Freight Forwarding And Insurance

• Couriers generally focus on using trucks and planes to transport goods and provide door-to-door service.
• Courier services specialize in quickly and efficiently tracking small packages and delivering them to the right address within a single delivery network. This is a great option for consumer companies or individuals from the business level who ship orders to individual addresses around the world.
• It is transported inland within a day, two, or a short period of time and is generally used for 03 to 14 days during exports. The advantage of this is that the parcel can be sent very quickly and it can be tracked at any time ie. Online tracking, all port clearance is done by the relevant courier company and the goods are delivered to the relevant address.
• The disadvantage of this method is that it is more expensive than other courier services and you have to pay the full cost even if it is less in terms of weight. That is, even if it is 20 grams, 1kg has to be paid.
• DHL FedEx UPS is one of the most recognized courier companies in any country in the world. In addition, there are local courier services in each country, which are less expensive and may provide tracking services, the average delivery period can take anywhere from a week to three weeks.
• The type of product you ship will affect the price you pay. Many shipping companies will charge extra for shipping hazardous goods. Items such as expired products and food items should be insulated during shipping and may incur higher costs.
• The specialty you need to know here is whether the couriers are responsible for the damage or not. The most common type of shipping insurance is carrier liability insurance, which covers shipping items and covers shipping costs of up to $ 100 when shipping is damaged or lost. If your value is higher than this, you should definitely make sure whether you go for third-party insurance.
• Most shipping providers will offer the opportunity to purchase third-party insurance on your shipments. You will have to pay extra to get it from them. The type of insurance you can purchase depends on the value of the goods you are shipping, your shipping origin, and the destination and shipping mode.
• Different shipping suppliers will charge you different fees based on a combination of these factors. Before signing a contract with a shipping service, determine what your business policies are regarding shipping.

•  Freight Agent is an essential component of international shipping. Freight forwarders are those who take the goods from the seller and deliver the goods to the desired location, at the right price, ensuring delivery to the buyer and using the most appropriate route possible. Sometimes the Freight forwarding companies will arrange all the customs work and deliver it to the relevant place.

• The main difference is that carriers focus on global shipping on a larger scale than a small scale, freight forwarders also do not use their own vehicles and vessels. They work with a large network of shippers, truckers, and movers to provide cost-effective shipping solutions all over the world.
  Freight companies are the best choice for exporting large quantities of goods. Ideal for parcels larger than 100 kg.
  Freight carriers always work with a network of small freight brokers instead of individuals. For example, these brokerage firms maintain the relationship between the shipping company and individuals.
• Shipping companies ship a variety of goods to their customers and control the entire shipping process to ensure that shipping arrives safely and in a timely manner. It usually provides a full range of services as follows;

* Monitoring local transport.

* Preparation of shipping and export documents.

* Warehousing facilities

* Inventory reservation

* Discussion of freight rates.

* Integration of goods.

* Commodity insurance.

* Payment of insurance compensation.

• Freight carriers usually ship under their own shipping or airline bills, and their agents or assistants (freight forwarders) at the destination provide document delivery, landing, and cargo collection services.
  An exporter ships merchandise through these agencies, which they call a C&F agent.
• Some Freight forwarders may have their own customs clearance department/divisions which means under normal circumstances and shipments, they would not use 3rd party customs clearing agents..

World Top 20 Global Freight Forwarders List

• C and F mean clearance and forwarding. Companies that provide transportation, supply, warehousing, distribution, and delivery services on behalf of manufacturing companies or exporters are considered third-party supply services (3PL) or C & F agents.
• As soon as the goods enter the port, the C and F agents manage to fill/unload the containers or other specialized loading space. In addition, they check and process all required customs documents. In addition, they prepare an export bill.
• As part of the procedure, all documents along with the export bill are submitted to the Customs Authority for export approval. If all goes well, Customs will approve the export. All these documents are assessed and certified by the Customs. Finally, the C&F agent returns these documents to the exporter. Then this C and F agreement ends.
• The total cost of a C&F bill includes tariffs, landing charges, terminal container charges, labor costs, service charges, and more. Customs duty on products varies according to the types of products.
• Also, the amount of payment related to the bill varies depending on the mode of transport (land/sea/air).
• Service charges also depend on the reputation and experience of the C&F agent. Therefore, an exporter should pay attention to price, trust, and service when considering the C and F agents.

