/ By tjchinafreight ivy / Shipping

Converting Bills of Lading: The Complete Manual and Recommendations

Converting Bills of Lading: The Complete Manual and Recommendations
Converting Bills of Lading: The Complete Manual and Recommendations

In a world of increasingly globalized economic fragmentation, shipping forwarders find themselves dealing with more trading companies and their foreign-to-foreign transactions than old-fashioned factory-to-importer freight.

The success of such contracts often depends on the ability of the trade agent to conceal factory contact details from the end buyer by issuing a conversion bill of lading.

What is a forwarding bill of lading?

A converted bill of lading is a second set of bills of lading issued by the carrier (or its agent) to replace the original bill of lading issued at the time of shipment.

Although it technically handles the same cargo, the information on the converted bill of lading is intentionally redacted for a variety of reasons and is not meant to be the same as the original bill of lading it replaces.

Reasons for Issuing a Conversion Bill of Lading

Conversion bills of lading are only issued upon surrender of the original and may be requested by any of the three parties directly involved in the purchase/sale of the goods: the owner/seller (or authorised representative), the trade agent and the ultimate buyer.

Reasons for needing to convert bills of lading include:

  • The seller (probably a trade agent) wants to hide the name of the actual exporter from the consignee to prevent the consignee from entering into a deal directly with the exporter.
  • The seller does not want the buyer to know the actual country of origin of the goods.
  • The original bill of lading may be detained in the country of shipment, or the vessel may arrive at the port of discharge before the original bill of lading.
  • The trade agent prefers to receive payment from the final payee before paying the shipper, thus easing his cash flow.
  • The cargo may be resold en route as a high seas sale and the port of discharge must now be changed to another port.
  • The destination customs or consignee requests to edit the cargo description. E.g. "tool" instead of "garden tool".
  • The goods were originally shipped in small packages on separate bills of lading and the buyer wanted to have only one bill of lading covering all packages to facilitate his sale. The reverse is also true - a single
  • bill of lading is issued for bulk cargo, which the buyer prefers to split into multiple bills of lading covering smaller packages.

Tips on how to handle converting bills of lading

1. The freight forwarder shall verify the reliability of the consignor authorized to issue the second set. Obtain their written authorization and a signed bond (countersigned by the bank if the agent deems it necessary) indemnifying the freight forwarder for all consequences of issuing a second set of bills of lading.

2. Freight forwarders should also consider whether they also need to obtain written authorization from other parties who may be affected by their actions, such as shipowners or shippers or banks. If the carrier authorizes the freight forwarder to issue an exchange bill of lading on behalf of the carrier, the written authorization of the shipowner must be obtained. Otherwise, the shipowner will make a valid claim to the agent for the loss caused by the unauthorized issuance of the second set.

3. If the principal requires the agent to issue a conversion order based on the client's indemnity, the agent shall obtain proper wording from the principal before issuing and obtain the complete indemnity approved by the principal.

4. It is also advisable to ensure that the freight forwarder is insured with the insurance for which the transfer order is issued. They should provide their insurance company with the exact reason for issuing the converted bill of lading.

/ By tjchinafreight ivy / Shipping

History of Incoterms

History of Incoterms
History of Incoterms

Now seems like a good time to dive into the history of Incoterms.

When were they first implemented? Why are they needed? What problem does each subsequent release aim to solve? More importantly, what can we expect to see in the future?

Below is the history of Incoterms - how they were born and how they have evolved over the years as commercial trade processes and practices have evolved.

A Brief History of Incoterms

FOB Incoterm was the first Incoterm created. Although its origins date back more than two centuries, the current Incoterms were not actually created by the International Chamber of Commerce (ICC) until 1936.

Since then, many changes have taken place in the international shipping world. To accommodate this change, new and improved versions of Incoterms appeared, such as those introduced in 1953, 1967 and 1976.

But for the past 5 years, revisions have alternated every decade and tend to be valid for the entire decade, e.g. Incoterms 1980, 1990, 2000 and 2010.

The importance of Incoterms and how they facilitate world trade cannot be denied. When Incoterms were first introduced, they were only available in 13 countries. After eight revisions, they are now widely used in over 140 countries and can be found in 31 different languages.

