➢ How to calculate a claim ADVANCED
➢ Understanding general average
➢ Can claims be followed up electronically?
➢ What are the steps in the claims process – including time lines?
➢ When considering insurance for a shipment, the following questions should be asked:
o Why does the shipment neeRdIinSsuKringM? A
o What needs to be insured?
o Where does it need to be insured from and to?
o Who is going to insure it (shipper/ FF agent / customer?) Watch the Incoterms used.
o How much would the insurance cost?
o Which documents are required for insurance purposes?
o When does insurance need to start?
o Is the insurance cover adequate to cover all possible problems for the entire journey?
o What is the claims process?
The insurance company can turn down a claim if the exporter/importer has not fulfilled their
obligations as laid down in their insurance policy.
FINANCIAL
SERVICES
Freight forwarding and clearing agents are NOT “bankers” or “financial institutions” and
need to control their “debtors” very well indeed. The monies that the agent is disbursing
on behalf of the importer or exporter can be large and they could find themselves with
cash flow and other problems if the debtors are allowed to get to big.
In the freight forwarding and clearing world financial issues revolve around and not limited to the
following items:
Negotiating rates (Ocean freight, transport, packers, etc)
Paying disbursements on behalf of the importer or exporter (VAT, customs duties, port
charges, etc) Credit facilities – i.e. customer only has to pay their account 30days from
invoice date or similar examples.
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Finance fees – prime plus a percAentDagVe ANCED
Freight forwarding organisations, depending on the size of the organisation, sometimes offer
financial facilities & assistance to their customers as a “draw-card” to get the business. This doesn’t
mean that they are “giving away money” but rather that they are offering perhaps an “easier”
payment term or something similar that woRrilslIuaSdssdKiestnltyMherecAcuesivtoema ehru.gTehoisrdkienrd. of negotiation is often
carried out when companies win tenders
As a freight forwarding organisation you must always remember that “THERE IS A COST TO
MONEY”... for instance, you cannot just give excellent terms of payment to your customer without
recouping the cost of the delayed payment somewhere else... you will not have a sustainable
business. You need to calculate the effect of giving a customer 60 days to pay their bill -how much
is that going to cost you by not having those funds in your bank account for 60 days since you will
have paid out all the disbursements prior delivery of their goods. This is usually where the “finance
fee” comes into play.
PROJECTS 252423 SO 3 AC 2
The concept of capital projects in the freight forwarding context
The concept of “Project Management” as it applies to freight forwarding is different to the concept as
it applies in other fields such as engineering, although there are connections between the two.
“Project Management” can be described as the specialist forwarding activity associated with the
international movement of capital plant and equipment for major “projects” such as the installation of
an electrical power station, or the construction of a dam wall.
Notable examples of “projects” have been power stations, oil pipelines, oil refineries manufacturing
plants and the like. Projects of this nature involve the shipment of large units such as turbines, reactors,
generators and earthmoving equipment, as well as smaller loads in break bulk form and in containers.
A “project” can also be a single shipment of large abnormal and/or heavy lift cargo such as a massive
earthmoving excavator from one country to a remote opencast mining area in the Democratic Republic
of the Congo.
A project can be based in one country, in which case the work of the project forwarder is import
oriented. On the other hand, a project may involve the coordination of the export movement of project
cargoes from a variety of different countries to a single project site on the other side of the world.
Specialised project forwarders may also become involved in projects where the goods may not transit
nor originate from their home countries. These situations could arise because of project expertise and/
or an understanding of local conditions on a particular continent, and/or because lower costs than
would be incurred in managing a project from an overseas base makes it viable to do so.
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A key characteristic which distinguishes AproDjeVct fAroNm CothEerDtypes of forwarding is that every project
has a defined start and end date. As a result, they are subject to contracts between the forwarder and
the customer (usually the lead contractor in the project).
Some of the parties involved in projects are identified, the turnkey concept explained
Large projects normally involve contractors who undertake the supply or the acquisition of, and
construction and/or installation of, the apnladnRtthaeIntSdypeKequoiMfpemqAeunipt.mTehnetrebecionugldpubrechaanseudm. bSeormoefticmonetsatchteorres
depending on the nature of the project
is a lead contractor who is responsible for the overall co-ordination of a project and the appointment
of sub-contractors and other service providers.
As an example, when an electricity utility company decides to build a power station, it may appoint
a company like Alstom, a French company involved in the supply of electrical equipment, to act as
the lead contractors.
Projects are often handled on a “turnkey” basis. “Turnkey” can be described as “supplying something
in a fully equipped or operational state”. Thus, in the example above, Eskom would expect the
contractors to hand over a fully operational power station once the project has been completed.
Consulting engineers and project forwarders will also have key roles to play.
It is important for the project forwarder to understand the role of each party, particularly the decision
maker(s) on forwarding. Note that more than one project forwarder may be involved with a project.
The project forwarder must still perform the role of what may be called a conventional forwarder. This
role includes Customs work, preparation and processing of documentation, payments to third parties,
rate negotiations and communication etc.
But, in addition to these functions, the project forwarder will appoint and deal with aircraft charter
operators, heavy lift road carriers, ship-owners of vessels with heavy lift gear, and crane hire
companies. And the selection of reliable and professional operators in this regard is very important.
The project forwarder must know about staged consignments and the procedures relating to
temporary imports under rebate.
On occasions it is necessary and/or appropriate to import machinery and plant on a temporary basis.
This would be the case, for example, where a foreign contractor has been employed to lay pipelines or
cables, and special machinery, which is not available in the country, is required for purpose.
The project forwarder may have to position members of staff at the project site where the plant is
being erected and/or machinery and equipment are being installed, or alternatively, will have to pay
frequent visits to the site.
Scheduling requires the planning and timing of activities so that goods move in the most expedient
way, with minimum delay, and cost effectively, from the point of supply to the site of the project.
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Effective scheduling in the first place reqAuirDesVtheAcoN-oCpeEratDion of, and the sharing of information by,
three key parties - the supplier(s); the contractor or project manager responsible for the construction,
installation, building programme; and the project forwarder. (The consulting engineers may also play
a part in this aspect of project work.)
Some considerations to be applied in abnormal cargo movements
The carriage of abnormal ilnoavdosluamnde,hoerahveyalivfRytsinIbSywaKeiirgrheMtq, utoiArbees aircraft which have the capacity to carry
items which are too large flown on conventional freighter aircraft.
Key issues regarding air are:
• The location of site from the airport
• Off-loading/lifting equipment (forklifts, cranes) at the airport and at site, and whether or not
this has to be imported and transported to the airport on a temporary basis for the specific
purpose of handling the abnormal cargo (the word “mobilise” is sometimes used to describe
this action)
• Road delivery to site and whether or not trailers vehicles need to be mobilised.
The exercise of routing of heavy cargo by sea is likely to start with the identification of the most
appropriate ports of loading and discharge. Evaluation will involve the proximity of the port of loading
to the supply point(s) and the port of discharge to the final destination, and the handling facilities at
both ports. Should the ports have wharf and/or mobile and/or floating cranes capable of lifting the
load(s), this widens the choice of shipping line. (Note that the actual lifting capacity of a crane is
dependent on the reach it has to extend to and this might eliminate options on large pieces where the
centre of gravity is situated far from the crane.)
The “projects” freight forwarder does not become physically involved in the road haulage of abnormal
or heavy lift consignments. This function is outsourced to specialists with the necessary trucks and
equipment.
Whilst it is not necessary for the projects forwarder to know the legislation and regulations in detail,
some idea of the requirements will assist him in understanding the forces at work and the disciplines
under which the heavy haulage company has to operate.
An important aspect of the transport of abnormal loads is the warning that is given to other users
of the roads along the route. Hand in hand with this goes the escorting requirements which are
stipulated for abnormal load vehicles.
In the case of onward delivery by rail, issues include availability of low bed wagons, bridges, tunnels,
power lines and the logistics of moving the goods from the rail head to site.
In all cases one would have to check on import and Customs regulations.
