Logistics

Operations
Almahi Suliman
Supply Chain Consultant
Learning Objectives

• By the end of this course, participants should be

able to:

• Improve and accelerate logistics

operations
• Minimize logistics cost

• Plan logistics effectively and efficiently

What will we learn?
• Introduction to logistics pillars
and objectives
• Supply chain strategies and
logistics management
• Planning of logistics activities
• The modes of transport
• Third party logistics providers
and how to negotiate with
them
• Trips scheduling and fleet
management
• Drivers Management
• Logistics Policy Framework
• Logistics budgeting
• Shipments building
• Material handling
• Shipping documents
• Incoterms 2010
• Specific logistics for electronic
equipment
• How to be aligned with Logistics of
vender Company (like Ericsson,
Huawei)
• HSSE in Logistics
• Logistics Terminology
Timetable:

• F i rst S e s s i o n : 08:00 – 10:00 am

• B re a k fa st : 10:00 – 10:30 am

• Second Session : 10:30 – 12:30 pm

• Lunch Time : 12:30 – 01:15 pm

• End Time : 01:15 – 02:30 pm

Introduction to logistics
pillars and objectives:
• What is Logistics?
• Logistics – Mission [A Bill of “Rights”]
• Logistics .. Additional definition
• What is the Inbound Logistics
• Outbound Logistics – Market Logistics
• Alternatives of Outbound Logistics
• Reverse Logistics: Related to customer service
• Factors affect Logistics
• Day-to-day Responsibilities
logistics
What is Logistics?

Logistics - Science of managing (controlling) the movement and

storage of goods (or people) from acquisition to consumption.

Movement = Transportation (between locations).

Storage = Inventory, Warehousing (at locations).

Goods: Raw Materials  Final products, and everything in between.

Logistics for services & people similar to goods logistics.
Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc.

Difference between acquisition and consumption is a matter of space and time.

Focus: Best way to overcome space and time that separates acquisition and consumption.
 Logistics is also defined as:

“that part of the supply chain

process that plans, implements
and controls the efficient,
effective flow and storage of
goods, services and related
information from the point-of-
origin to the point-of-
consumption in order to meet
customer requirements“

ITC M10:U1:1.1-2
Logistics – Mission [A Bill of “Rights”]

• Logistics embodies the effort to deliver:

• The right Product
• In the right Quantity
• In the right Condition
• To the right Place
• At the right Time
• For the right Customer
• At the right Cost
• With the right information needed by the customer
during & at the end of the logistics process
Ultimately delivery the right level of customer service at the right cost
Logistics Functions

Inventory
Mgt

Warehouse
Transport
Mgt

Logistics

Order
Material Processing
Handling Customer
service
Logistics types

Suppliers Inbound Company Outbound Customers

W.I.P

Reverse Logistics

W.I.P = WORK IN PROCESS

Relating marketing channels, logistics management, and
supply chain management
What is the Inbound Logistics
• Inbound logistics is the movement of materials
from suppliers and vendors into production
processes or storage facilities.
• Inbound Logistics’ Solutions
• JIT [Just In Time Delivery]
• JITii [Just In Time Two]
• Consignment Inventory
• VMI Vendor Management Inventory
• Buffer Stock
Outbound Logistics – Market
Logistics
• Related to distribution of finished goods
• Includes: packaging, shipping and payment
collection
• It is very critical to the company or organization
success because it fulfill the company commitments
towards its customers and beneficiaries.
• It needs strict KPIs like:
• On Time Delivery
• Logistical Defect Rate
• Cost
Alternatives of Outbound Logistics

• Third party logistics provider (3PL)

• Fourth party logistics provider (4PL)
• Short term individual contracts
• Public transportation
• One-off Lease
• Courier
Reverse Logistics
Related to customer service:
• Reverse logistics is the process of
moving goods from their final
destination back to the area of origin.
For the reasons of:
• Defects
• Maintenance
• Replacement
• Proper Disposal
Factors affect Logistics
• Distance between supplier and customer
• Urgency
• Value and quantity of the merchandize
• Market conditions and competition
• Firm’s/organizations logistical capabilities
• Agreement on terms and conditions of both parities
supplier and buyer
• Transportation and stocking cost
  

The logistics manager is involved in a wide range of

business activities, such as:

 Managing interfaces relating to goods delivery

 Scheduling & organising supplies of inputs
 Organising picking and packing
 Ensuring preparation, labelling, sorting etc
 Managing transport
 Tracking & recording of deliveries
 Administering documentation
 Liasing with shipping agents, ports and customs
 Ensuring compliance with handling & safely requirements
 Organising back-loads
 Managing goods to be returned and/or recycled

ITC M10:U1:1.1-5
Supply chain strategies and
logistics management:
• Logistics & the Supply Chain

• What is Supply Chain Mgt?

