Round Voyage Costing of General Cargo

Containers from Nhava Sheva to Middle East

and back

By

Gururaaj Naikar

PGDTL

Submitted in partial fulfillment of the requirements for the Post

Graduate Diploma in Transport and Logistics

June 20, 2009

TOLANI MARITIME INSTITUTE

Sher-e-Punjab Society, Andheri East,
Mumbai 400 093
 Table of Content

I. Introduction
I. Operations of NVOCC
II. Revenues of an NVOCC
III. Expenses of an NVOCC
IV. Profits and Losses of an NVOCC
V. Conclusion

Appendix A – Sample MTO License

Appendix B – Copy of Delivery Order
Appendix C – Copy of NVOCC Bill of Lading
Appendix D – Copy of MTD
Appendix E – Table of THC
Appendix F – Table of Costs during Imports
Appendix G – Table of Costs during Exports
Appendix H – Sample Shipping Bill
Appendix I – Sample of Indemnity Bond Required by a Line
Appendix J – Sample of Customs Continuity Bond
Appendix K – Container Track Record
Appendix L – Copy of Bill of Entry
Appendix M – Copy of Customs IGM
Appendix N – Copy of Customs EGM
Appendix O – List of CFS’s at Nhava Sheva
Appendix P – List of MTO’s registered at DGS
Appendix Q – List of MLO operating ships at Nhava Sheva
Appendix R – List of Major shippers on Nhava – Gulf Sector
Appendix S – List of Major Freight Brokers at Mumbai
Appendix T – List of Major Freight Forwarders at Mumbai
Appendix U – Types of Containers in Use
Appendix V – Terms and Conditions of Insurance
Appendix W – Conditions of Carriage
INTRODUCTION:

Non-Vessel Operating Common Carrier (NVOCC). A cargo consolidator in ocean

trades who will buy space from a carrier and sub sell it to smaller shippers. The NVOCC
issues bills of lading, publishes tariffs and otherwise conducts itself as an ocean common
carrier, except that it will not provide the actual ocean or intermodal service.

In this project we will be seeing the round voyage costing of general cargo
containers from Nhava Sheva to Middle East and back.

OPERATIONS OF AN NVOCC:

Goods moving in International Trade are often moved by more than one mode of
transport i.e. Road, Rail, Sea and Air. Under the conventional system of each
transportation mode, the Shipper/Consigner has to enter into contract with each owner of
these segments of the transport modes and deal with them separately for co-ordination
and for claims if any. This was time consuming and costly. With the Multimodal
Transportation only one Agency known as Multimodal Transport Operator takes the
responsibility of performing all modes of transport. Thus it becomes easy for the
Shipper/Consigner to deal with one agency. These agencies are mostly renowned Freight
Forwarders (not C&F agent who are mainly Custom House Agents). They are also known
as NVOCC i.e. Non Vessel Owner Cargo Carriers who are authorized to issue their own
Bills of Ladings.
A non-vessel-owning common carrier that buys space aboard a ship to get a lower
volume rate. An NVOCC then sells that space to various small shippers, consolidates
their freight, issues bills of lading and books space aboard a ship.

It may be a person or company (often a forwarding agent) who does not own or operate
the carrying ship but who contracts with a shipping line for the carriage of the goods of
third parties to whom he normally issues a house bill of lading.

NVOCC may be a cargo consolidator of small shipments in ocean trade, generally

soliciting business and arranging for or performing containerization functions at the port.

An NVOCC may be-

Ship-owners
Road operators
Container terminals (in which case they may be called terminal operators).
Warehouse
Container freight stations (CFS) or group age or consolidation depots
Container leasing organisations
Organisations like freight forwarders attending to packaging, customs clearance, import/
export formalities, foreign exchange transaction and connected documentation.

Types of Multimodal Transport Organisations (M T O)

There are different types of organisations or enterprises functioning as MTOs, but
essentially, they may be grouped under two categories.
i) Vessel Operating MTOs
Individual shipping companies or groups of consortia of shipping companies
Producers/ exporters of certain commodities who are the major users of their own
multimodal transport operations that operate with owned or chartered ships.
ii) Non-Vessel Operating MTOs (NVO-MTOs)
Freight Forwarders
Road Transport Operators
Railways

Operations of NVOCC’s:

The operation of NVOCCs begins when their marketing personnel confirms the inquiry
about the rate quotation. When the rates are confirmed the D/O is issued for empty
container. Once the D/O is received the containers are sent to factory of the shipper or to
the CFS as per the requirement of the shipper. The shippers then send the follow up for
stuffing and also send the load list for the same.

