When an exporter engages a custom broker or forwarder to handle the customs declaration, he/she must give instructions on what to do with the shipment in the shipping instructions. The format of the shipping instructions varies, but all the forms essentially contain the same information. One form is often used in different modes of transportation.

B/L Application-Instructions
(Bill of Lading Application-Instructions)

Please see the sample B/L Application-Instructions (BLAI) below that is used in ocean shipment. The letter of credit (L/C) is a confidential document. Many exporters prefer not to let the customs broker or forwarder see the L/C, and instead provide a BLAI detailing the requirements and instructions of an ocean shipment. Please refer to the Ocean (Marine) Bills of Lading for the explanations on some of the fields in the sample B/L Application-Instructions (BLAI).

The exporter may provide the BLAI to the customs broker after he/she has obtained a shipping order (S/O) or a space booking number from the carrier. The BLAI usually is provided to the customs broker before obtaining the S/O in cases where the packing list and valid export permit are required to obtain the S/O.

The BLAI normally is accompanied by a copy of the commercial invoice and packing list, and the Insurance Application-Instructions if the customs broker is to arrange for insurance.

Some exporters supply the original L/C or its photocopy without supplying the BLAI, and let the forwarder manage the rest of the export routines with payment of fees and charges, which may include preparing of export documents and sending them to the bank.

Shipper's Letter of Instructions

The Shipper's Letter of Instructions (SLI) are shipping instructions that are used in air shipment, and at times in ocean shipment. The SLI contains basically the same information as in a B/L Application-Instructions, and it may contain the words "The exporter authorizes the forwarder named above to act as forwarding agent for export control and customs purposes" or the like. The SLI form is available from the carrier or the forwarder.

The dock receipt---shipping note---when signed by the receiving clerk (cargo checker) at the container terminal or dock is a proof of the delivery of goods.

Please see the sample Dock Receipt below. The format of the dock receipt varies, but the contents are basically the same. Some dock receipts may include the Commodity Code (of goods) field. In practice, the commodity code of goods may be entered in the "Description of Packages and Goods" field in the dock receipt.

The dock receipt is made out by the customs broker following the instructions and information contained in the shipping order (S/O), B/L application-instructions (BLAI or the export shipping instructions) and packing list.

The number of copies of the dock receipt required depends on the circumstances. Certain countries require a fixed number, where at least one signed copy is returned to the forwarding agent or the shipper as proof of delivery. The bill of lading (B/L) is issued in due course in exchange for the dock receipt.

The bill of lading (B/L) is made out word for word according to the dock receipt. Therefore, it is very important that the shipper provides the correct information in the B/L application-instructions and packing list, and that the customs broker or forwarder does not make any errors and omissions in the dock receipt, otherwise a discrepancy may occur in the B/L and the bank will reject the documents.

The phrase "only clean dock receipt accepted" in the dock receipt is to ensure that the receiving clerk (cargo checker) at the container terminal or dock puts a 'clean' or similar notation on the conditions of goods received.

The dock receipt can be clean or foul (unclean, dirty or claused). If a dock receipt is clean, the bill of lading (B/L) issued in due course will be clean, otherwise the B/L will be foul (please refer to the Clean versus Foul Bills of Lading for more information).

Mate's Receipt

The counterpart of the dock receipt that is used in the chartering trades is known as mate's receipt. The mate's receipt is signed by the mate (the deck officer) of the vessel.

The bill of lading (in ocean transport), waybill or consignment note (in air, road, rail or sea transport), and receipt (in postal or courier delivery) are collectively known as the transport documents.

Please see the sample Ocean Bill of Lading below. The bill of lading (B/L) serves as a receipt for goods, an evidence of the contract of carriage, and a document of title to the goods. The carrier issues the B/L according to the information in a dock receipt, or in some cases according to a completed working copy of the B/L supplied by the customs broker.

The B/L must indicate that the goods have been loaded on board or shipped on a named vessel, and it must be signed or authenticated by the carrier or the master, or the agent on behalf of the carrier or the master. The signature or authentication must be identified as carrier or master, and in the case of agent signing or authenticating, the name and capacity of the carrier or the master on whose behalf such agent signs or authenticates must be indicated.

Unless otherwise stipulated in the letter of credit (L/C), a bill of lading containing an indication that it is subject to a charter party and/or that the vessel is propelled by sail only is not acceptable.

The Date of Shipment in Ocean Freight

In cases where the bill of lading (B/L) has pre-printed wording indicating that the goods have been loaded on board or shipped on a named vessel, the issuance date of such B/L is considered to be the date of loading on board or the date of shipment.

In cases where the B/L does not have pre-printed wording indicating that the goods have been loaded on board or shipped on a named vessel, the loading on board a named vessel is evidenced by the on board notation (e.g. "on board", "laden on board" or "shipped on board") on the B/L, which must be initialled and dated by the carrier or its agent. The date of the on board notation is considered to be the date of shipment.

Transhipment Clauses in Ocean Bills of Lading

If the bill of lading incorporates clauses stating that the carrier reserves the right to tranship, then the transhipment is allowed even if the letter of credit (L/C) prohibits transhipment.

Loading On Deck

Unless otherwise stipulated in the letter of credit (L/C), the bill of lading (B/L) must not indicate that the goods are or will be loaded on deck. Modern cellular container ships carry about one-third of the containers on deck. Consequently, the B/L may contain a provision that the goods may be carried on deck. If such provision is contained on the B/L, then the loading on deck is acceptable even if the L/C stipulates otherwise, provided that the B/L does not specifically state that the goods are or will be loaded on deck.

