11:15-12:00pm Session 3: Documentation Responsibilities of a Project Forwarder. Dennis Devlin, Vice-President Panprojects Division, Panalpina Group

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1 October 25, 2011 / New Orleans 1 11:15-12:00pm Session 3: Documentation Responsibilities of a Project Forwarder Dennis Devlin Vice President Business Development Panalpina Inc. Panprojects Division USA Dennis Devlin, Vice-President Panprojects Division, Panalpina Group

2 Objective Freight Forwarding Documentation October 25, 2011 / New Orleans 2 To outline the role of the project forwarder in project logistics, and to explain what documentation a project forwarder must handle, and how important this task becomes in a successful project supply chain.

3 October 25, 2011 / New Orleans 3 Agenda What is a Freight Forwarder? What is a Project? Some Examples of Industrial Projects What is Project Logistics / Project Forwarding? What purpose does documentation serve in international trade and transportation? Documents used in international transportation (and in project logistics/project forwarding), and their specific purposes Why accurate, complete and timely documentation is vital to the success of a project. And the converse: the ramifications of bad or late documentation

4 October 25, 2011 / New Orleans 4 What is a Freight Forwarder? Freight forwarding is a service used by companies that deal in international or multi-national import and export. While the freight forwarder doesn't actually move the freight itself, it acts as an intermediary between the client and various transportation services. Sending products from one international destination to another can involve a multitude of carriers, requirements and legalities. A freight forwarding service handles the considerable logistics of this task for the client, relieving what would otherwise be a formidable burden. One of the many advantages of using freight forwarding is that it handles ancillary services that are a part of the international shipping business. Insurance and customs documentation and clearance are some examples. As a consolidator, a freight forwarding service might also provide Non-Vessel Operating Common Carrier (NVOCC) documentation, or bills of lading. Warehousing, risk assessment and management, and methods of international payment are also commonly provided to the client by the freight forwarding service.

5 What is a Freight Forwarder? Freight Forwarding Documentation October 25, 2011 / New Orleans 5 A good freight forwarding service can save the client untold time and potential headaches while providing reliable transportation of products at competitive rates, as well as vital assistance with the necessary documentation. A freight forwarding service is an asset to almost any company dealing in international transportation of goods, and is especially helpful when in-house resources are not versed in international shipping procedures. A freight forwarder, forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as a carrier (NVOCC). A forwarder is often not active as a carrier and acts only as an agent, in other words as a third-party (non-asset-based) logistics provider that dispatches shipments via asset-based carriers and that books or otherwise arranges space for these shipments. Carrier types include ships, aircraft, trucks, barges, and railroads. Sources: Wikipedia and wisegeek

6 What is a Freight Forwarder? Freight Forwarding Documentation October 25, 2011 / New Orleans 6 Freight forwarders typically arrange cargo movement to an international destination. Also referred to as international freight forwarders, they have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper s export declaration (now an electronic filing in the USA), Bill of Lading and other documents required by the carrier or country of export, import or trans-shipment. Much of this information is now processed in a paperless environment. The FIATA (International Federation of Freight Forwarders Associations) shorthand description of the freight forwarder as the Architect of Transport illustrates clearly the commercial position of the forwarder relative to his client. Source: Wikipedia

7 October 25, 2011 / New Orleans 7 What is a Project? A project is a temporary endeavor undertaken to create a unique product or service. The purpose of the project for our discussion is to build or construct something, usually something very large and very complex It can also comprise a plan to define and constrain a future by limiting it to set goals and parameters. The planning, execution and monitoring of major projects sometimes involves setting up a special temporary organization, consisting of a project team and one or more work teams A project usually needs resources Source: Wikipedia

8 October 25, 2011 / New Orleans 8 Examples of Industrial Projects Power generation (various sorts of power plants; solar; wind power) Refineries LNG Terminals Chemical and pharmaceutical plants Mines Air separation projects Oilfield projects such as offshore platforms Pipelines Auto plants; other manufacturing facilities such as food process plants; breweries and other beverages, cement; paper mills; high tech; aerospace; civil projects (airports; stadiums) Plant relocation projects Government projects (e.g. the Hoover Dam)

9 October 25, 2011 / New Orleans 9 Roles in an Industrial Project Owner Engineering & Design Procurement Expediting Logistics Construction Health, Safety and Environmental Policies, Supervision, Compliance, etc. Other Regulatory Compliance (local, national and international laws/regulations) Project Cost Accounting / Cost Control Project Management

10 What is a Project? What is Project Logistics? What Makes It Project Logistics Freight Forwarding Documentation October 25, 2011 / New Orleans 10 For One of the Aforementioned Industry Sectors or a Related One We Didn t Mention Definite beginning and end. Phases / Bell Curve Planning Early Logistics Activities Full Implementation Late Logistics Activities End. Cargo moved. Plant or end product (mine, building, refinery, etc.) operational Project logistics / project forwarding often involves the transport of heavy-lift and oversized cargoes very specialized logistics work.

