MODULE 4AD

SHIPMENT PLANNING A
Main players in the shipping process
1. Importer: The importer is the buyer. He identifies the need for a
product at a specific location, searches for the best supplier globally,
and places an order for purchase. There are three types of importers:
• Actual user, who utilises the imported goods for himself. An
actual user can be industrial (uses the goods for manufacturing
in his own industrial unit) or non-industrial (utilises the goods
for his own use in a commercial unit, lab, research institute,
university, hospital, etc)
• Established importer, who, as the name suggests, is granted a
quota to import a product on the basis of past imports
• Registered exporter, who imports under the government’s
export promotion schemes
2. Exporter: The exporter is the seller. He manufactures or procures
the product required by the buyer. The various types of exporters
are:
• Merchant exporter, who procures the product from the market
or manufacturer and exports it in his name
• Manufacturer exporter, who procures raw material,
manufactures the goods and exports the finished product
• Service exporter, who exports services (software, consultancy
services, etc)
• Third-party exporter, who exports goods and services on behalf
of another exporter (manufacturer exporter)
 • Project exporter, who provides goods and services on contract
(designing, manufacturing, etc) and earns foreign exchange
3. Bank: Banks play multiple roles in international trade. They act as
financiers, providing loans and trade finance products such as Letters
of Credit and Documentary Collections. A Letter of Credit is a
promise by a bank on behalf of the importer to pay the exporter an
agreed-upon sum. A Documentary Collection is when a bank takes
charge of collecting the payment due to an exporter from the
importer’s bank. In addition, banks negotiate trade contracts and are
custodians of goods and documents. Documents are vital to the
import-export business.
4. Insurance Company: Shipping goods comes with risks, including
but not limited to lost or damaged cargo, delays and additional costs
due to factors such as natural disasters, human error, theft, piracy
and more. Insurance companies help cover these risks.
5. Freight Forwarder: Freight is the cargo carried by ships and a
freight forwarder is an agent who, on behalf of the importer or
exporter, coordinates with all the other players (port and customs
authorities, shipping company, etc) in the ocean freight business. His
responsibilities include negotiating for better routes and rates,
handling paperwork and other formalities, organising land
transportation, being an advisor to the importer/exporter, and much
more.
6. Shipping Company: The company that owns the carrier (ship) that
transports the goods from the port of loading to the port of
destination.
7. Customs House Agent (CHA): A customs house agent assists
exporters and importers in getting clearance for the cargo from
customs authorities.
8. Customs Authorities: In international trade, the customs
authorities of at least two countries – the country of export and
country of import – are involved. They provide clearance for goods to
leave the country of export and to enter the country of import.
9. Port Authorities: Like customs authorities, the port authorities of
at least two countries are involved in the shipping process. In the
exporting country, they provide clearance for goods to be loaded on
to the ship. In the importing country, they provide clearance for
goods to enter that country.
10. Intermodal Transport Providers: Rail and road transport
providers facilitate the movement of goods from the
factory/warehouse to the port of loading and from the port of
destination to the final destination.

From Exporter to Importer: How the Shipping Process works

Contrary to popular belief, the international shipping process does
not start when a product is loaded onto a ship. It starts much earlier,
when an importer identifies the need for that product and floats an
enquiry to procure it. As such, the shipping process covers the flow
of goods and documents from the place of origin to the place of
destination. For the process to be completed successfully, the
transfer of goods and documents from one party to another must be
highly synchronised.
This infographic is a step-by-step guide to the international shipping
process (for a shipment exported from India):
Hurdles in the shipping process
The shipping process can be troublesome and intimidating for
importers and exporters, given the number of steps, players and
documents involved. These are some of the most common problems
they can face:
• Filing incorrect, incomplete information in the required
documents
• Lack of knowledge of exchange rates, packaging and marking
rules, restrictions on certain products, etc
• Failure to verify the reputation of a supplier (exporter) or
customer (importer)
• Lack of clarity on payments and how to secure them
• Failure to establish good ties with customs authorities
• Failure to find the right intermediaries (freight forwarders,
customs house agents) who can ensure a smooth transaction
• Blind dependence on middlemen/intermediaries

SH

INTAINER
HOW TO LOAD A SHIPPING CONTAINER
The safe shipment of cargo is a primary objective within the shipping industry.
Unfortunately, we face a number of shipping container accidents every year,
with a major cause being improperly loaded containers.

