Module 4—International Distribution: UNIT 1 MODES OF TRANSPORTATION

Air Transportation In 2014, air transportation accounted for the movement of 51.3 million metric tonnes of goods, approximately 35 percent of global trade value (USD 6.8 trillion annually) but less than

1 percent by volume. Air cargo generates 9 percent of airline revenues, more than twice the revenues of first class passengers

Trip time

: A short time charter agreed for a specified route only.

Affreightment contract

: Involves the same terms as a voyage charter, but is for a number of cargoes, within a specified time frame and on a specified route. It could involve more than one ship

Documentation Some of the documents required to transport goods internationally include

: • Bills of lading • Waybills, title documents • Bills of sales • Customs documents (including any taxation information) • Health and safety certificates • Import permits • Certificates of origin

Always ensure the required paperwork is: ∙

Accurate and consistent ∙ In order ∙ In the required language ∙ Compliant with regulations

Criteria for classifying chemicals: Health: »

Acute toxicity » Skin corrosion/irritation » Serious eye damage/eye irritation » Respiratory or skin sensitization

Management of Integrated Transport of Shipments If using containers, especially FCL, it is more efficient to move between the different modes of transportation.

As long as the appropriate handling equipment is available at transfer points, it is easy to lift and set containers off a ship onto a train car or truck trailer.

The Model Regulations cover: •

Classification and definition of classes • Packing requirements • Testing procedures • Marking • Labelling and/or placarding • Transportation documents

Legal Considerations for Integrated Transportation For international trade with regards to transportation, it is necessary to understand the legal requirements for all the jurisdictions that may have authority over shipments and the parties involved during transit. Shippers need to:

Consider use of carriers, freight forwarders and transportation brokers that have the required qualifications and experience. • Check operator, load transportation and handling regulations for the different modes of transportation and each jurisdiction on the route. • Ensure all transportation documents are in compliance,shipping documents customs requirements-Ensure transportation contracts detail the responsibilities of all parties-Check for international, multilateral or bilateral agreements

UN Model Regulations The United Nations developed the Recommendations on the Transport of

Dangerous Goods to address the development of new hazardous materials,

Criteria for classifying chemicals:

Health:Physical:Environmental:

Time charter:

Hiring of a vessel for a specific period of time. The ship owner manages the vessel but the shipper determines the destination port and the route. The shipper is also responsible for the fuel, port charges, and a daily hire rate for the ship owner.

professionals to understand all the potential threats to and from cargo, and to take the steps necessary to ensure their cargo and organizations are protected.Risk Mitigation Strategies

If risks in international trade are not addressed, it would be ill-conceived to be involved in international trade transactions. If risks are not addressed, possible outcomes are: • Loss and damage to cargo • Unexpected additional costs, e.g. storage • Delays or disruption of supply chain • Personal injury or death • Increased insurance premiums • Increased prices of goods for consumers

The carrier is liable for loss or damage to the cargo if the loss or damage took place during the carriage by air. Carrier defences against liability are:

Inherent defect, quality or vice of the cargo • Defective packing of the cargo performed by a person other than the carrier or its staff or agent • An act of war or an armed conflict

Bareboat/Demise:

Involves supplying only the vessel. The shipper is responsible for the operating costs, including the crew, provisions, fuel, port charges and insurance.

China

Publication of 28 Global Harmonized System (GHS) compulsory national standards (GB 30000-2013) fully aligned with GHS Rev.4

• Use modes of transportation to smuggle in weapons:C-TPAT

Some of these include inspections and electronic scanning, as well as initiatives like the Customs-Trade Partnership Against Terrorism (C-TPAT)

Shipping rates are considered competitive with the decline of conferences. What has emerged now are shipping alliances and consortia. (OECD) The most common consortia agreements are:

T• Slot charter: Lease of container slots by one or more consortia partners. • Slot exchange: Reciprocal leasing of container slots by consortia partners. • Vessel sharing: Sharing of ship capacity with consortia partners in order to increase ship utilization rate.

Integration of Transportation Modes-intermodal or multimodal

Using containers simplifies cargo handling by enabling: • Consolidation of shipments into standardized units • Arrangements for door-to-door transportation services

Chartering involves a contract by which a ship owner agrees to rent out a ship or part of a ship to a shipper for the carriage of freight, in return for a sum of money. T

Voyage charter: Hiring of a vessel and crew for a voyage between a load port and a discharge port. Payment can be on a per tonne or lump sum basis.

