chapter 1 freight forwarding

MODULE OBJECTIVESThe learner should be able to: • The students should be able to explain the business aspects of freight forwarding and to describe the various activities of a forwarding

Lecturer: Th.s Đoàn Thị Hoàng ThảoEmail: thaodth@ut.edu.vn

Phone : (+84) 836 418 992

INTRODUCTION TO FREIGHT

FORWARDING

Vietnam Logistics Research and Development Institute

5th Floor, Saigon Port Building, Dist 4, HCMCTel: (+84) 28 7301 8689 – Email: vli1@vli.edu.vn

Website: www.vli.edu.vn

 

MODULE OBJECTIVES

The learner should be able to:

• The students should be able to explain the business aspects of freight forwarding and to describe the various activities of a forwarding company

• The students should be able to define functions, the roles and liabilities of freight forwarder• The students should be able to describe the general structures and processes in freight forwarding as well as

identify the legal status of a freight forwarder• The students should be able to apply international trade, L/C, ICC INCOTERMS• The students should be able to differentiate FIATA forms and documents and their application in forwarding

processes • The students should be able to list names and functions of different international organizations in forwarding

and trade• The students should be able to identify general knowledge of special transport services and packing

requirements.

Chapter 1: International Freight Forwarding and the Freight Business

Chapter 2: International Trade

Chapter 3: International Organization in Forwarding and Trade

Chapter 4: Organization of the Company

Chapter 5: Financial and Legal Requirements

Chapter 6: FIATA Document

Chapter 7: General Knowledge of Transport Related Geography

Chapter 8: Special Transport Services

Chapter 9: Packing Requirements

Chapter 10: Information & Communication Technologies (ICT)

MODULE CONTENTS

Welcome to CHAPTER 1

CHAPTER 1 INTERNATIONAL FREIGHT FORWARDING AND THE FREIGHT BUSINESS

Learning Objective:

Identify the position of a forwarder in international freight business and explain the

differences among shipper, carrier, and forwarderDifferentiate the interrelation between international trade and forwardingDescribe the functions of a freight forwarder, the general structures and processes in freight

forwarding as well as identify the legal status of a freight forwarder

INTERRELATION BETWEEN INTERNATIONAL TRADE AND FORWARDING ACTIVITIES

1.The parties involved in trade and forwarding

activities

2.Forwarding Services

3.The Legal Position of a Freight Forwarder

Parties involved in Trade and

Forwarding Activities

SellerConsignor

(Sender)Forwarding

Contract

Trade Contact

ForwarderShipper

Contract of Carriage

BuyerConsignee

(Receiver)

CarrierTransport+ Delivery

Parties involved in Trade and

Forwarding Activities

 Buyer: Purchases goods and pays the purchase price

 Seller: Sells goods and has to deliver the goods

according to the contract

 Consignor: Sender of the goods (may be different

from the seller)

 Consignee: Receiver of the goods

Parties involved in Trade and

Forwarding Activities

 Shipper: Is responsible for delivery of the goods and is the

contractual partner of the carrier within a contract of carriage

 Carrier: Carries the goods from the point of collection to the

point of delivery according to the contract of carriage, is responsible for loss, damage or delay

 Forwarder: Organizes the carriage in his own name but on

account of the shipper as intermediary, is responsible for due diligence in choosing carriers and other service providers

Parties involved in Trade and

Forwarding Activities

 Brokers: conduct negotiations on behalf of buyers and

seller

 Commission Agents: namely person who enter into

contracts with third parties in their own name, although they do not do so as agent

 Loading brokers: conduct loading operations

 Forwarding Agents: whose duties are determined by

the contract Their role and duties are open to agreement

FORWARDING SERVICES AND LEGAL STATUS OF A FREIGHT FORWARDER

1.Forwarding services

2.The legal position of a Freight Forwarder

3.The FIATA model rules for freight forwarding

services

FORWARDING SERVICES

Freight Forwarding Services are services of any kind

relating to the carriage, consolidation, storage, handling, packing or distribution of the goods as well as ancillary and advisory services in connection therewith, including but not limited to customs and fiscal matters, declaring the goods for official purposes, procuring insurance of the goods and collecting or procuring payment or documents relating to the goods

Up date: see FIATA Circular letter 04-06

THE LEGAL POSITION OF A

FREIGHT FORWARDER

goods from each other

from one place to another

goods in the event of loss or damage

financial institutions

THE LEGAL POSITION OF A

FREIGHT FORWARDER

ancillary services and choosing the carriers and service providers in its own name for and on account of customer

on its own account to secure the movement of goods from A to B for a customer but then entering into a series of contracts with performing carriers to fulfill the head contract

The Freight Forwarder’s liability (basic):

The Freight Forwarder’s duty care:

Is liable if he fails to exercise due diligence and take

reasonable measures in the performance of the freight forwarding service

No liability for third parties: Is not liable for acts and omissions

by third parties unless he has failed to exercise due diligence in selecting, instructing or supervising such third parties

THE FIATA MODEL RULES FOR FREIGHT

FORWARDING SERVICES

The Freight Forwarder’s liability as principal:

liability as principal not only when he actually performs the carriage himself by his own means of transport, but also if, by issuing his own transport document or otherwise, he has made an express or implied undertaking to assume Carrier liability (contracting Carrier)

THE FIATA MODEL RULES FOR FREIGHT

FORWARDING SERVICES

The Freight Forwarder’s liability as principal:

 The Freight Forwarder’s liability as principal for other services:

storage, handling, packing or distribution of the Goods, as well as ancillary services in connection therewith, the Freight Forwarder shall be liable as principal:

1) When such services have been performed by himself using

his own facilities or employees or 2) If he has made an express or implied undertaking to assume

liability as principal

THE FIATA MODEL RULES FOR FREIGHT

FORWARDING SERVICES

THE FIATA MODEL RULES FOR FREIGHT

FORWARDING SERVICES

The Freight Forwarder’s liability as principal:

The freight forwarder as principal shall be responsible for the acts and omissions of third parties he has engaged for the performance of the contract of carriage or other service

IMPORTANT TRADE TERM

WHAT IS A SALE CONTRACT?

Agreements between two or more parties that create in each party a duty to do or not do something and a right to performance of the other's duty or a remedy for the breach of the other's duty It might also refer to documents that embody such agreements

ITEMS OF A TRADE CONTRACT

DOCUMENTS IN INTERNATIONAL TRADE

1.Official Documents: Certificate of Origin,

Commercial invoice, Packing list…

2.Transport Documents: Air Way Bill, Bill

of Loading, House Bill of Loading…

3.Banking and Insurance Documents: Bill

of Exchange, Letter of Credit, Certificate of Insurance…

REQUIRED EXPERTISE OF A FREIGHT

FORWARDER

1.Transport Modes and Geography

2.Statutory Compliance

3.Risk Management

4.Cross Functional Integration and SCM

5.Finance and payment

Transport Modes and Geography

Know how in all modes of transport

Know how in goods requirements

Know how in IT

Know how in geography

STATUTORY COMPLIANCE

Know how in dangerous goods

Know how in export/import practice

Know how in customs

RISK MANAGEMENT

Know how and advice on risks

Advice on exchange rates

Advice on traffic hindrances

Cross Functional Integration and SCM

Ability to ensure cross functional integration

Supply chain management

FINANCE AND PAYMENT

Know how in terms of payment

Accuracy in all documentary and

financial transactions

Ability to calculate and to quote

End of CHAPTER 1