WHAT IS A BILL OF LADING ..??

Bill of Lading (abbreviated to B/L) is one of the MOST important documents in the whole shipping and freight chain..

A Bill of Lading has 3 basic purposes or roles..

1. Evidence of Contract of Carriage
2. Receipt of Goods and
3. Document of Title to the goods

Let’s examine these roles in more detail..

1) Evidence of Contract of Carriage – emphasis on the term “Evidence“..

Many people think that a B/L is a Contract between the Seller and the Buyer and many also think that a B/L is a Contract of Carriage between the Carrier and Shipper..

Both notions are wrong..

The contract between a buyer and seller was already established when the buyer placed the order with the seller and they both discussed and agreed (verbally or in writing) the what, where, when, how and how much of the transaction in detail..

The contract between a shipper and the carrier was already established when the shipper or his agent made a booking with the carrier (shipping line) to carry the cargo from A to B..

The B/L is the EVIDENCE of the contract of carriage entered into between the “Carrier” and the “Shipper or Cargo Owner” in order to carry out the transportation of the cargo as per the contract between the buyer and the seller..

2) Receipt of Goods – emphasis on the term “Receipt“..

A B/L is issued by the carrier or their agent to the shipper or their agent in exchange for the receipt of the cargo.. The issuance of the B/L is proof that the carrier has received the goods from the shipper or their agent in apparent good order and condition, as handed over by the shipper..

3) Document of Title to the goods – emphasis on the term “Title“..

It means that the goods may be transferred to the holder of the bill of lading which then gives the holder of the bill of lading, the rights to claim the goods or further transfer it to someone else..

Based on the above roles, there are several variations of the Bill of Lading (let’s call it Types), important among which are as below..

1) Straight Bill of Lading – is a B/L issued in Original(s) to a “named” consignee and therefore is a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT.. Release of cargo at destination must be issued ONLY to the named consignee and ONLY upon surrender of all the original bills issued..

This bill of lading satisfies roles 1 & 2 above fully and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..

However, straight bills of lading might be issued in original and at least 1 original of the number of originals issued must be handed back to the shipping lines agent at destination in order for the cargo to the released, and the cargo may be released ONLY to the consignee mentioned in the bill of lading..

2) Seaway Bill of Lading – is a B/L similar to a Straight Bill of Lading and is also a NON-NEGOTIABLE DOCUMENT.. But the similarity ends there..

A Seaway B/L is usually issued

1. for inter company shipments like from ACME Company Hollywood to ACME Company in the Middle of the Australian Outback or
2. where the shipment takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and
3. the shipper doesn’t need to submit an original bill of lading to anyone to secure his payment

No originals are issued in the case of a Seaway B/L and therefore no surrender is required.. This bill of lading satisfies roles 1 & 2 above and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..

As there are no originals issued for this type of bill, the release is termed as an Express Release and is mentioned as such on the body of the bill of lading and manifest..

3) Negotiable Bill of Lading – is a B/L issued in Original(s) and maybe consigned “TO ORDER” or “TO ORDER OF SHIPPER” or “TO ORDER OF XYZ BANK” (where Letter of Credit maybe involved).. Also known as an Order Bill..

One of the most important aspects of a bill of lading is that it can be used as a negotiable instrument for payments between a buyer and seller using Letter of Credits.

A negotiable bill of lading must be treated like gold and due care must be taken not to lose it.. There are several cumbersome procedures to be followed if an original bill of lading is lost.

Another notable feature of this type of B/L is that it contains the Terms and Conditions of the Carrier on the 1st Page of the B/L.. The 1st page is what we all commonly refer to as the “back of the bill of lading”.. Seaway bills issued by some carriers do not have these Terms and Conditions on the back.

Destination port agent may issue release of cargo only after at least 1 of the issued originals are surrendered and after checking the endorsements on the back of the bill of lading as it is possible for this type of bill of lading to be endorsed or transferred to another company.. This bill of lading satisfies all of the above 3 roles.

There are also various ways in which the bill of lading is termed or titled, the purpose of which is to identify the carriers responsibility in terms of the carriage..

Below are some of the ways in which a bill of lading is termed or titled..