Reflections on the Evolution of International Trade

The world of international trade has changed a lot over the past 80 years—some big, some relatively small. These changes include new modes of transport, modifications to the types of international sales contracts, modifications to customs clearance of goods, new ways of information transfer, and more.

As this behavior changes, so must the terms that govern them. The ICC's goal of revising Incoterms is to keep shipping terms up to date and adapt to changing international trade demands.

/ By tjchinafreight ivy / Shipping

Top 5 Shipping Documents All Shippers Should Be Familiar With

Top 5 Shipping Documents All Shippers Should Be Familiar With
Top 5 Shipping Documents All Shippers Should Be Familiar With

The maritime industry is known for its paperwork. Knowing all of this is already tedious - getting them right is a task in itself. Any seemingly innocuous error can cause problems and delays that can seriously disrupt your supply chain.

In general, many of these documents contain the same information - buyer, seller, item details, etc. But each document plays a different role, and it is important to not only ensure that the information written on each document is accurate, but that it is consistent across all documents.

Below are the top 5 shipping documents that all shippers should be familiar with, and the differences between them.

1. Bill of Lading

A bill of lading, also known as a bill of lading, is a contract of carriage between a shipping company and a cargo owner. This is a document issued by the carrier to confirm receipt of your cargo for shipment on their vessel.

Importer and exporter information needs to be listed clearly as the bill of lading is proof of ownership of the goods being carried on board. The information on the bill of lading should also correctly reflect the conditions of the Incoterm in which the transaction was made.

Once the goods arrive at their destination, the bill of lading needs to be presented to the carrier to release the goods, which then serve as a shipping receipt.

Type of bill of lading

If you have booked through a freight forwarder, you may encounter two different bills of lading: house B/L and master B/L. Read through our post on the difference between a house and a master bill of lading thoroughly to understand how they differ.

Depending on your working relationship with the importer, you may prefer to use Express Release or Telex Release, both of which are variants of the bill of lading.

2. Packing list

Just like a bill of lading, a packing list is a mandatory document for ocean shipments. It lists the tiniest details about the cargo. This includes not only the weight, volume and value of the overall shipment, but also the weight, volume and value of each individual box.

Packing slips inform your freight forwarders, importers, customs and carriers of the goods you are sending without actually verifying the contents. If Customs decides to inspect your shipment, a packing list helps to identify the box or item that is raising the alarm, facilitating the inspection process. This saves time and reduces the risk of damage to the shipment by avoiding opening every box in the shipment.

It is important that the packing slip is filled out correctly and the information listed is as accurate as possible as this may be used to generate the bill of lading. That is, the information on the packing list (number of pieces, weight, etc.) must match the information on the bill of lading, as both documents are required for customs clearance in most countries.

3. Commercial Invoice

Any international transaction involving import/export of goods must be accompanied by a proof of sale called a commercial invoice. To a large extent, it is similar to a standard invoice. But unlike a standard invoice, it contains details about the purpose of customs clearance of the goods and is one of the most important documents in ocean shipping. Details of all parties involved, including importers, exporters, freight forwarders, banks, shipping lines, etc., must be listed correctly on the commercial invoice.

A commercial invoice is a legal document that lists the goods sold and their selling price—that is, what the importer agrees to pay for those goods, and is sent to the party paying for the goods. As mentioned earlier, the packing list details the items in the shipment and serves as evidence in the event of disputes and claims, and is sent to the consignee of the shipment.

4. Certificate of Origin

According to the International Chamber of Commerce, Certificates of Origin (COO) are "important international trade documents that certify that the goods in a particular export are obtained, produced, manufactured or processed entirely in a particular country. They also serve as an exporter's declaration.

A Certificate of Origin is required for customs clearance, which determines the amount of duties and taxes that need to be paid. It also helps determine whether there is a tax exemption in the case of special trade agreements between exporting and importing countries.

5. Letter of Credit

A letter of credit is a formal, binding payment agreement between a buyer and a seller. The international sourcing process is a lengthy one considering the length of time it takes from the time the seller ships the goods to the safe hands of the buyer. This makes it difficult to determine when payment is due, especially if the importer cannot verify the authenticity of the purchase.

This is when letters of credit come into play. It is considered one of the safest payment methods. The importer first develops a list of terms and conditions that must be agreed upon by both parties.