11 October 25, 2011 / New Orleans 11 What is Project Logistics / Project Forwarding? Multi-Modal and Multi-Disciplinary Planning Supplier Management / Expediting Materials Management & Tracking Domestic Transport Truck; rail; barge Packaging; Corrosion Prevention Warehousing & Consolidation Regulatory Compliance Loss Prevention Ocean Transport LCL; Containers; Liner Break-Bulk / Conventional; Charters; Specialized Heavy Lift Airfreight (commercial; charters) Documentation

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13 Documentation What is the purpose of documentation? Generally, documents do one or more of the following: Freight Forwarding Documentation October 25, 2011 / New Orleans 13 Document a contract, such as a contract of carriage (e.g. Bill of Lading; Airway Bill). Insurance documents show proof of insurance, and thus a contract for insurance. Purchase Orders and related documents represent agreements to buy and sell certain things. And these documents often spell out in great detail the terms and conditions of the contract in question. Documents provide information. Packing lists show what is included in a shipment, often in great detail. Commercial invoices show what is being sold, at what costs and in what currencies, the parties to the transaction, payment terms and other information required by customs and other regulatory authorities, and for banking and insurance purposes. Bills of Lading show cargo origins and destinations (ports, airports, addresses), consignor and consignees and other important details. Certificates of Origin, while usually produced only because they are required for Customs purposes, show the origin of cargo, and some legal certification of that origin.

14 October 25, 2011 / New Orleans 14 Documentation Documents satisfy Customs authorities requirements for importation. International trade is regulated, so each nation s customs authorities have certain documentation requirements some quite onerous which must be satisfied before imports are permitted Some documents represent title to the goods, in a way that is similar to a check (which entitles the bearer, after endorsing the check, to collect money). These documents are negotiable Documents are required for compliance to certain regulations, and thus satisfy legal requirements (a Shipper s Declaration for Hazardous Goods for example, or a Certificate of Origin). Other documents satisfy compliance not with local, national or international regulations but rather compliance with contractual obligations. Test certificates for example are sometimes stipulated as contractual requirements in purchase orders. Many documents serve some or all of the above purposes.

15 October 25, 2011 / New Orleans 15 Documentation Detailed inventory and tracking. Materials Management. Export clearances and documentation Import clearances and documentation Electronic documentation Documentation for duty minimization or duty-free schemes Various nomenclature for the cargo being described Shipping Documentation Ocean Bills of Lading (House B/L; Master B/L) Truck, Barge and Rail Bills of Lading Charter parties Dock Receipts

16 October 25, 2011 / New Orleans 16 Materials Management / Line Item Tracking / Visibility Logistics Management The process of planning, implementing and controlling the efficient cost effective flow and storage of raw materials, in-process inventory, finished goods and services from the point of supply to point of consumption to meet the project s needs (construction; installation). Source: Council of Logistics Management

17 October 25, 2011 / New Orleans 17 Materials Management / Line Item Tracking / Visibility

18 October 25, 2011 / New Orleans 18 Materials Management / Line Item Tracking / Visibility Purchase Order Number SCM-001 Line Item 1: Bicycle Quantity 1 But what will actually be shipped? A bike? No! Parts to assemble a bike: Line Item 1: Bicycle Quantity 1 Sub Line Items 001 Bike Frame Quantity Bike Wheels Quantity Handlebar Quantity Brakes Quantity Seat Quantity 1 Etc.

19 October 25, 2011 / New Orleans 19 Materials Management / Line Item Tracking / Visibility Line Item Logistics Management Maintain Line Item (and Sub Line Item) Integrity across the Project Supply Chain Current & Future System Capabilities Bar Coding / RFID Integrated Supply Chain Methodology In-transit Line Item Visibility Large Projects vs. Smaller Projects Obviously More Important on Large and Remote Projects

20 October 25, 2011 / New Orleans 20 Materials Management / Line Item Tracking / Visibility The use of systems C2C EDI Material Line Item Management Purchase Order Management Receiving / OSD Management Bar Coding / RFID Material Receipt Release To Pack Packing Invoicing Packing Delivery Management Vendor Management (Expediting) Commercial Invoice Packing List

21 October 25, 2011 / New Orleans 21 Documentation The Bill of Lading Issued by a Carrier or its agent, or a contractual carrier (NVOCC) or its agent Freight forwarders can be NVOCCs or simply agents of the shipper or consignee. Either way, the freight forwarder provides B/L instructions to the carrier, usually in the form of the B/L itself as a sample. When working as NVOCC the forwarder sends Master B/L instructions to the carrier; when working as agent, the forwarder sends sample instructions or a copy of what the B/L should look like (details) Can be done via EDI Received for Shipment or Shipped on Board Point to Point; Point to Port; Port to Point; Port to Port Bill of Lading (title document; represents title to the goods whether made out to order or to the actual consignee) Seaway Bill a.k.a. Express Bill of Lading (non-negotiable; a contract of carriage only; does not represent title to the goods)