• Logistics vs Supply Chain Management

• Effective & Efficient Supply Chains

  

Cross-Functional Integration
Logistics activities need to be carried out in close
co-ordination with the other functions within the
organisation including purchasing, inventory
management, manufacturing, and sales operations!
Organisations also need to be closely integrated with
external bodies such as shipping & freight agencies,
independent warehousing, cross-docking centre operators,
customs, transport regulatory authorities & suppliers, end
users & customers

ITC M10:U1:1.2-1
 What is Supply Chain Mgt?

Supply chain management is:

“the management of upstream & downstream
relationships with suppliers & customers to
deliver superior customer value at less cost to
the supply chain as a whole“

Supply chain management does not just take

into consideration material flow from the
supplier to the customer but also information
& financial flows throughout the supply chain

ITC M10:U1:1.2-2
 Logistics vs Supply
Chain Management

Logistics management involves the strategy &

operations relating to the movement of goods within
the enterprise & with its immediate suppliers &
customers.

Supply chain management involves managing the

relationships amongs all members in the supply chain.

A company‘s Logistics strategy needs to be closely

aligned with the supply chain‘s overall strategy.

ITC M10:U1:1.2-3
 An example of a simple supply chain
An example of a simple supply chain
Logistics: transport, storage,
packing and handling
Logistics: transport, storage,
packing and handling

Raw
Final
materials
Raw consumer
supplier Final
materials
consumer
supplier

Component Assembler Retailer

manufacturer
Component Assembler Retailer
manufacturer

ITC M10:U1:1.2-6
Planning of logistics activities:

• Supply chain managers balance total logistics cost

factors against customer service factors

• Logistics Planning

• Trips scheduling and fleet management

Supply chain managers balance total logistics cost
factors against customer service factors
Logistics Planning
Strategic Planning Operational Planning
• Service Level • Setting Priorities
• Maintenance & Repair
• Logistics Targets (Quality, Time, Cost,
Responsiveness) • Trips and delivery schedule
• Drivers’ management
• Logistics Strategy
• Capacity Planning
• Insurance
• SLA & KPIs • Fueling
• Facilities (warehouses) • Licensing
• Equipment (Trucks & Handling equipment) • Records keeping
• Facilities Design • Inventory control
• Storage Systems • Material handling
• Inventory Levels
• Shipment building
• Own, Lease, Outsource
• Reporting
• Hire, Fire & Training
•
• HSSE issues
Technology (ordering system)
• Policies (usage, HSSE) • Inbound logistics follow up
• Routes • 3PL contract Mgt & Performance Evaluation
• International Freight • Disputes Resolution
• Resolving different legal issues
Trips scheduling and fleet
management:
• Planning and Scheduling Deliveries
• Warehouse siting & delivery cycles
• Variable vs. Fixed Delivery Schedules
• Variable Delivery Schedules
• Required Handling Capacity under Variable vs. Fixed
Delivery Schedules
• Fixed Delivery Schedules
  

Two variables are important in the planning of

inter-stores transport:
 Siting of each working store and its territory to serve
 Delivery frequency & load size for the working store

The nature of those two variables determines:

 The size and design of the store
 The vehicle size which suits direct deliveries to
working stores

ITC M10:U4:4.3-64
 Variable vs. Fixed Delivery Schedules

Variable delivery schedule (with fixed quantity)

Week 1 Week 2 Week 3 Week 4 Week 5

Fixed delivery schedule (with variable quantity)

ITC M10:U4:4.3-66
 Variable Delivery Schedules
Variable delivery schedules wait until a full vehicle
load of materials is needed in the working store

