As the international shipping and trading community continues to expand in size and scope, the wealth of opportunities that it offers businesses all over the world also increases. While this is certainly a good thing, it does come with a couple of drawbacks.

As every new or experienced importer/exporter knows, there are several complexities that arise in the world of commerce in this day and age. It is for the reason that things like domestic freight terms and various shipping terms were devised. The ultimate aim of which is to assist in making international trade and commerce easier, smoother and less complicated.

One of the most effective solutions that have been devised in this area is the International Commercial Terms, or Incoterms, as they are more popularly known.

It’s been reportedly proven that buyers and sellers who have a working understanding of Incoterms trade more efficiently and with lesser complications.

Incoterms – What it is and why it’s so important

Incoterms are a special way of communicating between buyer and seller. It is basically an international trading language unique to importers and exporters designed to help both groups fully grasp what responsibility is expected of one party and how it is to be executed.

With international trade, there are a lot of moving parts. Consequently, the whole process can be highly susceptible to mishaps due to communication mix-ups. Terms like FOB Australia, CIF shipping and EXW price help trading parties sort out details like logistics, transportation solutions, as well as financial responsibilities.

It also extends to helping importers and exporters identify what tasks are to be executed, who bears the risks associated with it and the details of when and how the cargo in question will leave the origin country and arrive at its destination location.

At its core each Incoterm meaning clearly highlights everything that regards the obligation that one trader owes the other. It provides a compact system that helps clear up the ambiguities that come with international trade.

It follows a simple yet effective structure. As you may have noticed Incoterms come with three-letter acronyms (FCA, FOB, CIF, and so on). A location name is then added to this acronym. All the location name does is supply information on the handling of transportation costs.

With regard to these domestic freight terms and shipping terms it should be noted that while many of them can be used for cargo coming through any means of transport, some terms are highly specific to one method of transport.

Reasons You Need Knowledge of Incoterms

While it definitely comes with a considerable amount of stress, having an in-depth understanding of Incoterms is always in your best interests.

Some major reasons you need this information include:

1. It Minimises Risk of Shipping

   Even though the resources a contract supplies should be more enough to clarify obligations, the fact that each region defines tariffs, surcharges and fees in different ways and at different tiers necessitates a level of clarity that only Incoterms can provide to minimise risk.

2. It Streamlines Your Supply Chain

   Not using Incoterms at all or using it incorrectly may negatively impact your delivery schedule, delay the payment for your goods and even increase costs in unexpected ways. With Incoterms to guide you, you have a specific shipping practice that is clear to both parties which helps streamline the entire process.

3. It Directly Impacts Your Competitive Edge and Bottom Line

   There’s often a clear difference between importers who use Incoterms and those who don’t. For Incoterms users, you find that responsibilities and obligations are well-highlighted ahead of time, leaving room for little confusion. There is a set process and point at which risk is transferred, so payment and services are not supplied at random but follow a strict schedule.

   This maximises work rate and increases efficiency, making Incoterms users more profitable in the long run.

   Incoterms are revised often enough to reflect significant changes in the global market. Here is the latest edition that reflects costs and risks in the most concise manner.

IncoDocs (Blog). https://incodocs.com/blog/incoterms-2020-explained-the-complete-guide/

In greater detail, here are major Incoterms you should be aware of.

EXW Incoterms

Arguably the most popular Incoterms, the Ex Works meaning follows a basic principle. With Ex Works or EXW Incoterms, all that the seller will usually be in charge of is seeing the goods to a set location after which the buyer takes over. The buyer will cover everything from loading to transportation and the risk involved. As you can imagine, this makes EXW price significantly different when compared to that of other Incoterms.

FOB Incoterms

Dissimilar to both the FCA shipping terms and FAS Inco (which are considerably less popular but still well-used), Free On Board or FOB, the seller is expected to do more than just deliver the goods at the established location. For instance, with FOB Australia, not only must the seller deliver the cargo at any ship of the buyers’ choice in the country, they are also expected to load it as well. That is essentially what the “Free On Board” represents.

Operating on FOB Incoterms or using FOB shipping also directly implies that cost and risk is split between buyer and seller even after the cargo has been moved into the ship, further establishing the difference between FOB and FCA Inco.

CFR Incoterms

Cost and Freight (CFR) Incoterms as well as CFR shipping is relatively uncomplicated to grasp. Essentially, CFR Incoterms definition refers to cases where the seller is directly responsible for the financial implications of delivering the cargo to its destination location. With CFR shipping, the seller is expected to pay all transportation costs. However, according to CFR Incoterm definition, all risk associated with the goods is held by the buyer from the moment the cargo is loaded on the ship.

