152224269 Sea Freight in Logistics Management

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PROJECT REPORT ON

SEA FREIGHT IN LOGISTICS

MANAGEMENT

K.J.SOMAIYA COLLEGEVIDYAVIHAR (EAST)

SUBMITTEDBY

SATISH K. PARATET.Y.B.M.S. [Semester V]

NAME OF PROJECT GUIDE

MR. SANDIP GUPTA

SUBMITTEDTO

UNIVERSITY OF MUMBAI

ACADEMIC YEAR2011 - 2012


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DECLARATION

I SATISH KESHAV PARATE student of K.J.SOMAIYA

COLLEGE of TYBMS (Semester 5) hereby declare that I have

completed this project on SEA FREIGHT IN LOGISTICS

MANAGEMENT in the Academic Year 2011-12. The Information

submitted is true and original to the best of my knowledge.

Signature of Student

(Satish k. parate)

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CERIFICATE

I SATISH PARATE student of K.J.SOMAIYA COLLEGE of

TYBMS (Semester 5) herby certify that I have completed this project on

SEA FREIGHT IN LOGISTICS MANAGEMENT in the Academic

Year 2011-12. The Information submitted is true and original to the best

of my knowledge.

Signature of the Principal of Signature of Project

The College/Institution Co-coordinator

Signature of Internal Signature of External

Examiner Examiner

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INDEX

Sr.No Particulars Page No

1.

Introduction of Logistics Management

8-10

2. Shipping 11-19

3. Cargo Vessels Types 19-26

4. Different Types of Ship Size 27-28

5. Terms Of Shipment 28-33

6. Sea Transport 34-39

7. Shipping Documents 40-46

8. 3rd Party Logistics & 4th Party Logistics 47-51

9. Ports In India 52-83

10. Customs And Procedures 84

11. Multimodal Transport 85-88

12. Marine Insurance 89-95

13. Warehousing and Warehouse Management 96-100

14. Panama Canal 101-106

15. Conclusion 107-108

16. Case Study 109-110

17. Bibliography 111

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The proposed module covers thirteen main areas of concern to overcome the

weakness in the field of freight forwarding is as follows:

- Elaboration on duties and responsibilities of the freight forwarder andits relationship with intervening parties;

- Rights, duties and responsibilities of Multimodal Transport/FreightForwarding institutions;

- The art by packaging, marking and handling of special cargoes;- Principles of carriage of goods by sea;- Principles of carriage of goods by air;- Carriage ofgoods by road and rail;- Practices of customs activities and port procedures;- The art of consolidation and intermodal transport- Freight forwarding documentation practices- The use of incoterms- Application of documentary credits;- Cargo insurance; and- Liability insurance.

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INTRODUCTIONWhat do the term Logistics Management in sea freight means?

The transportation ofgoods in ships, or goods sent by sea. It simply meansthe Logistics is the art and science of managing and controlling the flow of

goods, energy, information and other resources like products, services, and

people, from the source of production to the marketplace. It is difficult to

accomplish any marketing or manufacturing without logistical support. It

involves the integration of information, transportation, inventory, warehousing,

material handling, and packaging. The operating responsibility of logistics is

the geographical repositioning of raw materials, work in process, and finished

inventories where required at the lowest cost possible.

Overview of LogisticsThe word of logistics originates from the ancient Greek logos (),

which means ratio, word, calculation, reason, speech, and oration.

Logistics as a concept is considered to evolve from the military's need to

supply themselves as they moved from their base to a forward position. In ancient

Greek, Roman and Byzantine empires, there were military officers with the title

Logistikas who were responsible for financial and supply distribution matters.

The Oxford English dictionary defines logistics as: The branch of military

science having to do with procuring, maintaining and transporting material,

personnel and facilities.Another dictionary definition is: "The time related

positioning of resources." As such, logistics is commonly seen as a branch of

engineering which creates "people systems" rather than "machine systems".

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Military logistics

In military logistics, experts manage how and when to move resources to the

places they are needed. In military science, maintaining one's supply lines while

disrupting those of the enemy is a crucialsome would say the most crucial

element of military strategy, since an armed force without food, fuel and

ammunition is defenseless.

The Iraq war was a dramatic example of the importance of logistics. It had

become very necessary for the US and its allies to move huge amounts of men,

materials and equipment over great distances. Led by Lieutenant General William

Pagonis, Logistics was successfully used for this movement. The defeats of the

British in the American War of Independence, and the defeat of Rommel in World

War II, have been largely attributed to logistical failure. The historical leaders

Hannibal Barca and Alexander the Great are considered to have been logistical

geniuses.

Logistics Management

Logistics Management isthat part of the supply chain which plans,

implements and controls the efficient, effective forward and reverse flow and

storage of goods, services and related information between the point of origin and

the point of consumption in order to meet customers requirements.

Logistics management is applicable to public as well as private sector,

Public sector are government undertaking, government start business with and so

on. Private sector is classified into sectoral segmentation of industry. Ex. electrical,

mechanical, electronics etc.

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Business logistics

Logistics as a business concept evolved only in the 1950s. This was

mainly due to the increasing complexity of supplying one's business with materials

and shipping out products in an increasingly globalized supply chain, calling for

experts in the field who are called Supply Chain Logisticians. This can be defined

as having the right item in the right quantity at the right time for the right price and

is the science of process and incorporates all industry sectors. The goal of logistic

work is to manage the fruition of project life cycles, supply chains and resultant

efficiencies.

In business, logistics may have either internal focus(inbound logistics), or

external focus (outbound logistics) covering the flow and storage of materials from

point of origin to point of consumption (see supply chain management). The main

functions of a logistics manager include Inventory Management, purchasing,

transport, warehousing, and the organizing and planning of these activities.

Logistics managers combine a general knowledge of each of these functions so that

there is a coordination of resources in an organization. There are two

fundamentally different forms of logistics. One optimizes a steady flow of material

through a network of transport links and storage nodes. The other coordinates a

sequence of resources to carry out some project. Logistics as a concept is

considered to evolve from the military's need to supply themselves as they moved

from their base to a forward position. In ancient Greek, Roman and Byzantine

empires, there were military officers with the title Logistikas who were

responsible for financial and supply distribution matters.

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ShippingShipping has multiple meanings. It can be a physical process of

transporting goods and cargo, by land, air, and sea. It also can describe the

movement of objects by ship.

Land or "ground" shipping can be by train or by truck. In air and sea

shipments, ground transportation is often still required to take the product from its

origin to the airport or seaport and then to its destination. Ground transportation is

typically more affordable than air shipments, but more expensive than shipping by

sea.

Shipment of freight by trucks, directly from the shipper to the destination,is known as a door to door shipment. Vans and trucks make deliveries to sea ports

and air ports where freight is moved in bulk.

Much shipping is done aboard actual ships. An individual nation's fleet and

the people that crew it are referred to its merchant navy or merchant marine.

Merchant shipping is essential to the world economy, carrying 90% of

international trade with 50,000 merchant ships worldwide. The term shipping in

this context originated from the shipping trade of wind power ships, and has come

to refer to the delivery of cargo and parcels of any size above the common mail of

letters and postcards.

Ship transport is watercraft carrying people (passengers) or goods (cargo).

Sea transport has been the largest carrier of freight throughout recorded history.

Although the importance of sea travel for passengers has decreased due to aviation,

it is effective for short trips and pleasure cruises. Transport by water is cheaper

than transport by air.

Ship transport can be over any distance by boat, ship, sailboat or barge,

over oceans and lakes, through canals or along rivers. Shipping may be for

commerce, recreation or the military. Virtually any material that can be moved, can

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be moved by water, however water transport becomes impractical when material

delivery is highly time-critical. "General cargo" is goods packaged in boxes, cases,

pallets, and barrels. Containerization revolutionized ship transport in the 1960s.

When a cargo is carried in more than one mode, it is intermodal or co-modal.

MERCHANT SHIPPINGA nation's shipping fleet (merchant navy, merchant marine, merchant

fleet) consists of the ships operated by civilian crews to transport passengers or

cargo. Professionals are merchant seaman, merchant sailor, and merchant mariner,

or simply seaman, sailor, or mariner. The terms "seaman" or "sailor" may refer to amember of a country's navy.

