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Project Procurement & Contract Management
Transportation Management
Muhammad Ali Raza Federal Board of Revenue
[email protected]
Transportation Management
Scope of Discussion Proactive Transportation Management
Contracting with Carriers Transportation Documents INCOTERMS Cost
of Service & Freight Terminal & Line-haul Services by
Carriers
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Supply Chain Management A Wider Perspective
. Supply Chain Management
Procurement Management Logistics
Transportation
Warehousing Contract Management
Inventory Mgmt
Post Award Pre-Award
Contract Design
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Total Procurement Price
.
Basic Input Price
Direct Transaction Costs
Supplier Relationship Costs
Transportation Costs
Quality Control Costs
Operations / Logistics Costs
Multi-modal Delivery
Incoterms
Warehousing
Inventory Mgmt
Quotation
Shipping Documents
Purchase Order
Supplier Evaluation
Buyer Only Buyer & Supplier Muhammad Ali Raza
Transportation Management
Why Transportation Management? q Transportation Costs are 40-50%
of total
logistics cost q Transportation Costs are 4-10% of product
selling cost q Costs on Carrier pricing, services &
documentation are 3-5% of Product selling cost
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Transportation Management
Proactive Contract Management in Transportation
q Reducing Number of Carriers: Shipper/Seller Increases its
freight volume Increases in freight revenue paid to carrier
Increases ability to get good rates from carrier Carrier becomes
more dependent on shipper
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Proactive Contract Management in Transportation (Cont)
q Contracting with Carriers: Through Contract Terms,
Shipper/Seller Enables a carrier to eliminate a empty backhaul
Specifies pickup time Increases tonnage Attracts carriers to give
concession
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Proactive Contract Management in Transportation (Cont)
q Consolidating Shipments: Through bundling, Shipper/Seller gets
lower rates from carrier for larger shipment
volumes gets to lower shipping time for FCL rather than
LCL reduces Carrier cost per weight unit transported
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Proactive Contract Management in Transportation (Cont)
q Monitoring Service Quality: Through contract monitoring,
Shipper/Seller
Manages delivery on schedule Gets undamaged goods at destination
Manages replenishment of reduced
inventory Manages to reduce transit time
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Transportation Management Bill of Lading
Bill of Lading (B/L) is a Document issued by a common carrier to
a shipper for the receipt for the goods delivered to the carrier.
The B/L defines the terms of the contract of carriage and acts as a
title to the goods contained therein
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The principal use of the bill of lading is as a receipt issued
by the carrier once the goods have been loaded onto the vessel.
This receipt can be used as proof of shipment for customs and
insurance purposes, and also as commercial proof of completing a
contractual obligation, especially under Incoterms
Transportation Management Bill of Lading (Cont.)
Muhammad Ali Raza
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You are required to use the Bill of Lading when;
The goods are being traded/sold in transit. The letter of credit
terms require that a
negotiable document to be used. The laws and regulations of a
country
demand the production of a paper Bill of Lading.
Bill of Lading
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Transportation Management
Documentation - Domestic:
Bill of Lading: The single most important transportation
document
It originates the shipment Provides all the information the
carrier needs to
accomplish the movement Stipulates transportation Contract terms
Acts as a receipt for goods the shipper gives to
Carrier Shows certificate of title to the goods Muhammad Ali
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Transportation Management
Documentation - Domestic:
i) Straight Bill of Lading: Non-negotiable instrument Carrier
does not require presentation of its
original copy to effect delivery Carrier must simply deliver the
goods to
person as consignee
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Transportation Management
Documentation - Domestic: 2) Order Bill of Lading:
Negotiable instrument
Shows certificate of title to the goods it names
Consignor retains security interest in goods.
Consignee must pay goods invoice value to obtain original copy
that must be presented to
Carrier for delivery, if arranged as such.
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A Sea Waybill is used in lieu of a Bill of Lading for straight
consignments whenever a letter of credit or similar banking
arrangement is not involved in the sale of goods. You can use a Sea
Waybill when; The recipient of the cargo is known, Cargo will not
be traded/sold during transport. Payment of goods is made under an
open account or
there is a high degree of trust between the importer and
exporter and
where a negotiable transport document is not required under a
letter of credit.
