fees. This results in the cost of the goods going up. Buyers can easily avoid this mark-up by arranging for the clearance and payment of duties and taxes at their end.

Delivery Duty Unpaid (DDU)

The terms and conditions between the seller and buyer, when they agree to do business, may state that the seller would only be responsible for sending the goods by sea to an agreed-upon location.

However, the seller has to pay for all the export formalities and licenses. This includes expenses at the transit ports if any. In such cases, the buyer or consignee will have to clear the cargo by paying all the applicable customs duties and taxes at the port of discharge.

The seller’s responsibility ends when the goods reach the place agreed. The cargo becomes the buyer’s responsibility once it has reached the specified location.

Such an agreement between the seller and buyer is termed Delivered Duty Unpaid (DDU). The International Chamber of Commerce has replaced the Incoterm DDU with DAP (Delivered at Place) in its latest publication ‘Incoterms® 2020’.

Here, the usage of ‘Delivery’ and ‘Delivered’ mean the same.

When the Incoterms® is Delivered at Place (DAP), when the goods reach the agreed destination, the customer has to be ready for its clearance by payment of customs duty and any other taxes.

Since he will also be responsible for the unloading of cargo and its transportation to his premises, these two factors have to be considered beforehand.

Delivered at Place (DAP) and Delivered at Place Unloaded (DPU)

In ICC’s latest publication ‘Incoterms® 2020’, the term DAP (Delivered at Place) has replaced DDU. Another important term that has been replaced is DAT (Delivered at Terminal). DAT is replaced with DPU (Delivered at Place Unloaded) to specify that the place of unloading can be anywhere and is not restricted to just a terminal.

DAP and DPU are two Incoterms® that are similar to DDU. DAP stands for Delivered at Place and DPU stands for Delivered at Place Unloaded. Under DAP, the buyer takes care of the payment of customs duties and taxes and unloading as well.

The seller arranges for carriage and delivery of goods to a pre-agreed location, ready to be unloaded. DAP can be used in agreements of any mode of transport.

In DPU, the seller is responsible for delivering and unloading the cargo at the place that is specified in the agreement between him and the buyer.

CIF, CFR, CIP

Whether Delivered Duty Paid or Delivered Duty Unpaid, the insurance may or may not be part of the cost. The cost of goods could include cost, insurance, and freight (CIF) or only cost and freight (CFR). Cost and Freight are also shown as C&F. In the case of CFR (or C&F), the insurance is taken by the buyer. The terms CIF and CFR are used in sea freight.

Another incoterm that is similar to the ones mentioned above is Carriage and Insurance Paid To (CIP). Under this agreement, the seller pays for carriage and insurance to a specified location that need not be the final destination of the cargo.

Once the goods reach the specified location and are handed over to the buyer or his appointed agent, the seller’s responsibility for the cargo ceases. Since the seller pays for carriage and insurance only up to a specified location, the buyer will have to make arrangements for the rest of the journey by way of carriage and insurance.

According to Incoterms® 2020, trading under CIP terms requires a higher insurance cover. Like most of the other terms, the term CIP is used with a location name, such as CIP Los Angeles.

Let us look at an example to understand the term CIP further.

Company X in South Korea sells mobile phones to company Y in Dallas, Texas, USA. The incoterm for shipment is CIP Charleston, USA.

Once the vessel with the cargo of mobile phones reaches the Port of Charleston and is handed over to the representative of Company Y, Company X’s obligation is complete.

The movement and responsibility for the goods from Charleston to Dallas now rests on the buyer or Company Y. In this case, Company Y would have already arranged for the trucking of cargo and its insurance from Port Charleston to Dallas.

DDP and DDU (now DAP) are very often confused with CIF, CFR, CIP, etc. To clarify this, these terms are all entirely different.

DDP means that customs duty and taxes at the destination port are paid by the seller. DDU means that the customs duty and taxes at the destination port are paid by the buyer.

CIF is the incoterm used for a trade agreement between the buyer and the seller where the seller agrees to exchange goods with the buyer for a price that includes the cost of goods, its insurance during sea freight, and the sea freight.

CFR (also shown as C&F) is the cost and freight only without including insurance on the goods. When carriage and insurance of the goods are only up to a specified point it is called CIP (Carriage and Insurance Paid To).

As we can see, DDP and DDU are concerned with the payment of customs duties and taxes during the import process whereas CIF, CFR, and CIP are all about the cost of goods, insurance, and sea freight.

The Incoterms® DDP and DDU are also used in conjunction with other Incoterms® such as CIF, CFR, CIP, etc. When the Incoterms® shown in a trade document are CIF DDP it means that the price at which the goods are sold to the customer includes cost, insurance, and freight.

Duties and taxes incurred on the cargo are also paid and taken care of by the seller.

Where are Commercial Incoterms® Shown?

Incoterms® specify the responsibilities of the different parties to a trade agreement – the seller, the carrier, and the buyer. As such, they are normally found on documents such as the commercial invoice, bill of lading, or any other trade document that shows the arrangements between the seller and buyer.

Why is Incoterms® Important?

It is common to find poorly worded or even incomplete trade documents and agreements. When prepared by inexperienced hands, they can even become open-ended.