2005 registration of merchant ships (1,000 gross register tons (GRT) and over)

per country.

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According to the 2005 CIA World Fact book, the world total number of

merchant ships of 1,000 Gross Register Tons or over was 30,936. Statistics for

individual countries are available at the List of merchant marine capacity by

country.

Professional marinersA ship's complement can be divided into four categories: the deck department,

the engineering department, the steward's department, and other.

Deck department

An able seaman stands iceberg

lookout on the bow of the freighter

USNS Southern Cross during a re-

supply mission to McMurdo Station,

Antarctica; circa 1981.

Officer positions in the deck

department include but not limited

to: Master and his Chief, Second,

and Third officers. The official

classifications for unlicensed

members of the deck department are

Able Seaman and Ordinary Seaman.

An able seaman stands iceberg lookout on the bow of the

freighter USNS Southern Cross during a re-supply mission

to McMurdo Station, Antarctica circa 1981.

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A common deck crew for a ship includes:

(1) Chief Officer/Chief Mate

(1) Second Officer /Second Mate

(1) Third Officer / Third Mate

(1) Boatswain

(2-6) Able Seamen

(0-2) Ordinary Seamen

A deck cadet is person who is carrying out mandatory seatime to achieve their

officer of the watch certificate. Their time onboard is spent learning the operations

and tasks of everyday life on a merchant vessel.

Engineering departmentA ship's engineering department consists of the members of a ship's

crew that operate and maintain the propulsion and other systems on board the

vessel. Marine Engineering staff also deal with the "Hotel" facilities on board,

notably the sewage, lighting, air conditioning and water systems. They deal with

bulk fuel transfers, and require training in firefighting and first aid, as well as in

dealing with the ship's boats and other nautical tasks- especially with cargo

loading/discharging gear and safety systems, though the specific cargo discharge

function remains the responsibility of deck officers and deck workers. On LPG and

LNG tankers however, a cargo engineer works with the deck department during

cargo operations, as well as being a watch keeping engineer.

A common Engineering crew for a ship includes:

(1) Chief Engineer

(1) Second Engineer / First Assistant Engineer

(1) Third Engineer / Second Assistant Engineer

(1-2) Fourth Engineer / Third Assistant Engineer

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(0-2) Fifth Engineer / Junior Engineer (1-3)

Oiler (unlicensed qualified rating) (0-3)

Greaser/s (unlicensed qualified rating)

(1-5) Entry-level rating (such as Wiper (occupation), Utility man, etc.)

Many American ships also carry a Qualified Member of the Engine Department.

Other possible positions include Motorman, Machinist, Electrician, Refrigeration

Engineer, and Tanker man. Engine Cadets are trainee engineers who are

completing sea time necessary before they can obtain a watch keeping license.

Steward's department

A typical Steward's department for a cargo ship would be composed of a

Chief Steward, a Chief Cook, and a Steward's Assistant. All three positions are

typically filled by unlicensed personnel.

The chief steward directs, instructs, and assigns personnel performing

such functions as preparing and serving meals; cleaning and maintaining officers'

quarters and steward department areas; and receiving, issuing, and inventorying

stores.

On large passenger vessels, the Catering Department is headed by the

Chief Purser and managed by assistant pursers. Although they enjoy the benefits of

having officer rank, they generally progress through the ranks to become pursers.

Under the pursers are the department heads - such as chief cook, head waiter, head

barman etc. They are responsible for the administration of their own areas.

The chief steward also plans menus; compiles supply, overtime, and costcontrol records. May requisition or purchase stores and equipment. May bake

bread, rolls, cakes, pies, and pastries.

A chief steward's duties may overlap with those of the Steward's

Assistant, the Chief Cook, and other Steward's Department crewmembers.

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In the United States Merchant Marine, in order to be occupied as a chief

steward a person has to have a Merchant Mariner's Document issued by the United

States Coast Guard. Because of international conventions and agreements, all chief

cooks who sail internationally are similarly documented by their respective

countries.

Other DepartmentsStaff officer positions on a ship, including Junior Assistant Purser, Senior

Assistant Purser, Purser, Chief Purser, Medical Doctor, Professional Nurse, Marine

Physician Assistant, and Hospital Corpsman, are considered administrative

positions and are therefore regulated by Certificates of Registry issued by the

United States Coast Guard. Pilots are also merchant marine officers and are

licensed by the Coast Guard. Formerly, there was also a radio department, headed

by a chief radio officer and supported by a number of radio officers. Since the

introduction of GMDSS (Satellite communications) and the subsequent

exemptions from carrying radio officers if the vessel is so equipped, this

department has fallen away, although many ships do still carry specialist radio

officers, particularly passenger vessels. Many radio officers became 'electro-

technical officers', and transferred into the engineering department.

Life at seaMariners live much of their life spent beyond the reach of land. They

face sometimes dangerous conditions at sea. Yet men and women still go to sea.

For some, the attraction is a life unencumbered with the restraints of life ashore.

Sea-going adventure and a chance to see the world also appeal to many seafarers.

Whatever the calling, those who live and work at sea invariably confront social

isolation.

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Findings by the Seafarer's International Research Center indicate a leading

cause of mariners leaving the industry is "almost invariably because they want to

be with their families." U.S. merchant ships typically do not allow family members

to accompany seafarers on voyages. Industry experts increasingly recognize

isolation, stress, and fatigue as occupational hazards. Advocacy groups such as

International Labour Organization, a United Nations agency, and the Nautical

Institute are seeking improved international standards for mariners.

Ocean voyages are steeped in routine. Maritime tradition dictates that each

day be divided into six four-hour periods. Three groups of watch keepers from the

engine and deck departments work four hours on then have eight hours off watchkeeping. However there are many overtime jobs to be done daily. This cycle

repeats endlessly, 24 hours a day while the ship is at sea. Members of the steward

department typically are day workers who put in at least eight-hour shifts.

Operations at sea, including repairs, safeguarding against piracy, securing cargo,

underway replenishment, and other duties provide opportunities for overtime work.

Service aboard ships typically extends for months at a time, followed by protracted

shore leave. However, some seamen secure jobs on ships they like and stay aboard

for years.

In rare cases, veteran mariners choose never to go ashore when in port.

Further, the often quick turnaround of many modern ships, spending only a matter

of hours in port, limits a seafarer's free-time ashore. Moreover, some foreign

seamen entering U.S. ports from a watchlist of 25 high-risk countries face

restrictions on shore leave due to security concerns in a post 9/11 environment.

However, shore leave restrictions while in U.S. ports impact American seamen as

well. For example, the International Organization of Masters, Mates & Pilots notes

a trend of U.S. shipping terminal operators restricting seamen from traveling from

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the ship to the terminal gate. Further, in cases where transit is allowed, special

"security fees" are at times assessed.

Such restrictions on shore leave coupled with reduced time in port by

many ships translate into longer periods at sea. Mariners report that extended

periods at sea living and working with shipmates who for the most part are

strangers takes getting used to. At the same time, there is an opportunity to meet

people from other ethnic and cultural backgrounds. Recreational opportunities

have improved aboard some U.S. ships, which may feature gyms and day rooms

for watching movies, swapping sea stories, and other activities. And in some cases,

especially tankers, it is made possible for a mariner to be accompanied by

members of his family. However, a mariners off duty time is largely a solitary

affair, pursuing hobbies, reading, writing letters, and sleeping.

On modern ocean going vessels, typically registered with a flag of

convenience, life has changed immensely in the last 20 years. Most large vessels

include a gym and often a swimming pool for use by the crew. Since the Exxon

Valdez incident, the focus of leisure time activity has shifted from having officer

and crew bars, to simply having lounge-style areas where officers or crew can sit to

watch movies. With many companies now providing TVs and DVD players in

cabins, and enforcing strict smoking policies, it is not surprising that the bar is now

a much quieter place on most ships. In some instances games consoles are

provided for the officers and crew. The officers enjoy a much higher standard of

living on board ocean going vessels. Crews are generally poorly paid, poorly

qualified and have to complete contracts of approx 9 months before returning

home on leave. They often come from countries where the average industrial wage

is still very low, such as the Philippines or India. Officers however, come from all

over the world and it is not uncommon to mix the nationality of the officers on

board ships. Contracts average at the 4 month mark for officers, with generous

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leave. Most Ocean going vessels now operate an Unmanned Engineroom System

allowing engineers to work days only. The engine room is computer controlled by

night, although the duty engineer will make inspections during unmanned

operation. Engineers work in a hot, humid, noisy atmosphere. Communication in

the engineroom is therefore by hand signals and lip-reading, and good teamwork

often stands in place of any communication at all.

