Organization of maritime transport

6 July 2020

goodloading-organization-of-maritime-transport

Whenever it is necessary to carry goods from one continent to another, the importer will need to choose between maritime and aviation transport. Transportation of loads by plane takes much less time than by ship, which constitutes the main advantage of aviation transport over maritime transport.

Nevertheless, many importers decide on the latter option. Eurostat data shows that in 2017 the weight of goods carried by sea amounted to 4 billion tons as compared to 16.3 million tons transported by air.

Price as the main factor

For many importers, price is the most important factor when choosing the means of transport. Carriage of the same loads by air costs several times more.

It is difficult to estimate the costs of maritime transport as they depend on various aspects. Weronika Dutkiewicz, the ATC-Cargo Key Account Manager explains: “The three main factors influencing the cost of transport are: INCOTERMS concluded between the manufacturer and the importer. The selected conditions shape and have an impact on transportation and its costs by indicating when the importer’s responsibility begins. The second factor is destination, i.e. location of ports which the load is imported from. The third factor is a type of a load – full container (FCL), less than container (LCL) or requiring a special container.”

INCOTERMS determine not only responsibility between the manufacturer and the importer, but also costs incurred by either side.

– EXW port of loading – the buyer is obligated to bear all the local costs – export clearance, port and terminal charges as well as cost of transport to the place of destination.
– FCA port of loading – the buyer incurs all the local costs, however, the manufacturer takes responsibility for delivery charges. The further process of transport is regulated analogically to EXW terms.
– FOB port of loading – the buyer (importer) covers all the costs from the moment of loading goods on a ship.
– CIF port of unloading – the seller (exporter) bears the costs applicable up to the moment of arriving at the port of unloading (destination), as well as insurance costs.
– CFR port of unloading – the seller (exporter) bears the costs applicable up to the moment of arriving at the port of unloading (destination), excluding insurance.

Other INCOTERMS include: FAS, CPT, CIP, DAP, DPU and DDP. All the details regarding the Incoterms are published by the International Chamber of Commerce (ICC).

The factor that may also influence the manufacturer’s choice is a country from which goods would be imported. It is related to the possibility of obtaining preferential tariff rates for some goods, applicable within the European Union. As Weronika Dutkiewicz explains, “a preferential tariff rate is applied based on the certificate of origin of a given good, which is defined separately. It is also possible to use a zero tariff rate for goods from less developed countries and regions.”

Hand over goods to the sea freight forwarder

Transport of goods by sea can be easily handled by the sea freight forwarder, who has a comprehensive knowledge of the applicable provisions and additional regulations.

“Forwarders have quick access to information, bookings and available locations of a forwarding company. It is important to choose the partner for cooperation,” says Marina Della Rocca, the Logistics and Administration Coordinator from BVALVE FLOWY SYSTEMS & CONTROLS SLU.

When the sea freight forwarder receives an order, he prepares all the documents necessary to execute the order and, therefore, reduces the sender’s paperwork.

“Documents to be prepared and responsibility for them depend on the established Incoterms. Within EXW the importer takes care of preparation of all the documents, however, it is the forwarder who will direct him through the whole process. In the case of CIF, the manufacturer will take responsibility for the documentation. Regardless of the selected terms, the forwarder will guide you through the whole process and provide you with the needed information,” adds Marina Della Rocca.

The process of maritime transport

“The importer requests maritime transport from the specialized forwarding company, which prepares an offer based on the conditions agreed between the manufacturer and the importer, considering all the costs to be incurred by the importer. If the offer is accepted, the importer provides details of the manufacturer, who will be contacted by the forwarding agent operating in his country. The manufacturer reports when his transport will be ready and the agent books a place on the ship. Formal matters in the port of loading take around a week. The next step is a delivery of goods to the port or a warehouse and customs clearance. The detailed process of transport depends on accepted Incoterms. Following the transportation, the goods are unloaded at the port of destination. Next, the importer is responsible for the collection of the goods at the port, customs clearance and delivery to the place of destination,” explains Weronika Dutkiewicz.

The process of maritime transport depends on the established conditions. For instance,
– EXW – the importer has to collect goods from a warehouse, then deliver them to the designated location at the specified time so that they can be transported by sea.
– FCA – when compared with EXW terms, it is the manufacturer who has to deliver goods to the designated place.
– FOB – the importer together with the forwarder book a place on the ship, however, it is the seller who must deliver it to the loading place. If the seller is late and does not inform on this fact early, he will incur additional costs related to the necessity of re-booking the place on another ship. According to the FOB terms, it is the importer who may choose a shipowner.
– CIF – the manufacturer chooses a ship and date, whereas the importer has to wait until his load reaches the port of destination.

goodloading-incoterms-rules

Organizing maritime transport is quite a challenge, especially when we do not have a sufficient knowledge of the INCOTERMS rules or particular stages of transport. In this situation it is best to contact the person who will guide you through the whole process and assist with the preparation of relevant documents.