GENERAL QUESTION AND ANSWERS

● What is logistics?

Logistics is the process of planning and executing the efficient transportation and storage of goods
from the point of origin to the point of consumption. The goal of logistics is to meet customer
requirements in a timely, cost-effective manner

● What is supply chain management?

Supply chain management is the management of the flow of goods and services and includes all
processes that transform raw materials into final products. It involves the active streamlining of a
business's supply-side activities to maximize customer value and gain a competitive advantage in the
marketplace.

Supply chain management includes an integrated approach of planning, implementing and controlling
the flow of information, materials and service from raw material to the finished good for the ultimate
distribution to the customer

● Explain what is LTL (Less than truckload)?

LTL (Less than Truckload) shipment is a contract between the shipper and transport owner.
According to the contract, instead of the entire truck, the shipment are priced according to the weight
or volume of the freight and mileage within designated lanes..

FTL = FULL TRUCK LOAD

LCL = LESS THAN A CONTAINER LOAD

FCL = FULL CONTAINER LOAD

● What is freight?

FRIEGHT is the charge to transport goods from one place to another.

Freight class is based on four factors

• Density: Weight per cubic foot

• Freight Stowability: width and length based on carrier mode rules
• Ease of handling: Evaluation of the effort required in transporting
• Liability: It includes liability to damage, breakability and perishability, freight price per pound and
susceptibility of theft

● Explain what is meant by Reverse Logistics?

Reverse Logistics is the collection of all processes that come into play for goods that move in the
reverse directions which means transportation of goods customer to the business.

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 ● Explain what is the difference between logistics and transport?

Logistics: Logistics is referred as the procedure of managing goods, resources and information from
the source to the consumers in a manner that it fits the requirements of both parties.

Transportation: Transport is the movement of the goods from one point to the other.  It is considered
as part of logistics.

● Explain what is bonded warehouse?

Bonded warehouse is a dedicated portion of a facility where imported goods are stored before the
customs duties or taxes are being paid.

● What are APS, ASN and ASRS?

APS: It stands for Advance Planning and Scheduling

ASN: It stands for Advanced Shipment Notifications

ASRS: Automated Storage and Retrieval Systems

● What does a bill of lading include?

A bill of lading includes following details

• Name and complete address of shippers and receivers

• Special account numbers or PO used between business for order tracking
• Instruction for the carrier for secure delivery
• Date of the shipment
• Number of shipping units
• Types of packaging that includes cartons, pallets, skids and drums
• Description about the shipped items (common name & material of manufacture)
• Declared value of the goods being shipped
• Note included if there is any hazardous substance in it
• Exact weight of the shipments – for multiple commodities, weight for each commodity is
mentioned separately
• Freight classification of the items shipped, according to NMFC (National Motor freight
classification)

● Explain what is TEU?

TEU stands for twenty foot Equivalent Unit. It is a method of calculating vessel load or capacity, in
units of containers that are twenty feel long. For example, a 40ft long container measure 2TEUs.

FEU = FOURTY EQUIVALENT UNIT

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 ● Explain what is cross docking?

Cross docking is a process of unloading materials from an incoming semi-truck and loading directly
into out-bounds trucks or trailers. It reduces handling costs, operating costs and the storage of
inventory.

● What is an inventory?

Inventory is the goods available for sale and raw materials used to produce goods available for sale. 

Inventory is generally categorized as raw materials, work-in-progress, and finished goods.

● Explain about containers

A  shipping container is a container with strength suitable to

withstand shipment, storage, and handling. Shipping containers range from large reusable steel boxes
used for intermodal shipments to the ubiquitous corrugated boxes. In the context of international
shipping trade, "container" or "shipping container" is virtually synonymous with "intermodal freight
container," a container designed to be moved from one mode of transport to another without
unloading and reloading

How big is a Shipping Container?

● Standard ISO shipping containers are 8ft (2.43m) wide, 8.5ft (2.59m) high and come in two
lengths; 20ft (6.06m) and 40ft (12.2m).
● Extra tall shipping containers called high-cube containers are available at 9.5ft (2.89m) high.
● Smaller 10ft (2.99m) and 8ft (2.43m) containers are also available but cannot be shipped in
the same way as 20ft and 40ft containers.
● A standard ISO 20ft shipping container has a capacity of 33.1m3 – enough room for almost
100 household washing machines

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 DIFFERENT TYPES OF CONTAINERS
Dry storage container

The most commonly used shipping containers; they come in various dimensions standardized
by ISO. They are used for shipping of dry materials and come in size of 20ft, 40 ft and 10ft.

