Tips, Tricks for the everyday Forwarder
Archive for September, 2010
CIF, CNF, FOB
0601 days
by admin
in Everything Else
Ever heard of the terms on the title? If you are into shipping, you are bound to encounter these 3 words. What do they represent? Check out the information below:
Terms of shipment
Common trading terms used in shipping goods internationally include:
- Freight on board, or 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 and lash, 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 Kunming Airport” means that the exporter delivers the goods to the airport, and pays for the cargo to be loaded and secured on the plane. 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.
- Cost and freight (C&F, CFR, CNF): Insurance is payable by the importer, and the exporter pays the ocean shipping/air freight costs to the specified location. For example, C&F Los Angeles (the exporter pays the ocean shipping/air freight costs to Los Angeles). 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.
- 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.
- 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.
In case you don’t understand a gibberish about what’s said above, here’s an extreme-simplified version:
FOB = Free on Board. Exporter does not pay the freight costs, he/she only brings the cargo to the port and perhaps pay loading fees. Buyer actually pays the freight costs.
CNF = Cost & Freight. Exporter pays for almost everything, except insurance. (Anything wrong happened, don’t blame exporter on CNF terms!)
CIF = Last but not least, Cost, Insurance & Freight. Exporter pays everything. Buyer just needs to pay one lump sum to the exporter. Simple, quick, happy. Of course though, buyer will have to pay extra hidden costs. Exporter most likely will mark up the shipping prices and forward the fees to the customer, earning some extra profit.
Happy Mid Autumn Festival!
0606 days
by admin
in Everything Else
It’s the time of the year again, where Chinese all over the world celebrate this festive day by eating moon cakes and carrying lanterns around and maybe surf the Internet at home.
Mooncakes
The staff, administrators and even the blog himself would like to wish our Chinese readers a very happy Mid Autumn Festival!
Lanterns
中秋节快乐！ (zhong qiu jie kuai le!)
Customers are like boy/girl friends.
0607 days
by admin
in Everything Else
Did you know that customers and boy/girlfriends are actually pretty similar?
-They don’t like sticky partners.
-They like a stable ongoing relationship.
-They like loyalty rewards (eating out on an anniversary/loyalty points)
-They like free gifts.
-They hate rude partners.
-They for some damn reason, always love to complain like to give feedback when they see things not going as they expect.
-and the list goes on.
As you can see, they are indeed rather similar. In some cases, they might even be the same (your partner is your customer!). The point I’m trying to say is, treat them well, respect them, make sure that you do not step on their feet. They like to give only one chance, and if you fail that second chance, that’s it! But if you treat them well, they will keep coming back for more delicious loving. 
And the saying goes; “A good boyfriend makes a good salesman” – Sifu Panda”
AsiaticFreight.com IS BACK
0608 days
by admin
in Everything Else
AND BETTER THAN EVER.
If you are one of our dedicated followers, AsiaticFreight.com, along with all the other websites were ‘down’ for a period of almost 3 weeks. This caused quite a big loss in terms of potential clients and reputation amongst the shipping community.
What in fact happened, is a very simple task that led to a major server meltdown.
3 weeks ago, our servers are running a routine maintenance by our web-hosting staff. In the midst of the maintenance and backups, the server for some unknown reason, crashed halfway, whilst connected to the backup servers.
This led to a multi-crashing Hard Disk scenario. Both hard disks on the backup server and the current running servers have died, and attempts to restore the data is futile.
Temporary servers are set up, but at the moment, the data has still not been backed up. This all occured while the entire Barracuda Technologies team is on a company holiday trip. Whilst we managed to attempt restoration over the next few days, most data has been lost.
Finally, since the past week, most sites and features have already been restored. Bonoko.com has successfully restored most of its posts, Barracuda.com.my is now restored and functional, other sites like shippingfrommalaysia.com and most importantly, AsiaticFreight.com, has been cleaned up and restored to previous databases.
There are still some minor issues to be fixed, but till then, everything is now back in order. WE ARE BACK, and BUSINESS AS USUAL!
Thanks to this episode, we have learnt a great deal of website management, and do not wish for this to be repeated in the future. It’s all about gaining experience!
Till then,
BonoKo!
Demurrage = Hell
0620 days
by admin
in Everything Else
Have you ever did a shipment, and encountered demurrage fees? If you do, you sure as hell know that you should avoid it, evade it, run away from it, and just totally stay away from the D word as much as possible.