" Full Set ... " (as stipulated in the sample Letter of Credit)
   and
" Number of Original B(s)/L "

Full set means all the originals as so issued by the carrier or its agent. A set contains at least two originals. In practice, a set of three originals is the most common.

The number of original bills of lading (Bs/L) may be expressed as 3/3 (read as 'three of three') or 2/2 (read as 'two of two'). In the sample Letter of Credit the L/C stipulates "Full set 3/3 ...", which means that DEF Imports requires a full set B/L containing three originals.

If the L/C did not contain the expression "Full set 3/3", then the number of original bills of lading required would depend on the number as so issued by the carrier. It can be a sole original B/L, that is, one original only.

The originals are marked as "original" on their face and all have equal value, that is, all have the same validity. The purpose of issuing more than one original is to ensure that the port of destination will receive the original when dispatched separately. The original Bs/L are proof of ownership of goods, one of which must be surrendered to the carrier at destination, duly endorsed by the title holder in the goods in exchange for the goods or the delivery order. When one of the originals being surrendered to the carrier, the others become invalid.

　

" ... two (2) non-negotiable copies "
(as stipulated in the sample Letter of Credit)

The non-negotiable copy of bill of lading (B/L) should not be confused with the non-negotiable bill of lading or straight bill of lading. The non-negotiable copy of B/L simply means the unsigned copy of the B/L, which is for information purposes. The copies are marked as "non-negotiable".

The copies of the B/L can be of any number. The number depends on the requirements of the importer, importing country, shipper, carrier, Chamber of Commerce (if the L/C calls for certification of the B/L), and Consulate (if the L/C calls for consular legalization of the B/L).

In the sample Letter of Credit DEF Imports requires two copies of the non-negotiable copy of bill of lading.

" Place of Receipt "

If the place of receipt (or taking in charge) is different from the port of loading, as in the case of multimodal transport, the on board notation or the pre-printed wording must include the letter of credit (L/C) stipulated port of loading and the name of vessel on which the goods have been loaded.

" Container No(s). "   and   " Seal No(s). "

Please refer to The Marking and Identification of Containers. The container number is entered on the dock receipt and the bill of lading (B/L).

Under the shipper's load and count arrangement, the shipper or its agent must seal the container before transferring it to the carrier. The container that originates from a bonded factory outside the EPZ (export processing zone) or from a factory inside the EPZ is sealed before leaving the bonded factory or the EPZ.

The metal seal for the container is provided by the carrier. The seal number is entered on the dock receipt and the B/L. If a seal is broken for customs purposes, a customs inspector must supervise the breaking of the seal and the resealing of the container. The new seal number replaces the previous number that was entered on the dock receipt.

" Shipper "

Unless otherwise stipulated in the letter of credit (L/C), the bill of lading may indicate as the shipper (the consignor) of the goods a party other than the beneficiary of the L/C.

" Notify Party "   and  
" Also Notify "   or   " Additional Notify Party "

The notify party is the party that the carrier must notify when the goods arrive at the port of destination. The carrier issues an Arrival Notice informing the notify party about the cargo discharge point, number of packages and other information. The letter of credit (L/C) may require that the carrier notifies a party in addition to the notify party, usually using the words "also notify".

The notify party depends on the L/C requirement, it can be the importer, freight forwarder or bank. In the sample Letter of Credit the L/C stipulated "notify the above accountee", in other words the notify party is DEF Imports, 7 Sunshine Street, Sunlight City, Import-Country.

If the notify party and the consignee are the same party, then enter the word "SAME" or "CONSIGNEE" in the 'Notify Party' field in the bill of lading (B/L).

Sample Document:
Ocean Bill of Lading

Remarks:  Fields or items in blue color contain links to the explanation.

A RELIABLE SHIPPING LINE ( NON-NEGOTIABLE UNLESS CONSIGNED TO ORDER )

( SEE REVERSE FOR TERMS AND CONDITIONS )

The sample letter of credit (L/C) below is a comprehensive case study of a Confirmed Irrevocable Letter of Credit opens by means of airmail.

For the explanations of the stipulations and fields in the L/C (i.e., under the Message Text in the L/C), please see Letter of Credit Particulars and Export Documentary Requirements. And, please consult the table of contents in different departments (Export, Shipping, Production, etc.) for other topics and discussions.

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications

The documentary credit---letter of credit, documentary letter of credit, or commercial letter of credit---is an arrangement whereby the applicant (the importer) requests and instructs the issuing bank (the importer's bank) or the issuing bank acting on its own behalf,

• pays the beneficiary (the exporter) or accepts and pays the draft (bill of exchange) drawn by the beneficiary, or
  
  
• authorizes the advising bank or the nominated bank to pay the beneficiary or to accept and pay the draft drawn by the beneficiary, or
  
  
• authorizes the advising bank or the nominated bank to negotiate,

against stipulated document(s), provided that the terms and conditions of the documentary credit are fully complied with.

For purpose of maintaining uniformity in the text, the words "letter of credit", "credit" and "L/C" are used on this website to refer to the documentary credit.

Please see the sample letter of credit.

A letter of credit (L/C) can be irrevocable or revocable. The L/C usually indicates whether it is an irrevocable or revocable letter of credit. In the absence of such indication, the L/C is deemed to be irrevocable.

Irrevocable Letter of Credit

An irrevocable letter of credit cannot be amended or cancelled without the consent of the issuing bank, the confirming bank, if any, and the beneficiary. The payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary. The words "irrevocable documentary credit" or "irrevocable credit" may be indicated in the L/C.

In some cases, an irrevocable L/C received by the beneficiary may become invalid without the amendment or cancellation of such L/C, for example, when the trade between importing and exporting countries is suspended such as in a trade sanction, or when the issuing bank has ceased operation.