Flat rack container

With collapsible sides, these are like simple storage shipping containers where the sides can
be folded so as to make a flat rack for shipping of wide variety of goods.

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Open Top Container

With a convertible top that can be completely removed to make an open top so that materials
of any height can be shipped easily

Tunnel container

Container storage units provided with doors on both ends of the container, they are extremely
helpful in quick loading and unloading of materials

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Open side storage container

These storage units are provided with doors that can change into completely open sides
providing a much wider room for loading of materials.

Refrigerated ISO containers

These are temperature regulated shipping containers that always have a carefully controlled
low temperature. They are exclusively used for shipment of perishable substances like fruits
and vegetables over long distances.

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Insulated or thermal containers

These are the shipping storage containers that come with a regulated temperature control
allowing Insulated or thermal containers

These are the shipping storage containers that come with a regulated temperature control
allowing them to maintain a higher temperature.

The choice of material is so done to allow them long life without being damaged by constant
exposure to high temperature. They are most suitable for long distance transportation of
products.

Insulated or thermal containers the choice of material is so done to allow them long life
without being damaged by constant exposure to high temperature. They are most suitable for
long distance transportation of products.

Tanks

Container storage units used mostly for transportation of liquid materials, they are used by a
huge proportion of entire shipping industry. They are mostly made of strong steel or other
anti-corrosive materials providing them with long life and protection to the materials.

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Half height containers

Another kind of shipping containers includes half height containers. Made mostly of steel,
these containers are half the height of full sized containers. Used especially for good like
coal, stones etc. which need easy loading and unloading.

● What is Inco terms

INTERNATIONAL COMMERCIAL TERMS

Incoterms is an abbreviation for “International Commercial Terms.” This term represents a very
useful way of communication and it’s actually aimed at reducing confusion between buyers and
sellers

So what is an incoterm? An incoterm represents a universal term that defines a transaction between
importer and exporter, so that both parties understand the tasks, costs, risks and responsibilities, as
well as the logistics and transportation management from the exit of the product to the reception by
the importing country. Incoterms are all the possible ways of distributing responsibilities and
obligations between two parties. It is important for buyer and seller to pre-define the responsibilities
and obligations for transport of the goods.

Here are the main responsibilities and obligations:

● Point of delivery: here, the incoterms defines the point of change of hands from seller to
buyer.
● Transportation costs: here, the incoterms defines who pays for whichever transportation is
required.
● Export and import formalities: here, incoterms defines which party arranges for import and
export formalities.
● Insurance cost: here, incoterms define who takes charge of the insurance cost.

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Advantages of using incoterms:

● As they stand today, there are 11 main terms and a number of secondary terms that help
buyers and sellers communicate the provisions of a contract in a clearer way; therefore,
reducing the risk of misinterpretation by one of the parties.
● Incoterms govern everything from transportation costs, insurance to liabilities. They
contribute to answering questions such as “When will the delivery be completed?” “What are
the modalities and conditions for transportation?” and “How do you ensure one party that the
other has met the established standards? Having said that, it is important to remember that
there are also limits to Incoterms. For example, they do not apply to contractual rights and
obligations that do not have to do with deliveries. Neither do they define solutions for breach
of contract

THE 13 TERMS ARE GROUPED INTO FOUR BASIC DIFFERENT CATEGORIES:

Group E: Departure term.

Where the seller makes the goods available to the buyer at the seller's own premises,

● EXW - EX WORKS (... named place)

"Ex works" means that the seller fulfils his obligation to deliver when he has made the goods
available at his premises (i.e. works, factory, warehouse, etc.) to the buyer. In particular, he is not
responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for
export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from
the seller's premises to the desired destination. This term thus represents the minimum obligation for
the seller. This term should not be used when the buyer cannot carry out directly or indirectly the
export formalities. In such circumstances, the FCA term should be used.

GROUP F: SHIPMENT TERMS - MAIN CARRIAGE UNPAID.

Where the seller is called on to deliver the goods to a carrier named by the buyer, (FCA, FAS and
FOB). These are shipment contracts with the shipment point named, and carriage unpaid by the seller.

● FCA - FREE CARRIER (... named place)

"Free Carrier" means that the seller fulfils his obligation to deliver when he has handed over the
goods, cleared for export, into the charge of the carrier named by the buyer at the named place or
point. If no precise point is indicated by the buyer, the seller may choose within the place or range
stipulated where the carrier shall take the goods into his charge. When, according to commercial
practice, the seller's assistance is required in making the contract with the carrier (such as in rail or air
transport) the seller may act at the buyer's risk and expense.

