SHIPPING GOODS, MARKETS & INSTRUCTIONS (VI)

Freight Transportation

Today, The Grandma has been revising her notes taken in her Logistics course in Sant Boi de Llobregat. She has been searching more information about shipping, a complex process that involves lots of information, places, protocols and instructions.

Working in Logistics is a team group. If a piece of the chain breaks, all the chain breaks and it is necessary to find the mistake and start again. It is very important to know who are your partners and whose works they are developing. This is the main reason because of The Grandma has played Who is Who, an amazing game of identification, and has revised her list of vocabulary about jobs.

More information: Who is Who I & II

The Grandma has been thinking about the importance of creating a shipping language, a code that allows the total identification of goods, transports, places, providers and customers. Language is an ancestral way of communication and every community or every economical sector has its own. Logistics has its own code created by acronyms.

The Grandma has read about the importance of learning languages talking about the example of Ramon Llull, the mathematician, polymath, philosopher, logician, Franciscan tertiary and writer from the Kingdom of Majorca. He is credited with writing the first major work of Catalan literature and also considered a pioneer of computation theory. Ramon Llull understood the importance of languages in communication and created his own codes and methods in a system named Ars Combinatoria.

The Grandma has searched more information about interesting languages used along the history like Navajo -Native American Language- and Silbo Gomero (Canary Islands) or codes like the Bell's Code -used by churches, sea transport and railway- and El Barallete a largely vanished argot which used to be employed by the traditional knife-sharpeners and umbrella-repairers (afiadores e paragüeiros) of the Galician province of Ourense.

She has also read about how Occitan poets and Gypsy people used poetry and Tarot cards, respectively, as a method to transfer information in a hidden way.

More information: Inbound Logistics

Freight transport is the physical process of transporting commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it has been extended to refer to transport by land or air, in International English: carriage, as well. Logistics, a term borrowed from the military environment, is also used in the same sense.

Ricard is preparing a new shipping

Much freight transport is done by ships. An individual nation's fleet and the people that crew it are referred to as its merchant navy or merchant marine. Merchant shipping is the lifeblood of the world economy, carrying 90% of international trade with 102,194 commercial ships worldwide. On rivers and canals, barges are often used to carry bulk cargo.

Cargo is transported by air in specialized cargo aircraft and in the luggage compartments of passenger aircraft. Air freight is typically the fastest mode for long-distance freight transport, but it is also the most expensive.

Intermodal freight transport refers to shipments that involve more than one mode. More specifically it usually refers to the use of intermodal shipping containers that are easily transferred between ship, rail, plane and truck.

For example, a shipper works together with both ground and air transportation to ship an item overseas. Intermodal freight transport is used to plan the route and carry out the shipping service from the manufacturer to the door of the recipient.

More information: Freight Center

Common trading terms used in shipping goods internationally include:

-Free on Board (FOB)–the exporter delivers the goods at the specified location and on board the vessel. Costs paid by the exporter include load, lash, secure and stow the cargo, including securing cargo not to move in the ships hold, protecting the cargo from contact with the double bottom to prevent slipping, and protection against damage from condensation. For example, FOB JNPT means that the exporter delivers the goods to the Jawahar lal Nehru Port, India, and pays for the cargo to be loaded and secured on the ship. This term also declares where the responsibility of shipper ends and that of buyer starts. The exporter is bound to deliver the goods at his cost and expense. In this case, the freight and other expenses for outbound traffic are borne by the importer.

-Carriage and Freight, now known in the US as Cost and Freight, (C&F, CFR, CNF): Insurance is payable by the importer, and the exporter pays all expenses incurred in transporting the cargo from its place of origin to the port/airport and ocean freight/air freight to the port/airport of destination. For example, C&F Los Angeles, the exporter pays the ocean shipping/air freight costs to Los Angeles. Most of the governments ask their exporters to trade on these terms to promote their exports worldwide such as India and China. Many of the shipping carriers such as UPS, DHL, FedEx offer guarantees on their delivery times. These are known as GSR guarantees or guaranteed service refunds; if the parcels are not delivered on time, the customer is entitled to a refund.

