FAQ
FREQUENTLY ASKED QUESTIONS
Ro-Ro ships are vessels designed to transport vehicles on wheels, i.e. cars, trucks or industrial vehicles
Sometimes they have built-in ramps for the loading and unloading of vehicles. The fact that the cargo can access the ship under its own steam removes the need for a crane, thus reducing the intermediary costs related to loading, unloading and stowage. These ships can only carry wheeled vehicles and mustn’t be confused with Ro-Pax vessels, like ferries, which combine the transport of vehicles and passengers.
To transport wheeled cargo, such as all kinds of vehicles and machinary with wheels. The cargo can be loaded using the ramp, with no need for cranes or intermediaries, thereby making for lower costs and risks.
Vessels designed to transport freight in containers. They monopolize the majority of international dry cargo transport and represent more than half of all maritime trade. They are intended to transport standard containers according to ISO regulations.
A ship agent is an independent shipping agent who acts on behalf of the ship owner. Ship agents are responsible for a ship when it comes into port and conduct all of the procedures required to streamline its dock time in order to reduce the cost of the operation.
For the purposes of duty and tax, we have two different kinds of warehouses, the CW and the WAOC:
1 – ( Customs Warehouse ) (CW): This is a space where goods can be stored for an unlimited period of time, during which duty and tax payments are suspended. Goods will only become liable for duty and tax when they leave the premises again. It is an excellent option for companies with a medium-low inventory turnover, but who need to have stock on hand
2 – ( Warehouse Authorisation Others than Customs ) (WAOC): Also known as a tax warehouse, this is another place where goods can be kept for an unlimited time, offering advantageous conditions for the storage of goods imported within the EU, with no need to pay VAT in advance
These terms mustn’t be confused with the concept of storage in a free warehouse or open-air warehouse, since both can function as a CW and WAOC.
A forwarding agent or forwarder is a transport operator. They act on behalf and in favour of importers and exporters, organising safe, efficient and economical goods transport. In other words, a professional expert at your disposal for the purposes of hiring transport, selecting the most efficient route, taking out insurance policies, choosing the appropriate packaging and taking care of storage where required
A customs agent is responsible for managing all customs duties and documents required by the tax administration in every country for the traffic of goods between states. Their importance lies in knowing the legal regulations in order to satisfy the tax authorities and avoid last-minute surprises such as tax duties or surcharges.
The main kinds of customs controls according to the route and jurisdiction are as follows:
* Land customs: Are found at the borders between countries, where they deal with heavy goods transport, private cars and even people who cross on foot in the case of city border points. Their functions are to check that the documentation matches the articles transported.
* Air customs: Are located at international airports and deal with the highest flow of human transit. Imported and exported goods arriving at an airport are checked by customs on arrival, and subsequently by customs at the place of their destination
* Maritime customs: This kind of customs deals with the vast amount of goods travelling between countries geographically very distant from one another. Here the goods are generally of great weight or size, such as vehicles or industrial machinery. Maritime customs are responsible for verifying the goods entering and leaving, as well as their documentation.
On the other hand, depending on their function, customs controls can be classified as:
* Customs at the port of entry: Which deal with goods to be declared for national consumption.
* Customs at the point of destination: Receive goods or products sent. At this point the goods are no longer considered as being in transit and become liable for tax.
* Border customs: These are customs which neither receive nor issue goods, but control goods in transit, often when travelling from their country of origin to that of their destination.
Customs control the movement of goods between different states in three steps:
- Customs declaration: Must be presented to the customs authority in order to identify the goods to be transported and their destination.
- Goods inspection by the customs agents, to check that they match the declaration.
3. Verification that trade policy norms have been met and amounts due have been paid (import and export duties).
The role of customs control is to regulate and inspect shipments in order to guarantee that commercial exchanges between different countries proceed legally, that they comply with all tax and duty obligations and with all other requirements related to their entry or exit.
As well as guaranteeing compliance with international trade rules, collecting taxes and duties due where appropriate, customs controls are a fundamental mechanism for preventing money laundering, tax fraud and drug trafficking.
The management of all formalities required by the customs authorities. It is important for these formalities to run smoothly and trouble-free in order to prevent delays due to bureaucratic issues. These formalities are therefore usually entrusted to a customs agent who will carry them out on behalf of the freight owner.