Clearing Agents

• Clearing agents are companies that deal with the customs clearance sector. This could be a shipping company or some other third-party company.
• The Clearing agent is a type of agent who deals with local customs authorities, border authorities, ports, and so on. Relevant documents will be passed at the Customs.
• In-depth knowledge of HS codes helps in calculating tariffs and VAT.
• Organizes the payment of tariffs and VAT payable.
• Clearing agents help to avoid tariff anomalies to the clients.
• The Clearing agent is chosen by the freight forwarder or customer (exporter or importer).

Some of the important documents are handled by the clearing agent.

• Bill of Entry
• Bill of Lading
• Commercial Invoice
• Packing list of goods
• Certificate of Origin
• Import license of the consignee
• Insurance certificate
• Letter of Credit (L/C)

• Freight class is a measurement that allows for standard prices across all LTL freight carriers and businesses. The National Motor Freight Traffic Association (NMFTA) determines freight classes. Generally, every type of product or commodity has a National Motor Freight Classification (NMFC), which corresponds to a specific freight class number for LTL shipments.
• NMFC is the standard that enforces this system, grouping commodities into one of 18 classes – ranging from 50 to 500. The NMFC determines this class using four characteristics: Density, Stowability, Handling, and Liability.

Pallet is a type of tertiary packaging that is generally a flat structure used as a basis for unitization of goods in the supply chain.

The pallet is a “portable, horizontal, rigid, compact platform that is used as a base for assembly, storage, stacking, handling and transport. Pallets are used to store, store, protect and transport goods by handling equipment such as forklifts, pallet jacks, or conveyors.

Pallet material: wood, plastic, metal or corrosive paper.

The International Standards Organisation established standard dimensions for container pallets. However different dimensions of pallets continue to exist. The most widely used pallet types are Euro pallets and Standard pallets. The dimensions are as follows:

• Standard/EUR2/ISO2

The size of these individual pallet sizes are as follows and these type of pallets are most commonly used in Europe and Asia:

W: 1200mm L: 1000mm H: dependent on how high the shipper builds the pallets

Number of pallets in a 20 foot container single stacked = 10 

Number of pallets in a 40 foot container single stacked = 20 

• EUR/EUR1/ISO1|

The size of these individual pallet sizes are as follows and these type of pallets are mainly used across Europe, the benefit of this pallet is that they can fit through a standard exterior door so suit the more B2C market more: 

W: 800mm L: 1200mm H: dependent on how high the shipper builds the pallets

Number of pallets in a 20ft container single stacked = 11

Number of pallets in a 40ft container single stacked = 24

The main issue with this pallet size is the amount of wastage in a 40 foot container with around 15% wastage due to the pallet dimensions vs the dimensions of the container. 

• North American Standard/GMA

The size of these individual pallet sizes are as follows and these type of pallets are most commonly used (yes, you guessed it) in North America: 

W: 1016mm L: 1219mm H: dependent on how high the shipper builds the pallets

Number of pallets in a 20 foot container single stacked = 10 

Number of pallets in a 40 foot container single stacked = 20 

• FCL means Full Container Loading.
• The container is used only for complete individual shipping. You do not share the container with the inventory of other parties. You pay for a full container to be shipped. The container can be loaded from the factory and sealed and used up to the destination store.
• FCL is the best carrier for shipping large, fragile (ceramics, chemicals, glass) and expensive goods.
  FCL can be used to carry a large enough container to fill a 20 'or 40' for shipping.
• FCL is the fastest way to ship cargo after air cargo. FCL shipping usually takes about 3-6 weeks, depending on the start and end destination.
• A volume of 13 cubic meters or more or comprising 12 pallets or more is better shipped by FCL. For small weights, it is more expensive to use an FCL of approximately 13 cubic meters or less.
• For FCL shipping, you can choose from door-to-door, door-to-door, port-to-house, and port-to-port services.
• FCL uses refrigerated containers for pharmaceuticals and perishable goods such as fresh produce, fruits, vegetables, meat, etc. It ensures temperature, humidity, and ventilation control. Refrigerated containers are not commonly used in LCLs.
• The risk of FCL damage is low, which means you have one container full of FCL your own products so you can be assured that your product will maintain integrity as your products will not mix with other products.
• Goods handling under FCL is less required as the goods are not mixed. The container can be sealed from the supplier's warehouse and left unopened until you receive the goods at the final destination. You can save money by using this method as you do not have to pay export handling fees, document fees, and delivery and collection fees.
• Some FCL containers can be tracked directly from the carrier's e-commerce portal.

FCL Price

• The freight is charged for the full container load basis means you pay a flat fee for the entire container, regardless of how much is in it.

