Guam Chamber of Commerce Small Business Focus

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Guam Chamber of CommerceSmall
Business Focus Development Committee
presents Shipping A-ZOctober 30,
2009Phillip Santos Matson NavigationPaje
Butler DGX Ocean/Air Freight Lynwood Baker
JL Baker Sons
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An Overview of Ocean Transportation

• Section 1
• Profile of a Shipment
• Financial Instruments
• Selling Terms
• Bill of Lading
• Equipment Types

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Section 2

• Equipment Packing and Stowing
• Calculating shipment size
• Cargo Flow
• US Trucking
• Regulatory Agencies
• Section 3
• Air Cargo
• Q A

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Profile of a Shipment Export Profile

• Shipper
• Book shipments
• Marks cargo plainly
• Prepares B/L for movement of cargo to terminal
• Make arrangements with Trucker
• Motor Carrier or Trucker
• Accepts cargo for transit to Port
• Forwarder (if applicable)
• Provides Dock Receipt and special permits, if any
  to delivering motor carrier

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Profile of a Shipment

• Terminal operator
• Ingates container against booking number
• Steamship company
• Issues Ocean Bill of Lading to shipper or agent

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Profile of a Shipment Import Process

• Steamship Company
• Notifies consignee prior to ships arrival
• Consignee or Broker
• Obtains customs release, freight release, Dept.
  of Agriculture clearances before contacting
  trucker
• Motor Carrier or Trucker
• Obtains container(s)
• Terminal Operator
• Verifies cleared documents and issues container

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Financial Instruments

• Terms of SaleBuyers and Sellers division of
  cost and risk
• Responsibilities
• Who will arrange and pay for carriage of the
  goods from one point to another?
• Who will bear the risk if these operations cannot
  be carried out?
• Who will bear the risk of loss of or damage to
  the goods in transit?
• Frequently used Terms of Sale
• Free on Board (FOB)
• Cost and Freight (CF)
• Cost, Insurance and Freight (CIF)

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• Selling Terms (Seller/Buyer Responsibility)

INCOTERMS A series of International sales terms
published by the International Chamber of
Commerce (ICC). They are used to divide
transaction costs and responsibilities between
buyer and seller and reflect transportation
practices EXW (Ex-Works) Goods are made
available for pick-up at the shipper/sellers
factory or warehouse and delivery is
accomplished when the merchandise is released to
the consignees carrier. FCA or FOB (Free
Carrier) Seller is responsible for arranging
transportation, but is acting at the risk and the
expense of the buyer. Seller chooses and works
with the freight forwarder. Delivery is
accomplished at a predetermined port or
destination point and buyer is responsible for
insurance.
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• CFR (Cost and Freight) It is the
  shippers/sellers
• responsibility to get the goods from their door
  to the port
• Of destination. Delivery is accomplished at
  this time. It is buyers
• responsibility to cover insurance from port of
  origin to buyers door.
• Given that the shipper is responsible for
  transportation, the shipper
• also chooses the carrier.
• CIF (Cost, Insurance and Freight) The shipper/
  seller will
• insure the merchandise. The seller usually
  chooses the carrier.
• Delivery as with CFR, is accomplished at port
  of destination.
• DDP (Delivered Duty Paid) The shippers/seller
  is responsible for
• dealing with all the tasks involved in moving
  goods from the
• manufacturer, warehouse, or shippers door to
  buyer/consignees
• door. It is the shippers responsibility to
  insure the goods and absorb
• all costs and risks including the payment of
  duties, fees and taxes.
• DDU (Delivered Duty Unpaid) This arrangement is
  basically the
• same as DDP, except for the fact that the buyer
  is responsible for the

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Financial Instruments

• Terms of PaymentHow will the seller get paid?
• Cash in Advance
• Letter of Credit
• Documentary payments
• Open Account

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Financial Instruments

• Letter of CreditIssued by a bank at the buyers
  request in favor of the seller.
• It provides the issuing banks promise to pay a
  specified amount of money upon receipt by the
  bank of certain documents within a specified
  time.