1) Port to Port Bill of Lading – When a B/L is issued as a Port to Port B/L (also known as Ocean Bill of Lading), the carrier’s responsibility begins at the port of loading and ends at the port of discharge and therefore the Place of Origin/Receipt or Place of Destination/Delivery should not be mentioned in the B/L.

2) Combined Transport Bill of Lading – When a B/L is issued as a Combined Transport Bill of Lading, it involves multiple modes of transport from the Place of Receipt to Place of Delivery and all these movements are carried out as a single contract by multiple service providers under the employ of the carrier..

Carrier takes responsibility for any loss or damage for the entire transport including the sea and other mode of transport..

3) Multimodal Transport Bill of Lading – Same as Combined Transport Bill of Lading..

4) Through Bill of Lading – Similar to Combined Transport Bill of Lading except that in the case of the Through Bill of Lading, the carrier is directly responsible only for the sea leg and for the inland movement they act as an agent in arranging the inland movement..

The terms on the Through Bill of Lading issued by the carrier will specifically state this, in such a bill of lading..

When a bill of lading is released as a Through Bill of Lading, the boxes like “Pre-Carriage by”, “Place of receipt by pre-carrier”, “Place of delivery by on-carrier”, “On-Carriage by” etc will be filed in..

Another misconception that most people have is terming a bill as Telex Release Bill of Lading.. There is no such term.

DIFFERENCE BETWEEN A FREIGHT FORWARDER AND CLEARING AGENT

What is the difference between a freight forwarder and clearing agent..??

This is one of the questions that many people ask.. The answer is that in the current economic and business scenario, the line dividing these two is quite thin..

Freight Forwarder : Essentially secures the business of various exporters and importers and has the ability/facility to

• storage the cargo belonging to the clients at their warehouse (usually all big forwarders have their own warehouses)
• arrange the distribution or “forwarding” of the cargo as per the instructions of their client.. This could be a regular routing or various routings
• negotiate freight rates with the shipping line to cover the interest of their clients
• book the cargo with the shipping line as per the requirement of the client
• prepare bills of lading and associated shipping/negotiating documentation (F178, Certificate of Origin, etc)
• issue their approved house bill of lading as applicable
• MAY or MAY NOT also do Customs Clearance
• may or may not be accredited to customs, port etc and cannot do customs clearance if not accredited
• almost viewed by clients as an alternative shipping line

Clearing Agent : Essentially takes care of the customs clearance aspect of the business..

• is a company accredited with the local customs authorities, border agencies, port etc
• arranges to pass the relevant documents at customs
• arrange for customs inspections as required
• check and process Duty and VAT payments as applicable
• apply for refunds etc where applicable
• cannot issue own bills of lading if not registered or acting as a freight forwarder

These are the major differences between a Freight Forwarder and Clearing Agent..

THE IMPORTANCE OF WAREHOUSING IN A LOGISTIC SYSTEM

Warehousing and warehouse management are part of a logistics management system, which is itself a component in supply chain management. Although viewed by some as simply a place to store finished goods, inbound functions that prepare items for storage and outbound functions that consolidate, pack and ship orders provide important economic and service benefits to both the business and its customers.

Central Location

A warehouse provides a central location for receiving, storing and distributing products. As each inbound shipment arrives, responsibility for the goods transfers to warehouse personnel, products are identified, sorted and dispatched to their temporary storage location. Storage isn’t a static “thing” but rather a process that includes security measures and maintaining an environment that preserves the integrity and usefulness of the items. Once it’s time to move items, each order is retrieved, grouped, packaged and checked for completeness before being dispatched to their new destination.

Value-Adding Operation

The objective of a logistics system is to reduce cycle times and overall inventories, lower costs and most importantly, improve customer service. Warehousing increases the utility value of goods by providing a means to have the right products available at the right place in the right time. Operations such as order consolidation, order assembly, product mixing and cross-docking that take place within the warehouse structure also add value to the overall logistics system.

Economic Benefits

Warehouses provide economies of scale through efficient operations, storage capacity and a central location. Economic benefits are realized, for example, through consolidation and accumulation operations. Consolidation operations cut outbound delivery costs for both the business and its customers. Instead of shipping items individually from multiple sources, items are delivered to a central warehouse, packaged together and shipped back out as a complete order. Accumulation operations allow a warehouse to act as a buffer, balancing supply and demand for seasonal and long-term storage. This can be vital to business profitability when demand for a product is year-round but the product may only be available at certain times of the year.