Why? Why the fear of this simple yet cool word?
Let’s just focus on the example of shipping a container. Sending a container and the container got ‘stuck’ at the port for some reason or another? Yeah that sure as hell suck. Why would a container get ‘stuck’? It really depends. On some occasions its because of Customs, some others might be due to some issues with the container or the goods themselves.
Whatever the case, demurrage fees are incurred when the container stays in the port for too long. The port will then charge a ‘fee’ for putting the container over the -free parking duration provided-, and they charge a fixed rate per day. If you think the fee is nothing, think again.
There are cases where they can’t settle the payment for the container, and therefore cannot obtain the Bill Of Lading document from their supplier. (Read more about Bill Of Lading here.) This is one of the worst cases that can happen to you.
Lets do a simple example: Buyer A requests for shipment from Supplier B, and Supplier B does a CIF shipment to Buyer A. Supplier B waits for Buyer A to complete full payment before the item is released to Buyer A. Buyer A then has some problems with their company, and thus can’t afford the payment. Assuming demurrage fees for Buyer A’s port is $100 per day, a month delay will therefore costs approximately $3000 extra for a shipment. Now think about it, a full container might costs about 2000-4000 for a delivery to anywhere in the world. Now add another extra $3000 and the fee just doubled. Throw in Sales Tax and Import Tax, and add the price of your goods themselves, thats a whole whopping figure.
If Buyer A delays for too long, the demurrage will keep going up. It will reach a point where the price becomes so expensive that the container just stays stuck in the port with the goods! Yes, that happens everywhere, everyday, all the time. It’s really common. Now looking at those ports with many containers, have a self doubt and think about how many containers are left-over containers instead.
Tip: Always make sure everything is planned well ahead for any shipment!
Restoration of bonoko.com, done!
0621 days
by admin
in Everything Else
Thankfully for Google’s cache system, most of the posts have been salvaged and painstakingly manually reposted.
Sorry for the inconvenience, and many thanks for your patience!
Harmonized System Codes (or HS Codes)
0621 days
by admin
in Everything Else
What are Harmonized System Codes?
Harmonized System codes or HS Codes facilitate customs clearance. It is an internationally standardized system of names and numbers for classifying traded products.
More meaning from Wikipedia:
The Harmonized Commodity Description and Coding System (HS) of tariff nomenclature is an internationally standardized system of names and numbers for classifying traded products developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization with over 170 member countries based in Brussels, Belgium.
More than 200 countries, customs and economic unions, representing more than 98% of world trade, use the HS as a basis for:
-Customs tariffs
-Collection of international trade statistics
-Rules of origin
-Collection of internal taxes
-Trade negotiations (e.g., the World Trade Organization schedules of tariff concessions)
-Transport tariffs and statistics
-Monitoring of controlled goods (e.g., wastes, narcotics, chemical weapons, ozone layer depleting substances, endangered species)
-Areas of Customs controls and procedures, including risk assessment, information technology and compliance.
Codes have been revised through the years. If it is necessary to reference a code related to a trade issue from the past, one must make sure the definition set being used matches the code.
As a forwarder or broker, you sometimes encounter terms such as HS codes… hope this article helps!
BTW, Here’s a good source.
Bill of Lading
0621 days
by admin
in Everything Else
One of the most feared and respected document in the history of sea freight, the Bill of Lading, or B/L or BoL or just BL.
What the heck is a “BILL OF LADING”?
You have no idea.
Today we are going to talk about the Original Bill Of Lading and the Surrender Bill of Lading (the 2 most common B/L documents)
Original Bill of Lading.
A normal standard B/L document is created by the agent on the supplier side which then passes it to the supplier. Let’s imagine a scenario. Some company in Singapore wants to buy handicraft goods from Indonesia. They contact the supplier on Indonesia side, and negotiate on the pricing and the delivery charges. The supplier and the buyer then engages a logistics company or a forwarding company to help them with the shipment. The supplier will receive a Bill of Lading from the forwarding company.