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The interrelationship between the role oAf tDheVprAojeNctCforEwaDrder and the Incoterms
The right to appoint the forwarder in the country of supply, and the clearing agent in the receiving
country, depends on the trade terms under which the goods are purchased. When the trade terms are
ex-works, FCA, FAS or FOB, the buyer has the right to appoint both the overseas forwarder and the
local clearing agent. Under the trade terms CFR, CIF, CIP, DES and DEQ, the seller appoints the overseas
forwarder and the buyer decides on the clearing agent. The DDU term dictates that the buyer remains
responsible for Customs clearance. When thRe tIrSadKe teMrm Ais DDP, the seller is responsible for Customs
clearance in the receiving country and can appoint a local clearing agent as well as the overseas
forwarder.
In the case of projects, the decision on which forwarder to use may not be in strict accordance with
Incoterms rules. This means, for example, that the forwarder of the supplier may be empowered to
handle the project on a door-to-door basis even although the trade term is FOB.
Description of the types of road transport equipment typically used for projects as well as
procedures
Note that road route evaluations and selections for the transport of heavy and abnormal loads are
generally done by or in conjunction with a transport company, and are likely to require the input of
consulting civil engineers who are capable of judging the strength of bridges and checking on other
civil engineering matters relevant to the carriage of the goods.
When it comes to the execution of the road delivery, the project forwarder normally relies on the
transport company and/or consulting civil engineers to arrange for provincial clearances of the
route, to secure permits, to order escorts, to ensure that regulations applicable to the various
countries en route are adhered to, and to arrange for the propping bridges, the raising of overhead
cables or the widening of gates. The project forwarder acts very much as the
overseer/monitor/coordinator.
There is a “vehicle” called a “SPMT” which is an abbreviation of Self Propelled Modular Transport.
This vehicle is computers controlled with the ability of carrying very heavy and out-size articles and
placing them with pin-point accuracy.
It is a multi-wheeled unit which can be linked to other identical units (two, three or four etc. and
hence the term “modular”) to create a platform of the size required. It moves at a low speed but,
with its many axles all working independently, it is able to move over rough surfaces while
maintaining the load level horizontal.
The SPMT is relatively new to the market but more will be heard of it in the future as a method of
transporting heavy lifts and abnormal goods.
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Description of the types of aircraft typiAcalDly VuseAd NforCabEnoDrmally large or heavy cargo
The carriage of abnormal loads and heavy lifts by air requires aircraft which have the capacity to
carry items which are too large in volume, or heavy in weight, to be flown on conventional freighter
aircraft.
These specialist heavy-weight and out-of-gauge aircraft must be hired from charter operators.
Details of some of these large aeroplanes, aRs wISellKas sMomAe of the bigger freighters, are given below.
The actual loads will depend on the distance to be travelled, fuel capacity, fuel burn, alternate
airports and the wind factor.
Airbus A300-600ST
Maximum load 47 m. tons
Useable main deck volume 1400 m³
Typical main deck dimensions 37m x 7m x 7m (L x W x H)
This aircraft is known as the Super Transporter or Beluga. It has a distinctive dolphin-like profile.
It has the largest freight compartment cross-section of any existing aircraft (April 2001) and can
accept a 4.88m cross-section load into the main cargo hold.
A specific fixed loading and unloading platform has been developed to enable the transport of very
long and large freight. Technicians are making this platform air-transportable.
Cranes can be used to load directly into the aircraft but more substantial loading equipment is only
available at Airbus production sites.
Antonov AN-124 (Russian)
Maximum load 120 m. tons
Useable main deck volume 1013 m³
Typical main deck dimensions 36m x 6.4m x 4.4m (L x W x H)
Main deck cargo door dimensions 6.4m W x 4.4m H
The AN-124’s nose door is the largest in the world. Special handling devices can load one-piece
cargo up to 120 tons in weight.
Simultaneous operation of the forward and rear loading doors quickens the loading and unloading
manoeuvres.
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To assist with the loading of very large loAadDs sVucAh aNs rCailwEaDy locomotives, oil installations, complete
helicopters and small aircraft, the AN-124 is equipped with two overhead travelling cranes, each
with a capacity of 10 tons. Heavy duty floors, roller tracks and winches add to this capability.
Another unique feature of the Russian which aids loading is its ability to “kneel” by lowering its
undercarriage for or aft.
The aircraft has the ability to operate fromRsnIoSwKandMiceA-covered strips.
Antonov AN-22 80 m. tons
Maximum load 638 m³
Useable main deck volume 33m x 4.4m x 4.4m (L x W x H)
Typical main deck dimensions
80 tons can be carried a distance of 5000km and 50 tons can be carried twice as far. Loading into
the aircraft is via a retractable door and ramp under the rear of the fuselage. Special loading
equipment includes two winches and four roof-mounted gantries. The plane can land on landing
strips in virtually any condition because of the nature of its landing gear.
Ilyushin IL-76 46 m. tons
Maximum load 185 m³
Useable main deck volume 24m x 3m x 2.5m (L x W x H)
Typical main deck dimensions 3.46m W x 3.40m H
Main deck cargo door dimensions
Although this aircraft can carry 46 tons, its more normal payload is 20 tons which it can transport
6400km. The almost square door at the rear of the plane allows ease of access for large and
cumbersome cargo as well as road vehicles. The aircraft has overhead hoists giving a 2.5 – 3.0 ton
lift. There is also provision for floor rollers.
Boeing B747-400F
Maximum load 112 m. tons
Useable main deck volume 605 m³
Typical main deck dimensions 56m x 6m x 3.6m (L x W x H)
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Main deck cargo door dimensions AD3V.4A0mNWCx E3.1D2m H
Nose door dimensions
2.67m W x 2.49 H
The Boeing 747-400F can carry more cargo further than any other commercial jet freighter. It can
transport 112 tons more than 8150km. In the case of the 747-200F model, the maximum load is
lower at 90 tons and the cubic capacity 588RmI³S. K MA
Lockheed L-1011-200F Tristar 59 m. tons
Maximum load 347 m³
Useable main deck volume 39m x 5.8m x 2.0m (L x W x H)
Typical main deck dimensions 3.94m W x 2.92m H
Maximum dimensions for open door
This aircraft has a side-loading door which is large and wide, permitting the loading of 6.1 metre
pallets with outsize cargoes.
McDonnell Douglas MD-11 90 m. tons
Maximum load 487 m³
Useable main deck volume
Typical main deck dimensions 38m x 5.0m x 2.5m (L x W x H)
Maximum dimensions for open door 3.56m W x 2.59m H
The cargo door of this aircraft is located forward in the fuselage. The MD –11C version incorporates
a cargo door at the rear of the fuselage with dimensions of 4.06m W x 2.59m H. The plane is capable
of carrying 20 foot containers.
Description of the types of ship typically used for abnormally large or heavy cargo
As far as seafreight is concerned, a number of specialised shipping lines undertake the movement
of heavy lift (abnormal) cargoes. Membership of an organisation known as the Heavy Lift Club is
open to ocean carriers whose business is usually that of the transport of heavy lift and project
cargoes by means of long-term fleets of self-sustained heavy lift ships. At the time of writing (June
2009), a non-rate discussion agreement was pending with the Federal Maritime Commission (USA).
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The following carriers applied for membAerDshiVp: ANCED
• Australia Asia Line;
• BigLift Shipping BV;
• Beluga Chartering Gmbh;
• BBC Chartering & Logistic GmbH & Co KRG; ISK MA
• Chipolbrok;
• Clipper Projects A/S; Conti-Lines;
• Hyundai Merchant Marine;
• Intermarine, LLC, representing Industrial Maritime Carriers, LLC;
• K/S Combi Lift; Nordana;
• Rickmers-Linie GmbH & Cie KG;
• Scan-Scott;
• Scan-Trans;
• and Universal Africa Lines Ltd
This does not mean to say that other shipping lines will not be able to carry abnormal loads.