Freight Transportation

-Carriage, Insurance and Freight, now known in the US as cost, insurance and freight (CIF): Insurance and Freight are all paid by the exporter to the specified location.

For example, at CIF Los Angeles, the exporter pays the ocean shipping/air freight costs to Los Angeles including the insurance of cargo. This also states that responsibility of the shipper ends at the Los Angeles port.

-The term best way generally implies that the shipper will choose the carrier who offers the lowest rate, to the shipper, for the shipment. In some cases, however, other factors, such as better insurance or faster transit time will cause the shipper to choose an option other than the lowest bidder.

-Door-to-door shipping is a service provided by many international shipping companies. The quoted price of this service includes all shipping, handling, import and customs duties, making it a hassle-free option for customers to import goods from one jurisdiction to another. This is compared to standard shipping, the price of which typically includes only the expenses incurred by the shipping company in transferring the object from one place to another. Customs fees, import taxes and other tariffs may contribute substantially to this base price before the item ever arrives.

More information: Science Direct

Freight is usually organized into various shipment categories before it is transported. An item's category is determined by:

-The type of item being carried. For example, a kettle could fit into the category 'household goods'.

-How large the shipment is, in terms of both item size and quantity.

-How long the item for delivery will be in transit.

Shipments are typically categorized as household goods, express, parcel, and freight shipments:

-Household Goods (HHG) include furniture, art and similar items.

-Express: Very small business or personal items like envelopes are considered overnight express or express letter shipments. These shipments are rarely over a few kilograms or pounds and almost always travel in the carrier's own packaging. Express shipments almost always travel some distance by air. An envelope may go coast to coast in the United States overnight or it may take several days, depending on the service options and prices chosen by the shipper.

-Parcel: Larger items like small boxes are considered parcels or ground shipments. These shipments are rarely over 50 kg, with no single piece of the shipment weighing more than about 70 kg. Parcel shipments are always boxed, sometimes in the shipper's packaging and sometimes in carrier-provided packaging. Service levels are again variable but most ground shipments will move about 800 to 1,100 km per day. Depending on the origin of the package, it can travel from coast to coast in the United States in about four days. Parcel shipments rarely travel by air and typically move via road and rail. Parcels represent the majority of Business-to-Consumer (B2C) shipments.

-Freight: Beyond HHG, express, and parcel shipments, movements are termed freight shipments.

More information: Shapiro

MARKETS

The international shipping industry can be divided into four closely related shipping markets, each trading in a different commodity: the freight market, the sale and purchase market, the newbuilding market and the demolition market. 

These four markets are linked by cash flow and push the market traders in the direction they want.

Freight Transportation

The freight market consists of shipowners, charterers and brokers. They use four types of contractual arrangements: the voyage charter, the contract of affreightment, the time charter and the bareboat charter.

Shipowners contract to carry cargo for an agreed price per tonne while the charter market hires out ships for a certain period. A charter is legally agreed upon in a charter-party in which the terms of the deal are clearly set out.

Freight derivatives, which includes Forward Freight Agreements (FFA), container freight swap agreements, container freight derivatives, physical-deliverable freight derivatives, and options based on these, are financial instruments for trading in future levels of freight rates, for dry bulk carriers, tankers and containerships.

These instruments are settled against various freight rate indices published by the Baltic Exchange (for Dry and most Wet contracts), Shanghai Shipping Exchange (International and domestic Dry Bulk, and International Containers), and Platt's (Asian Wet contracts), or physical delivered through Shanghai Shipping Freight Exchange.

More information: The Natural Academies Press

FFAs are often traded over-the-counter, through broker members of the Forward Freight Agreement Brokers Association (FFABA), such as Arrow Futures, Clarkson's Securities, Marex Spectron, SSY -Simpson Spence Young, Braemar Seascope LTD, Freight Investor Services, BGC Partners, GFI Group, ACM Shipping Ltd, BRS, Tradition-Platou and ICAP. However, screen-based trading is becoming more popular, through various screens.