There have been cases of an irrevocable L/C being amended without the consent of the beneficiary in the OEM arrangements. The beneficiaries affected were export-manufacturers from a developing country. The importers were able to convince and instruct the issuing bank to amend the latest date for shipment in the L/C, changing to a date earlier than the agreed upon date, at which time the beneficiary would not be able to ship the OEM products. The importers used sneaky tactics that aimed to cause the beneficiaries to default in the delivery. The intention of the importers was to cancel the orders from the existing OEM suppliers and buy from other suppliers in another developing country where the prices had become lower.

In the event of an amendment like the above-mentioned case, the beneficiary must give notification of rejection of amendment to the bank that advised the amendment at once.

Irrevocable and Without Recourse Letter of Credit

The irrevocable letter of credit received from an advising bank may be indicated as "irrevocable and without recourse documentary credit". The words "without recourse" mean that the advising bank will not be able to recover the money paid to the beneficiary in case the issuing bank does not pay the advising bank.

Revocable Letter of Credit

A revocable letter of credit can be amended or cancelled by the issuing bank at any time without the consent of the beneficiary, often at the request and on the instructions of the applicant. There is no security of payment in a revocable letter of credit (L/C). The words "this credit is subject to cancellation without notice", "revocable documentary credit" or "revocable credit" usually are indicated in the L/C.

The revocable L/C was not uncommon in the 1970's and earlier when dealing with less developed countries. It is rarely seen these days in international trade.

Confirmed Irrevocable Letter of Credit

An irrevocable letter of credit (L/C) opened by an issuing bank whose authenticity has been confirmed by the advising bank and where the advising bank has added its confirmation to the credit is known as confirmed irrevocable letter of credit. The words "we confirm the credit and hereby undertake ..." or "we add our confirmation to this credit and hereby undertake ..." normally are included in the L/C.

An exporter whose method of payment is a confirmed irrevocable L/C is assured of payment even if the importer or the issuing bank defaults. The confirmed irrevocable L/C is particularly important from buyers in a country which is economically or politically unstable.

In a confirmed letter of credit, the exporter or the importer pays an extra charge called the confirmation fee, which may vary from bank to bank within a country. The fee usually is added to the exporter's account. The exporter may indicate in the sales contract that the confirmation fee and other charges outside the seller's country are on the buyer's account.

Unconfirmed Irrevocable Letter of Credit

An irrevocable letter of credit (L/C) opened by an issuing bank in which the advising bank does not add its confirmation to the credit is known as an unconfirmed irrevocable letter of credit. The promise to pay comes from the issuing bank only, unlike in a confirmed irrevocable L/C where both the issuing bank and the advising bank promise to pay the beneficiary.

Restricted Negotiable versus
Freely Negotiable Letters of Credit

Restricted Negotiable Letter of Credit

In a restricted negotiable letter of credit, the authorization from the issuing bank to pay the beneficiary is restricted to a specific nominated bank. The sample letter of credit is a restricted negotiable credit, that is, the authorization from The Sun Bank to pay the UVW Exports is restricted to a specific nominated bank, which is The Moon Bank.

Freely Negotiable Letter of Credit

In a freely negotiable letter of credit, the authorization from the issuing bank to pay the beneficiary is not restricted to a specific bank, any bank can be a nominated bank as long as the bank is willing to pay, to accept draft(s), to incur a deferred payment undertaking, or to negotiate the L/C. The words "this credit is not restricted to any bank for negotiation" or "this credit may be negotiated at any bank", or similar words, may be indicated on the L/C.

When a letter of credit (L/C) is specifically designated "revolving letter of credit", the amount involved when utilized is reinstated, that is, the amount becomes available again without issuing another L/C and usually under the same terms and conditions.

The revolving L/C may be used in shipments of a wide range of goods to a buyer within a period of time (several months to one year usually).

The pattern of cargo reception and shipment has changed with the use of the freight container---container, box or LO/LO (lift on/lift off). The use of containers, which started more than 40 years ago, in intercontinental traffic is now available in most seaports worldwide.

In the 1960's, many seaports either had inadequate container facility or none at all. Consequently, export shipments often relied on conventional (break-bulk) vessels. The cargoes were placed alongside a vessel for hoisting on board. The stevedores (longshoremen) were often employed to carry cargoes on and off the vessel. The loading and unloading of vessels consumed too much time, which caused dockside bottlenecks and delayed shipments. With the increased use of containers, the congestion was decentralized. The problem of congestion was transferred from the docks or piers to the container freight stations or terminals.

ISO Freight Containers

The acronym ISO stands for the International Organization for Standardization, with headquarters in Geneva, Switzerland. The ISO freight container refers to a container complying with the ISO container standards in existence at the time of its manufacture.

Containers are available in configurations to take almost every kind of cargo and mode of transportation (ocean, air, road, and rail).

Containers intended for intercontinental use have external nominal dimensions of:

All above dimensions have permissible tolerances.

The 20 feet (20') and 40 feet (40') containers are very popular in ocean freight. The 8.5 feet (8.5') high container---8 feet 6 inches (8' 6") high container---is often referred to as standard container.

The demand for the high cube container---hicube---is increasing. The popular high cube container has a normal height of 9.5 feet (9.5' or 9' 6").

There are half height containers (4.25' or 4' 3" high) designed for heavy loads such as steel rods and ingots, which absorb the weight limit in half the normal space.

The most widely used type of container is the general purpose (dry cargo) container  having a nominal length and height of 20' x 8.5', 40' x 8.5', and 40' x 9.5'. Referring to the below, the dimensions shown in the table are not fixed, that is, the external and internal dimensions may vary among containers of the same length and height.