Maritime Carrier Shipping (MACS) and its subsidiary Gulf Africa Line (GAL) are two that can. MACS
have ships with gear capable of lifting up to 110 tons and for heavier cargoes would have to use
landside crane facilities for loading and off-loading. MACS have their own offices in Johannesburg,
Durban and a representative in Cape Town. King & Sons are the port agents. MACS assume
responsibility for GAL in this country. Ports of call and transit times can be obtained from sailing
schedules available on the internet. (www.macship.com)
Delmas Shipping operates services in an African context between Durban and Cape Town and the
West Coast ports of:
Abidjan Ivory Coast
Douala Cameroon
Libreville Gabon
Tema Ghana
Lagos Nigeria
Cotonou Benin
Lome Togo
Luanda Angola
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Lobito Angola ADVANCED
Matadi*
Pointe Noire Democratic Republic of the Congo
Congo
*Matadi is a Congo river port reached via Pointe Noire where cargo is transhipped.
East Coast ports serviced from Durban incRludIeSMKapMutoA, Beira and Nacala in Mozambique, Dar es
Salaam in Tanzania and Mombasa in Kenya. Sailing schedules and transit times can be obtained on
the website, www.delmas.com.
Description of the types of port handling equipment typically used for abnormally large or heavy
cargo
Transnet National Ports Authority defines abnormal cargo as:
i. any article with a mass in excess of 25 tons *, or
ii. any article with one or more external dimension exceeding the following:
Length 12.00 metres
Width 2.50 metres
Height 2.87 metres
Abnormal cargo is handled in the ports at owner’s risk.
Transnet National Ports Authority may refuse to accept abnormal cargo for loading onto departing
vessels, or being discharged from incoming vessels, until “satisfactory” arrangements have been
made for its handling and carriage.
Excluded from the definition of abnormal cargo are vehicles on tyres which are not handled ashore
by Transnet National Ports Authority.
*a ton is a harbour ton which, for general cargo is, defined as 1 cubic metre or 1000kg whichever
yields the higher tonnage. What this means is that if the volume in cubic metres is greater than the
weight in metric tons, then the cubic metres becomes the harbour tonnage and vice versa. For
example, the harbour tonnage of a 4.0 cubic metre shipment weighing 3500 kg or 3.5 metric tons is
4. The harbour tonnage of a 3 cubic metre shipment weighting 3500 kg or 3.5 metric tons is 3.5.
To determine the harbour tonnage of empty vehicles, driven or towed, from or to the port, including
trailers carrying boats/yachts and similar indivisible loads, the length of the vehicle has to be
measured. If the load extends beyond the end of the vehicle then the measurement must include
the extended section. Each metre in length is taken to be 2 harbour tons.
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There is no specific definition of heavy lAift DcarVgoA. SoNmCe pEroDject managers consider a heavy lift to be
a unit in excess of 100 metric tons. Others believe that any article weighing more than 25 metric
tons is a heavy lift.
When dealing with heavy lift cargo moving into and out of the country, a major consideration is the
availability of suitable cranes to lift the cargo on and off the carrying vessel.
Bweitahrinaglifintinmgincadptahcaittyhoefavbyetliwfteseanre4btyondsefaRinnditIio1S5nKtoovneMsr i1sA1c0letaornlys in weight, the normal wharf crane
not strong enough. And when the
ship’s gear is also not adequate to lift the cargo, it is necessary to use high capacity floating cranes
which are available in Durban and Cape Town, or the mobile cranes in Richards Bay.
Durban
The big floating crane in Durban has the name of “Ndlovu” with lifting capacities of:
200 tons at a reach of 21 metres
125 tons at a reach of 35 metres
There is a second floating crane in Durban but the maximum capacity is 60 tons at a reach of 6.1
metres.
The port has two mobile cranes each with a 35-ton capacity.
Cape Town
The floating crane in Cape Town has a maximum lift capacity of 200 tons at a reach of 3 metres and
125 tons at a reach of 10 metres.
There is also a mobile crane with a capacity of 72.5 tons
Richards Bay
Richards Bay has no quayside cranes
There are two Reggiane mobile cranes with a capacity of 90 tons depending on the reach and one
Gottwald mobile crane with a capacity range between 90 tons and 200 tons depending on the reach
required.
East London
The port of East London has one mobile crane capable of lifting 72 tons.
Definitions of abnormal loads by sea and road for South African projects.
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ADVANCED
Abnormal Loads
Transnet National Ports Authority
Transnet National Ports Authority defines abnormal cargo as:
i. any article with a mass in excess of 25 tons *, or
ii any article with one or more externRal IdSimKensMionAexceeding the following:
Length 12.00 metres
Width 2.50 metres
Height 2.87 metres
Abnormal cargo is handled in the ports at owner’s risk.
Transnet National Ports Authority may refuse to accept abnormal cargo for loading onto departing
vessels, or being discharged from incoming vessels, until “satisfactory” arrangements have been
made for its handling and carriage.
Excluded from the definition of abnormal cargo are vehicles on tyres which are not handled ashore
by Transnet National Ports Authority.
* a ton is a harbour ton which, for general cargo is, defined as 1 cubic metre or 1000kg
whichever yields the higher tonnage. What this means is that if the volume in cubic metres is greater
than the weight in metric tons, then the cubic metres becomes the harbour tonnage and vice versa.
For example, the harbour tonnage of a 4.0 cubic metre shipment weighing 3500 kg or 3.5 metric
tons is 4. The harbour tonnage of a 3 cubic metre shipment weighting 3500 kg or 3.5 metric tons is
3.5.
To determine the harbour tonnage of empty vehicles, driven or towed, from or to the port, including
trailers carrying boats/yachts and similar indivisible loads, the length of the vehicle has to be
measured. If the load extends beyond the end of the vehicle then the measurement must include
the extended section. Each metre in length is taken to be 2 harbour tons.
2.1.2 Transnet Freight Rail (Rail)
For the purposes of transporting goods by rail, abnormal loads are those having width and/or height
dimensions exceeding:
Width 3.050 metres
Height 2.895 metres, or
2.680 metres, or
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2.285 metres ADVANCED
Any single package or unit weighing more than 18 metric tons is considered to be abnormal.
Goods carried by Transnet Freight Rail by road are considered abnormal if the height and/or width
exceed the dimensions of a standard freighRt cIoSntKaineMr aAnd/or the axle mass load limit is exceeded,
and/or the mass exceeds 24 000kg. Transnet Freight Rail does not generally get involved in the road
haulage of abnormal loads, having sold this division to Eskom.
2.1.3 Road
In terms of an official document on abnormal loads (see later), for road transport purposes an
abnormal load is a material object which, due to its dimensions and/or mass, cannot be transported
on a vehicle or vehicles without exceeding the limitations of either dimension or mass contained in
Chapter VI, Parts III and IV of the National Road Traffic Regulations, 2000.
For example, Section 221 (d) states that no person may operate on a public road, an articulated
motor vehicle, or any combination of motor vehicles, consisting of a drawing vehicle and a semi-
trailer, if the overall length (including drawbar or coupling) exceeds 18.5 metres. So any load carried
on this type of vehicle which exceeds 18.5 metres in length would be considered abnormal.
Section 221 (g) states that no person may operate on a public road, any other combination of motor
vehicles, if the overall length (including drawbar or coupling) exceeds 22.0 metres. In this case
“abnormal” means a length of over 22.0 metres.
An abnormal “vehicle” is defined as a vehicle or a combination of vehicles which, by virtue of its
dimensions or mass, or a combination of both, does not comply with the requirements of Chapter
VI, Parts III and IV of the Road Traffic Regulations.
Heavy Lift Cargo
There is no specific definition of heavy lift cargo. Some project managers consider a heavy lift to be
a unit in excess of 100 metric tons. Others believe that any article weighing more than 25 metric
tons is a heavy lift.
Self-supporting Load
A self-supporting load is one which does not require support beams or similar support mechanisms
right along its length.
A 40 metre concrete beam capable of being transported on two separate trailers, with each trailer
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holding up one of the ends of the beamA, anDdVwiAth NtheCreEbeDing no other intermediate support, is an
example of a self-supporting load.