Ships and watercraftShips and other watercraft are used for ship transport. Types can be

distinguished by propulsion, size or cargo type. Recreational or educational craft

still use wind power, while some smaller craft use internal combustion engines to

drive one or more propellers, or in the case of jet boats, an inboard water jet. In

shallow draft areas, such as the Everglades, some craft, such as the hovercraft, are

propelled by large pusher-prop fans.

Cargo vessels types:

Until the 20th Century, ships generally, were all-purpose cargo vessels,

with very little specialisation (with the exception of tank vessels which first

appeared in the 1880s). All cargoes were carried in general purpose holds, or on

deck. Modern commercial vessels are designed and built to carry specific cargo

types. The names we give to the various vessel types reflect the type of cargo for

which they are designed and the names we give to the various vessel types reflect

the type of cargo for which they are designed and built to carry. For example, a

"bulk carrier" is specially designed to carry cargo "in bulk" and the hatch cover and

hold design is focused on the carriage of raw dry cargo goods, such as coal, grain,

iron ore and bauxite, which are simply poured into cavernous holds then grabbed

and bulldozed out at the port of discharge.

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Tankers carry liquid cargo in tanks the most obvious example is the well-

known oil tanker, but even within this generic type each tanker is specially

designed to carry a particular type of liquid cargo not just crude this generic type,

each tanker is specially designed to carry a particular type of liquid cargo, not just

crude oil. Other liquid cargoes would include petroleum products, chemicals and

yes, even wine! 2 recent hybrid designs of tanker carry Liquefied Natural Gas

(LNG) and Liquefied Petroleum Gas (LPG), both of which need to be kept under

pressure and at low temperature to maintain the cargo in a liquefied state. A further

hybrid is the Floating Production, Storage and Offloading unit (FPSO), which is

usually a large tanker (maybe a converted old VLCC, but now brand new

specialized FPSOs are being built) specifically designed for the oil industry,

working offshore where an onshore facility to process and store offshore oil is

deemed impractical.

Bulk carriers, such as the

Sabrina I seen here, are

cargo ships used to transport

bulk cargo items such as ore

or food staples (rice, grain,

etc.) and similar cargo. It can

be recognized by the large

box-like hatches on its deck,

designed to slide outboard for loading. A bulk carrier could be either dry or wet.

Most lakes are too small to accommodate bulk ships, but a large fleet of lake

freighters has been plying the Great Lakes and St. Lawrence Seaway of North

America for over a century.

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Container ships arecargo ships that carry

their entire load in truck-

size containers, in a

technique called

containerization. They

form a common means

of commercial

intermodal freight transport. Informally known as "box boats," they carry the

majority of the world's dry cargo. Most container ships are propelled by dieselengines, and have crews of between 10 and 30 people. They generally have a

large accommodation block at the stern, directly above the engine room.

Tankers are cargo shipsfor the transport of fluids,

such as crude oil,

petroleum products,

liquefied petroleum gas,

liquefied natural gas and

chemicals, also vegetable

oils, wine and other food -the tanker sector comprises one third of the world

tonnage.

Reefer ships are cargoships typically used to

transport perishable

commodities which

require temperature-

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controlled transportation, mostly fruits, meat, fish, vegetables, dairy products

and other foodstuffs.

Roll-on/roll-off ships,such as the Chi-

Cheemaun, are cargo

ships designed to carry

wheeled cargo such as

automobiles, trailers

or railway carriages.

RORO (or ro/ro)

vessels have built-in

ramps which allow the cargo to be efficiently "rolled on" and "rolled off" the

vessel when in port. While smaller ferries that operate across rivers and other

short distances still often have built-in ramps, the term RORO is generally

reserved for larger ocean-going vessels.

Coastal trading vessels,also known as coasters,

are shallow-hulled ships

used for trade between

locations on the same

island or continent. Their

shallow hulls mean that

they can get through reefs

where sea-going ships usually cannot (sea-going ships have a very deep hull for

supplies and trade etc.).

Ferries are a form of transport, usually a boat or ship, but also other forms, carrying (or ferrying) passengers and sometimes their vehicles. Ferries are also

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used to transport

freight (in lorries

and sometimes

unpowered freight

containers) and

even railroad cars.

Most ferries

operate on regular,

frequent, return

services. A foot-passenger ferry with many stops, such as in Venice, issometimes called a waterbus or water taxi. Ferries form a part of the public

transport systems of many waterside cities and islands, allowing direct transit

between points at a capital cost much lower than bridges or tunnels. Many of

the ferries operating in Northern European waters are ro/ro ships. See the

Herald of Free Enterprise and M/S Estonia disasters.

Cruise shipsare passenger

ships used for

pleasure

voyages, where

the voyage

itself and the

ship's amenities

are considered

an essential part of the experience. Cruising has become a major part of the

tourism industry, with millions of passengers each year as of 2006. The

industry's rapid growth has seen nine or more newly built ships catering to a

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North American clientele added every year since 2001, as well as others

servicing European clientele. Smaller markets such as the Asia-Pacific region

are generally serviced by older tonnage displaced by new ships introduced into

the high growth areas. On the Baltic sea this market is served by cruise ferries.

Ocean Liner is a passenger ship designed to transport people from one seaport to another along regular long-distance maritime routes according to a schedule.

Ocean liners may also carry cargo or mail, and may sometimes be used for

other purposes. Ocean liners are usually strongly built with a high freeboard to

withstand rough seas and adverse conditions encountered in the open ocean,

having large capacities for fuel, food and other consumables on long voyages.

Cable layer is a deep-sea vessel designed

and used to lay

underwater cables for

telecommunications,

electricity, and such.Large superstructure

and one or more

spools that feed off the

transom distinguish it.

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A tugboat is a boatused to manoeuvre,

primarily by

towing or pushing

other vessels (see

shipping) in

harbours, over the

open sea or through

rivers and canals.

They are

also used to tow barges, disabled ships, or other equipment like towboats.

A dredger

(sometimes also

called a dredge) is

a ship used to

excavate in

shallow seas or

fresh water areas

with the purpose

of gathering up

bottom sediments

and disposing of

them at a different

location.

A barge is a flat-bottomed boat, built mainly for river and canal transport ofheavy goods. Most barges are not self-propelled and need to be moved by

tugboats towing or towboats pushing them. Barges on canals (towed by draft

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animals on an adjacent

towpath) contended with

the railway in the early

industrial revolution but

were outcompeted in the

carriage of high value

items due to the higher

speed, falling costs, and

route flexibility of rail

transport.

A Multi-purpose ship (sometimes called a general cargo ship) is used totransport a variety of goods from bulk commodities to break bulk and heavy

cargoes. To provide

maximum trading

flexibility they are

usually geared and

modern examples

are fitted for the

carriage of

containers and

grains. Generally

they will have large open holds and twee decks to facilitate the carriage of

different cargoes on the same voyage. The crew will be highly competent in the

securing of break bulk cargoes and the ship will be equipped with various

lashings and other equipment for sea fastening.

Ships that fall outside these categories include Semi-submersible heavy-liftships or OHGC (Open Hatch General Cargo).

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Major ship size includes:

Handy max: Traditionally the workhorses of dry bulk, the handy and morerecent handymax types remain popular ships less than 60,000dwt. The

handymax sector operates in a large number of geographically dispersed global

trades, mainly carrying grains and minor bulks including steel products, forest

products and fertilizers. The vessels are well suited for small ports with length

and draft restriction and also lacking transshipment infrastructure. This category

is also used to define small-sized oil tanker.

Panamax: Represents the largest acceptable size to transit the panama canal,which can be applied to both freighters and tankers; length are restricted to amaximum of 275 meters, and widths to slightly more than 32 meters. The

average size of such abig ship is about 65,000 dwt. They mainly carry coal

,grain and lesser extent, minor bulks, including steel product, forest products

and fertilizers.

