Category Archives: Maritime Law

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10 Major Ports In Morocco

The Kingdom of Morocco is an African country located in the North-Western Maghreb region. It is blessed with large water bodies to the North and West that provide high-quality fish and produce.

The Atlantic Ocean lies to the West at one of the widest points between the Americas and Africa. The Mediterranean Sea lies to the North and separates it from Europe.

Spain is the main European country that Morocco has trade relations with, although Portugal, France, the UK, and the Nordic countries are also regular trade partners.

Morocco was heavily influenced by French and Portuguese occupation, with the former having a lasting effect on the culture and traditions of the people.

The main languages are Arabic and Berber, although French is widely spoken. The capital city is Rabat and it is connected to most of the major ports. Morocco has control over the Spanish enclaves of Ceuta, Melilla, and Penon de la Gomera.

It plays a major role in the global supply chain because of its proximity to the Straits of Gibraltar and the large volumes of trade it carries out with Europe.

Ships headed to the Suez Canal pass through Morocco with many of them halting for transhipment. For all these reasons, ports in the country are well developed and interconnected.

In this article, we explore the top 10 ports of Morocco. While the ranking is not in the order of cargo tonnage and volume, we have included ports that have outstanding facilities, provide essential income to the surrounding regions, and handle the largest annual quantities of cargo.

Many of these are fish ports, and this is extremely common in Morocco where fishing continues to be a lucrative business for export to Europe and the rest of Africa.

Besides those ports mentioned in this list, there are other prominent facilities such as Al Hoceima and Mohammedia.

Sit back, grab your atlas, and let’s go through Marine Insight’s list of the top 10 ports in Morocco!

1. Port of Nador

Beni Ensar, Mediterranean Region

UN/Locode: MA NDR

The Port of Nador is located in the Rif region and is a busy shipping hub in Morocco. It is operated by the regional SODEP and is classified as a semi-artificial lagoon. The port operates out of the Bou Areg Lagoon in Beni Nsar and Aït Nsar. The port neighbours the Spanish enclave of Melilla and shares a large volume of trade with the harbour located there. Both harbours are interconnected and share many facilities with Nador Port occupying 30% of the harbour area.

The harbour handles busy ferry services that run throughout the year. Some ro-ro operators ply to and from international ports mainly in Spain and France. The major passenger routes are the Almeria and Motril ferry services. The port has a 600-meter dock for passenger vessels and an average port anchorage depth of 13 meters.

The port also deals in general cargo, dry bulk, and fish exports. Terminal 2 operated by Marsa Maroc services bulk vessels. The major goods passing through here are ores and billet imports that are used by the SONASID steel mill. Nador Port also has facilities to store hydrocarbons and has a dedicated 100-meter-long pier for handling such vessels. Lastly, the harbour includes a fish port that exports local produce.

The port is well connected by road and rail to major cities in Morocco and is linked to several international destinations by ferry services. The main ferry operators include Trasmediterranea, Ferri Maroc, Grandi Navi Veloci, Balearia, and Africa Morocco Link. The rail services from Nador are run by the Moroccan national railway operator – ONCF. There are regular services to other major ports in Morocco including Tanger and Casablanca. The port is also close to the Nador International Airport and the Spanish Melilla Airport.

2. Port of Tanger Med

Mediterranean Region

UN/Locode: MA PTM

The Port of Tanger Med (aka Tangier Med) is the largest in Africa by cargo capacity and is one of the top harbours of Morocco. Run by the Tanger Med Port Authority, it is the largest Mediterranean port on the Moroccan coastline. It has been operational since 2007 and has achieved record container and cargo shipments in a short period. The original facilities were built to handle a capacity of 3.5 million TEUs but a recent development project has increased that to a maximum of 9 million TEUs.

Based out of Northern Morocco, the port is in a prime location to carry out trade with Europe. This was laid down as a proposal in a free trade agreement signed between Morocco and the EU in 2012. The port’s proximity to the Straits of Gibraltar allows it access to major shipping hubs. It offers many incentives to private firms that set up operations out of the port’s logistics hub and freeport zone. An interesting feature of Tanger Med is that it is currently building a hub that will make it the only port in North-Western Africa that runs a facility for the transhipment of cereal. The harbour also stores over 10 million tons of oil annually.

Terminal 1 of the harbour has a 3.5 million TEU capacity and operates 1.6 kilometres of container docks. The average anchorage depth is 17 meters for this terminal and it sits on 140 hectares of land. The passenger terminal spans 2.5 kilometres and operates out of 8 berths. The average water depth is 10 meters and this facility spreads across 35 hectares of land. Terminal 2 has a capacity of 5.5 million TEUs and spans 2.8 kilometres in length for container facilities. An area of 160 hectares is set aside for this terminal and it includes oil stations for refuelling.

Besides the port harbour and facilities, Tanger Med also runs an industrial hub for international and regional companies. It is an important facility that contributes to income generation in the engineering and logistics fields. As of 2017, the port was working with 54 projects and hosts over 750 companies. Some of the top firms that operate from the industrial platform include Bosch, Emirates, and Adidas AG. Other than the industrial hub, Tanger Med also operates large automobile manufacturing plants run by several reputed firms. Some of the top car companies that run operations out of here are Nissan and Fiat.

3. Port of Kenitra (Port Lyautey)

North Atlantic Region

UN/Locode: MA NNA

The Port of Kenitra is a riverine commercial port located on the banks of the Sebou River. The harbour includes the Mehdia Port and lies close to Casablanca and Tangier. The complex is situated 17 kilometres inland from the Atlantic Ocean and is linked to the National Highway and Rail System. For air transport, Rabat Airport is located 25 kilometres away.

Kenitra serves as a fishing and cargo port that has been in use for over a millennium. Set up as a military base, it was selected as an excellent location for a riverine port that would remain accessible from the Atlantic. With time, trade commenced and the port was instrumental in the development of the Gharb plains. Fishing also became a major activity, with the Mehdia outer port being a top location for fish exports.

Kenitra was used for nearly 50 years as a United States Naval and Air Base. Starting from World War 2 till the post-Cold War era, the port was developed by the US Engineer Corps and was later transferred to Morocco in 1991. The current facilities include an anchorage depth of 5 meters, a dock length of over 1 kilometre, and an area of 22.7 hectares.