This leaves scope for pitfalls especially in the event of litigation between the trading parties. Therefore, it is a good practice to show all terms and conditions using the correct Incoterms® on sales and shipping documentation.

Since they are standardized and recognized internationally, it averts confusion and misunderstanding between parties involved in the business and improves communication.

The responsibilities of each party are pre-defined and each one is clear about his role in doing the business. It helps banks to understand the documents they are dealing with, especially when it comes to letters of credit, guarantees, etc.

The buyer who requires a letter of credit from a bank will want the LC (letter of credit) to reflect precisely what is expected of the seller, in terms of documents required and other relevant points in doing business on credit.

Source: Marine Insight

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What is ETD and ETA in Shipping?

Those in the shipping, warehousing, or supply chain business may be quite familiar with the acronyms, ETD and ETA.

Organizations and businesses depend on these two for their planning and scheduling.

What are EDT and ETA in Shipping?

ETD is the abbreviated version of Expected or Estimated Time of Departure while ETA stands for Expected or Estimated Time of Arrival.

ETD could be the estimated departure time of the shipper’s cargo on board a vessel or that of the transport vessel itself. It could be the estimated departure time of anything that could be waiting for dispatch.

Similarly, in ETA, arrival could be that of the vessel or the cargo.

An ETD normally means the expected date of departure while ETA means the expected date of arrival of an ocean carrier or cargo.

The time is not mentioned in most cases as delays and early arrivals of vessels and cargo are unpredictable.

ETD and ETA are only the indicative dates and are not binding on the ocean carrier, clearing or freight forwarding agent.

Where can I find the ETD and ETA of a shipment?

The estimated times of departure and arrival are usually mentioned in the booking confirmation issued by the ocean carrier or the freight forwarder. It is an acknowledgement for the booking of cargo by ship (or any other mode of transport).

A booking confirmation will have the booking confirmation number, description and quantity of the load to be shipped, the equipment that is used for the shipment, and the journey plan.

The equipment means the type of container or pallet that is used to hold the cargo. A typical journey plan would include the ETD and ETA of the carrier.

Confirmation of Booking

A booking confirmation is a valid contract between the carrier and the shipper. It is issued by the carrier or freight forwarder to the shipper.

The shipper could be the consignor or the consignee.

The booking confirmation of a container would normally include the following information:

  • Booking party
  • Booking confirmation number
  • Shipper name
  • Place of return of the empty container or containers
  • Dangerous goods information
  • ETD
  • Vessel name
  • Port of discharge
  • ETA
  • Trans-shipment ports if any
  • Container number and description
  • Details of the trucker
  • Date of booking
  • Authorized signature

The booking confirmation number is usually mentioned on all documents and correspondences related to a shipment.

How are ETD and ETA calculated?

ETD and ETA depend on factors such as the ship’s schedule, stops for bunkering and maintenance, and also depending on known conditions at the various ports – at origin and en.

A carrier may change the given ETD and ETA based on any of the above factors. Weather and rough seas are other reasons for delayed departures or late arrivals of ocean vessels.

Some companies that deal in marine delay insurance classify these factors as shore-side factors and ship-related factors.

Shore-side factors are those conditions that affect the departure of a vessel such as labour unrest, traffic congestion, transport problems at port, infrastructure breakdown, etc.

Ship-related factors are those which affect the arrival of the vessel at a port such as weather delays, breakdown of ship’s machinery en route, etc.

While ETD and ETA are approximations, the Actual Time of Departure (ATD) and Actual Time of Arrival (ATA) show the actual time of the vessel’s departure and arrival at a port.

The variances between ETD – ATD and ETA – ATA over a prolonged period is not a desirable situation and it has to be corrected accordingly.

ATD and ATA are important in inventory forecasting, manufacturing processes, project management, etc. ATD or ATA are used in the calculation of the lead time of goods.

Importance of Lead Time, ETD, and ETA

In shipping and cargo movement, a lead time is a total time taken for a ship or cargo to move from point A to point B (origin to destination of the vessel or cargo) expressed in the number of days.

Accurate lead times are critical in inventory forecasting. Inventory forecasting is the projection of inventory requirements of a business at a future time.

It uses data such as stocks on hand, sales and demand, inventory lead time, and other factors to arrive at the forecasted figures. Accurate and up-to-date data helps to produce accurate forecasts.

Of these data, the inventory lead time can be considered the most unpredictable since most of the factors causing delays in the departure or arrival of vessels (ATD and ATA) are hard to predict.

Predictive models to arrive at projected delays are not practical. However, based on historic trends, organizations can factor in a certain number of days in their inventory forecasting models to cover these unforeseen delays.

Lead time is a critical key performance indicator (KPI) measure for supply chain and logistics companies. Lead time figures are usually broken down into goods ready days, transit days, and clearance and delivery days.

Goods ready days show the number of days taken by the supplier to get the goods ready and have them delivered to the port for shipment.

Transit days show the number of days taken for the transit of the cargo from the port of origin to the port of destination or discharge.

The Clearance and delivery days show the number of days taken for the goods to be customs cleared from port and delivered to the customer’s premises.

All these days are the actual days taken for the movement of cargo from its point of origin at the supplier’s warehouse to the customer’s storage location.

Analysts of the ocean carrier compare the ETD and ETA given with the actual times of departure and arrival.

