LECTURE 11

Transportation Management
Ms. Syeda Tooba Saleem
“
WORKING OF SHIPPING LINES, FREIGHT
FORWARDERS, & NVOCCS

”
 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION
CARRIER:
is an organization that transports a product.

SHIPPER: (CONSIGNOR) (exporter)

is the person or company that places a shipment with the carrier to be transported from origin
to a destination
CONSIGNEE: (Importer)
is the person who receives/ accepts the cargo/products/shipment.
 EXPORT COMPANIES:

 NVOCC (Non Vessel operating common carrier)

 International freight forwarder

 Export distributes

 Custom house broker

 Trading Companies
 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION
ROLES OF NON-VESSEL OPERATING COMMON CARRIER (NVOCC) & FREIGHT
FORWARDER
• A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier
(NVOCC), is a person or company that organizes shipments for individuals or corporations to get goods
from the manufacturer or producer to a market, customer or final point of distribution.
• Forwarders contract with a carrier or often multiple carriers to move the goods.

• A forwarder does not move the goods but acts as an expert in the logistics network.
• The carriers can use a variety of shipping modes, including ships, airplanes, trucks, and railroads, and often
use multiple modes for a single shipment.

For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck,
flown to the destination city and then moved from the airport to a customer's building by another truck.
 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION
ROLES OF NON-VESSEL OPERATING COMMON CARRIER (NVOCC) & FREIGHT
FORWARDER

International freight forwarders typically handle international shipments and have

additional expertise in preparing and processing customs documentation and
performing activities pertaining to international shipments.

Information typically reviewed by a freight forwarder includes the commercial

invoice, shipper's export declaration, bill of lading and other documents required
by the carrier or country of export, import, and/or transshipment.
 NVOCC:

• It’s a Non vessel operating common carrier works as a mediacor between shipping companies
and shipping lines. They consolidate small shipments from shipper (LCL) into full container load
(FCL) and accepts the responsibility for all detail of the international shipments from the shipper
Exporter dock /port . It includes paperwork and documentation and then deliver those full
container loads(FCL) to shipping line then receive the shipment on the destinations port and
deconsolidate the FCL and deliver the shipment to the consignee according to HBL.
 FREIGHT FORWARDER:
1. Freight forwarder is a middle person between shipper, consignee and shipping line as BPL

2. They work as certain margin.

3. They provide means of transportation to the shipper/consignee

4. They are liable for the Damages to the shipper.

5. They take small or big shipment from the shipper and consolidate it and give as FCL to the shipping line.

6. They provide option regarding rates and time to the shipper /consignee.

7. They provide services scope to the shipper/consignee depending for whom they work .

8. They can work as domestically and internationally and if they are working internationally than can provide
documentation service to they firms who have limited international market experience.

9. service scopes that they provide include , door to door service, one window solution for operation , custom
handling , Inland transportation warehousing service for shipper/consignee etc.

10.Freight forwarder can be shipper to shipping line / carrier and shipping line / owner to shipper.
 BROKER:

1. Broker works as intermediary , they can’t be shipping and carrier and carrier to shipper.

2. They are not liable for any damages to shipper however , they can provide coverage .

3. They can only provide motor vehicles as transportation means

4. Shipper/consignee can make contract with the broker as well.

 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION
SHIP BROKERS:
• Shipbroking is a financial service, which forms part of the global shipping industry.
• Shipbrokers are specialist intermediaries/negotiators (i.e. brokers) between ship-owners and charterers
who use ships to transport cargo, or between buyers and sellers of ships. The Institute of Chartered
Shipbrokers sets educational standards throughout the industry, Fellowship of which is considered a
great honor.
• Some brokerage firms have developed into large companies, incorporating departments specializing in
various sectors, e.g. Dry Cargo Chartering, Tanker Chartering, Container Chartering, Sale & Purchase,
Demolition and Research.
 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION

