9. 이행 단계 (국제운송 및 해상보험)

English for Global Business

Unit 07 Implementation Phase

In the Implementation Phase

, the exchange of

products itself and the payment, logistics, insurance

and customs services take place by the followings

;

• Providing Required Documents

;

• Delivering Goods

; and

• Paying for the Goods

;

as per the

performance of contract

and

the

termination of contract

.

1

Delivery

of Goods

How are Containers Loaded? | Cargo Operations on Container Ship

To watch :

https://www.youtube.com/watch?v=OINg49D z8J0

Boeing B-777F MainDeck Loading timelapse

https://www.youtube.com/watch?v=0JeDrrO L5gk

Boeing 747-400 Passengers to Cargo Conversion (1분 20초 10'' 컨테이너 로딩)

https://www.youtube.com/watch?v=SHhSIh6 T6UU

Pesawat Ini Angkut Kereta Api + 3 Helicopter + Pesawat + Kontainer (1’24’’)

International Cargo Transportation

 Carriage of goods can be achieved by means of sea, rail, air,

inland waterway, parcel post, or multimodal transport. 1. Types of Transportation

1) Ocean Freight

 Ocean Freight, also called Ocean Shipment , Carriage by Sea, or Marine Transportation, is the most widely used mode of transportation in international trade as well as the most efficient form in terms of energy.

 The first advantage is the easy passage since about 70% of the earth surface is covered by water.

 It still has the attraction of being a cheap mode of transport delivering large quantities of goods over long distances.

 Because of the large capacity of ocean shipping, the unit distribution cost is reduced.

International Cargo Transportation

 Furthermore, ocean transport has good adaptability

to cargoes of different size, weight, shape, etc.

 However, it is slow, vulnerable to bad weather and

less punctual if compared with road or air transport.

 Therefore, before a shipment is made, the exporter

has to consider many different factors influencing

transport consideration, e.g. cost, safety, speed and

convenience.

International Cargo Transportation

2) Air Transport

 Air transport is one of the youngest forms of distribution.

 Air freight is most desirable for consumer cargoes such as

fresh flowers and fruits which will deteriorate easily,

fashionable articles that have a short selling life, seasonal

goods or merchandise of high value but low volume.

 The most outstanding attraction of air freight is quick

transit.

 Quick, reliable transit eliminates the needs for warehouses

and

reduces

the

risk

of

stockpiling,

obsolescence,

deterioration and capital tied up in warehouse and stock

provision.

International Cargo Transportation

2) Air Transport

 A low risk of damage and pilfering with consequent

competitive insurance premiums is another advantage.

 However, the average aircraft capacity is limited, so air

transport is subject to a high operating cost when

compared to its overall capacity.

 In addition, when airlines or air cargo companies issue an

air waybill, it is often a straight waybill, the buyer is named

as the consignee on the waybill, so the buyer can claim the

cargoes from the carrier by simply showing proof of identity.

 For this reason, air freight must be a risk way to ship

goods.

to steal, especially in small quantities.

International Cargo Transportation

 A cargo aircraft (also known as freight aircraft, freighter,

airlifter or cargo jet) is a fixed-wing aircraft that is designed or

converted for the carriage of cargo rather than passengers. Such aircraft usually do not incorporate passenger amenities and generally feature one or more large doors for loading cargo. Freighters may be operated by civil passenger or cargo airlines, by private individuals or by the armed forces of individual countries.

 Aircraft designed for cargo flight usually have features that distinguish them from conventional passenger aircraft: a wide/tall fuselage cross-section, a high-wing to allow the cargo area to sit near the ground, a large number of wheels to allow it to land at unprepared locations, and a high-mounted tail to allow cargo to be driven directly into and off the aircraft.