Centre of Gravity
When loading, lifting or transporting large and heavy items of plant and machinery, it is important
to have them properly balanced so that thReyIdSo Knot MtopAple or cause the carrying vehicle to topple.
Particular care is required when an item is of an irregular shape.
The centre of gravity of an item is defined as the point at which the weight of that item is supposed
to act. This means that the centre of gravity point should be positioned on the carrying vehicle so
that, when appropriately secured, the most stable loading arrangement is obtained.
Transport companies rely on engineering drawings to determine where the centre of gravity is
located.
Engineering Drawings
Engineering drawings are diagrams of the machinery showing details such as external features,
cross-sections, dimensions, weights, securing points, centre of gravity etc. Although these are
required primarily for the purposes of plant installation and construction, they also provide
important information to the road, rail, sea and air carriers.
Securing Points
Securing points are those points on a piece of machinery which are used to tie-down (secure, affix)
the load to the carrying vehicle, or when the load is being lifted.
Securing points must be strong enough to withstand the forces to which the load will be subjected.
It is important that securing points are shown on the engineering drawings of the machinery to
facilitate the planning of load lifts and transportation.
The Customs regulations pertaining to staged consignments rulings
Staged Consignments
When importing plant or machinery as part of a project, it is not always possible to ship an entire
machine as a single shipment.
Some of the reasons for this situation to arise could be:
i. that portions of the complete machine are being supplied from different sources and even
from different countries
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ii. that, for the purpose of erecAtinDg VorAcoNnstCruEctinDg the complete plant or machine, it is
necessary for portions to be shipped in stages so as to facilitate the erection or construction
iii. that, as a result of production problems, not every part of the complete machine is ready for
shipment at the same time.
The consequence of having split shipments is that the duty rate applicable to the individual shipments
may be higher than that applicable to the mRachIiSneKas aMwhAole.
Accordingly, as a concession, and solely in relation to machines which fall within Section XVI (i.e.
Chapters 84 and 85) of the Customs Tariff, the Commissioner for the South African Revenue Service
has provided special arrangements for tariff classification, subject to stipulations which must be
observed, which allow for a single rate of duty to apply to all shipments relating to a machine. (Note
that the South African Revenue Services (SARS) incorporates the Department of Customs & Excise)
These provisions are made by means of Additional Note 1 inserted in the Notes at the commencement
of Section XVI of the Customs Tariff.
This Additional Note reads as follows:
The Commissioner may in his discretion and in the circumstances which he deems exceptional, in
respect of an unassembled or disassembled machine, allow the provisions of General Note A. (2)(a) to
be applied also to an unassembled or disassembled machine of this Section which is imported in more
than one consignment if the mass of such machine exceeds 500 tons or is of a measurement for shipping
purposes exceeding 500 m3, provided the application to enter the unassembled or disassembled
machine in terms of this Note reaches the Commissioner prior to the importation of the first
consignment.
As is explained in the Explanatory Notes to the Customs Tariff, the second part of Rule 2 (a) provides
for complete or finished articles, presented unassembled or disassembled, to be classified under
the same tariff heading (i.e. the same rate of duty is to apply) as the assembled article. When goods
are so presented, it is usually for reasons such as the requirements or convenience of packing,
handling or transport.
[Note that General Note A. (2) (a) is the same as Rule 2 (a)]
Two other notable points covered in the Additional Note are:
i. the size of the machine, which has to exceed 500 freight tons, and
ii. the need to have an application submitted to the Commissioner before the importation of the
first shipment. However, bearing in mind the documentation which the Commissioner has to
review (see below), applications should be made much earlier than this.
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The application for approval must be bAy lDettVerAadNdrCessEedDto the Commissioner for South African
Revenue Services, Department of Customs & Excise, and posted to Private Bag X923, Pretoria 0001;
or hand delivered to 299 Bronkhorst Street, Nieuw Muckleneuk 0181.
Documentation to accompany the application
The application must be accompanied by thRe foIlSlowKingM: A
i. A copy of the contract or order in terms of which the total consignment is being supplied.
ii. A complete list of all the component parts of the machinery showing precisely those parts which
are to be imported as well as those other parts which may be procured locally. This list must
also indicate the mass and volume of each component.
iii. A complete blueprint or drawing on which the imported components are clearly indicated
and which can be reconciled with the list referred to above.
iv. A schedule of the shipping programme indicating when importations will commence, their
progressive sequence, and the anticipated date of completion of the programme.
v. A set of illustrated brochures (if available) to assist in the determination of the tariff heading.
vi. A full list of all spares and replacement parts which will be imported along with the
machinery. The spares and replacement parts must be described separately and separate
values must be shown on the invoices covering each staged consignment.
These details are essential because such spares and parts will be subject to classification and
duty in accordance with the normal tariff rules.
vii. A lucid explanation of the function of the machinery, particularly to provide clear evidence
that the component parts of the machine act as one continuous process for the successful
completion of its function.
viii. An indication of which South African ports and airports are likely to be used during the
execution of the complete consignment.
For an importer to take advantage of the concession, he must prove to the satisfaction of the
Commissioner that the imported components comprise a complete machine or, if the machine is
incomplete, that they comprise an incomplete machine which has the essential characteristics of the
complete machine.
On receipt of an application the Commissioner will most often contact the applicant to arrange for an
interview with the appropriate tariff expert in the Customs head office in Pretoria. At this interview
the applicant should to be accompanied by a qualified representative of his clearing agent and a
technical expert who can explain the construction and function of the machine with reference to the
blueprints or other documents submitted.
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Once the Commissioner approves an appAlicDatiVon,Aa NlettCerEofDinstruction will be issued to the applicant
indicating all the terms and conditions relevant to that approval and the requirements needed for the
completion of import bills of entry.
Conditions generally imposed by the Commissioner include:
* the furnishing of a bond or guarantReeI. SK MA
* some form of control system which cross-references clearance particulars and suppliers’
invoices with the original contract or order.
* an examination after the erection of the machine.
* spares and replacement components imported with the staged consignments must be
classified under their individual tariff headings.
Guidelines for Importation Purposes
In order to facilitate the identification and clearance of consignments at the time of importation,
the following guidelines should be adopted:
* a uniform identification mark should be devised and quoted on all invoices and packing lists, and
preferably on bills of lading and air waybills as well. It should also be applied to all packages
containing goods brought in under the staged consignment ruling. However, this identification
mark must not be applied to packages containing other goods.
* the identification mark should incorporate the brief name of the contract, and if the contract
comprises a series of separate orders, the identification mark should also include the relevant order
number(s). Furthermore, all such order numbers should run in numerical sequence.
* sectional drawings or blueprints should accompany each set of shipping documents. These
drawings/blueprints should cover the component(s) being imported in each staged consignment,
and be capable of identifying the imported component(s) with the main drawing or blueprint
supplied with the application sent to the Commissioner.
* as mentioned earlier, the invoice for each staged consignment must enumerate, separately, the
spares and replacement parts imported with that consignment, together with their values, so that
they can be entered under their correct tariff heading in terms of the normal tariff rules.
* reference to the staged consignment ruling must be made on every bill of entry.
* copies of the staged consignment ruling should be distributed to all persons involved in the process
including those responsible for producing invoices, packing lists, transport documents, and bills of
entry.
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* a register should be kept of all shipmeAntDfileVs rAelaNtinCg Eto Dthe project and all completed files should
be stored together for ease of access and control.
The Customs regulations pertaining to temporary importations
Temporary Importation of Capital Equipment
On occasions it is necessary and/or approRprIiaSteKtoMimpAort machinery and plant on a temporary
basis. This would be the case, for example, where a foreign contractor has been employed to lay
pipelines or cables, and special machinery, which is not available in the country, is required for
purpose.
Schedule 4 of the Customs Tariff provides for the rebate of Customs duty under certain
circumstances. A “rebate” of duty is a “reduction” of duty, and rebate item 490.00 provides for the
rebate of the full duty normally payable on the goods listed, provided they are eventually exported
in the same condition in which they were imported. The wording used in the tariff is:
“Goods temporarily admitted subject to exportation in the same state”.
