Switch Bill of Lading

Switch B/L is the new set of b/ls issued upon customer’s request in exchange of the first set of original bill. This is also called ” the traders’ second set”. Switch b/ls are intended to keep the identity of the supplier from the sub purchaser and thus to prevent future direct dealing between the supplier and the sub purchaser. Shipper, Consignee and Notify are the information that are most commonly requested to be changed by the traders. Due care and consideration must be exercised when issuing such bills of lading because of inherent exposure to fraud/conversion of factual data . Furthermore, the agent at POD must confirm that amendment may be performed without fines. If amendment is done too late, cargo declaration may already have been done or even cargo may already been discharged, leading to fines / costs for amendments. These fines/costs are to be borne by the party requesting the amendment.

HIGH SEA SALE.

High Sea sales (HSS) is a sale carried out by the actual consignee (ie, the consignee shown in the Bill of Lading) to another buyer while the goods are yet on high seas or after their dispatch from the port of loading (POL) and before their arrival at the port of discharge (POD). HSS contract/agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. The agreement should be on stamp paper. The word ‘Sea’ appearing in HSS should not be taken by it’s literal meaning. As long as the sale is formalized after dispatch from port of origin and before arrival at the first port of discharge at destination, such sale is considered as HSS.

On concluding the HSS agreement, the B/L should be endorsed in favour of the new buyer. If the seller does not mind disclosing original import values to HSS buyer, in such case it is better from custom clearance point of view for the seller to endorse the B/L, invoice , packing list in favour of the HSS buyer. The endorsement should read "Transferred on High Sea Sales basis to M/S -------- for a sales consideration of Rupees --------". Such endorsement should be stamped and signed by the HSS seller.

Sometime HSS buyers buy goods after their arrival. Such sale are not HSS. The stamp paper on which the HSS agreement is executed must not bear the stamp paper purchase date as being post cargo arrival date. Such a case can easily be detected by customs as being a post arrival sale.

The IGM should be filed by the carrier in the name of the HSS buyer. If not Import General Manifest (IGM) should get amended for which Customs will impose a penalty.

Same goods can be sold more than once on high seas. In such cases, HSS agreement should give indication of previous title transfers. The last HSS buyer should also obtain copies of previous HSS agreement as such documents may be called upon by the customs. HSS is considered as a sale carried out outside the territorial jurisdiction of India. Accordingly, no sales tax is levied in respect of HSS. The title of goods transfers to HSS buyer prior to entry of goods in territorial jurisdiction of India.

Successful Writing - a skill you can develop...

Why writing skills important?

People who have good writing skills enjoy an advantage in almost all situations. If you are a good writer, you are always more likely to get what you want. As your writing skill improves, your self confidence also improve. So it is imperative that you put in some effort / invest time, to improve your writing skill as it will be helpful during the student days and later when you write business proposals / reports / speeches/presentations etc.

What are the elements of good writing.

Good writing is clear , well organised , focused to the subject and should adapt to the audience.
If you take note of below 3 points , you will do fairly well with your assignments / reports.

Analyse the subject

Understand the subject well and select a title based on the purpose of the report. Before you start writing, think about the audience and their level of understanding with related to the subject. And also be careful to treat the subject adequately in the limited space. Generally the assignments would be of 10 – 12 pages (2500 – 3000 words) and very broad treatment of the subject will not be possible.

Your writing is CLEAR if your readers are able to understand the ‘real’ meaning you tried to communicate. Write simple / small sentences to communicate the ideas across. Do not write lengthy , complicate paragraphs. You can chose tools like graphs, pictures , different colouring , letter size etc to make your writing more clearer and appealing to readers.

Organize your report well .

The assignment should have good pattern , (a) an introduction (b) central idea and (c) conclusion, a master plan, which holds all parts together.

Suggest to start with a draft as it will help you to summarize the relevant points in a proper order prior finalizing the report. Write a good introduction which forecast your central idea and formulate a crisp /catchy conclusion.

Chose subtitle which accurately reflects the content and it is advisable to cite the source of information. Do not waste the reader’s time by repeating same points and writing unwanted words / sentences.