International Cargo Transportation

 A single export shipment can involve a lot of different documents to ensure that the goods reach the final consignee. A few commonly used transportation documents are listed below:

 Bill of Lading;  Sea Waybill;

 Rail Consignment Note;  Road Consignment Note;  Air Waybill;

International Cargo Transportation

(1) Bill of Lading (B/L)

 A bill of lading, i.e. the most important document for sea transport, is a document issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel, stating the conditions in which the goods were delivered to the ship; and an engagement to deliver goods at the prescribed port of destination to the lawful holder of the B/L.

 A B/L is, therefore, both a receipt for merchandise and proof

of a contract to deliver it as freight.

 It is a document of title to the goods, enabling the shipper or owner of the goods to endorse title to other parties, sell goods in transit, and present to banks with other documents in seeking payment under documentary credits.

International Cargo Transportation

 Shipping companies issue sea waybills (SWB) to shipper as a sort of proof or evidence that there is a contract of carriage between the shipper in question and the shipping company.  In other words, the SWB is a document that serves as proof

that the shipper actually received the goods from the shipper and agreed to carry it to a stated destination.

 In a sense, the SWB is similar to the B/L, which is the main shipping document.

 The SWB is important because it serves as an alternative for a B/L for the purposes of shipping goods and having someone collect the goods on arrival at the destination port.

International Cargo Transportation

 The reason why this document is necessary is because the B/L might take a much longer time to arrive because of situations such as postal delays and other unforeseen circumstances.

 In this sense, the SWB also serves as an authorization for the goods covered by the document to be released to the consignee named on the document.

 Such a precaution helps shippers expedite the process of offloading the cargo on arrival at their final destination.

 Without the waybill, they might be obliged to wait for the arrival of the B/L for the cargoes, which might delay the offloading process.

International Cargo Transportation

 One major distinction between an SWB and a B/L is that the B/L can transfer title, but the SWB cannot.

 This means that the B/L can be used as a form of collateral, unlike the SWB.

 The reason for this is because the name of the consignee on the SWB is locked and cannot be changed after it has been issued by the owner of the cargo.

 On the contrary, the owner of the cargo or the person whose name is on the B/L can transfer the title to anyone.

International Cargo Transportation

 A consignment note for rail transport serves as prima facie

evidence of the contract of carriage between the railway and

consignor, by evidencing the receipt of the goods and the date of acceptance for carriage by the carrier.

 The consignment note will be delivered with the cargo from the departure station to the consignee at the destination station against payment of the amounts by the consignee.

 Unlike a B/L, it is not a document of title and is not transferable or negotiable.

 The seller should be responsible for the accuracy of the information in the consignment note.

International Cargo Transportation

 A road consignment note, similar to rail consignment note in form and contents, functions as prima facie evidence for the contract of the carriage of goods by road in vehicles, completed by the sender and carrier with the appropriate signatures and/or stamp.

 Like a rail consignment note, it evidences the place and date of taking over the goods and the place designated for delivery.

 It is not a negotiable or transferable document or document of title.

International Cargo Transportation

 The air waybill (AWB) is one of the most important cargo documents prepared and issued by a carrier or its authorized cargo agents.

 It is the shipping document when the goods are shipped by air.

 It is proof of acknowledging receipt of the goods from the shipper by the airline, evidence of a contract between the shipper and the airline for moving the goods, a certificate of insurance, a customs declaration and an instruction sheet guiding the carrier’s staff in handing the cargo.

International Cargo Transportation

 The AWB is an internationally standardized document printed in English or the language of the air carrier.

 AWB is a straight or non-negotiable form of B/L.

 Until now, no “to order” or negotiable AWBs are issued by IATA (International Air Transport Association) members.  Therefore, the word “non-negotiable” must not be crossed

International Cargo Transportation

 A Combined Transport Document (or multimodal Transport document) proves the contract of carriage of goods by at least two modes of transport, issued by a combined transport operator under a combined transport contract.  It is quite similar to “through B/L” and combined transport

B/L used for ocean transport, but is broader than them.

 Through B/L and combined transport B/L are always connected with the sea and used for any transport

combined with the sea, while combined transport

documents can be applied to any kind of combined transport.