Rebate item 490.40 provides for the rebate of the full Customs duty payable on:
“Machinery or plant (excluding tower cranes) for use on contract in civil engineering or construction
work, in such quantities and at such times and subject to such conditions as the Commissioner, on
recommendation of the Department of Trade and Industry, may allow by specific permit”.
As at May 2001, goods of a capital nature falling under Chapters 84 and 85 of the Customs Tariff are
all duty free and the Department of Trade & Industry (ITAC) will only entertain an application for a
rebate if duty is involved. This means that the rebate item 490.40 has virtually no further part to
play in the importation of capital equipment and machinery.
However, the situation has created a VAT problem for importers. In terms of Schedule 1 Part A of
the VAT Act, products listed under Rebate Item 490.00 are exempt from paying VAT at the time of
importation. However, this exemption can only be put into effect if there is an ITAC permit. With
ITAC refusing to issue these permits because no duty is payable, importers are compelled to outlay
the VAT and wait for the goods to be exported before applying for a refund.
Although it is unlikely that importers will have any need for the rebate item 490.40 in the
foreseeable future, the conditions and procedures associated with it are nonetheless given below.
The temporary admission of goods under rebate item 490.00 is subject to the following:
i. the goods must be physically examined at the time they are declared to Customs on
importation.
ii. where articles cannot be readily identified by foreign seals, by marks, by numbers or other
identification permanently fixed to them, then Customs may fix a mark or seal to them.
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iii. all bills of entry must be supportAedDbyVa wAriNtteCn uEndDertaking from the importer to the effect
that the goods will be exported within the prescribed period, failing which duty will be
brought to account.
iv. The “Endorsements” field on the bill of entry must bear the words “Commissioner’s letter
dated … authorising clearance under rebate item 490.40 produced”.
v. the goods may be beexpmoardteedinthmrooRruegIhthSaaKnnyonMCeucsAotonmsigsn&meEnxtc.ise office where exports are
permitted, and may
vi. when the goods are exported, the documents which were produced at the time of
importation must be submitted to the Controller. The Controller may require that the
exportation takes place under the supervision of a Customs officer.
vii. exportation must take place within six months of importation, or before the expiry of a
longer period stipulated/permitted by the Commissioner. On application the Commissioner
will normally allow an extension of up to two years. When goods are covered by an
international carnet they must be exported within the period validity set down in the carnet.
viii. with the permission of the Commissioner, goods which have been imported on a temporary
basis may be entered for home consumption and not exported.
Temporary importations require the lodging of security with the Controller for Customs, either in
the form of a deposit (provisional payment), bank guarantee or a guarantee issued by an insurance
company. This security must cover duty and VAT.
The application process involves the following steps:
* the importer submits letter to ITAC providing details of the goods and for a motivation for the
need to import and why 490.40 should apply. The letter would give equipment values as well
as the intended length of time the goods are to remain in the country.
* ITAC issues an authority to import under 490.40, specifying the goods.
* The importer submits ITAC authority to Commissioner, via the local Controller, and requests
approval to import.
* The Commissioner provides a letter of approval stipulating the conditions which are to apply.
In terms of the administration of documents, it is important that all the following are held in
safekeeping so that they are readily available at the time the goods are exported.
* import clearance documents (bill of entry, supplier’s invoice, import permit, transport
document)
* any correspondence with the Commissioner and/or the Controller
* provisional payment, bank guarantee or insurance guarantee.
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ADVANCED
Should the machinery or plant be exported in more than one shipment, it will be necessary to
submit proof of export of all the equipment before the financial security held by Customs will be
released.
Temporary Importation of Equipment, Plant and Machinery on a Hire or Lease Basis
When capital equipment, machinery or plaRnt iIsSteKmpMorarAily imported under the financial conditions
of a hire or lease, the duty payable on the rental or lease amounts must be brought to account on
a DA500 using the purpose code “DP”. The Customs value will be the rent or lease payable on the
goods. VAT is payable in the normal way on the value for VAT purposes.
A provisional payment equal to 100% of the Customs duties payable must be lodged and this will
only be released on proof of export under Customs supervision.
Admission of the goods as a temporary importation is normally granted, in the first instance, for a
period of two years. An extension up to four years is possible on application.
Transnet National Ports Authority Facilities
When dealing with heavy lift cargo moving into and out of the country, a major consideration is the
availability of suitable cranes to lift the cargo on and off the carrying vessel.
Bearing in mind that heavy lifts are by definition over 110 tons in weight, the normal wharf crane
with a lifting capacity of between 4 tons and 15 tons is clearly not strong enough. And when the
ship’s gear is also not adequate to lift the cargo, it is necessary to use high capacity floating cranes
which are available in Durban and Cape Town, or the mobile cranes in Richards Bay.
Durban
The big floating crane in Durban has the name of “Ndlovu” with lifting capacities of:
200 tons at a reach of 21 metres
125 tons at a reach of 35 metres
There is a second floating crane in Durban but the maximum capacity is 60 tons at a reach of 6.1
metres.
Where necessary, the floating cranes can be transferred from Durban to other ports such as
Richards Bay and East London.
The port has two mobile cranes each with a 35-ton capacity.
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Cape Town ADVANCED
The floating crane in Cape Town has a maximum lift capacity of 200 tons at a reach of 3 metres and
125 tons at a reach of 10 metres.
Where necessary, the floating crane can be transferred from Cape Town to other ports such as Port
Elizabeth and Mossel Bay. RISK MA
There is also a mobile crane with a capacity of 72.5 tons.
Richards Bay
Richards Bay has no quayside cranes
There are two Reggiane mobile cranes with a capacity of 90 tons depending on the reach and one
Gottwald mobile crane with a capacity range between 90 tons and 200 tons depending on the reach
required.
East London
The port of East London has one mobile crane capable of lifting 72 tons.
Transnet National Ports Authority Terms and Conditions
The use of the ports under the jurisdiction of Transnet National Ports Authority is governed by a set
of regulations called the Harbour Regulations. These regulations deal with:
Ships – reports, movements and cargo working
Wrecks
Small Craft and Ferries
Pilotage and Pilots
Landing, Shipping and Transhipping of Goods/Cargo
Handling of Flammable Liquids
Explosives
General items
The Regulations make clear reference to the Harbour (now Transnet National Ports Authority) Tariff
Book. The Regulations:
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* stipulate that goods may not be delivAereDd tVo iAmpNorCterEs wDithout the necessary Customs clearance
* give the details required on the landing, shipping and container terminal orders
* indicate how amending orders are to be treated
* stipulate which documents are to be produced by importers and exporters
* describe the procedures to be followed in the case of defective packages held for examination
list RISK MA
* give the times relevant to the receipt of export shipments, and the loading and unloading of
Transnet National Ports Authority road vehicles by exporters and importers
* the goods which may not be placed in Transnet National Ports Authority warehouses
* deal with receipts for goods, including qualified receipts
Transnet National Ports Authority is not liable for any delay in shipment or for the non-shipment of
goods if exporters fail to abide by the Regulations.
Project Managers should acquaint themselves with the detail of the Regulations by reading through
the Regulations in the Harbour (now Transnet National Ports Authority) Tariff Book.
Cranage available for project cargo in South Africa.
Cranes
It is highly likely that a project will at some stage require the use of cranes to lift and position heavy
lift and abnormal load pieces.
Cranes are generally hired for project work and a leading crane hire company is Johnson Crane Hire
(Pty) Ltd which has seventeen branches throughout South Africa.
Cranes supplied by Johnson’s include those produced by Liebherr, Krupp, Grove, Demag and
Tandano. Lifting capacities range from 50 tons to 550 tons with actual weights dependent on the
reach and height a crane has to operate to.