The container requirement for the shipper depends upon the type, dimension, and weight
of the cargo. The container may be 20’, 40’, reefer container, flat rack container for ODC
cargo. Once the requirement of the container is decided then the container is send for
stuffing of the cargo. The stuffing of the cargo is done either at the factory of the shipper
or at CFS by the line (NVOCC). If it is factory stuffing then the container is send directly
to warehouse of the shipper and all responsibility regarding stuffing of the cargo is
looked after by the shipper.

In the case of dock stuffing were goods are stuffed by the line, then the shipper sends his
cargo by his mode of transport to warehouse of the line at his CFS. In this case the line
looks after the stuffing of the cargo in the container as it is now their responsibility.

When the container is loaded i.e laden container, it is then inspected by the customs
officials. After the inspection of the container by the custom house agents, the container
is sealed and the container seal number is given. The customs after inspection also gives
the LET EXPORT ORDER or shipping bill to the line. Once all these formalities are
completed the lines takes the container to the port and offloads the container at the
container yard.
Once the container reaches the port the line provides form 13 along with vessel details to
the shipper. The line also submits the load list to vessel operator. Then follow up for
loading is done. After this line prepares the B/L draft which is given to the shipper and
the B/L draft is released. The filing of EGM is done by the line.

ROUND

Services by NVOCCs:

The scope of services rendered by the NVOCCs is as follows:

When goods are carried in containers and when full container loads (FCL) are offered by
the consignor, the packing is normally done by the consignor or freight forwarders or
other agents acting on his behalf and the loaded containers are delivered by the consignor
at the container yard (CY) used by the NVOCCs. Some NVOCCs also provide an
ancillary transport service between the Container Freight Stations (CFS) and the

ECY
consignor's premises for collecting such loaded containers. Such service is also made
available to the consignee's premises in the case of imports.

In the case of FCL, the NVOCCs do not normally supervise the packing, but some
NVOCCs have a packing advisory service in their organisation which is available to the
consignor on request.
In the case of less than container loads, (LCL) containers are usually packed under the
supervision of the NVOCCs or his agents at a groupage depot or container freight stations
and unpacked under similar supervision at the CFS in the country of destination. Such
CFS are usually set up adjacent to a marshalling yard (MY) for assembling containers
near the berth where the vessel which is to carry the containers is to be berthed, but if
they are packed at the groupage depot of a freight forwarder, the packing may not be
subject to supervision by the NVOCCs, who may treat the loaded containers as FCL
cargoes.

Many Container Freight Stations also function as inland clearance depots where customs
inspection is carried out. The customs clearance, export/import formality, execution of
foreign exchange transactions etc. are generally attended to by the consignor or his agent
but these functions are also performed by the NVOCCs.

After having accepted the cargo from the consignor, the NVOCCs reserves space on the
different modes of transport concerned through his sub-contractors for the transport of
cargo to the final destination.

After the goods are taken into custody at the Container Yard (CY) the NVOCCs is
responsible for their safe custody until they are delivered to the consignee. The NVOCCs
or his agent supervises loading and unloading of the goods on or from each mode of
transport used in the chain in order to ensure their expeditious and smooth movement to
the destination.
TYPES OF CONTAINERS:

Type Sizes (ft) Characteristics Typical uses

Open Tops 20/40 Soft detachable roof Machinery requiring top loading and
tarpaulin or tilt over height cargo.
Half Heights 20/40 Soft detachable roof High density cargoes such as ingots,
tarpaulin or tilt, half heavy steelwork, drums.
height
Flat racks 20/40 No sidewalls or roof For out of gauge cargoes and
(and ends may be restricted loading situations.
collapsible)
Platforms 20/40 Flatbed with corner Over-length cargoes and special
castings. Limited projects.
numbers of high rated
equipment
Fantainers 20/40 Extractor fan fitted Agricultural products requiring
ventilation e.g. onions, potatoes.
Also used as a normal GP container.
Highly Ventilated 20 Side vents along top Hygroscopic cargoes such as coffee,
and bottom rails cocoa, tobacco and seeds.