In January 2015, the International Maritime Organization (IMO) amended the Safety of Life at Sea Convention (SOLAS) that requires all packed containers being loaded on vessels to

be actual packed weighed. illegal for a carrier to allow not weigh. The weight of container will be used for vessel stow planning.Verified Gross Mass (VGM) certification,

Liners are conventional cargo ships that operate between scheduled, advertised ports of loading and that discharge on a regular basis. Liners can be used over short or long distances. Their design usually enables them to

carry cargo of various types. Liners are often equipped with loading and unloading devices suitable for cargo weighing between 15 and 50 tonnes

One of the important components of the system is the Globally Harmonized System Classification and Labelling of Chemicals (GHS). The GHS identifies and explains the

classification of chemicals by: • Type of Hazard: Health Physical Environmental

Intermodal transportation: Involves the shipper arranging transportation from origin to destination, preparing documentation and negotiating the terms of carriage with each participating carrier. This means that each carrier is responsible for

damages and liability for their respective transport segment of the shipment.

Cargo Containers Airline cargo containers are called Unit-Loading Devices (ULD). These containers are designed to

fast load, fit wide or narrow body aircraft. By consolidating loose general freight into larger units for loading and transporting, ULDs decrease ground-handling costs and maximize the use of space on board.

hipping Lines All ocean-going vessels are broadly categorized as either tramp or liner services. Tramp services do not

follow fixed routes or schedules, but move freight as and when needed. Liner services have a fixed routing with scheduled ports of call

The amount for which a carrier can be held liable is extremely limited under both sets of rules.

he Hamburg Rules, which are the product of the UN Convention on the Carriage of Goods by Sea, require the captain and crew be held liable for damage and delays.rules fix a one-year limitation o

Belly cargo space on regular scheduled flights is offered "as available," rate is usually set based on the marginal cost, which is then adjusted for the level of service. For charter services, the rates are usually

higher, reflecting the incremental distance flown, including the empty legs and the balance between demand and available capacity. For shorter distances, the freight rates per kilometre are much higher as a greater part of the trip is spent on the ground, and in ascending and descending.

Pipelines Though not considered a major mode of transportation, pipeline usage is still

integral to the movement of materials.

Legal Considerations for Air Transportation In international trade, it is essential that shippers understand the

legal requirements for all jurisdictions that may have authority of shipments and the parties involved in transportation.

Vessels The following types of vessels are used in marine transportation: • Conventional cargo (break bulk) vessels are normally used to

transport non-containerized goods. Transporting these types of goods requires frequent handling in port. Consequently, they must be properly packaged and secured in the ship's hull to prevent damage to goods. Conventional vessels are used to transport bulky or heavy goods,

Rail freight can be more cost-effective and energy efficient than other modes of transportation when

transporting high volumes of bulk commodities over long distances.

Criteria for classifying chemicals Physical:

» » Explosives » Flammable gases, liquids and solids

UNIT 1 MODES OF TRANSPORTATIONThere are four major modes of transportation:

• Marine/ocean • Rail • Road • Air

mitigate these risks.Shippers can take advantage of new businesses that specialize in packing and theft control. Carriers and terminal infrastructure are also investigating, and investing in, new technologies for securing and moving cargo.

due diligence when engaging a carrier when there are choices available. They must: • Determine how long the carrier has been in business. • Check their equipment or distribution centre, e.g. Is it well maintained? Is there security?

The primary distinction between intermodal transportation and multimodal transportation is in

liability. In intermodal transportation, each carrier is responsible for the performance of its particular stage of the journey, but cannot be held liable for damage. For multimodal transportation, a transportation enterprise takes full responsibility for the entire movement of the cargo and is responsible even when damage or loss cannot be attributed directly to one transportation mode.

Understand claims notification periods; for example, any claim must generally be given to a carrier within 60 days of the date of delivery of the goods or, in the case of failure to make delivery, within

nine months of the date of shipment. The carrier is not liable unless timely notice was given. Legal action must commence within nine months.

To navigate the complex legal terrain of international transportation successfully, risk management must be a

priority for exporting and importing organizations, not an afterthought. Proper consideration must be given to contract negotiations

Incoterms® 2010 rules CIF or CIP definition requires the seller to obtain cargo insurance as agreed in the sales contract, at their own expense. It also stipulates that the buyer, or any other person having an insurable interest in the goods, shall be entitled to claim directly from the insurer, and that the seller shall

provide the buyer with a copy of the insurance policy or other evidence of insurance coverage. In this case the seller is the insured, but the buyer is the beneficiary. M

Shipping conferences are associations of ocean carriers that regulate

rates and conditions of ocean transportation among their member lines.

Legal Considerations for Marine Transportation-carriers

required qualifications and experience. all have been collected and conditions met. • compliance. • customs requirements- regulatory conditions for exporting and importing jurisdictions - transportation contracts detail the responsibilities of all parties and the arrangements between shippers and tramp, charter or liner service providers.

The SeaBee: A sea barge with a barge carrier design similar to LASH ships. The SeaBee uses

rollers to move the barges aboard the ship.

