US 252423 – Explain the
administration of a Freight
Forwarding and Clearing
Operation
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This Module is suitable for training towards the FIATA Diploma, TETA, QCTO
Qualifications and similar courses.
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Learner Guide compiled by:
Mark Goodger
Edited date – May 2017.
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Copyright © 2017 edition. Date of revision: May 2017.
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LEARNER GUIDE
Explain the administration of a Freight Forwarding
and Clearing Operation
Unit Standard 252423
Level 3 Credits 5
OVERALL OBJECTIVES OF THIS MODULE
The person credited with this Unit Standard will be able to describe the role of forwarding and
clearing operations in the international supply chain and differentiate between the functions
required.
The qualifying learner is capable of:
• Explaining the functions carried out in an airfreight export, import and consolidation
operation.
• Describing the functions carried out by an over-border freight forwarding operation.
• Outlining the functions carried out in a surface freight operation.
• Describing the work carried out by the clearing/compliance function in a forwarding
operation.
• Describing typical support functions within a freight forwarding organisation.
• Describing the work of a marketing/sales department in a freight forwarding organisation.
• Outlining the transition of the industry from traditional freight forwarding to international
supply chain management.
Table of Contents
INTRODUCTION: .....................................................................................................................................5
QM (QUALITY MANAGEMENT) SYSTEMS IN FREIGHT FORWARDING AND INTERNATIONAL LOGISTICS.......... 6
ENVIRONMENTAL MANAGEMENT STANDARDS ISO 14000.2004 (FIRST PUBLICATION) 252423 INTRO .......... 7
EXPLAIN THE FUNCTIONS CARRIED OUT IN AN AIRFREIGHT EXPORT, IMPORT AND CONSOLIDATION
OPERATION. .........................................................................................................................................11
DESCRIBE THE FUNCTIONS CARRIED OUT BY AN OVER-BORDER FREIGHT FORWARDING OPERATION. ....25
OUTLINE THE FUNCTIONS CARRIED OUT IN A SURFACE FREIGHT OPERATION. ........................................36
DESCRIBE THE WORK CARRIED OUT BY THE CLEARING/COMPLIANCE FUNCTION IN A FORWARDING
OPERATION. .........................................................................................................................................86
DESCRIBE TYPICAL SUPPORT FUNCTIONS WITHIN A FREIGHT FORWARDING ORGANISATION. .............. 149
DESCRIBE THE WORK OF A MARKETING/SALES DEPARTMENT IN A FREIGHT FORWARDING
ORGANISATION. ................................................................................................................................. 159
OUTLINE THE TRANSITION OF THE INDUSTRY FROM TRADITIONAL FREIGHT FORWARDING TO
INTERNATIONAL SUPPLY CHAIN MANAGEMENT.................................................................................. 165
HISTORICAL ORIGIN OF LOGISTICS................................................................................................................. 165
VALUE ADDED SERVICES ................................................................................................................................ 170
COMMODITY RELATED SYSTEMS................................................................................................................... 173
INTRODUCTION: ADVANCED
Freight forwarder is a third-party logistics provider. As a third party (or non-asset based) provider, a
forwarder dispatches a shipment via asset-based carriers and books or otherwise arranges space for
those shipments.
Logistics is the management of the flow of goods, information and other resources, including energy
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inventory, warehousing, material-handling, and packaging, and occasionally security. Logistics is a
channel of the supply chain which adds the value of time and place utility.
Freight forwarders typically arrange cargo movement to an international destination. Also referred
to as international freight forwarders, they have the expertise that allows them to prepare and
process the documentation and perform related activities pertaining to international shipments.
Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's
export declaration, bill of lading.
A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common
carrier (NVOCC), is a person or company that organizes shipments for individuals or corporations to
get goods from the manufacturer or producer to a market, customer or final point of distribution.
Forwarders contract with a carrier to move the goods. A forwarder does not move the goods but acts
as an expert in the logistics network. A forwarder contracts with carriers to move cargo ranging from
raw agricultural products to manufactured goods.
Freight can be booked on a variety of shipping providers, including ships, airplanes, trucks, and
railroads. It is not unusual for a single shipment to move on multiple carrier types. International
freight forwarders typically handle international shipments. International freight forwarders have
additional expertise in preparing and processing customs and other documentation and performing
activities pertaining to international shipments.
Information typically reviewed by a freight forwarder includes the commercial invoice, shipper's
export declaration, bill of lading and other documents required by the carrier or country of export,
import, and/or transhipment. Much of this information is now processed in a paperless environment.
The FIATA shorthand description of the freight forwarder as the 'Architect of Transport' illustrates
the commercial position of the forwarder relative to his client. In Europe, some forwarders specialize
in 'niche' areas such as rail-freight, and collection and deliveries around a large port.
Lloyd's Loading List is the freight forwarding industry's journal of record, first published 160 years
ago as a UK export directory. Today it provides details of forwarders, NVOCCs and shipping
lines/agents who serve over 10,000 ports globally.
One of the earliest freight forwarders was Thomas Meadows and Company Limited of London,
England, established in 1836.
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According to "Understanding the FreighAt BDusVineAssN," wCriEtteDn and published by the executive staff of
Thomas Meadows and Company in 1972, the advent of reliable rail transport and steamships created
demand for the fledgling freight forwarding industry.
Trade developed between Europe and North America, creating additional demand. The first
international freight forwarders were innkeepers in London who held and re-forwarded the personal
effects of their hotel guests.
The original function of the forwarder was tRo aIrSraKngeMforAcarriage by contracting with various carriers.
Forwarder responsibilities included advice on documentation and customs requirements in the
country of destination. His correspondent agent overseas looked after his customers' goods and kept
him informed about matters that would affect movement of goods.
In our modern times, the forwarder accepts the same responsibilities. It operates either as a
domestic US carrier or otherwise with a corresponding agent overseas or with his own branch-office.
In a single transaction, the forwarder may be acting as a carrier (principal).
QM (QUALITY MANAGEMENT) SYSTEMS IN FREIGHT FORWARDING AND INTERNATIONAL
LOGISTICS
According to Business Week magazine, a quality management system (QMS) is defined as the
“organisational structure, procedures, processes and resources needed to measure the
effectiveness of producing goods and services to clients and customers.” The purpose of QMS is to
develop and maintain an organisational system which provides quality assurance and audit through
every area of an organisation while optimizing productivity. These processes benefit an organisation
and lead to customer satisfaction.
In the QMS of each organisation is recorded the systems, policies and procedures used to manage
each operation which is carried out within that organisation These records consist of formally
structured documents which are known as Standard Operating Procedures.
Within the Freight Forwarding and Logistics environment (in common with many other service
related industries) the most widely applied QMS is The International Organisation for
Standardisation ISO 9001:2008 series, which describes standards for a QMS addressing the
principles and processes surrounding the design, development and delivery of a general product or
service. Organisations can participate in a continuing certification process to ISO 9001:2008 to
demonstrate their compliance with the standard, which includes a requirement for continual (i.e.
planned) improvement of the QMS. In order to be certified as being compliant with the ISO
9001:2008 standard, the organisation needs to subject itself to a continuous audit process which is
undertaken by a body which has been accredited to carry out such audits by ISO.
The areas which must be covered by an organisation wishing to be accredited under the ISO
9001:2008 QMS are as follows:
1. Organisational structure
2. Responsibilities
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3. Methods ADVANCED
4. Data Management
5. Processes - including purchasing
6. Resources - including natural resources and human capital
7. Customer Satisfaction RISK MA
8. Continuous Improvement
9. Product Quality
10. Maintenance
11. Sustainability - including efficient resource use and responsible environmental operations
12. Transparency and independent audit
Within the field of freight forwarding and logistics the possession of an up to date ISO 9001:2008
compliance certificate is deemed to be a sine qua non (prerequisite) for securing and retaining the
business of major companies simply because such companies will not do business with those who
cannot prove that they subscribe to an objectively structured and assessed QMS. This applies
particularly to multinationals who, when appointing overseas forwarders, have few other means of
verifying the credentials of the companies they appoint.
The administration of any business is really important, but even more so in a freight forwarding and
clearing operation due to the high volume of paperwork that needs to be controlled, the number
of “third parties” involved that you have no control over and to ensure excellent customer service
is achieved.
With regards the “paperwork or documentation” the fundamentals remain the same whether you
are moving cargo per Air freight, surface freight, road freight or rail freight, import or export.