Check for spelling and grammar mistakes prior finalizing the report. Must do proof reading to correct the mistakes as spelling / grammar mistakes always send wrong signals to the readers.
Write authentically so that your presence will be felt. To write authentically, you should have good understanding of the subject.

Make your work look good

The white space in and around the writing strongly affect the look and readability of your document. Leave proper margins ,sufficient space between the words / lines , columns , paragraphs etc.

Give proper headings and sub headings to your writing. Readers absorb information better when it is arranged into meaningful units and blocks.Use pictures and graphs , wherever needed, to improve the readability / understanding of the document. Do not use too much of graphics / colors , which will spoil the look of the document.

To Conclude...

Let me remind , writing skill can be developed if you invest genuine time / efforts and surely this will pay off handsomely. All successful writers are not born with 'writing talents' , most of them developed it, for which genuine efforts are required.

Most Turbulent years in the history of liner shipping....

Dear students

Below article I happend to read in Shipping Gazette today and thought of sharing with you all as it is relevant to your chosen feild. This is the right time to get equiped for entering into the re-emerging liner trade, where surely will have a demand for highly competent and qualified people.

Quote

MAERSK Line CEO Eivind Kolding spoke of the tough times that new graduates face when entering the job market, citing excessive overcapacity as one of the main factors behind the container losses in recent years.

"This has been one of the most turbulent years in the history of liner shipping, affected as it has been by both the global economic crisis and excessive overcapacity, bringing about financial losses for all carriers in the industry," he said.

Speaking to graduates at Rotterdam's Erasmus University, Mr Kolding told of the continued need for "highly competent new talent" in the liner sector, which he said would eventually emerge from the current crisis to maintain its role as the main facilitator of global trade and prosperity.

In congratulating graduates of the Maritime Economics and Logistics (MEL) course, Mr Kolding said MEL graduates would be welcomed into what he was confident would be a stronger market sector, emerging from the current crisis to maintain its role as the main facilitator of global trade and prosperity.

Among the students graduating was this year's winner of the 'Maersk Best Thesis Award," presented by Mr Kolding to Baris Demirel of Turkey for his thesis entitled "Private Container Terminal Efficiency in Turkey".

In addition the Prize for Student Excellence was awarded to Daria Vereana Katrin Buchi of Switzerland.

Sponsored by NOL and APL since its inauguration in 2001 the Student Excellence Prize is won by the graduate receiving the highest course marks. NOL Benelux managing director Peter Jongpier presented it.

unquote

Work hard and learn as much as possible now to gear up for a bright and lucritive career in liner sector / logistics / supply chain etc....

What is a Sea way Bill ?

Sea way bill is a type of Bill of Lading which is non-negotiable and allows quick (express) release of consignment to the receiver named on the document. The ownership of the goods cannot be transferred by endorsing the sea way bill. It is a simple receipt of the cargo, incorporating the terms and conditions of the transport contract between the carrier and its customer. The drafting of a waybill is similar to the one of a bill of lading. Only one (1) original is issued, copies may be obtained but photocopies have the same value.

For a shipment covered by a waybill, the receiver can take delivery of the cargo by justifying his identity, original document is not required. A waybill is issued upon request of the shipper.This document is more relevant for non commercial transactions, inter company stock transfers or where the letter of credits are not involved . If a documentary credit (L/C) is used for the commercial transaction, a negotiable bill of lading must be used.

Waybills could be used for
- shipment between mother and sister companies
- Shipments of MNCs
- buyer and seller are working in current account and payment of goods is not again documents
- short transit time
- buyer and seller are entertaining good relationship and thus not using any documentary credit
- for personal effects

Also please make a note that in some countries ( Latin America, Afganistan, Iraq,Iran, Lybia etc) sea way bills are not allowed.

Economies of Scale in Container Shipping

What is Economies of Scale ??

Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods.

The effect of Economies of Scale in Container Shipping.

