Freight and Forwarding

cargo-ship-pollutionOn this post, I will deliver to you about all matter related to freight and forwarding activity. I wrote this based on my experience during my work in arrange all things to import my project equipment from some country to Indonesia where is my project located. For your information, the project is in power generation sector, Combined Cycle Power Plant Project with main equipment come from Sweden, Czech Republic, Netherlands, South Korea, Egypt, and Vietnam.

What the first things to be done on freight and forwarding process? Choosing freight forwarding services company to deliver the cargo’s from hand over point to buyer specified location. These freight and forwarding services company will handle all transportation, including inland transport, shipping and air freight if needed to buyer specified location. To choose this freight and forwarding company, a packing list from supplier which contain all information about the cargo’s to be delivered will needed. This packing list needed to calculate how big space required on vessel and how heavy the cargo’s to be deliver. All of this information shall exist on the packing list from supplier.

The second things should be done is understanding of delivery term between buyer and seller. For this, on my project I still refer to Incoterm 2010 as international standard in freight transaction. Incoterm set the limitation of obligation between buyer and seller, the following is some example of term on Incoterm:

  1. FOB (Free On Board)*
  2. EXW (Ex Works)*
  3. FAS (Free Alongside Ship)*
  4. DDP (Delivered Duty Paid)*

(* more detail about this can be found on Incoterm 2010 file)

Usually agreement about this term to be accomplished during the contract negotiation with seller, if  this not accomplished/miss, a lot of miss understanding will appear during the execution of the job, please be careful.

The third things is knowing import document and import process, in this case my project location is in Batam, this is Free Trade Zone (FTZ) area. So I don’t need to pay any tax to import, but the remaining process is almost typical with others area in Indonesia. The following is document needed to import cargo’s:

1. Packing List

Import document which contain any information about the cargo’s. The minimum information shall be exist on the packing list is as follow:

  • Consignee Information
  • Shipper Information
  • Cargo description
  • Packing type
  • Cargo dimension and weight
  • Quantity
  • HS Code
  • Storage type required

2. Invoice

The second important document during customs clearance process. For non free trade zone area, this document will be used as reference to determine how much tax to be paid. The following is minimum information shall exist on the invoice:

  • Consignee Information
  • Shipper Information
  • HS Code
  • Cargo description
  • Cargo price
  • Cargo weight and volume

3. Master List

This document is officially issued by customs or government. This document should be prepared before the cargo’s arrive on destination country or port, otherwise demurrage and storage charge will applied to the party.

  • Consignee information
  • Cargo description
  • HS Code
  • Packing list and invoice as attachment

4. Company Administration Document

This document needed to issued Master List from authorized bureau. In Indonesia, normally we need the following document:

  • API-U/P
  • SIUP
  • TDP
  • NPWP
  • NIK
  • SIUJK

Next is the container. As we know, container is the storage for cargo’s during delivery from supplier hand over point to buyer specified location. There are several type of container usually used. Based on size, we can’t divide the container in to:

1. 20′ (feet) container.

2. 40′ (feet) container.

Based on the specification, the following is common container used to ship cargo’s:

1. DC Container

DC is stand for Dry Cargo. This is common used container to deliver cargo’s.

2. HC Container

HC is stand for High Cube, this mean this container high’s is higher than DC container.

3. DV Container

DV stand for Dry Van, this container equipped with van for ventilation and heat exchange purpose. Normally this container used to deliver cargo’s which sensitive to temperature fluctuation.

4. OT Container

OT stand for Open Top, this container just like DC container but without roof. Purpose of this container is to deliver cargo’s with height more than container height.

5. FR Container

FR stand for Flat Rack, container without roof and wall. This container usually used to deliver oversize cargo’s.

Storage, Demurrage, SOC and COC

Demurage is extra charge levied by shipping company on consignee if the container is not cleared and returned within specified free days given to empty shipping depot. This free day charge usually depend on the earlier agreement between buyer and shipping company and the additional charge to be paid is depend on the shipping company and country.

Storage is extra charge levied by port to shipping company if the container is not moved from port within specified free days by the port. Usually if this happen, shipping company will billed to buyer for this extra charge.

SOC stand for Shipper Owned Container. This mean, the container used on the shipping process is belong to seller or buyer, instead of shipment company. Demurrage can’t applied on this term but only storage be.

COC stand for Carrier Owned Container. This mean the container used on the shipping is belong to shipping company, storage and demurrage will be applied on this term to consignee.

End of this post, please write on comment form if any discussion🙂

 

Reference:

Incoterm 2010

Own experience

Multiple internet source

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