In addition to carrying out the actual lift work, Johnson’s heavy lift division provides an all-
embracing service which includes planning, the engineering of rigging, all ground bearing
calculations, full rigging studies, method statements using CAD software, the supplying of all rigging
beams, equipment and personnel. With their international partners, Johnson’s have the experience
and technology to offer turnkey “ship-and-lift” contracts which include the shipping of the goods,
the heavy haulage, the heavy lifting and the rigging.
The terms and conditions applicable to a crane hire contract deal with the minimum hours which
apply to a contract, insurance, site conditions and supervision, and pricing. There are separate
conditions of hire which are available on request and one would need to study to determine the
obligations imposed on the hirer, and their reasonableness.
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It would be important to determine whaAt thDeVpoAsitiNonCwaEs Dwith regard to the insurance of the goods
whilst in the care of the crane hire company.
It is noted that Mammoet has the largest crane currently available in the world, capable of lifting
3500 tons.
Project Procedures Manual RISK MA
Introduction
The project procedures manual goes to the heart of the project. Many project managers will relate
experiences of how “the wheels came off” some of the projects in which they were involved as a
result of the procedures manual being vague, badly written and incomplete. Whilst there is no doubt
that many of the aspects of projects are standard, the project procedures manual should be very
carefully tailored to the needs of that project.
The hallmark of a good project procedures manual is:
The activities which are to be undertaken in terms of the forwarder’s project contract are detailed.
As time is of the essence in every project it is particularly important that timelines are given for the
completion of each activity.
The respective responsibilities of each and every party who will be involved in the project are clearly
spelled out
Most of the cargo moved in most projects moves smoothly, given reasonable planning. It is however
when things go wrong that the differences between an adequate project procedures manual and an
excellent one, are shown up because it is the excellent projects manual which not only covers normal
situations, but also endeavours to foresee potential problem areas and suggests contingency plans
which may be used to overcome these.
Factors which could go wrong in a project forwarding operation and suggested contingency plans
Whilst the movement of any piece of cargo across the earth’s surface involves transit risks which
have generally been well identified, project work involves a great deal of other risks which require to
be managed if the project is to be a success.
In order to identify potential risks to which a particular project is subject it is necessary to categorise
them. It however always well worth bearing in mind that in many instances risks are interconnected
and that, for instance, a lack of communication in the destination country can cause miss-scheduling
in the country of supply, and so on.
In developing contingency plans to overcome these risks it then becomes necessary for the project
manager to explore all the consequences of a particular risk and to take steps to minimise each of
those through the drawing up of comprehensive contingency plans.
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Potential risks can be classified as followAs:DVANCED
COMMERCIAL
Although the financial viability of the main contractors in capital projects is generally guaranteed,
commercial risks do exist within smaller contractors.
In this regard the forwarding project manager needs to practice great circumspection in appointing
sub-contractors to carry out project work. RTheIsSeKmayMincAlude road hauliers, railways, cargo handling
equipment operators, air and ocean carriers as well as sub agents in outstations where the forwarder
does not have direct representation.
In developing contingency plans to minimise the risk in these appointments it is first of all necessary
to establish what the financial standing of the organisations concerned are. This is a step which is
often omitted by forwarders and although the obtaining of such information is not cheap, it is worth
the effort. The higher the financial risk posed by a sub-contractor, the more meticulous the
contingency planning needs to be.
Another area of commercial risk is that of currency fluctuation. In many instances the project contract
with the forwarder allows for the forwarder to be compensated for adverse currency fluctuations. In
scrutinising the currency fluctuation clauses of such contracts however care must be taken to ensure
that all currency fluctuations are covered and not just the dominant currency of the contract (e.g. US
Dollars).
NATURAL PHENOMENA
Especially in the movement of very large pieces, weather can pose significant risks to the movement
of cargo. There is no doubt that we are living in a period of changing weather patterns, so that what
pertained in the past as far as weather patterns are concerned may not be so in the future.
Main problems caused by weather are:
Icing up of waterways, snowing and icing of overland routes, icebergs, monsoons, flooding,
landslides, hurricanes, typhoons, tornadoes, sand and dust storms and the like.
Although many of these phenomena may hit unexpectedly, certain areas of the world are more prone
to some of them than others (i.e. hurricanes in the USA South East, monsoons in India etc.).
Contingency planning requires knowledge of where these phenomena are likely to occur, in what
season and with what probability in order to put in place plans which are aimed at mitigating their
effects.
More unexpected, but perhaps more devastating are other natural phenomena not directly
associated with weather. These include such things as earthquakes, volcanoes and tidal waves. Here
again, these are associated with specific regions of the world although, unlike weather phenomena
they are not confined to specific seasons.
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Here again, a knowledge of where suchAdDisaVsteArsNmCayEbeDencountered is required and then some
investigation as to whether there is any probability of them occurring during the course of the
project. For example, it is known that the San Andreas fault is going to cause a major earthquake in
the San Francisco area in the near future although it is not yet known exactly when. This is a factor
of concern to anyone attempting to move project cargo into or out of that region.
SOCIO POLITICAL RISK MA
Into this category fall the risks of political instability in the origin, transit or destination countries, and
the risk of civil or labour unrest.
If any of these risks turn into reality they are likely to disrupt the project.
In assessing these risks, the following questions need to be asked of each country through which
project cargo must move (more particularly of the origin and destination countries:
To what degree are the countries concerned democratised?
Have there been any recent changes in governments in the countries concerned and if so how were
these affected?
Are there any records of groups attempting to overthrow any of the governments in the countries
concerned by forceful means?
Have there been any recent incidents of population uprisings in the countries concerned and if so
how were these dealt with?
Are any of the countries engaged in any form of conflict with other countries or do they seem likely
to become engaged in such conflicts?
What are the recent experiences of the countries concerned with regard to labour unrest?
Are their strong organised labour presences in the countries concerned and are the organisations
that we will be dealing with strongly unionised? For those that are, what are their labour relations
like?
Do the labour legislation measures in the countries concerned appear to encourage or discourage
orderly labour relations?
The answers to these questions will give clear indications of the extent to which contingency plans
need to be put in place to minimise socio political risks.
LEGISLATIVE
Capital projects involving the international movement of cargo generally take place over extended
periods, even over numbers of years.
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The longer the duration of the project,AthDe hVigAheNr thCeErisDks of changes in conditions and this may
affect the project. This is particularly so in the area of legislation.
The specific areas of concern for the international forwarder are:
Changes in Customs legislation and in the areas of import and export control
Changes in exchange control legislation
Changes in transport legislation RISK MA
Changes in immigration and emigration legislation which control the movement of project personnel
Prior to appointment the project forwarder needs to gain very good insights as to the legislative
climate of the countries which will be involved in the project (origin, destination and transit). In
certain countries the aim of legislation is to act as the facilitator of business and trade but in others
the legislative environment is very uncertain, where new and contradictory measures are put into
place at the whims of those in power and where interpretation of these measures is often left to
incompetent and corrupt officials.
Contingency planning requires that the greater uncertainty in the legislative environment, the more
attention is paid to putting in place plans which will minimise these risks. These may include
alternative cargo routeings, obtaining of guarantees from authorities that the project in question will
be exempt from legislative changes and others.
MECHANICAL
A nightmare for any project manager is the failure of any of the equipment used to transport or
handle project cargo.
Whilst nobody can be sure that mechanical equipment will not fail, there are measures which can be
put in place to minimise the risks of this happening.
Part of the evaluation of any operator of equipment must include an evaluation of that operator’s
quality management system in general and the preventative maintenance system and records in
particular.
Given the high stakes involved in any project, it is probably well worth paying a premium for the
services of an operator who does have in place a preventative maintenance programme which is
strictly adhered to.
Related to the breakdown of equipment is the fact that certain equipment is not available when
required. This may be caused by operator failure but it may also be caused by changes in cargo
movement scheduling which are not advised to all parties concerned, including equipment operating.
Although emails and established communications distribution lists have gone far in ensuring that
communications are effectively distributed, it is necessary throughout the project to review all
distribution lists constantly and update them as necessary.
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EXPERTISE ADVANCED
A key factor in the success of any project (although this is seldom given the recognition it deserves)
is the expertise of the people involved.