4. Port of Casablanca

Port of Casablanca Region

UN/Locode: MA CAS

The Casablanca Harbour Complex is an artificial seaport and the largest port in Morocco (based on area). Ranked behind Tanger Med Port in terms of annual cargo and container tonnage, the harbour handles around 38% of maritime traffic through the country. Spread over a vast expanse of 605 hectares, the port front stretches for 8 kilometres and can simultaneously berth nearly 40 vessels. The average cargo handling tonnage of Casablanca is 21.3 million tons.

Currently operated by Marsa Maroc, it is divided into a commercial port, a fish port, a marina, and a shipyard. As one of the largest cities in Morocco, Casablanca is connected to the ONCF rail system and the major metro cities. The port is at the centre of a protracted expansion project to keep the facilities up to the required standards. With traffic on the rise, the port has seen many additions since it became the first port of the 19th-century Moroccan kingdom. From the addition of jetties and piers for recreational boating to the commissioning of the Tarik and Est container terminals, the harbour has been a hive of activities aimed at revamping and renovating the port.

5. Port of Jorf Lasfar

Central Atlantic Region

UN/Locode: MA JFL

The Port of Jorf Lasfer is a deep-water harbour located close to Casablanca and El Jadida. Operational since 1982, the port sits on an area of 110 hectares and has a mean berthing depth of 5 – 15.6 meters. The primary shipments through here are fertilizers, chemicals, and petrochemical products. The port is currently managed by Marsa Maroc with investment from foreign firms such as the ABB Group (Swedish-Swiss), CMS Energy (America), IPIC, and the US Trade and Development Agency. The port is connected to the National Highway N1 and lies on the Nouasseur-Jorf Lasfar railway line.

The port facilities extend beyond conventional harbour equipment and provisions. Jorf Lafar boasts of an air quality research lab run by the Office Cherifien des Phosphates (OCP), a $5 billion oil refinery built by the International Petroleum Investment Company (IPIC) based out of Abu Dhabi, a desalination plant, fertilizer factories, a thermal power plant, and hydrocarbon depots. The power plant is the largest in the country and was set up jointly by the government, CMS Energy, and ABB. The port also specializes in handling ore shipments and has docks spanning over 2.4 kilometres.

6. Port of Safi

Central Atlantic Region

UN/Locode: MA SFI

The Port of Safi is located in Western Morocco and is a major commercial harbour in the country. The port has had a rich history of maritime trade and naval battles during the 20th century. From the 12th century, the Safi Port has been a major trading harbour due to its proximity to Marrakesh (a major city and the erstwhile capital of Morocco). Today, it is the premier fishing port in Morocco that exports world-class sardine across the globe. Besides fish, the port also deals in exporting chemicals and textiles.

Situated just over 100 kilometres from the Jorf Lasfar Port and within 6 hours’ reach from Port Agadir, Safi is one of the safest ports in Morocco since it is protected from storms by cliffs. The port is linked to National Road #1 on the Casablanca-Agadir and Marrakesh-Safi routes. The railway service is provided by ONCF on the Safi_Benguerir Lasfar Line.

The port boasts nearly 2.3 kilometres of berthing docks, a shallow craft berthing depth of 5 meters, and a deep vessel anchorage depth of 12 meters. Spread over 54 hectares, a major non-fish export from Safi is Phosphates sourced from nearby Youssoufia. Coupled with other chemical exports, they are handled at a dedicated chemicals wharf. The port is divided into the North and Shore Wharfs.

7. Port of Agadir

South Atlantic Region

UN/Locode: MA AGA

Situated in central Morocco and near the Souss River, Agadir Port is an important trade harbour in Morocco. It has led to the development of the Souss-Massa regions and has resulted in the growth of local industries. A major activity of the port is agricultural exports which are sourced from the port hinterlands. It is well connected by road via the Marrakesh-Agadir motorway and the N1 and N40 national roads.

In operation since the early 17th century, the port’s initial shipments mainly included trade in sugar, weapons, and textiles with Europe. France, England, and the Netherlands had a majority share of the trade passing through Agadir. Following an earthquake in the 18th century, the port was closed and Essaouira Harbour took on great importance.

Later on, the port was again opened for military expeditions and has been operational since. The modern-day commercial port was built in 1950 and supported the growth of the local agricultural, mining, and fishing industries. The earthquake of 1960 destroyed most of the facilities at the harbour and forced the authorities to rebuild most of the region. The port of Agadir is used today for mining exports, fishing, and tourism. Agadir is a port frequented by tourists visiting the famed Moroccan beaches.

8. Port of Tan Tan

South Atlantic Region

UN/Locode: MA TTA

The Port of Tan Tan is one of the Southernmost ports in undisputed Morocco and is a small harbour based in El Ouatia. Located close to the Tan Tan Plage Blanche Airport, the harbour is also connected to the main National Highway N1.

The primary activity here is coastal fishing and the produce is sent to neighbouring countries and other Moroccan ports to supplement their international exports. Besides fishing, oil tankers frequent this port although pilotage is required during the low tide, and berthing is prohibited at night.

Considered to be a mostly regional harbour, Tan Tan has excellent facilities to handle fishing and oil shipments but is ill-equipped to handle other goods. Over time, considerable investment has been pumped in to improve the dock and breakwater facilities.

9. Port of Laayoune (Port El Aaiun)

Great Southern Region

UN/Locode: MA EUN

The Port of Laayoune is located in the Western Sahara region of North-Western Africa. This port specializes in hydrocarbon imports and the export of sand and phosphates mined from the surrounding region.

Operational since 1986, it has been a trade hub in the South and has witnessed rapid growth and numerous development activities to improve the facilities at the harbour. The port has been expanded three times since opening to keep up with the large volumes of trade passing through the region.

Like most of the other ports in Morocco, a major activity in the El Aaiun Port is fishing. The annual revenue from fishing contributes to 43% of the port’s income.

At present, the Moroccan government is in the process of settling a fishing agreement with the EU on the division of the region surrounding Laayoune.

The port is connected via air through the Hassan I Airport. It is situated close to the Port of Dakhla and ships head there during congestion at Laayoune. Combined, both these ports handle 89% of commercial maritime traffic in South Morocco.