CIF Incoterms

Cost, Insurance and Freight (CIF) Incoterms is remarkably similar to CFR shipping with one major distinction; Unlike with CFR Incoterms, the seller is expected to take even larger responsibility where CIF shipping and CIF Incoterms is concerned. In addition to paying for the shipping costs of the merchandise like with CFR shipping, CIF Incoterms also requires the seller to organize and handle insurance for the cargo as well.

DDP Incoterm

All the Delivered Duty Paid (DDP) Incoterm translates to in international trade and commerce is that the seller carries all financial responsibility and risk for clearing the cargo through customs and delivery.

Less commonly used Incoterms include,

FCA Inco

Free Carrier or FCA shipping terms such as FCA free carrier Incoterms are specifically used to refer to a trade scenario where the buyer is responsible for the transportation of the cargo once it is handed over to the first carrier by the seller. When FCA terms like FCA transport terms are in use, you know the goods are to be handed over at a predetermined location in the seller’s country and the buyer essentially takes over all the costs of the operation afterwards.

FAS Terms

This is short for Free Along Ship and these terms are used to describe transactions where the seller must deliver the cargo right by (alongside) the freight ship that will be used to transport the merchandise. Unlike FCA terms and FCA Inco, all risk and responsibility is transferred from seller to buyer only after the cargo has been placed alongside the ship.

CIP Incoterms

With these terms in operation, risk is transferred directly from seller to buyer from the moment that the cargo makes contact with the first carrier. However, until then, the seller is responsible for handling freight shipping and insurance costs until the goods reach a pre-established destination location.

CPT Incoterms

Also very distinct from CFR shipping and CIF shipping, Carriage Paid To (CPT) shipping simply implies that once the destination place has been firmly determined, the seller is to handle all customs charges for clearing the cargo for export and delivering it where it is supposed to be.

DPU Incoterm

Delivered at Place Unloaded (DPU) Incoterm, similar to DDP Incoterm establishes that most obligations fall firmly within the purview of the seller. Not only is DPU Inco a change of name from Delivered At Terminal (DAT) Incoterm, it also clears the misunderstanding associated with it.

Essentially, this particular Incoterm remains till date the only term that makes it the responsibility of the seller to also unload the cargo at the set destination after delivery.

Delivered At Place or DAP delivery Incoterms is the last in this line. The DAP terms Incoterms meaning is quite simple. Also updated recently, the DAP term is taken to mean that the duty of delivery rests solely with the seller. With DAP delivery Incoterms in effect, the destination location is usually the buyer’s premises.

While DAP Incoterms ensures that the seller handles the cost of freight shipping, this doesn’t extend to covering risk. Due to this, DAP term tends to be more favorable for some destinations more than others.

You should note that while an Incoterms meaning is usually quite succinct, that doesn’t make it infallible. For example, an Incoterm meaning won’t necessarily highlight plausible solutions when breach of contract has occurred. It also has its limits where contractual rights and obligations are in question.

As such, working with a partner who can guide you through the steps is invaluable to saving time and resources.

The post The TSL Australia Ultimate Guide to Incoterms appeared first on TSL Australia.

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Whether you’ll be shipping a package just once or you’re fully into the shipping for your import and export business, knowing the various types of freight shipping options available to you is very important.

Some people may not be aware that there are multiple ways you can package and ship your cargo. Understanding what these various methods are and what they offer is what helps you make the best decision for the goods you are shipping.

As well-established shipping methods, there are various options available to you. However, below are the common ones you are most likely to encounter.

Freight Shipping Methods

Sea Freight

When it comes to shipping extremely large quantities of cargo, ocean or sea freight is usually one of the best and most efficient ways to go. The average container can easily carry about up to 30 tons in gross weight.

What’s more, it is arguably cost-efficient for shipping heavier cargo. Ideally, using sea freight to ship your cargo can be conveniently carried out from any part of the world into Australia and vice versa.

In terms of delivery time, some certain factors directly influence how fast your cargo arrives.

A few of the most prominent variables that affect this includes;

The duration of time spent on the seas,

Time spent on door-to-door shipments, and

The origin location you are shipping cargo from.

There are primarily two ways you can use sea freights to ship your goods. You can use,

Ship full container (FCL), or

Less than container (LCL)

Most times, people tend to use FCL or LCL, depending on whether they have enough goods to fill a full container or not.

Even though this is a rational method of approach, there’s more to using FCL or LCL than that. For instance, in terms of cost, shipping FCL is generally cheaper than using LCL when it comes to larger volumes.

Also, opting for LCL will usually mean your cargo will arrive later than if you use FCL. Perhaps the most important distinction is that LCL cargo usually suffer more accidents (damage or loss) due to the more level of exposure and handling it receives.

Air Freight

When you are planning on shipping cargo and speed of delivery is your topmost priority, then air freight is the way to go.