All formalities and requirements to be completed for goods entering and leaving a specific national territory in order to control and approve their transportation. The customs agent is responsible for completing these formalities on behalf of the importer or exporter, and for submitting a declaration of information to the competent customs authority in each case.
Customs clearance means that the customs procedure has been completed, i.e. that all of the paperwork has been submitted and that the shipment can continue on its way.
Dangerous goods are classified according to the ADR (European Agreement concerning the International Carriage of Dangerous Goods by Road), as follows:
Class 1: Explosive substances and articles
Class 2: Gases
Class 3: Flammable liquids
Class 4.1: Flammable solids
Class 4.2: Substances liable to spontaneous combustion
Class 4.3: Substances which, in contact with water, emit flammable gases
Class 5.1: Oxidizing substances
Class 5.2: Organic peroxides
Class 6.1: Toxic substances
Class 6.2: Infectious substances
Class 7: Radioactive materials
Class 8: Corrosive substances
Class 9: Miscellaneous dangerous substances and articles.
There are different regulations on dangerous substances.
The road transport regulation is the ADR (European Agreement concerning the International Carriage of Dangerous Goods by Road), an agreement including 32 EU countries.
The carriage of dangerous goods by rail is governed by the RID.
For the ocean carriage of dangerous goods, the IMDG (International Maritime Dangerous Goods) code applies. Here such cargoes are also known as IMO goods due to the fact that the International Maritime Organization is the authority in the matter.
Finally, the ICAO provides the regulation for the air transport of dangerous goods.
- Delayed shipment: The most common causes of delay are inefficient management of port times and formalities. Other variables may also affect the shipment, such as circumstances of force majeure, like a storm for instance, or, in some parts of the world, the risk of a pirate attack.
- Lost goods: While this represents a very low risk today, it can occur in the event of problems such as the boat sinking or breaking down, as well as due to robbery or theft in ports of loading and destination in countries with high levels of corruption.
- Moisture, humidity or extreme temperatures: Environmental conditions must be perfectly controlled to prevent the cargo from being rendered unusable due to moisture, humidity or extreme heat or cold. All cargo must therefore be transported in containers suited to their particular characteristics and checked to ensure that they are properly closed. They must also be correctly loaded, unloaded and stored.
- Contamination: Interaction between different goods can ruin them. The goods must therefore be well packaged and properly stowed in the hold to prevent their contamination.
- Natural disasters: Natural disasters are becoming more frequent and serious in recent years; this represents the most unpredictable risk on the list.
- Computer threats: This is one of the new risks of international maritime transport since the famous “NotPeya attack” suffered by Maersk. Companies and ports are therefore currently working on logistics cybersecurity.
Incoterms
The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the global or international transportation and delivery of goods. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer, but they do not themselves conclude a contract, determine the price payable, currency or credit terms, govern contract law or define where title to goods transfers. The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from the differing interpretations of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide. “Incoterms” is a registered trademark of the ICC. The first work published by the ICC on international trade terms was issued in 1923, with the first edition known as Incoterms published in 1936. The Incoterms rules were amended in 1953, 1967, 1976, 1980, 1990, 2000, and 2010, with the ninth version — Incoterms 2020 — having been published on September 10, 2019.
The seller makes the goods available at their premises, or at another named place. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used while making an initial quotation for the sale of goods without any costs included. EXW means that a buyer incurs the risks for bringing the goods to their final destination. Either the seller does not load the goods on collecting vehicles and does not clear them for export, or if the seller does load the goods, he does so at buyer’s risk and cost. If the parties agree that the seller should be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale. There is no obligation for the seller to make a contract of carriage, but there is also no obligation for the buyer to arrange one either – the buyer may sell the goods on to their own customer for collection from the original seller’s warehouse. However, in common practice the buyer arranges the collection of the freight from the designated location, and is responsible for clearing the goods through Customs. The buyer is also responsible for completing all the export documentation, although the seller does have an obligation to obtain information and documents at the buyer’s request and cost. These documentary requirements may result in two principal issues. Firstly, the stipulation for the buyer to complete the export declaration can be an issue in certain jurisdictions (not least the European Union) where the customs regulations require the declarant to be either an individual or corporation resident within the jurisdiction. If the buyer is based outside of the customs jurisdiction they will be unable to clear the goods for export, meaning that the goods may be declared in the name of the seller by the buyer, even though the export formalities are the buyer’s responsibility under the EXW term. Secondly, most jurisdictions require companies to provide proof of export for tax purposes. In an EXW shipment, the buyer is under no obligation to provide such proof to the seller, or indeed to even export the goods. In a customs jurisdiction such as the European Union, this would leave the seller liable to a sales tax bill as if the goods were sold to a domestic customer. It is therefore of utmost importance that these matters are discussed with the buyer before the contract is agreed. It may well be that another Incoterm, such as FCA seller’s premises, may be more suitable, since this puts the onus for declaring the goods for export onto the seller, which provides for more control over the export process .