10. Port of Dakhla

Great Southern Region

UN/Locode: MA VIL

Located between the Oued Ed-Dahab peninsula and the Moroccan coastlines, the Port of Dakhla lies on the sheltered Ed-Dahab Bay. With a width of 7 miles, the port is located near the Punta de Lasarga, Rio de Oro, and the Punta del Pescador. It handles fishing and cargo vessels with a dedicated facility that handles spare part exports. Fishing is a major activity at the port and features several facilities to process fish before export. Sitting on 280 hectares of land on the coastline, Dakhla Port runs a free port zone on 13 hectares.

Although Dakhla Port is a minor Moroccan port, it has “strong halieutic potential” as per the regional authority for ports – the Agence Nationale des Ports (ANP).

A plan proposed in the early 2000s to revamp the harbour was the development of 2 adjacent ports within the Ed-Dahab Bay. With ample space on the 25-mile Bay, the twin ports would work to encourage investment in the region and boost the maritime trade economy.

One of the ports is currently home to a military base while the second one handles commercial activities. The port handles 330,000 tons of cargo annually and fish exports of 170,000 tons per year.

The port is connected by road on the Laayoune-Lagouira National Road and via air from the Dakhla airport situated 5 kilometres from the harbour. Some of the other sections of the port include an administrative zone, a petroleum products warehouse, and a large high-risk warehouse.

Source: Marine Insigh

020820210COMMENTS

Types of Container Terminals On The Basis of Ownership

Macnels Macnels

Maritime Law

Types of Container Terminals On The Basis of Ownership

To this day, containerization has largely evolved with the standardized sized boxed units which have enhanced cargo handling and transportation techniques. Containerization has led to a global transformation in trade and business with collective progression in imports as well as exports and decreased theft, damage and loss of cargo.

Modern day container handling has given the shipping industry a newer perspectives of trade with far off places. In the most developed areas of the world, containerisation has a high value share in the maritime based import, export and transhipment of general goods. Resources have proven that ‘ transshipment’ is the driving force for the rise of container handling in the past few years.

Containerization has also transformed the business of transportation into a standardised function, leading to development of many container terminals around the world. All types of shipping containers have to conform to the industry recognised ISO standards; which means global acceptance.

Moreover, newer container technologies have also sprung up to transfigure with the changing times. Shipping containers are made up of weathering steel welded together to form super strong reinforcements, framings and structure. These fail-safe cargo carriage units are highly advantageous and profitable particularly to the ship and cargo owners.

Every single shipment of cargo travels from point A to point B in several formats either by rail, road or sea. There are stand alone transportation systems for different types of cargoes to be transported in bulk. Containers are the only transport system that are used by all three modes of carriage. Shipment over sea is carried out on the container ships; similarly, rail and road transport of the containers is done by trains and trucks.

Containers are transferred through container ports, terminals and depots. All the way down the years, cargo handled via containers has increased enormously. Now-days, the container ships are able to carry more than 10000 units in one single voyage. This, as a result, has led to the rise in the importance of container terminals and ports. Several aspects along with shipping operators and government play an important role in successful operation of container terminals. Mentioned herein are different types of container terminals that are found around the world.

Types of Container Terminals

The Container terminals around the world are classified with respect to their ownerships into five categories:

Public Terminals, Carrier-leased Terminals, joint venture of the Carriers and Terminal operators, Terminals those are Operator built and Operated terminals and finally those which are Carrier built and Operated terminals. The following is a brief overview of the five types of terminals –

1. Public or state run terminals

Since they operate on a first come first serve basis, all the facilities of the public terminals such as tariff rates, loading and unloading processes, berths in and out, etc are shared equally among all the shipping lines. The handling of the containers and other related charges are mostly calculated at regular tariff rates or discounted upon agreed rates.

2. Carrier-Lease dedicated terminals

With such terminals in operation, major carriers have collaborated with the port authorities and signed long term lease contracts for using the terminals exclusively. The carriers are liable to pay up the facility charges, contract kick backs, berth rents, etc. which are used up as priority usages for the carriers. Maersk group being one the largest carriers in the world has quite a few terminals contracted for their long term usage. Also, there are a few partnerships among the shipping lines that have multi-user long term contracts to share out the terminal usages.

3. Terminals built and operation terminals

Terminal operators invest directly in the construction, operation, handling facilities of a terminal. The operators make agreed contracts for lease with the port authorities by depositing a sum towards the total handling charges of the container operations.

4. Carrier – built and operation terminals

The methodology is similar to the one for terminal built and operated terminals. In such kind of licensing, a carrier or several carriers together lease the container terminals by making deposits to the port authorities or investing directly in their construction, operation and handling services

5. Joint venturing of the carriers and terminal operators

In this type of contract, an agreement is made between the shipping lines and the terminal operators thereby establishing a company. Direct investments are made and the terminals are jointly operated for safe, prioritised and efficient container handling operations.

Source: Marine Insight

020820210COMMENTS

Ship Chartering Process – The Ultimate guide

Macnels Macnels

Maritime Law

Ship Chartering Process – The Ultimate guide

When a ship is taken on rent, it is known as ship chartering. Just as people take an apartment or a car for rent, some people may rent a ship based on their requirements. It could be to transport passengers or cargo.

Renting a ship is known as ship chartering and it begins with the shipowner and a second party entering into an agreement. In shipping parlance, this agreement is known as a charter party.

The party that rents out the ship is the shipowner and the second party who is taking the ship on rent is known as the charterer.

Who brings these two parties together?

Shipbrokers play an important role in bringing the right shipowner and charterer together and in finalizing the terms of the agreement between them.

Typically, someone who wants to take a ship on a lease would approach a shipbroker to find the right vessel that suits their purpose.

As we can see here, there are three parties in the process of ship chartering:

– the shipowner who owns the vessel being rented,

– the charterer who requires the ship on rent, and

– the shipbroker who has helped to bring them together.

Let us take a quick look at the roles of each of these parties.

Shipowner
A shipowner may be an individual or an organization who owns merchant ships that are registered under their name with a ship registry. Merchant ships carry cargo or passengers for a charge.

Shipowners are usually members of the regional chamber of shipping or the International Chamber of Shipping (ICS). This global body is responsible for all regulatory and operational issues to do with shipping. Legal issues that crop up in the shipping business are also handled by the ICS.

Charterer
Someone who wants to rent a ship, either to transport cargo or passengers, is called a charterer. The cargo may or may not belong to the charterer. The charterer may be transporting it on behalf of a different party.