ENVIRONMENTAL MANAGEMENT STANDARDS ISO 14000.2004 (FIRST PUBLICATION) 252423
INTRO
The concept of an environmental management system evolved in the early nineties and its origin
can be traced back to 1972, when the United Nations organised a Conference on the Human
Environment in Stockholm and the United Nations Environment Programme (UNEP) was launched
(Corbett & Kirsch, 2001). These early initiatives led to the establishment of the World Commission
on Environment and Development (WCED) and the adoption of the Montreal Protocol and Basel
Convention.
In 1992, the first Earth Summit was held in Rio-de-Janeiro, which served to generate a global
commitment to the environment. In the same year, BSI Group published the world's first
environmental management systems standard, BS 7750.
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This supplied the template for the develoApmDeVntAof NtheCISEO 1D4000 series in 1996, by the International
Organisation for Standardization, which has representation from committees all over the world
(ISO). As of 2010, ISO 14001 is now used by at least 223 149 organizations in 159 countries and
economies.
The standard is not an environmental management system as such and therefore does not dictate
absolute environmental performance requirements, but serves instead as a framework to assist
organizations in developing their own enRviIroSnmKenMtalAmanagement system. ISO 14001 can be
integrated with other management functions and assists companies in meeting their environmental
and economic goals.
ISO 14001, as with other ISO 14000 standards, is voluntary, with its main aim to assist companies in
continually improving their environmental performance, whilst complying with any applicable
legislation. Organizations are responsible for setting their own targets and performance measures,
with the standard serving to assist them in meeting objectives and goals and the subsequent
monitoring and measurement of these.
This means that two organizations that have completely different measures and standards of
environmental performance, can both comply with ISO 14001 requirements.
The standard can be applied to a variety of levels in the business, from organizational level, right
down to the product and service level. Rather than focusing on exact measures and goals of
environmental performance, the standard highlights what an organisation needs to do to meet
these goals. Success of the system is very dependent on commitment from all levels of the
organisation, especially top management, who need to be actively involved in the development,
implementation and maintenance of the environmental management system.
ISO 14001 is known as a generic management system standard, meaning that it is applicable to any
size and type of organisation, product or service, in any sector of activity and can accommodate
diverse socio-cultural and geographic conditions. All standards are periodically reviewed by ISO and
new ones issued.
The administration of any business is really important, but even more so in a freight forwarding and
clearing operation due to the high volume of paperwork that needs to be controlled, the number
of “third parties” involved that you have no control over and to ensure excellent customer service
is achieved.
With regards the “paperwork or documentation” the fundamentals remain the same whether you
are moving cargo per Air freight, surface freight, road freight or rail freight, import or export - i.e.
you always need:
1) An invoice from the supplier
2) Packing list
3) Transport document
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4) Customs documents (both sides)ADVANCED
5) Any document “mode of transport” specific
6) Any document “product specific”
7) Any document “country specific”
8) Any document for any relevant authority bodies
RISK MA
A word of wisdom - Freight Forwarding is a very exciting industry to be involved in, an industry that
changes continually – YOU always need to be on top of change.
It is good, at the early stages in a career in freight forwarding, to keep in mind the following
with regards international trade:
• There is always a process to follow
• There are always documents required within the process
• There are always authority bodies regulating the process and the documents required
• There are always time frames and deadlines to work to
• There is always risk and cost to manage
• You must always follow procedures and accurately complete documents to have the desired
result of effective and efficient freight forwarding
• Make an “abbreviation or acronym” list from the start for yourself ... it’s a time/life saver
Keep the above points in your mind whilst going through this unit standard and you’ll find it easier
to comprehend.
Useful websites: www.sars.gov.za (you’ll find customs & excise / VAT on this website)
www.reservebank.co.za and www.cargoinfo.co.za.
SAMPLE DOCUMENTS RELEVANT TO THIS UNIT STANDARD CAN BE FOUND AT THE END OF
THIS MATERIAL AND IN PDF FORMAT.
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The continual changes happen all the tiAmeDdVueAtoNEDCI (EEleDctronic data Interchange) – keep that in
mind when reading this material, always check how your company operates – some companies are
more electronically based than others.
There is something else you need to be very familiar with from the start when administering
shipments and that is to know and understand the role-players within the freight forwarding
process. When different parties get involved in the shipping process, the role-players “names”
change. The diagram below should assist inRthIiSs rKegaMrd. A
Understanding the role-players
Seller Buyer
Beneficiary Bank Applicant
Shipper Carrier Consignee
Insured Insurer Insured
Exporter Customs Importer
Non resident S.A. Reserve Bank
Resident
2
Start
here
Always remember that there are authority bodies that have rules and regulations with
regards imports and exports, and these rules and regulations MUST be adhered to, and this means
you should be familiar with the Customs & Excise act and other relevant legislation.
SARS – customs / VAT / Duties
Reserve bank
Dept. of Trade & Industry
Dept. of Nature Conservation
SA Ports Operations
Occupational Health & Safety
Dept. of Labour
Dept. of Health
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State Veterinarian ADVANCED
Dept. of Agriculture, and
MANY others
Exporters and importers rely heavily on the freight forwarding and clearing agent for advice and
expertise – their knowledge of the shippinRg pIrSocKessMis gAenerally quite weak, so you therefore as a
forwarding and clearing organisation need to ensure you are on top with regards the latest rules,
regulations, methods, etc. within the shipping process. Importers and exporters obtain the services
of freight forwarders and clearers but this does not abdicate them from being ultimately responsible
for complying with all the rules and regulations.
As a forwarding and clearing organisation there is much to administer, organise and control
when moving cargo and many third parties involved, so act immediately throughout the process
and pay attention to detail all the way through.
KNOW THE RULES
& FOLLOW THE
RULES.
SPECIFIC OUTCOME 1
Explain the functions carried out in an airfreight export, import and consolidation operation.
ASSESSMENT CRITERION 1
The KEY PERFORMANCE AREAS of the airfreight export and airfreight import control functions are
explained in context of a freight forwarding organisation
Key performance areas
Obviously throughout the freight forwarding process whether imports or exports, there are KEY
PERFORMANCE areas that need to be monitored and attention to detail needs to be given if you
are to reduce risk and cost and give excellent service. Freight forwarding has many third parties
involved in the process, which makes monitoring the key performance areas a MUST and not
optional.
The freight forwarding fundamental cycle never changes whether imports or exports but within the
process lays a number of functions that are carried out. The diagram below will help you see the
basic fundamental flow of the freight forwarding process.
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ADVANCED
Overview of process
Shipment Documentation Shipment Shipment to
ready & is handled port /airport
packed RISK MAclears customs
Shipment Shipment Arrival & off load
loaded onto travels destination
ship/plane port/airport
Shipment Shipment
Cleared for Delivered to
import Customer
1
A basic organogram (“family tree”) of a freight forwarding and clearing operation
It is good to know and understand the “general layout” of who does what in a freight forwarding
and clearing organisation. If you look at the organogram below it will give you an idea of a “basic”
staffing structure of a clearing and forwarding organisation. There is always someone in charge,
someone needs to manage the operations (a hectic side of things) and then there are managers
that manage the controllers/clerks fulfilling the functions on the ground.
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ADVANCED
CEO
Chief Executive Officer
COO
Chief Operations Officer
RISK MA
IMPORT MANAGER EXPORT MANAGER WAREHOUSE
Air & sea Air Sea Road MANAGER ACCOUNTS MANAGER HR MANAGER
CONTROLLERS CONTROLLERS PACKERS CREDIT SALARY CLERK
Forwarding & Clearing Forwarding CONTROLLERS
ESTIMATOR MESSENGERS DRIVERS ACCOUNTS CLERKS ADMIN. CLERK
Same estimator could do
imports and exports/ air Customs Sales &
Entry clerks / tariff consultant servicing
& sea
MESSENGERS
Freight forwarding and clearing is strictly To administer and control freight
controlled by DATE AND TIME, you must forwarding & clearing operation
therefore ensure things are done timeously - takes precision work – things
considering the many third parties involved must be done right the first time
in the process that you have NO control
over. and communication must be a
priority
Fundamental Freight Forwarding & Clearing Key Performance Areas
If you look at the “overview process” diagram and relate it to an import/export shipment you’ll find
the follow Key Performance areas:
No. Key Performance area What makes it “KEY”
1. Start of the shipment • Estimate
• Routing order
Making sure the shipment: Is correctly packed for the
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prAodDuctVanAd NmoCdeEoDf transport for the entire trip
Making sure
2. Documentation • All documents required (product specific & aligned to
Govt. & authority bodies rules & regulations) have been
completed accurately by the shipper & the agent, filed
eRfficIieSnKtly &MdisAtributed timeously
Making sure
3. Customs clearance for • The shipment is processed through customs TIMEOUSLY
export
• This includes documentation for this stage of the trip
Making sure
4. Moving the shipment to • The shipment movement is smooth, aligned to the
exit port/airport scheduled plan and reaches the exit point.