Service Benefits

Warehouses can serve as part of a contingency plan to ensure outbound orders are filled in full and on time. A practice called safety stocking allows businesses to maintain a predetermined number of inventory items at its warehouse. On the inbound side, safety stocking means that an emergency such as a transportation delay or a shipment containing defective or damaged goods won’t delay filling and shipping customers order. On the outbound side, safety stocking is insurance against out-of-stock items.

At Logical Maritime Services Limited, we provide comprehensive storage and distribution services for your company. Our integrated approach to storage and distribution, ensure that your supply chain functions properly and offers your customers fast response times in the competitive marketplace.

Contact us today to learn more about how we can increase the speed of your delivery processes while managing all aspects of distribution and storage for your company. 

Call us on +233 243 026201.

CHOOSING A FREIGHT FORWARDER

CHOOSING A FREIGHT FORWARDER

You must first choose a freight forwarder before you can manage one. Even in this economy, do not let cheap rates and low logistics costs wrongly influence that choice. The old adage rings true: you get what you pay for. Selecting the best forwarder for your business is critical to smooth supply chain operations.

At the beginning of the freight forwarder selection process, it is wise to create a requirements list. The freight forwarder must have knowledge of and experience in your product, desired shipment method, and destination country. The freight forwarder’s staff must be trained in documentation, record keeping, reporting, and licensing requirements.

The freight forwarder must also demonstrate willingness and the capability to communicate regular status updates and problems, and maintain records on export transactions, including the depletion of licenses in order to provide comparative internal audits.

Even in this economy, do not let cheap rates and low logistics costs wrongly influence your choice of freight forwarder. You get what you pay for.

Depending on the business requirements, companies should keep their forwarder relationships to a manageable number. In general, you should choose no more than two or three freight forwarders, as managing multiple forwarders requires more manpower and can ultimately create more problems than it solves.

Put in place a power of attorney (POA) with each authorized forwarder, clearly defining its role and responsibilities in your supply chain. And while there are certainly times when a company must grant limited authority to other agents, this should be a rare exception— never the rule.

Your evaluation process should also include meeting with each potential forwarder’s operational staff so you can gauge their capabilities. Don’t let the forwarder’s account representative keep you from interfacing with operational staff during the evaluation process.

A MISSION TO MANAGE

After you have selected a forwarder, your challenge and responsibility becomes managing the service effectively. The following forwarder management activities are all critical to maintaining best-practice standards. Give them high priority.

Establish and maintain clear communication guidelines 

Creating and maintaining an open dialog with your freight forwarder is vital. You should discuss and document needs and expectations up front. Provide detailed documentation to support any potential staff turnover that may occur. Hold regular conference calls or face-to-face meetings to discuss problems and identify solutions that will improve compliance and shorten timelines. Keep metrics of your shipping activity to monitor progress and problems— both yours and the forwarder’s.

It is essential to have a reporting structure for any potential non-compliance issues or government inquiries relative to the transaction. This may seem like a lot of work, but your compliance department will function more smoothly, and you will have better control of your shipping activity.

Be sure the communication process includes prior notification of shipments

For exports, use a Shipper’s Letter of Instruction or its equivalent to ensure that shipment details are communicated clearly and accurately. Many mistakes occur because a forwarder has insufficient or inaccurate shipment information.

In addition to the required logistic information, such as weights and dimensions, export-related documents should include compliance information such as Classification, License Authorization, and AES Internal Transaction Number. For imports, require that forwarders notify you of all incoming shipments. This allows time for verifying shipment details, such as consignee and correct harmonized tariff schedule classification, and ensuring supporting documents are provided.

Get a complete copy of the transaction 

A common complaint from exporters and importers is that they are unable to get a copy of their shipping records. Establishing communication guidelines makes this much easier. A checklist of required documents will help ensure that the entire transaction has been received. Giving a copy of the checklist to the forwarder can help limit the number of requests.

Audit documents after receiving them

The audit doesn’t have to be complete, but your compliance department should establish a threshold to maintain a good compliance rating. In general, you should conduct a weekly audit for a smaller threshold and a quarterly audit for a larger threshold. If you find errors, you can correct them as soon as possible to limit potential penalties and fines. As you find and correct errors, research each occurrence so that the problem is solved for future shipments.