Air freight has many advantages. The first being the fact that with road freight, international cross continent shipping really isn’t an option.

Also, many people consider air freights to be a more reliable and secure means of transporting their cargo.

In Australia, you’ll often find different types of air freight methods to use in shipping your goods.

There are,

Air charters,

Freighters or Cargo aircrafts, and

Passenger aircrafts or PAX.

Of course, the size of your cargo plays a huge role in determining which choice you go for.

Road Freight

Without a doubt, this is the most popular and commonly used freight shipping method used everywhere in the world when it comes to land transport and do not cross continents.

It also has one of the widest varieties of shipping options available among the freight options. Some of the most popular road freight options include,

The Less Than Truckload Freight Shipping (LTL)

This is arguably the most common shipping option you’ll find out there today.

A high percentage of the individuals involved in the shipping world currently do so on a small scale. As such, they tend to drift towards a shipping option that is economical and more suited for moving small-sized cargo.

The less than truckload shipping option provides this in abundance. It affords you the chance of transporting cargo with a weight range as small as a few kilos or many tons.

The Intermodal Freight

Essentially, the Intermodal freight employs the use of International Organization for Standardization containers (in most cases) to transport the cargo in need of shipment.

Using these containers, the mode of transportation can vary from air to rail or sea, as the occasion demands. Due to how the cargo is shipped, there’s no point in time which directly handling the goods is warranted or necessary.

There are several benefits to using this particular method of freight shipping method. One that many people find quite acceptable is that it is one of the most environmentally friendly options you can go for.

The Expedited Freight

If you have a package that needs to be delivered fast and within a set time, you want to go for the expedited freight.

With this method of cargo transporting, the vehicle doesn’t make any stops on the road to its destination.

To get the most out of this transportation option, you need an experienced logistics team to handle your planning properly.

Partnering with a competent logistics team, you have access to all the information and resources you need to pick the right freight option for your cargo.

The post What are the Various Types of Freight appeared first on TSL Australia.

Freight forwarding is a lengthy and involved process that requires meticulous planning and professionalism at every stage. But what are the steps TSL takes to ensure your valuable load reaches its final destination safely and quickly?

These are the main stages our professional freight forwarders in Australia + overseas will take in order to get your load from A + B:

1. Pick-Up

We’ll work with you to arrange collection of your goods at a time that suits you. If your cargo is oversize or awkward, we’ll use specialised equipment to load it onto a heavy haulage vehicle such as a rigid or articulated truck.

2. Warehousing

If necessary, we can store your cargo safely at one of our thousands of secure units located within Australia and throughout the world. Our locked facilities are protected by alarms and surveyed by CCTV as well as other layers of security such as night staff and guard dogs.

3. Inland Transport

Using rail, road or a combination of both, we’ll get your cargo to the designated port or airport for exportation overseas.

4. Loading Up

The next task is to prepare your items for travel. Depending on the type of load, we may need to dismantle the cargo – this is often the case with larger items of machinery, for example. We use forklift trucks, cranes and other equipment to shift your consignment.

5. Transit

Safely stowed and/or containerised, your consignment is safe from damage from the elements and movement during transit and will be regularly checked throughout its journey. TSL’s online tracking service enables you to stay up to date with its progress using your smartphone or computer.

6. Customs Clearance

On arrival at its foreign destination or into Australia from overseas, TSL takes care of all documentation using highly effective systems that guarantee precision and reliability and avoids delays. This may involve electronic custom brokerage systems such as cargo automation and Tarifftech. As competent freight forwarders Australian companies can rely fully on, we liaise with the customs officials so that you don’t have to.

7. Delivery

Once your cargo is cleared, we’ll ensure it has a safe onward journey to its final destination using our expert inland travel and warehousing provisions.

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In order to build good relations, we need to get to know you as a client. We will work extra hard to get to know your company and its specific needs.  www.tslaustralia.com

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Global Warming – Implications for Shipping and Ship Owners

An overwhelming portion of the scientific populace agree that global temperatures across the Earth are heating up at a quicker pace than in previous years, with unprecedented temperature levels becoming commonplace, as a result of ever increasing greenhouse gas emissions. These extreme weather conditions have caused the ice in the arctic region to melt at an alarming rate.

Icebergs

As a consequence of rising global temperatures, many glaciers have been rapidly melting, causing the ice to break apart and form icebergs, which pose a significant danger to shipping vessels. It has been estimated that there are now well in excess of 400 icebergs in the North Atlantic region alone, which has impacted the behaviour and travel times of vessels voyaging throughout the area.

Captains have to be extra careful when traversing the surrounding waters in a bid to avoid colliding with one of these menacing behemoths of mother nature. Ships are either forced to travel at reduced speeds to make navigation safer or radically alter their courses to circumvent the treacherous conditions altogether. Such actions greatly hinder the arrival and departure times of all marine traffic and the delays caused by the icebergs can be as great as two days or more, which can be catastrophic for logistics companies.