Once the buyer and seller have finalized the terms, the seller begins preparing the goods according to the conditions. After the goods are shipped, the seller then goes to his bank with the proper documents as evidence that the goods have been prepared and dispatched according to the agreed terms and conditions. His bank will then verify and pay for the reimbursement before claiming it from the buyer's bank.

/ By tjchinafreight ivy / Shipping

America’s Largest East Coast Port

America's Largest East Coast Port
America's Largest East Coast Port

A massive union strike in California a few years ago forced many BCOs to look for alternatives to reach the continental U.S. rather than via the West Coast.

In a way, some experts say, it was the perfect precursor to the expansion of the Panama Canal and the opportunity it now offers East Coast ports.

East Coast ports are undoubtedly taking advantage of changing tides with massive expansion and investment up and down the coast.

Here's a look at the largest ports on the U.S. East Coast and what they're doing to accommodate the growth in demand and opportunity.

1. Ports of New York and New Jersey

New York/New Jersey ports are estimated to account for more than one-third of North Atlantic trade.

In response to increased competition from other East Coast ports and to be able to handle larger ships from the newly expanded Panama Canal, the port has deepened its port to 50 feet.

It has completed the raising of the Bayonne Bridge connecting New Jersey and Staten Island, New York, and can now handle vessels up to 18,000TEU.

2. Port of Savannah

Its intermodal system is being improved to gain better access and increase its market share in the Midwest, making the port a more cost-effective and viable option.

When these projects are completed, port authorities estimate that U.S. businesses could save up to 40 percent in shipping costs through the port.

3. Port of Virginia

The project became the deepest port on the East Coast.

Investments in intermodal transport have also begun - particularly the expansion of port rail and motor transport.

4. Port of Charleston

Container traffic at the Port of Charleston has grown 8 percent annually since the recession ended in 2009. This is largely thanks to changes in trade flows in and out of Asia rather than Europe.

The port is also currently being deepened to accommodate 18,000TEU vessels - up from the 14,000TEU vessels currently capable of handling.

/ By tjchinafreight ivy / Shipping

Is your Christmas made in China?

Is your Christmas made in China?
Is your Christmas made in China?

It's that time of year again to light up Christmas trees and decorate them.
Depending on where in the world you are, you may need to buy a Christmas tree -- or simply go and cut down a fir in your backyard.

Given that China is the world's largest exporter, it's no surprise that it is also the largest producer of artificial Christmas trees. It is estimated that about two-thirds of the world's Christmas decorations come from China - even though Christmas is not even a legal holiday in China.

Who knew Santa's logistics headquarters was in China?

More specifically, the production of Christmas goods takes place in the area around Yiwu in eastern Zhejiang province.

There are more than 600 factories and workshops there. Yiwu's market size is comparable to that of 26 large department stores, and it is the birthplace of most of the world's Christmas merchandise sales and listings.

Yiwu has direct freight trains to Madrid, London, Prague and Tehran. In fact, the London-Yiwu railway, which opened in 2017, has a total length of 12,000 kilometers and passes through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. The whole journey is less than 20 days.

Christmas year round

Production in Yiwu is almost year-round - their only time off is during the Lunar New Year period in January or February.

In addition to that, Christmas trees are being made every day. Even at Christmas itself.

However, most orders arrive in the summer to give workers enough time to complete their tasks by Christmas. Therefore, the busiest seasons for the production of Christmas decorations are June and July.

/ By tjchinafreight ivy / Shipping

What does Germany export?

What does Germany export?
What does Germany export?

EU's largest economy

As the EU's largest economy, Germany accounts for about one-fifth of the EU's overall GDP. It has been enjoying economic growth for nearly a decade. But it seems the tide may be turning.

The world's largest car exporter

As the world's fourth largest economy, Germany also has a pivotal economic presence on the world stage.

This is especially true for the auto industry, where five of the ten most valuable car brands have Germany as their home. That said, it's no surprise that Germany is the world's largest auto exporter.

In fact, around 21 percent, or one in five cars shipped around the world, is exported from Germany, according to the Economic Comprehensive Observatory. The second-largest car exporter is Japan, which accounts for around 14 percent of Germany's exports.

Of Germany's car exports, 58% are exported to other European countries. Asia and North America received 21% and 16%, respectively.