Top Ventilated 20 Side vents along top Hygroscopic cargoes such as coffee,
rail cocoa, tobacco and seeds.
Open Sides 20 Side gates and side Agricultural products requiring
curtains ventilation, livestock and side
loading.
Bulk 20 Top loading ports and Dry cargoes in bulk e.g. malt, sugar
door discharge shoot also used as a normal GP container.
Tank Containers 20 Tank within an ISO Liquid cargoes in bulks including
frame of various types foodstuffs and hazardous.
Refrigerated - 20/40 Refrigerated Integral 8'6" and 9'6"
Integral
Refrigerated - 20, (8’ and Top & bottom end Reefer cargoes on specialized ships
Insulated 8’6”) ports and connects to operating in ANZ and SAF Trades.
ships refrigeration
system
REVENUES OF NVOCC:

Cargo-handling and Storage earnings -

Crane and other cargo-handling equipment hire charges
Cargo-handling operation charges
Transfer and movement of cargo charges.
Warehousing charges.
Rent for storage
Overtime charges
Miscellaneous cargo related charges.
Ship related earnings -
Pilotage charges.
Port dues
Wharfage
Tugs
Mooring and docking
Water, electricity, telephone supply
Miscellaneous
Land and Building charges
Rent for areas rented out
Miscellaneous income
Financial and Interest earnings
Interest on deposits
Disposal of assets
Income from investments
Miscellaneous

Are NVOCC gross revenue calculated by the amount of House Bill of Lading and then
the net Revenues are calculated by subtracting the containership line’s carrier Bill of
Lading from the Gross Revenue ?

NVOCC Gross Revenue = Total House Bill of Lading Revenues

NVOCC Net Revenue = Total House Bill of Lading Revenues – Total Master Bill of
Lading Cost
EXPENSES OF NVOCC:

Port facilities and services used by ships -

Pilotage, tugs, channels and basins
Fixed marine facilities, buildings etc.
Administration and general expenses
Water, electricity, gas etc.
Depreciation
Cargo-handling related expenses -
Equipment operating costs
Repair and maintenance
Fuel, electricity etc.
Storage of cargo costs, Depreciation on equipments etc.
Land and building related costs
Maintenance costs
Depreciation and Administrative costs
Financial Costs
Interest on borrowings
Taxes and dues
Losses, Bad debs and write-offs
Administrative Costs
General administration
Computers and communications
Marketing and Insurance
Travel, Security expenses, Miscellaneous etc.
Apart from the above items, following factors are also considered while fixing the Port
charges:
Competition from other Ports in the area.
Nature of the cargo e.g. dangerous cargoes, refrigerated cargoes, livestock, dirty cargo,
oil, chemicals etc.
Special facilities needed e.g. floating crane; lighters etc.
Transport mode - break bulk, containers; palletised; RORO etc.
Subsidies offered by the state
Flag discrimination - preferential berthing; favourable rates for certain flags etc.
Currency - in local or hard currency like US$
Agreement with shipper's councils / trade associations
Value of goods
Labour rates and level of union activity.
PROFITS AND LOSSES OF AN NVOCC:

Suppose a container is exported

Nhava Sheva to Singapore

Slot Charges: $ 50 Market Rate: $ 10

Ground Rent: $ 10
MISC: $ 5
Total $ 65

Therefore the container exported from Nhava Sheva is at a loss of $ 55

($ 65 - $ 10)

Singapore to Nhava Sheva

Slot Charges: $ 200 Market Rate: $ 350

Ground Rent: $ 15
MISC: $ 5
Total $ 215

Therefore the container re exported from Singapore is at a profit of $ 135

($ 350 - $ 215)

Hence When the cargo is back in Nhava Sheva the Company

has earned $ 70 ($ 135 - $ 55)
LIST OF CFS AT NHAVA SHEVA:

CONCOR's Dronagiri Rail Terminal (DRT)

Punjab State Container & Warehousing Corporation Ltd
Seabird Marine Services Pvt. Ltd, CFS
The NDR Group's Continental Warehousing Corporation
Maharashtra State Warehousing Corporation
Best Roadways Limited
BLR India Pvt. Ltd
Bay Container Terminal Pvt. Ltd Shirdhon Depot
Hind Terminals Pvt. Ltd Dronagiri CFS
Forbes Patvolk’s CFS
Balmer Lawrie CFS, Dronagiri
Maersk CFS
All cargo CFS A leading Logistics Service Provider