They look for abnormal or large variances, find the reasons for these variances, and try to set them right. Variances have to be corrected for an optimum supply chain.

In shipping, it is important to note that the estimated time of delivery (ETD) is from the port of origin and the estimated time of arrival (ETA) is to the port of destination. ETD and ETA do not mean that it is from the shipper’s premises to the consignee’s doorstep unless mentioned specifically.

Can Compensation be Claimed on Delayed Departures?

When the shipper books cargo on an ocean vessel, the ocean carrier has the responsibility to take the cargo on the vessel that is mentioned on the booking confirmation.

The booking confirmation will also show the ETD of the vessel. In some cases, the ETA is also shown.

In the event of the cargo missing the sailing for no fault of the shipper, then the carrier should take the cargo in an alternative vessel latest within three days from the date of the original booking.

If it exceeds three days then, in most cases, the shipper can claim compensation from the ocean carrier for the days exceeded beyond the three days.

Compensation can be claimed only in the case of carrier haulage. It also has to meet certain conditions like full payment from the shipper or his customer to the ocean carrier, etc.

The claim for compensation has to be made by the shipper within a certain number of days as specified in the agreement with the ocean carrier. The exclusions here are, any force majeure or delays from the port.

However, the terms may vary from carrier to carrier and the shipper has to confirm this in the agreement with the ocean carrier.

Live Tracking of Vessels and Cargo

The old practice of updating the customer when the goods reach a pre-defined location has given way for live tracking of goods.

Earlier, the status of the vessel or goods between two pre-defined locations were not available, especially to the customer.

Live tracking gives clear visibility of goods and vessels in transit and therefore a realistic ETD and ETA. The movement of cargo vessels can be monitored by the shipping company and disruptive events en route avoided.

Along with the live-tracking of cargo, some companies offer additional services to their customers. Some of the services offered with live tracking of cargo are real-time monitoring of the cargo’s temperature, humidity, or shock levels. This can be very useful in the transportation of medical or hi-technology equipment, food items, etc.

Ocean carriers these days have effective Transport Management Systems (TMS) and live tracking of their vessels and the cargo that it carries. Tracking portals of ocean carriers allow the customer to see where exactly the goods consigned to them are at any given point in time.

Live tracking makes the calculation of ETD and ETA more accurate for the customer. It helps the ocean carrier or freight forwarding agent to see where delays happen and take necessary steps to reduce or even prevent the negative impact of such delays before the goods have reached their destination.

Several tools and software are available in the market today that simplifies the calculations of ETD and ETA. If used correctly, they are often very accurate and help an organization to plan.

Taking actions based on live tracking moves a company from being reactive to proactive. Customers prefer to deal with organizations that look ahead to avoid problems rather than deal with problems when they happen. Updated and accurate ETD and ETA help customers plan and manage their activities and also avoid stock-outs.

To understand the ETA forecast better, let us take a look at the following calculation based on the assumption that the ideal lead time for the journey (base days) is fifteen days.

The historic data available for the calculation (average values) is as follows:

Delay due to labor strike: 3 days
Delay due to poor weather: 2 days
Delay due to departure port congestion: 1 day
Delay due to arrival port congestion: 2 days
Delay due to extended stop for bunkering: 1 day
Delay due to malfunction of ship machinery: 2 days
Delay due to war or piracy: 3 days

Let us take the probability of occurrence of these events over the 15 days (lead time) period as follows:

Labor strike: 3%
Poor weather: 20%
Departure congestion: 10%
Arrival congestion: 15%
Extended bunkering: 5%
Technical malfunction: 10%
War or piracy: 1% (subject to variability depending on the current situation)

The probabilities are arrived at based on historic and recorded occurrences. For instance, data shows that a labour strike occurs over 10 days in a year. So, the probability that your shipment may be delayed due to a labour strike is (10/365) x 100 = 3%.

When it comes to poor weather, the objective of any shipping line would be to reduce the delay due to this by selecting better routes or including delays in the total shipping time (mentioned as 15 days in the above example).

The reason that the probability on account of poor weather is higher compared to other events is that it has a compounding effect. For example, a storm at one transhipment point might delay a vessel by 1 day.

Upon approaching the destination port, it may be low tide at the port thereby restricting entry into the port. For this reason, it has a higher probability of delaying the ship.

The calculation for the computation of ETA is as follows:

Total journey time = Base number of days + ∑(probability not in percentage x delayed days)

In the example given above, the total journey time will be calculated thus:

Total journey time equals 15 + (0.03 x 3) + (0.2 x 2) + (0.1 x 1) + (0.15 x 2) + (0.05 x 1) + (0.1 x 2) + (0.01 x 3).
Total journey time in days equals 16.7 days.

For the journey of 15 days, 1.7 days are to be accounted for various delays. As the base journey time (ideal lead time for the journey) increases, the probability of occurrences also increases, resulting in long delays.

Accurate ETD and ETA information helps the customer plan their storage space, labourers, and other operations effectively.

Source: Marine Insight

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Comprehending Transloading in Logistics

Intermodal shipping, transloading, crossdocking… these logistics and shipping terms can be pretty confusing.

Each of these terms may even have several different interpretations depending on where it is used and by whom. Some of them sound more or less the same. Why are such different terms used when there is not much difference between them?