Capsize: refer to a rather ill-defined standard which have the common characteristics of being incapable of using the panama or Suez Canal not

necessarily bcoz of their tonnage, but bcoz of their size. These ships serve

deepwater terminals handling raw materials, such as iron ore and coal.

Aframax: A tanker of standard size between 75,000 and 11,5000 dwt. The largest tanker size in the AFRA (Average freight Rate Assessment) tanker rate

system.

Suezmax: This standard, which represents the limitation of Suez Canal, hasevolved. Before 1067, the Suez Canal could only accommodate tanker ship with

maximum of 80,000dwt. The canal was closed between 1967 and 1975 bcoz of

Israel -Arab conflict. Once it reopened in 1975, the suezmax capacity went to

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150,000 dwt. An enlargement to enable the canal to accommodate 200,000 dwt

tankers is being considered.

VLCC: Very Large Crude Carriers, 150,000 to 320,000 dwt in size. They offergood flexibility for using terminals since many can accommodate their draft.

They are used in ports that have depth limitations, mainly around the

Mediterranean, West Africa and the North Sea. They can be ballasted through

the Suez Canal.

ULCC: Ultra Large Crude Carriers, 300000 to 550,000 dwt in size. It is usedfor carrying crude oil on long routes. The enormous sizes of these vessels

require custom built terminals.

Terms of shipment:Common trading terms used in shipping goods internationally include:

Freight on board, or free on board (FOB): The exporter delivers the goods at thespecified location (and on board the vessel). Costs paid by the exporter include

load and lash, including securing cargo not to move in the ships hold, protecting

the cargo from contact with the double bottom to prevent slipping, and protection

against damage from condensation. For example, "FOB Kunming Airport" means

that the exporter delivers the goods to the airport, and pays for the cargo to be

loaded and secured on the plane. The exporter is bound to deliver the goods at his

cost and expense. In this case, the freight and other expenses for outbound traffic

are borne by the importer.

Cost and freight (C&F, CFR, and CNF): Insurance is payable by the importer andthe exporter pays the ocean shipping/air freight costs to the specified location. For

example, C&F Los Angeles (the exporter pays the ocean shipping/air freight costs

to Los Angeles). Many of the shipping carriers (such as UPS, DHL, and FedEx)

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offer guarantees on their delivery times. These are known as GSR guarantees or

"guaranteed service refunds"; if the parcels are not delivered on time, the customer

is entitled to a refund.

Cost, insurance, and freight (CIF): Insurance and freight are all paid by theexporter to the specified location. For example, at CIF Los Angeles, the exporter

pays the ocean shipping/air freight costs to Los Angeles including the insurance.

The term "best way" generally implies that the shipper will choose the carrierwho offers the lowest rate (to the shipper) for the shipment. In some cases,

however, other factors, such as better insurance or faster transit time will cause the

shipper to choose an option other than the lowest bidder.

Agency Fee: Fee payable by a ship-owner or ship operator to a port agent.Agent: A person or organization authorized to act for or on behalf of another

person or organization. In the shipping field, an Agent is a corporate body with,

which there is an agreement to perform particular functions on behalf of them at an

agreed payment. An Agent is either a part of a shipping corporation or an

independent body part of a shipping corporation or an independent body.

Bill of Lading (B/L, plural: Bs/L): A document which evidences a contract ofcarriage by sea.

Break Bulk Cargo: General cargo conventionally stowed as opposed to unitized,containerized and Roll On-Roll Off cargo.

Bulk Carrier: Single deck vessel designed to carry homogeneous unpacked drycargoes such as grain, iron ore and coal.

Cargo: Goods transported or to be transported, all goods carried on a shipcovered by a B/L.

Carrier: The party undertaking transport of goods from one point to anotherClaim: A charge made against a carrier for loss, damage or delay.

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Clean Bill of Lading: A Bill of Lading which does not contain any qualificationabout the apparent order and A Bill of Lading which does not contain any

qualification about the apparent order and condition of the goods to be transported.

Consignee: The party such as mentioned in the transport document by whom thegoods, cargo or containers are to be received.

Consignment: A separate identifiable number of goods (available to be)transported from one consignor to one consignee via one or more than one modes

of transport and specified in one single transport document.

Consignor: ShipperContainer Terminal: Place where loaded and/or empty containers are loaded or

discharged into or from a means of transport.

Damaged Cargo Report: Written statement concerning established damages tocargo and/or equipment.

Dangerous Goods: Goods are to be considered dangerous if the transport of suchgoods might cause harm, risk, peril, or other evil to people, environment,

equipment or any property whatsoever.

Dead freight: Slots paid for but not used. Delivery Order: A carrier's delivery order (negotiable document) is used forsplitting a B/L (after surrender) A carrier s delivery order (negotiable document) is

used for splitting a B/L (after surrender) in different parcels and have the same

function as a B/L.

Export License: Document granting permission to export as detailed within aspecified time.

FTL: Full Truck Load, an indication for a truck transporting cargo directly fromsupplier to receiver.

Free In and Out (FIO): Transport condition denoting that the freight rate excludesthe costs of loading and discharging and, if appropriate, stowage and lashing.

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Freight Invoice: An itemized list of goods shipped and services rendered statingfees and charges.

Freight Prepaid: Freight and charges to be paid by the consignor. Freight Ton: A unit for freighting cargo according to weight and/or cubicmeasurement A unit for freighting cargo according to weight and/or cubic

measurement.

Full Container Load (FCL): A general reference for identifying container loads ofcargo loaded and/or discharged at merchants' premises.

Gantry Crane: A crane or hoisting machine mounted on a frame or structurespanning an intervening space, which often travels on rails.

Gross Tonnage (GRT): The measure of the overall size of a vessel determined inaccordance with the provisions of the international convention on measurement of

vessels usually expressed in register ton.

Heavy Lift: Single commodity exceeding the capacity of normal loadingequipment and requiring special equipment and rigging methods for handling.

House to House Transport: The transport of cargo from the premises of theconsignor to the premises of the consignee The transport of cargo from the

premises of the consignor to the premises of the consignee.

Insurance Certificate: Proof of an insurance contractIntermodal Transport: The movement of goods (containers) in one and the sameloading unit or vehicle which uses successively several modes of transport without

or vehicle which uses successively several modes of transport without handling of

the goods themselves in changing modes.

Less than Container Load (LCL): For operational purposes a LCL (Less than fullcontainer load) container is considered a container in which multiple consignments

or parts thereof are shipped.

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Letter of Indemnity: Written statement in which one party undertakes tocompensate another for the costs and consequences of carrying out a certain act.

The issue of a letter of indemnity is sometimes used for cases when a shipper likes

receiving a clean Bill of Lading while a carrier is not shipper likes receiving a

clean Bill of Lading while a carrier is not allowed to do so. Within P&O Nedlloyd

the issues of letters of indemnity are contrary to the company's instructions.

Liner in Free Out (LIFO): Transport condition denoting that the freight rate isinclusive of the sea carriage and the cost of loading, the latter as per the custom of

the port. It excludes the cost of discharging.

Mate's Receipt: A document signed by the chief officer of a vesselacknowledging the receipt of a certain consignment on board of that vessel. On this

document, remarks can be made as to the order and condition of the consignment.

Multimodal Transport: The carriage of goods (containers) by at least twodifferent modes of transport.

Negotiable: In terms of documents, 'negotiable' means that e.g. a Bill of Lading ishanded over/transferred in the right manner (viz proper endorsement) to another

person either over/transferred in the right manner (viz. proper endorsement) to

another person either endorsed in blank or endorsed to a person and that person

acquires, by this transfer certain rights vis-? is the goods e.g. is entitled to take

possession of the goods.

Owner: The legal owner of cargo, equipment or means of transport. Particular Average: A fortuitous partial loss to the subject matter insured

proximately caused by an insured peril but which is not a general average loss.

Particular average only relates to damage and/or expenses which are exclusively

borne by the owners of a vessel which has sustained damage as a result of e g

heavy weather or by the owners of the cargo which has been damage as a result of

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e.g. heavy weather or by the owners of the cargo, which has been damaged in

transit.

Quotation: Amount stated as the price according to tariff for certain services to beprovided or issued to a customer with specification on conditions for carriage.

