Session 3: Documentation Responsibilities of a Project ... · PDF file11:15-12:00pm Session 3: Documentation Responsibilities of a Project ... usually in the form of the B/L itself

Freight Forwarding Documentation

October 25, 2011 / New Orleans 1

11:15-12:00pm Session 3: Documentation

Responsibilities of a Project Forwarder

Dennis Devlin, Vice-President Panprojects Division,

Panalpina Group

Dennis Devlin

Vice President – Business Development

Panalpina Inc. – Panprojects Division USA



Objective

•To outline the role of the project forwarder in project logistics, and to explain what documentation a project forwarder must handle, and how important this task becomes in a successful project supply chain.



Agenda

• What is a Freight Forwarder?

• What is a Project?

• Some Examples of Industrial Projects

• What is Project Logistics / Project Forwarding?

• What purpose does documentation serve in international trade and

transportation?

• Documents used in international transportation (and in project logistics/project

forwarding), and their specific purposes

• Why accurate, complete and timely documentation is vital to the success of a

project. And the converse: the ramifications of bad or late documentation



What is a Freight Forwarder?

• Freight forwarding is a service used by companies that deal in international or

multi-national import and export. While the freight forwarder doesn't actually

move the freight itself, it acts as an intermediary between the client and various

transportation services. Sending products from one international destination to

another can involve a multitude of carriers, requirements and legalities. A

freight forwarding service handles the considerable logistics of this task for the

client, relieving what would otherwise be a formidable burden.

• One of the many advantages of using freight forwarding is that it handles

ancillary services that are a part of the international shipping business.

Insurance and customs documentation and clearance are some examples. As

a consolidator, a freight forwarding service might also provide Non-Vessel

Operating Common Carrier (NVOCC) documentation, or bills of lading.

Warehousing, risk assessment and management, and methods of international

payment are also commonly provided to the client by the freight forwarding

service.




• A good freight forwarding service can save the client untold time and potential

headaches while providing reliable transportation of products at competitive

rates, as well as vital assistance with the necessary documentation. A freight

forwarding service is an asset to almost any company dealing in international

transportation of goods, and is especially helpful when in-house resources are

not versed in international shipping procedures.

• A freight forwarder, forwarder, or forwarding agent is a person or company

that organizes shipments for individuals or other companies and may also act

as a carrier (NVOCC). A forwarder is often not active as a carrier and acts

only as an agent, in other words as a third-party (non-asset-based) logistics

provider that dispatches shipments via asset-based carriers and that books or

otherwise arranges space for these shipments. Carrier types include ships,

aircraft, trucks, barges, and railroads.

• Sources: Wikipedia and wiseGEEK




• Freight forwarders typically arrange cargo movement to an international

destination. Also referred to as international freight forwarders, they have the

expertise that allows them to prepare and process the documentation and

perform related activities pertaining to international shipments. Some of the

typical information reviewed by a freight forwarder is the commercial invoice,

shipper’s export declaration (now an electronic “filing” in the USA), Bill of

Lading and other documents required by the carrier or country of export, import

or trans-shipment. Much of this information is now processed in a paperless

environment.

• The FIATA (International Federation of Freight Forwarders Associations) short-

hand description of the freight forwarder as the “Architect of Transport”

illustrates clearly the commercial position of the forwarder relative to his client.

• Source: Wikipedia



What is a Project?

• A project is a temporary endeavor undertaken to create a unique product or

service. The purpose of the project for our discussion is to build or construct

something, usually something very large and very complex

• It can also comprise a plan to define and constrain a future by limiting it to set

goals and parameters. The planning, execution and monitoring of major

projects sometimes involves setting up a special temporary organization,

consisting of a project team and one or more work teams

• A project usually needs resources

• Source: Wikipedia



Examples of Industrial Projects

• Power generation (various sorts of power plants; solar; wind power)

• Refineries

• LNG Terminals

• Chemical and pharmaceutical plants

• Mines

• Air separation projects

• Oilfield projects such as offshore platforms

• Pipelines

• Auto plants; other manufacturing facilities such as food process plants;

breweries and other beverages, cement; paper mills; high tech; aerospace;

civil projects (airports; stadiums)

• Plant relocation projects

• Government projects (e.g. the Hoover Dam)



Roles in an Industrial Project

• Owner

• Engineering & Design

• Procurement

• Expediting

• Logistics

• Construction

• Health, Safety and Environmental Policies, Supervision, Compliance, etc.

• Other Regulatory Compliance (local, national and international

laws/regulations)

• Project Cost Accounting / Cost Control

• Project Management



What is a Project? What is Project Logistics?

• What Makes It Project Logistics

• For One of the Aforementioned Industry Sectors or a Related One We Didn’t

Mention

• Definite beginning and end.