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CONDITIONS OF CARRIAGE

Definitions and Interpretation:

1. In these conditions the following expressions shall have the following meanings:
"Company" means Southampton Isle of Wight and South of England Royal Mail Steam
Packet Company Limited (also known as Red Funnel Group, Red Funnel Ferries & Red
Funnel Holidays) including where appropriate its employees agents independent
contractors and sub-contractors who shall all have the benefit of the defences and
limitations provided by these conditions,

"conditions" these conditions as may be varied by the Company from time to time
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"customer" includes, without limitation, all passengers and persons entering into
transactions with the Company and named as consignor on the consignment note,

"goods" includes, without limitation, livestock and animals of all kinds, vehicles
including passenger vehicles, passengers' unaccompanied luggage merchandise and
personal property of all kinds whatsoever, together with any packaging and the container
and/or vehicle in which they may be carried,

"persons" includes firms and corporations, and

"transaction" means any arrangement between a customer and the Company in

connection with any of those matters undertaken by the Company as referred to in
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6. The Company undertakes the carriage of passengers and the collection, carriage,
loading, discharge, storage and warehousing custody and delivery of the goods solely
upon and subject to these conditions.

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Customers as to the storage and transport of the goods is followed or acted upon entirely
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Booking and Payment:

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delivery of the goods without prejudice to the Company's rights if any, against the
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Goods:

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condition of the goods or the correctness of the declared nature, quantity or weight of the
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and toxic goods entrusted to the Company and of the nature and danger involved by
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Regulations 1990, Explosives Act 1875, The Dangerous Substances in Harbour Areas
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(a) The Company shall not be liable for any indirect or consequential loss suffered by the
customer whatsoever.

(b) The liability of the Company for death or personal injury resulting from negligence is
not excluded or restricted hereby.

25. The Company shall not be liable for loss damage non-delivery or delay attributable
to:

(a) non-delivery or misappropriation of the goods where the Company has complied with
any special instructions by the customer as to delivery,

(b) act of God,

(c) war hostile military action rebellion riot or civil commotion,

(d) strike lockout or other industrial action,

(e) any other act or omission of the Company which is beyond the reasonable control of
the Company,

(f) orders of any competent public authority,

(g) lack of or defective or inadequate packaging,

(h) handling loading stowage or unloading of the goods by the customer or the consignee,

(i) the nature of the goods exposing them to total or partial loss or damage through
breakage rust decay desiccation leakage wastage inherent or latent defect or vice or
natural deterioration,

(j) insufficiency or inadequacy of addressing labeling or other markings or information

on the goods,

(k) any other act or omission of the customer or consignee or any person for whom the
consignee is responsible.

26. The Company shall not be responsible for any loss damage or delay unless the
customer notified the Company in writing within 3 days of actual delivery.
27. The Company draws attention to the right the Company may have in appropriate
circumstances to limit liability, whether under the provisions of statute or otherwise and
nothing in these terms and conditions is to be construed as a derogation of that right.

28. In respect of claims arising on or after 1 February 1978 these terms and conditions are
to be construed in such a manner as to afford the Company maximum protection
permissible under the Unfair Contract Terms Act 1977.

29. In accordance with The Carriage of Passengers and their Luggage by Sea (Domestic
Carriage) Order 1987, the Company gives the following notice:

(a) The provisions of the Athens Convention may be applicable; and

(b) The Athens Convention in most cases limits the carrier's liability for death or personal
injury or loss of or damage to luggage (including a vehicle) and makes special provision
for valuables; and

(c) The Athens Convention presumes that luggage has been delivered undamaged, unless
written notice is given to the carrier:

(i) In the case of apparent damage, before or at the time of disembarkation or re-delivery,
or

(ii) In the case of damage which is not apparent or of loss, within 15 days from the date
of disembarkation or re-delivery or from the time when such re-delivery should have
taken place.

30. Customers shall be liable for any loss, damage or delay to the goods and to the
property of the Company and of third parties and for personal injury or death to any
persons wheresoever such damage is caused or inflicted by the goods.