This term may be used for any mode of transport, including multimodal transport.

"Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the
performance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes. If
the buyer instructs the seller to deliver the cargo to a person, e.g. a freight forwarder who is not a

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"carrier", the seller is deemed to have fulfilled his obligation to deliver the goods when they are in the
custody of that person.

"Transport terminal", means a railway terminal, a freight station, a container terminal or yard, a multi-
purpose cargo terminal or any similar receiving point.

"Container" includes any equipment used to unitise cargo, e.g. all types of containers and/or flats,
whether ISO accepted or not, trailers, swap bodies, ro-ro equipment, igloos, and applies to all modes
of transport.

Under Incoterms 1990 all obligations related to a given trade term are grouped under 10 headings,
with the obligations for the seller and buyer under each heading stated and mirrored with respect to
the same subject matter.

● FAS - FREE ALONGSIDE SHIP (... named port of shipment)

"Free Alongside Ship" means that the seller fulfils his obligation to deliver when the goods have been
placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that
the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS
term requires the buyer to clear the goods for export. It should not be used when the buyer cannot
carry out directly or indirectly the export formalities.

This term can only be used for sea or inland waterway transport.

● FOB - FREE ON BOARD (... named port of shipment)

"Free on Board" means that the seller fulfils his obligation to deliver when the goods have passed over
the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks
of loss of or damage to the goods from that point.

The FOB term requires the seller to clear the goods for export.

This term can only be used for sea or inland waterway transport. When the ship's rail serves no
practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA term is more
appropriate to use.

GROUP C: SHIPMENT TERMS - MAIN CARRIAGE PAID.

Where the seller has to contract for carriage, but without assuming the risk of loss of or damage to the
goods or additional costs due to events occurring after shipment and dispatch, (CFR, CIF, CPT and
CIP). These are shipment contracts with the destination point named, and carriage paid by the seller.
There are two critical division points, one for the division of costs, the other for the division of risk.
Costs being assumed by the seller until the destination point; risk being transferred to the buyer at the
point of shipment. CIF and CIP are the only Incoterms related directly to insurance cover. In these the
seller arranges the contract of carriage and payment of freight and is regarded as being in a better
position than the buyer to arrange insurance.

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 ● CFR - COST AND FREIGHT (... named port of destination)

"Cost and Freight" means that the seller must pay the costs and freight necessary to bring the goods to
the named port of destination but the risk of loss of or damage to the goods, as well as any additional
costs due to events occurring after the time the goods have been delivered on board the vessel, is
transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment.

The CFR term requires the seller to clear the goods for export.

This term can only be used for sea and inland waterway transport. When the ship's rail serves no
practical purpose, such as in the case of roll-on/roll-off or container traffic, the CPT term is more
appropriate to use.

● CIF - COST, INSURANCE AND FREIGHT (... named port of destination)

"Cost, Insurance and Freight" means that the seller has the same obligations as under CFR but with
the addition that he has to procure marine insurance against the buyer's risk of loss of or damage to
the goods during the carriage. The seller contracts for insurance and pays the insurance premium.

The buyer should note that under the CIF term the seller is only required to obtain insurance on
minimum coverage. The CIF term requires the seller to clear the goods for export. This term can only
be used for sea and inland waterway transport. When the ship's rail serves no practical purposes such
as in the case of roll-on/ roll-off or container traffic, the CIP term is more appropriate to use.

● CPT - CARRIAGE PAID TO (... named place of destination)

"Carriage paid to... “Means that the seller pays the freight for the carriage of the goods to the named
destination. The risk of loss of or damage to the goods, as well as any additional costs due to events
occurring after the time the goods have been delivered to the carrier, is transferred from the seller to
the buyer when the goods have been delivered into the custody of the carrier.

"Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the
performance of' carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.

If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the
goods have been delivered to the first carrier.

The CPT term requires the seller to clear the goods for export.

This term may be used for any mode of transport including multimodal transport.

● CIP - CARRIAGE AND INSURANCE PAID TO (... named place of destination)

"Carriage and insurance paid to..." means that the seller has the same obligations as under CPT but
with the addition that the seller has to procure cargo insurance against the buyer's risk of loss of or
damage to the goods during the carriage. The seller contracts for insurance and pays the insurance
premium.

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The buyer should note that under the CIP term the seller is only required to obtain insurance on
minimum coverage. The CIP term requires the seller to clear the goods for export. This term may be
used for any mode of transport including multimodal transport.