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Bill of Lading

• B/L FunctionsRoles and Uses
• Legal Tool
• Transportation document

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Bill of Lading Legal Tool
Smith Inc
LegalOwner
Cruz Company
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Bill of Lading Financial Proviso
Smith Inc
Order of a Party Order of Shipper Order of Bank
Cruz Company
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Bill of Lading Transportation Document

• Contract of Carriage
• Agreements between shipper and ocean carrier

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Equipment Types
20 Dry Standard 194 x 76 x 78 1,172
ft. 62,330 lbs.
40 Dry Standard 396 x 76 x 710 2,387
ft. 59,460 lbs.
40 Dry High-Cube 396 x 79 x 810 2,686
ft. 59,040 lbs.
45 Dry High-Cube 445 x 79 x 810 3,030
ft. 57,200 lbs.
Refrigerated Containers
Open Equipment
40 Flatrack 236 x 79 x 710 1,972
ft. 56,950 lbs.
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Section 2

• Equipment Packing and Stowing
• Calculating shipment size
• Cargo Flow
• US Trucking
• Regulatory Agencies

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Equipment Packing and Stowing

• Packing of goods

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Equipment Packing and Stowing

• Stowing loads

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Equipment Stowing Loads
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Equipment Packing and Stowing

• Reefer packaging requirements

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Equipment Packing and Stowing

• Reefer stowage requirements

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Equipment Packing and Stowing

• Securing load

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How to compute the size of your shipment

• In order to compute actual cubic feet, you will
  need to measure the length, width and height (in
  inches) of each piece to be shipped.
• One cubic foot is equal to a single piece with
  the dimensions of 12" x 12" x 12".
• To compute cubic feet, first multiply together
  all the dimensions for the piece being measured.
• Then divide the total by 1728.
• This calculation will give you your total amount
  of cubic feet for the piece.
• Total the individual pieces "cubed" to determine
  your total shipment cube.
• 12" X 12" X 12" 1728
• 1728 / 1728 1 cubic foot or 12" X 12" X 12" 1
  cubic foot

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Helpful hints in computing cubic feet

• When taking your dimensions, round up to the next
  highest inch. Example 11 ½" 12".
• Total cubic feet should always be rounded up.
  Example 10.45 cubic feet 11 cubic feet.
• With multiple pieces of the same dimensions,
  multiply the total number of pieces along with
  the dimension. For example, 10 pieces at 12 x 12
  x12 would be computed as follows
• 10 PCs X 12" X 12" X 12" 17280 / 1728 10
  cubic feet

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• To compute density cubic feet, divide the weight
  of shipment by 45 to ensure that the 45 lb.
  density rule cube does not exceed the actual
  cube. If it exceeds the actual cubic feet, you
  will be charged based on density.
• The formulas used to convert weight and cube into
  metric for international shipment pricing are as
  follows
• International "less than container-load" (LCL)
  rates are quoted on a weight/measurements (w/m)
  -- revenue ton basis.
• A revenue ton is defined as 1 cbm (m3) and/or
  1000 kg. The basis for the calculation is
  whatever yields the greater revenue.

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• To calculate the cubic meters
• Follow steps to get cubic feet, divide cubic feet
  by 35.314 to determine cubic meters.
• To determine weight in kilos divide gross weight
  by 2.2046. Every 1000 kilos is considered a one
  CBM. The higher of actual measurement of the
  cargo or 1 CBM for each thousand kilos is used to
  determine the CBM for billing purposes.
• Shipments are always measured as tendered by the
  shipper, with the outer most dimensions inclusive
  of pallet, crating, banding or bundling to
  calculate volume.

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U.S. Trucking

• Trucking rates in the United Sates (also known as
  inland service) are based on Class Code, origin
  and destination.
• Class codes are determined by the NMFC.
  Commodities are grouped into one of 18
  classesfrom a low of class 50 to a high of class
  500based on an evaluation of four transportation
  characteristics density, stowability, handling
  and liability. Together, these characteristics
  establish a commoditys transportability.
• Trucking rates are given at a per 100 lb rate
  (cwt) basis.
• Class 50 items are lower in cost to transport,
  then class 500 items.