Now, pause for a while, and ponder. What’s a bill of lading and what’s it purpose anyway? Well, it’s a document, that’s for sure. What it really does is that it is a vital document to ensure that payment has been received by the supplier in order for the buyer to obtain their cargo. It’s much like a middle-man that ensures that no one will be able to cheat the other party. The supplier must send the Bill of Lading through post to the buyer in order for the buyer to obtain the cargo at the port. Else, the port will NOT release the items to the buyer. That way, both side ‘loses’ I guess. Buyer can’t receive their items, and the supplier already delivered the items without receiving payment… The best of course, is the buyer paying the supplier promptly. The supplier will then send the B/L document to the buyer, for cargo retrieval at the port.
Bill Of Lading–img–
So back to the scenario, assuming the buyer pays the supplier, and the item has already arrived at the seaport of Singapore. The buyer can then engage a haulage company to bring the container out of the port. The buyer must give the B/L document to the haulage company for retrieval. The port will not release the cargo otherwise. So it will be stuck at the port until you could finally pay the supplier, which you have to pay the port additional fees for holding your items! $$$$$
What about surrender B/L? This is an interesting one.
Some companies don’t wish to go through the trouble of sending and receiving a B/L. So, they can contact the port directly (in our case it’s the seaport of Singapore), and notify them that they wish to deal it with surrender B/L. For surrender B/L, the buyer is not obliged to pay first; they can take the items out of the port without paying the supplier first. This tends to be more dangerous for suppliers… But hey, I guess there are all kinds of people in the world aren’t there. Surrender B/L tend to incur charges from the port due to processing.
There you have it. Original B/L and Surrender B/L. Quite a mouthful!
Have a great evening guys.
HS Codes V2 (Also known as Tariff Codes)
0621 days
by admin
in Everything Else
Part 2 of Harmonized System Codes.
Over here in Malaysia, there is a single document that declares the varied items in your shipment a HS code or tariff code for that matter. In this document, you will see details about your forwarding agent’s name, your own company’s name and address, and 1 big bar code in the middle. Right below the bar code, there’s a line titled: No. Kod Tarif Pertama. The numbers below are the tariff code that represent your shipment.
The numbers are split into 3 sections, the first section containing 4 digits, the second containing 2 digits, and the final section containing 4 more digits.
It looks something like this: 4602.90.9000 (this tariff code applies for rattan products).
Further below there will be a line stating the description of the items.
It should look something like this:
HS Code Form
Sometimes, you will be asked for the customs code. What’s a custom code? Actually a custom code is similar to the tariff code, the only difference is that it is applied to each individual item being shipped. That way each item is being taxed differently. (Due to some items having more duty than others).
In a Malaysian customs import declaration form such as below, the circled part will be the customs code.
Customs Import Declaration Form
Custom Form 1
Why are these codes so important? Simple, its simply because of the import duty and sales tax. Importers especially, wish to avoid huge duties imposed by the customs department so that it is cheaper to buy from abroad. Items are being taxed at an average of 20%, so if your goods is worth $10000 USD, that’s an extra $2000 USD you need to fork out. Don’t ever forget there’s a thing called Sales Tax or in some countries, VAT. This is a compulsory percentage tax charged. If you add the import duty and sales tax (usually at 10%) together, that raise the price by 30%.
If you buy from certain countries however, you don’t have to pay any single cent. Countries that have relations in duty-free groups such as ASEAN, or MALAYSIA-CHINA bilateral ties allows for 0% import duty. Though for the sales tax you probably still need to pay. How to proceed with such stuff? You need to utilize a special document called Form D or it’s general name: Certificate of Origin – with duty exemption feature. (But that’s for another post)
To check what’s the tariff code for your goods, check out this link.
Appointment Letter.
0621 days
by admin
in Everything Else
In common sense, an appointment letter is a letter that says you appoint someone to do something. Common sense right?
In freight terms, an appointment letter appoints a forwarder to handle all the customs clearance and what nots for you. It’s pretty much a document to the customs officials saying “Hey you, I’m sending stuff across, and these mean guys are my forwarders. LET THEM THROUGH.” (though it might be the other way around. In terms of mean guys I mean.)
It shouldn’t be a complicated letter, and should state clearly that you wish to appoint so and so to handle your cargo through the customs clearance process. Other requirements may include your company name, a bill of your company (electric or water bill – to prove the actual address existence), a copy of your Identification Card, and other misc. details that your forwarder will require from you.
Usually though, they will give a sample piece of document for you to fill up, so you can just sign the document and send it to the forwarder.