• This includes documentation for this stage of the trip
(customs clearance)
Making sure
5. Loading onto transport • The shipment ACTUALLY was loaded and did leave as
scheduled
Making sure
6. Monitoring during travel • The shipment remains on track
• Up to date feedback to relevant parties
Making sure
7. Arrival at destination • The shipment remains on track – port handling
port/airport
• Up to date feedback to relevant parties
Making sure
8. Customs clearance for • Import documentation is processed timeously through
import customs
• No additional costs are gained for items like storage,
demurrage, customs penalties, etc.
9. Delivery to customer Making sure
• Transport collects and delivers as scheduled
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ADVANCED
• This includes documentation for this stage of the trip
Each key performance area of course has a number of functions that need to take place for the
shipment to be successful – by successful it means minimal risk / minimal cost / speedy document
processing, efficient transporting and a HUGE amount of effective communication.
For the Air export shipment then as forwarRdinIgSaKnd cMleaAring organisation you would need to follow
a basic administration process – something like this:
1) Estimate request from exporter
2) Acceptance of estimate
3) Receive notification from the exporter that the shipment is ready
4) Get the export instruction form completed by the exporter
5) Review the export instruction and handle any necessary queries and/or obtain additional
information for risk and cost management of the shipment. (e.g. Incoterm being used / special
packing requirements / air waybill shipper & consignee details)
6) Handle inspection if necessary
7) Request the relevant documentation from the exporter:
a. Export invoice
b. Any permits applicable
c. Packing list
d. Trade agreement certificates if applicable (e.g. EUR1 / Certificate of origin)
e. Any other authority bodies specific requirements
f. F178 (if shipment valued over R50,000 & foreign funds to be received) OR NEP for no funds
to be received/repair goods for return
g. Hazardous documentation if applicable
8) Make an air freight booking
9) Register the shipment on your system
10) Frame entry for customs clearance & quality control check prior submission – including SAD500
customs bill of entry / house air waybill
11) EDI submit documents to customs (handle VOC if required)
12) Obtain clearance documents
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13) Check documentation and informaAtioDn cVorrAecNt CED
14) Organise the collection of the shipment from the exporter timeously
15) Ensure shipment delivered to and accepted by the airlines timeously – Proof of delivery important
16) Invoice exporter & batch a complete set of documents
17) Forward documents to overseas agenRt foIrSimKpoMrt pArocess (if your responsibility)
18) Distribute document batch to exporter
19) Ensure any ACQUITTAL documents are received timeously
20) Follow shipment right through giving effective feedback to exporter
21) Close & file shipment
22) Your accounts dept. should ensure the exporter invoice was paid timeously
23) NOTE: the exporter needs to have certain documents in his file in specific time frames for
various authority bodies like SARS VAT / SARB so it is therefore important to keep a strict control
of all key performance areas to ensure they get their required documents timeously.
24) NOTE: Customs will not approve EDI entries if the loading depot does not reflect on the entry
Air Import Key Performance Areas
If you look at the above diagram (page 4) and relate it to an air import shipment you’ll find the same
Key Performance areas apply as the air export shipment – just more or less in “reverse”.
For the Air import shipment then as forwarding and clearing organisation you would need to follow
a basic administration process – something like this:
1) Estimate request
2) Estimate acceptance
3) Receive notification from the importer that a shipment has been placed with an overseas
supplier
4) Arrange the forwarding with your relevant agent aligned to the incoterm being used & the
dispatch date applicable – routing order required
5) Register the shipment on your system – this starts off the tracking of the shipment
6) Follow-up the dispatch of the shipment timeously
7) Give effective feedback to the importer
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ADVANCED
8) Receive a pre-advice and documents from the overseas agent who cuts the waybill
9) Get the import clearing instruction form completed by the importer (if applicable –not
usually done for air shipments but sometimes is necessary to avoid errors)
10) Review the import instruction (if used) and handle any necessary queries and/or obtain
additional information for risk and cost management of the shipment.
a. Watch for items like Bond storRe /IrSebKateMstoAre / etc.
11) Handle any specifics – veterinary requirements / health requirements / etc.
12) Ensure you have all the relevant documentation from the importer:
a. Supplier invoice
b. Any permits applicable
c. Packing list
d. Trade agreement certificates if applicable (e.g. EUR1 / Certificate of origin)
e. Any other authority bodies specific requirements
f. Hazardous documentation if applicable
13) Prepare the documents for customs clearance timeously – including SAD500 customs bill of
entry
14) EDI submit documents to customs and obtain clearance documents (Handle VOC if
necessary)
15) Draw the cargo - organise the collection of the shipment from the airlines or de-grouping
centre timeously
16) Arrange delivery transport
17) Prepare invoice/recovery reconciliation cost to recovery audit
18) Invoice importer & batch a complete set of documents
19) Ensure shipment delivered to and accepted by the importer timeously
20) Distribute document batch to importer WITH THE CARGO
21) Ensure the POD (Proof of delivery) is returned for filing
22) Courtesy call to importer
23) File shipment
24) Your accounts dept. should ensure the importer invoice was paid timeously
25) SARS deferment payment needs to be made timeously
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ADVANCED
26) NOTE: the importer needs to have certain documents in his file for audit purposes and
payment to supplier by the bank, so it is therefore important to keep a strict control of all
key performance areas to ensure they get their required documents timeously.
Filing is a Key Performance Area of note: RISK MA
It must be STRESSED that the documents controlled during the freight forwarding and clearing
process must work in a system that reduces risk and enhances customer service.
Many freight forwarding and clearing organisations use simple, but effective tools to manage the
document flow and control the paperwork. They may use “colour coded” files or folders per
shipment differentiating between import air and sea and export air, sea and road.
Most computer “freight packages” produce logical and sequential file numbers – e.g. SI = sea import
or AE = air export – this makes TRACKING, storing and finding files a lot easier.
A separate file is opened for every shipment and is given a unique reference number structured in
accordance with the company’s requirements. Because of this, there are likely to be many different
types of reference numbers in the industry.
It is noted for good order that the Rule 101.01 applicable to Section 101 of the Customs Act states
that:
Any person carrying on a business in the Republic shall, unless otherwise authorised by the
Controller, keep within the Republic on the premises where such business is conducted and
in one of the official languages reasonable and proper books, accounts and documents
relating to his transactions comprising at least the following:
(a) In the case of imported goods: copies of the relative import bills of entry, bills of lading or other
transport documents, supplier’ s invoices, packing lists, bank stamped invoices, payment advices and
other documents in terms of Section 39 of the Act
(b) ……….
(c) ………..
(d) in the case of exported goods: copies of the relative export bills of entry, invoices, bills of lading
or other transport documents.
Such person shall in all instances keep available such books, accounts and documents for a
period of two years from the date of importation, exportation ………… for inspection by an
officer …………………….
• File contents
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The important thing to remembAerDwiVthAfileNmCaiEnteDnance is that ALL documents, including
correspondence relating to the shipment must be in the file. Filing should be done
methodically and systematically.
A record of any communication (telecom / fax / email / one on one) should form part of the
file. Experience tells us that if you do not maintain files efficiently huge costs and penalties
can occur, not only for you as the freight forwarder but also for your customer.
A number of forwarders date stamp incomRingIdSoKcumMentAs to ensure that there is a natural record of
the date of receipt. This record can play an important role in the event of a dispute over the time
taken to affect a clearance and delivery.
Forwarders, in their role as clearing agents, are expected to affect the clearance of shipments, and
the delivery of the goods, as quickly as possible. They are generally judged by the time they take to
complete their task and it is important, therefore, for forwarders to keep a record of when events
within the clearance process take place. Many forwarders do this on the shipment file cover. Some
forwarders will note down both the “time” and the “date” while others will make provision only for
the “date”.