International Cargo Transportation

 Several carriers are involved in the through B/L, while the combined transport document is issued by one or carrier, that is, the combined transport operator.

 The combined transport document can be made as either negotiable or non-negotiable.

International Cargo Transportation

lading and a bill of lading?

 Bill of lading and multimodal bill of lading are two important transport documents.

 They are frequently used in international trade.

 Exporters and importers should be expecting to receive one of these transport documents from carriers, especially when they choose to use sea transportation.

International Cargo Transportation

 Port to port shipment can be defined as a single mode sea freight transportation, which is started at the port of loading and ended at the port of discharge.

 Bill of lading is the transport document which is exclusively used in port to port shipments.

 It is sometimes called as ocean bill of lading or marine bill of lading.

International Cargo Transportation

 Any shipment arrangement, which covers the transportation of goods from exporter’s factory to importer’s warehouse, organized by single carrier, who issues single transport document for the whole carriage, can be defined as a door to door shipment.

 If carrier of the door to door shipment uses more than one modes of transport, then these kinds of shipment are classified as multimodal shipments.

International Cargo Transportation

 Multimodal bill of lading is the transport document which is

used in door to door shipment. It is also known as combined bill of lading, intermodal bill of lading.

 Multimodal bill of lading is B/L issued for containerized

door-to-door shipments that have to different ships and/or different means of transportation (aircraft, railcars, ships, trucks etc.) from origin to destination.

 Unlike in case of a through bill of lading, the principal carrier or

the freight forwarder (who issued the multimodal B/L) takes on full liability under a contract of carriage for the entire journey and over all modes of transportation.

International Cargo Transportation

1. Straight bill of lading:

 The straight bill of lading is specified to the particular party and the specified party cannot re-assign it to anyone else. The party only has to take the delivery of the cargo and the cargo cannot be sold by transferring the bill of lading to another party’s name. 2. Order bill of lading

 This is the bill of lading that one would mostly come across onboard. The bill of lading is to the consignee or to his/her order. That is the named consignee will be the owner of the cargo or he/she can order the shipment to be delivered to another party by endorsing the bill of lading to that party.

 As the title (ownership) of the bill of lading can be transferred, Order bill of lading is negotiable document.

International Cargo Transportation

 A through bill of lading is just one kind of bill of lading.

 A bill of lading is between a shipper of the goods and a transporter or carrier used in international trade.

 It is required to ship goods, and acts as a receipt and contract.  It shows that the carrier has received the freight as described

– that’s the cargo receipt. It also documents the terms of delivery, stipulating that the shipper must deliver that cargo to the consignee in good condition – the carriage contract.

 A bill of lading is perhaps the most important document in shipping. It legally details the type, quantity and destination of the goods being transported, how it’s billed, and how the goods must be handled, and must accompany the shipped goods, signed by a representative of the shipper.

International Cargo Transportation

 A through bill of lading has specific stipulations and conditions.  A bill of lading will sometimes only cover one part, or one

aspect of the shipping process.

 A through bill of lading is more involved.

 A through bill of lading allows the transportation of goods both within domestic borders and through international shipment.  The bill if often required in order to export goods, and serve as

a legal certificate authorizing a party to be in possession of and transporting a particular goods.

 This is because a through bill of lading allows for the shipping carrier to pass the cargo through several different modes of transportation and several different distribution centers.

Marine Insurance

1. Fundamental Concepts

 In the GBT, goods travel long distances to another country.

 Both the exporter and the importer face all kinds of possible risks or losses all the time, and therefore goods must be insured against loss or damage at each stage of their journey.

 In other words, no matter what means of transport is being used, insurance exists to protect the importer or exporter against the possible financial losses which he/she would otherwise suffer in case damage or loss was inflicted upon him/her.

 Without adequate insurance and protection of the interests of those with goods in transit, the global business transaction cannot be guaranteed.