If a delivery is sent on a DAP basis, the seller is responsible for the delivery of the goods including transport costs to the named destination at the buyer. The costs of carrying out all the necessary import formalities are expressly excluded. These are borne by the buyer, meaning that all taxes incurred when importing to the country of destination must be paid by the buyer or the recipient. What does this mean for foreign customers? If VAT and/or customs are higher than the exemption limits, all duties must be paid on the doorstep upon receipt of the consignment. If the recipient is not present at the delivery or the outstanding amount cannot be paid, a collection invitation will be left for the shipment. Please note: If you do not clearly communicate the Incoterm DAP to your customers when ordering in the online shop, the customs duties are likely to annoy them.
For a delivery based on DDP (delivered duty paid), the seller must deliver the goods at their own expense and risk to a destination in the import country, taking care of all formalities and paying all import duties in addition to all costs. DDP is essentially same as DAP with additional customs and tax processing. What does this mean for foreign customers? They no longer have to pay anything on receipt, the goods are delivered as if they were a national delivery. In this variant, the shipping agent has the goods cleared in the EU by a partner such as Asendia. Thereafter, no further customs duties or value added tax must be paid.
Under FOB terms the seller bears all costs and risks up to the point the goods are loaded on board the vessel. The seller’s responsibility does not end at that point unless the goods are “appropriated to the contract” that is, they are “clearly set aside or otherwise identified as the contract goods. Therefore, FOB contract requires a seller to deliver goods on board a vessel that is to be designated by the buyer in a manner customary at the particular port. In this case, the seller must also arrange for export clearance. On the other hand, the buyer pays cost of marine freight transportation, bill of lading fees, insurance, unloading and transportation cost from the arrival port to destination. Since Incoterms 1980 introduced the Incoterm FCA, FOB should only be used for non-containerized sea freight and inland waterway transport. However, FOB is commonly used incorrectly for all modes of transport despite the contractual risks that this can introduce. In some common law countries such as the United States of America, FOB is not only connected with the carriage of goods by sea but also used for inland carriage aboard any “vessel, car or other vehicle.
CY (Container Yard) : Container Terminal – 1. Place of storage containers before / after their further shipment. 2. Conditions of carriage for departure / arrival time – the cost of transportation includes services for sending from / to CY (freight, loading / unloading from the vessel, placing on the CY, does NOT include underwriting services / shipments to / from CY).
Free In (FI) : in the international ocean freight terminology the word “Free” means “Not included”. I.e. if FI, then the shipper is responsible for the coast of loading goods onto a vessel for the international shipping overseas.
Free Out (FO) : is the international shipping term in ocean freight that indicates that the consignee (recipient) is responsible for the cost of unloading cargo from the vessel at the destination.
Free In and Out (FIO) : is the international shipping term used in the ocean freight industry means that the carrier is NOT responsible for the cost of loading and unloading goods onto/from the vessel.
Liner terms (LI/LO) : qualification to a freight rate which signifies that it consists of the ocean carriage and the cost of cargo handling at the loading and discharging ports according to the custom of those ports. This varies widely from country to country and, within countries, from port to port: in some ports, the freight excludes all cargo handling costs while in others the cost of handling between the hold and the ship’s rail or quay is included.
Free into Store (FIS) : is an unofficial trade term indicating that the seller’s price includes all costs up to delivery to the buyer.
Door to Door : said of a service or freight rate provided by a container shipping line whereby goods are loaded into a container at the shipper’s premises and not unloaded until they arrive at the consignee’s premises. Free carrier (F.C.A) – New combined transport incoterms replacing FOB where CT is involved but applicable to all mode of transport.
Important! : information about conditions of delivery always contain the cost of cargo handling at the loading and discharging ports, For example ( FILO, LIFI ).