/ By tjchinafreight ivy / Shipping

McKinsey heralds bad news for shippers

Shippers must prepare for events in which the tight container market may not normalize until 2024, according to a new analysis by McKinsey & Company. But the consultancy told ShippingWatch that shipping rates could end up being 50% higher than pre-pandemic figures.

The container market has been strained since mid-2020 due to the huge demand for goods in the United States, port closures due to the pandemic, container shortages and extreme congestion at the world's largest and most important container ports.

The result of the tight market is the soaring of container freight rates. The revenue and profit of container shipping companies in the past two years have experienced historic growth. Last year, the total revenue of the top ten shipping companies exceeded 100 billion US dollars. The punctuality rate has fallen to its lowest level in more than a decade.

Some shipper companies, which are customers of container shipping companies, have not stopped complaining about these situations for a long time, and they even believe that container shipping companies should be more strictly regulated.

But this recent McKinsey report throws cold water on shippers.

McKinsey, one of the world's largest management consulting firms, expressed its views on the current container shipping market in a report entitled "Navigating the current disruption in containerized logistics". A large number of new ships have been ordered to expand capacity, but the normalization of the container shipping industry may still be delayed until the first quarter. If the situation is worse, normalization of the market may take until after 2024.

McKinsey also noted that container freight rates will remain high for most of 2022, while disruptions to the container logistics supply chain will continue.

Steve Saxon, a McKinsey partner who is now a container market analyst based in McKinsey's Shenzhen office, said that if you asked us a few months ago for our views on the future of the container industry, we might also lean towards a positive (recovery) view. But right now, McKinsey is leaning more toward a pessimistic outlook -- bad news from a shipper's perspective.

McKinsey proposes four possibilities for the future development of the container shipping market.

In the most optimistic case, the container shipping market may return to normal in the third quarter of 2022. Normal freight volumes, normal capacity offers, and normal freight rates.

But McKinsey also said that the most optimistic scenario may not be possible.

/ By tjchinafreight ivy / Shipping

ONE partners with Google to introduce artificial intelligence

Ocean Network Express (ONE) has announced a new partnership with Google Cloud to integrate artificial intelligence (AI) into its business.
The company will leverage Google Cloud's leading data analytics, machine learning (ML) and AI technologies, as well as Deloitte's consulting expertise in Southeast Asia, to establish an AI Center of Excellence (CoE).
The new center is designed to enhance the employee and customer experience while facilitating cross-border trade and commerce.

Chris Lewin, Executive Director of Deloitte Southeast Asia, commented: "ONE improves productivity and employee satisfaction through automation, while reducing IT and data management complexity, allowing software engineers and data scientists to focus on innovation and can accelerate the development of the next generation of the world. Class shipping services that bring lasting value to their business.”

In February, amid news that Google Cloud was refocusing on supply chain, New York-listed business decision data and analytics provider Dun & Bradstreet and Google Cloud announced that they had signed a 10-year strategic agreement around supply chain visibility and other Business issues co-develop software and services.

In its statement, ONE acknowledged the many challenges facing the maritime sector due to the pandemic and the blockage of the Suez Canal in 2021, underscoring the importance of adopting new smart solutions.

ONE said the partnership with Google will advance the company's vision to deliver smart shipping innovations that support countries' economic development and long-term growth.

"We are delighted that ONE continues to select Google Cloud as its co-innovation partner as it leads the sea change across the maritime industry and demonstrates the accelerated and measurable impact a cloud-first and unified data strategy can help achieve," Google Cloud Southeast Asia Managing Director Ruma Balasubramanian added.

Last May, ONE began using Descartes Kontainers solutions to digitize the shipper-facing aspects of its freight fulfillment operations across 11 Asian countries.

In its latest financial report for November, ONE forecast net profit to soar to nearly $12 billion in 2021.

/ By tjchinafreight ivy / Shipping

The container shipping market is in short supply, and the price of second-hand ships has skyrocketed

Since the outbreak of the epidemic, the supply and demand of the container shipping market has been unbalanced, and the freight rate has skyrocketed. Shipping companies that are "not worried about money" have bought and leased them. The amount of scrap is almost zero.