Some of them may not have much of a difference between them, but in certain types of goods movement, the exact terms have to be used to avoid ambiguity and subsequent service breakdown.

Clarity in communication is critical for the timely and efficient dispatch of goods and their delivery at the correct location, in good condition.

Clear communication between the different logistics departments and timely actions helps in timely deliveries while reducing transportation costs.

Modern logistics operations follow different methods to achieve their objectives. Transloading is a useful tool in the complicated world of logistics and warehousing that helps to cut costs and increase efficiency in service.

The complexity of operations often prompts organizations to entrust the running of their services to third parties which are referred to as outsourcing. Logistics operators rely on efficient transloading to meet their delivery deadlines.

The modern intermodal Twenty Equivalent Unit (TEU or 20’ container) and Forty Equivalent Unit (FEU or 40’ container) containers are the most commonly used equipment for the transport of cargo by land or sea these days. These standardized container sizes have immensely popularized as well as helped in increasing the efficiency of transloading.

Intermodal Shipping

Intermodal shipping is a term that means the movement of cargo using two or more different modes of transport. It could be by road, rail, air, or water transport. But why is it necessary to use different modes of transport for a single consignment?

Cargo dispatched to nearby locations can go by truck from their storage location to the customer’s premises. But, let us take export cargo for example.

Overseas shipments are loaded onto trucks that take them to the nearest airport or seaport. It is then unloaded and moved to a cargo plane or a cargo ship for its onward journey.

Here, two modes of transport are used – road as well as air or sea. This is called intermodal freight.

Warehouses or logistics facilities are all not located at airports or seaports. Most of them are located quite far away in industrial areas or market centres. Inevitably, goods from such facilities have to be transported first by road to be put on a train, plane, or ship.

Once the cargo reaches its destination, it will most probably have to be loaded onto a truck once again, for onward dispatch to its final destination. Throughout the journey, the cargo container remains unopened and is only moved from one mode of transport to another.

One great advantage of intermodal transport is that the container used for transporting the goods remains unopened throughout its journey and can also be used for storing the goods for short periods. Intermodal containers are used by many organizations as storage units. They are secure and easy to store in a container yard.

Transloading

Transloading is the movement of goods using different modes of transportation as in intermodal shipping. But the similarity ends right there. In transloading, cargo is moved and rearranged between the different modes of transport.

It does not stay in the same container nor does it follow the same configuration as when it was loaded initially from its origin. An example is when boxes or pallets are moved from a truck and placed on the floor of a rail wagon or stowed in the cargo section of a ship.

Products such as oils may be transferred to larger tanks using heavy-duty pumps. Cement bags may be transferred from a truck and arranged inside a larger rail cargo wagon. Cargo that is loose-loaded may be palletized at a stage en route for onward shipment. In certain other cases, cargo may be repacked in boxes for ease of transport.

Supply chain these days is all about the speed of delivery of goods while at the same time controlling costs associated with its storage and transport. Transloading helps to connect the goods by the most efficient form of transport as it moves along the supply chain.

A particular mode of transport may not be able to carry the cargo all the way from its origin to its destination. It may require different modes of transport. Yards used for transloading of bulk goods such as grains, ores, etc. have to be equipped with specialized Material Handling Equipment (MHE) such as silos, bulk goods elevators, conveyors, etc.

At a very basic level of transloading, two trucks can be backed up against each other and goods arranged between them. Transloading can be done at sea by the use of floating platforms, barges, and floating cranes.

Modern logistics software is often used by organizations to plan the best routes, select a suitable mode of transport, and decide when goods have to be moved between the different modes of transport.

Leading companies such as Amazon, UPS, FedEx, Geodis, CH Robinson Worldwide, etc. transload their cargoes to achieve seamless on-time deliveries. Their state-of-art technologies and software help them achieve this.

Typically, in intermodal transport, the cargo stays in the same container throughout its entire journey while transloading involves unloading and reloading the cargo at some stage during its journey.

Cross-docking

What is cross-docking?

This is a term that is often confused with transloading. In cross-docking, as soon as goods are received at a warehouse, they are segregated and dispatched to the customer without being taken to the warehouse storage area.

The segregation and dispatch of goods are generally done within the receiving area or a separate marshalling area of the warehouse. Sometimes inbound goods may be sent directly from a Container Freight Station (CFS) to the customer after the necessary checks by the handling agent. It may or may not involve repacking or re-labelling.

Goods from a single delivery or multiple deliveries are thus dispatched to their customers without any further intermediate storage. The basic idea of cross-docking is to cut or reduce storage and handling costs. It helps in the consolidation of products from multiple shipments without incurring storage costs.

Some Drawbacks

While transloading and other similar methods of transporting goods are quite useful for the smooth running of logistics operations, they do have some drawbacks. The intermediate handling of goods during their journey from source to destination might mean more risk of damage. Chances of pilferage during this movement are also quite high. Operators have to ensure that processes are in place to avoid such issues.

Source: Marine Insight

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11 Basic Components of Logistics Cost

Finding out how much it costs to manufacture a product and deliver it to the customer helps a business fix a price for the product. It also takes into account a reasonable profit margin over the total costs.

Cost accounting is a very relevant field when it comes to deciding the selling price of a product and therefore the profit margin.