The type of events which would be monitored in this way includes:
1. The date shipping documents are received.
2. This is usefully done by document type, (e.g. original ocean bill of lading, supplier’s
invoice, importer’s written clearing instructions etc.) as they do not necessarily arrive all
at once. When documents are specifically called for it would be normal to record the
date on which the request is made.
3. The date a shipment is registered into the forwarder’s system (manual, computerised or
both)
4. The date the documents are sent to the bill of entry department for the framing of the
bill of entry
5. The date the bill of entry is sent to Customs
6. The date the bill of entry is either accepted or rejected by Customs
7. The event of a rejection, the dates of re-submission and subsequent acceptance would
be recorded.
8. The date the wharfage (cargo dues) clearance and release bill of entry are presented to
Portnet Revenue
9. The date the original bill of lading and release bill of entry are presented to the shipping
line or groupage operator together with payment of freight
10. The date the delivery release order (DRO), obtained from the shipping line or groupage
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operator, is handed to a haulier for the collection of the goods and delivery thereof to
the importer/consignee
11. The date proof of delivery (POD) is received
12. The date the shipment file is closed off.
The shipment file forms an integral part ofRthIeSsKhipmMenAt management process and it is important
for the personnel to make full use of the file cover for recording the shipment history. Files are to
be kept for 5 years.
Key Performance Area – Document control
The control of the shipment documents throughout the shipping process is of utmost importance.
Any problems arising from lack of document control will be costly to either the importer/exporter
or the freight forwarding agent.
One of the most common complaints from importers and exporters is “NOT RECEIVING THEIR
DOCUMENT BATCH TIMEOUSLY” and second “NOT RECEIVING A COMPLETE DOCUMENT BATCH”
and thirdly “HAVING ERRORS IN CALCULATIONS”
It is essential for the freight forwarding agent to ensure document batches are complete, accurate
and delivered on time to the customer. The customer cannot prepare their warehouse to receive
the cargo, cost the cargo, input their stock on receipt of the cargo and then have it ready for sale
timeously if they do not have the document batch. For sea freight shipments, the customer should
have the document batch PRIOR delivery of the goods and with air freight WITH the goods. This is
a “service” issue and makes for good sustainable business.
Once a shipment has been cleared, delivered and invoiced, it is necessary to send the company’s
tax invoice and certain documents to the importer. These would include:
• Customs stamped bill of entry
• Bill of entry worksheet Portnet stamped wharfage clearance (container shipments)
• Portnet and Customs stamped Landing Order (break-bulk shipments)
• Supplier’s invoice
• Transport document (bill of lading, rail consignment note, road consignment note)
• Importer’s clearing instructions
• Supporting vouchers for disbursements such as container depot invoices, shipping line
freight statements, state warehouse rent notes etc.
• Import permit if applicable
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• Costing sheet if applicable
• Insurance declaration if applicable
• Packing list if available
Other records RISK MA
It is normal for forwarders/clearing agents to keep the following types of records or files.
o Importer’s/Exporter’s Master File Record
For every client, it is likely that a forwarder/clearing agent will have a “master” file, per client,
on computer, in which details of a client; such as the name of the company, postal and physical
addresses, telephone and facsimile numbers, e-mail address, account number and the credit
limit; are held.
Some computer systems also enable the rates and service fees applicable to a client (i.e. the
rates and fees that the forwarder charges the client) to be captured and held in the master file.
This is not only a safe way of holding the information but it also provides computerised access
for invoicing purposes, which in turn eliminates errors.
It is important that the persons responsible for capturing the data do it accurately and that there
are mechanisms in place to check and verify the accuracy of the data captured.
o Product Codes
Many importers are able to supply their forwarder/clearing agent with “codes” which help to
identify, for Customs purposes, the products they purchase from overseas.
These “numbers” or “product codes” can be linked to the correct tariff headings of the products
they represent and thereby facilitate the correct declaration of the goods, on the Customs bill
of entry, at the time of importation.
To be useful and utilisable, the product codes must be recorded on the supplier’s invoice which
will be used by the entry clerk when preparing the bill of entry, and which will be submitted to
Customs with the bill of entry.
The computerised bill of entry systems being used by forwarders have the facility to hold these
product codes in the data base, each code being properly linked to the correct tariff heading, so
that, at the time the computerised bill of entry is being produced, the entry clerk need only
match the codes for the various items on the supplier’s invoice to the codes held in the data
base.
The facility does require the prior intervention of an expert in the Customs tariff to ensure that
every product item is properly classified and the correct link is made between tariff heading and
product code.
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Product codes are most useful whenAimDpoVrtAedNgoCodEs aDre reflected on suppliers’ invoices which
contain dozens or more line items, each line item having a different tariff heading.
o Client File
All forwarding companies keep what is known as a client file (one per client) in which the
following types of documents and records are kept.
➢ Routing orders accepted by tRheIiSmKportMer’sAoverseas suppliers. A routing order (or
routing request) is an instruction issued by an importer on an overseas supplier to use
the services of a particular foreign-based freight forwarder.
➢ Authorised credit application form
➢ The forwarder’s sales proposal document to the client
➢ Standing operating instructions
➢ Shipment cost estimates
➢ Visit reports written by sales and service personnel
➢ All correspondence
Client files would normally be placed in alphabetical order in filing cabinet.
Once a sales person starts working on a new account, a “working” file would normally be opened
for the prospect and this file would become the “client” file on successful acquisition of the
business.
Whilst the information above summarises the basic process, you need to be aware of the details
that go into moving cargo internationally and what the forwarding and clearing organisation is
required to do and what documentation needs to be administered.
Key Performance Area – Payments
Often the controllers working on the ground forget that the freight forwarder they work for has to
maintain good corporate governance to have a sustainable business. Receiving payment from
importers and exporters on time for shipments invoiced is highly important and therefore the
invoicing of shipments must be done timeously aligned to company policy. It is the responsibility of
the accounts dept. to ensure payment is received but team work is required to co-ordinate the
delivery of the document batch on time and invoicing the shipment on time, especially when CASH
SALES are involved.
The other side to payments is that you as a freight forwarding operation need to ensure that you
pay your service providers timeously and aligned to your agreement with them: this includes SARS,
transporters, packing company, agents, etc.
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ASSESSMENT CRITERION 2 ADVANCED
The operations of the airfreight import deconsolidation function are described in terms of a
freight forwarding and/or consolidation organisation.
In the freight forwarding industry generally, the buzz word “consol” refers to the consolidating of
airfreight shipments.
The concept is simple – the freight forwardRerIbSuyKs wMholAesale space from an airline at a discounted
rate and then retails to other freight forwarders or shippers. The freight forwarder then
consolidates various smaller shipments into one larger shipment and profits overall by the
difference between the wholesale price he purchases at and the retail price he sells at.
The airline wins administratively – they don’t have to worry about consolidating shipments and they
have fewer clients to liaise with – this ultimately reduces the number of staff they need to operate
and it is the freight forwarders risk if not all the space is sold. The house-bill done by the freight
forwarder controls the smaller shipments and the Master bill issued by the airlines controls entire
shipment. The above explains “how shipments are consolidated by air” it therefore stands to reason
that once the shipment reaches the “other side” it needs to be DECONSOLIDATED. The freight
forwarder would usually consign the master bill to a de-consolidating agent at destination and it
would be their responsibility to de-consolidate the whole shipment, unpack and distribute the
smaller shipments.
Diagrammatically the consolidation/de-consolidation process looks like this.
Various small shipments
from various shippers
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All small shipments packed
into ONE shipment
RISK MA
This consolidation sent by
freight forwarder to a de-
consolidating agent at
destination
This consolidation arrives at
destination and gets off
loaded
Shipment gets de-
consolidated
Smaller shipments get
delivered or collected once
customs cleared
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ASSESSMENT CRITERION 3 ADVANCED
The operations of the airfreight export consolidation function are described in terms of a freight
forwarding and/or consolidation organisation.
Whether importing or exporting the fundamentals of consolidation and de-consolidation don’t
change as explained under assessment criterion 2 above.
You always have the shipper / the freightRfoIrSwKardeMr aAnd/or consolidator / the airline / the de-
consolidating agent / the receiver of the shipment. Aligned to this would be the necessary
documentation & processes relating to handling the shipment.
SPECIFIC OUTCOME 2
Describe the functions carried out by an over-border freight forwarding operation.
ASSESSMENT CRITERION 1
The road and rail transport requirements of exporters and importers are described for an over-
border freight forwarding operation.