According to Alphaliner data, container lines have gone on a spree to acquire more than 500 container ships in the second-hand ship market in the past 18 months. Among them, Mediterranean Shipping was the largest buyer, purchasing a total of 169 second-hand ships with a total capacity of 636,900 TEU; followed by CMA CGM, which purchased 62 ships with a total capacity of 207,000 TEU. Maersk Line only ranked third, purchasing 27 ships of 141,600 TEU. The fourth is Wan Hai Shipping, which purchased 23 ships of 139,700 TEU.

ALphaliner pointed out that at the beginning of the market recovery, the price of second-hand ships was still at a low level, which made it a better choice for container shipping companies to buy and lease. At the same time, many small non-operating ship owners (NOO) are struggling on the brink of bankruptcy due to years of low rental income, and it is difficult to resist the high prices offered by container shipping companies.

Currently in the second-hand ship market, container ship prices have soared to record highs. The hot sale situation has also made the scrapping of container ships almost zero, and the capacity in the charter market has plummeted by 1.6 million TEU.

At the same time, orders for new container ships also hit a record high last year. Clarkson's data shows that in 2021, the order volume of container ships will reach 569 ships of 4.3 million TEU, and the contract value is as high as 42.8 billion US dollars. This order level is even 29% higher than the previous record level of 3.3 million TEU in 2007. 3.5 times the average order volume in the 10 years ending in 2020.

Since 2022, there have been 124 new orders in the container ship market, with a total capacity of about 857,600 TEU. It is estimated that the order volume of container ships will remain at a high level after 2022.

/ By tjchinafreight ivy / Shipping

South Korean shipbuilding industry returns to No. 1 after 7 years

With its strong performance in the field of LNG ships, the Korean shipbuilding industry has won half of the orders in the global newbuilding market.

According to data released by Clarkson on April 5, in the first quarter of this year, the global new ship order volume was 9.2 million revised gross tons (CGT), a decrease of 41% compared with the same period last year. Among them, South Korea undertook 4.57 million CGT, and the global The market share reached 49.7%, an increase of more than 12 percentage points from 37.2% in the first quarter of last year; China has undertaken 3.855 million CGT, and the global market share has dropped from 46% in the first quarter of last year to 41.9%; Japan has undertaken 248,400 CGT , the global market share fell to 2.7% from 12.8% in the same period last year.

This is the first time in the past seven years that a Korean shipping company has ranked first in the world in terms of orders received in the first quarter. At the same time, this is also the first time since Clarkson started statistics in 1996 that the number of orders received by South Korean shipping companies in the first quarter has reached about 50% of the global market share.

In addition, in March this year, the global order volume for new ships was 3.23 million CGT. The number of orders received by South Korean shipping companies also ranks first in the world in a single month, with a total of 1.64 million CGTs, accounting for 51% of the global share. Chinese shipbuilding companies ranked second with 1.36 million CGT orders, accounting for 42% of the global share.

As of the end of March, the number of global hand-held orders was 94.71 million CGT, an increase of 1.55 million CGT from the end of February. Among them, South Korean shipping companies have the largest increase in orders, reaching 1.12 million CGT; Chinese shipping companies have increased orders by 610,000 CGT, and Japanese orders have decreased by 240,000 CGT.

Industry insiders in South Korea said that last year, South Korea handed over the world's largest new ship order volume to China. In the first quarter of this year, the global new ship order transaction volume decreased significantly year-on-year, but South Korean shipbuilding companies worked hard and preemptively seized the place. The order finally overtook China to regain the first position. This is mainly due to the large number of LNG ship orders undertaken by South Korean shipbuilders. Regarding the reasons for the significant decrease in the number of orders received by Japanese shipbuilding companies, a Korean industry official explained that the data of the Japanese shipbuilding industry traditionally lags behind, so there may be changes in the future.

According to statistics, among the 38 large-scale LNG ships of 174,000 cubic meters or more ordered globally in the first quarter of this year, South Korea has undertaken 27 vessels, accounting for 71%; China has undertaken 11 vessels, accounting for 29%. In addition, a total of 44 container ships above 8000TEU have been ordered globally this year, of which South Korea has undertaken 21 ships, accounting for 47.7%.

A relevant person in the Korean industry said: "Although the number of new ship orders has decreased this year, Korean ship companies are benefiting from the booming LNG ship market. In the first quarter of this year, the number of LNG ships undertaken by Korean ship companies increased significantly, and the number of orders on hand It is also increasing, and the delivery time has been scheduled to the end of 2025. At present, European countries are looking for alternative sources of Russian energy, and the demand for LNG ships will continue in the future.”