Marine Insurance

2. Procedures of Marine Insurance

 In export trade, who will effect insurance depends on the particular trade terms adopted.

 Under CIF rules, it is the seller who arranges insurance with an insurance company, under the terms as FOB, CFR, the buyer effects insurance, but he/she may ask the seller to arrange insurance on behalf of the buyer.

 An insurance policy is issued when goods are insured, but it is also usually for a insurance certificate to be issued for documentary purposes.

 In completing the insurance contract, either party, buyer or seller will undergo the following different steps.

Marine Insurance

2. Procedures of Marine Insurance

(i) To Apply for Marine Insurance

 For the first step, the applicant (policy holder) should

take is to apply for insurance from a certain insurance

company.

 The applicant should fill in the special form or the

proposal form, which gives all the details concerning

ownership, value, time span insurance will be for, risk

and coverage, etc.

Marine Insurance

2. Procedures of Marine Insurance

(ii) To determine the Insurance Value for the Goods to be

insured

 The value to be insured is measured on the value of the commercial invoice;

 The recommended minimum amount is the total CIF value plus 10% for other fees and normal margin of profit.

 Probably the best way of determining the needed insurance is to estimate the market value of the goods at the port of destination and to obtain coverage for that amount.

 Other approaches to evaluate the goods may also be agreed upon by the insurer(insurance company) and insured to meet individual needs.

Marine Insurance

2. Procedures of Marine Insurance

(iii) To determine the Insurance Average and Coverage

 Determination of the right coverage sometimes can

be made only on the basis of the following factors:

the nature of the product, packing considerations

such as sacks or paper boxes; use of the products

such as chemicals or tea; the carriers of the transport

such as the difference of air and sea transport,

shipping route and ports consideration such as any

transshipment on the way to the final port, etc.

Marine Insurance

2. Procedures of Marine Insurance

(iv) To determine Insurance Premium Rates

 The rates charged by the insurer are based on such factors as the type of coverage desired, shipping routes, modes of transport, duration of the voyage, and nature of the goods and packing.

 Also important is each shipper’s past loss experience.

 After a period of favourable experience, rates may be lower.  Conversely, a shipper with a bad loss record may find his/her

premium increased.

 Generally, the greater the risks that the consignment is exposed to, the higher the premium will be.

Marine Insurance

2. Procedures of Marine Insurance

(v) To sign an Insurance Policy



Before filling in and signing an insurance policy, it is

essential to have a good understanding about what

an insurance policy is, and the kind of insurance

policy.



The most extensively used policies now in the

international trade, which are insurance policy,

insurance certificate.

 What is the difference between insurance policy and insurance certificate?

 There are 3 types of cargo insurance documents available in international marine cargo insurance market.

 These are insurance policy, insurance certificate and declaration under an open cover.

 Declaration under an open cover is not used so frequently in daily practice comparing to remaining two insurance document types.

 For this reason knowing details of insurance policy and insurance certificate is very important not only for exporters and importers but also other foreign trade participants.

 What is a cargo insurance policy?

 Insurance policy is a legally binding written documents, which is issued by insurance company or underwriter to policy holder or insured/assured.

 Just like bill of lading (Bill of lading states terms and conditions of the carriage as a transport document), insurance policies define the terms and conditions of the insurance contract and serves as a legal evidence of the insurance agreement.

 International marine cargo insurance policies are generally issued subject to ICC Cargo clause such as Institute Cargo Clause (A), Institute Cargo Clause (B) and Institute Cargo Clause (C).

A Study on the Institute Cargo Clauses(ICC) used in

marine insurance transactions

1. Importance of ICC

The London Insurance Association and Lloyd Insurance Association, which were formed in 1884 by the British government, have several common interests, and thus carry out joint assistance by the Technical Terms and Conditions Committee. All the terms and conditions established by this Technical Terms and Conditions Committee are referred to as association terms and conditions, and all provisions applicable to cargo insurance are referred to as Institute Cargo Clauses.

