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Tuesday, 15 April 2014

Systems of Customs Security Arrangements

Customs Security is usually composed of two elements :- 

-----  A requirement for a financial guarantee to be established in the transit country by the party responsible for the transit operation to meet possible claims by the Customs, coupled with

-----  Physical measures taken by the Customs to verify that the goods are eventually re-exported.

Under the TIR guarantee system, each contracting party designated a national guaranteeing assosiation, which undertakes to act as a guarantor for all TIR carnets used for transit on the territory of the country,

Regardless of whether the carnets have been issued by the association itself or by association of other countries which are parties to the TIR Convention.

All these associations form a chain in which members are linked to each other through an International Organization, which is the International Road Transport Union (IRU).

Reference to Customs Security Arrangements in the MT Convention was limited to the following .

-----  A financial guarantee, if required, should be provided to the satisfaction of Customs authorities under regulations in force in the transit country and under International Conventions.

-----  The guarantee should cover import/export duties and taxes chargeable, and in countries where they are covered by guarantees, any penalties due, and

-----  The system of guarantees should be simple, efficient and inexpensive. 

Monday, 14 April 2014

Trade Logistics

Trade Logistics is a chain of series of links and interfaces with potential for value addition. The difference between the revenue earned by a business enterprise and the cost of bought-in materials, services and components, represent the value which a firm adds by the process of production. The value added concept is also important in that it helps in measuring productivity and profitability of an enterprise, its impact on the national economy and keeping in focus the sources of comparative advantage like logistics, marketing, sales and service.

Through optimization which is the essential function of logistics, many nations like new big economic nation India and China, also developed nation like USA and western European nations and Japan have benefited by :-

-----  Selling service rather than remaining content with the price of exporting.

-----  Simplifying documentation, customs clearance and payment formalities.

-----  Offering varied choice of delivery terms.

-----  Increase in the size of export orders.

-----  Harnessing professionals knowledge and expertise to exercising model options, cost and time trade offs.

-----  Proactive rather than reactive approach to international trade logistics.

Logistics plays a significant  role in the developed economies with its importance growing pari pasu with the increase in the share of services as compared to manufacturing .

Thursday, 10 April 2014

Period of Responsibility of Carrier

Period of Responsibility for  Liability of Carrier :-

1)  The responsibility of the carrier for the  goods under many convention covers the period during which the career is in charge of the goods at the port of loading, during the carriage and at the port of discharge.

2)  For the purpose of  this article the carrier is deemed to be in charge of the goods.

a)  from the time has taken over the goods from

-----  the shipper or a person acting on his behalf

-----  an authority or other third party to whom, pursuant to law or regulations applicable at the port of loading, the goods must be handed over the shipment.

b)  Until the time has delivered the goods.

-----  by handing over the goods to consignee.

-----  in case where the consignee does not receive the goods from the career by placing them at the disposal of the consignee in accordance with the contract or with the law or with the usage of the particular trade applicable at the port of discharge.

-----  bu handing over the goods to an authority of other third party to whom, pursuant to law or regulations applicable at the port of discharge, the goods must be handed over.

In this article reference to the carrier or to the consignee means in addition to the carrier or consignee the servants or agents respectively of the carrier or the consignee.

Monday, 7 April 2014

Forecasts for Containerisable and Breakbulk Traffic

Traffic Forecasts :-

In traffic forecasting two methods can be resorted to, which as may appear are not mutually exclusive.
These are :-

-----  trend analysis and extrapolation.

-----  trade projections based on economy of the country and are done on the basis of actual economics parameters.

Both methods applied mechanically and in isolation can lead to very unrealistic figures. Normally trade forecasting will start with the trade statistics of the previous years preferably in both value and volume terms.

Port statistics may be helpful in other cases but in the context of LLCs where the serving ocean ports may not have the country-wise exports, this method will not help to allow analysis of trend, a run of figures is needed and the period should be preferably at least as long as the forecasting period.  

The economists approach in trade forecasting would tend to categorize commodities according to their economic properties .

A clear cut distinction has to be made between exports and imports. The export would be divided into agricultural and industrial products, each group being further broken down into main commodities.

Similarly , imports can also be divided according to their economic properties .
Such as :-

-----  Consumer goods.

-----  Intermediate products.

-----  Capital goods.