/ By tjchinafreight ivy / Shipping

The epidemic will not bring down Shanghai Port and Ningbo Zhoushan Port

Recently, the epidemic prevention and control in Shanghai has been in a severe period, and the infection rate has continued to rise. Shanghai Port cannot survive alone, and is making every effort to coordinate resources from all parties to keep the port open. On the other hand, many truck drivers were diagnosed in Ningbo, and the local government immediately introduced a policy of one nucleic acid per day for truck drivers to further tighten the prevention and control policy. As the two largest ports in the world, Shanghai Port will complete a container throughput of 47.3 million TEU in 2021, and Ningbo Zhoushan Port will complete a cargo throughput of 31.08 million TEU. These two ports account for nearly 40% of the national port container throughput. In this regard, the normal operation of the two ports is related to the smooth global supply chain, and the sensitive market remains highly concerned about this.

Recently, a screenshot of densely crowded ships in the waters near Shanghai circulated on the Internet. The screenshot was accompanied by a caption saying, "Hundreds of ocean-going freighters have been stranded in the open seas of Shanghai, and the supply chain is broken here."

The impact of this round of Shanghai epidemic on international shipping has also aroused high public attention.

On April 2, SIPG also responded to the news of "severe congestion in Shanghai Port": "We have noticed that some media have published false reports on the serious congestion in Shanghai Port, which mentioned that 'Shanghai's port is delayed. The situation is getting more and more serious', 'the number of ships waiting to be loaded and unloaded in Shanghai port has soared to more than 300 this week' and other unverified remarks and pictures, according to the internal data monitoring of Shanghai port, since February, Shanghai port terminal production and operation As usual, there is no congestion of container ships." SIPG further stated that there is absolutely no "congestion comparable to the port congestion in West America" ​​in Shanghai Port. The number of waiting ships is in single digits, and the average number of waiting days is normal.

Previously, it was believed that due to the severe epidemic situation in Shanghai, the transportation of import and export goods was also affected, and some ships calling at Shanghai Port may be diverted to Ningbo Zhoushan Port or Nanjing Port.

On April 6, the "Daily Economic News" reporter asked the relevant person in charge of Ningbo Port (601018.SH) to verify the above situation. The person in charge responded: "The company is now doing a good job of epidemic prevention and control in accordance with the requirements of the superior and the actual situation of the enterprise to ensure the continuous, stable and healthy development of port production. As for the ships that previously berthed at Shanghai Port, they will be moved to Ningbo Zhoushan Port. The situation is not obvious at the moment and we are monitoring it.”

On the same day, a person in charge of a shipping agency in charge of Ningbo also told reporters that from what he knew, Shanghai's port calls are relatively normal, and there has not been a large number of changes to Ningbo port.

At the same time, Ningbo Zhoushan Port had to face the problem of epidemic spillover. From April 4th to 5th, 6 of the 7 cases found in Ningbo City were road freight-related drivers and express service area staff, and one of them was in Beilun District; as a model of anti-epidemic, Ningbo Zhoushan The port quickly made a decision to close some container shipping bases in Beilun District, and organized truck drivers to conduct nucleic acid tests every 24 hours. For example, Ningbo Meidong Container Terminal Co., Ltd. issued a notice on April 3 that truck drivers entering the port area. A free nucleic acid test needs to be completed immediately before entering the port area; at the same time, for foreign vehicles, Ningbo City requires drivers to actively cooperate with nucleic acid testing and antigen testing at the high-speed bayonet. In addition, Ningbo has implemented closed management of staff in the city's expressway service areas, strictly implemented daily nucleic acid testing measures, and suspended refueling operations.

At present, Ningbo Zhoushan Port is still in normal operation as a whole, and the warehouses that were temporarily closed due to the detection of tight connections will also be unsealed from tomorrow. In addition to Ningbo City, two freight drivers in Shaoxing City were also found to be infected with the new crown. The freight drivers and passengers outside the city are required to perform nucleic acid tests every two days on the basis of implementing nucleic acid tests every two days, and each time they return to Shaoxing Expressway.