Advantages:
 Efficient use of transport

Disadvantages:
 Increased administration
 Increased possibility of stock shortages or stockouts
 Increased inventory charges & storage capacity
 Increased difficulty in transport management
 Increased staff expenses for overtime

ITC M10:U4:4.3-67
 Fixed Delivery Schedules
Fixed delivery schedules ensure that deliveries take place according to a
pre-determined plan with equal, fixed periods between deliveries

Advantages: L IV
ER
Y

DE
 Schedules can be planned
 Less administration is required
 Safety stocks are reduced
 No need for increase in stock, inventory or storage

Disadvantages:
 Higher transportation costs as vehicles operate with less than full loads

Due to the considerable advantages, many well-designed logistics systems

prefer to use fixed delivery schedules

ITC M10:U4:4.3-69
 An organisation can choose from sea, air and rail
as transport modes

Quality and speed have a price, but so do delays

and damages

Prices of fuels, interest rates and freight costs

are continuously changing

Movements should be constantly monitored

appropriate policy changes should be made when
necessary RY
IVE
L
DE

ITC M10:A:3.1-1
  Air Freight
Is the most cost-effective mode when lead-time &
order-to-cash cycle time must be minimised

 Rail Transportation
Provides limited service frequencies, the network is not
as extensive as road network, & it provides only
terminal-to-terminal service

 Road transportation
The most flexible & versatile mode of transport

ITC M10:A:3.1-4
 Choosing the most appropriate
mode of transport
Determine the ultimate destination & LIV
ER
Y
DE

the speed & frequency of delivery required

Match the type and size of the cargo to the type of transport available &
its capacity

Match the physical attributes & handling capacities of ports, terminals,

warehouses with the type of transport

Compare the cost implications of more frequent deliveries of small

cargoes against those of fewer shipments of larger cargoes

Obtain & compare freight quotations from different sources

ITC M10:A:3.2-1
 Sample of an analysis of the cost of transport alternatives
Purchase item: electronic equipment
Yearly gross tonnage by sea: 68 tonnes
by air: 66.3 tonnes
Volume of each shipment (sea/air): 2.5 m3/tonne
Average value/kg of the goods: $ 20
Basis for calculation Air Sea
¨ Door-to-door lead-time 9 days 41 days
¨ Annual interest rate 15% 15%
¨ No. shipments per year 40 10
¨ Supplier’s avge yearly stock awaiting shipment 0.8 tonnes 3.4 tonnes
¨ Buyer’s average yearly stock after shipment 2.5 tonnes 10.2 tonnes
Logistics costs per kg Air ($) Sea ($)
¨ Freight rate 2.05 0.40
¨ Packing 0.03 0.20
¨ Local transport in supplier’s country (to FOB) 0.05 0.15
¨ Insurance 0.06 0.30
¨ Tied up capital during the voyage 0.07 0.40
¨ Ordering costs 0.03 0.02
¨ Local transport in the buyer’s country 0.03 0.25
¨ In transit warehousing 0.10 0.45
¨ Tied capital in stock (before & after shipment) 0.30 1.15
ITC Total cost per kg: 3.17 3.32 M10:A:3.3-1
What is a 3PL?
• A third-party logistics provider (abbreviated 3PL) is a
firm that provides outsourced or "third party"
logistics services to companies for part, or
sometimes all of their supply chain management
function.
• Third party logistics providers typically specialize in
integrated warehousing and transportation services
that can be scaled and customized to customer’s
needs based on market conditions and the demands
and delivery service requirements for their products
and materials.
What does a 3PL do?
• Customized transportation (vehicles, perishables)
• Payment Collection on Delivery
• Price Marketing and Labeling
• Product mixing and packaging
• Cross-docking
• Inventory management
• Web based consignment tracking
• Frequent deliveries is small lots
• Load cobbling
What is 4PL?
• The definition of Fourth-Party Logistics (4PL) is an integrator that
assembles the resources, capabilities and technology of its own
organization and other organizations to design, build and run
comprehensive supply chain solutions.
• In essence, Fourth-Party Logistics (4PL) means that one company is able
to outsource the entire management of its supply chain to another
company. This would include all the assets, planning and management
of the process.