As far as contingency planning is concerned, it is advisable to establish the following in evaluating
potential partners and service providers:
What is the rate of staff turnover in the orgRanIisSatKion McomApared to that of others in the same industry
and locality?
Who are the key people who will be involved in the project?
How long have these people been employed in the organisation?
Is there any succession planning in place within the organisation?
Logistics procedures which need to be dealt with in the project procedures manual
The logistics of a project are, from the forwarding point of view, the heart of the project. Aspects
which need to be considered for inclusion in the project manual are:
Packing, marking and labelling,
SURFACE FREIGHT
Abnormal loads
Breakbulk cargoes
Containerised cargoes:
FCL
LCL/ LCL Groupage
Out of width/ out of gauge
Other specialised cargoes- perishable, dangerous, valuable
Pre-shipment procedures
Loading procedures
Discharging procedures
Delivery procedures
Port facilities and procedures
Warehousing procedures
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Road procedures ADVANCED
Rail procedures
Inland waterway procedures
Seafreight procedures
Specifications- containers and surface cargo handling equipment to be used (mobile cranes floating
RISK MA
cranes etc.)
AIRFREIGHT
Services to be used
Breakbulk cargo- normal
Breakbulk cargo- abnormal
Unitised cargo
Specifications- Unit Load Devices, aircraft and any specialised cargo handling equipment to be used
WAREHOUSING
Locality(ies), size(s) and equipment
The project needs to specify in detail the responsibility for the various aspects of the logistics of the
project.
Documentation and communications procedures to be covered in the project procedures manual
Key project personnel contact lists
Materials/ equipment status report
Documentation origination, deadline & distribution procedures
Use of EDI systems
Pre-advices
Bills of Lading
Non-negotiable waybills/ Express bills of lading
Insurance certificates & declarations
Certificates of origin
Commercial Invoices
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Packing lists ADVANCED
Manifests
Mass and measurement specifications
Engineering drawings
Freight notes RISK MA
Indents
Purchase orders
Clearing & Delivery Instructions- surface & air
Import, export and other statutory permits
Generalised and specialised project customs clearance procedures
General cargo clearing procedures & record keeping
Staged consignment ruling application, clearing & record keeping procedures
Temporary importation application, clearing & record keeping procedures
Bonded warehousing procedures & record keeping
Financial guarantees required
Detailed Harmonised System tariff classification of all project cargo.
Risk management and insurance procedures which must be outlined
Project work involves the forwarder in many more areas of risk than general forwarding and clearing.
During negotiations it will need to be determined which of the parties concerned will be responsible
for managing the risks which have been specified in the file “Identifying Risks in International Project
Forwarding Operations”. In many cases management of those risks involve the putting into place the
contingency plans suggested but in others insurance may be required for example insurance against
civil unrest, the effects of extreme weather and so on.
Once the risks have been assessed and it has been decided which contingency plans need to be put
in place to reduce these as far as is possible, it is time to call in insurance expertise to ascertain how
the remaining risks may be insured. It is well to remember a warning which is often sounded in this
regard- “It is never too early to involve an insurance expert but quite often it can be too late”
It is also necessary for the project manual to specify how the transit risks are to be insured and by
whom. In this context the following information will be required by the insurers:
Name of Insured and his experience in international trade.
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Commodities – whether new, reconditioAneDd Vor AsecNonCd hEanDd
Packing or other protections
Conveyances – whether specially chartered
Journeys and trans-shipments (if any)
Value of goods
Maximum value on any one conveyance anRd IatSoKne pMlacAe
Any cover required over and above normal
Any exclusion of cover over and above normal
Three years claims experience
The project manual will specify how insurance declarations are to be effected, by whom, and when.
In the same way the manual will specify the procedures to be followed when loss of, or damage to,
cargo occurs. This is vital.
The parameters in which the project forwarder is to become involved
It is surprising how often project forwarders find themselves carrying out all sorts of work which was
never contemplated at the start of the project. This is mainly because, as the project progresses,
good relationships are built up between the respective project teams and what once were one off
favours become services which are routinely demanded.
These can range from anything to assisting with immigration and emigration procedures, to finding
accommodation for project staff to sourcing local supplies and the purchasing, storage and delivery
of such supplies.
Whilst there is nothing wrong with taking on these added responsibilities it is as well to sound a note
of caution: some of these procedures are very time consuming and they may tie up resources which
the forwarder can ill afford to be without.
It is for this reason that the project manual needs to be as specific and as comprehensive as possible
in stating exactly what the forwarder’s contractual responsibilities will be.
AS part of the project parameters, the manual also needs to specify the lines of responsibility and
decision-making authority within the project.
Responsibilities for immigration, emigration, personal and household effects
An integral part of any project is the almost constant movement of project personnel in and out of
the destination country. It is very often expected that the forwarder will be asked to assist with the
immigration and emigration formalities for these people.
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Such assistance may also extend to theAfinDdinVgAanNd sCecEuriDng of accommodation, schooling, car hire
and all the other aspects needed to ensure that the people concerned have all they need to function
efficiently and effectively during their respective stays in the destination country.
Certain larger project forwarders have specialised facilities which cater for these aspects but this is
not usual. Most project forwarders, when called upon to carry out these functions, will sub contract
them to specialised, international household and personal effects removals companies who are also
in position to assist with immigration and eRmIigSraKtionMforAmalities.
The project manual must specify how these functions will be carried out, and by whom.
Financial aspects of projects
Surface freight rates
Airfreight rates
Ancillary 3rd party logistics charges such as airport and harbour dues, handling fees etc
Costing estimates
Forwarding tariffs
Clearing tariffs
Tariffs for ancillary services
Credit terms
Forwarders standard trading conditions may need to be modified for project work
Ideally the forwarder would like to have the project subject to the normal forwarder’s standard
trading conditions as these severely limit the forwarder’s liabilities in just about every circumstance
possible.
This is however not always feasible: in many instances the buying power of the customer is such that
the forwarder may be forced into a position of having to accept greater liability than he would
normally.
Where this is the case it is very important for the forwarder to take steps necessary to reduce his
exposure to these increased liabilities.
In the first instance legal advice should be sought to determine exactly what the implications are of
the increased liability. In the second (and this is most important) additional professional liability
insurance may be required.
The project manual must specify the limits of the forwarder’s liability which have been agreed.
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Notes on the parameters which must bAe tDakVenAintNo aCccEouDnt in calculating project cost estimates.
In analysing a project from the information available the first decisions to be made are those around
the packing and protection of the cargo and the second around the mode(s) of transport to be used.
Packing and protection will involve considerations whether cargo can be containerised and if so into
what type of container and, if un-container sable, how it should be packed and secured.
In general, forwarding it is tthheedmooorretoidmopoorRrctoaIsntStthKcoant smMidoerAreatthioannsoaftreentdhiacttamteasttehreiamls oadrerivoef transport.
In project work however in usable
condition and at the right time, even though to achieve this may be more expensive than the most
economical routeing of cargo which may not necessarily be able to offer the same levels of safety
and reliability.
Having made a decision regarding cargo routeing a cost estimate may be attempted. Once again, in
contrast to the costing estimates which are calculated for general cargo, project cargo costing
estimates involve the combination of very many variables in order to arrive at a solution. The costing
therefore needs to be very methodical, ensuring that, for every piece, each variable has been taken
into account.
Notes on the considerations leading to routing decisions for project cargo.
“Calculating project estimates without an Atlas is like trying to play golf with one hand”.
As projects involve the movement of unusually shaped and sized pieces of cargo, routeing is
important. It is found that in many areas of the world where the transport infrastructure has evolved
over a long time (sometimes even hundreds of years), the road infrastructure is simply not suited to
abnormal cargo movement.
In additions, there are natural barriers such as rivers and mountain ranges which preclude the
movement of large pieces, hence the necessity of studying possible routes very carefully and deciding
on the most viable alternative.
In a situation where there are large pieces involved but information regarding the movement of the
cargo is being urgently sought, it needs to be made clear that it will in all likelihood not be possible
to make any final arrangements until such time as proper route surveys and other feasibility studies
have been undertaken.