The port circle (ID: gangkouquan) believes that if the impact of the epidemic expands, the impact of the collection and distribution problem continues to expand, and the ports in the Yangtze River Delta region cannot handle the problem of transportation route configuration, which will be a heavy blow to the global supply chain. of. On the premise of "preventing imports from outside and preventing exports from inside", Shanghai should increase the capacity of waterway barges as soon as possible to transfer the pressure of road collection and distribution, while Ningbo Zhoushan Port must learn lessons and give priority to preventing the spread of the epidemic. The two ports will not be dragged down as the outside world fears, but for a period of time in the future, whether it is the cargo owner, the shipping company, or the port, it will be under the pressure of repeated epidemics.

/ By tjchinafreight ivy / Shipping

Pakistan Customs Manifest Has New Regulations

Korea Shipping recently announced that, according to the latest notification from Pakistan Customs, from April 1, 2022, for goods exported to various ports in Pakistan, detailed information such as the consignee’s and the notifying party’s importer’s tax number must be added to the manifest. .

In order to avoid problems such as failure of customs clearance by the consignee at the destination port and delay in delivery due to the lack of manifest contents, please be sure to complete the confirmation information of the bill of lading in strict accordance with the following requirements, otherwise all responsibilities and expenses arising therefrom shall be borne by the customer.

The specific requirements are as follows, and the following contents need to be entered in the address column of the consignee and the notifying party of the bill of lading:

1. Real and valid detailed company address

2. NTN (CNIC) number:

- The consignee is a company: the Pakistan National Tax Number (NTN) of the importer company

- The consignee is an individual: Individual National Identification Number (CNIC)

3. Contact number

4. Mailbox

/ By tjchinafreight ivy / Shipping

Evergreen’s container ship ‘Ever Forward’ has declared general average

After the ship left Baltimore on March 13, the Ever Forward ran aground. For the common interests of cargo owners and the safety of all involved, Evergreen Shipping has been making every effort to refloat the stranded ship. Evergreen declared general average on April 17, given the increased cost of continued attempts to re-float the vessel. There have been no reports of injuries or contamination.

Ever Forward, a 12,000 TEU container ship owned by Evergreen Shipping (Hong Kong) Co., Ltd., a subsidiary of Evergreen Shipping Group, ran aground in Chesapeake Bay after leaving Baltimore on the evening of March 13. No casualties have been reported to the ship or its cargo. , and there are no signs of fuel leaks or contamination.

Dredgers have been digging around the stranded container ship, and groups of tugboats made two unsuccessful attempts to pull the 1,095-foot vessel out of the silt last week.

Under new plans announced by the Coast Guard, cranes will be used to remove some of the containers from the "long haul" to reduce their weight before the next rescue effort. The lifting operation will start as soon as a crane with the right lifting height is installed. Meanwhile, the dredger will continue to dig to a depth of 43 feet around the vessel. During these operations, the fairway will remain one-way traffic and a 500-yard safety zone will remain around the vessel.

Salvage experts determined that in their current state of loading, they would not be able to overcome the gravity of the "long-range wheel". The new program offers the best chance of successfully relaunching the long haul. ' said the Coast Guard.

Containers will be unloaded from the port and starboard sides of the 12,000TEU container ship and placed on a barge, which will transport the containers to the Seagrit Marine Terminal in the Port of Baltimore and unload them. The ship is currently carrying 4,964 general dry cargo containers, according to the Coast Guard. The Coast Guard said that for safety reasons, lifting operations can only be carried out during the day.

Once the required number of containers has been removed, another re-float attempt will be made using tugboats and pulling barges.

According to the Baltimore Sun, the plan calls for the removal of several hundred of the 4,964 containers on the long-haul ship, with most of the cargo remaining on board. Since the shipowner Evergreen Shipping has declared general average, the shipper needs to provide the necessary guarantees and documents to the general average adjustment company before the container cargo shipped to the Seagirt terminal can be recovered.

/ By tjchinafreight ivy / Shipping

The difference between virtual overseas warehouse and overseas warehouse

Cross-border e-commerce and cross-border logistics coexist synergistically. Compared with the booming cross-border e-commerce in my country, the shortcomings of cross-border logistics are becoming more and more prominent, which restricts the development of cross-border e-commerce to a certain extent. In addition to using the domestic direct mail mode, traditional cross-border e-commerce can also use the overseas warehouse mode. The virtual overseas warehouse is a mode between domestic only delivery and overseas warehouse delivery.