The freight forwarding agent must ensure that he can give sound advice and guidance, relating to
the movement of cargo internationally, to the importer/exporter. There are many considerations
that need to be looked at in the early planning stages of a shipment if the shipment is going to run
smoothly.
Road and rail transport, especially through Africa needs careful planning and the freight forwarding
operation needs to be in tune with what is happening on route – from the beginning of the shipment
to the end of the shipment. It therefore stands to reason that the freight forwarding operation has
certain requirements in place for shipments. It is important that the importer/exporter & the freight
forwarder work as a team to ensure the shipment process and movement of cargo is done with
minimal risk and costs are controlled.
Some generic considerations for road and rail shipments
ITEM CONSIDERATION
PAYMENT by the exporter’s customer or PAYMENT to the importers supplier comes into the
considerations i.e. what mechanism is going to trigger off payment and when will payment be
made, this needs to be controlled.
Country of destination & • Environment
countries on route • Stability
• Specific requirements per product /per mode of
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Mode of transport AtraDnsVpoArt NCED
Product
Packing • Legal requirements
Documentation • Availability
Cost • Speed (transit time)
• SuRitaIbSleKfor McomAplete journey
• Suitable for product being shipped
• Loading requirements
• Securing the load
• Special requirements
o Temperature control
o Dangerous/hazardous
o Fragile
o Perishable
• Special requirements
o For mode of transport
o For conditions on route
o Specialised
o Refrigeration
• Securing the load
• Country specifics
• Country specific
• Product specific
• Standard export documentation
• Legal compliance: e.g. VAT requirements
• Permits
• Inspections (on exports)
• Most cost-effective way to move shipment
o Considering the whole route
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ADoVAThNe pCrodEuDct
o Co-loading
o Air/Road/Sea comparison
Time lines • WRhenISshKipmMentAneeded at destination
Route • Customs clearance times (exit & entrance)
Insurance • Transit time
Inco Term • Special requirements country specific
• Special packing
• When documentation to be in the file for exports to
comply to rules and regulations
• Aligned to mode of transport
• Most suitable for risk and cost management
• Requirements – from where to where
• Exclusions
• Where is the risk changing hands?
• Where is the cost responsibility change
Once all the considerations have been looked at and the best way forward has been agreed upon
by the freight forwarder and the shipper there are many functions that need to be carried out by
the freight forwarder.
Road hauliers offer the following services:
• Door to door – goods collected from the exporter’s premises by the haulier, and then
transport it to its final destination in a foreign country.
• Depot to depot – with facilities for collection at the point of origin and delivered to the
country of destination.
Road hauliers are strictly monitored by the Road Transport Quality System (RTQS) via means of
permits, covering all the countries they will be passing through. Permits are not renewed if the
haulier is found to operate sub-standard vehicles, overload or other related issues.
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Please ensure you get actual documentation samples and study them carefully – ask questions
of your manager should you be unsure of anything.
It is the freight forwarders responsibility to ensure the following functions have been carried out:
1) Documentation is received, drawRnI-uSpKanMd pArocessed for customs clearance & final
document batch.
a. The instruction is completed and signed by the importer / exporter (clearing
instruction or export instruction respectively)
b. Any specific permits are in place
c. The customs SAD 500 Bill of Entry is done
d. Supplier invoice / export invoice for the shipment
e. Packing list
f. Transport document
g. Trade agreement certificates (e.g. EUR1)
h. Certificate of origin (Form A) (as required)
i. Special documents – product specific e.g. hazardous safety data sheets, etc
j. Certificates of analysis if applicable
k. Dangerous goods declaration
l. Depot proof of delivery
m. Inspection certificate if applicable
n. Freight transit order (for rail)
o. Service request to rail freight
p. Waiver / loading certificate
q. Insurance certificate
r. NEP Bank form (for exports if applicable)
Note: Not all the above documents are required for every shipment or customs clearance.
Document requirements relate to import / export / mode of transport / country specifics and
product specifics.
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2) Cargo is received timeously, paAckeDdValiAgnNedCtoEshDipment requirements, labelled correctly
and inspected if that is the requirement.
3) Customs processing takes place timeously and clearance is received with the correct
documentation – including tariffing.
4) Transport is arranged aligned to thRe mIoSdKe ofMtraAnsport required, cargo is at the transporter
on time and with the correct documents, proof of receipt of the cargo for transporting is
received, follow-ups are done from date of departure to actual arrival at destination.
5) Status reports are given timeously and consistently with accurate information for keeping
track of the shipment.
6) Document batch is finalised, accurate and distributed timeously to relevant role-players
and aligned to Govt. rules and regulations
In summary, the freight forwarding agent needs to risk and cost manage the movement of the
cargo from beginning to end on behalf of the importer/exporter – liaising with the necessary
authority bodies and service providers and ensuring the documentation flows smoothly and the
cargo is moved efficiently.
ASSESSMENT CRITERION 2
The customs and VAT compliance processes are described for an over-border freight forwarding
operation.
The customs process handled by you the freight forwarding operation needs to be fully understood
in order for you to process documentation and follow procedures correctly the first time, thus
preventing problems arising and time delays happening. You need to comply with rules and
regulations relating to the export process and ensure you are given or draw-up the correct
documentation at the start of the process – for instance you need to be aware of what requires
permits or any other certification.
The Import and Export Control Act No. 45 of 1963 lists in its Schedules 1, 2 and 3 the products which
may not be exported without an export permit.
In addition to the products listed in these three schedules, the Consolidated List of Prohibited and
Restricted Exports also schedules products which are subject to Export Control.
The Export Control regulations state that the export of the following goods does not require a
permit:
• Goods landed for transit through the Republic
• Goods, excluding motor vehicles, exported as household or personal effects for personal use
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by a natural person leaving the RAepDubVlicApeNrmCanEenDtly
• Goods exported as bona fide gifts at own cost by a natural person in the Republic to a
designated natural person living outside the Republic permanently
• Samples of no commercial value
• Goods which are imported into the Republic for repair or maintenance and, after such repair
or maintenance, are exported to thRe oIrSigiKnal MconAsignor.
Applications for export permits are made on a form H.91 and submitted to the Department of Trade
and Industry (DTI). The number of copies to be made is indicated on the H.91 form.
It is stated on the H91 form that when goods to the total FOR (Free on Road/Rail) or FOB (Free on
Board) value authorised on the permit have been exported, or immediately after expiration of the
validity period, whichever is sooner, the holder of the permit must return it to the Department of
Trade and Industry.
Before submission to the DTI, all applications must be submitted to the various Government
departments which act as Controlling Authorities for a recommendation. The code letters and the
Government departments involved are as follows:
H Department of Trade and Industry
L Department of Agriculture
M Department of Mineral and Energy Affairs
N Department of National Health and Population Development
O Department of Environment Affairs
W Department of Water Affairs and Forestry
An export permit is subject to the following conditions:
✓ Only goods specified in the permit may be exported
✓ The permit may not in any manner be transferred by the holder to any other person
✓ The permit shall be valid for a maximum period of six months or for such period indicated
on the permit.
Schedules 1, 2 and 3 referred to above give the tariff heading, a description of the goods and
the code letter of the government department from which a recommendation must be
obtained.
In the Prohibited and Restricted Index for exports, in addition to the tariff heading and a
description of the goods, the index gives the documents and procedure required for export.
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For example, under heading 93A.01D, tVheAexNpoCrt Eof Dmilitary weapons; other than revolvers,
pistols and arms of heading 93.07; requires a police permit or temporary export permit
issued by authorised Customs and Excise officers.
Other Permits and Certificates
Examination of the Prohibited and RResItrSicKted MGooAds Index will reveal that a number of other
permissions are required for certain products and commodities.
Names of the authorising bodies may change as the political structure of South Africa is
rebuilt but at the moment some of these are:
Registrar of Livestock Improvement
Inspector of Mines
Registrar of Plant Improvement
Directorate of Plant and Seed Control
Chief Inspector of Explosives
Inspection certificates are required in certain cases and exporters should also be aware of
the need for end-user or import certificates in the case of strategic commodities. These
certificates issued by the appropriate authority in the importing country may have to
accompany the application for the export permit or, at least, be submitted with the export
bill of entry to Customs.
Offences and Penalties
Persons guilty of an offence under the Import and Export Control Act are liable on conviction
to a fine not exceeding R2 000 or imprisonment for a period not exceeding two years or both
the fine and prison sentence.