• Phases / Bell Curve

• Planning

• Early Logistics Activities

• Full Implementation

• Late Logistics Activities

• End. Cargo moved. Plant or “end product” (mine, building, refinery, etc.) operational

• Project logistics / project forwarding often involves the transport of heavy-lift

and oversized cargoes – very specialized logistics work.



What is Project Logistics / Project Forwarding?

• Multi-Modal and Multi-Disciplinary

• Planning

• Supplier Management / Expediting

• Materials Management & Tracking

• Domestic Transport – Truck; rail; barge

• Packaging; Corrosion Prevention

• Warehousing & Consolidation

• Regulatory Compliance

• Loss Prevention

• Ocean Transport – LCL; Containers; Liner Break-Bulk / Conventional; Charters; Specialized Heavy Lift

• Airfreight (commercial; charters)

• Documentation





Documentation

• What is the purpose of documentation?

• Generally, documents do one or more of the following:

• Document a contract, such as a contract of carriage (e.g. Bill of Lading;

Airway Bill). Insurance documents show proof of insurance, and thus a

contract for insurance. Purchase Orders and related documents represent

agreements to buy and sell certain things. And these documents often spell

out in great detail the terms and conditions of the contract in question.

• Documents provide information. Packing lists show what is included in a

shipment, often in great detail. Commercial invoices show what is being sold,

at what costs and in what currencies, the parties to the transaction, payment

terms and other information required by customs and other regulatory

authorities, and for banking and insurance purposes. Bills of Lading show

cargo origins and destinations (ports, airports, addresses), consignor and

consignees and other important details. Certificates of Origin, while usually

produced only because they are required for Customs purposes, show the

origin of cargo, and some legal certification of that origin.



Documentation

• Documents satisfy Customs’ authorities’ requirements for importation.

International trade is regulated, so each nation’s customs authorities have

certain documentation requirements – some quite onerous – which must be

satisfied before imports are permitted

• Some documents represent title to the goods, in a way that is similar to a

check (which entitles the bearer, after endorsing the check, to collect money).

These documents are negotiable

• Documents are required for compliance to certain regulations, and thus

satisfy legal requirements (a Shipper’s Declaration for Hazardous Goods for

example, or a Certificate of Origin). Other documents satisfy compliance not

with local, national or international regulations but rather compliance with

contractual obligations. Test certificates for example are sometimes stipulated

as contractual requirements in purchase orders.

• Many documents serve some or all of the above purposes.



Documentation

• Detailed inventory and tracking. Materials Management.

• Export clearances and documentation

• Import clearances and documentation

• Electronic documentation

• Documentation for duty minimization or duty-free schemes

• Various nomenclature for the cargo being described

• Shipping Documentation

– Ocean Bills of Lading (House B/L; Master B/L)

– Truck, Barge and Rail Bills of Lading

– Charter parties

– Dock Receipts



Materials Management / Line Item Tracking / Visibility

Logistics Management

• The process of planning, implementing and controlling the efficient cost

effective flow and storage of raw materials, in-process inventory, finished

goods and services from the point of supply to point of consumption to meet

the project’s needs (construction; installation).

• Source: Council of Logistics Management







• Purchase Order Number SCM-001

• Line Item 1: Bicycle – Quantity 1

• But what will actually be shipped? A bike? No! Parts to assemble a bike:

• Line Item 1: Bicycle – Quantity 1

– Sub Line Items

– 001 Bike Frame – Quantity 1

– 002 Bike Wheels – Quantity 2

– 003 Handlebar – Quantity 1

– 004 Brakes – Quantity 2

– 005 Seat – Quantity 1

– Etc.




• Line Item Logistics Management

• Maintain Line Item (and Sub Line Item) Integrity across the Project Supply

Chain

• Current & Future System Capabilities

• Bar Coding / RFID

• Integrated Supply Chain Methodology

• In-transit Line Item Visibility

• Large Projects vs. Smaller Projects – Obviously More Important on Large and

Remote Projects




• The use of systems

• C2C ®

• EDI

• Material Line Item Management

• Purchase Order Management

• Receiving / OSD Management

• Bar Coding / RFID

• Material Receipt

• Release To Pack

• Packing

• Invoicing Packing

• Delivery Management

• Vendor Management (Expediting)

• Commercial Invoice

• Packing List



Documentation

• The Bill of Lading

– Issued by a Carrier or its agent, or a contractual carrier (NVOCC) or its agent

– Freight forwarders can be NVOCCs or simply agents of the shipper or consignee. Either way, the freight forwarder provides B/L instructions to the carrier, usually in the form of the B/L itself as a sample. When working as NVOCC the forwarder sends “Master B/L” instructions to the carrier; when working as agent, the forwarder sends “sample” instructions or a copy of what the B/L should look like (details)

– Can be done via EDI

– Received for Shipment or Shipped on Board

– Point to Point; Point to Port; Port to Point; Port to Port

– Bill of Lading (title document; represents title to the goods whether made out “to order” or to the actual consignee)