• The 4PL management service provider would gather together all the
constituent parts required such as systems, transport providers, order
management, and inventory management with a view to providing the
client with a fully integrated supply chain. In return the client will pay an
appropriate fee and concentrate on its core business.
Logistics budgeting:
• Transportation Costs
• Usage and Working Life of Vehicles
• Fixed & Variable Costs
• Cost of Depreciation
• Comparing Vehicle Types
• Cost of Vehicle Drivers
• Fuel Costs
• Other components of operating cost
• Theoretical vs. Actual Unit Costs
• Hidden Operating Costs
  

Transportation Management involves

 Assessing transport modes

 Understanding regulations
 Decisions to have third party or own fleet vehicles
 Evaluating carrier performance
 Balancing trade-offs between costs & service in
transportation

Transportation is regarded as a driver of

logistics & supply chain efficiency & value
ITC M10:U4:4.3-1
 The first decision that determines a
company‘s transportation costs is whether to
operate with own fleet of vehicles or to use
commercial transport operators

The first option is recommended in cases of

big volumes & high delivery frequences,
whereas the second one is better for small
volumes

Costs vary from country to country and must

therefore be calculated locally
ITC M10:U4:4.3-3
 Combining an in-house fleet with haulage
contractors

Number of
vehicles Operate in-house truck fleet
required

Time
ITC M10:U4:4.3-4
 Usage and Working Life of Vehicles

Usage (the number of kilometeres that the vehicle operates each

year) has the greatest effect on per unit vehicle
operational costs

All fixed costs, such as capital depreciation, road tax and insurance,
are spread out over the number of km that the vehicle covers

Deciding on a realistic working life for vehicles is an important

planning & financial consideration for transportation operations

Vehicles are commonly depreciated over 5 years

ITC M10:U4:4.3-6
 Fixed & Variable Costs

Fixed costs are unaffected by the distance

that a vehicle travels

Variable costs are proportional to the distance

travelled per year

Vehicles drop in value by a fixed amount per

year even with very low use; & lose value more
rapidly with higher usage

ITC M10:U4:4.3-7
 Cost of Depreciation
 Capital depreciation starts as soon as the vehicle is
purchased

 When the depreciation period is decided, it is a

straightforward calculation to work out a cost per km

 When the weight carrying and/or the volumetric

capacities of a vehicle are known, it is easy to calculate
the theoretical annual depreciation cost per cubic meter
or per tonne for vehicles operating at full capacity

ITC M10:U4:4.3-8
 Vehicles used for cost comparisons

ITC M10:U4:4.3-9
 Comparative Unit Depreciation Costs
over the Full Life of Each Vehicle

Vehicle Unit depreciation over 5 years

Payload
Vehicle Class price cost (in $)
(in $) in m 3
in tonnes per m 3 per tonne
Car van 10,000 2.0 0.6 5,000 16,666
Van 12,500 5.2 1.25 2,404 10,000
Rigid body truck 32,000 40.0 12.0 800 2,666
Articulated truck 67,000 70.0 25.0 957 2,680

ITC M10:U4:4.3-10
 Comparing Vehicle Types
Despite variations in absolute price, the
relative cost of different classes of
vehicles will tend to maintain the same
ratio in any given country

There is a clear difference in economies of

scale between car vans, vans and trucks

ITC M10:U4:4.3-11
 Unit Depreciation Costs
per m3-km and per tonne-km

Km per Km over Unit depreciation costs over 5 years (in $)

Vehicle Class
year 5-year life per m 3 per m 3 -km per tonne per tonne-km
Car van 30,000 150,000 5,000 0.0333 16,666 0.111
Van 40,000 200,000 2,404 0.0120 10,000 0.050
Rigid body truck 90,000 450,000 800 0.0017 2,666 0.0060
Articulated truck 90,000 450,000 957 0.0021 2,680 0.0060

ITC M10:U4:4.3-12
 Cost of Vehicle
Drivers
Driver’s costs…

Drivers‘ wages, super annuation & employers‘ social

security contributions are the second largest
element of vehicle operation costs

The cost of a driver per year is relatively

unaffected by the capacity of a vehicle

The economy of scale advantages of large

vehicles are even greater than they are for
depreciation costs

ITC M10:U4:4.3-13
 Unit Costs of Vehicles
Drivers/Operators

Load carried yearly per cost

Payload
Km per year of one driver
Vehicle Class
(per driver)
in m 3 in tonnes in m3-km in tonnes-km
Car van 30,000 2.0 0.6 60,000 18,000
Van 40,000 5.2 1.25 208,000 50,000
Rigid body truck 90,000 40.0 12.0 3,600,000 1,080,000
Articulated truck 90,000 70.0 25.0 6,300,000 2,250,000