Non-vessel operating common carriers (NVOCC) usually act as consolidators, accepting small shipments that are referred to as Less than Container Load (LCL), and consolidating them into Full Container Loads (FCL). The NVOCC then acts as a

shipper, tendering the containers to ocean common carriers or using them to fill their already leased container slots. NVOCCs are subject to the same laws and statutes that apply to primary common carriers

Container vessels a

standard sized containers eight feet square and 20 or 40 feet long.Forty-foot Equivalent Unit (FEU). The 20-foot containerTwenty-foot Equivalent Unit (TEU) 25,000 to 50,000 tonnes. cargo ship can spend as much as 70 percent of its time in port loading and discharging cargo, a container ship spends as little as 20 percent

Bulk carriers are ships specifically designed to transport vast amounts of cargoes, such as

sugar, grain, wine, ore, chemicals, liquefied natural gas, coal and oil.

Marine/Ocean Transportation Maritime transportation accounts for 90 percent of cross-border world trade as measured by volume, and is the most common method of transportation for international trade. The nature of water transportation and its economies of scale make it

the most energy efficient mode since it uses only 7 percent of all the energy consumed by transport activities, a figure far below its contribution to the mobility of goods.2

IATA The International Air Transport Association (IATA) is the international

trade organization of global airlines, support services, travel agents and cargo agents. Airfreight services are sold both by air carriers and by airfreight forwarders, many of whom are registered as IATA agents.

The use of transshipment ports allows for the

transfer of containers from one cargo ship to smaller or more regional container ships for transportation to smaller ports closest to their cargo's final destination. This hub and spoke model of using very large and super-container ships and transshipment hub ports has increased the efficiency of container transportation, which has helped reduce overall shipping costs

Integrated transportation is not as easy when a container load or a shipment is a consolidated load and needs to be assembled or disassembled. At some transfer point, warehousing, dismantling and reassembly will need to occur. The way that it is handled will depend on .

whether transportation is intermodal or multimodal, and the final destinations

Shippers should consult with legal counsel when dealing with new suppliers, sales contracts, carriers and freight forwarders, to ensure that all jurisdictional legal issues have been identified and mitigated, and that business interests are protected.

international Civil Aviation Organization (ICAO)Product handling: Pharmaceutical products, e.g. temperature controls, time sensitivity Live animals Perishable goods • Online cargo documentation • Cargo security • Cargo operations • Cargo 2000 - Quality standards

Regardless of the Incoterms® rules, it is ultimately the organization receiving the cargo—the importer—that has the greatest interest in ensuring the cargo arrives safely.

CIF and CIP, the shipper is responsible for insuring the cargo, but the provided insurance is the minimum required and may not cover all the costs should the cargo get damaged. The importer must be aware of all their costs and ensure their insurance is adequate.

most companies, using rail transportation requires links with road transportation or other modes of transportation. This means that the effectiveness of rail transportation is usually tied to the ability to network with other forms of transport.For example,

Canadian National Rail offers rail, trucking, intermodal container services, freight forwarding, customs brokerage, and warehousing and distribution services in Canada and the U.S.

Companies known as pool car companies take advantage of this difference by leasing entire rail cars from railroad companies and consolidating several small shipments into each of those cars. T

Because many rail shipments must be transferred to cargo ships, freight trucks, or planes, there is often a transshipment cost involved. Businesses reduce these costs and expedite shipping times by using shipping containers, which are easily moved from one mode to another.

Legal Considerations shippers must Use carriers that have the required qualifications and experience...

Consider regulations for pilot, aircraft, and load transport and handling for each jurisdiction on the route. • Ensure all transp doc are collected and in compliance, e.g. cargo manifests. • EIATA regulations for handling freight. • customs requirements.Ensure transportation contracts Refer to international, multilateral or bilateral agreements

Containers are also referred to as

Containers are also referred to as shipping containers, cargo or freight containers, ISO container, sea or ocean container, or sea or c can.

due diligence when engaging a carrier con't

Determine their business model; do they have their own fleet or contract owner-operators? • Make sure their personnel are trained and qualified. • Check the carrier's track record. • Consult with other customers for their experiences working with the carrier. • Check drivers' training and accident record . • Understand the freight claim rate . • If using a freight forwarder, find out who they use as a carrier. • Review the relationships with carriers or freight forwarders that have been developed, ensuring that service levels are being maintained.

typical characteristics of air freight: . most expensive way to ship products.This •

High-unit-value, e.g. electronics, prototypes • Fragile, e.g. flowers, electronics • Perishable/short lifespan, e.g. flowers • Time sensitive items, e.g. magazines and newspapers, medications • Urgent, high demand, e.g. spare parts

In Transport Orgs Compliance with UN Model Regulations-International organization International Maritime Dangerous Goods Code (IMDG Code);The IMDG Code is mandatory for 162 countries parties to the International Convention for the Safety of Life at Sea (SOLAS

International organization International Maritime Dangerous Goods Code (IMDG Code); International Maritime Organization Description of regulations, codes, guidelines Amendment 37-14 is harmonized with the 18th revised edition of the UN Model Regulations and came into force on January 1, 2016 for two years (although it could have been applied in whole or in part, on a voluntary basis from January 1, 2015). ).