Not specifically a Title Document
Seaway Bill
Muhammad Ali Raza
Transportation Management Documentation Domestic (Cont):
Freight Bill: Carriers Invoice for charges the Carrier incurs
in
moving a given shipment
It lists the shipment, origin & Destination It lists the
consignee & consigner It lists the items, total weight It lists
the total charges
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Transportation Management Documentation Domestic (Cont):
Freight Bill (Cont): A brief description of Carriers credit
payment terms Procurement Manager to have working
knowledge of carriers credit payment as some carriers have
Excessive penalties for not paying within the
allowed payment terms Discounts for paying early
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Transportation Management Documentation Domestic (Cont):
Freight Bill (Cont):
Freight Bills may either be for: Prepaid Shipment- Carrier
presents
freight bill on effective day of shipment Collect Shipment
Carrier presents
freight bill on effective day of delivery
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Transportation Management Documentation Domestic (Cont):
Freight Bill (Cont):
Freight Bill Auditing: It involves matching the
computer-generated
charge with Carriers freight bill. If two do not match, Freight
Bill is given to
Procurement Manager to resolve Often, audit occurs prior to
paymen of freight
bills
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Transportation Management Documentation Domestic (Cont):
q Freight Claims: A document (with no prescribed form) that a
shipper
files with the carrier to recoup monetary losses resulting
from;
Loss Damage Delay Claim within 9 months of delivery Released
Value by Shipper-less liability by Carrier
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Transportation Management Documentation International:
q Sales Documents: Initial document in any international
business transaction Export sales contract Describes
commodities, price, payment terms Describes Transportation
arrangement Explain Insurance requirements Gives Carriers
information
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Transportation Management Documentation International
(Cont):
q Letter of credit (LC): After negotiating the sales contract,
parties
involved determine method of payment through LC which is
a banks assurance that buyer will make payment as long as the
seller meets the sales terms to which the parties have agreed. Only
Bill of Lading will be used here
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Transportation Management Documentation International
(Cont):
q Terms of Sale: Known as INCOTERMS:
o Unlike domestic terms of sale, where buyers & sellers
primarily use FOB origin &
FOB destination terms, there are 11
different INCOTERMS (revised 2011)
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Incoterms & Cargo Risk Coverage
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Transportation Management Documentation International
(Cont):
o The Incoterms 2010 are arranged in two categories as
follows:
o Rules for Any Mode of Transport q EXW - Ex Works
FCA - Free Carrier CPT - Carriage Paid To CIP - Carriage and
Insurance Paid DAT - Delivered At Terminal DAP - Delivered At Place
DDP - Delivered Duty Paid
o Rules for Sea and Inland Waterway Transport Only
o FAS - Free Alongside Ship FOB - Free On Board CFR - Cost and
Freight CIF - Cost, Insurance and Freight
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Incoterms 2013 Responsibility Chart
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Transportation Management Documentation International
(Cont):
q INCOTERMS: E-Terms: EX-Works : Departure Contract At suppliers
premises / Point of Origin Buyer bears risk of total shipment
Export Packing Cargo Insurance Custom duties
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Transportation Management Documentation International
(cont):
q INCOTERMS: F-Terms: These terms obligate the seller to
incur
cost of delivering shipment cleared for export to the carrier
designated by the buyer
FAS (Free-Alongside Ship): Risk transferred to buyer when goods
delivered alongside the ship
FOB (Free On Board): Risk transferred to buyer when goods are
loaded on vessel water mode
FCA (Free Carrier): Risk of Seller till delivery to Carrier
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Transportation Management Documentation International
(Cont):
q C-Terms: (Shipment Contracts) - Obligate the Seller to obtain
& pay for main carriage and/or cargo insurance
CFR (Cost & Freight): Sellers Risk till shipping
destination-Water Transportation
CPT (Carriage Paid To): Sellers Risk till shipping
destination-Any mode
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Transportation Management Documentation International
(Cont):
q C-Terms (cont) Seller pays for both main carriage & cargo
Insurance
CIF (Cost Insurance & Freight): Sellers Risk till shipping
destination Cargo Insurance by seller CD & Inland
transportation by Buyer Water Carrier
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Transportation Management Documentation International
(Cont):
q C-Terms (cont) Seller pays for both main carriage & cargo
Insurance
CIP (Carriage & Insurance Paid ): Seller till shipping
destination Cargo Insurance by seller CD & Inland
transportation by Buyer Any mode-air, motor, rail, inter-modal
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Transportation Management Documentation International
(Cont):
q D-Terms: Obligate seller to incur all costs related to
delivery shipment to foreign destination.
DAT (Delivered AT Terminal): Sellers Risk till
unloading at terminal + payment of Taxes
DDP (Delivery Duty Paid): Sellers Risk till Place of
Installation + payment of Taxes
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Transportation Management Documentation International
(Cont):
q Other Documents
E x p o r t D e c l a r a t i o n : P r o v i d e s i n f o r m
a t i o n c o n c e r n i n g e x p o r t shipments nature &
value
Export Licence: For Regulated Export
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Transportation Management Documentation International
(Cont):
q Other Documents Invoice: Sellers Commoditys value
less freight Commercial Invoice (Import Value) Consular Invoice
(Import Statistics)
Carnet: Issued for shipment in a sealed container
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Transportation Management Documentation International
(Cont):
q Other Documents (Cont)
Bill of Lading: Export Bill of lading (All inclusive) Ocean Bill
of lading (ocean part) Order Bill of Lading (proof of ownership
evidence)
Liability (Insurance Receipt) Dock receipt (At Terminal) Airway
Bill
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Transportation Management Documentation International
(Cont):
q Other Documents (Cont) Liability (Insurance Receipt)
Perils of sea Acts of God Acts of public enemies Inherent
defects of cargo Shippers negligence
Dock receipt (At Terminal) Universal Airway Bill
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Transportation Management Documentation International
(Cont):
q Basis for rates:
Cost of service: It reflects Carriers costs
Value of service: It is how much the
Shipper is willing to pay
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Transportation Management Documentation International
(Cont):
Terminal services Consolidation Breakbulk Shipment services
Freight Handling services Vehicle supply Loading/Unloading Shipment
monitoring & Tracing
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Transportation Management Documentation International
(Cont):
Line-Haul Services by Carriers: Re-consignment: Permits shipper
to change
destination and/or consignee after shipment has reached its
original destination but before the Carrier has delivered it to the
original consignee
Diversion: Permits shipper to effect same changes while shipment
is en-route and before it reaches the original destination
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Transportation Management Documentation International
(Cont):
q Line-Haul Services by Carriers (Cont.) Pooling: Shipper
combines many LCL or LTL
shipments into one CL or TL
Stopping In Transit: Also called Drop Shipment Partial loading
to complete the shipment or partial unloading of freight
Transit Privilege: change Product physically-repacking etc
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Thankyou
Q & A
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