ITC M10:U4:4.3-14
 Fuel Costs

 Fuel charges are the third main vehicle

operating costs

 Fuel costs vary substantially from

country to country

 There are significant economies of scale

in operating larger vehicles in relation to
fuel consumption
ITC M10:U4:4.3-15
 Unit Fuel Costs

Load carried per cost of

Payload
Consumption one litre
Vehicle Class
km / litre
in m 3 in tonnes in m 3 -km in tonnes-km

Car van 16.0 2.0 0.6 32 9.6

Van 12.5 5.2 1.25 65 15.6
Rigid body truck 3.2 40.0 12.0 128 38.4
Articulated truck 2.5 70.0 25.0 175 62.5

ITC M10:U4:4.3-16
 Other components of operating cost

Y
ER
LIV
DE

Maintenance Insurance Road & vehicle Drivers’ travel

taxes expenses

ITC M10:U4:4.3-17
 Other Operating Costs
Maintenance, repair and other operating charges
 Minor increase for larger vehicles
 Relate to distance travelled per year
 Important element of variable costs
 Economies of scale for larger vehicles

Insurance, road and vehicle taxes

 Fixed regardless of distance travelled (except for tolls)
 Important element of fixed costs
 Economies of scale for larger vehicles

Drivers‘ expenses
 Significant on long trips
 Factor contributing to justification of intermediate stores

ITC M10:U4:4.3-18
 Comparing Overall Vehicle
Operating Costs
Y
ER
LIV
DE

Relative overall operational cost ratios

Vehicle Class
per m3 of goods transported 1 km
Car van 30.0
Van 11.0
Rigid body truck 1.3
Articulated truck 1.0

ITC M10:U4:4.3-19
 Operating Costs - Overall

Substantial cost differences between large &

small vehicles have been illustrated

There is a clear scale of advantage that can be

obtained in transport costs if loads, which were
previously delivered by many suppliers in small
vehicles, were consolidated into larger loads &
then shipped inter-stores using larger vehicles

It is essential to work out the vehicle costs

taking account of local conditions
ITC M10:U4:4.3-20
 Theoretical vs. Actual Unit
Costs
 There is a difference between the assessed theoretical &
the actual unit cost of operating vehicles

In actual practice:
 A company does not operate its equipment at full capacity

 Costs vary depending on operating conditions

such as travic levels and the state of the roads

 Comparing theoretical & actual unit costs allows to

identify better ways of utilising capacity & reducing costs

ITC M10:U4:4.3-21
 Calculating Actual Unit Costs

In order to calculate actual costs, the following data must be

collected & analysed for different vehicles:

 Number of km actually travelled

 Average load actually carried in cubic meters and/or in tonnes
 Actual fuel consumption
 Number of driver-hours actually worked under both normal and overtime pay
conditions
 Actual maintenance and repair costs
X
5
2

The data should ideally be available for an individual year to make a

comprehensive assessment possible
ITC M10:U4:4.3-22
 Hidden Operating Costs

 A hidden cost is the mistreatment of

vehicles & equipment which is often not
immediately recognisable

 Incentives & observation can help to

decrease those costs including:
 Tachograph
 Satellite tracking of vehicle
 Damage & loss reports
 Collection of driver explanations for delays in
deliveries
ITC M10:U4:4.3-23
   Delivery frequency
 The most suitable frequency between
stores is an important issue to decide on

 The delivery frequency is determined by

the volume of the business

 In order to arrive at the most economical load

quantity, it has to be decided into how many
shipments the total yearly requirement for a
route will be broken down

ITC M10:U4:4.3-41
The same requirements can be met with
The same requirement can be met with loads of
loads of different sizes & frequency
different size and frequency

Lower
Greater stocks
handling Less economical vehicle
costs

Lower More economical vehicle

handling
Higher
costs stocks

ITC M10:U4:4.3-42
 Balancing costs in delivery
frequency
Transport Inventory
Handling Storage