Sometimes a charterer may take a vessel on lease and re-rent it to another party for the transport of cargo or passengers, for a profit.

The charterer plans the ship’s voyage and the arrangements for the handling of cargo during loading and unloading. As such, he is responsible for the safety of the ship, its crew, and the cargo.

The charter party is signed between the shipowner and the charterer.

Shipbroker
Like all other brokers, shipbrokers also help to identify the right customer for a shipowner who wants to rent his ship or vice versa. For their services, they charge a fee or a commission to the shipowner. The commission may be a percentage of the total freight paid to the shipowner by the charterer.

Sometimes, a shipowner might appoint a full-time shipbroker for getting business. In the ship chartering business, it is common to find brokers who specialize in the chartering of certain types of vessels. It could be for the transportation of goods such as dry bulk, liquid bulk, etc.

A shipbroker is not liable for the ship, its operations, or the cargo that it carries. He is just the intermediary between the shipowner and the charterer.

The Institute of Chartered Shipbrokers
The Institute of Chartered Shipbrokers (ICS) founded in 1911 is a professional body that is recognized worldwide among the shipping fraternity. It was brought under the British Royal Charter in 1920.

Based in London, the Institute of Chartered Shipbrokers is considered the representative body of the many shipbrokers and ship managers on a global level. Through its various courses, it certifies qualified and experienced individuals to become professional shipbrokers.

Ship Registry
The authority or body that registers a merchant ship is known as a ship registry. It may be a government ship registry or a registry owned by private organizations such as the Lloyds Registry, Bureau Veritas, Indian Register of Shipping (IRS), etc.

Every ship has to be registered whereby it gets its nationality and confirmation of ownership. Each registered ship comes under the jurisdiction of the law of the country where it is registered, known as the flag state. Some countries or organizations may register only the ships of that particular country. Such organizations are known as National Registries.

Organizations that are open to register both national, as well as ships of other countries, are called Open Registries.

The 3 Main Types of Ship Charters
Voyage Charter
This is the most common type of ship charter. A voyage charter normally involves renting the vessel as well as its crew for a particular voyage between two or more ports. The rent will be based on the quantity or weight of the cargo that is carried on the voyage or it could be a fixed amount that is agreed upon between the parties.

Time Charter
When a ship is hired for a certain period, it is known as a time charter. As in the other types of charters, the vessel is rented along with the crew but for a stipulated period. The charter party will clearly state the terms and conditions of the voyage, the agreed period of hiring, the type of cargo to be carried, etc.

In a time charter, the charterer may pay a daily or a monthly rate based on the deadweight ton.

Bareboat Charter
In the bareboat charter, the vessel is operated and managed by the charterer’s crew and vessel management staff. The shipowner will only be looking after the ship’s technical management and matters relating to port operations.

Responsibility for the safety of the ship and all the financial settlements with outside parties will be with the charterer for the duration of the charter party. A bareboat charter is also known as a demise charter.

Charterparty
The charter party is a contract between the shipowner and the charterer. It states the responsibilities of both these parties with regard to the ship charter.

The charter party must be detailed and cover all aspects of the charter, especially points like re-renting of the vessel by the charterer, the type of cargo to be loaded on the ship, and ports of call.

In ship chartering, all the parties involved should be aware of the various details that go into the making of a successful charter party or fixture.

The shipowner, as well as the charterer, must be aware of the background of the other, their financial standing, and business reputation.

Just as the shipowner must know the type of cargo that is to be carried on the ship and its date of sailing etc. the charterer should be aware of the cargo-handling capacity of the vessel and its flag.

It would do the shipbroker good if he knew all these details before approaching a prospective client.

Source: Marine Insight

020820210COMMENTS

Macnels Macnels

Maritime Law

What are Bonded Goods in Shipping?

Import of goods to a country normally involves payment of its customs duty, taxes, or any other charges to the government at the time of import. However, in some special cases, goods are allowed to be imported without payment of customs duties and other charges upfront.

These goods are then stored in special warehouses and either cleared or re-exported at a later point in time, on a need-basis, after payment of the necessary customs duties and taxes. Such a warehouse where goods are stored temporarily prior to the payment of customs duties and taxes due on them is called a bonded warehouse.

Customs duty and taxes are levied only on that portion of the goods that are either cleared or re-exported. A bonded warehouse is a secure warehouse that comes under the purview and supervision of national customs.

Goods that are stored in such a warehouse are known as bonded goods. Bonded warehouses are meant only for the storage of imported goods on which customs duties and taxes have not been paid.

Governments usually allow the import of raw materials for manufacturing or reprocessing, without payment of customs duty. Such bonded goods are stored in a bonded warehouse and customs duty and taxes due on them are deferred.

Once the manufacturing or reprocessing is completed and it is time for the importer to move the finished goods to the domestic market, the importer has to pay all customs duties and taxes on the finished goods to the government at the time of clearance.

Another scenario is when goods in bonded storage are processed further to enhance their value and readied for re-export. Bonded goods such as these do not enter the country. When such goods are re-exported, the importer does not have to pay customs duties or taxes.

In certain cases, goods such as those for humanitarian aid, etc. may be exempt from customs duties and taxes completely.

Customs Warehouse

A bonded warehouse is sometimes known as a customs warehouse. Most countries allow the storage of bonded goods in a bonded warehouse for an indefinite period. However, in some countries, bonded goods are subject to a warehousing period of 5 years beyond which they cannot be stored as bonded goods.

Before the expiry of this period, they have to be either cleared or re-exported. When the bonded goods are not disposed of within this period, it is usually confiscated and auctioned by the bonded warehouse owner under customs supervision.

Bonded warehouses are most commonly used for the storage of items with high customs duties such as alcoholic spirits, cigarettes, etc. However, as we have seen earlier in this article, they are also used to house goods temporarily for the purpose of reprocessing or re-working and subsequent clearance or re-export.

Origin of Bonded Warehouses

Bonded warehouses had their origin in England around the latter half of 1800. Before bonded warehouses came to be in operation, customs duty had to be paid by an importer at the time of import of goods.

The other option available to him was to furnish a bond or guarantee for payment of the duty amount at a later point in time. Both these methods often meant tying up large sums of money towards payment of customs duty.

What are the Types of Bonded Warehouses Available Today?