The container capacity is the total cube a container can accommodate. The term cube often refers to the cubic measurement of cargo. The capacity (i.e., the internal volume) is determined by multiplying the internal dimensions, that is, the product of internal length, width and height. The capacity may vary among containers of the same length and height.

Rating

Rating is the maximum gross mass (or weight), that is, the maximum permissible weight of a container plus its contents. The rating of a 20' dry cargo container is 24,000 kgs. (52,900 lbs.), and a 40', including the high cube container, is 30,480 kgs. (67,200 lbs.).

Tare Mass

Tare Mass---tare weight or tare---is the mass (or weight) of empty container, including all fittings and appliances used in a particular type of container in its normal operating condition.

The tare mass of containers may vary due to the different construction techniques and materials used in the container. A 20' x 8.5' dry cargo container may weigh 1,800 kgs. to 2,400 kgs., a 40' x 8.5' may weigh 2,800 kgs. to 4,000 kgs, and a 40' x 9.5' may weigh 3,900 kgs. to 4,200 kgs. Some dry cargo containers may fall outside the indicated weight range. The reefer weighs more than a dry cargo container of the same size.

Payload

Payload is the maximum permitted mass (or weight) of payload, including the dunnage and cargo securement arrangements that are not associated with the container in its normal operating condition. Therefore, Payload = Rating - Tare Mass.

If the tare mass of a 20' dry cargo container is 2,400 kgs. and a 40' is 3,900 kgs., the payload of 20' is 21,600 kgs. (i.e., 24,000 kgs. minus 2,400 kgs.) and 40' is 26,580 kgs. (i.e., 30,480 kgs. minus 3,900 kgs.). However, the exporter may be prohibited to have that much payload in areas where there are legal limitations to the overall load of a vehicle.

In exporting, it is common to encounter a payload of 17,500 kgs. or less in the 20' container, and 24,000 kgs. or less in the 40' container.

The rating, tare mass and payload of a container is marked on its wall, usually on the end (rear) door in the case of an end-loading dry cargo container.

Each container has an identification code or container number---a combination of the 4-letter characters that identify the owner (the operator of container) and the 7-numeric characters that identify the container. The container number can be found on the outer and inner side walls.

The container number is entered on the bill of lading to facilitate the identification and tracking of the container and the cargo.

The ports worldwide handle over 100 million TEUs annually. The unit TEU (twenty-foot equivalent unit) is used to express the relative number of containers based on the equivalent length of a 20' container. For example, 100 containers of 20' is 100 TEUs, while 100 containers of 40' is 200 TEUs.

The container ships used in the international traffic are designed with the cells (compartments with cell guides) resembling a honeycomb wherein the containers are placed, thus named cellular container ships.

The ships are bigger and faster nowadays, especially those used in the deep-sea voyage (long haul). Those rated below 20 knots are common in the short-sea voyage (short haul). The knot is a unit of ship's speed, being one nautical mile per hour. One nautical mile is 1.852 kilometers. A ship that steams at 20 knots is moving at a speed of about 37 kilometers per hour.

Some cellular container ships in the 20 to 23 knot range can accommodate 2,000 to 3,000 TEUs. Some rated 24 knots have a carrying capacity of 4,000 to 4,900 TEUs and load of 56,000 to 75,000 metric tons. The length of the vessel can be about 900' (275 meters) and the beam---the widest part of a ship---can be about 125' (38 meters). The size of vessel is huge compare to a standard football field having a goal line of 300' (91.44 meters) and an end line of 160' (48.77 meters).

Convenience of Containers in
Multimodal Transport and Transhipment

Containers are designed to facilitate the carriage of goods without intermediate reloading. They are fitted with devices permitting their ready handling, particularly in the multimodal transport and transhipment (the word "transhipment" is also written with two letter 's' as "transshipment").

The prefix 'multi-' means at least two or many. The term mode refers to the way or means. Multimodal transport means at least two different modes of transportation. In export shipping, it refers to delivery using a combination of usually ocean and land (rail or road) carriers, and using only one shipping document known as through bill of lading or combined transport bill of lading, issued usually by the ocean shipping company or its agent.

Theft, Pilferage, Damage, and Insurance

The cargo security of container shipments against theft, pilferage and damage is improved, especially in the CY/CY container service. Hence, the cargo insurance in a container shipment generally is lower than in a break-bulk shipment.

The metal seal that is provided by the carrier and used in securing the container doors is tamperproof, but it is easily removed. In some countries, the importer's customs broker may use padlocks to secure the doors of container for their client once the FCL (full container load) shipment reached the destination port.

　

Importer's Specified Container Shipping Company

Importers may specify in the purchase order and/or the letter of credit (L/C) the container shipping company or the vessel to use for their shipment. Big importers, such as chain stores, and large shippers may have a contract with the shipping company to deliver an annual minimum TEU (twenty-foot equivalent unit) at preferred or discounted freight rates.

The cargo weight and cube influence the size and number of containers needed for an order. The term cube refers to the cubic measurement of cargo.

From the analysis in the Case Sample: Container Selection (1) below, it is obvious that not all 1,500 cartons (2,250 cu. ft. or 63.713 CBM) will fit into two 20' containers or one 40' standard container. A solution is to request the importer to adjust the order to 1,365 cartons (2,047.5 cu. ft or 57.979 CBM) to make one 40' FCL (full container load), in case the high cube container (the hicube) is not available. The alternate solution is to use a 40' hicube. However,

• not all shipping companies and sea routes have the hicube,
• there are legal limitations to the overall height of a vehicle in certain areas (e.g, tunnel and underpass) and countries, and
• the FCL (full container load) freight rate of hicube is higher than the standard container.