ITC M10:U4:4.3-43
How total logistics cost varies with number of warehouses
used
 Other Factors to consider

 The types of goods which are transported also affect

the design of a transport system & can override the
advantages of using large economical vehicles

 Perishability is an example of an important

factor to consider

 Other alternatives to using economical

vehicles are:
 Using a commercial transport operator which will achieve
economical vehicle use by pooling the loads of several
customers together

 Introducing intermediate level stores

ITC M10:U4:4.3-45
 Introducing Intermediate Stores

ITC M10:U4:4.3-46
 Transport objectives
1. Use Large vehicles, as these are more economical

2. Utilise full vehicle capacity

3. Minimise idle time

ITC M10:U4:4.3-48
Drivers Management:
Managing drivers should focus on:
• The selection and recruiting criteria like age, fitness, knowledge,
experience, etc.
• Drivers qualification and disqualification
• Contract coverage, scope of work, salaries, wages, overtime, etc
• Work load distribution
• Training (awareness of policies and procedures, skills)
• Performance evaluation
• Incentives and punishment when necessary
• Adherence to policies and procedures
• Leaves, vacations, etc
• Medical check, follow up and reporting
Logistics Policy Framework:
Fleet Drivers and Management policies and
procedures:
• Warehouse Management
• Inventory Planning and Control
• Order Processing
• Service level
• Material handling
• The policy should contain at least the following:
• Who May Drive a Vehicle
• Permitted and Prohibited Uses
• Personal Use of Vehicles
• Vehicle Assignments
• Accidents and Liability
• Fleet Manager, Fleet Coordinator, Driver Supervisor Responsibilities
• Driver Management
• Vehicle Management
• Accidents and Emergencies
• Records Management
• Disposal
• General business principles and ethics
Material handling:

• Definitions of Material handling

• Functions of Material Handling

• Principle of Material Handling

• Objectives of Material Handling

• Efficiency of Material Handling Systems

• Material Handling Costs

Definitions of Material handling

Materials handling may be defined as the art and

science of movement, handling and storage of
materials during different stages of manufacturing
considered as material flow into, through and away
from the plant. It is in fact, the technique of getting
the right goods safely, to the right place, at the right
time and at the right cost.

Right Right Right Right Right

goods place time cost MH
Functions of Material Handling …II

Receiving

Dispatching Emptying

Put Away Sorting

Principle of Material Handling… I

Principle of Planning • All Handling activities should be planned

• Plan a system integrating as many Handling activities

Systems Principle as is possible and coordinating the full scope of
operations

• Plan an operation sequence and equipment

Principle of Material-Flow arrangement to optimize material flow

• Reduce, combine, or eliminate unnecessary

Principle of Simplification movements and /or equipment.

Principle of Gravity • Utilize gravity to move material whenever practicable

Principle of Material Handling… II

Principle of Space- • Make optimum utilization of building cube

Utilization

• Increase quantity, size, weight of load handled by

Principle of Unit-Size unifying the unit load

Principle of Safety • Provide for safe handling methods and equipment

Principle of • Use mechanized or automated handling equipment

Mechanization/Automation when practicable

• In selecting Handling equipment, consider all aspects

Principle of Equipment of the material to be handled, the MOVE to be made,
Selection and the method(s) to be utilized.
 Objectives of Material Handling

‘- what is the
ToTo
To
save
save
money
save time
men
amount money I’m
going to save?
-How many
hours/Mins I’m
going to save?
-‘ MH vs. Labors
(how many ?)
Efficiency of Material Handling Systems

• “Equipment built for motion should be kept in motion; idle Equipment

should be kept inexpensive”.
• ”Continuous material movement is most economical”
• “Materials’ handling economy is generally directly proportional to the
size of load handled”.
• “Storage space is best measured in terms of cubic content”
• “Material Handling Operations are only as good as the physical layout of
the plant will permit”
• ”Standardization of methods, types of equipment and sizes of
Equipment is desirable for good material handling efficiency”
• “The value of equipment is directly proportional to its Flexibility”
• ” The use of mechanized equipment instead of manpower generally
increases efficiency and economy in handling.”
• “Productivity increases as working conditions become safer”.
• ” The ratio of dead weight to payload must be kept minimum.
Material Handling Costs

o Total Cost of Ownership

o Initial purchase price
o Operating expenses
o Maintenance costs
o Direct and indirect labor
costs
o Miscellaneous associated
costs
Training
Insurance
 Documentation
Documentation is a vital part of the
import & export process