Trades can be given up for clearing by the broker to one of the clearing houses that support such trades, or be executed in integrated electronic exchange. There are five clearing houses for freight: NOS Clearing/NASDAQ OMX, EEX, CME Clearport, ICE Futures Europe and SGX, and one electronic exchange: Shanghai Shipping Freight Exchange.

Freight derivatives are primarily used by shipowners and operators, oil companies, trading companies, and grain houses as tools for managing freight rate risk. Recently, with commodities standing at the forefront of international economics, the large financial trading houses, including banks and hedge funds, have entered the market.

Baltic Dry Index measures the cost for shipping goods such as iron ore and grains. The trading volume of dry freight derivatives, a market estimated to be worth about $200 billion in 2007, grew as those needing ships attempted to contain their risks and investment banks and hedge funds looked to make profits from speculating on price movements. At the close of the 2007 financial year, the number of traded lots on dry FFAs doubled the derived physical product.

Freight Transportation

Shanghai Shipping Freight Exchange is the first electronic shipping freight exchange in the world. It has three lines of businesses, including International Dry Bulk, Domestic Coastal Coal, and International Container.

The container freight derivatives were launched in 2011 and shortly became the most liquid container freight contracts. Based on the success and experience from container freight contracts, SSEFC launched coastal coal contracts in 2012. In 2014, in order to better achieve the risk shifting effect of shipping freight derivatives, SSEFC innovated and launched the world's first physical-deliverable shipping capacity contract.

In the sale and purchase market, second-hand ships are traded between shipowners. The administrative procedures used are roughly the same as in the real-estate business, using a standard contract. Trading ships is an important source of revenue for shipowners, as the prices are very volatile. The second hand value of ships depends on freight rates, age, inflation and expectations.

The newbuilding market deals with transactions between shipowners and shipbuilders. Contract negotiation can be very complex and extend beyond price. They also cover ship specifications, delivery date, stage payments and finance. The prices on the newbuilding market are very volatile and sometimes follow the prices on the sale and purchase market.

On the demolition market, ships are sold for scrap. The transactions happen between shipowners and demolition merchants, often with speculators acting as intermediaries.

More information: UK Essays

CONTAINER LOADING & GOODS

A Full Container Load (FCL) is an ISO standard container that is loaded and unloaded under the risk and account of one shipper and only one consignee.

In practice, it means that the whole container is intended for one consignee. FCL container shipment tends to have lower freight rates than an equivalent weight of cargo in bulk. FCL is intended to designate a container loaded to its allowable maximum weight or volume, but FCL in practice on ocean freight does not always mean a full payload or capacity -many companies will prefer to keep a 'mostly' full container as a single container load to simplify logistics and increase security compared to sharing a container with other goods.

Less-than-Container Load (LCL) is a shipment that is not large enough to fill a standard cargo container. The abbreviation LCL formerly applied to less than (railway) car load for quantities of material from different shippers or for delivery to different destinations carried in a single railway car for efficiency. LCL freight was often sorted and redistributed into different railway cars at intermediate railway terminals en route to the final destination.

LCL is a quantity of cargo less than that required for the application of a carload rate. A quantity of cargo less than that which fills the visible or rated capacity of an inter-modal container. It can also be defined as a consignment of cargo which is inefficient to fill a shipping container. It is grouped with other consignments for the same destination in a container at a container freight station.

After reading all this information about shipping goods, markets and instructions, The Grandma has explained For/Since prepositions and Imperative, the best tense to give instructions.

More information: For/Since-Imperative I & II

Download Verbs & Irregulars Verbs Cards

Every product you have ever loved was a compromise

from the ideal vision of its creators to the realities of shipping on time,

on budget, and on price point.

Anyone who has ever manufactured a physical product

that had to be on the shelves for Christmas shopping

knows how painful these choices can be.

Jay Samit