The cost of producing or delivering a service is known as Cost of Goods Sold or more popularly, COGS. It does not factor in costs incurred on shipping or other such related expenses.

What is Logistics Cost?

Logistics cost may be explained as all the costs incurred by an organization in moving a product. It would include the cost of moving raw materials from the supplier, storing them in a warehouse for release at an appropriate time, moving the finished products to the customer, and all activities associated with these activities.

As we can see here, it includes several parties such as the manufacturer, transport and shipping companies, clearing and forwarding agents, the warehouse operator, and a host of other players.

Generally, logistics costs are of two types – fixed logistics costs and variable logistics costs.

Costs that do not change frequently such as rents, taxes, etc. come under fixed logistics costs while variable costs are those that change according to the volume of goods involved and other such factors.

Let us take a brief look at some of the main components of logistics cost.

Components of logistics cost

Transportation

Transportation is the moving of goods between locations. It could be from the supplier to the buyer, where the buyer could be a distributor or a retailer. It can also be moving the goods from the distributor or retailer to the customer.

These parties may be located in different countries or they could be within a country. Typically, transportation cost forms a chunk of any logistics cost.

Goods may be generally classified as perishable and non-perishable commodities. Perishable commodities may require special transport arrangements such as temperature-controlled containers and special packaging.

When compared with the transport of non-perishable cargo, transport arrangements made for perishable cargo can be quite expensive.

Goods for transport are usually charged per cubic meter or CBM.

Warehouse Rent

Warehouse space is much in demand these days. Most goods require to be stored somewhere during their movement from the manufacturer to the distributor or retailer. Goods are usually stored and released according to demand.

As in transport, goods may require special storage facilities such as a temperature-controlled warehouse, special racks to store the goods, special Material Handling Equipment (MHE), picking arrangements, etc. All these involve costs that go into a product’s logistics cost.

Packing and labelling call for packing and labelling supplies.

The cost of technology used in modern warehouses such as the Warehouse Management Systems (WMS) and cost of the warehouse administration also form part of logistics cost.

Typically, warehouse rent charged to a customer is inclusive of the cost of all such arrangements and it is charged per square foot (sq. ft.) space occupied.

Staff and Labor

Just like in all other industries, automation and robotics are gaining prominence in the logistics field too. However, the human element or the human workforce, to a certain extent, is unavoidable.

Staff are required to operate computers and robots. Certain types of goods and operations will inevitably require handling or decision-making by a human being.

Management of the warehouse and its operation are performed by humans as it cannot be left to machines. Similarly, the customer services or the human resources departments of an organization have to have people handling it as it includes situations where human emotions and decision-making come into play.

In all such cases, there is a cost associated with this labour. This cost is part of the logistics cost. It is usually shown as man-hours spent on an operation.

Logistics as Revenue Centers

Traditionally, logistics operations were considered cost centres or simply operations that attracted costs without any profit. However, these days, the logistics industry has successfully come out of this doldrum, and logistics operations are proving to be high-grossing cost centres. But, how does it achieve this?

Cost reduction is considered the key factor in increasing the profits of a logistics organization. Factors such as bulk handling of goods, purchasing the necessary materials in bulk, consolidation of cargo, and provision of value-added services are also important here. Let us take a look at some of these.

Selection of Mode of Transport and Carrier

Typically, logistics organizations decide on the mode of transport that is suited to them as well as the customer. In doing this, they go for a preferred carrier who will provide them with rate discounts without compromising on the quality of their services.

Bulk Handling of Cargo

Bulk cargo usually gets bulk discounts from carriers and other operators. To make use of this situation, logistics organizations often prompt their customers to deal in bulk. Customers also benefit from ordering in bulk as they can avail of bulk discounts from their suppliers.

Packing and labelling materials that may be required are often purchased in bulk by logistics companies, availing bulk discounts offered by their suppliers.

Consolidation of Cargo

Consolidation is the transportation of several small cargo shipments from a location, in a single container as Full Container Load (FCL). Besides protecting the cargoes from damage, it helps to avail of full container load discounts from the carrier or operator.

There is also considerable savings in handling and other related charges when goods are transported as FCL. Consolidation is also known as groupage.

Value-added Services

These are services provided free of cost to the customer. It may differ from company to company but the common value-added services offered by logistics companies are reporting of data and reverse logistics.

Improved customer services and varied value-added services help in customer retention and increased goodwill of the organization.

3PL Services

What are 3PL services? Third-party Logistics Providers or 3PL are outsourced services to help with the warehousing and distribution services of an organization.

3PL operators usually specialize in a variety of logistics operations such as transport, storage, etc. Savings earned through the selection of the right 3PL service provider contributes to an organization’s bottom line.

Technology

Investing in the right logistics technologies can go a long way in improving the performance of an organization and therefore increasing its savings.

Data technologies such as Enterprises Resource Planning (ERP), Artificial Intelligence (AI), robotics, and automation are used increasingly by logistics operations these days.

Innovations and Reorganizations

A dynamic management that always encourages innovations and reorganizes operations to meet requirements helps to drive up the revenue. Constant monitoring of the organization’s performance and taking pre-emptive measures to prevent aberrations and arrest negative trends can avoid losses. It can also result in increased revenues if handled correctly. These actions also go a long way in increasing staff productivity.