Some of the shipping companies having high cube containers include:

• APL (U.S.A.)
• Evergreen (Taiwan)
• Hanjin (South Korea)
• Hapag-Lloyd (Germany)
• "K" Line (Japan)
• Maersk (Denmark)
• NYK (Japan)
• OOCL (Hong Kong-Taiwan)
• Sea-Land (U.S.A.)

The hand packing and emptying of containers is still common in many countries. The time required in packing or emptying a container depends on the kind, size and weight of the cargo, the means (manual or mechanical), and the number of persons doing the packing or emptying. Packing generally takes more time than emptying.

Unitized Load

Unitizing or unitization is the assembly and packing of a number of cargo, either the same or different items, into a standardized or compact unit for ease of handling by the mechanical equipment. The palletized cargo, container load and carload are examples of a unitized load.

The unitized load facilitates the loading, unloading and inventory of shipment, and improves the cargo security against theft, pilferage and damage.

Turn-Over Rate of Containers

In the CY/CY, CY/CFS and CFS/CY container services, the carrier allows the shipper or the consignee, as the case may be, to retain (hold) the container at their premises normally for 24-48 hours only, in order to maximize the turn-over rate of the container. An overtime use charge, known as demurrage, is collected on overstayed containers. In special cases, such as when the shipper or the consignee is doing a substantial amount of business with the carrier, some carriers may allow a longer time without charging demurrage.

Not all shippers have a container loading dock or raised bank with suitable dock plate at their premises, where the forklift and pallet truck can enter the container. The cargo is often manually or mechanically lifted from the ground onto the container that sits on the chassis (the bogie) or flatbed truck (the open truck). The inclining belt conveyor sometimes is used to move the cargo from the ground up to the container doors, and the roller conveyor is used to convey the cargo from the container doors to the inner section, particularly when packing a 40' container, which is deep.

In the case of a CY/CY or CY/CFS container service, the shipper has to arrange for the drayage of the empty container from the carrier's container terminal to the shipper's premises. The shipper must inspect the container to ensure it will adequately protect the cargo. In a dry cargo container, the doors, walls and ceiling demand the utmost attention.

The doors must be in good working condition and the door locking bars should secure and lock properly. The load may push against the container doors during a rough sea voyage. Even though the rating of a 20' container is 24,000 kgs., the doors cannot withstand that much pressure of solid load pushed against them during conveyance.

The walls and ceiling must be free from cracks or damage to prevent water and moisture from entering. There is a chance that a dry cargo container will be carried on deck since the cellular container ship carries about one-third of the containers on deck. The possible ingress of the sea water, rain and salt-laden moisture through a damaged container may ruin the cargo.

Never allow anyone to smoke inside a container. A carelessly discarded cigarette can cause a serious fire that may destroy the cargo and the ship, and may cause the loss of life.

In tropical areas, the air inside a dry cargo container is hot, humid and suffocating, especially inside a 40' container. To relieve discomfort when packing a container, it is necessary to use forced ventilation with an electric blower or fan. The air humidity is high, especially during the wet or rainy season. Forced ventilation can minimize humid air from being trapped inside a container, as the air may condense into liquid and damage the cargo when the container enters a subzero temperature area.

The weight of cargo must be distributed evenly within the container. As a rule of thumb, the center of gravity should not be above half the height of the container, and it should be within two feet from the center of container in the front-rear direction and within one foot in the sidewise (transverse) direction.

Cargoes like video monitors and glass wares have a stacking limit or the maximum stack. Otherwise, the compression from excess weight of overlaying packages may damage the goods underneath. For this reason, heavier packages should never be stowed above lighter packages. Liquids should never be stowed above non-liquids. Keep soft packages away from other packages or objects with protrusions or sharp corners, to prevent damage cause by movement at sea and on land (rail and truck).

A ship at sea may move in different directions simultaneously. Always apply dunnage (i.e., material used to separate and protect the cargo from damage during conveyance, for example, foam, mat and fiberboard) and/or cargo securements when necessary to prevent the cargo from crashing and cascading inside the container. Cascaded cargo may lie against the container doors, posing danger to any person who opens the doors.

Referring to the Table: Pallet Yield above, the number of pallets in a container can be doubled by double stacking of pallets, but at the expense of the total height and the gross weight of each loaded pallet. Stack loading is possible only if the cargo underneath can stand up to the compression from the overlaying pallet, and the center of gravity does not exceed half the height of the container.

To prevent the cargo beneath the stack from being torn and damaged, use dunnage like plywood, compressed particle board, fiberboard, and matting, to separate the lower and upper pallets. L-shaped wood or steel corner supports can be used to give added strength to the packages.

Pallets are built with varied construction techniques. The materials commonly used in the construction of pallets are wood (softwood and hardwood) and plastic (high density polyethylene). Metals (steel and aluminum) are also used but less frequently.

The low cost softwood pallet---made of softwoods like pine and spruce---is used for light cargo and it is expendable. The hardwood pallet---made of hardwoods like ash and maple---costs more but has greater strength than the softwood pallet, and is good for repeated use.

The wooden pallet is often customized to suit the type, size and weight of the exporter's cargo and to meet handling and loading requirements.

The plastic pallet generally costs more than a wooden pallet of the same size, but it is chemical and moisture resistant, cleans easily, is lighter, and will not splinter. Hence, the plastic pallet is more durable than the wooden pallet. Nevertheless, the wooden pallet is used most often in export shipments.

Basic Pallet Designs

 Two-Way  or  Four-Way Pallets

A two-way pallet allows forking at the two opposite sides of the pallet, while a four-way pallet allows forking at all four sides. The four-way pallet is good for both pallet orientations [1] and [2].