Public Customs Bonded Warehouse

Typically, Public Customs Bonded Warehouses are government-owned and controlled by the government. Such warehouses are available to the public for the temporary storage of their goods until payment of customs duties and taxes. In some countries, private parties are also authorized by the government to run such warehouses.

Private Customs Bonded Warehouse

As the name suggests, these are privately-owned bonded warehouses that function under the supervision of the customs. The owner may store his goods or those belonging to other licensed importers in such warehouses.

The responsibility of the running, upkeep and security of the warehouse rests with the private owner. Goods coming in and going out of the warehouse are strictly monitored and recorded by the customs for payment of duties and taxes. The bonded goods that are re-exported are similarly accounted for.

Special Economic Zones

Also known as a Free Zone or a Bonded Logistics Area, these are secure geographical locations that house several logistics facilities, warehouses, processing centers, and associated businesses belonging to various organizations.

Usually located close to seaports or airports, they offer a dynamic duty-free base for companies to operate from. Several leading organizations have their offices inside such special economic zones.

Examples of highly successful special economic zones are the JAFZA (Jebel Ali Free Zone) in Dubai, UAE, the SEZs of India, China, etc.

Documents Required for Bonded Storage of Goods

Most of the countries have gone digital when it comes to operating within a special economic zone or a bonded area. Hence, the procedure of bonded warehousing is easy to comply with. Some of the common digital documents that are required in bonded warehousing are the following:

– Bill of Entry

– Transport document such as the Bill of Lading

– Transfer request form from bonded warehouse

– Bill of Export

– Shipping Bill

Advantages of Bonded Warehouses

A bonded warehouse allows for the long-term storage of imported goods without having to pay customs duties and taxes on them. This allows for bulk purchases by importers when the price is favorable. Bulk purchases help to develop the relationship between the buyer and the seller.

The importer does not have to invest in a large sum of money for the immediate payment of customs duties and other charges to the government at the time of import. He pays these only when goods are either cleared to the domestic market or re-exported.

Bonded warehouses are ideal for the storage of restricted goods. Examples are alcoholic spirits, cigarettes, etc.

Bonded warehouses are convenient for re-export as they are generally located near points of entry or exit of a country such as airports or seaports.

Such warehouses are secure and the mode of operation is easy as it is digital.

Disadvantages

Advantages far outweigh the disadvantages in storing goods bonded.

Certain formalities and documentation have to be followed for the storage of bonded goods in bonded warehouses.

While bonded warehouses are ideal for the planned storage and use of imported goods, they may be cumbersome when it comes to an emergency clearance.

Source: Marine Insight

010820210COMMENTS

Macnels Macnels

Maritime Law

Required Documentation For Shipping – Complete List

When cargo is shipped from one location to another, it has to be accompanied by a set of documents authenticating the transfer and the products being transferred. This set of documents are referred to as shipping documents.

Different countries have different requirements as far as shipping documents are concerned. The two main world organizations that frame rules and guide business organizations in this matter are the World Trade Organization (WTO) and the International Chamber of Commerce (ICC).

Most shipping documents are based on the rules and regulations set forth by these world bodies and the governing authorities of the respective countries, such as the chamber of commerce, customs, trade councils, etc.

Roles of the WTO and ICC

The World Trade Organization facilitates trade between nations through negotiations and agreements. The main aim of WTO is to ensure the smooth and free flow of trade between nations. Besides this, they settle disputes between members and also helps developing countries in doing business.

The International Chamber of Commerce is the voice of over 45 million business organizations all over the world. They guide these organizations on the references, rules, and standards to be followed while doing business. As such, the work of ICC is referenced and taken as the guide by arbitrators, lawyers, and bankers especially in the event of disputes between organizations based in different parts of the world.

Let us examine the main shipping documents that are used in doing business. While some countries require documents to be in hard copy, others have moved to the paperless shipping documentation.

The documents that are mentioned here may be common for the different types of transport such as by land, sea, and air. However, here we will focus mainly on shipping documents for the transportation of goods by sea.

Export and Import License

A business organization that has to export or import goods are required to register with the licensing authority in their region. Normally, the licensing authority grants permission to the organization by issuing an Import Export Code (IEC).

This permission is given only after ensuring that the business has met all statutory requirements and is eligible to export or import.

In India, the IEC is issued by the Directorate General of Foreign Trade (DGFT).

Proforma Invoice

A proforma invoice is a preliminary invoice that shows the quantity and description of goods, the total amount to be paid by the buyer, the date when the products or services being sold will be delivered to the buyer, and other important details of the transaction. Any advance paid on the transaction will be based on the proforma invoice. It is also a commitment between the seller and the buyer.

Bill of Lading or Seaway Bill

A bill of lading (BL) is a confirmation issued by the shipping company of having received the cargo from the seller onboard their ship. It is a contract of carriage between the seller and the shipping line.

A BL serves as proof of ownership of the cargo. Typically, a bill of lading is a negotiable instrument. In other words, it can be transferred to a third party with the seller’s consent.

Just like the bill of lading, a seaway bill is also a contract of carriage between the seller and the shipping line. However, it is a non-negotiable contract in which the shipping company undertakes to deliver the goods only to a specific consignee.

A seaway bill cannot be transferred to a third party.

Both the bill of lading and seaway bill are legal documents.

Commercial Invoice

A commercial invoice is a final invoice that is used for customs clearance and other purposes. It should have the complete details of the business transaction between the seller and buyer.

At the least, it should include the name and address of the seller and buyer, the description of the goods being sold, quantity, value, terms of sale and payment, and the country of origin of the goods.

The commercial invoice forms the basis for the payment of customs duty and other taxes.

Packing List

As the name suggests, it is a document that provides details of the packing of the goods being shipped. A packing list will show the description of goods, their individual and collective packing, dimensions, weights, and markings. It may look very similar to the invoice but does not replace either the proforma or the commercial invoice.

A packing list helps the customs, the shipping carrier, and the receiver to easily identify the individual cargo during inspection or receipt.

Insurance Certificate

An insurance certificate or an insurance policy that is taken on the goods being shipped assures coverage in the event of an accident that causes damage to the cargo.

Besides showing the conditions of insurance coverage and the value of insurance, it will mention the liability of the carrier or any other third party who is a party to the contract to transport the goods.

Bill of Entry

A bill of entry is filed with the customs authorities by the importer at the time of import of goods to the country. Such goods may be for consumption within the country or reprocessing and re-export.