Logistics costs are defined by different companies in different ways. The best way to reduce costs and thereby increase profit is through regular review of the company’s logistics strategies and taking the necessary actions to address drawbacks.

Plan carefully and negotiate with suppliers and service providers aiming for better rates without compromising on the quality of their services.

Source: Marine Insight

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Why Dry Ice Is Used For Packaging?

The solid form of carbon dioxide gas is commonly known as Dry Ice. One, which is a colourless and odourless gas, and the other, its solid form, share the same chemical formula as CO2.

Often referred to as a wonder agent, dry ice has myriad uses. In logistics, it is used in packaging to preserve frozen foods, especially during transport where other forms of cooling arrangements or mechanisms are unavailable.

 

Many temperature-sensitive pharmaceutical drugs and biological samples are packaged in dry ice during transport. Dry ice, which is non-toxic, maintains the cold chain during the movement of such items. Unlike ice, which is made by freezing water, dry ice leaves no wet patches on the packages.

Properties of Dry Ice

Let us go through a few important features of dry ice before we see how useful it is in preserving temperature-sensitive items.

Dry ice is colourless, odourless, and non-flammable. It has an extremely low surface temperature of −78.5° Centigrade (−109.2° Fahrenheit).

At normal atmospheric pressure, it directly changes from solid form to gas at temperatures lower than −78.5° Centigrade. This process is called sublimation. The very low sublimation temperature makes dry ice ideal as a cooling agent in packaging. However, it is the same property that makes it dangerous to humans if not handled correctly.

Handling Dry Ice

Unprotected and prolonged exposure to dry ice, especially in confined spaces, can cause a condition called hypercapnia, where the carbon dioxide level in the bloodstream shoots up. If left untreated, hypercapnia can lead to respiratory failure, convulsions, or even death.

If handled incorrectly, dry ice can cause severe burns to the human skin, similar to severe frostbite. It is normally stored as blocks or pellets in insulated chests. It should be handled with the utmost care and only be done in well-ventilated rooms. Vehicles transporting dry ice or packages containing dry ice should have proper ventilation to prevent carbon dioxide buildup.

Staff handling dry ice must wear insulated gloves, face shields, and safety glasses. They should also have proper training in handling dry ice and dry ice packages. Dry ice must also be kept out of the reach of children at all costs.

Markings on Packages Containing Dry Ice

Dry ice is classified as dangerous or hazardous in most countries and has a hazardous substance number of UN 1845. Any dry ice package must carry the Class 9 label (miscellaneous dangerous goods) on it.

Transport operators have to follow various norms and regulations when dry ice is used in the packaging of their cargo – whether it is transported by land, air, or sea.

Cargo packaged using dry ice must be marked (UN 1845) and labelled clearly to indicate that it contains dry ice. The packaging must be strong enough to withstand any damage during transport and handling. The transport bill must show “Dry ice. Class 9. UN1845” and the number of packages containing dry ice, along with the net weight of dry ice used, in kilograms.

How is Dry Ice Made?

The process of making dry ice is simple and, therefore, not very expensive. Carbon dioxide gas is first liquefied, then frozen at a temperature of −78.5° Centigrade (-109° F). It is then compressed into solid form, which is then cut into blocks or made into pellets, as required. Large dry ice blocks are cut using pneumatic saws.

In most cases, the carbon dioxide used in making dry ice is a byproduct of ammonia refinement. Natural gas is burned to separate carbon and hydrogen atoms. While hydrogen is mixed with nitrogen to make ammonia, the leftover carbon is mixed with oxygen to form carbon dioxide.

Carbon dioxide gas is also a byproduct of ethanol production.

Dry ice is usually packed tightly with insulated sheets or paper to slow sublimation.

Food Grade Dry Ice

Sometimes, normal dry ice may not be used to preserve certain pharmaceutical drugs or food items. The carbon dioxide used to make food-grade dry ice is subject to a process called adsorption.

For this, carbon dioxide is passed through a chamber containing a carbon dioxide adsorbent. During adsorption, any other gases are removed, and only clean carbon dioxide is left behind.

This carbon dioxide is then liquefied, frozen, and compressed into large blocks. Later, it is cut into the required sizes. In logistics and transport parlance, this process is called scrubbing.

Packaging of Goods using Dry Ice

Expanded polystyrene foam (EPS) boxes and corrugated cardboard boxes are used to transport temperature-sensitive goods using dry ice for best results. Sometimes, Styrofoam is also used instead of EPS.

The temperature-sensitive goods are placed inside an EPS (or Styrofoam) box, and dry ice is stuffed inside. This box is then secured and placed inside a slightly larger, sturdy, corrugated cardboard box. The space between the two is then filled with more dry ice and closed securely.

The double-layer packaging ensures that the dry ice will last long without sublimation, keeping the goods cold.

Special care should be taken to ensure the boxes are not completely sealed or airtight. The emission of carbon dioxide gas during sublimation can cause pressure buildup inside completely sealed boxes and may cause an explosion.

Generally, with an extremely low temperature of −78.5° C, 10 kilograms of dry ice in an appropriate insulated box will last for about 40 to 50 hours if the packing is not opened in between. But, to a large extent, it would depend on what is packed and how.

Good quality packing materials should be used to ensure the best results.