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Example

• A shipment of bricks Class 50 at 1000 lbs which
  is very heavy, small in size and low value. The
  rate may be around 4.00 per 100 lbs. You would
  pay 40.00
• 1000 lbs divided by 100 lbs 10 10 times
  4.00 40.00
• A shipment of appliances Class 300 at 1000 lbs
  which can be very light, large in size and high
  value. The rate may be around 24.00 per 100 lbs.
  You would pay 240.00.
• 1000 lbs divided by 100 lbs 10 10 times
  24.00 240.00

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Cargo Flow - Discharge
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Cargo Flow Port of Guam Terminal
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Cargo Flow Container Availability

• Port Free Time
• Demurrage
• Carrier Free Time
• Detention

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Regulatory Agencies

• US Customs and Border Protection
• 10 2 Program (for export from Guam to US)
• US Department of Treasury/Office of Foreign
  Assets Control
• US Coast Guard
• Port Authority of Guam
• Department of Transportation/DMV
• Other
• The Adherence Group (TAG)
• Long Beach Clean Truck Program

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Guam Customs Quarantine

• What Customs wants from you?
• 1) Commercial invoice listing seller, buyer,
  commodity, quantity and cost of goods, with a
  total invoice dollar amount in US.
• 2) A current valid Guam Business license.
• 3) A BOL or freight bill.
• 4) Their fees.
• Will Customs hold up your shipment?
• 1) Shipments will be held if a Use Tax is due
  when arriving through the port authority of Guam.
  Air freight shipments will not be held, but the
  Use Tax must be paid to the Treasurer of Guam
  with in 14 days.
• 2) Shipments will be held for a satellite
  inspection or physical inspection.
• 3) Shipments will be held if specialized
  documents are requested. WPC, NOA, EPA release
  and quarantine inspection.

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Section 3AIR CARGOIntroduction into Shipping by
Air
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Types of products shipped by Air

• High Value Products
• High-Tech ie. Microsoft, Hp, Dell, IBM etc.
• Significant inventory carrying costs
• Time Sensitive Shipments
• Laptops, cell phones, periodicals, etc.
• Medical Supplies
• Critical Parts

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Types of Air Services

• Express (2-3 Days)
• Deferred (3-7 Days)
• Consolidated Services
• Direct Service or Direct IATA
• Charter Service

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Types of Air Services - Continued

• EXPRESS
• Serviced by Express Companies ie. UPS, DHL,
  FEDEX, TNT
• Express Companies usually more aggressive when it
  comes to guarantees
• Traditional Freight Forwarders, who use regularly
  scheduled commercial carriers do not always
  guarantee
• Express is the highest priced air service
• DEFERRED
• Consolidated Services (Consolidation)
• Shipments from different shippers are grouped
  together and tendered to the airline as one
  shipment
• The forwarder gets a much lower price because of
  the higher volume
• Airport to Airport
• Door to Airport
• Door to Door

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Types of Air Services Contd

• DEFERRED
• Direct IATA Service
• When no consolidation service is available
• Sometimes used for DG where contract rates are
  not available
• This method is more expensive than consolidation
  but offers speedier service
• CHARTER
• Many times a forwarder will help a customer
  charter an entire aircraft
• The aircraft is completely at the customers
  disposal
• All charges are normally paid in advance

IATA International Air Transport Association is
an international trade body, created over 60
years ago by a group of airlines. IATA represents
some 230 airlines comprising 93 of
scheduled international air traffic. The
organization also represents, leads and serves
the airline industry in general
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Moving Goods by Air
Things to know before shipping your product into
Guam

• AIRFREIGHT RATES
• Basic cost of Airfreight
• Charged per Kilogram (kg) Weight or Volume,
  whichever is greater, known as Chargeable Wt
  (dimensional weight)
• Rates apply for movements from the airport of
  origin to the airport of destination.
  Pre-departure and post-arrival expenses are
  additional to the airfreight cost
• Other additional expenses

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• AIRFREIGHT
• DOCUMENTATION
• Air Waybills
• Provides evidence of a contract of carriage
  between exporter and forwarder/carrier
• Proof of receipt of goods for shipment
• Unlike the ocean Bill of Lading, the AWB isnt,
  when in your possession, a title to the goods

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• Customs Invoice
• Commercial Invoice -Used in International Trade
• Used as Customs Declaration provided by the
  shipper
• No specific format BUT must include Shipper,
  Consignee, Qty, Description, Unit Price and Total
  Price

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PACKAGING

• Will your product withstand damage if other,
  heavier packages are stacked on top of your en
  route
• Stabilize your goods within the packaging use
  filling material, ie bubble wrap, peanuts
• Pallets and wood packaging from foreign countries
  require treatment for infestation and marked to
  this effect
• Size of package Narrow body aircraft vs Wide
  body aircraft

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Q A
Thank You!