WHAT ARE THE CONSEQUENCES OF IMPROPERLY LOADED CONTAINERS?

Containers that haven't been loaded correctly pose the risk of damaging or
losing cargo, containers, the vessel, and may cause potential hazards to people
and marine life. This can lead to significant economic losses for carriers and
customers. The shipper can be held liable for any accident or event attributable
to poor cargo packing, securing or handling.

As the shipper, you should be familiar with the CTU Code, which is the
international best practice guideline for safe loading of containers. A key
message in the CTU Code is to dedicate careful planning prior to loading the
shipping container.

• CARGO & CONTAINER IN GOOD CONDITION

When the empty shipping container is delivered and ready to be packed, the first
thing to do is make sure the container is clean and dry, check that there are no
holes, and it is functionally operative. The floor area must be clear, undamaged
and free of any protruding nails or screws that may damage the cargo. You must
also make sure that the container can cater for the required pay-load.

Then, check that the cargo is in good condition to ship. This means goods are
correctly packed, marked, labelled and placarded. It is important that none of
the packaging is damaged prior to loading, and that dangerous goods are
declared. Take photos as a record in case goods are damaged by the consignee
or third parties.

• LOADING THE CARGO

When it comes to loading, the process should be planned well before the
operations commence. The load distribution must be considered, so that no
more than half of the container bears more than 60 percent of the payload.

As a simple rule of thumb, heavier cargo goes on the bottom, and must be
distributed evenly over the floor area. This will ensure that the shipping
container is not proportionally heavy on any one side or corner. Lighter cargo
should then be stowed on top. The same applies for wet and dry cargo, which
goes at the bottom and on top, respectively.

Make sure that any incompatible cargo is properly segregated. The physical
characteristics such as weight, size, density, and whether they are liquids or
solids, must be taken into account. You must also consider cross-contamination
by odour or dust. When it comes to hazardous goods, ensure that you adhere to
regulations and segregate the goods accordingly.

• SECURING THE CARGO

Securing ensures that the cargo remains in its intended position, and does not
cause any damage to itself or other cargo. The best possible way of securing is
when cargo items are placed tightly against each other, within the container
walls. However, if the cargo doesn't fill the entire space, this is when the cargo
must be secured.

In heavy seas, the cargo within a shipping container is exposed to compressive

forces, due to pitching and rolling of the vessel. As a result, the normal strain on
any securing devices may be increased by as much as 100%. Clearly, it is
important that you effectively secure the cargo within the container.

There are a number of methods available to secure cargo, such as tie downs,
strapping, dunnage, fasteners, direct or friction lashing, blocking or bracing.
Pictured below is an example of bracing, where lumber is used to artificially fit
amongst the cargo. There is a great deal of responsibility involved with securing
a load, so it is important that your packing team have a solid understanding of
these methods.
 • VERIFYING THE WEIGHT

In light of recent amendments to SOLAS (Safety Of Life At Sea) regulations, you

are required to get a verified gross mass (VGM) of the shipping container, and
submit it to the terminal and shipping line.

• Weigh the entire container and it's contents after the door is sealed
(Method 1); or
• Weigh all individual cargo items, the dunnage and add this to the
container's tare weight (Method 2).
Steps to Load & Prepare Your Shipping Container Properly