Virtual Warehouse is an international logistics model that combines the advantages of physical overseas warehouses, and is more intended to make up for its shortcomings. By generating a tracking number in the destination country of the domestic (Shenzhen) system, the centralized goods are directly delivered by high-quality air. In the destination country, the electronic express pre-clearing method is adopted to shorten the delivery time of the express in the destination country.

Overseas warehouse mode

1. Headway transportation
Cross-border e-commerce transports goods to overseas warehouses by sea, air, land or intermodal.

2. Warehouse management
Through the warehouse management system, cross-border e-commerce merchants can effectively view overseas warehoused goods and manage inventory in real time.

3. Local delivery
According to the order information, the overseas warehouse center distributes the goods to customers by local post or express.

Disadvantages: need to stock up, there is inventory risk and increase capital cycle costs, it is inconvenient to operate multiple SKUs at the same time, increase inventory storage costs and operating costs, overseas national policy changes will cause certain losses and troubles

Virtual overseas warehouse mode

1. First of all, the virtual overseas warehouse model does not require sellers to stock up, there is no inventory risk, and there is no financial pressure;

2. The virtual overseas warehouse mode is equivalent to having local overseas warehouse inventory at all sites on any platform;

3. The virtual overseas warehouse model shows local delivery, which improves consumers' purchasing confidence and purchasing experience, increases sales, and increases profits. At the same time, it also prevents buyers from malicious returns and exchanges because the delivery address is displayed in China;

4. The overall logistics cost of the virtual overseas warehouse model will be similar to the local delivery price, but the timeliness will be much faster. After all, it is equivalent to taking a special line to the destination country by yourself;

5. The virtual overseas warehouse model can respond to changes in foreign policies at any time, operate flexibly, reduce risks, and is more suitable for small sellers who are not particularly well-funded. Details (dimensional: ues5588)

Disadvantages: At present, virtual overseas warehouses are not recognized on e-commerce platforms.

Suitable for the crowd: small amount of capital, weak risk tolerance.

/ By tjchinafreight ivy / Shipping

Practical knowledge of export supervision warehouse

What is an export regulated warehouse?

Export supervision warehouse, commonly known as "export warehouse", refers to a warehouse established with the approval of the customs to store, bonded logistics and provide value-added services for goods that have completed customs export procedures. The export supervision warehouse and the bonded warehouse are collectively referred to as "two warehouses", which are the basic form and carrier of bonded logistics.

What are the types of export supervision warehouses?

Export distribution warehouse
A warehouse for storing export goods for physical departure.
Domestic knot transformation warehouse
A warehouse that stores export goods for domestic carry-over.

Which goods can be stored in the export supervision warehouse?

With the approval of the customs, the export supervision warehouse can store the following goods:

  • General trade export goods.
  • Processing trade export goods.
  • Export goods transferred from other areas and places under special customs supervision.
  • Goods imported for assembling export goods, and packaging materials imported for repackaging of goods in export-supervised warehouses.
  • Other goods for which customs export procedures have been completed.

Which goods cannot be stored in export supervision warehouses?

Export supervision warehouses shall not store the following three types of goods:

  • The country prohibits the import and export of goods.
  • Unapproved countries restrict entry and exit of goods.
  • Other goods that are not allowed to be stored by the customs.

What are the practical functions of the export supervision warehouse?

Goods storage, assembly and distribution
Processing trade export goods, general trade export goods, goods imported for assembling export goods, and packaging materials imported for changing the packaging of goods can be stored in the export supervision warehouse at the same time, and can be assembled and distributed according to regulations. In addition, goods can also be transferred between export supervision warehouses and other special customs supervision areas and bonded supervision places.

Carry out value-added services for circulation

With the approval of the competent customs, value-added services such as quality inspection, grading and classification, sorting and packaging, marking, marking, filming, and packaging change can be carried out in the warehouse. The domestic equipment and materials needed to carry out value-added circulation services in the export supervision warehouse can only be transported into the warehouse after being examined and approved by the competent customs, and the customs shall implement registration management for this business.

Some warehouses that meet the conditions can realize warehousing tax rebate
For export supervised warehouses that are approved to enjoy the policy of tax rebate upon entry into the warehouse, the customs will handle the tax rebate certificate procedures for export goods after customs clearance of the goods. For export supervised warehouses that do not enjoy the policy of tax rebate upon entry into the warehouse, the customs will handle the tax rebate certificate procedures for export goods after the goods actually leave the country.