Rate: The price of a transport service.Rebate: That part of a transport charge which the carrier agrees to return.Roll-on Roll-off (Ro-Ro): System of loading and discharging a vessel wherebythe cargo is driven on System of loading and discharging a vessel whereby the

cargo is driven on and off by means of a ramp.

Schedule: A timetable including arrival/departure times of ocean- and feeder

vessels and also inland transportation. It refers to named ports in a specific voyage

(journey) within a certain trade indicating the voyage (number's). In general: The

plan of times for starting and/or finishing activities.

Seaworthiness: Fitness of a vessel to travel in open sea mostly related to aparticular voyage with a particular cargo.

Shipment: A separately identifiable collection of goods to be carried.Shipper: The merchant (person) by whom, in whose name or on whose behalf acontract of carriage of goods has been concluded with a carrier or any party by

whom, in whose name or on whose behalf the goods are actually delivered to the

carrier in relation to the contract of carriage.

Tariff: The schedule of rates, charges and related transport conditions. Time Sheet: Statement, drawn-up by the ship's agent at the loading anddischarging ports, which details the time worked in loading and discharging the

cargo together with the amount of lay time used.

Voyage: A journey by sea from one port or country to another one or, in case of around trip, to the same port.

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SEA TRANSPORT

Definition: Transport goods and commodities by ship Goods is measured in tons

but transport is Transport goods and commodities by ship. Goods is measured in

tons but transport is measured by tons / miles (the weight carried multiplied by thelength of the voyage). The value of a commodity is not its price or its cost but its

utility , can be invariable increased by transport for example, coal which is

underground has no value , but ounce transported to a person freezing in winter it

can have considerable value

Characteristic Of Sea Transport:

1. Sea transport is slowships carrying raw material (tramp) move at around 13-14knots- container ships speed 18-25 knots.2. Sea transport is cheap because e it can take advantage of economies of scale,large ships can reduce the cost per unit carried.

3. Sea transport connect land which separated by water.

Pattern of seaborne trade:World seaborne trade increased strongly in 2004, reaching 6.76 billion tons of

loaded goods. The annual growth rate, calculated with the provisional data

available for year 2004, reached 4.3 per cent. Total maritime activities measured in

ton-miles increased to 27,635 billion ton-miles, compared with25, 844 billion ton-

miles in 2003. The world merchant fleet expanded to 895.8 million deadweight

tons (dwt) at the beginning of 2005, a 4.5 per cent increase.

Development of International sea born trade, selected years.

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YEAR Tanker Cargo Dry Cargo Bulk CargoTotal

(All Cargoes)

1990 1442 1124 448 2566

1995 1871 1833 796 3704

2000 1755 2253 968 4008

2006 2163 9821 1288 5983

2008 2674 4724 1828 7416

1unit - Millions Of Tons

Shipping markets:World seaborne trade in cargo (things to be moved) splits into three markets.

1. The Liner Market: This deals with general cargo which is usually relatively

expensive compared with bulks and the liner ships run on scheduled routes with

fixed tariff and condition.

2. The Dry Cargo Tramp Market: Tramps, in shipping terms relates to the way the

ship tramps from place to place where the market drawn it .Tramps carry mainly

ship load of bulk materials , the main commodities or Grain, Coal etc . The

freight rates and conditions are negotiable as per Charter parties.

3. The Tanker Market: Tankers are specialized trumps being designed to carry

liquids in bulk. The oil trade routes are limited. This market contains 2 main

groups, Large tankers carry the crude oil and smaller carry the refined products.

THE LINERSIt started through the last century when steamships appeared and started

offering started scheduled services between ports. They then tended to offer a

faster and more highly more highly quality service than the selling ships and

despite their higher freight rate tended to their rate tended to attract shippers

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with high value cargo who were prepared to pay extra for speed and predictable

delivery dates. In the sixtieth the conventional general cargo ship was increasingly

replaced by the container ship. Increasingly replaced container. Then

containerization has had effect and it will continue to have on shipping industry

.Container ships have a larger, faster, and a quicker turn around than the ships they

replace. The containers are introduced to reduce the cargo handling cost introduced

cargo cost which has increased for more than any shipping cost and to increase

productivity comparing port time for general cargo ships and container ships.

LINER FREIGHT RATESLiner freight rates are relate to a tariff of somewhat or some sort .They are, far

less volatile that those in tramp shipping. In many cases that any increases in the

tariff may only take place after period of notice. To overcome short -run variation

in cost such as changes in bunker prices or in rate of as changes exchanges, liner

operators generally resort surcharges typical of which are BAF AND CAF.

LINER CONEFERENCESConferences are organization of shipping lines operating on particular route.

For example, the Transpacific West Bound Freight Agreement operates on the

route from the US to Far east route and the Indian sub-content. The conferences are

formal agreement between shipping lines on route setting prices and sometimes

pooling profits or revenues, managing capacity, a locating routes and offering

loyalty discounts.

Conferences can be either open or closed to accept new members.

Conferences issue a freight tariff.

Conferences may also allocate output among their members by either cargoquotas or Sailing quotas.

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Conferences employ policing agencies to check on adherence to the tariffConference Practice.

The conferences set prices, often based on loyalty arrangement they use twokind of loyalty contracts; The contract rates and differ rebate .The shipper sign

in agreement to deal in exclusively with the conference and in turn receive

discounts on the freight rate .

The conferences response to an entrant by lowering the rate on one of its

vessels to compete with the entrant until entrant lost money and left the market.

In the last decade, the conferences have lost their importance and decline in the

number of the members.

CHARTERINGCharterparty A charterparty is a contract of lease of a ship in whole

or in part for a long or short period of time or for a particular voyage. It has been

said that its origin lies in the mediaeval Latin "carta partita" or "charta partita" or

"charta divisa", where an agreement was torn into two pieces and one half was

given to each party. Proof of the whole contract was no doubt difficult if one party

was obstinate - modern methods of photocopying the contract for each party seem

preferable Affreightment is essentially placing a ship at the disposal of another

party, while transport is essentially the carrier taking charge of goods. Hire is the

consideration paid under demise and time charterparties; freight is the

consideration paid under voyage charterparties and bills of lading.

a) Charterparty by demise A Charterparty by demise is a contract by which theship- owner places a ship in the hands of the chartered who assumes possession

and control. The consideration paid by the chartered is hire which is payable at

specified intervals during the term of the charter. Under a demise Charterparty, the

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ship-owner appoints the master and the crew, although they are paid and controlled

by the demise chartered.

A bareboat charter is a demise charter whereby the bareboat chartered names,pays and controls the master and the crew.

Among the most common forms of demise charter are the "Baltic and

International Maritime Council Standard Bareboat Charter" (Code Name:

"Barecon '89"); and the "BIMCO Standard Charter" (Code Name: "Barecon

2001") forms of BIMCO.

b) Consecutive voyage charter A consecutive voyage charter party is a voyageCharterparty for a determined number of consecutive voyages.c)Slot charter - A Charterparty whereby the shipper leases one or more "slots,"each capable of holding a 20-foot container, aboard a container ship.

d) Space charter it is a contract whereby a capacity of carriage is put at thedisposal of the shipper for the carriage of his goods during a period of time under

particular terms and conditions. Whether it is a contract of

Hire or a contract of carriage or even a contract of agency like a freight forwarders

contract, depends on its terms.

e)Time Charterparty A time Charterparty is a contract whereby the ship-ownerplaces a fully equipped and manned ship at the disposal of the chartered for a

period of time for a consideration called "hire" payable at specified intervals during

the term of the charter. Among the most common forms of time Charterparty are

the New York Produce Exchange (NYPE) and the Exchange (NYPE) and Baltime.

Main terms

Ships name and other details to identify her

Many other detail of the ship including total deadweight grain and bale cubic,draft, number of decks hold and hatches, number and lifting capacity of

derricks ,crane etc.

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Rate of hire expressed in days or months.

The period in months or years.

Delivery place.

Re-delivery place.

Delivery time ex: not before certain date.

f)Voyage Charterparty: A voyage Charterparty is a contract whereby the ship-owner places all or part of the carrying capacity of a ship at the disposal of the

charter (the voyage chartered) for the transport of goods agreed upon, on one or

more voyages, for a consideration called "freight" based on the quantity of cargo

carried, and usually payable at the end of the voyage. Among the most commonlyused form is the "Baltic and International Maritime Council Uniform General

Charter form of BIMCO.