• LCL is a term used to describe ships that are "'Less Container Load'." or have not fully filled a container.
• Depending on the route, destination, and requirement, shipping via LCL can be more expensive than FCL. CBM will cost LCL shipping will be higher compared to FCL shipping, but the price per container is often lower. LCL has more freight per unit than FCL. This is because freight forwarding agents have less labor and less workload for full containers while LCLs incur additional labor work and costs.
• Although LCL classifies that the goods they collect are in the same container, there is a higher risk of inspecting the container for customs purposes compared to FCL. Also, LCL shipments may mix with other shipments or be misplaced due to involvement in the landing process.
• The average transit time for LCL shipments is 4 to 6 weeks from the date of departure and 5 to 9 days for shipping by air.
• It helps to know when is the best time to ship using the LCL method. There are five things to consider:

Volume
Gross weight
Product category
Route
Time

• Shipping volume is calculated based on the amount of space available. The volume of a cartoon box is calculated by multiplying the length, width, and height. Shipping is charged by its volume (unless it is more than 1,000 kg for CBM), and this includes LCL shipping. If the volume of goods is between 1 and 13 CBM, it is best to consider an LCL agreement. Otherwise, air shipping (less than 1 CBM ) or full container (greater than CBM 13) may be a good option.
• Gross weight is the total weight of the shipping as a whole, including the weight of the packaging and the main boxes. If the gross weight of the shipment is more than 150 kg during the peak season and more than 200 kg during the off-peak hours, it is best to consider shipping under an LCL agreement.
• Product category is also considered when shipping. That is, some products are not allowed to be shipped by air due to flight restrictions. In this case, shipping cargo, especially LCL, may be a good option in terms of shipping volume.
• Shipping Rout is also considered when selecting an LCL agreement. LCL cannot be shipped due to a lack of integration into all routes for maritime shipping. The usual reason for this is that there are not many ships to use that route. In such cases, the next step is to find an alternative route or port. If the alternative route is more expensive, other shipping options should be considered.
• The final factor is time. Time plays an essential part in any supply chain. LCL is the longest exporting mode of transport. Therefore, it states that delivery time should be considered when shipping products.

Price Calculation LCL

Under LCL this cost is calculated as weight (in tons) or volume (in cubic meters) of the shipment, whichever is higher, multiplied by the base rate charged by the shipping line.

A volume of a carton is calculated by multiplying the length, width, and height.

L*W*H* = CBM * Rate

CBM means Cubic Meter. However, the total weight of cargo should not exceed 1 ton. That means, if the cargo weight is above 1000kgs, the volume of cargo is treated on the basis of weight. In short, freight forwarders charge LCL rate on the basis of ‘per CBM’ or per weight of 1000kgs (1 ton) whichever is higher.

CBM – cubic meter is calculated by multiplying the length, width, and height of packages of goods.

For example, 4L* meters, 1W and 1.4H meters respectively, the volume of cargo is 4 X 1 X 1.4 = 5.60 CBM.

If you have the measurement in inches or centimeters, first you need to convert in meters and then calculate CBM which will be easier for you. If freight forwarders quote a rate of USD 20.00 per CBM, the price will be 5.60CBM X 20.00$ per CBM = USD 112.

These freight charges are borne by the buyer or seller according to their Incoterms. The relevant party needs to pay these fees to the most appropriate freight forwarder who will then arrange the logistics process. Different carriers offer different rates and services please check before handovering the goods.

• Transport Cost

The cost of shipping goods up to the port: Cost of freight forwarders.

• Documentation Fees

Cost of all documents required for verification and custom clearance procedures.

• Terminal charges

Charges for handling and maintenance of goods at the port terminal.

• FCL and LCL Fees

The cost of the container you choose to export/import your product.

• Customs Value

The cost of customs clearance.

• Security Charges

The cost of protecting goods from damage and risk factors

• Insurance

The cost of insurance to cover the security of goods

• Duties and taxes

Customs clearance fees and specific country taxes are payable by the parties to the duty distribution.

• BAF (Bunker Adjustment Factor)

It is a fuel surcharge levied by shipping lines to adjust for fuel price fluctuations.

• CAF (Currency Adjustment Factor)

The price charged by shipping lines for adjustment or stoppage against currency volatility.

• Demurrage and Detention

Demurrage and Detention fees must be paid if a carrier or shipping container is not returned during the permitted free days. Free Delivery Day is determined by the number of days a shipper can use the container free of charge. If the free time is exceeded, the user will have to pay a delay and retention fee. These fees are usually calculated per day.

Demurrage charges are always associated with the time a container is in a terminal. detention is a charge for extended use of the container until it’s returned empty to the shipping line.

• Port storage charges

Port storage charges are levied for non-release of imported goods and for unfinished containers for export or for empty containers within the port. Different terminals offer different free days.