22 Documentation Airway Bill Issued by a freight forwarder with an IATA license Never negotiable = Always non-negotiable Commercial Invoice Freight Forwarding Documentation October 25, 2011 / New Orleans 22 A bill or invoice for the goods from the seller to the buyer. These invoices are usually used by customs authorities to determine the true value of goods when assessing customs duties. Government regulations spell out the language used in a commercial invoice, as well as the format and content. In many cases, commercial invoices must be translated into the local language. For a major project in Saudi Arabia or China, for example, each and every item being shipped must be described in Arabic or Chinese, respectively. This is usually done as part of the import process, during a period of time before or shortly after shipment from the origin country. The Commercial Invoice is one of the most important documents in an international shipment in that it is often the primary document used by customs authorities as part of the import customs clearance process

23 Documentation Export Packing List Freight Forwarding Documentation October 25, 2011 / New Orleans 23 This is a vital document. Typically, in North America, domestic packing lists show a list of items and quantities included in a shipment. An export packing list shows much more detail. It also lists the items and quantities, but most importantly, it shows which items are in which packages. On large, wellorganized projects, packages are not numbered in the typical domestic supply chain way (1 of 3; 2 of 3 etc.) but rather with unique, never-repeated package numbers. Bar codes and RFID are also used. Imagine trying to locate a particular part at a power plant construction project with many hundreds packages in a lay-down area (outside storage area) with only 1 of 3 as the package number. An export packing list also shows the net and tare (package) weights. Net weights are often used by customs authorities. And usually it is prepared in the imperial system (used by the USA) and the metric system (used by the rest of the world). The export packing list usually also shows the shipper(s) (there can be more than one if documenting a consolidated shipment), consignee, shipping marks on the outside of the packages, and sometimes conveyance information (vessel, flight, etc.)

24 Documentation Consular Invoice Freight Forwarding Documentation October 25, 2011 / New Orleans 24 Required by certain countries this is either a separate document by similar to a Commercial Invoice but it is consularized or certified (reviewed, approved and stamped as such) by the Consulate of the destination country s offices in the origin country. It is used in lieu of a Commercial Invoice by Customs officials but for the same purpose - to verify what is being shipped/exported/imported, how many, the value, etc. Certificate of Origin Required by certain countries this is a signed and usually notarized attestation of the country of origin of the goods. Often in the USA a local chamber of commerce issues or stamps C/Os. The information on a C/O is usually much the same information that is included on a Commercial Invoice and/or a Consular Invoice. NAFTA Certificate of Origin This is a specific C/O used by the Mexico, the USA and Canada for trade between our countries

25 Documentation Inspection Certificate Freight Forwarding Documentation October 25, 2011 / New Orleans 25 Some countries and some buyers require independent inspection certificates for certain kinds of products such as chemicals or steel. These certificates attest to the nature of the goods (purity of chemicals, for example) They are issued by independent testing agencies. Warehouse Receipt / Material Receiving Report Issued by a warehouse and/or a freight forwarder with a warehouse this documents the receipt of cargo. Typically, a warehouse receipt will simply reiterate truck B/L and packing list information, whereas a Material Receiving Report is typically issued after a detailed check of all of the items in a shipment, with a view to ensuring that the correct items and quantities were shipped and received. This process is often used on projects due to the problems that can occur when shipping discrepancies are found at destination (customs problems; project delays; major costs) Dock Receipt A dock receipt documents cargo being received at an ocean terminal (dock facility) for export. Usually it is prepared by the freight forwarder, and sent along with the shipment to the port.

26 October 25, 2011 / New Orleans 26 Documentation Vital to the Success of a Project Accurate, Complete and Timely Documentation Results In the Following The delivery of vital information to the project team regarding what is being shipped, where it is in the shipping process, in which packages, shipping dates, etc. Expedites the customs clearance process Helps to ensure compliance with import/export and other regulations Plays a role in the timely payment of supplier invoices Helps those involved in the supply chain to properly manage the shipment, for example special handling or stowage instructions being communicated on shipping documents In cases where the destination country (where the project is being built) has some sort of duty minimization scheme to attract investment, accurate documentation supports the process of minimizing or avoiding duty payments Accuracy, completeness and timeliness are all vital

27 October 25, 2011 / New Orleans 27 Documentation Vital to the Success of a Project Potential Ramifications of Documentation Errors and Delays Lack of transparency in the project supply chain. The construction team, who needs the equipment to build the project, don t know where cargo is. In extreme cases, this can result in the duplication of purchases, with vast sums of money being spent unnecessarily In the case of hazardous materials, improper documentation can result in injury or death, and can have major legal consequences Can result in regulatory non-compliance, and can cause major customs fines, delays and other headaches; in extreme cases can cause the importer to lose the legal right to import, or even jail time Can result in the exporter being in violation of export laws, with legal consequences Can cause improper handling, stowage or storage of the cargo May cause problems with insurance Definitely will cause projects in a project

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P12 Export Documents

P12 Export Documents Types of Export Documentation for Air Freight and Sea Freight Commercial Invoice Packing List Certificate of Origin Bill of Lading Air Waybill Export License/Declaration Commonly Used