GROUP D: ARRIVAL TERMS.

Where the seller has to bear all costs and risk needed to bring the goods to the country of destination,
(DAF, DES, DEQ, DDU and DDP). These are arrival contracts.

● DAF - DELIVERED AT FRONTIER (... named place)

"Delivered at Frontier" means that the seller fulfils his obligation to deliver when the goods have been
made available, cleared for export, at the named point and place at the frontier, but before the customs
border of the adjoining country. The term "frontier" may be used for any frontier including that of the
country of export. Therefore, it is of vital importance that the frontier in question be defined precisely
by always naming the point and place in the term

The term is primarily intended to be used when goods are to be carried by rail or road, but it may be
used for any mode of transport.

● DES - DELIVERED EX SHIP (... named port of destination)

"Ex Ship" means that the seller fulfils his obligation to deliver when the goods have been made
available to the buyer on board the ship uncleared for import at the named port of destination. The
seller has to bear all the costs and risks involved in bringing the goods to the named port of
destination. This term can only be used for sea or inland waterway transport.

● DEQ - DELIVERED EX QUAY (DUTY PAID) (... named port of destination)

"Delivered Ex Quay (duty paid)" means that the seller fulfils his obligation to deliver when he has
made the goods available to the buyer on the quay (wharf) at the named port of destination, cleared
for importation. The seller has to bear all risks and costs including duties, taxes and other charges of
delivering the goods thereto.

This term should not be used if the seller is unable directly or indirectly to obtain the import licence.

If the parties wish the buyer to clear the goods for importation and pay the duty the words duty
unpaid, should be used instead of "duty paid".

If the parties wish to exclude from the seller's obligations some of the costs payable upon importation
of the goods (such as value added tax (VAT)), this should be made clear by adding words to this
effect: "Delivered ex quay, VAT unpaid (... named port of destination)",.

This term can only be used for sea or inland waterway transport.

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 ● DDU - DELIVERED DUTY UNPAID (... named place of destination)

"Delivered duty unpaid" means that the seller fulfils his obligation to deliver when the goods have
been made available at the named place in the country of importation. The seller has to bear the costs
and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges
payable upon importation) as well as the costs and risks of carrying out customs formalities. The
buyer has to pay any additional costs and to bear any risks caused by his failure to clear the goods for
import in time

If the parties wish the seller to carry out customs formalities and bear the costs and risks resulting
therefrom, this has to be made clear by adding words to this effect.

If the parties wish to include in the seller's obligations some of the costs payable upon importation of
the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect:
Delivered duty unpaid, VAT paid, (... named place of destination)

This term may be used irrespective of the mode of transport.

● DDP - DELIVERED Duty PAID (... named place of destination)

"Delivered duty paid" means that the seller fulfils his obligation to deliver when the goods have been
made available at the named place in the country of importation. The seller has to bear the risks and
costs, including duties, taxes and other charges of delivering the goods thereto, cleared for
importation. Whilst the DDU should be used.

If the parties wish to exclude from the seller's obligations some of the costs payable upon importation
of the goods (such as value added tax (VAT)), this should be made clear by adding words to this
effect: "Delivered duty paid, VAT unpaid (...named place of destination)".

This term may be used irrespective of the mode of transport.

The International Air Transport Association (IATA) is the trade association for the world's airlines,
representing some 290 airlines or 83% of total air traffic. We support many areas of aviation activity
and help formulate industry policy on critical aviation issues.

A letter of credit, also known as a documentary credit or bankers commercial credit, or letter of
undertaking, is a payment mechanism used in international trade to provide an economic guarantee
from a creditworthy bank to an exporter of goods

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Gross weight refers to the total weight (including containers, packing, and pallets) of the goods being
loaded on a vessel. Net weight refers to the weight of the goods after they have been unloaded from
their containers and unpacked.

Multimodal transport is the transportation of goods under a single contract, but performed with at
least two different modes of transport; the carrier is liable for the entire carriage, even though it is
performed by several different modes of transport

What is Cross Docking? Cross docking is a system that virtually eliminates the need to hold
inventory. Products are delivered to a warehouse where they are sorted and prepared for shipment
immediately – usually being reloaded onto other trucks stationed at the same warehouse.

Breakbulk ocean shipping is a common method used to successfully transport cargo or goods that
cannot fit in standard-size shipping containers or cargo bins. Instead, cargo is transported in bags,
boxes, crates, drums, barrels, other handling equipment, or is simply rolled, lifted, or pushed onto a
ship or barge.

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