DRY CARGO BROKING

Dry cargo brokers are typically specialists in the chartering of Bulk carriers, and are appointed to act
either for a ship-owner looking for employment for a ship, or a charterer with a cargo to be shipped.
Dry cargo chartering brokers have to maintain large databases of vessel positions, cargoes and rates and
pay close attention to the direction of the markets so that they can advise their clients accurately as to how
to maximize profits or minimize expenses.
Dry cargo shipping can be categorized by Vessel size: namely, Bulkers. Each size of vessel suits different
types of cargo and trade routes. Thus owners, charterers and brokers tend to specialize in one or other of
these sectors.
 PARTIES INVOLVED IN SHIPPING AND
TRANSPORTATION
TANKER BROKING
• Tankerbrokers specialize in the chartering of Tankers, which requires different skills and knowledge from
Dry cargo broking. • Tanker brokers may specialize in crude oil, gas, oil products or chemical tankers.
• Tanker brokers negotiate maritime contracts, known as Charter Parties.
• The main terms of negotiation are freight/hire and demurrage (a charge payable to the owner of a
chartered ship on failure to load or discharge the ship within the time agreed).
• Oil being a fast moving trade, freight rates for crude oil tanker charters are most commonly based on the
World scale Index; the World scale Association publishes flat rates annually.
• Some specific voyages, such as named voyages (i.e., from A to B) and for specialist ships, like LNG
(liquefied natural gas) tankers (a highly specialized sector of the tanker market), freight rates can be agreed
at a fixed rate between the parties.
 ADVANTAGE AND DISADVANTAGE OF CONTAINERS:
•Advantage:
1.Easy of handling of good, via container result in lower labor cost.
2.Can be used as storage of goods result in lower warehousing cost.
3.Provides safety as well as security to the good/cargo damage from result in transportation cost.
4.It’s the most efficient way to transfer good.
5.Cost and risk benefits (low financially risk and cost).
6.Its available in variety of sizes , many of which are standardized for international use.

•Disadvantage:
1.The port with container facilities may not be available in certain ports of the world.
2.Large capital expenditure are required to initiate a container based transportation network.
3.Even if they are available then they may be overburdened with in bond and out bond cargo that long delay
occurs.
 CARGO TYPES
1.Dry cargo:
• It includes all kind of dry commodities such as grain, rice, pairs and fruits, etc.it usually are containerized
cargo and their rates are high as well as claims the claims are paid by shipping line.

2.Perishable cargo:
• It include all kinds of seasonable item that have low shelves life .such as , fruits , vegetables, etc. it usually
are kept in air conditional containers or OPT (open top) containers that does not have roofs their rates are
high as their commercial values are high. air cargo is preferable for them.

3.Dangerous/IMO/ Hazardous cargo:

• It includes all kinds of harmful commodities such as gas ,petrol, gum, bombs, etc. its handling are difficult
and careful so its rates are also high plus, their commercial values are also high. Other charges that are
applied is IMO & recharge that is charges on per kg. air cargo is more dangerous then shipping cargo .

4.Heavy / oversized cargo:

• It includes all kinds of heavy or oversized commodities such as , heavy cars , trucks , machineries , steel
structure , iron ore Etc. It have high commercial values so the rate are also high . OPT or FR( flat Feet ) kind
of containers are required for these goods/ cargo . It also includes extra charges as well as documentation .
 TYPES OF CARGO DELIVERY

1. Door to Door:
• In this, the forwarder will pick the stock or commodity /cargo from shipping place
then custom clearance will be done and give it to shipping line on point of origin
then it will be shipped on the point of destination , then again the agent of FF will
do custom clearance and deliver the consignment to the consignee.
2. Port to port:
• In this, shipper will pack his consignment and deliver to shipping line , they land it
and deliver to port of destination from those the consignee will take it and in this
process , agent and FF of both consigner and shipper will involve depending upon
who will be paying ? Either its prepaid or collect freight.
 QUALIFIED SALES LEAD

Following characteristics which are as follow:

1.Name and detail of contract of shipper.
2.Name and Contract details of consignee.
3.Nature of the commodities
4.Volume per week /month
5.Frieght / Competitors.
 Claims
1. Delays:
This claim will be file by the person whose consignments was delay and who own the goods .paid the fright fee to the
shipping line. If the volume would be high then the shipping line would easily pay the claim its depend upon the level of
volume of your shipment that gives the power of negotiation to shipper the claim as well as discounts.
Higher the volume= higher the chance of getting claims paid.