Maintain strict controls on AES filings

To avoid mistakes, it’s best for the exporter to directly file AES. Mistakes are less likely to occur when you have more control over your shipment documentation; you’ll also spend less time managing your forwarder.

If you opt to have the forwarder file AES, put strict controls in place. Your best defense is to outline clear Service Level Agreements. If possible, get a copy of the transaction before it is submitted. Changes to the AES record will result in a compliance alert message to the filer, meaning your shipment violates export reporting requirements. If a filer consistently receives compliance alerts, the business practices that led to them must be identified and corrected. The filer will otherwise be subject to delays, fines, and/or penalties.

Make compliance your business

You know your transactions better than anyone. A freight forwarder will never be able to effectively run your compliance program, and you cannot outsource liability. The onus is always on the exporter and importer. When a government agency comes knocking, very little blame for violations can be laid on the forwarder.

The more control you give up, the more likely you are to increase regulatory noncompliance risk. With the exception of AES, companies should control their own jurisdiction determinations, classifications, license determination, license authorization, and screening.

Qualify your own transactions

Don’t let forwarders qualify your transactions for preferential trade agreements. Often, improperly trained shipping personnel are responsible for filling out the certificates of origin. Only the trained personnel in your company’s compliance department should perform the cumbersome, detailed qualification process.

Limit POAs, written authorization, or signed authorization granted to agents

The more POAs and authorizations you give forwarders, the harder they are to manage. Many companies— both importers and exporters— aren’t even sure how many authorizations they have granted, and therefore are unable to manage their forwarders.

Importers who have granted POAs to several customs brokers discover that shipments clear Customs without their knowledge; the freight just arrives. No import documentation is provided, making it nearly impossible to audit the transaction. Are qualified experts performing the classification? Do you audit for accuracy? Are you overpaying duty or, worse, underpaying? Do you have all the documents required for a complete transaction file?

These are just a few common problems experienced when you lose visibility into your supply chain and control over your brokers. Limiting authorizations limits errors— and, just as important, your workload.

Keep talking

It’s important to keep your forwarder aware of new regulation enforcement and new technology development. When an open dialog is maintained, you can more readily share, plan, and act upon information. A proactive approach will limit your errors— which will limit the time you spend correcting them and reduce the likelihood of penalties and fines.

Make LOGICAL MARITIME SERVICES LIMITED your preferred Freight Forwarder today!!

Call us on 0243026201 or visit our website at www.logicalmaritimegh.com.

HOW TO FIND A SHIPPING AGENCY

For any business, small or large, logistics is a concern that can make or break one’s profitability. If you are in the business of making products, then you would most likely have to worry about sending these to your distributors locally and around the world. For those in the business of exporting goods, this means finding a good shipping company to bring your products to foreign shores.

Finding a shipping agency might be a different experience, depending on whether your business is small or if it has already scaled into a large enterprise. When you need to ship products across the globe, you have several options.

If you only need to ship several boxes of products at a time, you might want to get in touch with a logistics services company first. These companies let you send small parcels and even boxes to locations around the world. They are considered logistics service companies because they cater to businesses that need to send products and items around the world without necessarily having their own shipping containers.

Logistics service companies employ different means of transporting parcels around the world. Costs would differ depending on the weight of a parcel that you wish to send. If you are sending in bulk, then you can probably save up on the per-unit cost. Upon arrival at the destination country, the logistics service company would also be the one to take care of distributing these to the addressee.

If your shipping requirements are bigger, you can get in touch with a local shipping agency, which can give you better rates for bigger items. These agencies usually loan out container vans, which you can fill with goods and raw materials. Container vans are even big enough to load with fully-assembled vehicles and household appliances and furniture. Container sizes are measured by “twenty foot equivalent units” or TEUs, which indicate the length of the container van. The most common size is two TEUs, which means the container van is 40 feet in length, and usually eight feet in height and width.

Signing up for a shipping agency’s services would require you to disclose the nature of your shipment, particularly whether these are for commercial purposes, or if you simply intend to move personal goods from shore to shore, as is the case if you are moving from country to country. These would then be indicated in the bill of lading, which is the document used by the operator of the shipping line when processing your container van through customs officials both in your country and the destination.