– Seaway Bill a.k.a. Express Bill of Lading (non-negotiable; a contract of carriage only; does not represent title to the goods)



Documentation

• Airway Bill

– Issued by a freight forwarder with an IATA license

– Never negotiable = Always non-negotiable

• Commercial Invoice

– A bill or invoice for the goods from the seller to the buyer. These invoices are usually used by customs authorities to determine the true value of goods when assessing customs duties. Government regulations spell out the language used in a commercial invoice, as well as the format and content. In many cases, commercial invoices must be translated into the local language. For a major project in Saudi Arabia or China, for example, each and every item being shipped must be described in Arabic or Chinese, respectively. This is usually done as part of the import process, during a period of time before or shortly after shipment from the origin country. The Commercial Invoice is one of the most important documents in an international shipment in that it is often the primary document used by customs authorities as part of the import customs clearance process



Documentation

• Export Packing List

• This is a vital document. Typically, in North America, “domestic” packing lists show a list of items and quantities included in a shipment. An export packing list shows much more detail. It also lists the items and quantities, but most importantly, it shows which items are in which packages. On large, well-organized projects, packages are not numbered in the typical domestic supply chain way (1 of 3; 2 of 3 etc.) but rather with unique, never-repeated package numbers. Bar codes and RFID are also used. Imagine trying to locate a particular part at a power plant construction project with many hundreds packages in a “lay-down” area (outside storage area) with only 1 of 3 as the package number. An export packing list also shows the net and tare (package) weights. Net weights are often used by customs authorities. And usually it is prepared in the imperial system (used by the USA) and the metric system (used by the rest of the world). The export packing list usually also shows the shipper(s) (there can be more than one if documenting a consolidated shipment), consignee, shipping marks on the outside of the packages, and sometimes conveyance information (vessel, flight, etc.)



Documentation

• Consular Invoice

• Required by certain countries this is either a separate document by similar to a Commercial Invoice but it is “consularized” or “certified” (reviewed, approved and stamped as such) by the Consulate of the destination country’s offices in the origin country. It is used in lieu of a Commercial Invoice by Customs officials but for the same purpose - to verify what is being shipped/exported/imported, how many, the value, etc.

• Certificate of Origin

• Required by certain countries this is a signed and usually notarized attestation of the country of origin of the goods. Often in the USA a local chamber of commerce issues or “stamps” C/Os. The information on a C/O is usually much the same information that is included on a Commercial Invoice and/or a Consular Invoice.

• NAFTA Certificate of Origin

• This is a specific C/O used by the Mexico, the USA and Canada for trade between our countries



Documentation

• Inspection Certificate

• Some countries and some buyers require independent inspection certificates for certain kinds of products such as chemicals or steel. These certificates attest to the nature of the goods (purity of chemicals, for example) They are issued by independent testing agencies.

• Warehouse Receipt / Material Receiving Report

• Issued by a warehouse and/or a freight forwarder with a warehouse this documents the receipt of cargo. Typically, a warehouse receipt will simply reiterate truck B/L and packing list information, whereas a Material Receiving Report is typically issued after a detailed check of all of the items in a shipment, with a view to ensuring that the correct items and quantities were shipped and received. This process is often used on projects due to the problems that can occur when shipping discrepancies are found at destination (customs problems; project delays; major costs)

• Dock Receipt

• A dock receipt documents cargo being received at an ocean terminal (dock facility) for export. Usually it is prepared by the freight forwarder, and sent along with the shipment to the port.



Documentation – Vital to the Success of a Project

• Accurate, Complete and Timely Documentation Results In the Following

– The delivery of vital information to the project team regarding what is being shipped, where it is in the shipping process, in which packages, shipping dates, etc.

– Expedites the customs clearance process

– Helps to ensure compliance with import/export and other regulations

– Plays a role in the timely payment of supplier invoices

– Helps those involved in the supply chain to properly manage the shipment, for example special handling or stowage instructions being communicated on shipping documents

– In cases where the destination country (where the project is being built) has some sort of duty minimization scheme to attract investment, accurate documentation supports the process of minimizing or avoiding duty payments

– Accuracy, completeness and timeliness are all vital



Documentation – Vital to the Success of a Project

• Potential Ramifications of Documentation Errors and Delays

– Lack of transparency in the project supply chain. The construction team, who needs the equipment to build the project, don’t know where cargo is. In extreme cases, this can result in the duplication of purchases, with vast sums of money being spent unnecessarily

– In the case of hazardous materials, improper documentation can result in injury or death, and can have major legal consequences

– Can result in regulatory non-compliance, and can cause major customs fines, delays and other headaches; in extreme cases can cause the importer to lose the legal right to import, or even jail time

– Can result in the exporter being in violation of export laws, with legal consequences

– Can cause improper handling, stowage or storage of the cargo

– May cause problems with insurance

– Definitely will cause projects in a project









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