	Two-Way Pallet
	Two-Way Pallet
	Four-Way Pallet
	Four-Way Pallet

 Single-Faced  or  Double-Faced Pallets

A single-faced pallet has one full deck (i.e., non-reversible deck), which is often called a skid, while a double-faced pallet has two full decks (i.e., reversible decks). The double-faced pallet is ideal for stack loading, racking of palletized cargo, and conveyor use.

	Single-Faced Pallet Skid
	Double-Faced Pallet

　

 With Forklift Pockets  or 
     With Forklift or Pallet Truck Entries

Pallets with the forklift pockets allow forking with a forklift, while pallets with the forklift or pallet truck entries allow forking with either a forklift or a pallet truck. Some pallets are designed with forklift pockets that also permit forking with a pallet truck, in which the rollers beneath the forks of the pallet truck can come in firm contact with the floor of warehouse and container.

	With Forklift Pockets
	With Forklift or Pallet Truck Entries

Variations of Basic Pallet Designs

 Two-Way Single-Faced Pallet

It is usually made of wood, with forklift or pallet truck entries.

Two-Way Single-Faced Pallet

　

 Two-Way Double-Faced Pallet

It is usually made of wood, with forklift pockets

Two-Way Double-Faced Pallet

 Four-Way Single-Faced Pallet

It is usually made of wood or plastic. The four-way single-faced pallet made of wood may have a 'half-deck' at the bottom. The four-way single-faced pallet made of plastic usually does not have a bottom deck

Four-Way Single-Faced Pallet ('Half-deck' bottom)

 Four-Way Double-Faced Pallet

It is usually made of plastic or wood, with forklift pockets at all four sides

Four-Way Double-Faced Pallet

Besides the full container ship, the RO/RO (roll on/roll off) vessel and the LASH are other systems of water transport used in international trade.

RO/RO (Role On/Role Off ) Vessels

The RO/RO vessel (RO/RO or RORO) derived from the traditional car ferry, where motor vehicles are driven on and off by their drivers. RO/RO is popular within the European trade routes. It is also used in other trade routes like the U.S.A.-Central America route and Europe-West Africa route.

The RO/RO is equipped with ramp(s) that makes loading and unloading from the side and/or bow (front of vessel) and/or stern (rear of vessel) possible. Some modern RO/ROs are designed as a trailer/break-bulk/container carrier suitable for the deep-sea voyage (long haul), making loading and unloading of containers from the top, like a full container ship, possible using the crane. The type of cargo that can be carried on a RO/RO is flexible, including large objects.

The full RO/RO has low stowage factors, as a result of wasted space around the underside of the trailers and other motor vehicles. Therefore, the full RO/RO is not ideal for deep-sea trade. The low stowage factors, however, are compensated for by the quickness of the "turn around' time in ports in the short-sea voyage (short haul).

In general, the capital cost for a full RO/RO is lower than the full container ship or the LASH. When the cargo availability is insufficient in a port in the short-sea trade, investment in sophisticated container handling installations can be uneconomical. Therefore, the full RO/RO offers a solution to short-sea transport needs. A large area of land for parking trailers and other motor vehicles is necessary while they await loading.

LASH (Lighter Aboard Ship)

The lighter aboard ship or LASH---barge-carrier or barge-carrying vessel---is designed to carry lighters (barges), where they are lifted by crane over the stern (rear) of the vessel.

The LASH and barge come in different configurations. Some LASHes can accommodate over 24 barges. Each barge may carry 600 to 1,000 metric tons of cargo, which is much bigger than the ocean freight container, and can float and be towed up and down a river or canal, thus the barge is often referred to as the floating container.

The LASH is useful in moving a relatively large volume of cargo in the short-sea trade and to and from sites on rivers and canals, such as Rhine Canal in Europe, that cannot be used by the larger ocean-going vessels. The LASH keeps the load in the same vessel for the entire trip, thus reduces cargo handling, transport costs and time.

The LASH is popular in Europe, taking advantage of the extensive inland waterway systems which are the cheapest means of inland transport. The export goods from landlocked European countries like Switzerland may move by LASH or other inland waterway transports to the port of Rotterdam (Netherlands) or Antwerp (Belgium), and transfer to the ocean going vessel for the deep-sea voyage.

Conference shipping has regular sailing schedules, thus is called the liner service.

Most ocean freight is carried by conferences. Conference carriers or their agents issue an ocean bill of lading.

Non-conference shipping often does not have regular sailing schedules and freight rates between ports. Consequently, it is perceived as less dependable than conference shipping.

Independent carriers or their agents issue an ocean bill of lading.

While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.

A charter party is required in charter shipping. A charter party---charter party contract---is a written contract between the ship operator and the charterer (shipper). The contract normally includes the ports, freight rate and time involved in the voyage(s).

The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation.

Some trade terms used specifically in charter shipping are as follows:

Voyage charter

The ship is chartered for a single journey and it may involve more than one port of call. The ship operator crews and operates the ship and it is the operator's own ship's master in control of the ship.

This type of charter shipping is analogous to the limousine service where the driver, who is in control of the car in a journey, is provided by the car operator.

Time charter

The ship is chartered for a period of time. This type of charter shipping is similar to a voyage charter in the crewing and operating of the ship. The contract may call for a specific or unlimited number of voyages within the agreed time.

Bareboat charter

The term bareboat means a ship without a crew and ship's master. The charterer (shipper) is in charge of crewing and operating the ship within a period of time, usually a number of years.

This type of charter shipping is analogous to a car leasing where the lessor (the car operator) provides the car only and the lessee provides his/her own driver.