1. Determine the container’s needs:

Before hiring a shipping container, assess your needs in advance. Find out how
much goods you intend to load and look for the right one for you. Consider
certain factors such as size, weight and types while choosing the proper shipping
container for you. You could find various standard-sized freight containers (e.g.
20ft, 40ft, 45ft and 53ft), with several kinds (open-end, open-top, flat-rack, etc.),
choose the right one according to your needs.
2. Pack your goods carefully for loading:
While preparing the shipping container for loading, first identify the items you
would like to load and then pack them carefully for loading. Write an inventory
list of your shipping items. For the safety of your goods, it is advised to use new
boxes for packing.
Packing for commercial needs:
For a business, make sure that the container you are planning to use to pack
your cargo is in good condition to avoid the possible cargo damages. Also,
ensure that it is clean, safe and sound, dry, and most importantly, it is cargo
worthy. As there is a chance of causing harm to your shipment due to the
movements during transit, therefore consider tighter and more secure packing
to eliminate cargo damages as much as possible. Also, pack your cargo in a way
so that they can be moved or appropriately handled by mechanical equipment
(e.g. forklift, crane, etc.).
When packing is done double-check all your items, make sure that they are
secure. Close them with robust and gummed tape. Do not forget to level each of
the pieces and put the number of the box according to the contents. To make it
more effective, you could keep a running tally for the shipping items.
3. Cautiously load and prepare your shipping container:
Following are some of the guideline you should follow while loading and making
the freight container ready:
• Before loading your goods in the freight container, give it a check; check
the overall condition and cleanliness. Also, check the locks and note down
the serial number of it (if there is any) for the reference.
• Load distribution is another crucial consideration you should take into
account while loading the shipping container. Distribute the weight of
your cargo goods and other boxes respectively through the container,
ensuring their weight spread over the entire freight container area. It is
recommended to use the whole space of your shipping container. So
while loading, you should try to cover the entire maximum area at utmost
with leaving no empty spaces.
• Load the larger and heavier cargo and boxes containing non-fragile items
that are at first; put them on the bottom and make sure that they are
evenly distributed over the container’s floor area. With this, you could be
assured that your shipping container is not proportionately heavy on one
side. On the other hand, place the lighter cargo and fragile items boxes on
top. In doing so, you could balance the container and prevent crushing
when your shipment is subjected to violent movement.
4. Ensure the safety of the cargo:
The shipping container is exposed to powerful movement form compressive
forces during transporting, therefore ensure the safety of your shipment. One of
the best possible ways to secure your load is to place the contents of the cargo
firmly against each other throughout the container and make sure that your
loading fills the entire space of the shipping containers. Another excellent idea
to secure your cargo is by applying some cargo securing aids.

5. Use machinery:
For loading your bulk amount of cargo or bulky goods in your container, you
could use some useful tools. Doing so, it does save not only your time but also
lessens the health risk like back injuries for the staff. Corresponding to your
needs, you could use non-motorized or motorised equipment such as pallet
trucks, forklifts and like others.
6. Conduct a final check after loading:
After you are done with filling all of your items, it is the time look through your
inventory list and to check if you missed anything to load. Make sure you place
everything in order and make any adjustment if needed to lock down better and
protect your valuable things. Also, ensure that you have used all the spaces of
the container and the contents are entirely safe from damages. After then, close
the container doors as well as lock the arms using a sturdy padlock. It is
recommended to use a straight shackle padlock or similar lock particularly the
one that is resistant to bolt cutters. Now you are ready to transport your
container with better protection.
TYPES OF CONTAINER SERVICES

What is FCL and LCL?

The full form of FCL is ‘Full Container Load’, it is a container that is for the use of
a single consignee. In international shipping, an FCL means a single container
that is booked by the shipper exclusively for the transportation of their cargo
only. The shipper doesn’t have to share the container with cargo booked by
other shippers. This enhances security and simplifies ocean freight logistics
management.

Whereas, LCL which is Less than Container Load is handy when the exporter
doesn’t have to book an entire container because the size of the cargo doesn’t
demand that much space. Smaller shipments that need to be sent economically
and are less time-sensitive are sent on an LCL container.

Difference between FCL and LCL - LCL vs FCL

Freight forwarders often book cargoes under the LCL category and create a
‘consolidation’ by merging several of their LCL cargoes. They do so by booking an
FCL container and consolidating the same with cargo accepted from different
shippers. The cargoes are then sorted as per their port of destination or trans-
shipment.