Shipping CO2 Emissions

Of course, the great irony here is that shipping vessels themselves contribute to the growing problem of global warming and its subsequent effects on the shipping industry. According to Transport & Environment, CO2 emissions from the shipping industry have risen by 70% since 1990 and could account for as much as 10% of global greenhouse gas emissions by the year 2050. Such numbers would only worsen the already perilous conditions faced by many vessels navigating the North Atlantic seas.

Fuel Efficiency – Technology in Reverse

According to a recent study conducted by Transport & Environment, the fuel efficiency of modern vessels is actually worse than that of those that were built way back in 1990, by an average of 10%, with bulk carriers performing the poorest. To combat these worrying trends, the U.N. agency, International Maritime Organisation (IMO) has devised a climate change standard known as the Energy Efficiency Design Index (EEDI), aimed at forcing all new vessels to comply with the parameters outlined in the legislation. So far, the EEDI has not proven particularly successful and has been largely ignored by ship manufacturers.

Tackling Ship Greenhouse Gas Pollution

Under an agreement that was reached in October of 2016, a blueprint for tackling GHG pollution from vessels is set to be delivered in 2018. This a precursor to a set of strict guidelines that is likely to be announced several years later, which will detail environmental protection initiatives and penalties that will be enforced upon ship operators for non-compliance.

There is Hope Yet

Global warming is a man-made miasma that has far reaching effects, and its impact extends to the shipping industry. Rising temperatures are triggering record levels of melting ice, leading to the creation of an unprecedented number of dangerous icebergs within the North Atlantic Ocean. Icebergs pose a serious threat to cargo vessels and attempts to avoid them result in slower travel times and delayed arrivals and departures, causing chaos for logistics companies.

As we’ve seen however, ships themselves are responsible for a sizeable and ever-growing proportion of greenhouse gas emissions and are thus partly to blame for their troubles. Only through the enforcement and strict adherence of environmental protection guidelines can the issue of global warming and its many symptoms hope to gradually improve.

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Autonomous Ships – Unmanned Vessels and The Future of Shipping

Autonomous vehicles have been appearing in our daily vernacular with growing regularity and it seems that the irrepressible march of self-governing technology is set to one day take control of the shipping industry as well. In the coming years, entire cargo ships will operate with a complete absence of on-board personnel. Instead, they’ll be remotely operated by individuals located in a command centre.

Like AI driven passenger and transport vehicles, companies in the shipping industry will look to delegate the responsibilities of travel and on-board function with machines, while human beings will shift their focus to purely managerial roles, helping to monitor the vessels and ensure that all components are operating as normal.

Future communication systems will see wireless surveillance and service operations, both internally and externally. These operations will consist of highly sophisticated guidance technology that will allow for the total command of a vessel in a completely autonomous capacity.

The Diminishing Crew Size

Although ships have always been manned by an on-board crew, the size of personnel required to operate a vessel has been steadily declining, in line with advances in technology. Back in the 1960’s, a Japanese general cargo ship was the first vessel to adopt an intermittently manned engine room, which was unprecedented at the time and a sign of things to come. Fast forward to the present day and there are proposals from various companies to have a completely autonomous engine room.

The MUNIN Project

A collaborative research project known as MUNIN, an abbreviation for Maritime Unmanned Navigation through Intelligence in Networks, endeavours to create a viable solution for an autonomous vessel. The project is a combined effort of EU nations, created in an effort to help ease the burdens of maritime transportation throughout the EU. There is already an alarming shortage of seafaring personnel in the area as it is and the ever increasing number of ships required to cope with the demands of ocean freight is only going to make the situation even more desperate.

Another Example of Machines Stealing Our Jobs?

Rather than autonomous vessels being seen as another example of technology stealing jobs from the human workforce, it’s instead seen as a necessity by shipping companies to help deal with the growing industry crisis of an on-board skills shortage. Seafaring jobs are seen as undesirable, especially by younger generations, due to the lonely and isolated nature of the job and the extended periods that personnel are required to be out at sea.

With on-board ship operations shifted to machines, human beings can assume the role of much more desirable job roles, allowing them to take control from an on-shore location and doing away with the need to be separated from their loved ones.

The post Autonomous Ships – Unmanned Vessels and The Future of Shipping appeared first on TSL Australia.

The national key freight routes map assist governments and industry to better understand and plan for, critical freight flows, and will be maintained to inform a range of national transport infrastructure policy, regulatory, planning, and operational issues. It provides a detailed picture of the road and rail routes connecting Australia’s nationally significant places for freight. http://bit.ly/2u0T4JT

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