What are Some of the Other Uses of Dry Ice?

Dry ice has various other uses besides refrigeration. Let’s look at a few of them here.

Dry ice is used to carbonate beverages and make them fizzy and in the manufacture of ice cream. It is also used in decorations that use ice to stop it from melting, in theatres and stages for the fog effect, etc.

When used inside closed containers, dry ice can prevent attack from certain pests, such as insects. It is also used to control pests such as rodents and certain insect baits.

Dry ice also has several industrial uses. The main one is in a process called blast cleaning. In this process, dry ice pellets are shot through a nozzle, using an air compressor to remove various residues, such as paint, glue, oil, mould, etc., from machinery and equipment.

The French inventor Adrein-Jean-Pierre Thilorier is credited with discovering dry ice in 1835. In 1925, it was patented and trademarked in the United States, and it started selling commercially, mainly for refrigeration.

Source: Marine Insight

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What is HS Code?

These days we are all spoilt for choice when it comes to buying something. Thousands of lines of commodities are available to us for purchase from the supermarket or by simply going online. Some of the commodities that we purchase are locally made while others are imported.

With the vast number of products that have flooded the market, authorities need a method of monitoring what is imported into the country and what goes out as exports. This is where the system of harmonized codes comes in.

Harmonized codes are used universally to identify goods. It is a system of classifying the different types of goods. Several conventions and government initiatives recognize the WCO’s Harmonized Commodity Description and Coding System (HS).

The HS code, as it is commonly known, is used for the declaration of goods at the border customs, calculation of its correct customs duty, and the recording of such data. This is usually followed by the publication of trade statistics and their evaluation by the relevant bodies.

Every exporter or importer is legally responsible to correctly classify the goods that are shipped and declare this to the customs using the correct HS code at the time of export or import.

As the name suggests, it harmonizes customs and trade procedures on a global level.

Harmonized Commodity Description and Coding System shortened to HS System, was introduced by the World Customs Organization (WCO).

The HS System serves to standardize the names and terms used in classifying goods so that goods can be identified easily for different purposes during exports and imports.

HS codes help to remove ambiguity while classifying goods for charging customs duty, surcharge, taxes, etc. They are also used by governments, trade bodies, and the private sector to calculate freight tariffs, keep control over the goods while implementing trade quotas and policies set by governments, identify goods that are hazardous to the environment, plants, animals, and human beings, etc.

Numbering Convention of HS Codes

HS codes have a minimum of six digits. It is a number consisting of sections, chapters, headings, and sub-headings of the harmonized coding system. Typically, each country adds another two to four digits to this six-digit code prescribed by the WCO to form a unique HS number. For example:

62 35 10 & 0000 = 6215.10.0000
Chapter number Heading number Subheading number Country prescribed code Complete HS Code
WCO prescribed hs code

The format of HS codes follows the first six digits set by the WCO followed by the two to four digits given by the respective country. As can be seen, the first six digits are always the HS code that has been set by the WCO.

The first two digits are the chapter number in the HS system of numbering, followed by the next two digits that show the heading under this chapter. The last two digits show the subheading under the heading.

In the above example, it means the tenth sub-heading under heading number fifteen coming under chapter number sixty-two of the harmonized coding nomenclature. The last four zeros are the digits given by the authorities of the country issuing this HS code.

The HS coding system includes more than 200000 internationally traded commodities. It has more than 1200 headings that have around 96 chapters. These chapters are grouped under 21 sections.

How Does the HS Code Work?

While importing or exporting goods the consignee or the consignor or their respective authorized agents have to declare the goods to the port customs by using the correct harmonized system codes.

By following the HS system, there is no confusion in the classification of goods that are imported or exported. This classification is important to the customs as well as the consignee or consignor as it is used for several purposes including calculating the customs duty and other surcharge or taxes.

Wrong declaration of goods using any other methods can result in a loss to one of these parties. The World Customs Organization does not set the customs duty rates as this is done at a national level, following the WCO classification by way of HS codes.

The current version of harmonized system codes used internationally is the HS 2017. However, the version that is set to be released on 1 January 2022 is the HS 2022.

This edition would include 351 sets of amendments to the existing rules that govern the trading of goods between countries. A new version is normally released every five to six years by the WCO and it takes into account issues that are encountered and the possible solutions to these issues.

The World Customs Organization (WCO)

Headquartered in Brussels, Belgium, the World Customs Organization or WCO was founded in 1952. It was initially called the Customs Cooperation Council or the CCC. This intergovernmental organization was set up for the cooperation, technical assistance, increased efficiency, and effectiveness of customs bodies all over the world.

Currently, the WCO includes about 183 customs bodies whose role is to provide guidance and support to the customs organizations of the world. Its performance is measured and evaluated through Key Performance Indicators (KPI) on the total initiatives taken to provide leadership, guidance, and support to its members.

The objectives of the WCO are to facilitate trade, improve the collection of revenue by the members, and take up initiatives that protect the environment and society.

The WCO strives constantly to improve its strategy for achieving its objectives. How does it achieve this? The WCO streamlines processes, international standards, and cooperation between nations. It is also involved in capacity-building through technical assistance for the improvement of standards and training of associated staff.