The container shipping trade has been growing substantially over the past decades and this has created a trend of building bigger ships to reduce unit cost of transport. By increasing the size of the ship the building, operating and capital costs do not increase proportional to the size of the ship. For example , the cost of building a 10,000 teu vessel is not the double of 5000 teu vessel .Similarly the operational expenses like bunker (fuel) charges , crew expenses, maintenance cost of the big vessel etc are not the double of small or medium sized vessels. And the increase in container trade helps to fill the bigger vessels ( generally on a space sharing basis by the carriers) without much difficulty and this re-affirm the economies of scale ( lower transport cost / teu) from larger ships.

The new sea giants , CMACGM Christophe Colomb and Emma Maersk are typical examples of economies of scale innovation.

ALL ABOUT LETTER OF CREDIT ........

What is Letters of Credit ?

A letter of credit, which is also known as a Documentary Credit , is a promise to pay. Banks issue letters of credit as a way to ensure sellers that they will get paid as long as they do what they have agreed to do.

Letters of credit are common in international trade because the bank acts as an uninterested party between the buyer and seller. Both importers and exporters might use LC to protect themselves as it spells out the details so that everybody's on the same page.
• A payment undertaking given by a bank (issuing bank)
• On behalf of a buyer (applicant)
• To pay a seller (beneficiary) for a given amount of money
• On presentation of specified documents representing the supply of goods
• Within specified time limits
• Documents must comply with terms and conditions set out in the letter of credit
• Documents to be presented at a specified place

How does it work ?

• Buyer and seller agree to conduct business.
• The seller demands a letter of credit to guarantee payment.
• Buyer applies to his bank for a letter of credit in favor of the seller.
• Buyer's bank approves the credit risk of the buyer, issues and forwards the credit to its

correspondent bank (advising or confirming). The correspondent bank is usually located in the

same geographical location as the seller (beneficiary).
• Advising bank will authenticate the credit and forward the original credit to the seller

(beneficiary).
• Seller (beneficiary) ships the goods, then verifies and develops the documentary requirements

to support the letter of credit.
• Seller presents the required documents to the advising or confirming bank to be processed for

payment.
• Advising or confirming bank examines the documents for compliance with the terms and

conditions of the letter of credit.
• If the documents are correct, the advising or confirming bank will claim the funds by:
o Debiting the account of the issuing bank.
o Waiting until the issuing bank remits, after receiving the documents.
o Reimburse on another bank as required in the credit.
• Advising or confirming bank will forward the documents to the issuing bank.
• Issuing bank will examine the documents for compliance. If they are in order, the issuing bank

will debit the buyer's account.
Issuing bank then forwards the documents to the buyer

Negotiability

Letters of credit are usually negotiable. The issuing bank is obligated to pay not only the beneficiary, but also any bank nominated by the beneficiary. The transaction is considered a straight negotiation if the issuing bank's payment obligation extends only to the beneficiary of the credit.

Revocability

Letters of credit may be either revocable or irrevocable and it will be referenced on its face. A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. The revocable letter of credit is not a commonly used instrument and is generally used to provide guidelines for shipment.

The irrevocable letter of credit may not be revoked or amended without the agreement of the issuing bank, the confirming bank, and the beneficiary. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made.

Documents to be submitted along with LC

When making payment , the issuing bank must verify that all documents comply with the terms and conditions of the letter of credit. Although the credit can require an array of documents, the most common documents that must accompany the draft include:

Commercial Invoice

The billing for the goods and services. It includes a description of merchandise, price, FOB origin, and name and address of buyer and seller. The buyer and seller information must correspond exactly to the description in the letter of credit.

Bill of Lading

A document evidencing the receipt of goods for shipment and also serve as a receipt for the merchandise shipped and as evidence of the carrier's obligation to transport the goods to their proper destination.

In addition to above , Packing list ( if any), Declaration Letter , Papers related RBI regulations (FERA) etc .. also need to submit .