Main Contract term:

Ships name and other details to identify her

name and details

The cargo and the quantity the ship carry

The loading and discharge ports

Rate of freight

"Lay days and canceling" ex: loading not to commence not before a certain datewith charterers having the option to cancel the charter if the ship is later than

the second date.

The rates of loading and discharging

Demurrage and dispatch.

Charter party forum to be used

Total commission in involve

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SHIPPING DOCUMENTATIONDocumentation used in international trade performs a number of separate functions

and these can be divided into and can into the following categories: instruction;

financial; identification; authorization.. In this section we will be dealing withthose documents which are used in international trading activity.

BILL OF LADINGFUNCTION

It is evidence that a contract of carriage exists between shipper (exporter) andship owner.

It is a receipt for goods, showing prima facie that they have been received intothe charge of a carrier.

It is a document of title which allows title to the goods to be transferred byendorsement and delivery of the bill of lading.

Main details to be incorporated in the bill of lading Name and address of the shipper

The name of the vessel name of the

description of cargo, including identifying marks, numbers and types ofpackages, types contents, gross weights and volume;

port of shipment

port of discharge

details of freight, including whether it is to be "prepaid" (at port of dispatch) or"payable at destination" (freight collect);

Consignor's name and address which may be that of the buyer. Alternativelybills of lading may be made out to show "to order" in the consignee box or "to

the order of..."

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Notify party's name and address - often an agent acting on behalf of the

consignee at the port of destination. However, the consignor's details may be

entered in the "Notify party" consignor details be entered box where "order"

bills of lading are applicable

Terms of sale

The date on which the goods are received for shipment or date on which goodsare shipment or shipped on board the named vessel

Number of original bills issued

Signature of shipping line or its appointed agent.

Principal notations on bills of lading:Clean bills and Claused bills:

A "clean" bill of lading is one in which no notation is shown on the

document relating to cargo having been received by the line or shipped in any

other than good condition and correct n any than good and quantity. Thus,

standard printed bills of lading usually bear the wording "Shipped (or received for

shipment) in apparent good order and condition". If no clause to the contrary is

entered, the bills are said to be clean. In the case where the cargo is noted to be

wet, damaged or otherwise in doubtful condition or quantity, bills of lading will be

issued "claused" (or "dirty"), showing the defect in the cargo. It follows that if

goods are the cargo. It allows are shipped under a claused bill, consignees

may reject them or, alternatively, banks may not accept such bills of lading for

payment purposes.

Received bills and shipped bills:

As has already been said above, a bill of lading constitutes a receipt for

goods receipt goods delivered into the charge of a shipping line. Thus the

standard wording on a printed bill of standard printed lading may state

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"Received for shipment..." and will be signed and dated by the line or its will or

agents. Although this shows that the goods have moved out of the exporter's charge

into that of the carrier, it does not show that actual shipment has taken place.

Through bills of lading:

The "through" bill of lading concept allows door-to-door shipments to be

covered by a bill of lading. This became necessary following the development of

containerization. Thus, this type of bill may cover ocean shipment, plus inland

transport by other modes.

Combined transport bills of lading:

Similar to a through bill of lading, the combined transport bill of ladingallows for the contract of bill the carriage to be covered by a single document and a

clearly defined single set of conditions of carriage to include the use of road and/or

rail shipment at either end of the sea leg. This document will, when issued, extend

the carrier's liability as set out in the carrier as set in the combined transport bill of

lading to the other transport modes. Freight forwarders operating as non-vessel

owning carriers (NVOCS) will most issue this type of document.

Group age and house bills of lading:

The concept of groupage - combining a number of individual consignments

into a complete container load for shipment - has been developed over many years

by freight forwarders operating services between two inland points in different

countries working in conjunction with an overseas office or partner. An ocean bill

of lading for a container load of group age is issued by the shipping lines showing

the sending forwarder as the shipper and the receiving forwarder as the consignee.

The forwarder thereafter issues his own house bills to individual exporters. These

house bills become the controlling document for the release of the cargo at

destination and enable the exporter, if required, to negotiate these with his

customer in return for payment of the goods.

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It is important to note that a "house" bill of lading does not have the same

status as an ocean bill issued by a shipping line as it is not a document of title, in

the same sense of the word, as an ocean bill. However, it is capable of negotiation,

and is often acceptable to banks for letter of credit purposes when this has been

stipulated in the credit at the time it is opened.

Negotiation of bills of lading:

The bill of lading is a negotiable document which allows title to goods to be

transferred by endorsement and delivery. This facility gives one or other parties to

the transaction control over title to the goods and for this reason letters of creditoften stipulate certain types of bill of lading in order for this control to be

exercised. Three basic types of endorsement are possible:

1. Endorsement by consignee:

In this case the bill of lading is completed as below:

Shipper box in bill of lading: Actual shipper (exporter)

Consignee box in bill of lading: Actual consignee (buyer)

Notify box in bill of lading: Consignee's agent at port of arrival.

Completion of the bill of lading in this manner allows either the bill allowsconsignee to present himself in person to the line to take delivery of the goods

or to endorse the bill of lading on the reverse side to allow his agent to do so

and to deliver the goods to him. Thus the consignee exercises control over who

takes the goods in charge at the destination port.

2. "To order" bills of lading

Bills of lading made out "to order" are completed as below:

Shipper box in bill of lading: Actual shipper (exporter)

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Consignee box in bill of lading: "To order"

Notify box in bill of lading: Actual consignee (buyer)

In this instance, the shipper must stamp and sign the bill of shipper must stamp

sign the lading in order for title to the goods to be transferred to the

consignee. Thus the bill of lading is useless to the consignee without this

endorsement. This is a useful safeguard against bills being accidentally

transmitted to buyers directly. Clearly, should this happen the buyer would not

be able to take delivery of the goods and the bill of lading would have to be

returned to the shipper for endorsement and presentation to the bank. Bills

shipper or and bank Bills of lading completed in this manner are also said to be"To order blank endorsed".

3. To order of (bank)

In this case, the bill of lading is completed as follows:

Shipper box in bill of lading Actual shipper (exporter)

Consignee box in bill of lading To the order of (bank)

Notify box in bill of lading True consignee (buyer)

The bank is the party which carries out the endorsement in this instance andwhich, therefore, exercises control over the goods. Thus, if the bank wishes to

ensure that the buyer has actually paid for the goods before he takes delivery,

the bank may goods before he takes the endorse the bill of lading when

payment is made.

Sea waybills:Sea waybills offer a non-negotiable alternative to the bill of lading.

Generally speaking, they embody the Hague-Visby Rules. With a few exceptions

they are not negotiable and are, therefore, not usable as a means of transferring title

to goods. A freight forwarder might use them to control groupage cargo. The sea

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waybill can thus be sent forward with the goods allowing the consignee to take

immediate delivery. The legal protection offered to the shipper under a sea waybill

is thought by some to be inferior to that offered under a bill of lading. However,

being a relative new innovation, there has been insufficient time to test them in

law.

Letter of guarantee:

Letter of guarantee: A written undertaking, or letter of indemnity, usually

provided by a bank, promising to hold the carrier harmless, up to a certain sum, for

claims that may arise from the delivery of goods to a particular person who is

unable to surrender the original bills of lading in return for the goods.

Letter of indemnity:

Letter of indemnity: A written undertaking by a shipper to indemnify a carrier

for any liability which any which the carrier may incur for having issued a clean

bill of lading when, in fact, the goods received were not as stated on the bill of

lading .Such a letter is usually a central document in a fraud, whereby the shipper

and carrier knowingly misrepresent to third parties the actual order and condition

of the goods at the and of the at the time of shipment or the bad order of the

packing, or whereby they issue duplicate bills of lading to replace lost or stolen

originals. Letters of indemnity or stolen originals should not be condoned by courts

and are generally held ineffective as against third parties.

MARITIME GEOGRAPHY

Definition: Studying seas and costal area which you have to find your way

round to pickup and deliver your cargoes.