When the reprocessed goods are re-exported, the bill of entry is a requirement and should be included along with other shipping documentation.

Certificate of Origin

A certificate of origin is usually issued by the Chamber of Commerce of the country. It is a declaration that the goods are produced in the country following certain prescribed requirements.

A certificate of origin often decides the import tax that has to be paid or not paid by the buyer.

Health or Phytosanitary Certificate

Edible items that are exported from a country need a health or phytosanitary certificate issued by the relevant authority of the exporting country.

This is a requirement for the clearance of such products at the destination port. It certifies that the goods being exported meet safety standards and are suitable for human consumption.

A phytosanitary certificate is normally used for the export of plant or plant products.

Dangerous Goods Declaration

When dangerous goods are shipped, the shipper has to follow the rules and regulations set forth by the International Maritime Dangerous Goods code (IMDG) which is an arm of the International Maritime Organization (IMO). The IMDG covers the packing, segregation, and storage of dangerous cargo.

A dangerous goods declaration is a document in the prescribed format issued by the manufacturer or shipper and included with other shipping documentation. It certifies that the dangerous goods being shipped have been classified correctly, packaged, and labelled according to IMDG standards. It will also have instructions on segregation, safety, and storage of the goods.

Letter of Credit

A letter of credit is a bank guarantee that the buyer will pay the seller. The bank guarantees payment in the event of the buyer defaulting on payment to the seller. Also known as bank guarantee, documentary credit, etc. there are different types of letters of credit.

Having Your Shipping Documentation in Order

There may be other country-specific documentation requirements for export and import. What we have covered above briefly are the main shipping documents that are required to export goods and receive them at the destination without any hassles.

Poorly organized shipping documentation can significantly delay cargo. It can affect your shipping costs or even result in fines imposed by the customs or other authorities.

Source: Marine Insight

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Understanding Transit Time in Shipping

A very simple explanation for the term transit time is that – it is the time or the number of days taken for a consignment to move from point A to point B. In shipping terminology, this is referred to as transit time or transit days.

It is an important factor affecting businesses and any other operations that procure raw materials, parts, or finished goods from suppliers to be reprocessed, repackaged, or simply redistributed.

Generally referred to as raw materials, these items are shipped by suppliers based on purchase orders from the customer, using a convenient and economical mode of transport as agreed between the two.

Why is transit time important? Without receiving raw materials, finished goods, or parts from their suppliers on time, any business will not be able to operate. They will not be able to meet their commitments to their customers.

Transit time is an important component of lead time. In business, lead time is the total time taken to realize a purchase order placed with a supplier.

It is a measure of the total time taken from the moment a purchase order is placed with a supplier till the goods are received at the purchaser’s warehouse.

Lean Business Models and Lead Time

Lean business models operate on a strict policy of waste elimination and cost reduction. In the current competitive business environment, most organizations operate on lean business models.

What are lean business models? A lean business model is all about minimizing or eliminating waste within an organization. This results in increased customer satisfaction and ultimately the profitability of the organization.

Companies that follow the lean business model achieve their objective by focusing on improvement and optimization of their processes and increasing the knowledge base of their employees, thereby reducing costs.

Here, the lead times of the required materials play an important role. Variations in transit time affect the lead time. Fluctuating lead times can make purchase order forecasting difficult and unrealistic. Without getting the raw materials at the right time, companies cannot meet their deadlines.

When raw materials are received earlier than required, it takes up storage space and also results in unnecessary stockholding for the company.

Any delay in the receipt of raw materials would affect the processing or production cycle. It might result in stock-outs that affect the timely delivery of goods to customers.

Just-In-Time (JIT) is an inventory management concept in which material and labour for manufacturing are arranged to arrive only when required and just in time for the manufacturing process.

Lead Time and Transit Days

Typically, the breakup of lead time is as follows:

Total Lead Time = Goods ready days + Transit days + Clearance and delivery days

Goods ready days (GRD) is calculated as the number of days taken from the time of placing a purchase order with a supplier to the time it is available to the transporter for shipment.

The supplier has to have the goods ready as agreed with the buyer and transporter. However, there may be delays from the supplier’s end in readying the goods.

Production bottlenecks, issues with packing and labelling, or incomplete export formalities and documentation can cause delays.

Unexpected delays from the supplier’s side may result in the cargo missing its sailing. If it is a transhipment cargo there is a very likely chance of it missing all the subsequent sailings from the other ports.

Sometimes a purchase order may consist of different goods from different sources that may have to be consolidated by the supplier. Delay in consolidation can upset the delivery deadline that has been agreed with the transporter.

Transit days (TD) is the number of days taken from when the goods are picked up from the supplier by the transporter, till it is discharged at the destination port.

Transit days include the time taken to move it from the supplier’s warehouse to the port of origin, storage days at the port if any, the sailing time, and finally, the time taken to discharge the cargo at the destination port, ready for customs clearance.

The number of days it takes for customs clearance of the goods and their delivery to the customer’s premises is the clearance and delivery days (CDD).

A simple example of the breakup of lead time by its different components is given below.

The Techstart company in Chennai, India places a purchase order for 20 pieces of machinery with Yamaguchi & Sons, Yokohama, Japan on 25 June. As agreed between both companies, the number of days to ready this order is 10 days.

On 5 Jul, the transporter picks up these 20 units and puts them in a 20’ GP container, and moves it to the port of Yokohama. It is booked by vessel MV Marijan that sets sail on the 7 Jul. The sailing time is 19 days from Yokohama to Chennai.

The vessel berths at Chennai port on 26 July and the goods are discharged the same day. Customs clearance takes another 3 days and the container is transported to the warehouse of Techstart company on 29 July.

The number of days taken for each component is as follows:

Goods Ready Days (GRD)	Transit Days (TD)	Clearance & Delivery Days (CDD)	Total Lead Time Days (LTD)
25 Jun – 5 Jul	5 – 7 Jul + 7 – 26 Jul	26 – 29 Jul	25 Jun – 29 Jul
10	2+19	3	34

Forecasting

Forecasting is the technique of predicting future demands by using historic data. Different organizations use different forecasting models to arrive at the demand quantities.

The 2 main types of forecasting are quantitative forecasting and qualitative forecasting. Quantitative forecasting makes use of historical data to calculate future demands while qualitative forecasting makes use of judgment based on past or recurring events.