With the U.S. now threatening to impose tariffs of up to 25 percent on cars and auto parts imported from the European Union, the German auto industry has reason to worry. Outside of the European Union, the United States is the largest importer of German cars.

Germany's largest trading partner

German exports totaled $1.33 trillion in 2017, up from $1.25 trillion in 2016. Two-thirds of them are European countries.

By country, Germany's largest export destinations are the United States, France, China, the United Kingdom and the Netherlands. Collectively, these five countries receive more than one-third of Germany's exports.

/ By tjchinafreight ivy / Shipping

6 common Incoterms mistakes to avoid

6 common Incoterms mistakes to avoid
6 common Incoterms mistakes to avoid

Incoterms are an essential part of any international ocean cargo. It is established by the International Chamber of Commerce or the ICC and sets out clear guidelines that buyers and sellers must execute transactions according to the parts of the transaction identified by each Incoterm.

Incoterms establish rules and responsibilities for both parties that can be used to resolve differences in the event of a dispute. The choice of Incoterm is determined and agreed upon by the buyer and the seller, who not only understand the responsibilities involved with each Incoterm, but also ensure that he/she is able to meet them.

Despite its importance and the potential consequences of misuse, many buyers and sellers are still unaware of some of the key responsibilities of every Incoterm.

In this article, we'll cover the six most common mistakes in Incoterms listed in Incoterms 2010.

1. Containerized goods use FOB

Despite common belief and practice, FOB Incoterm should only be used for non-contained ocean freight. This error is so common that it becomes a misunderstanding that is deeply ingrained in the minds of importers and exporters.

The main risk involved is the port of origin. Under FOB, the risk is formally transferred when the cargo is loaded on board. However, it is common practice for the shipper to hand over the cargo to the carrier at the terminal awaiting loading.

Since the cargo is at the dock, it has not yet been considered on board. Any damage sustained during this period is still technically the shipper's responsibility and the shipper's insurance should cover this part of the process as well.

However, when disputes arise, the shipper can and does often argue that he has done his part. So, in order to avoid hassle, delays and, more importantly, disputes that can lead to a deterioration in the relationship with the supplier, often the result is that the consignee has to bear the cost.

Apart from FOB, FAS, CFR and CIF are also not suitable for containerized cargo due to the above reasons.

2. Do not specify a location

Many people are unaware that Incoterms rules allow specifying locations. In fact, the failure to specify the full address may be controversial, as the ambiguity allows the seller to choose any delivery point he wishes within the general location provided.

This may be inconvenient for the buyer at all, especially if he has to spend extra time and money to transfer the goods to the final location he originally booked.

3. Seller commits to DDP or DAP without checking if he/she can handle import responsibility in buyer country

Under DDP and DAP, the seller is responsible for paying all arrival charges at the destination. With DDP, this includes paying local taxes (eg GST, VAT, etc.) and handling customs clearance at the destination. Note that unlike DDP, DAP does not require upfront customs clearance fees.

The latter requires him to register as an overseas importer in the destination country, a country-dependent process that can require a lengthy and lengthy program.

4. Buyer uses EXW regardless of his/her influence in the export process

This is similar to the role-reversal point of view mentioned earlier. Under EXW, the seller's responsibility is minimal and ultimately ends with the correct packaging of the item.

From then on, the buyer is responsible for export procedures from the country of origin and any necessary communication with the exporting authorities. For the buyer, it may not be that simple, especially if he/she is not familiar with the export process in the country of origin. In some cases, the seller may be required to participate.

5. Using CIP or CIF without checking that insurance coverage is adequate and complies with commercial contract requirements

According to CIP and CIF Incoterms, sellers are obliged to insure the goods. According to Incoterms rules, only minimum coverage (110% of contract value) is required.

However, depending on the conditions of the contract of sale, this may be insufficient and insufficient for the item being shipped. This amount needs to be met if the commercial contract requires more coverage.

6. Failure to align Incoterm with the bank's payment security requirements

This applies to international payment methods, such as letters of credit, whose secure and reliable nature suggests a lack of complete trust between buyers and sellers.

For letters of credit, payment can only be made after submitting the required documents to the bank to demonstrate that the trading conditions have been met.

/ By tjchinafreight ivy / Shipping

The most important free trade area in the world

The most important free trade area in the world
The most important free trade area in the world

What is a free trade zone?

