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INTERNATIONAL TRANSPORTATION The DCI Way
Objectives The objective of this presentation is to give you an understanding of international transportation terminology and procedures so you are able to confidently sell the product to your customers.
Topics • • • Laws and Licenses DCI and Dedicated Global Incoterms Harmonized Tariff Schedule Information Required Looking Forward
Laws and Licenses • Air There are no laws or licenses to broker air freight. The Transport Security Administration (TSA) are very stringent in regulating the security procedures of an In-direct Air Carrier (IAC). An IAC has gone through a thorough security check and, because of this, is permitted to book freight directly through an airline onto its aircraft. The IAC carries out security threat assessments against any company or individual who comes into contact with the freight or paperwork to ensure that it isn’t tampered with and that it is safe to travel on passenger aircraft. Also, as of Aug 2010, all freight that is going to travel on a passenger aircraft must be screened. The TSA are establishing a system of security that is commensurate to that of passengers baggage. This will require screening at piece level. This means that pallets/skids will have to broken down in to individual items prior to screening. The charges for the screening will be the consignor’s responsibility.
Laws and Licenses • Sea The Federal Maritime Commission (FMC) have declared that no company or individual may be involved in, or promote themselves as freight forwarders without an Ocean Transportation Intermediaries (OTI) license. OTI services refer to the following: 1. Dispatching of shipments on behalf of others to facilitate shipments by common carrier, including ordering cargo to port 2. Preparing or processing export declarations, bills of lading and other export documentation 3. Booking or confirming cargo space 4. Arranging for warehouse space 5. Arranging cargo insurance 6. Clearing shipment in accordance with US Government export regulations 7. Preparing and/or sending advance notice of shipments to banks, shippers and consignees 8. Handling freight monies on behalf of shippers 9. Coordinating the movement of shipments from origin to the vessel 10. Giving export advice to exporters.
DCI and Dedicated Global DCI is a certified IAC. To gain this accreditation, DCI had to go thru multiple security and threat assessment checks. This certification allows DCI to tender its customers cargo to on passenger aircraft. . To accomplish this, all persons involved in this process must be security threat assessed and pass a simple knowledge test. The customer must also become a known shipper to the IAC which involves a security assessment. Dedicated Global Carriers is now a fully licensed Ocean Freight Forwarder and Non-Vessel Operating Common Carrier (NVOCC). This means that as Dedicated Global, we are able to tender cargo loads for USA customers, whether import or export, for shipment by sea. We are able to make commissions for this service and charge the customer directly without having to use a third party.
Incoterms or International Commercial Terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices. They closely correspond to the U. N. Convention on Contracts for the International Sale of Goods. The first version was introduced in 1936 and the present dates from 2000.
Incoterms Group E – Departure • EXW - Ex Works (Named Place) The seller makes the goods available at his premises. The buyer is responsible for all charges Group F – Main Carriage Unpaid • • • FCA – Free Carrier (Named Place) The seller hands over the goods, cleared for export, into the custody of the first carrier, named by the buyer, at the named place. FAS – Free Alongside (Named Loading Port) The seller must place the goods alongside the ship at the named port. The goods must be cleared for export. This is for maritime only. FOB – Free On Board (Named Loading Port) The seller must place the goods on the ship, named by the buyer; cost and risk being divided at the ships rail. The goods must be cleared for export. This is for maritime only. FOT – Free On Truck (Named Truck Loading Location) FOR – Free On Rail (Named Loading Railhead)
Incoterms Group C – Main Carriage Paid • • CFR – Cost and Freight (Named Destination Port) The seller must pay the costs and freight to bring the goods to the port of destination. Risk is transferred to the buyer once the goods have crossed the ships rail. This is for maritime only. CIF – Cost, Insurance and Freight (Named Place of Destination) Exactly the same as CFR except the seller must in addition procure and pay for insurance for the buyer. Maritime only. CPT – Carriage Paid To (Named Place of Destination) The general/containerized/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed to the first carrier. CIP – Carriage and Insurance Paid (To) (Named Place of Destination) The containerized transport/multimodal equivalent to CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
Incoterms Group D – Arrival • • • DAF – Delivered at Frontier (Named Place) The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier. This is for rail and road. DES – Delivered Ex Ship (Named Port) Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading by the buyer. This is common on bulk commodities such as coal, grain and dry chemicals and where the seller owns or has chartered their own vessel. DEQ – Delivered Ex Quay (Named Port) This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.
Incoterms Group D – Arrivals (continued) • • DDU – Delivered Duty Unpaid (Named Destination Place) The seller delivers the goods to the buyer to the named place of destination. The goods are not cleared or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination. DDP – Delivery Duty Paid (Named Destination Place) This seller pays for all transportation costs, duties and bears all risks until the goods have been delivered.
Harmonized Tariff Schedule The Harmonized Tariff Schedule (HTS) is the primary resource for determining the tariff classifications or duty for goods imported into the USA. The HTS is based on the international harmonized commodity coding and classification system, which has been established by the World Customs Organizations. All countries base their tariff schedules on the harmonized system, making it easier to conduct international trade. The HTS assigns a 10 digit classification number to a good, based on such things as its name, use and/or the material used in its construction. There are over 17, 000 unique 10 digit HTS classification code numbers. There are 99 chapters arranged in to 22 sections.
Harmonized Tariff Schedule SECTION XII: FOOTWEAR, HEADGEAR, UMBRELLAS, SUN UMBRELLAS, WALKING STICKS, SEASTICKS, WHIPS, RIDING-CROPS AND PARTS THEREOF; PREPARED FEATHERS AND ARTICLES MADE THEREWITH; ARTIFICIAL FLOWERS; ARTICLES OF HUMAN HAIR Chapter 64 Footwear, gaiters and the like; parts of such articles Chapter 65 Headgear and parts thereof Chapter 66 Umbrellas, sun umbrellas, walking sticks, seasticks, whips, riding-crops and parts thereof Chapter 67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair
Information Required To ensure that a suitable method of transportation is selected for the customer, the following information is required: 1. Consignor 2. Consignee 3. Full description of freight 4. Sizes 5. Weights 6. Country of origin (goods could have been imported then assembled in the USA for re-export) 7. Incoterm 8. Harmonized tariff code 9. Expected shipping date 10. Expected arrival date
Looking Forward • • IATA certified (Dangerous Goods by Air) IMDG certified (Dangerous Goods by Sea) C-TPAT (Customs-Trade Partnership Against Terrorism) ISO 9001 -2000 (International Supply Chain standards)