The distances in shipping are always given in nautical miles which equal to

1852 meters. Latitude and Longitude: Latitude Is used for measuring how far

North or South and Longitude how far east and west. Time is also Is function of

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Longitude this for every 15 you move east you advance your watch one hour and

vice versa for westerly movement

Weather

Ports Water depth and tides

Time zone

LOGISTICAL MOVEMENT BY SEA THROUGHOUT THE WORLD

Oceanic masses and rivers are the two major components of maritime circulation.Oceanic masses account for 71% of the terrestrial surface. The four major oceans

relevant to maritime circulation are: the Pacific (165 millions square km), the

Atlantic (82 million square km), Indian (73 million square km) and the

Mediterranean (2.5 million square (2 km).

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3PL (Third Party Logistics)-

Third-party Logistics is simply the use of an outside company to perform

all or part of the firms materials management and product distribution function.

-- Simchi-Levi (2000)

A relationship between a shipper and third party which, compared with the

basic services, has more customized offerings, encompasses a broad number of

service functions and is characterized by a long-term, more mutually beneficial

relationship

-- Murphy & Poist

(1998)

Characteristics of 3PL:o Perform outsourced logistics activities

o Process management / Multiple activities

o More customized services

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o Mutually beneficial and risk-sharing relationship

o Long-term commitments (1~ 3 years).

Why is it needed?Advantages :

o Cost reduction.

o Focus on core competency.

o Improved efficiency, service and flexibility.

o Industry-specific application.build-to-order systems and e-merchants

Disadvantages:

o Loss of control.

o Impact on in-house workforce.How is a 3PL Differentiated from a Transportation Provider?

Transportation provider gets product from point A to point B Could be considered a 3PL

Just one function of logistics

3PL provider assists in multiple functions.

Successful Implementation of 3PL

Why you want to select the right provider the first time Only about 65% of companies believe their provider is doing a

good job.

55% of logistics outsourcing contracts end in 3-5 years

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The source had a list of 14 key tips for success, but we are goingto focus on the 5 most important issues.

1)Have an outsourcing strategy.Know what your outsourcing strategy is. It needs to be well thought out and

measured against in house solutions and capabilities.

SWOT analysis. As a company you should understand the strengths,weaknesses, opportunities and threats of outsourcing logistics, rather than

keeping them in house.

2)Do your homework.Do a comprehensive study: Clearly document advantages, challenges, costs

and benefits.

Document expectations: Set down expectations in clear terms andinclude current costs.

Make a site visit to the 3PL, and talk with its existing customer.

3)Measure and review performanceHave a efficient and accurate measurement system: Qualitative measures

that focus on effectiveness and quantitative measures that focus on efficient

utilization.

Have an efficient costing system: This will help you to understand the costsinvolved in outsourcing.

Are we making money doing this?4)Create an Implementation Strategy

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Create a project plan road map: Be clear who does what, create a project

management team with members from both organizations and review

progress vs. planned milestones.

5)Nurture the Relationship: Both Parties must nurture the relationship to makeoutsourcing successful. Create mutual trust, respect and a sense of integrity.

A third-party logistics provider (3PL) Provides outsourced or 'third party'

logistics services to companies for part or sometimes all of their supply chain

management functions. Well known 3PLs include DHL, Wincanton, Norbert-

Dentressangle, CEVA & NYK Logistics

A fourth-party logistics provider (4PL) is an independent, singularly

accountable, non-asset based integrator who will assemble the resources,

capabilities and technology of its own organization and other organizations,

including 3PLs, to design, build and run comprehensive supply chain solutions for

clients.

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4PL (4th

party logistics)Manage and direct the activities of multiple 3PLs, serving as an integrator Refinement on the idea of 3PLs 4PLs are not asset based like 3PLsAssembles and manages the resources, capabilities, and technology of

its own organization and other organizations to design, build and run

comprehensive supply chain solutions.

Transways Express 4PLOne stop transport and logistics supplier. Work with suppliers and customers.

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PORTS IN INDIAIndia has a long coastline, spanning 7600 kilometers, forming one of the

biggest peninsulas in the world. It is serviced by 13 major ports (12 government

and 1 corporate) and 187 notified minor and intermediate ports. The latest additionto major ports is Port Blair on June 2010, the 13th port in the country.

Major ports handled over 74% of all cargo traffic in 2007. However, the

words "major", "intermediate" and "minor", do not have a strict association with

the traffic volumes served by these ports. As an example, Mundra Port, a newly

developed minor port in the state of Gujarat registered cargo traffic of around 28.8

million tonnes per annum during the financial year of 2008, which is higher than

that of many major ports.

The classification of Indian ports into major, minor and intermediate has

an administrative significance. Indian government has a federal structure, and

according to its constitution, maritime transport falls under the "concurrent list", to

be administered by both the Central and the State governments. While the Central

Shipping Ministry administer the major ports, the minor and intermediate ports are

administered by the relevant departments or ministries in the nine coastal states

West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa,

Maharashtra and Gujarat. Several of these 187 minor and intermediate ports are

merely "notified"; little or no cargo handling actually takes place. These ports have

been identified by the respective governments to be developed, in a phased

manner, a good proportion of them involving publicprivate partnership.

Cargo handling is projected to grow at 7.7% until 2013-14. Some 60% of

Indias container traffic is handled by the Mumbai Port and Jawaharlal Nehru Port

Trust in Navi Mumbai.

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MAJOR PORTS IN INDIA

There are also 7 shipyards under the control of the central government

of India, 2 shipyards controlled by state governments, and 19 privately owned

shipyards. The major ports handled 423.4 million tons of cargo for the financialyear 2005-2006, with Vishakhapatnam, Kochi, Kolkata Port, Chennai Port and

Kandla carrying the greatest tonnage. Major ports can collectively handle 400+

million tons of cargo annually, and port operations have improved since the mid-

1990s. All major ports, except one (Ennore Port), are government administered,

but private-sector participation in ports has increased. The brief information of

some major ports In India is as follows:

1. CHENNAI PORT

Chennai Port formerly known as Madras Port, is the second largest

port of India, behind the Mumbai Port, and the largest port in the Bay of Bengal.

Being the third oldest port among the 12 major ports of India, it is over 125 years

old, although maritime trade started way back in 1639 on the sea shore. It is an

artificial and all-weather port with wet docks. It was a major travel port before

becoming a major container port. It is a substantial reason for the economic growthof Tamil Nadu, especially for the manufacturing boom in South India, and has

contributed in no small measure to the development of the city. It is due of the

existence of the port that the city of Chennai became known as the Gateway of

South India. The port with 3 docks, 24 berths and draft ranging from 12 to 16.5 m

(39 to 54.1 ft) has become a hub port for containers, cars and project cargo in the

east coast of India.

Location and geography

Chennai Port lies on a flat coastal plain known as the Eastern Coastal

Plains on the east coast of the Indian peninsula known as the Coromandel Coast in

the Bay of Bengal. The port is situated on the thermal equator and is also coastal,

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which prevents extreme variation in seasonal temperature. The climate is tropical,

specifically tropical wet and dry, and for most of the year, the weather is hot and

humid, with temperatures ranging from a maximum of 42C in May to a minimum

of 18C in January. The annual rainfall in the region is about 1250 mm, and the

spring tides are up to 1.2 m (3 ft 11 in).

Chennai Port

Location

Country India

Location

Chennai (Madras)

Details

Opened 1881

Operated by Chennai Port Trust

Owned by Chennai Port Trust, Ministry of Shipping, Government of India

Type of harbor Coastal breakwater, artificial, large seaport

Size of harbor 169.97 ha (420.0 acres)

Land area 237.54 ha (587.0 acres)

Size 407.51 ha (1,007.0 acres)

Available berths 26

Employees 8,000 (2004)

Chairman Atulya Misra

Main tradesAutomobiles, motorcycles and general industrial cargo including

iron ore, granite, coal, fertilizers, petroleum products, and containers

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Majorexports:Ironore,leather,cottontextiles

Major imports: Wheat, raw cotton, machinery.

World Port

49450Index Number

Website http://www.chennaiport.gov.in/

Port layout and infrastructure

Chennai port was the second smallest in the country measured by surface area,encompassing only 274 hectares. Chennai port

area is divided into north, central and south Type Nos.Area

(sq.m)zones and fishing harbors Dr. Ambedkar Dock,

Satabt Jawahar Dock, and Bharathi Dock alongCovered

with the container terminal, and draft ranging Warehouses 12 65,686

from 1216.5 m (3954.1 ft). Jawahar Dock has Transit sheds 8 36,000

6 ert s, B arat Doc as 3 ert s or o an Covered area

6 43,450iron ore), the container terminal has 3 berths and for FCI

the moorings has 1 berth. The berths can handleContainer

2 12,600containers as well as liquid and dry bulk andfreight stations

breakbulk cargoes.