Any person will be guilty of an offence if he:
o Fails to comply with any condition stated in a permit
o Fails to comply with any order issued by the Minister of Trade and Industry for
information in regard to exportation
o Furnishes false information
o Hinders or obstructs the Director of Import and Export Control or any inspector in the
performance of his duties
o Represents himself as the Director of Import and Export Control or inspector.
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If we look at the customs process andAwDhaVt wAe NasCthEe fDreight forwarding company need to be
concerned about in relation to “customs compliance” the following check list will help you get your
thinking on the right track.
NOTE: All goods entering or exiting South Africa need to be cleared through customs.
1. Customs Code Number for you atRhseeIrfvSreicKieghptrMofovriAdwearrdtoinegxapgoerntetrtsoaenndaibmlepoyrotuertso process
documents through customs as
2. VAT Number for you the freight forwarding agent to enable you to comply with the VAT
act.
3. Customs Code Number for the exporter/importer. You can’t process through customs
without this.
4. VAT Number for the exporter/importer – to comply with the VAT act.
5. Relevant permits required – product / shipment / country / Govt. Dept. specific
6. Customs Bond Store Number – to comply with bonded warehousing of goods
7. Reserve Bank forms – NEP if applicable – to comply with the reserve bank rules and
regulations on exports
8. Ensure that shipments enter and exit via DESIGNATED ports
9. Ensure the use of South African registered transport companies for exports
When we come to the VAT compliance side of things, as the freight forwarding agent you need to
be registered for VAT and know when to and when not to charge VAT to importers/exporters.
VAT is somewhat more complicated for the EXPORTER in that he has many rules and regulations to
comply with, within the export process and this is where you as the freight forwarding agent will
make a huge difference indeed. So, get to know and understand a bit more by studying the
information below.
To be able to advise and guide the exporter, you need to be familiar with the VAT ACT No. 89
of 1991 and related notes, to get a full understanding of what is required to comply with it, paying
special attention to the VAT EXPORT INCENTIVE SCHEME section.
VAT compliance by the exporter is extremely important and you as the freight forwarding
organisation need to be really sure you fully understand what is required, when it is required and
how you go about ensuring compliance in the end. The diagram below summarises it quite clearly
and also gives an indication of which Incoterms is suitable to use and stay complaint with the VAT
scenario.
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Direct Exports In-direct Exports
RISK MA
Physically delivered by YOU engage cartage Goods exported by Goods exported by
YOU to customer at an Contractor, who is ROAD or RAIL AIR or SEA
Address IN a foreign contractually liable to Must You elect to supply
country effect delivery of goods. STD RATE At ZERO or STD RATE
YOU are liable for
transport costs of goods
Supply at ZERO RATE Export via
DESIGNATED
Export via commercial port
DESIGNATED
commercial port VAT refund
customer claim
Incoterms
CFR, CIF, CPT, CIP Incoterms
DAF, DES, DEQ, DDU, DDP EXW, FCA, FAS, FOB
1
The exporter has to meet STRICT time-lines within the export process to avoid penalties and it is
important that you as the freight forwarding agent carry out your functions timeously and ensure
the exporter can fulfil the time lines required – this is not a value-added service you would be
giving the exporter this is what you get paid to do as the freight forwarder.
Activity Time line
1. Shipment of cargo
Within 60 days from tax invoice date OR payment
2. Proof of export documentation to received date WHICHEVER is the earliest
be in the file
By 90 days from tax invoice date OR payment
received date WHICHEVER is the earliest
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The documentation control, which formAs Da bVigApaNrt Cof EtheDexport process, that you as the freight
forwarding organisation need to pay attention to is summarised below – this includes other basic
compliance issues:
Type of Incoterms Documents Time line
export RISK MArequirements
Direct CFR
export CIF • Order • 60 days from
CPT • Tax invoice tax inv date or
ZERO RATE CIP • Payment to carrier payment
DAF • Payment from received date
DES to ship goods
DEQ customer • 90 days from
DDU • BOE release tax inv date or
DDP payment
received date
ALL documents
to be in the file
Special requirements • Road: POD & manifest (proof goods
• Carrier must be SA VAT taken by contractor)
registered • Rail: freight transit order, combined
consignment note, invoice
• Sea: Copy bill of lading (SOB)
• Air: Copy air waybill (all details)
1
Type of Incoterms Documents Time line
export requirements
EXW
In-Direct FCA • Order • 60 days from
export FAS • Tax invoice tax inv date or
• Payment to carrier payment
STD rate • Road/rail • Payment from received date
or STD RATE to ship goods
for EXW customer • 90 days from
ZERO Rate • BOE release tax inv date or
with • Port: THC payment
• Individuals: received date
conditions ALL documents
passport & trading to be in the file
doc
• Companies: Articles
of Incorp.
Special requirements • Road: POD & manifest (proof goods
• Carrier must be SA VAT taken by contractor)
registered
• Designated ports proof • Rail: freight transit order, combined
documents
consignment note, invoice
• Sea: Copy bill of lading (SOB)
• Air: Copy air waybill (all details) 22
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ASSESSMENT CRITERION 3 ADVANCED
The customer service requirements are described of an over-border freight forwarding operation.
It must be said from the start that CUSTOMER SERVICE plays a huge part in a freight forwarding
operation maintaining sustainable business. In the shipping industry one can negotiate rates, but
this is controlled by whether the customer moves large volumes or not – e.g. if the customer moves
small volumes they’ll get the higher rate inRcoImSpKarisMon tAo a customer that moves big volumes who
would get the best rate.
Clearing charges are there because you as the freight forwarding agent fulfil functions for and on
behalf of the importer/exporter and need to place a cost against the function – clearing charges
don’t make the freight forwarding organisation money, money is made on the forwarding.
Basically, we are now left with CUSTOMER SERVICE which can make or break a business
relationship.
It must be understood that there are things that a freight forwarding agent is obligated to do aligned
to a freight forwarders roles and responsibilities -e.g. giving expert advice, documentation handling,
customs processing, disbursements of customs, duties, VAT, etc, handling of claims, control of
efficient delivery of cargo, effective communication and feedback – in essence the management
and control of shipments.
Customer service includes:
1) Using reputable transporters
2) Advising the customer which mode of transport is best – product specific and travel specific
3) Tracking the movement of the cargo daily & offering productive reports
4) Ensuring the packaging of the product is adequate for the total trip
5) Ensuring the loaded of the product onto the transport is done properly
6) Handling the inspection process if applicable
7) Specialist handling (fine arts, antiques, etc)
8) Being sure of what documentation is required – country specific/product specific/authority
body specific during the whole process – every country along the route
9) Doing all you can to ensure the customs process is not held up at any stage
10) Efficient passing of documentation throughout the process
11) Effective communication – clear and consistent
12) Timeous & accurate processing of estimate requests
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13) Customs brokerage – tariffs, ruleAs DandVrAeguNlaCtioEns,Ddraw-backs, entries, inspections, MIDP,
consultancy, bonded warehouse management, clearance.
14) Warehousing facilities
15) Handling of complaints timeously and professionally
16) Claims submission and control
17) Productive reports – including statuRs rIeSpoKrts M& pAerformance monitoring
18) Consistent visits from sales/servicing people
19) Acquittal control
20) Chartering
21) Global networking
Much of the abovementioned functions effectiveness can be enhanced by ensuring excellent
customer service and going the extra mile – for instance “efficient delivery of the cargo you are
obligated to do BUT delivering PRIOR the expected date or always delivering on time would be
considered excellent service.
Customer service means going the “extra mile” and giving VALUE ADDED services like cost saving
tips, offering reports that add value to the customers logistical planning, offer customer workshops
where they can learn and understand more about what you do as the freight forwarder and where
they overlap with the functions you perform, be pro-active, and much more. Doing things right the
first time, paying attention to detail and effective communication are probably the three biggest
winners for customers.
As a freight forwarder, you need to know your customer, understand the needs your customer has
and ensure those needs are met. Customer satisfaction is not enough – you want to take the
customer to places no other agent has ever been” – not literally of course BUT relating to the service
you give – you need to be “SIMPLY THE BEST”. The promises you make, you need to keep –
communicate effectively, timeously and often to avoid misunderstandings.
Excellent customer service is essential to sustainable business........it is what the customer wants.
SPECIFIC OUTCOME 3
Outline the functions carried out in a surface freight operation.
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ASSESSMENT CRITERION 1 ADVANCED
Value added by the surface freight function is described in terms of the key services of a surface
freight function.