However as already mentioned, trend extrapolation used for long term forecasting can be extremely misleading. Therefore after acquiring a general idea of growth trends, economic parameters may be introduced to formulate more realistic relationship would be quite different for imports and exports.


Tuesday, 25 March 2014

Lay Time in Shipping

In a voyage charter the time spent by the vessel at the port is, of particular importance to the owner because the freight is fixed only with reference to the quality of cargo carried and any undue detention during which he continues to incur fixed overhead charges such as depreciation, insurance, interest on invested capital, wages etc. would reduce his calculated profit.

An important clause in the charter party is therefore the one stipulating the maximum time to be allowed for the cargo loading and discharging operations, that is Lay Time.

The provisions of the charter party usually state that lay time is to commence at a specific time after notice of readiness has been given.

The cancelling date is applicable to the loading port only and is the absolute last day under the terms of the charter party on which the charterer is obliged to make use of the vessel.

Lay Time may be expressed as the maximum number of days allowed for loading and discharge or as loading/discharge rate like an example 1500 tons/200 tons per day.

Demurrage is the compensation to which the owner is entitled for detention of a vessel beyond the agreed lay time.

The voyage charter party usually provides for payment of dispatch money to the charterer for the time that is thus saved. In other words, dispatch money is opposite to demurrage and is the compensation payable to the charterer for completing loading and discharging faster than stipulated under the charter party.

Friday, 21 March 2014

Time Charter in Shipping

Time Charter in Shipping is usually restored to when the charterer desires to operate a vessel for a period of time without undertaking either the financial commitments of ownership or responsibilities of navigation and management of the vessel.

Point of difference between time charter and voyage charter is the basis of calculating hire or freight . In the case of voyage charter freight is paid on the cargo carried and is directly proportionate to the volume of the cargo. In the case of time charter, the volume of cargo has no relation to the charter hire which is fixed on the basis of carrying capacity of the vessel and is directly proportionate to the period of charter .

Followings are the clauses contained in the time charter party usually related to :-

-----  Description of the vessel name, flag, ownership, class, gross and net registered tonnage, cargo capacity, indicated horse power and speed, bunker consumption, etc.

-----  Rate of cahrter hire and mode of payment.

-----  Charter period and redelivery of the vessel.

-----  The charterer's right to direct the vessel in regard to the voyage it shall perform and the cargo it shall carry.

-----  Allocation of operating cost - The owner has to pay running expenses like wages, provisions, insurance, stores etc. and charterer has to pay other expenses like bunker and waters, port charge , canal passing charge etc.

-----  Owner's indemnity against liability incurred under bill of lading.

-----  Liability for damage to the vessel - while the owner is responsible for maintaining the vessel in an efficient  state during the currency of the charter and has therefore to assume responsibility for any damage sustained in connection with navigation, the charterer is to be responsible for any loss or damage caused to the vessel or owners by improper loading or unloading of goods or any negligent act on the part of the charterer or his servant.

-----  Off-hire or suspension of hire during period of inefficiency of the vessel.

Wednesday, 19 March 2014

Bare Boat Charter

 Two container ships pass in San Francisco Bay

Bare Boat Charter is also known as Demise Charter. This is a type of contract under which the owner provides the service of vessel to the Charterer for a period of time in return for charter hire. For all practical purpose, charterer acts as the owner of the vessel during the period of charter but without undertaking the financial commitments of ownership.

The Bare Boat Charter party commonly used is the standard "Barecon" charter party. The charter party usually contains clauses relating to;

1)  Description of vessel - such as size, speed, fuel consumption, loading capacity etc. on which the performance will be depend.

2)  Survey to be carried out on delivery and re-delivery.

3)  Inventories of stores to be taken on delivery and re-delivery.

4)  Charter period - usually a provision of included giving the charterer the option of extending the validity of the charter by a specified period.

5)  Rate of charter hire and mode of payment. This is usually computed on the deadweight tonnage of the vessel per month and is payable every month in advance.

6)  Maintenance and operation during period of charter - The vessel to be at the disposal and under the complete control of the charterer who will be responsible, for supply of crew officers, stores, provisions, bunkers etc. and for all other items of operational costs including insurance. 

Sometimes, Bare Boat Charter serves as "hire/purchase" contract .

Under such a contract , the owner/seller retains formal ownership and thereby security in the vessel until the full purchase price is paid .