United States

Occupational Health and Safety Standards: revised Hazard Communications Standard (2012)Hazard Communications Standards (HCS

2013 Container Shipping Standard - Maersk Triple E Class Container Ships

Started in February 2011, the first of 20 ships built in South Korea. Named Triple E for its: ∙ Energy efficiency - energy efficient ship and engine design ∙ Economies of scale - cEnvironmental improvements - produces less CO2 emissions by 35 percent per unit moved

GHS Around the World-Canada Hazardous Products Act

Workplace Hazardous Materials Information System (WHMIS)

(WCO) SAFE Framework of Standards to secure

World Customs Organization (WCO) SAFE Framework of Standards to secure and facilitate global trade. Many of the programs mutually recognize the security credentials of other jurisdictions.

A freight forwarder who is selling cargo space as an agent for airlines must be registered with the IATA. As agent, the freight forwarder provides each shipper with a house bill of lading (HBL),and acts on behalf of the

air carriers with whom it arranges flights and from whom it receives a commission FF present shipments ready for carriage, cargo is compliant with all requirements and regulations. The carrier, not the forwarder, assumes liability for the shipment.

Most countries implement the international regulations, codes and guidelines of the UN Model Regulations on the Transport of Dangerous Goods through federal, state, provincial and territorial legislation, depending on the mode of transportation. In most countries, transportation by

air, marine and rail are overseen by federal regulations. road is overseen by state/provincial/territorial regulations, that are generally harmonized with federal/national legislation and regulations governing transportation of dangerous goods.

It is important to ensure that there is a stowage plan in place. A stowage plan lays out how containers or cargo will be placed inside the shipping vessel's stowage compartment or bays.Planning During transit,

cargo loads undergo different types of stress: • Mechanical stress:hese dynamic forces are a result of motion.static forces result from the dimensions of weight, shape and height of the cargo. • Climatic stress: Caused by the changing climatic conditions during transportation, especially when cargo travels through different climatic zones (eBiological stress:Chemical stress: Caused by the changing of chemicals' state or temperature in response to different environments.

The Hague-Visby rules prescribe two important notice periods when the goods are damaged by the carrier: » If the damage is apparent, the consignee must notify the

carrier in writing when it removes the goods from the carrier. » If the damage is not apparent, the consignee must notify the carrier within three days after removal. Otherwise the removal of the goods is taken as evidence of good delivery by the carrier of the goods described in the Bill of Lading (B/L).

The Warsaw Convention: » » Establishes the parameters to define carriage by air as the period within which the cargo is under the carrier's charge. Carrier is liable if the cargo is

delayed, lost or damaged during air carriage unless they can prove otherwise. » Carrier liability is limited to a fairly inconsequential sum unless, at the time that the package was handed over to the carrier, the consignor made a special declaration of interest and paid a supplementary sum (if required).not later than 14 days from the due date of receipt of the cargo. In case of delay, the complaint must be made within 21 days of the date that the cargo is eventually placed at the consignee's disposal.

Shipping Rates Freight rates are determined by

demand and supply in the market, operating expenses, fuel and other costs.Shifting capacity to higher demand routes • Applying fixed rates • Raising surcharges • Postponing new-build deliveriesCutting service • Using slow or super slow steaming (speed levels) • Scrapping old vehicles to reduce capacity1

Multimodal transportation: Involves the shipper arranging for a freight forwarder, transportation broker or an integrated transportation carrier to perform these tasks. This is the more common option. The shipper only deals

with one company, the freight forwarder, broker or carrier who co-ordinates the through movement of cargo as the representative of the shipper. The transportation freight forwarder, broker or carrier and the shipper agree to a single transportation contract between them, stipulating the terms and conditions of the entire transportation movement of goods. The transportation freight forwarder, broker or carrier assumes responsibility for the performance of the entire transportation contract. Full responsibility includes accepting liability for loss, damage or delay arising from the performance of the cargo movement

Criteria for classifying chemicals Environmental: »

» Pyrophoric liquids and solids » Self-heating substances and mixtures Substances and mixtures which, in contact with water, emit flammable gases » Organic peroxides » Corrosive to metal Hazardous to the aquatic environment (acute and chronic) » Hazardous to the ozone layer