A Study on the Institute Cargo Clauses(ICC) used in

marine insurance transactions

2. Basic Terms and Conditions (1) ICC (A)

The ICC (A) is the largest coverage of insurers and is a former risk collateral condition in the Old Testament. This Agreement specifies the scope of liability covered by the insurer and covers all insurance accidents except in the case of insurer general liability risk, war and strike risk and non-intervention of the vessel.

(2) ICC (B)

The ICC (B) is collateralized by the Old Testament. Like the existing insurance terms, the scope of the collateral risk was more easily understood by specifically listing the collateral risk to be compensated by insurers, supplementing that the previous security risk was unclear. In "B Clause", in addition to the risk covered by "C Clause",

[1] Disposal and damage of insurance purposes that are significantly related to earthquakes, volcanic eruptions, and lightning;

[2] Loss, damage to insurance purposes resulting from deck loss;

[3] insurance purposes resulting from the intrusion of seawater, lakes and rivers into the main line, substrates, potholes, transportation, containers, forklift trucks, or storage areas;

[4] The risk of all damages per pack unit falling to the sea or falling to the deck during shipment or loading as a main line or sub shipment is covered. The indemnification risk in "B Clause" is the same as in "C Clause

(3) ICC (C)

The ICC (C) is the condition that the insurer has the narrowest coverage and is subject to the sole termination collateral of the Old Testament. It is important to note that under any exemption, an insurer will not compensate for any loss in any case for general immunity and non-compliance of Article 4. However, any additional matters that fall under Article 6 and 7 of the Alliance Strike Terms and Conditions can be compensated

3. Additional Conditions

(1) TPND (Theft, Pilferage and Non-delivery)

Pilferage means the discharge of some of the packing contents by petty theft. Non-Delivery is when a shipment of packing units has not arrived at its destination on a whim.

(2) RFWD (Rain and/or Fresh Water Damage)

[Sea Water Damage] is secured as a condition to compensate for damage caused by rain or fresh water, but [RFWD] is not covered by the nature of the cargo, even if it is attached under [WA] conditions. Rain damage can occur while in the buoyant line.

(3) Breakage

[A/R] or ICC(A) conditions take comprehensive accountability to compensate insurers for all risks, except for legal and liability risks specified in the terms of the terms and conditions. However, breakage may be an ordinary loss during transport, or a consequential loss of cargo-specific defects or properties. Therefore, for goods subject to breakage, such as glass and ceramic products and precision instruments, the insurance premium must be paid after the listing of the risk of damage to achieve compensation, even if the collateral conditions are [A/R] or ICC (A)

(4) Leakage/Shortage

[Shortage] refers to the loss of a liquid or gas discharge from a vessel, mainly due to weight loss or lack of quantity.

(5) Sweat and Heating

[Sweat Damage] is the damage caused by condensation of moisture in the vessel, and [Heating Damage] is an increase in the temperature of abnormal temperature or ventilation caused by moisture containing grains. These two losses are often difficult to distinguish because they are related.

(6) JWOB (Jettison and Washing Over Board)

Offshore freight is generally loaded onto the docks, but logs, vehicles, living things and animals are often loaded onto deck, such as when cargo is dropped or lost by a windward. Therefore, it is desirable to apply [FPA + JWOB] condition when applying for cargo insurance in the case of the origin.

(7) COOC (Contact with Oil and/or Other Cargo)

Loss of water when contaminated in contact with oil and other cargo.

(8) Hook and Hole

The conditions attached when a cargo, such as textiles, is insured for damages caused by the use of hook during loading and unloading operations.

(9) Contamination

Loss of quality due to seawater or fresh water

 What is a cargo insurance policy?

 An insurance cargo policy should specify the terms on which the indemnity cover has been provided by giving an express reference to one of above mentioned ICC cargo clauses.

 Furthermore, an insurance cargo policy may mention additional risks covered such as war risks and strike risks.