The three processes of landbridge are as follows:

• Microbridge (Micro-landbridge)
  
  Shipment from a country's port to another country's inland destination and vice versa. For example, shipment from Asian port to U.S. Midwest destination, cargo unloads at U.S. West Coast port and connects via rail to the final destination under one bill of lading, instead of eastbound route via Panama Canal or westbound route via Suez Canal to the U.S. East Coast port and then to final Midwest destination. Please see Diagram: Microbridge below.
  
• Minibridge (Mini-landbridge)
  
  Shipment from a country's port to another country's port with overland journey in the first country. For example, shipment from Port of Seattle (Washington, U.S.A.) to the Port of Rotterdam (Netherlands), cargo delivers via rail to New York (New York, U.S.A.), and then to Rotterdam.
  
• Landbridge
  
  Shipment from a country to another country, and passes overland in a third country. For example, shipment from Kobe (Japan) to Hamburg (Germany), cargo unloads at Los Angeles (California, U.S.A.) and connects via rail to New York (New York, U.S.A.), and then to Hamburg.

The major advantage of landbridge is the speed of shipment, based on the fact that the traffic by land or air is generally faster than by sea, and that the nearest distance between the two points is a straight line. The landbridge is useful for cargo semi-sensitive to time and cost.

During winter some ports in the northern hemisphere may be closed due to heavy snow and frozen seaway. Nevertheless, the landbridge keeps the export and import cargo moving.

The volume of ocean freight flowing between the East and the West increased considerably in the past decades, especially between the Far East and North America. The growth in cargo traffic is expected to continue.

The conventional Eastbound ocean traffic from Asia to the East Coast areas in North America flows via the Pacific Ocean---the Trans-Pacific Route. The route crosses the Panama Canal (in central Panama) into the Caribbean Sea, and then into the Atlantic Ocean. It may take 7-8 hours for ships to negotiate the 82-km. Panama Canal through six pairs of locks.

The conventional Westbound ocean traffic from Asia to the Western Europe or the East Coast areas in North America flows via the Mediterranean Sea---the Trans-Mediterranean Route. The route crosses the Indian Ocean, Red Sea (between Africa and Middle East), Suez Canal (in eastern Egypt, a 161-km. canal linking several lakes and without any locks), and then into the Mediterranean Sea, serving the Mediterranean countries and their neighboring landlocked countries. The voyage continues from the Mediterranean Sea through the Strait of Gibraltar (between Spain in Europe and Morocco in Africa) into the Atlantic Ocean, serving the East Coast areas in North America, and from the Atlantic Ocean northbound to the North Sea and Baltic Sea, serving the North Sea and Baltic countries and their neighboring landlocked countries.

An alternate ocean route to the Trans-Mediterranean Route is through the Cape of Good Hope at South Africa, that is, going around the southern tip of the African Continent, but the transit time is much longer.

The panamax is the draft limits of the Panama Canal, which imposed a ship's carrying capacity limit to around 3,500 TEUs (twenty-foot equivalent units). Modern container ships exceed the panamax, that is, cannot transit the canal. The future container ships in the deep-sea voyage are expected to be much bigger than those currently in service. The landbridge service that utilizes the West Coast ports in North America becomes more important in the Trans-Pacific Route.

There were plans to build a dry canal---rail line for container traffic---linking the Pacific Ocean and the Caribbean Sea in Central American country (e.g. Nicaragua) using the landbridge service, in order to meet the increasing flow of cargo between the East Asia and the North and Latin America.

　

Feeder Vessels and Transhipments
in Relation to the Landbridge Services

As export and import traffic increases worldwide, large container ships having a load capacity of 80,000 metric tons or more are expected to service the Trans-Pacific Route and other sea routes, calling at a limited number of deep-sea ports at each end of the voyage. Consequently, the network of feeder services serve by the smaller container ship, called the feeder vessel, serving the large deep-sea ports is expected to expand. In the process, a wider application of the landbridge is indispensable, particularly in North America, and the transhipment of export goods will become more frequent in certain trade routes. The ports of Hong Kong (China) and Singapore in Asia and the port of Rotterdam (Netherlands) in Europe, for example, are popular ports of transhipment in the deep-sea voyage.

• Shipment to the European Ports
  from the West Coast Ports in North America
  
  Use the minibridge (mini-landbridge) or the land-sea carriage, that is, freight container from the West Coast port send via rail to the East Coast port, and then by ship to Europe.
  
• Shipment to the European Ports or Areas
  from the Far East and Australia and Vice Versa
  
  Use the landbridge in North America or the sea-land-sea carriage or air-land-sea carriage, that is, ocean vessel or airplane reaches the West Coast port or area in North America and the freight container (or the air cargo transfers to ocean container) connects by rail to the East Coast port or area in North America, and then by ship to Europe.

  Alternately, use the Trans-Siberian landbridge in the Russian Federation or the sea-land carriage or air-land carriage, that is, ocean vessel or airplane reaches the East Coast port (e.g. Port of Nachodka situated in Asia) or area in the Russian Federation and the freight container (or the air cargo transfers to container) connects via Trans-Siberian Railway to the border station in Europe, and then by rail and/or truck to the European countries.

  Some exporters from Japan, Hong Kong (China) and Australia use the Trans-Siberian landbridge. Exporters also use the ocean-air service (non-landbridge service) through the Russian Federation, that is, cargo reaches the Russian East Coast port (e.g. Port of Vladivostok situated in Asia) and connect by air to Europe.

• 　
• Shipment to the East Coast and Midwest Areas
  in North America from the Far East Ports
  
  Use the microbridge (micro-landbridge) or the sea-land carriage, that is, ocean vessel leaves the Far East port and reaches the West Coast port in North America, such as Vancouver (in British Columbia, Canada), Los Angeles (in California, U.S.A.), or Seattle (in Washington, U.S.A.), and the freight container delivers via rail and/or truck from West Coast port to the Midwest and East Coast areas.