The Tariff and Trade Affairs Directorate (T&TA) of the WCO is mainly in charge of the classification of commodities, valuation of goods that are imported, as well as matters relating to rules of origin. The Harmonized System (HS), Valuation agreement, and the Rules of Origin of the World Trade Organization (WTO) are managed by the T&TA.

Another Committee of the WCO is the Harmonized System Committee (HSC). The main function of the Harmonized Systems Committee is the interpretation of legal texts, settlement of disputes in the classification of goods between parties, and to affect amendments to legal texts whenever there are developments in trade patterns or technology that affect the system.

The WCO works in close cooperation with some leading world bodies such as the Commonwealth Secretariat, the INTERPOL, and the FATF.

Commonwealth Secretariat

The Commonwealth Secretariat consists of 54 independent member states that work with the WCO in meeting its goals and for the mutual benefit of these states.

Founded in 1965, it is headquartered in London, UK.

INTERPOL

The International Criminal Police Organization (INTERPOL) and the WCO have cooperated and continue to work on several issues that range from fighting criminal activities to weapon, drug, and human trafficking. A memorandum of understanding was signed between the WCO and INTERPOL in 1998 to this effect.

The headquarters of the INTERPOL is in Lyon, France and it has 194 member countries.

FATF (Financial Action Task Force)

Set up in 1989, this is an intergovernmental body that works to combat terrorism and money laundering. The FATF has set standards that help to deliver a coordinated global response for fighting terrorism, organized crimes involving drugs and human trafficking, and corruption.

The FATF monitors countries for the correct implementation of its standards. Defaulting countries are held accountable and punitive measures are taken until the corrective and effective actions are implemented.

The WCO works with the FATF to find and implement new methods in combating terrorism, terrorism funding, and financial fraud.

The headquarters of the FATF is in Paris, France.

HS Codes in India

In India, the ITC-HS codes are used for national trading as well as for import and export operations. ITC-HS stands for Indian Trade Classification – Harmonized Coding System (ITC-HS).

The ITC-HS is an eight-digit code. The first six digits being the WCO code followed by the code given by the office of the Directorate General of Foreign Trade of India.

The ITC-HS coding system has two schedules, one for the import of goods and the other for export. Import Schedule I of the ITC-HS explains in detail the rules and procedures to be followed while importing goods into the country.

The Export Schedule II of the ITC-HS explains the rules and procedures for exporting goods.

The Directorate General of Foreign Trade (DGFT) is responsible for HS codes in India. It is an arm of the Ministry of Commerce and Industry of India. The main tasks of the DGFT are to formulate and implement foreign trade policies and to promote exports.

HS Codes in the US

The HS codes that are used in the US have ten digits of which the first six are the WCO-designated HS code. These codes are called the Harmonized Tariff Schedule of the United States or HTS-US. The United States International Trade Commission (USITC) is in charge of these codes. The HTS-US codes are used for the classification of traded goods.

When it comes to exports from the country, this ten-digit code is known as a Schedule B number and is mandatory for all goods that are exported from the country.

The administrative authority in charge of the Schedule B number in the US is the United States Foreign Trade Division (USFTD) that comes under the US Census Bureau. The USFTD is primarily responsible for the compilation of data relating to domestic trade and export of goods from the US to other countries. The Schedule B number classification is mainly used for this purpose. A Schedule B number follows the same pattern as the HTS-US code although the last four digits of the ten-digit number may be different.

HS Codes in Europe

Integrated Tariff of the European Communities (Tarif Integre Communautaire) shortened to TARIC is used by countries of the European Union. Following WCO directives, the TARIC code also begins with the first six digits of the HS code followed by the European Union’s code.

This may extend to more than ten digits taking into consideration the TARIC coding methodology that includes tariff suspensions, preferences, anti-dumping quotas, embargo, etc.

The TARIC code is used in imports and exports between EU member countries as well as in international trade from these countries.

The United Kingdom and HS Codes

The United Kingdom is no longer part of the European Union with effect from 31 December 2020. Her Majesty’s Revenue and Customs (HMRC) is a department of the government of the United Kingdom whose main duties include facilitation of international trade, collection of taxes, and compilation of trade statistics of the country.

The administration and regulation of HS codes also come under this department.

Some of the other responsibilities of the HRMC are payment of benefits, enforce tax and customs rules, etc.

Faulty Declaration of HS Codes and its Implications

Incorrect declaration of an HS code to the customs can result in payment of the wrong duty and taxes on the commodity that is being imported. Overpayment or underpayment of duties and taxes has its implications. The overpaid amount can be claimed by the importer but only after the submission of the required supporting documents.

The waiting period for getting this refund is also usually very lengthy. Similarly, underpayments are recovered by the authorities along with hefty penalties or fines.

In certain countries, an underpayment may even result in the confiscation of the goods involved. Such confiscated goods are returned to the importer only after submission of the correct supporting documents and payment of penalties or fines.

To avoid such situations, the person who is responsible for submitting the customs documents that require the input of the HS codes should have a thorough and in-depth knowledge of the classification of commodities and their application.

Staff who are experienced in working with HS codes can help companies to avail benefits that are offered by the government.

When goods are classified correctly using the right HS code, it will show if the customs duty is suspended, whether a license is required to move your goods, if it has any anti-dumping duties or tariff quotas.

Source: Marine Insight

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