Key Differences between FCL and LCL containers

• As the volume of the cargo increases, there is a break-even point at which
the cost of LCL surpasses that of FCL
• The product type suited for FCL is bulky and heavy, while for LCL it is small
and portable
• Traditionally, FCL rates are known to be volatile, compared to the more
stable LCL rates

What is FCL & LCL in shipping terms?

To ship an FCL cargo, the shipper will have to book at least one whole container.
For an LCL shipment, it is not necessary to book a container; only a portion of it
needs to be booked. Naturally, in the case of FCL, the goods therein will be
owned by one company only. In LCL, there may be goods that are consolidated
and are owned by different companies.

FCL delivery happens much faster than LCL. As the entire container is booked,
there is no need to sort and unpack the container at separate delivery ports. The
possibility of delay at ports and in the hands of customs authorities is also lower.
In the case of LCL, additional time is required for sorting the goods,
consolidation of documents, and processing. The time required in loading and
unloading can also be higher in the case of LCL consignments.

Unlike with FCL, there may be less clarity about the handling and documentation
charges associated with LCL cargoes. Although the freight charge itself is quite
low compared to FCL, there may be higher terminal handling charges and
documentation fees, so it is best to discuss the terms with the shipper
beforehand.

Shipment Cost
In terms of total costs, booking an FCL container will be more expensive given
the sheer volume. However, if the dimension-wise cost is considered, the FCL
booking is generally cheaper than LCL. So, the cost per freight is higher in the
case of LCL booking, although in terms of the total cost it is the more economical
option.

For small cargo, it is obvious that LCL is the only logical option. However, if the
volume of the cargo is big, the exporter must compare the costs for both FCL
and LCL. Apart from the freight, there will be haulage charges and destination
service charges. These charges may be recovered from the buyer, but even in
that case, such price escalation may affect future dealings.

The cubic meter calculation of LCL will also determine how good an option it is
for an exporter. In the case of FCL, the freight is charged for the full container
load basis. But in LCL, the freight charge calculation is based on the volume of
the cargo. Beyond a certain weight limit, the freight is charged based on the
weight instead of the dimension.
FCL VS LCL Container - Which is Better?
Several essential considerations decide which of the two load options is best for
you.

A primary factor is transit time. In LCL, the goods are stuffed into the container
only after the freight forwarder receives sufficient cargo to fill the container.
With multiple cargoes, there might be multiple trans-shipment ports, which can
delay the arrival of the cargo at the port of destination. So, while selecting LCL,
the exporter must find out the container stuffing date, the carrier itinerary, the
trans-shipment schedule, and the expected date of arrival.

The choice between FCL and LCL is quite simple when the volume of the cargo is
a lot or very little. But when it comes to choosing between the two, an exporter
has to balance the cost of the shipment with the convenience and speed of the
logistical process.

What is Consolidated Shipping?

Consolidated shipping is a method of shipping where a consolidator combines
individual LCL shipments from various shippers into one full container shipment.
Participating in consolidated shipping earns the shipper preferred rates. When
the full container shipment reaches its destination, the shipments are then
deconsolidated into their original LCL shipments.
LCL vs. FCL
• Less than container load (LCL, also referred to as less than truckload or
LTL), as defined above, is when a shipment is too small in mass to require
a full container to ship. These types of shipments are priced based on
volume and are consolidated to fit into full containers. LCL shipments are
commonplace in supply chains.
• The alternative is full container load (FCL), which is when a shipment does
have enough mass to require an entire container to ship. This type of
shipment usually has a flat rate per container. Unlike with LCL shipments,
FCL shipments are loaded and sealed at the origin by the supplier or
manufacturer.
Benefits of Consolidated Shipping
• Cost savings. Oftentimes, shippers will only use half or two-thirds of a
trailer, but have to pay for the entire space. Consolidation services
combine multiple LTL shipments that are heading in similar locations into
a full truckload, and you pay only for the space your freight takes up.
• Reduced chance of damages. Where LTL uses a hub-and-spoke
distribution method with multiple touchpoints, consolidation uses a
model that significantly reduces the handling of the product as freight
moves from shipper to consolidation center to receiver/consignee. With
fewer touchpoints there’s less opportunity for product to be damaged.
• Speed to market. A consolidation strategy can help get your freight
delivered where it needs to be, on your schedule. A provider with large
freight volumes can put a plan into place that puts your freight on a truck
and on the road, better utilizing truck space and a swifter transportation
delivery model.
Challenges of Consolidated Shipping
• Finding a Carrier. Not all carriers are willing to carry consolidated
shipments because of the added complexity. When you find a carrier
willing and able to move consolidated shipments, you need to be
cognizant that they are charging you correctly.
• Organization and Planning. Consolidated shipments require more
organization and planning than FCL shipments. As a shipper, you need to
be aware of pricing methods, dimensions, timing, and other specifics in
order to make sure your shipment gets where it needs to go safely and
promptly.
• Time. Consolidated shipments can take more time than FCL shipments
because of the added steps (consolidation and deconsolidation). As a
shipper, you need to be aware of this and plan accordingly.