In qualitative forecasting, numerical data is not used for working out future demands and it relies heavily on experienced and knowledgeable company staff or forecasters.

Lead time is critical in forecasting and it is used to work out the optimum order quantities. Forecasters and planners have to consider the different factors that may cause delays to their orders and arrive at the purchase order figures accordingly. Maintaining an optimum buffer stock to tide over such emergencies is one option available to forecasters and planners.

Factors Affecting Transit Time

Several factors affect the transit time of goods.

Port terminals usually have their woes which in turn may affect the transit time of vessels. Inadequate handling equipment at ports, equipment breakdown, and labour problems are just some of these.

Any of these problems can result in delays to vessels, whether incoming or waiting to set sail. Delays affect the loading and unloading of cargo.

Blank sailing of a cargo vessel can upset the loading and unloading of cargo at these ports. What is blank sailing? Blank or void sailing is when a ship does not call at a scheduled port.

It could be a single port that is omitted or more than one, in the string. All the ports that are covered by the ship during its voyage are called a string.

Blank sailing affects all the cargo waiting to get loaded onboard the ship from the port or ports. Cargo that could not be loaded will have to take the next available sailing. It results in extended transit time.

It affects unloading too. When a ship skips a port, the cargo that should have been offloaded at that port is discharged at the next port of call. Once again, the transit time is stretched. For more details on blank sailing please read the article available on the following link:

Transit time can be affected by port congestions when the ship is not able to get a berthing slot. Bad weather or changes to the vessel’s sailing schedule can also affect transit time.

Forecasters and planners have to consider all the various factors and plan accordingly. These factors include weather conditions at origin and enroute, holidays and seasonal market closures, etc.

Customs clearance of cargo after it is discharged at the destination port must be planned well. Discrepancies or errors in documentation, failure to arrange the necessary labour and transport, etc. can unnecessarily extend the lead time.

Reference: Marine Insight

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What is a Letter of Credit in Shipping?

International trade is very competitive, and businesses, banks and financial institutions go the extra mile to provide the best service to their customers.

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TEU in Shipping – Everything You Wanted to Know

Developed economies and rapid industrialization has led to the exponential growth of the cargo transport industry. 85% of international trade is done using ocean freight with a very vast majority of these cargo being transported in shipping containers.

Container vessels that can accommodate several thousand TEU on board, help move large quantities of cargo from one point to another.

The largest of such vessels can accommodate about 23000 TEU! Statistics of the World Bank show that close to 800 million TEU containers were shipped globally in 2019.

The COVID-19 pandemic had a negative impact on world trade and the movement of goods. However, the discovery of vaccines in 2021 to combat the pandemic is seen as the silver lining and the world’s economy is expected to bounce back.
Origin of the Modern Intermodal Container

Before the shipping container came into the scene, the cargo was usually loaded inside boxes of different sizes for handloading onto trucks and ships.

Malcolm Maclean, an American transport entrepreneur developed the first container made of corrugated steel in 1955 that could be easily transported on a truck or ship. He later sold the idea of his invention to the United States military which used these boxes to transport military equipment.

The two decades following the invention saw containers of different sizes and locking mechanisms that posed problems when it came to loading on different trucks and ships. In the following years, these problems were gradually sorted out.

The first standard container vessel launched in 1968 was Hakone Maru, a Japanese registered ship. This ship sailed between Japan and the west coast of the US. It catered to the transport of TEU containers and it could transport 752 twenty-foot equivalent unit containers.

Along with the different modes of transport that cater to the industry, the equipment used for transporting goods, and the technology used have also evolved. Modern cranes and cargo handling equipment are just two examples.

Types of Containers

Different types of cargo are transported over land, sea, and air. It is generally categorized as dry, chill, or frozen. Cargo could be temperature-sensitive, for example, food products, meat, pharmaceutical drugs, etc.

Such temperature-sensitive cargos have to be transported in containers that can maintain the temperature or humidity requirements of the cargo.

There could be other special transportation requirements too. Containers of different types and sizes are used to transport the different types of cargo based on the customer’s requirements. It is estimated that currently there are between 20 to 23 million TEU in circulation globally!

Containers are generally of two categories – dry containers and refrigerated containers.

Usually, dry containers are bare containers with lockable doors at one end though, containers with doors on either end are also found.

Refrigerated containers also known as reefers are used to transport goods that require special temperature settings so that they do not deteriorate or get damaged during transit and storage. The internal temperature of a reefer is controlled according to specifications.

Flat racks and open-top containers are used for the transport of Out of Gauge cargo (OOG). These are cargo that comes in abnormal sizes and shapes that do not fit inside a conventional shipping container such as a twenty-foot or a forty-foot container.

Examples for OOG cargo are wind turbine blades, very large industrial boilers, bulldozers, etc. Flat racks and open-top containers are also available in sizes of twenty-foot and forty-foot.

Container Size

Shipping containers come in two standard sizes, namely, twenty-foot and forty-foot containers. In shipping terms, these two are referred to as a TEU (Twenty-foot Equivalent Units) and an FEU (Forty-foot Equivalent Units) respectively. A standard TEU or FEU also goes by the name of a general-purpose container (20’ or 40’ GP container).

Though containers of varying sizes are used globally for the transportation of goods, the TEU and FEU are the most common. Some other sizes that shipping containers come in are forty-foot High Cube (40’ HC), forty-five-foot High Cube (45’ HC), etc.

The high cube containers have a height of one foot more than the normal GP containers. It is interesting to note here that in the world container market, there are more general-purpose containers than high cube ones, just as there are more of FEUs in circulation than TEUs!

Typically, a TEU is made of tough, heavy-duty, weather and corrosion-resistant steel, known as Corten steel. The components of such a container are the front-end wall panels, a roof, two sidewall panels, the floor, and a door frame with the door assembly and locking mechanism. One of the sidewall panels usually has a small opening for ventilation.

Containers are locked using lock-rods that run vertically on the two doors. Each door usually has two lock-rods on it. Port authorities around the world require that loaded containers for transport are secured using at least one container seal that is affixed on the lock-rod mechanism in its prescribed slot.

The lock and seal are for the safety and security of the cargo inside the container. Container seals are covered by the standards set by the International Standards Organization (ISO) under ISO 17712:2013.

Let us take a look at the dimensions of a TEU here.