Inaccuracy or incompleteness of documentation,

or late delivery, can lead to delays in clearance
and payment, losses, legal actions and fines

Every document should be scrutinised for:

 Authenticity
 Deadlines for presentation & expiry
 Conformity with contract & credit requirements
 Accuracy & completeness

ITC M10:U5:5.4-2
 Transport Documents
The Bill of Lading

The bill of lading serves three functions:

1) It is a document of title
2) It is an evidence of the contract of carriage
3) It is a receipt

The bills of lading documents vary amongst

shipping companies & for different classes of
vessel
ITC M10:A:5.1-1
 The main components of
a Bill of Lading

Bill of Lading
Schedule of Standard
information contractual
relating to clauses
the shipment
(back)
(front)

ITC M10:A:5.1-2
 B/L - Front page schedule
-
----------
-
----------
------
--
----------

- -- -- -- --
-- --
- --
- -- - -- --

- -- - - - -
--

-
- --
-- -
Bill Serial No: identity of issuer, date and place of issue
Identity of shipper and consignee (person who can sign for receipt)
Address to which notifications are to be sent
Identity & place of receipt of pre-carrier (if any)
Vessel, ports of loading and discharge, place of delivery to the
carrier
A detailed list of all items/packages/containers including: quantity,
weight, dimensions, identifying marks, description
Freight charges and daily demurrage rates
Number of original bills (usually 3 or 4)
Signature of the legally authorised issuer with the words
“in apparent good order” if the goods consigned for shipment are so

ITC M10:A:5.1-3
 BOL - Back page schedule
Legal definition of terms & agreement to ship goods ber
b
Ru
Paramount clause invoking Hague and/or Visby rules
Legal jurisdiction of the contract (carrier’s country)
Period of responsibility for the cargo & scope of the voyage
Conditions under which alternative vessels may be substituted or
transshipments made
Responsibility of shipper for lighterage & making goods available
for loading and carrier for discharge & delivery
Restrictions on live animal carriage & deck cargo
Freight charges, demurrage rates & terms of payment
Responsibilities of all parties for variations, delays & demurrage
& in hazardous situations
Carrier’s responsibilities due to breach of contract
Respective responsibilities for variations in routing
ITC M10:A:5.1-4
Incoterms 2010

• Incoterms or International commercial terms are well known terms in

international trade issued by the international chamber of commerce in
Paris. They distribute the cost and risk of goods delivery between
buyers and sellers beside specifying a named place of delivery.
• Incoterms are divided into four groups. Each group start with one letter
(E, F, C or D). Each group has its own meaning and functions.
• Group E contains one term called EXW and means that the buyer shall
bear all cost and risk of the goods movement from the warehouse or
plant of the seller in its country.
• Group F contains three terms (FCA, FAS and FOB) and means the
buyer shall bear all cost and risk of goods movement from the main
carrier in the seller’s country. In other words, the seller responsible to
deliver the goods to the carrier on his own cost and risk.
Incoterms 2010

• Group C contains four terms (CFR, CIF, CPT and CIP) and means the
group F plus that the seller shall pay the international freight to the first
carrier without bearing any risk or other additional cost (e.g. in transit).
The seller transfers the risk as soon as it submit the goods to the first
carrier.
• Group D which has four terms (DAT, DAP, DDP). Group D is group C
plus the seller responsibility of the international risk.
• Some terms are applicable for sea freight only. They are FAS, FOB,
CFR and CIF while others are applicable for multimodal transport (sea,
air, road). They are FCA, CPT, CIP, DAT, DAP and DDP).
http://www.incotermsexplained.com/
http://www.incotermsexplained.com/
www.ghanashippingguide.com
References:
• Venod V. Sople, Logistics Mgt, Pearson 2004
• David Blanchard, Supply Chain Mgt, Wiley 2007
• Managing Logistics in the Supply Chain, ITC, WTO,
2014
• Material Handling, Dal Group Manual, By
Mohammed Elkhatim Hamada 2011
• OSHA Pocket Guide, Occupational Safety and
Health Administration 2004