Container Stuffing and Destuffing

Stuffing is the loading of goods into a container while destuffing is the opposite
of stuffing. It is the unloading of goods from a container.
Several factors are to be considered while stuffing or destuffing cargo. Here we
have taken shipping cargo by sea, as the context. Let us take a look at stuffing
first.

Every warehouse will have a daily plan for stuffing that is normally prepared by
the warehouse operational staff. Stuffing of a container will usually coincide with
the stack dates announced by the port for a particular vessel that the container
is supposed to take.

Readying Goods for Stuffing

Most commonly known as loading, stuffing also goes by many other names such
as stowing, filling, etc.

The process of stuffing starts when an empty container arrives at the warehouse
yard, according to the daily stuffing plan and as agreed with the transporter or
freight forwarder. The condition of the container along with its cleanliness and
hygiene has to be ensured first.

There may be goods that are incompatible and therefore should not be loaded
together in a container. An example being detergents and food materials. Any
such omissions in planning have to be brought to the attention of the
warehouse supervisor immediately by the loading staff for the necessary action.

Certain types of goods have to be loaded in pre-cooled reefers (refrigerated

containers). In such cases, the receiving staff has to check and confirm that the
reefer arrives pre-cooled and is set at the required temperature.

The MHE and manpower necessary for the operation must be ready by the time
the container arrives at the warehouse. The empty container is then positioned
at the allotted loading bay, ready for loading.

When there is more than one container for stuffing, the warehouse operations
planner may arrange for more than one loading bay, MHE (Material Handling
Equipment), and the personnel accordingly. This saves time but takes up extra
space, equipment, and manpower. When a single bay is used to stuff cargo in
multiple containers it will take more time to complete the operation.

The warehouse staff has to ensure that the goods are picked and kept ready for
loading .

Goods have to be packed and labelled as agreed between the buyer and seller
and according to the requirements of the relevant authorities.

Special packaging requirements apply to toxic materials, certain types of drugs,

etc. Goods may have to be palletized and shrink-wrapped or packed in
cardboard or wooden cartons. Goods such as electronics and other fragile items
may require shock-proof packaging material to prevent them from damage
during handling and transit.

Goods for stuffing have to be labelled according to the statutory requirements of

the exporting as well as the importing countries. The exporter/shipper will have
to ensure that he has the complete and correct details for this. Labels meeting
all these standards have to be fixed on all cartons or units.

Most warehouses pre-pick the orders meant for loading and keep them in the
marshaling yard located near the loading bay for convenience. Once the
container arrives, these prepicked goods are moved inside the container.

When chilled or frozen items are transported, they have to be picked from their
storage locations and loaded directly into the container. Such items cannot be
kept out in the open as it will result in the deterioration or spoilage of the cargo.