31. General average (if any) to be settled in accordance with York-Antwerp Rules, 1974,
or any subsequent amendment thereto.

32. No employee agent independent contractor or sub-contractor of the Company shall in

any circumstances whatsoever be under any liability whatsoever to the customer for any
loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from
any act, neglect or default on his part while acting in the course of or in connection with
his employment but without prejudice to the generality of the foregoing provisions of this
clause, every exemption, limitation, condition, and liberty herein contained and every
right, exemption from liability, defence and immunity of whatsoever nature applicable to
the Company or to which the Company is entitled hereunder shall also be available and
shall extend to protect every such servant or agent of the Company acting as aforesaid
and for the purpose of all the foregoing provisions of this clause the Company is or shall
be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons
who are or might be its servants or agents from time to time (including independent
contractors as aforesaid).

Warranties and Indemnities:

33. Customers entering into transactions of any kind with the Company expressly warrant
that they are either the owners or the authorized agents of the owners of any goods to
which the transaction relates and further warrant that they are authorized to accept and
are accepting these conditions not only for themselves, but also as agents for and on
behalf of all other persons who are or may thereafter become interested in the goods.

34. The customer shall pay to the Company the amount required to indemnify the
Company against any claim arising out of the custody or carriage of the goods in
pursuance of or in connection with these conditions by any person or entity having an
interest in the goods and any costs and expenses associated with such a claim.

Sub-contractors:

35. The Company shall be entitled to employ or contract with the Railways other
Shipping Companies or any other carriers or persons for any purpose of or incidental to
the collection, carriage, loading, discharge, storage and warehousing, custody or delivery
of the goods. In so doing, the Company shall be deemed agents for the customers.

36. Where customers booking include the carriage of goods or the travel of passengers by
road or rail then that part of the journey (provided it is not undertaken by the Company)
shall be subject to the relevant carrier's terms and conditions and other relevant applicable
laws, copies of which are available on request.

Delivery:

37. Where the Company undertakes to arrange collection and/or carriage of the goods
prior to loading aboard the vessel or on carriage of the goods after discharge from the
vessel such arrangements will always be made by the Company prior to loading aboard
the vessel or after discharge from the vessel.
Commencement and Termination:

38. (a) The transit in respect of which a consignment note is issued by the Company shall
commence when the goods are handed to and accepted by the Company whether at the
point of collection or at the Company's premises. For the avoidance of doubt, unless
otherwise previously agreed with the Company, any goods abandoned on any Company's
premises may be disposed of by the Company without compensation to the owner of the
goods and without any responsibility on the part of the Company.

(b) The transit shall (unless otherwise previously determined) be deemed to end:

(i) In cases where the Company has not undertaken to arrange on-carriage, when the
goods are discharged from the vessel, or:

(ii) In cases where the Company has undertaken to arrange on-carriage (a) when the
goods are tendered at the usual place of delivery at the consignee's address, or other
agreed place of delivery within the customary cartage hours of the district, (b) when upon
arrival at the place of delivery, it is found that no safe and adequate access or no adequate
unloading facilities there exist, (c) when for any other reason whatsoever a consignment
cannot be delivered.

(iii) In cases where the Company has undertaken to arrange on-carriage but no on-
carriage is available, the transit shall be deemed to terminate on arrival of the goods at the
Company's wharf or depot. Any money received by the Company in respect of the
intended on-carriage shall be held in trust for the customer and may be appropriated by
the Company to payment, in part or in full, of any additional expenses by the Company.

(iv) In cases where a consignment is held by the Company "to await order" or "to be kept
till called for" or upon any like instructions and such instructions are not given, when the
consignment is not called for and removed within thirty days.

39. When the transit has come to an end by virtue of Clause 40 above the Company may
sell the goods (although the Company shall not be obliged to do so) and payment or
tender of the proceeds after deduction of all proper charges and expenses in relation
thereto and all outstanding charges in relation to the carriage and storage of the goods
shall discharge the Company from all liability in respect of such goods, their carriage and
storage. Whether or not the Company elects to sell the goods the owners shall be liable
for all additional expenses or charges of whatsoever nature incurred after the transit has
come to an end.
40. English Law shall apply to any transactions between the Company and customers
under these conditions and the parties shall submit to the exclusive jurisdiction of the
English courts.