Shipping a container van would usually take six to twelve weeks, and there is an additional time for clearing at the destination port, as customs authorities would usually have to inspect the contents for any illegal or disallowed shipments. After clearing, containers then have to be forwarded to the final destination, so you would also have to get in touch with a forwarding company, which owns the trucks that will haul the container van to its destination.

Popular shipping lines today include big companies like NYK, Hapag-Lloyd, Maersk, Hanjin and COSCO.

The need to find a shipping agency would depend on how large your intended cargo would be. For smaller items, you might be able to save on money and time by shipping through a logistics service company. However, for bulk cargo, freight shipping is the most viable means to send raw materials and finished products from shore to shore.

At LOGICAL MARITIME SERVICES LIMITED offer a complete range of logistical solutions to suit importers and exporters. We at LMS benefit from the globalization process as we have identified in the market a need for true personalized service to suit your international logistic requirements. We are one of the top Freight Forwarding Companies within Ghana, providing professional global transport solutions to our clients.

Make us your prefered logistics service company today!!

Contact Us on 0243026201 or visit our website at www.logicalmaritimegh.com.

CUSTOMS PROCEDURES REQUIREMENTS AND PROCESS IN GHANA

Customs Clearing Procedures

Customs clearance of cargo through the seaports/airport involves dealing with a number of logistics service providers and governmental bodies in order to fulfill all contractual and tax obligations that might be associated with the import consignment. The agencies include CEPS, GPHA, Shipping Agents and Destination Inspection Companies.

Legislative Instrument 1178 (Customs House Agent Licensing Regulation) of 1978 enjoins all importers with the exception of Declarants to engage the services of licensed Customs House Agents for the clearance of cargo at any freight station in Ghana.

There are various stages in the customs clearance processes of cargo from the seaport. The clearance process starts with the valuation of the cargo, declaration of cargo data on to the GCNET, payment of duty and other relevant cargos, verification at the Compliance Section of CEPS, release by the Shipping Agent, delivery by GPHA/AVIANCE and CEPS physical examination or scanning of cargo before cargo is allowed to exit the port.

Valaution

All consignments imported into the country must be valued for tax and other purposes. Importers need to submit the Final Invoice, Import Declaration Form (IDF), a copy of the Bill of Lading/Air Way Bill (if it is available) and the Packing List (itemizing the value of the packages) on all commercial imports prior to the arrival of cargo to the designated Destination Inspection Company for the preparation of the Final Classification and Valuation Report (FCVR). The FCVR contains an assessment of the Dutiable Value, Import duty and VAT of the consignment.

Containerized cargo selected for scanning through the Risk Management System procedure of the Destination Inspection Companies is also indicated in the FCVR. Importers of personal effects are required to send the packaging list and Bill of Lading/Air Way Bill on their cargo to the CEPS long room for the assessment and valuation on the arrival of the cargo. Large importation of the same kind commodities, even if they are not meant for commercial purposes, is classified as commercial and must be valued by a Destination. Inspection Company.

Importers of used cars are required to submit their bill of lading, bill of purchase or deed proving that vehicles were acquired legally as well as Chassis number of the vehicle to the CEPS office at the Port to obtain the computation of the value of their vehicles.

Tax Identification Number (TIN)

Importers require Tax Identification Number (TIN) for Customs clearance of commercial goods. The TIN is a unique identification number generated by the Internal Revenue Service for every tax payer. This number has to be quoted in the entry that the importer or his representative would send the GCNET copy.  Corporate bodies are required to use their tax registration number for the above purpose. Without a TIN, customs clearance of cargo from the port is not allowed.

Importers can obtain their TIN at the Internal Revenue Head Office.

GCNET

The importer or his Customs House Agent submits a customs declaration on the cargo electronically to the GCNet which is routed to the GCMS. The declaration includes;
       
CPC (Customs Procedure Code) of commodity (this indicates whether Consignment is dutiable, when the entry is validated, the GCMS generates and sends a response. Commonly referred to as a Declaration to the front end of the declarant. The Declaration indicates all the taxes and tariffs that have to be paid on the consignment. In addition, the name of the CEPS officer to verify the declaration at the Compliant Section of CEPS is indicated in the Declaration.