Common issues in Documentation

The seller (beneficiary) should prepare and examine all documents carefully before presentation to the paying bank to avoid any delay in receipt of payment. Commonly found discrepancies between the letter of credit and supporting documents include:
• Letter of Credit has expired prior to presentation of draft.
• Bill of Lading evidences delivery prior to or after the date range stated in the credit.
• Stale dated documents.
• Changes included in the invoice not authorized in the credit.
• Inconsistent description of goods.
• Invoice amount not equal to draft amount.
• POL and POD not as specified in the credit.
• Description of merchandise is not as stated in LC.
• A document required by the LC is not presented.
• Invoice or statement is not signed as stipulated in the letter of credit.

When a discrepancy is detected by the negotiating bank, a correction to the document may be allowed if it can be done quickly while remaining in the control of the bank. If time is not a factor, the exporter should request that the negotiating bank return the documents for corrections.

What is special about Vallarpadam International Transhipment Terminal ?

Vallarpadam International transhipment terminal has been a dream for so may years and the dream is slowly coming true now ! As per initial plans , the terminal should have been operational from Nov’09 . Like all other big projects, this too has so called ‘technical issues’ which delays the commissioning. As per the latest update, the terminal will be operational with effect from April’10.

Though Vallarpadam was in news for many years , I wonder how many of you know the difference between the present Rajiv Gandhi Container Terminal and the International Transhipment Terminal in the making.

Through the present RGCT , we can do the import and export of containers , ie, we can ship in containers which is destined to Cochin and ship out containers from Cochin to other country/port . Coastal movement , transportation of containers from one Indian port by sea to another Indian port, also possible. This year the Customs /Port authorities allowed shipping companies to tranship containers via Cochin to other Indian Ports like Tuticorin,Mangalore etc using coastal services (Indian flagged ships which calls only Indian Port ). But transhipment of containers via Cochin to other Foreign ports were not allowed, because RGCT is not a ‘Tanshipment Terminal’ .

What is a Transhipment Terminal?

Transhipment in simpler terms is a container coming in to the terminal ( a port can have multiple terminals , it is something like North and South railway stations in Ernakulam, or Central and Egmore railway stations in Chennai) by ship and going out from the terminal by another , generally bigger in size, ship. In other words transporting a container by sea from one port (eg, Cochin ) via an interim port (egs, Colombo) to the final destination ( Europe,USA,Australia etc) . Such switching ports are called ‘Hub Ports’ or Transhipment ports.
When Vallarpadam is commissioned , like our neighboring hub (transhipment) ports Singapore & Colombo, shipping companies could tranship containers to / from foreign ports via Cochin (Vallarpadam ) . This is expected to bring a lot of revenue

Logistics , What is it ?????????

What is Logistics ?


The term "logistics" originates from the ancient Greek word "logos" .

Logistics is considered to have originated to fulfill the military's need to supply arms, ammunition and rations from their base to a forward position.

In simple terms ,Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers . It involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging.

Logistics as a business concept evolved in the 1950s to deal with the complexity of supplying materials and shipping out products in a globalised supply chain management system.

Third-party logistics is the utilization of external organizations to execute logistics activities that have traditionally been performed by the organization itself. In other words, third party logistics is the outsourcing of logistics activities previously performed in-house.


What is Logistics management ?


Logistics management is that part of the supply chain which plans, implements , controls
- the efficient, effective forward and reverse flow and
- storage of goods, services and related information
- between the point of origin and the point of consumption
- in order to meet customer & legal requirements.


Who is a Logistician ??


A professional working in the field of logistics management is called a logistician. The main functions of a qualified logistician are
- inventory management,
- purchasing,
- transportation ,
- warehousing,
- consultation and
- the organizing and planning of these activities.

What is the Scope ?


Logistics as a business concept is gaining a lot of importance in this era of globalisation . The production and assembly units of many big industries like Automobile and Electronics are scattered all over the world. And Logistics /Supply chain management plays a crucial role in providing the right item, in the right quantity, at the right time ,at the right place, for the right price, in the right condition, to the right customer .


In other words , without a proper logistics management , today’s business world can not function, be it ,information , production, Power supply, shipping , warehousing, Military……!!!



Good Luck !!!