  ---

  Weight or Measure
  in the Freight Cost Calculation

  The freight rate on export goods is often based on W/M (weight or measure), that is, based on the weight or the volume of cargo (the cube or measurement of cargo). The rate uses the comparative relation between weight and volume of cargo. A cargo that is large in relation to its weight is charged according to its total cube, while a cargo that is heavy in relation to its size is charged according to its gross weight.

  In general, light cargo is charged based on measure, while heavy cargo based on weight. Most sea consignments are charged based on measure, while most air consignments are charged based on weight.

  The freight cost by weight or measure that will give the carrier the higher revenue is the rate that applies.

  The unit of ton being used in the freight cost calculation may differ among carriers. It can be a metric ton (2204.6 lbs. or 1000 kgs.), a short ton (2000 lbs. or 907 kgs.), or a long ton (2240 lbs. or 1016 kgs.). The exporter must verify with the carrier which unit is being used. In practice, the most frequently used is the metric ton.

Units of Weight or Measure Commonly Used
in the Freight Cost Calculation

LEGEND:
MT	= metric ton
kg.	= kilogram
lb.	= pound
CBM	= cubic meter
cu. cms.	= cubic centimeters
cu. ft.	= cubic feet
cu. ins.	= cubic inches

		Weight	or	Measure
Mode of Transportation
Ocean Freight		1 MT (1000 kgs.)	or	1 CBM (35.3 cu. ft.)
Air Freight		1 MT(1000 kgs.)	or	6 CBM (211.8 cu. ft.)
	1 kg.	or	6000 cu. cms. (366 cu. ins.)
	1 lb.	or	166 cu. ins.
Road and Rail Freight		1 MT(1000 kgs.)	or	3.3 CBM (116.5 cu. ft.)
	1 kg.	or	3300 cu. cms (201.3 cu. ins.)
	1 lb.	or	91.3 cu. ins.

　

Some freight carriers may use the (long ton) 2240 lbs. (as weight) or 40 cu. ft. (as measure) in the freight cost calculation.

In ocean freight, some freight carriers may use the terms U.S. shipping ton and British shipping ton. One (1) U.S. shipping ton is equivalent to 40 cubic feet, and one (1) British shipping ton is equivalent to 42 cubic feet.

Other units may be used in the inland freight cost calculation. For example, the inland freight could be charged on a per package basis, but within a maximum allowable weight and/or cube per package. Some carriers may rate a product on a weight basis only.

In the case of irregular shaped cargo, the weight or measure applies, where the measure is determined by taking the three widest dimensions that describe the smallest cubic space enclosing the cargo.

　

Minimum Bill of Lading

A minimum bill of lading---minimum billing or minimum charge---is often required in a freight service.

In ocean freight, a minimum of usually 2 or 3 CBM (cubic meters) is required. The freight consolidator may specify the minimum requirement in a dollar amount, instead in CBM.

In air freight, a minimum of usually 1 kilogram is required. If a consignment is light and small, it is more economical to ship by air rather than by sea considering the benefits of air freight.

In road and rail freight, the minimum requirements vary widely among carriers.

Case Sample: Weight or Measure Assuming that an ocean carrier or a freight consolidator offers an exporter US$65 W/M for the shipment of 665 cartons of product DX. The gross weight of each carton is 10.5 kgs. and its length-width-height is 1.5' x 1' x 1', which is 1.5 cu. ft. or 0.04248 CBM per carton. The specified weight is per 1,000 kgs. and measure is per cubic meter. The consignment has a weight of 6,982.5 kgs. (i.e., 10.5 kgs. x 665) and a measure of 997.5 cu. ft. (i.e., 1.5 cu. ft. x 665) or 28.25 CBM (i.e., 0.04248 CBM x 665). Freight Cost Calculation   The freight cost by weight is:   US$65  x  (6,982.5    1,000)     =     US$ 453.86   The freight cost by measure is:   US$65  x  28.25     =     US$ 1,836.25   The measure of product DX is large in relation to its weight, that is, the freight cost by measure gives the carrier or the consolidator a higher revenue, thus the exporter pays US$1,836.25.

Freight Adjustments

Currency Adjustment Factor (CAF)

In times of unstable currency, the freight rate is often quoted with a currency adjustment factor (CAF) to cover an additional charge for currency appreciation. The CAF, if any, is indicated on the bill of lading. The tariff of most international carriers uses the U.S. dollar as the basis of the freight cost calculation. The CAF allows for fluctuations in the value of the dollar against the currency in which the carrier earns its revenues.

Bunker Adjustment Factor (BAF)

The term bunker refers to oil. It may also refer to a compartment on a ship for storing fuel, that is, oil in modern ships and coal in old-time steamships.

In times of unstable oil prices, the freight is often quoted with a bunker adjustment factor (BAF) to cover an oil price hike. The BAF, if any, is indicated on the bill of lading. The BAF allows for fluctuations in the cost of oil.

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• Shipment to the West Coast and Midwest Areas
  in North America from the European Ports
  
  Use the microbridge (micro-landbridge) or the sea-land carriage, that is, ocean vessel leaves the European port and reaches the East Coast port in North America, such as Halifax (in Nova Scotia, Canada), Saint John (in New Brunswick, Canada), or New York (in New York, U.S.A.), and the freight container delivers via rail and/or truck from East Coast port to the Midwest and West Coast areas.
  
  
  
  
• Shipment to the Far East Ports from the
  East Coast and Midwest Areas in North America
  
  Use the microbridge (micro-landbridge) or the land-sea carriage, that is, freight container from the East Coast and Midwest Areas send via rail to the West Coast port, and then by ship to the Far East.