A free trade zone is a type of Special Economic Zone (SEZ), which refers to an economic zone that is exempt from trade-related charges such as duties and taxes.
In these regions, goods manufactured, stored and handled are subject to different customs preferences. They often receive relief and incentives to encourage investment.

Here is the OECD definition of a free trade area:

"Countries that generally remove tariff and non-tariff trade barriers among member countries but have no common trade policy for non-member countries"

-Organisation for Economic Co-operation and Development (OECD)

The benefits of a free trade zone include:

  • Promote trade and business opportunities
  • Reduce logistics costs
  • Reduce red tape and bureaucracy
  • Increase foreign exchange earnings
  • Create job opportunies
  • Attract investment

History of Free Trade Zones

To understand the history of free trade zones, we must look at the general category: Special Economic Zones (SEZs).
There are many different variations of the term SEZ. But they are all built for the same purpose.

The first SEZs are simply called "free zones" and are designated areas, usually adjacent to seaports, airports or between two or more countries. These started in the 1960s and started growing exponentially in the 1980s.

Today, there are more than 5,400 SEZs around the world. Of these, 1,000 were established within the past five years. Experts expect more than 500 new special economic zones to be established in the next few years.

  • North American Free Trade Agreement (NAFTA)
  • EU single market
  • African Continental Free Trade Area (AfCFTA)
  • Association of Southeast Asian Nations Free Trade Area (AFTA)
  • Special Economic Zones in China
/ By tjchinafreight ivy / Shipping

China Golden Week: How logistics came to a standstill

China Golden Week: How logistics came to a standstill
China Golden Week: How logistics came to a standstill

What is China Golden Week?

As one of the largest and most important markets in the world, China's logistics infrastructure is under enormous pressure to maintain a certain level of productivity and efficiency to keep global supply chains functioning and stable.

From factories and warehouses to ports, docks and more, Chinese workers in all logistics industries work long hours throughout the year to ensure the maintenance of global supply networks.

But twice a year, the world's largest exporter allows itself a break.

Known in China as Golden Week, the country has two such week-long respites - once every six months.

The first, known as the Lunar New Year Golden Week, is in January/February at the beginning of the year, giving people time to celebrate the Lunar New Year.

The second, National Day Golden Week, is part of the country’s National Day celebrations and takes place in October – right in the middle of the peak shipping season.

Given China's impact on global markets and world trade, the week-long - albeit expected - lull threatens to disrupt global supply chain operations, ripple effects and logistical delays.

In this article, we will focus on the National Day Golden Week in October. But to understand how China's National Day Golden Week affects logistics, we must first dive into some basic facts about the holiday.

When is China's National Golden Week?

China's National Golden Week is held every year in the first week of October to celebrate the founding of the People's Republic of China.

Golden Week 2022 will run from October 1st to October 7th.

How does China's Golden Week affect logistics?

Demand for Chinese exports soared in the weeks leading up to China's Golden Week as companies tried to get their exports out before operations in the country shut down completely.

In response to the lack of activity, shipping lines often announce service cuts.

At the time of writing, two major shipping alliances have announced cuts to 15 weekly sailings from Asia to North America:

  • Nine o'clock to the west coast
  • Four to the east coast
  • Two go to the gulf coast

Even after Golden Week, capacity and personnel tend to remain limited, and production may slowly pick up. Carriers may also continue to cancel sailings in the coming weeks.

That said, failing to get your goods in and out of China ahead of the festivities can have dire consequences, as Golden Week delays can sometimes stretch for months.

For businesses, this can translate into potential contract breaches, accumulated delay charges, low sales figures, and more.

High demand and low availability

Demand for Chinese exports surged in the weeks leading up to the start of Golden Week.

That's in anticipation of the shutdown, as businesses importing from China try to get a spot on outgoing ships to ensure their goods leave the world's largest exporter before production halts.

In response to this growing demand, shipping lines have increased spot rates. Spot freight rates from China to the North American West Coast were at their highest level in two months as of early September.

Amid this boom, the industry is also facing shortages of containers, slots, truckers and everything in between. Shippers should be prepared to go the extra mile to ensure not only a slot on a container ship, but also cover for the equipment they need for transportation.

In addition to the standard General Rate Increase (GRI), there are other surcharges to consider.