There are a few things that freight forwarders and clearers can do that will impress the customers
and within the surface freight function you can add tremendous value to your customer by really
“thinking shipping”. This rmueleasnasntdakginugidienltionRecsoInaSnsiddKegrivaMitniognAthAeLLctuhsetoamspeercotsptoiof tnhsethshaitpwmiellnrte,daupcpelyriinsgk
“best shipping practice”
and save costs.
There are different ways of moving cargo for cost effectiveness and risk management – review the
list below – you need to understand the options available and how to best advise the customer. This
may take some comparison calculations to establish the most cost effective way to move the cargo,
e.g. the break point for LCL and FCL is 13 cubes but this is an indication only and other factors are
to be considered – for instance the product e.g. copper bars may not meet the cubic metre capacity
because it is too heavy -i.e. copper bars will never FILL a container because of its weight but it is
least risky to bring it in a container rather than break bulk – pilferage being a big problem with this
product.
➢ Bulk cargo = cargo that is not containerised nor unitised – can be dry bulk or liquid bulk
➢ Break Bulk cargo (sea freight) = cargo that is packed or unitised but not containerised
➢ Full container (FCL) = cargo that is packed and sealed into a container
➢ Less than container load (LCL) = cargo that is too small to fill a container – the line will
containerise small consignments in consolidation with similar cargo going the same route.
➢ Groupage = cargo that is small and containerised in a single container by a freight forwarder
or NVOCC (non-vessel operating common carrier) for economic reasons.
➢ Road = cargo moved by road transport – product specific
➢ Rail = cargo moved by rail
➢ Sea = cargo moved by ship
➢ Multi-modal = cargo moved by multiple modes of transport during the duration of the
shipment
As a freight forwarder, you will need to have all the information you need “at your finger tips” to be
able to “think shipping” on your customers behalf and to be able to offer accurate advice.
You need to know your geography (covered in another unit standard), your break points for
estimate purposes, any customs items specific to product (e.g. dumping rules and regulations,
permit requirements), any country specific requirements (e.g. IDF Import declaration forms) or
transport specific requirements (e.g. hazardous packing, etc).
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You need to have all your rates accuratAe, uDpVtoAdaNteCanEd aDvailable for quick calculation, like ocean
freight rates, cargo dues cost, transport costs, etc. and of course have quick reference to the tariff
heading used to calculate duties.
You need to be able to “think on your feet” and know what type of options to offer the customer
for their specific need – minimizing risk and saving costs.
It’s all about what key services you have gaRovaoIidlaSwbKloerktoMinygoArueltaotioonffsehripthseanBdESsTusptoaisnsaibbllee way to move
your customer’s cargo. You need to build relationships
with all your service providers to ensure you can offer the customer what they want or better.
Other key services could include:
➢ Track and trace
➢ Customer service
➢ Value added services
➢ Sea freight forwarding
➢ Dangerous goods
➢ Insurance
➢ Inspection services
➢ Chartering
➢ Projects
ASSESSMENT CRITERION 2
Specialised services provided by the surface freight function are described in terms of a freight
forwarding organisation.
As a freight forwarder, you “NEED TO KNOW WHAT YOU ARE DOING” when it comes to
handling and moving “Special cargo”.
Covered below are some specialist fields that will cross your path during your career in freight
forwarding. They will be outlined briefly under their individual headings to help you retain what you
are learning.
PROJECTS
A project of any sort needs careful planning, expertise, skills & knowledge, a large
amount of administration, usually big finance and a HUGE amount of effective
communication.
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ADVANCED
Let us look at an example project: in this instance “the dis-mantling, packing and exporting of a
power station to China”.
As you can imagine this will not be a simple task at any stage during the process, and even though
you are the freight forwarding agent and your concern would be the “movement” part of the supply
chain, or so one would think: In actuality, thRe TIOSTKAL sMuppAly chain in this instance affects the smooth
exporting of the power station.
As the freight forwarding organisation requested by your customer to fulfil the task of doing this
export for them you would need to be involved from the start. To put this in some perspective it
will be categorised for easy understanding, people, vehicles, equipment, etc.
Projects come in 3 basic stages with many “sub-stages” to each stage:
• Planning
• Execution of plan – including monitoring
• Debriefing
EFFECTIVE COMMUNICATION IS HIGHLY IMPORTANT and ENSURING LEGAL COMPLIANCE
THROUHOUT THE PROJECT PROCESS IS CRUCIAL
Planning: 1. How to dismantle the power station – minimizing risk &
would be broken down most cost effectively
into smaller portions
2. How to pack, label & register the power station for export
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Freight ADVANCED
forwarding
input is highly 3. Storage of dismantled power station prior shipment
important
4. What documentation is required to export the power
station to China
5. What mode of transport is required to move the power
station from inland to port, on the water, port to inland
6. WhRat fIinSaKnceMis rAequired for the project
7. Defining of all role players roles and responsibilities
8. How to communicate effectively
9. What resources would be required to handle this project
Once the planning has been done then each individual planned point would have its own
plan for the execution of the project.
Dismantling: 1. Start date & anticipated end date
would be broken down
into smaller portions
2. Site plan – broken up into small sections
Pay 3. Resource assignment to each section – including people,
attention vehicles, equipment, etc.
to detail
4. Detailed method for dismantling, packing, labelling and
registering of each item – section specific
5. Communication – daily progress operations meeting
6. Budget sheet
7. Daily documentation requirements for removal off site
8. Service providers details and schedule
How to pack, label and register the power station for export
Packing, labelling & 1. Packing:
registering: a. What to pack
would be broken down b. How to pack - items specific
into smaller portions c. When to pack
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Do it right ADd. VWAheNreCtoEpaDck
the first time
2. Labelling:
a. What to label
b. How to label
Rc. IWShKenMto lAabel
d. Where to label
3. Registering:
a. What to register
b. How to register
c. When to register
d. Where to register
4. Daily requirements for
a. Packing
b. Labelling
c. Registering
5. Service providers details and schedule
6. Communication – daily progress operations meeting
7. Budget sheet
8. Resource assignment to pack/label and register
Storage prior shipment would be important and there would be many ways of coping with
this
Storage of dismantled 1. Where to store the dismantled cargo
cargo prior shipment:
would be broken down 2. How to store the dismantled cargo
into smaller portions 3. Logging or keeping a register of stored cargo
4. Daily requirements for Transporting the cargo off site
As a FF you
need to ensure
this is controlled
well
5. Service providers details and schedule
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6. CAomDmVunAicaNtioCn –EdDaily progress operations meeting
7. Budget sheet
8. Resource assignment to handle the storage process
Documentation needs EARLY research aRndIhSaKndliMng tAo avoid delays
Documentation 1. What documentation is required:
requirements for export: a. Permits
would be broken down
into smaller portions b. Import control in China
c. Documents required for payment
Pay d. Legal documents required e.g. VAT
attention to e. Customs documents required
f. Bank documents
detail
g. Product specific documents
2. Who is responsible to produce each document
3. Check list of documents required for quality
4. Deadline dates for documentation to be produced
5. Service providers details and schedule
6. Communication – daily progress operations meeting
7. Budget sheet
8. Resource assignment to handle the documentation
process
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ADVANCED
Transport requirements locally / externally need to be kept in mind throughout the process
– the transport mode affects the type, sRizeI,SquKalitMy ofApacking for instance.
Transport 1. What transport is required (including number, type,
requirements: availability)
would be broken down a. On site
into smaller portions
b. Locally to storage area
Needs to be c. Inland to port
coordinated d. Internationally (vessel)
well
e. Port to inland
2. Schedule to coordinate and control the transport
3. Proof of delivery and other such document control
4. Resource assignment to handle the coordination of the
transport required AND to control the documentation
5. Service providers details and schedule
6. Communication – daily progress operations meeting
7. Budget sheet
Project finance is critical; if this is not in place and controlled correctly your project will be a
nightmare indeed
Finance: would 1. What finance is required AND when by the various
divisions:
be broken down into a. Dismantling
b. Packing, labelling, registering
smaller portions c. Storage
d. Documentation
Needs to be e. Transport
coordinated f. Resources (HR and equipment)
well
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ADVANCED
g. Communication
h. “Buffer”
2. Banking details and coordination, support
3. Schedule to coordinate and control the budget
4. ProoRf oIfSpKurchMaseA, delivery and other document control
5. Resource assignment to control the budget AND to control
the documentation
6. Service providers details and schedule
7. Communication – daily progress operations meeting
8. Budget sheet
Designated role-players who are a hundred % sure of their roles and responsibilities are
required. You CANNOT have a weak link in the team.