Goods may be hand-stacked inside a container without palletization to maximize

utilization of container space. In this case, the container has to be packed full to
avoid shifting of goods within the container during movement. Palletization and
shrink-wrapping help to contain the cargo and minimize its shifting within the
container during handling and transport.
The loading staff has to ensure that goods are handled carefully and that it is
stacked inside the container in a well-balanced, yet compact arrangement. They
should be aware of the weight limitations for the cargo set by the relevant
transport authorities or the shipping line.

Containers of different sizes and types have different payloads. Payload is the
weight that a container is capable of carrying safely. Typically, a 20’ GP container
can take 21450 kilograms while a 40’ GP van can accommodate 26850 kilograms
of cargo.

Destuffing of Container

Destuffing, sometimes referred to as devanning, requires the same planning as

stuffing. A container bay should be ready to receive the container. The
warehouse staff must ensure that the required storage space is free inside the
warehouse to put away the incoming cargo.

The staff receiving the goods must confirm that the container that comes in is in
good condition and that the container seal is intact. The container seal is a one-
time lock that is affixed to the container door by the original shipper of the
cargo. It is usually removed in the presence of the customs officer who is
present at the warehouse at the time of destuffing.

If customs inspection is done at the receiving port, then the container seal is cut
from the port in the presence of the customs officer. Once the inspection is
completed, the consignee or the receiver would lock the container using his lock
and transport the container to the warehouse.

When the container door is opened, damages if any, have to be noted down. For
high-value cargo that is prone to damage during transit, it is advisable to have a
representative from the insurance company present while the container is
opened. The representative can then record damages and other details, directly.
In the event of an insurance claim, this makes it a little easier.
The goods receipt is recorded by the warehouse staff and these details are given
to their inventory control or inventory administration section who will account
for it in their records accordingly.

Goods coming to the warehouse may or may not be palletized. Such goods will
have to be stacked appropriately on pallets with or without shrink-wrapping,
before being moved to their assigned storage racks and locations.

In some warehouses, cartons are sometimes stacked on the floor without

palletization. When stacked on the floor, especially when there is a large quantity
of stock, locating and picking goods at a later stage can be cumbersome.

As most modern warehouses use the WMS (Warehouse Management System)

and the WMS picking rules, they prefer to store goods on racks that are easily
accessible, rather than resort to floor stacking. If the incoming cargo requires
labelling, then that has to be completed before it is put away on the racks.

Cross Docking and Destuffing

Cross docking is a time-saving and cost-cutting method used to transport goods

to the customer. In cross-docking, the incoming goods are destuffed, checked,
and loaded immediately onto the transport that will take it to its final customer
or destination. There is no storage involved in this process as the activities after
destuffing and before dispatch, are all carried out from the warehouse
marshaling yard or the staging area.

Cross docking helps to move the cargo immediately upon receipt to its
customer.

The warehouse employees who handle stuffing, de-stuffing, and cross docking
have to be well trained in handling the different types of goods, the MHE, and in
using WMS. These jobs cannot be done casually. They are part of a well-planned
operation requiring experienced and dedicated warehouse staff.
Container Unloading
Container unloading
The definition of unloading is as follows:
Unloading is placing the appropriate container on a ship,
chassis, wagon, or any other means of transport.
When the ship arrives at the port, the containers should be
unloaded. This is usually done with the help of special
container cranes. In the photo below, you can see how such
a crane looks like.

These types of cranes pick up containers from the ship’s

cargo hold and deck.
Then the containers are placed on the vehicles.
AGVs (automated guided vehicles) can also be used to
transport containers. These types of vehicles move without
the participation of drivers. They are run by PLC controllers
(programmable logic controller) for mobile applications.
After receiving the container, AGV moves the container to
the previously selected stack. The stack consists of several
lines between which containers can be stored for a limited
time.
Setting up containers in such stacks is done using
automatically controlled container stackers, the so-called
ASC (Automated Stacking Cranes).
Further container unloading steps
When the AGV arrives near the sensor-rich line, the ASC
pulls the container and places it on a certain stack.
Stacking
The procedure of placing containers on appropriate stacks is
to facilitate operations taking place in specific parts of the
quay and the public area during unloading of ships and
subsequent reloading.