Region Water spreadLand areaNo. of

berths

Inner harbour 218 acres 413 acres 16

Outer harbour200 acres 100 acres 7

Total 418 acres 513 acres 23

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Terminals

Chennai Container Terminal: Chennai Container Terminal (CCT) is the first

container terminal in Chennai port built in 1983. The container terminal was

privatized in 2001 and is operated by DP World since 30 November 2001 with a

capacity of 1.2 million TEUs. CCT is managed under a 30 year build-operate-

transfer agreement set up with the Chennai Port Trust of the Government of India.

The terminal is capable of handling fifth generation vessels up to 6,400 TEU and

has direct services to China, West Africa, Europe and the United States. Chennai

International Terminal. Chennai International Terminal Pvt Ltd (CITPL) is the

second container terminal that started operations from June 22, 2009. The build-

operate-transfer facility, built at a cost of about US$110 million, is a joint venture

between PSA International and Chennai-based Sical Logistics Ltd.

Ro-Ro car terminal

Dubbed the Detroit of Asia, Chennai is base to several international car makers,

namely, Ford Motor Co., Hyundai Motor Co., Nissan Motor Co., Renault SA,

Daimler AG and BMW AG. Car export (mainly Hyundai) increased by 80.25 per

cent to touch 2, 48,697 during 2008-09 as against 1,37,971 in the previous year.

The port handled 65 car carriers compared with 40 in the previous year. In 2009,

the port shipped nearly 274,000 cars, 10 per cent more than the previous year. The

port is now the number one ro-ro car terminal in the country. After Hyundai, the

ports have started attracting global manufacturers like Mahindra, Toyota, and Ford.

Ford has decided to move exports to Chennai Port by 2010.

Hyundai Motor India is coming up with a first-of-its-kind dedicated

automobile terminal at the Chennai port. The Chennai port facility is expected to

be on the lines of its Ulsan Port, from where it exports half of Korea's 1,500,000

vehicles annually. The export terminal at the Chennai port would cater to its total

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Export target of 300,000

Cargo-Handling Equipmentscars, which would be 50 per

cent of its total productionLocos (diesel) Chittaranjan

by 2009-10.BHEL loco

Cruise terminalDiesel/electric loco

Total

Units

8

10

2

The Chennai Port Trust has Mobile cranes 12

already in place a cruise Fork lift trucks 55

terminal. On an average,Floating crane 1

seven to eight cruise vessels Electrical forklift trucks 24dock in the port each year.

The country's first cruisePay loaders 7

ship, AMET Majesty, isShore electric cranes 25

registered in Chennai and is Transfer cranes 10

set to start from Chennai on Tractor head 34

8 June 2011. Container quay cranes (35.5T/40T

4In 2007, a fullycapacity)

automated, round-the-clockTop lift trucks (25T and 35T capacity) 5helpline for providing

Trailers 32information on the ships

berthed and waiting, theCrawler-mounted cranes 3

scale of rates and facilities Empty container handler 1

available at the port, the first Reach stackers 3

of its kind in the country, 10T/3T FLT 7

was established. In the same

year, the Indian government agreed to lift restrictions on concessionary Sri Lankan

tea and apparel exports at the port.

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On 11 May 2011, the Madras High Court directed the Shipping Secretary that only

clean cargo such as containers and cars be allotted to the port for handling from 1

October 2011. The port is one of the six ports in India through which drugs are

permitted to be imported, which is handled by the Central Drugs Standard Control

Organization (CDSCO), the other ports being Kolkata, Mumbai, Nhava Sheva,

Kochi and Kandla ports.

As of 2011, cargo movement to the port is increasing by 21 per cent.

Single Operator Container Terminal

On 16 February 2005, Dubai Ports World announced that it has

formally signed an agreement with the Copt to construct, develop and operate anInternational Container Transshipment Terminal (ICTT) An India Gateway

Terminalat Vallarpadam.

Approval for the agreement was given by the Cabinet Committee of

Economic Affairs of the Government of India, Ministry of Finance and meanwhile,

the DP World will manage and subsequently transfer its operations at the Rajiv

Gandhi Container Terminal in Cochin Port to the new terminal upon its

completion. Vallarpadam Terminal is the largest single operator container terminal

in India and the first in the country to operate in a special economic zone. The

terminal makes Kochi a key centre in the shipping world reducing Indias

dependence on foreign ports to handle transshipment.

In the first phase there will be 600 m Quay length and a draft of more than 15 m,when the terminal may handle 1 million TEU containers annually by the end of

2012.

In the second phase the capacity will be enhanced to 3 million TEU's by the endof 2014.

In the third phase the terminal may handle even up to 5.5 million TEU's.The total cost of the project is estimated at 3200 crore.

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2. Visakhapatnam Port.Visakhapatnam is a major sea port on the south east coast of India.

According to the history, the city was named after the god of Valor, Visakha.

Visakhapatnam port Situated on the east coast of India, Visakhapatnam serves as

the gateway for waterways for the state of Andhra Pradesh. Visakhapatnam has

one of the country's largest ports and its oldest shipyard on the eastern coast of

India. It is a land-locked harbour as it is connected to the sea by a channel cut

through solid rock and sand. The shipbuilding yard situated at Visakhapatnam is

the largest in India. Situated on Chennai - Kolkota corridor, the city is also a hub of

on-ground traffic. The Gangavaram Sea Port is India's deepest sea port. In

December 2010, Coal India agreed a deal that would allow an additional berth to

be built at the port.

Gangavaram Port, located in Andhra Pradesh, is India's deepest port.

Inaugurated in July 2009, it has a depth of 21m. It is managed by Gangavaram Port

Ltd., a special-purpose company floated by Mr. DVS Raju, who serves as its

Chairman and Managing Director. The company is owned by the DVS Raju Group

(59%), global Private Equity firm Warburg Pincus (30%) and the Andhra Pradesh

Government (11%).

Country India

Location Andhra Pradesh

Details

Opened July 2009Gangavaram Port Ltd.Owned by

Size 2,800 acres (11 km2)

Statistics

Website www.Gangavaram.com

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History of Gangavaram Port

Construction of the port began in December 2005, and commercial operations

commenced in August 2008. The port was formally inaugurated in July 2009, by

the Andhra Pradesh Chief Minister Y S Rajasekhara Reddy. Fishermen in the

Gangavaram and Dibbapalem villages, who were directly affected by the

construction of the port, demanded construction of an alternative jetty and a relief

and rehabilitation package. The DVS Raju group invested Rs. 1,850 crore in the

development of the port. Gangavaram Port Ltd. has taken a loan of Rs. 1,170 crore

from a consortium of 13 banks, including the State Bank of India, to fund the

Phase I development.

Comparisons with the Vizag port

The first client of the Gangavaram Port Ltd. is the Rashtriya Ispat Nigam Ltd.,

which runs the Vizag Steel Plant, and earlier used the Vizag port. The Gangavaram

Port Ltd. plans to build conveyors for taking imported raw materials directly to the

Vizag Steel plant, in order to reduce the railway transportation costs.

The Union Government of India, which owns the Vizag port, had

proposed a joint venture between the Vizag port and the private operator of the

Gangavaram port to make sure that the Vizag port's business remains unaffected.

However, this proposal was rejected by the then Andhra Pradesh Chief Minister,

N. Chandrababu Naidu.

DVS Raju, while talking to reporters during the port's inauguration

ceremony, insisted that it would be "complementary in nature" to the Vizag port,

and not a competitor.

The Gangavaram port is capable of handling Super Cape size vessels of

up to 200,000 DWT. The State Government plans to construct a Rs. 21-crore four-

lane flyover to the Gangavaram port.

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3. Ennore Port.

Ennore Port

Location

Country India

Location Ennore, Chennai

Details

Opened 2001

Operated by Ennore Port Limited

Owned by Ennore Port Limited

Type of harbor Seaport (Artificial)Available berths 4