 Information that could be mentioned on cargo insurance polices are :

 Amount of insurance premium

 Shipment details such as port of loading, port of discharge, vessel name and voyage number, description of goods etc.

 Current of the insurance cover  Insurance cover amount

 Insurance company’s agent at the port of destination  Procedures for the claim and required documents

 Important Aspects of Insurance Policies

 Insurance policies issued by the insurance companies for specific transactions.

 An insurance company gets the details of the shipment from the policy holder and prepares his/her insurance policy offer.  If insurance holder agrees on the terms and conditions as

well as insurance premium, then the insurance company or the underwriter issues the insurance policy.

 An insurance policy generally issued when the goods are loading and expires on completion of unloading from the carrying vessel at the port of destination.

 What is a cargo insurance certificate?

 In some cases, exporters or importers do not prefer to make insurance for each shipment separately, but they sign an insurance cover for a certain period of time such as 1 year.  During the insurance period, as illustrated 1 year on the

above example, exporter’s all shipments will be covered with a cargo insurance. Periodic insurance contracts are also

known as open cover.

 In case the exporter, whom uses an open cover insurance, needs an insurance document for a specific shipment, then insurance company issues an insurance certificate.

 Insurance certificates are not issued as a stand alone insurance document for a specific shipment, but they are issued under an open cover.

 What is a cargo insurance certificate?

 Both insurance policy and insurance certificate should be issued by an insurance company or an underwriter.

 Both documents should state identical information such as:  Insurance terms and additional risks covered

 Amount of insurance premium

 Shipment details such as port of loading, port of discharge, vessel name and voyage number, description of goods etc.

 Current of the insurance cover  Insurance cover amount

 Insurance company’s agent at the port of destination  Procedures for the claim and required documents

 What is the difference between insurance policy and insurance certificate?

 May be the only difference between insurance policy and insurance certificate occurs under letter of credit payment.  According to L/C rules, an insurance policy is acceptable in

lieu of an insurance certificate or a declaration under an open cover. But reverse situation is not valid.

 If the seller presents documents under a letter of credit, then the seller should keep in mind that the seller can present insurance policy instead of an insurance certificate.

 But the seller cannot present an insurance certificate instead of an insurance policy under a letter of credit.

Marine Insurance

2. Procedures of Marine Insurance

(vi) To lodge an Insurance Claim

 Whenever an actual loss occurs, claims can be made by the shipper, the buyer or even a carrier that has first lien on goods.

 It is of vital importance that the insured must be able to prove a loss by perils against which he/she was insured.  The one who registers a claim should get the survey

report conducted by the expert, together with a copy of the bill of lading, the commercial invoice, the insurance policy, and a covering letter requesting payment, and

then send them to the insurance company for

Marine Insurance

2. Procedures of Marine Insurance

(vi) To lodge an Insurance Claim

 Most insurance company policies require that immediate notice be given to the nearest branch or agency in the event of damage giving rise to a claim.

 This notice means that a claim has been filed.

 A delay in giving the notice might result in the underwriter’s refusal to process the claim.

 When notified of damage, the insurance company will appoint a suitable surveyor to inspect the goods and to report on the nature and extent of the damage.

Marine Insurance

2. Procedures of Marine Insurance

(vi) To lodge an Insurance Claim

 As a common practice, a report or certificate of loss

together with the

surveyor’s findings will be issued to

the consignees, who pay the fee.

 This certificate of loss is included with the claim

papers and, if the loss is recoverable under the

insurance cover, the fee is refunded to the claimants.

Marine Insurance

2. Procedures of Marine Insurance

(vi) To lodge an Insurance Claim

 Where goods are sold on CIF terms and the policy is assigned to the consignee: arrangements are made for any claims to be paid at the destination.

 In such cases, the consignees approach the agents named in the policy for payment of their claims.

 Of course, the claims procedure will vary by

circumstances, but undoubtedly a quicker settlement should be secured in the event of loss or damage.

 As a matter of fact, settling a claim is not so easy; it needs patience, evidence and knowledge.