Roles and 1. What people & what skills are required for handling this
project:
responsibilities:
a. Project co-ordinator
would be broken down
b. Finance manager
into smaller portions
You’ll need c. Divisional managers
skilled people
d. Specialists (e.g. freight forwarding agent / tariff
consultant)
e. Supervisors
f. Clerks
g. Drivers
h. Refreshment coordinator
i. First aid
j. HR
2. Schedule to coordinate and control the personnel
3. Documentation control e.g. ID’s on site
4. Standard operating procedures & flowcharts for each
person
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ADVANCED
5. Service providers details and schedule
6. Communication – daily progress operations meeting
7. Budget sheet
Communication is of the utmost importRanIceSaKnd MmusAt be taken seriously
Communication: 1. What protocol will be used i.e. who will communicate with
would be broken down who
into smaller portions
2. What equipment is required to communicate effectively:
a. Cell phones
You’ll need b. Phones
skilled c. Email
people d. SMS
e. Loud Haller
f. One on one
3. Documentation control e.g. distribution of equipment
4. Communication flowchart
5. Equipment maintenance and control: e.g. batteries on
charge
6. Service providers details and schedule
7. Budget sheet
Resources – a critical part of the project – they need to be available, efficient and controlled
Resources: 1. What resources are required for the project by EACH
would be broken down DIVISION (including people)
into smaller portions
This needs tight 2. Where will these required resources be obtained
control to be
effective 3. Who will obtain the required resources (this could be
done per division)
4. Documentation control of resources on order & delivered
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ADVANCED
5. Schedule of required resources review
6. Service providers details and schedule
7. Budget sheet
Tcohveeirmepdo–rteavnetrythaisnpgeacbtothurtotuhgehaobuotvtehelisptreodRjetacItbShleaKssirsetMqoueiArnesmureentthsethTaOtTnAeLedprtoojbecetmreeqtutoireomneendetsgraeree
or another. (NOTE: the above tables are not necessarily complete – they are an indication of the
thought process required when handle projects.)
The tables above are merely an outline of what’s required in project management; there is a large
amount of detail not covered. If you consider the tables above you will realise that you as a freight
forwarder need to be really sure that you have the necessary skills, knowledge, resources, finance,
etc. available to you to give excellent service and “trouble free’ shipping – complying with ALL the
relevant rules and regulations.
PERISHABLES
Perishables are items like foods stuffs, medicines, flowers & plants, ...... Items that need
to be moved speedily and under specific control conditions, e.g. refrigeration
It is safe to say that most perishable goods are move by air freight because its transit times are short
and spoiling or damage to the goods is minimised.
Handling perishable cargo requires knowledge and skills as there are strict rules and regulations
that control the movement of this type of cargo locally and internationally, shipment forward
planning is required to ensure the correct container, facilities, etc, are available and in place.
In South Africa the PPECB (Perishable Products Export Control Board) is a certified and accredited
body that is authorised to issue SANAS certificates (official export certificates issued in terms of the
Agricultural Product Standards Act, 1990 (Act No 119 of 1990) and the Perishable Products Export
Control Act, No. 9 of 1983.
Other references are found, to name a few – Codex guidelines for generic official certificate formats
& the production and issuance of certificates: CAC/GL 38-2001, Codex principles for food import &
export inspection and certification; CAC/GL 20-1995, Commission regulation EC No 1148/2001 of
12 June 2001 – checks on conformity to marketing standards applicable to fresh fruit and vegetables
as amended. The process entails an inspection and detailed certification PRIOR the goods leaving.
These certificates can be produced manually or electronically BUT under strict control of the
authority body and following the prescribed process.
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The government departments that contArolDpeVrisAhaNbleCexEpoDrt standards, rules and regulations are:-
1) National Department of Agriculture (NDA) (Administer the Animal Diseases Act and the
Abattoir Hygiene Act)
a. National Directorate of Veterinary Services
b. Directorate of Plant Health aRndISQuKalitMy (PAHQ)
2) Department of Trade & Industry
3) Department of Health (Administer the Foodstuffs, Cosmetics and Disinfectants Act No. 54 of
1972)
4) Department of Environmental Affairs and Nature Conservation
5) South African Bureau of Standards (SABS)
6) CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora)
Of course, as with the movement of any cargo the fundamentals of moving cargo need to be
considered and acted on accordingly in relation to perishable goods:
• Packing & labelling specifics
• Mode of transport specifics
• Documentation specifics (like the Export Inspection Certificate)
• Customs specifics
• Authority body specifics (like the Phytosanitary Certificate / MBR20 form for medicines)
• Risk and cost management
On a lighter note, a little useless information:
By the time Valentine’s Day dawned in 2010, Lufthansa Cargo would have delivered to Europe
around 450 tonnes of roses on board its freighters or in the belly holds of its passenger aircraft. That
equates to about 24 million roses, or ten full MD-11 freighters. Kenya is among the world’s biggest
rose producers, with more than 280 tonnes of roses sourced from Nairobi. (Ref: Cargo Info News
dated 2 Feb 2010). Now, that’s something to think about – how many inspections were done, how
many documents were produced, how many customs clearances done, etc.
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ADVANCED
DANGEROUS
GOODS
Handling dangerous goods shipments requires specialised skills and knowledge and
tlohcearlulyleasnadnidntreerngautlaiotnioanllsy.aTghaein,toapsicwRoitfhIhSpaeKnrdisliMhnagbAalensd, are strict and well controlled
shipping dangerous goods is
covered in depth in the unit standard 252413.
International Maritime Dangerous Goods code (IMDG latest version) lays down the rules and
regulations with regards moving dangerous goods by surface freight. The details below will give you
an overview of what is involved in moving this type of cargo – DO NOT under estimate the
importance of having someone handle these shipments, that is skilled and qualified to do it, errors
are costly and could result in death if they happen, never mind financial ruin.
FOCUS POINTS WITHIN THE DANGEROUS GOODS PROCESS:
➢ Identify the dangerous goods
➢ Mode of transport to be used
➢ Class
➢ Class division
➢ Exceptions
➢ Packing groups
➢ Packing instruction
➢ Special provisions
➢ Unlisted items
➢ Packing requirements
➢ Compatibility
➢ Types of packing / methods of packing
➢ Packing specs
➢ Performance test
➢ Markings
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➢ Labelling ADVANCED
➢ Documentation
➢ Handling
➢ Loading
➢ Provision of info RISK MA
➢ Reporting of undeclared
➢ State variations
➢ Operator variations
➢ Excepted quantities
➢ Emergency and Occupational Health & Safety procedures
➢ Reporting incidents and accidents
If you now take this list and categorise it into “main categories” and “sub categories” you’ll find it
easier still to retain the information when learning it.
Main Category Sub-categories to be considered
Dangerous goods – the product o Identification
o Class
o Class division
o Exceptions
o Special provision Unlisted items
o State variations
o Operator variations
o Excepted quantities
Transport o Mode of transport to be used
Packing o Packing groups
o Packing instructions
o Packing requirements
o Types of packing
o Methods of packing
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Marking & labelling ADVoANPaCckiEngDspecifications
Handling & loading
Provision of information o Performance testing
Emergencies o Compatibility
o Marking specs
INSURANCE o Labelling specs
RISo KHaMndlAing
o Loading
o Provision of information
o Reporting of undeclared
o Emergency procedures
o Occupational Health & Safety
o Reporting incidents
o Reporting accidents
It is important to note that “not just anyone can advise someone” on insurance issues-
in South Africa the person giving insurance advice has to be FAIS (Financial Advisory
Intermediary Services) compliant.
Insurance forms part of the shipping process, certainly under the “consideration” stage and as a
freight forwarder you should be advising your importers and exporters to take out insurance,
especially with sea freight shipments since a “general average” scenario could put them out of
business.
Important information for an importer or exporter to know about insurance is as follows:
➢ Is the insurance company they are using knowledgeable in MARINE insurance?
➢ Is the insurance company they are using reputable in the industry?
➢ Is the insurance company they are using LOCALLY represented?
➢ What pertinent exclusions are found in their insurance policy?
➢ Is their insurance policy valid?
➢ How to come to an “INSURED VALUE”
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