Declaration regime (whether the cargo is for home consumption, warehousing, transit)
Consignee Name of vessel.
Date of arrival of vessel Rotation and Weight of cargo (gross &. net)
Number of packages Delivery terms (e.g. CIF, FOB, and EX WORKS).
Total Invoice Value (TIV) as determined by CEPS or Destination Inspection Company;
Breakdown of the TIV into FOB, freight and Insurance
Conversion of TIV into local currency using the prevailing Inter Bank Foreign Exchange Rate.
Break-down of Items per consignment Commodity code of the items (10 digits) Item value (in both foreign and local currency) of the consignment 

The taxes/tariffs indicated in the declaration include:

Import Duty (ID): Calculation is based on the CEPS Tax Schedule
Import VAT (IV) + NHIL; (12.5% + 2.5%) x (lD +TIV)
Import Special Excise (Where Applicable)
Import Excise Duty (Normally charged on luxurious goods)
Processing Fee: 1 % TIV
ECOWAS Levy (EL): 0.5% x TIV
Export Development Levy (EDL): 0.5% x TIV

Payment of Duty

Upon receipt of the validated Customs Declarations at the front end of the declarant, the declarant prints a hard copy and signs it. To make payment of the amount indicated in the declaration, the importer or his representative needs to submit the signed Customs Declaration and attach all supporting documents like the Bill of Lading, the Invoice, the IDF, the FCVR, the Packing List, an IRS Certificate as well as other relevant permits and documents at either of the GCNet participating banks (i.e. ECOBANK, Ghana Commercial Bank) in order to make payment.
Special Bank Receipts are given to importers or their representatives to acknowledge payment.

Verification

A hard copy of the Declaration, the Bank receipt, and Bill of Lading and all other relevant attaching documents are submitted to the designated Officer at CEPS Compliance Section for Verification of the documents and receipts. When no discrepancy is found, the cargo is ruled for immediate release or physical examination pending release.

Message is then sent to the relevant shipping agent to release cargo for the next procedure.
The importer or the representative Customs House Agent submits a hard copy of the Customs Declaration, the Bank receipt, and Bill of Lading and all other relevant attaching document relevant documentation as well as the Delivery Order (earlier purchased from the Shipping Agent) to the Shipping Agents

CAUTION

Do not deal with an unlicensed clearing agent. Common traits of such agents are as follows:
They have no offices (under-tree operators).
They have no identification cards that link them to any recognized clearing
They promise short delivery times.
They promise lower duties.
They have lower clearing charges.

DIFFERENCE BETWEEN LCL AND CONSOLIDATION.

There are cases where shippers don’t have enough cargo to fill a full container and they have only small parcels.. They deliver these small parcels to the shipping line's Container Freight Station. These small parcels are known as LCL which stands for Less than Container Load.

The shipping line collects these small parcels and make up a Full Container Load.. In these cases, although there is a full container load, as the shippers are many, the shipping line would issue their individual bills of lading to the various shippers..

These bills will be the direct line bills of lading and will have a term CFS/CFS mentioned. This means that the shipping lines responsibility begins at the CFS (Container Freight Station) in port of load and ends at the CFS in port of discharge..

The freight charges for these are charged by the line directly to the shippers in proportion to the amount of cargo they have received from the shipper.

In some countries however, the shipping lines do not offer LCL shipping services and these services are handled by Groupage Operators. In these countries, the LCL cargo is delivered by the client to a warehouse for packing into a container.. The act of collecting the LCL cargo from the various shippers and packing into a container is known as Consolidation.. The entity that handles such operations are known as Consolidators (Groupage Operators)..

In the case of consolidation cargo, the consolidators issue their House Bills of Lading to the shippers and secure a Master Bill of Lading from the shipping line for the container which is booked with the line as an FCL and which will show them as a shipper on the lines bill of lading..

Depending on the contract with their customers the House Bill of Lading maybe termed as CFS/CFS or Door to Door.. The consolidators responsibility and delivery terms will depend on these terms mentioned on the bill of lading..

The freight charges for these are charged by the Consolidator to the shippers in proportion to the amount of cargo they have received from the shipper

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