2. Damages:
This claim is depend upon whose fault it is. the shipper will file the claim as the goods is his and insurance company will
do inspection and make a report in which the details and pictures of the cargo is include. The pictures of cargo before and
after the container is loaded as well as the container would be taken. when the cargo received by the consignee and there
would be any damage in the cargo then he will complain to shipper after matching the pictures that are in inspection report.
Then if it’s the fault of shipping line then shipper will file the claim if its prepaid otherwise consignee and if its shipper then
consignee will complain to him. The shipper line will pay if the fault of them and the volume is high of the cargo . As they
don’t want to let their business go and venue as well.
3. Other situation like damage due to external environment or loss of cargo for this situation , claim can also be filed.
 CHARGES/ FEES TO PAY WHEN
DELAY

Detention:
It’s a fee that is charge by the shipping line from the person who pay the freight charges against the containers
when the person delay in returning the container to the shipping line and lay time is over that is usually approx.
7-10 days then it is charge from the person.

Demurrage:
It’s a fee that is charge by the terminal/port to the person who is responsible for the delay in off loading or
loading of cargo from the port and due to which cargo stay for too long in the port that causes in crossing the lay
time which is usually approx. 7-10 days
 THIRD PARTY LOGISTICS (3PL)

• A 3PL (third-party logistics) is a provider of outsourced logistics services. Logistic services

encompass anything that involves management of the way resources are moved to the areas where
they are required.
• In business, 3PL has a broad meaning that can be applied to any service contract that involves
storing or shipping things. A 3PL service may be a single service such as transportation or
warehouse storage or it can be a system-wide bundle of services capable of managing the entire
supply chain.
• A third party logistics company is one that works with shippers in order to manage another
company’s logistics operations department. 3PL is the action of outsourcing one or multiple
logistics activities.
 FOURTH PARTY LOGISTICS (4PL)

• Arrangement in which a firm contracts out (outsources) its logistical operations to a specialist
firm that takes over the entire logistics function.
• The concept of a 4PL provider is an integrator that accumulates resources, capabilities and
technologies to run complete supply chain solutions.
 MAIN DIFFERENCE BETWEEN 3PLS AND 4PLS

• The 3PL targets a single function, whereas the 4PL manages the entire process.
• A4PL may manage the 3PL.
 WHY WE USE 3PL

• Providing better quality service

• Limiting investment opportunities
• Cost reduction > Control
• Political considerations
• Focus on core competences
• Customers demand order accuracy , excellent service and time compression
THIRD PARTY LOGISTICS
 OUTSOURCING - INDUSTRY TRENDS

• Findings of a Survey : Why company's Outsource

 TYPES OF 3PL PROVIDERS

• 3PLs are external suppliers that perform part of a company’s logistics functions, including:
• Transportation
• Warehousing
• Distribution
• Financial services
• IT
Terms contract logistics and outsourcing are sometimes used in place of 3PL
 FOB PRICING
1) Freight to prepaid:
 When the payment is bear and charge by the shipper at the point of origin or loading.
 In this , the business is more controlled for the shipping line
 If there would be any claims it will be filed by the shipper
 The goods in transit is owned by the one who files the claim.

2) Freight is Collect:
 When the payment is bear and charge by the consignee at the point of destination and
discharge.
 In this the business for shipping line is not controlled so in order to control they make qualified
sales lead which they send to their sales team at POD.
 If there would be any claims , it will be filed by the consignee.
 FOB PRICING
Term of sale and corresponding buyer and seller responsibilities
 WHY FOB TERMS ARE IMPORTANT

1. The buyer know the final delivered price prior to the purchase.
2. The buyer does not have to manage the transportation activity involved in getting the product
from the seller’s location to the buyer’s .
3. The buyer typically will not control the transportation decision. so it is possible that a made or
carrier could be selected by the seller that might be disadvantage to the buyer (e.g. due to poor
service levels provided by the mode/carrier).
THANK YOU !
The End