The external length of a twenty-foot equivalent GP unit is 20 feet. It has a width of 8 feet and a height of 8 feet 6 inches. Its internal dimensions for loading are a length of 19 feet 4 inches, a width of 7 feet 8 inches, and a height of 7 feet 10 inches.

There might be minor differences in measurements between containers made by different manufacturers but remember that they all have to fit correctly on the trucks they are loaded, meet the specifications of the lifting and handling equipment that are used in seaports, as well as in the container storage area of a ship.

Pallets

Typically, a general-purpose TEU can hold about 11 wooden pallets arranged in a single stack. The number of pallets can go up to 22 when pallets are double stacked. Again, a lot of these numbers depend on whether standard pallets or euro-pallets are used. It also depends on the height of each packed pallet.

While the International Standards Organization (ISO) has set the standards for uniform pallet size and quality through its ISO standard 18333: 2014, the standard pallets and the euro-pallets vary in size. Dimensions of the former are 48 inches X 40 inches while the latter has dimensions of 47.24 inches X 31.50 inches.

Container Load

What is the weight that can be loaded inside a twenty-foot container? Logistics and shipping companies normally load up to 24000 kilograms (24 metric tons) of cargo in a TEU.

An empty container of this size weighs 2280 kilograms (2.24 metric tons). Hence the total weight of a fully laden twenty-foot container will be 26280 kilograms (26.28 metric tons).

The actual weight-bearing capacity of a twenty-foot container is 28200 kilograms (28.2 metric tons) and its fully laden total weight is 30480 kilograms (30.48 metric tons).

Cubic meter (CBM) is the standard unit to measure freight volume. If we look at the overall volume that a twenty-foot GP container can take, it is about 33 CBM (cubic meters). However, the actual usable freight volume will only be in the range of 25 to 28 CBM.

Now, that brings us to the question of what is the basis of charging freight by the shipping company? When a business leases a container for transporting cargo, the charge will be for the full container irrespective of whether it fully or partially filled.

However, for Less-than Container Load (LCL) shipments, according to the convention, if the weight of cargo exceeds 1000 kilograms (1 ton) then the weight is used for the calculation of freight charges.

Only when the weight is below 1 ton is the volume in CBM considered for the calculation of freight.

TEU Reefer and Dimensions

Reefer containers are sturdy, large, mobile refrigerators that are used to carry goods with special temperature requirements. They can maintain a temperature normally ranging between -30° C and +30° C.

Reefers are cooled using Gensets (generator sets) that work on both electricity and fuel since they are transported over land as well as by sea on cargo carriers.

Refrigerated containers use temperature logging equipment called Data Loggers to indicate and log temperature inside a reefer unit during transport.

This data can often be downloaded onto a personal computer for evaluation. Most of the reefer containers in circulation around the world are of TEU size.

Because of the design and insulation materials used in the construction of reefers their internal dimensions are much less than normal dry vans or TEU.

While loading and stacking cargo, enough gap has to be left for the circulation of cool air within the container. This eats into space further. Gratings on the container floor and the walls along with the additional space at the base of a pallet help in air circulation.

Another requirement while loading the container is to leave a minimum space of 12 centimetres between the cargo and the inner roof of the TEU reefer.

The internal length of a TEU reefer is 17 feet 10 inches. Its width is 7 feet 6 inches and the height is 7 feet 1 inch. These containers have a tare weight (weight of the container when empty) of 2990 kilograms and they can take a maximum payload of 21450 kilograms or a volume of 24 to 26 CBM (848 to 918 cubic feet) each.

What is a CSC Plate?

Containers that are used to transport cargo have something called a CSC plate fixed on them and a TEU is no exception. The CSC plate is a safety approval plate that lists the container details such as its design, inspection date, the gross weight (total weight of the container and its payload) of the container, etc. These details are required as a minimum.

According to the CSC 1972 (Convention for Safe Containers), every container that is used for transportation of cargo has to be inspected by an authorized inspector once in 30 months to certify its sea or roadworthiness. A CSC plate is fixed on the container after each such successful inspection.

Convention for Safe Containers 1972

Convention for Safe Containers 1972 abbreviated to CSC 1972 is a set of uniform safety regulations that applies to all transport containers above a certain prescribed size.

The convention was jointly held by the United Nations (UN) and the International Maritime Organization (IMO) to promote human safety while handling transport containers.

The CSC 1972 mandates containers that are covered under this convention to fit safety approval plates showing the required details on it.

Comparison – TEU and FEU

The table given below provides a quick comparison between the TEU and FEU.

Equipment	Size (LxWxH)	Internal Dimensions (LxWxH)	Weight of Container (TARE)	Weight of Cargo (NET WEIGHT)	Volume
TEU	20’ x 8’ x 8’6”	19’4” x 7’8” x 7’10”	2280 KG	28200 KG	33 CBM
FEU	40’ x 8’ x 8’6”	39’5” x 7’8” x 7’10”	3700 KG	28800 KG	67 CBM
TEU REEFER	20’ x 8’ x 8’6”	17’10” x 7’6” x 7’1”	2990 KG	27490 KG	27 CBM
FEU REEFER HC	40’ x 8’ x 9’6”	37’11” x 7’11” x 7’11”	4520 KG	29480 KG	67.5 CBM
TEU OPEN TOP	20’ x 8’ x 8’6”	19’5” x 7’8” x 7’6”	2280 KG	28000 KG	–

Note: There may be minor variations in dimensions between containers of different series or make.

What Goes Inside a TEU?

Yet another difficult question is, what can go inside a TEU? It would depend on several factors such as the packing, weight, and volume of the cargo.

For comparison sake, let us say about 282 bags of flour each weighing 100 kilograms, 2820 packets of corn weighing 10 kilograms each, 1 large car with enough padding around it to prevent scratches and damage, or about 100 washing machines double-stacked is what a GP TEU can hold. However, remember that these numbers depend a lot on the individual packing of cargo and other such factors.

Reference: Marine Insight

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Maritime Law

What Is A Cargo Manifest In Shipping?

A cargo manifest is a consolidated list of all the cargo that is on board a cargo vessel. The list of all cargo carried on the vessel will appear under the vessel name and identification marks of the vessel.

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Maritime Law

8 Major Types of Cargo Transported Through the Shipping Industry

The global shipping industry transports goods all over the world, connecting commerce and businesses across continents. In today’s fast-paced world, the speed and capacity of ships have increased.

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