Approved warehousing goods can be distributed and reported
With the approval of the competent customs, for the goods stored in the export supervision warehouse with small batches and frequent batches, the goods can be stored in batches, and then the customs declaration formalities can be handled in a centralized manner within the specified time limit.

Inbound cargo replacement
For the goods that have been stored in the export supervision warehouse and are required to be replaced due to quality and other reasons, the goods can be replaced with the approval of the customs in charge of the warehouse. Before the replaced goods are released from the warehouse, the replacement goods should be put into the warehouse first, and the commodity code, product name, specification, model, quantity and value of the original goods should be the same.

/ By tjchinafreight ivy / International

Bank Guarantee vs. Letter of Credit

Bank guarantees are similar to letters of credit in that they both instill confidence in the transaction and the parties involved. The main difference, however, is that the letter of credit ensures that the transaction goes smoothly, while the bank guarantee reduces any losses that arise if the transaction does not go as planned.

Letter of Credit - Reduce Risk

A letter of credit is a financial institution's commitment to fulfill a buyer's financial obligation, thereby eliminating any risk that the buyer will not perform payment. Therefore, it is often used to reduce the risk of non-payment after delivery.

In addition, a letter of credit is issued to the buyer after the necessary due diligence has been carried out and sufficient collateral has been collected to cover the secured amount. The letter is then submitted to the seller as proof of the buyer's credit quality.

Types of Letters of Credit

Just like bank guarantees, letters of credit vary according to need. Here are some of the most commonly used letters of credit:

  • An irrevocable letter of credit ensures that the buyer is obligated to the seller.
  • The confirmed letter of credit is from the second bank, which guarantees the letter of credit when the credit of the first bank is in question. If the company or the issuing bank fails to meet its obligations, the confirming bank will ensure payment.
  • An import letter of credit allows importers to make immediate payments by giving them a short-term cash advance.
  • An export letter of credit lets the buyer's bank know that it must pay the seller, provided that all the conditions of the contract are met.
  • A revolving letter of credit allows customers to make withdrawals within a certain range within a certain period of time.

Bank Guarantee – Failure to perform contractual obligations

Bank guarantees help companies mitigate any risk arising from both sides of a transaction and play an important role in facilitating high-value transactions. The agreed-upon amount is called the guaranteed amount and will always benefit the beneficiary.

In venture capital, both parties are obligated to perform certain duties in order to successfully complete a transaction, and both parties often use bank guarantees as a way to demonstrate their creditworthiness and financial standing.

Also, if one party fails, the other party can invoke the bank guarantee and get the guaranteed amount by filing a claim with the lender. Unlike a LOC, a bank guarantee protects the parties involved.

Types of Bank Guarantees

Bank guarantees are just like any other type of financial instrument - they can take a variety of different forms. For example, banks provide direct guarantees in both domestic and foreign operations. Indirect guarantees are usually issued when the subject of the guarantee is a government agency or other public entity.

The most common types of guarantees include:

  • Shipping Guarantee: This guarantee is provided to the carrier for shipments that arrive before any documentation has been received.
  • Loan Guarantee: An institution that issues a loan guarantee promises to assume financial obligations in the event of a borrower default.
  • Advance Payment Guarantee: This guarantee is used to support the performance of the contract. Basically, this security is a form of security to repay the advance payment if the seller does not deliver the goods specified in the contract.
  • Confirmed Payment Guarantee: With this irrevocable obligation, the bank pays the beneficiary a specific amount on behalf of the customer by a specific date.

Summary: What is the difference between a bank guarantee and a letter of credit?

Letter of Credit (LC)
A letter of credit is a promise by a bank to pay the beneficiary after certain conditions are met.
Often used by merchants engaged in the import and export of goods.
Protects both sides of the transaction, but benefits the exporter.
Example: A letter of credit can be used to transport goods or complete services.

Bank Guarantees (BGs)
A bank guarantee is a promise by the bank to pay the beneficiary in the event that the counterparty does not fulfill its contractual obligations.
Typically used by contractors to bid on large projects, such as infrastructure projects.
Protects both parties to the transaction, but benefits the beneficiary (usually the importer).
Example: A bank guarantee is used when a buyer buys an item from a seller, then the seller is in financial difficulty and cannot pay.