Given the higher demand for Chinese exports compared to Chinese imports, there is often an urgent need to return containers to terminals to manage demand in Chinese ports.

At this point, carriers began implementing surcharges such as equipment imbalance surcharge (EIS) to compensate for the cost of returning empty containers to Chinese ports to meet export demand.

/ By tjchinafreight ivy / Shipping

Top 5 major ports in Spain

Top 5 major ports in Spain
Top 5 major ports in Spain

Spain has long been synonymous with efficient and vast maritime trade, an association that has historically brought prosperity to European nations. With well-maintained ports and continued growth in technology, equipment and expertise, Spanish ports will continue to be key to trade, partnerships and economic growth in the region.

Here are five top ports in the country that continue to make Spain a force to be reckoned with in the region:

1. Port of Algeciras

Algeciras is one of the largest ports in Spain. The port, like its sister port, sits on the 5,000 km coastline of the Spanish country. Although it is the largest port in Spain, it is the third largest port in the Mediterranean. Globally, it is the ninth largest.

Located in Andalusia, in the province of Cadiz, the port is a center for the tobacco, fishing, agriculture and oil trade. It is estimated that up to 70 million tons of freight are handled annually. As the largest city in the Gulf of Gilbrata, the city of Algeciras is strongly supported by the port trade. The three areas where the Port of Algeciras competes most with other large European ports are transshipment, cargo and containers.

From January 2019, general cargo throughput at the port increased by 6.4%, with the port handling 92 million tons of cargo. This number is up 3% from 2018. The port also houses ro-ro and unloading services, a fishing fleet, cruise ships and fuel handling facilities.

2. Port of Valencia

The fifth busiest port in Europe is also the second largest in Spain: the Port of Valencia. The size of the port is impressive, with an annual cargo volume of 57 million tons. Annual container volume was 4.2 million TEUs in 2010, and this number has grown over the past decade.

Operated by the Port of Valencia Authority, it can accommodate vessels up to 500 feet long and is a port of call for ship repairs. The port offers two berthing surfaces and facilities such as VIP lounges, duty-free shops, personal assistance for travelers in need, public transport connections and a tourist information office.

The Port of Valencia also distributes cargo to North Africa and the European Union, with a radius of more than 2000 km.

3. Port of Barcelona

Barcelona is located on the northeastern coast of Spain, in the country's Catalonia province. The port has been around for over 2,000 years and is still going strong in terms of trade and port services. The port is an excellent partner for major European ports on the Mediterranean coast.

The Port of Barcelona experienced almost 3 million TEUs in 2017, with around 4 million passengers in the same period. Traffic flowing into the cruise portion of the port in 2019 added even more revenue following a €2 million renovation project to the port.

Compared to other ports, this port is closer to tourist areas, and they use these tourist attractions to build their portfolio in the cruise market. In terms of trade, the port's proximity to France makes it an important gateway for international trade.

The Port of Barcelona is divided into a commercial port, an old port and a logistics port. It also has a free trade zone.

4. Port of Bilbao

This port is located in Bilbao Abra Bay in the Basque Country, also known as the outer port. The port has been popular since the Middle Ages and is associated with the steel trade of the time.

Bilbao developed into a gateway to the Euro-Atlantic trade route. It has become the premier port for trade with Britain. As an important logistics player in trade along the Atlantic Corridor, the port has established infrastructure in dry ports and other logistics areas.

The cruise ship footprint at the Port of Bilbao is smaller, as they are still developing this side of the port business. Still, they saw 80,000 passengers from 58 cruise ships in their ports.

The Port of Bilbao is closely related to the economic growth of the Vizcaya region. Locals rely on the port for transportation, tourism, engineering, ship repair, and other income-generating activities.

5. Port of Castellon

Located in the city of Castellon de la Plana, this port is the youngest compared to other major ports in Spain, but the number is impressive. It is a logistics port with an average growth rate five times that of other ports of similar size in Spain. It is the leading logistics service provider for the local economy of Castellon, with a freight capacity of more than 20 million tons in 2018.

Castellón is a well-known area, known for the production of ceramics by the city's tile factories. The Port of Castellón is responsible for shipping 95% of ceramic exports from Spain to the rest of the world. The area is also home to the only oil refinery in the Valencia region, so it also handles and transports large quantities of refined and unrefined petroleum products as well as chemicals.