Techniques and formulas used to calculate volumes of irregularly shaped bodies.
Projects involve the movement of abnormal loads which are often irregularly shaped. An area where
a great deal of confusion often arises is in the calculation of the volumes of such loads for freight
tonnage and similar purposes. It is an area in which the inexperienced project manager can lose a
great deal of money but it is also an area in which, by understanding the principles, involved great
savings are achievable.
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Strictly speaking, for freight calculatioAn pDurVpoAseNs, CtheEvDolume of an irregularly shaped piece is
calculated by putting it in an imaginary box which covers piece entirely and then calculating the
volume of the box by multiplying length, X width, X height. Any empty space left in the imaginary box
is known as “dead freight” because although it is fresh air it will still make up the volume of the
imaginary box and freight will still be payable on it.
It is for this reason that when the shipment of such pieces is planned the professional project
manager will advise the client that, whereRpoIsSsibKle,MpieAces which stick out of the main body of the
abnormal load should be removed and other pieces should be partly disassembled in order to reduce
their freight tonnage volumes.
Consider for example a mobile crane whose cab and engine assembly measured 3200 X 2500 X 3200.
Affixed to the top of this and sticking out horizontally is the boom with dimensions (LWH mms.)
12000 X 1200 X 520.
The dimensions of the imaginary box which would cover this piece would then be (LWH mms.) 12000
X 2500 X (3200 + 520 = 3720) and its volume in cubic metres would be 111.6 m3. If, however it were
possible to ship the cab and engine assembly and the boom separately the total volume would be as
follows;
Cab and engine assembly: 3.2 X 2.5 X 3.2 = 25.6 m3
Boom: 12.0 X 1.20 X 0.52 = 7.488 m3
Total volume = 33.088
Total savings on volume by shipping disassembled: 111.6 – 33.088 = 78.512, which is considerable.
Another aspect of abnormal load freight calculations which becomes the subject of negotiation
between the project manager and those to whom freight and other volume related charges (such as
port charges) become payable is the calculation of the volume of cylindrical pieces.
In geometric terms the volume of a cylinder is π r2 h where:
π = 22/7,
r is the radius of the cylinder, and
h is the height of the cylinder.
In freight calculation terms, the application of this formula is called calculating the volume “on the
round”.
However, in terms of the imaginary box technique the volume of a cylindrical piece will be d2 h where:
d is the diameter of the cylinder and
h is the height of the cylinder
In freight calculation terms, the application of this formula is called calculating the volume “on the
square”.
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What does this mean in practical terms?ADVANCED
Consider a cylindrical piece with dimensions (hd mms.) 12000 X 3500
Calculating the volume on the round in m3 gives us:
22/7 X 1.75 X 1.75 X 12 = 115.5 m3
Calculating the volume on the square in m3 gives us:
RISK MA
3.5 X 3.5 X 12 = 147m3
Thus, if freight is charged on the volume calculated on the square, there is 31.5 m3 of dead freight.
To save being charged for this dead freight requires negotiation with the carriers and harbour
authorities concerned.
In every instance of an irregularly shaped piece it will be noted that the volume calculated on the
square will exceed the volume which is calculated using the geometric formula applicable to that
piece.
Procedures to be considered when having to consolidate different types of cargo on one carrier/
vessel
Almost without exception these days cargo is containerised as often as possible even though, for
some larger pieces, specialised containers such as flat racks and/ or open top containers may be
required.
Where project timing dictates that the shipment of container sable and un-container sable cargo
either as one consignment or, at worst, to arrive simultaneously, the project manager is faced with
a dilemma: which carriers can accommodate both kinds of cargo, or, if it is not possible to use a single
carrier, is it possible to use two vessels whose arrivals can be coordinated to be very close?
Outlining the factors to be taken into account when evaluating risks associated with projects
The Incoterms under which the project is being handled will identify the party (buyer or seller) who
will be responsible for risks during various stages of the project.
It is important for the forwarder to make sure, in calculating cost estimates and in writing an
operations manual and/ or modus operandi, that all risks are managed and that the cost of doing so
is included.
Considerations which must be taken into account at loading and offloading on site of project
cargoes
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Something which can well be overloAokeDd VwAhenNlCooEkinDg at project costings and in allocating
responsibilities between, buyer, seller and freight forwarder are the costs and responsibilities for
loading cargo onto vehicles at point of origin and for offloading the cargo at final destination site.
Especially where abnormal cargo is concerned, these procedures require special arrangements and
not inconsiderable costs.
The modus operandi needs to be very cleaRr oInSwKho MwillAbe responsible for these arrangements and
who will pay the costs.
Outlining the consequences of late delivery
It is normal in project work to find that contractors will be subject to penalties if the project
concerned not completed on time.
This affects the forwarder whose responsibility is to ensure that cargo arrives on site within the
timing parameters of the project. However, the magnitude of penalties payable in terms of late
project completion can be considerable and will easily wipe out any profit which the forwarder may
earn. Since forwarders are in the hands of many third parties on whom they rely for the timeous
movement and delivery of cargo and since there are many factors beyond the control of either the
forwarder or his third-party contractors which could prevent or delay cargo delivery, the forwarder
needs to protect himself from the consequences of delays or even non delivery.
Therefore the modus operandi needs to make it clear that the forwarder cannot be held responsible
for such delays or non-delivery.
Notwithstanding this, consideration may still have to be given to obtaining insurance cover in case
the forwarder is eventually found liable for penalties imposed in the event of delay or non-delivery.
ASSESSMENT CRITERION 3
Customer service requirements of a surface operation are described for a forwarding
organisation.
Specific outcome 1 – assessment criterion 2 covers the fundamentals of customer service. In the
freight forwarding industry, whether you are giving service to an exporter or importer, regardless
of mode of transport the basic service issues remain the same.
It has been said a number of times throughout this unit standard that client service requirements
revolve around:
✓ Doing things timeously
✓ Doing things right the first time
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✓ Ensuring all documentation requAireDd lVocAallyNanCdEintDernationally have been prepared
✓ Ensuring all authority body specifics have been complied with
✓ Consistent, effective communication with all role-players
✓ Smooth and efficient passing of documentation throughout the process
✓ Total compliance to all government rules and regulations throughout the process
✓ Total risk and cost management thrRouIgShoKut tMhe Aprocess
Customs clearing and compliance is no exception, in fact it is probably here that the most
compliance risk is found and considerable attention needs to be paid to all aspects of customs
clearance to ensure compliance takes place.
Never forget the words of wisdom:
✓ 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
Customer service is giving of your best, ensuring customs clearing compliance and ensuring
functions are carried out timeously, these things result in excellent customer service.
One must not forget that you as the freight forwarding organisation need to be customs complaint
as well. This means being registered and accredited with customs as a trustworthy organisation
with high integrity. You need to obey the rules, set a good example and make sure you advise your
importer and exporter customers to do the same.
SPECIFIC OUTCOME 4
Describe the work carried out by the clearing/compliance function in a forwarding operation.
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ASSESSMENT CRITERION 1 ADVANCED
Essential activities carried out by the clearing/compliance function are described for air and
surface forwarding operations as port health.
IMPORTATION OF GOODS – CLEARING/COMPLIANCE PROCESS
RISK MA
1. Importer must 2. Documentation 3. Compliance 4. Customs
have a customs for the shipment with all relative clearance
code number must be in place authority body process
rules, regulations,
permits
5. Cargo release 6. Cargo 7. Cargo delivery 8. Final document
process collection process process batch
9. Payment to 10. Final file
supplier process check for
compliance and
file closure
OVERVIEW OF THE CLEARING PROCESS FOR THE IMPORTATION OF GOODS BY SURFACE
TRANSPORT
The transportation of cargo from overseas and its importation into South Africa is a multi-faceted
operation. It involves specialists in various disciplines, compliance with local and international
procedures, production of prescribed documentation, and the participation of a number of
Government departments and other bodies.
The first step in the importation process is to “clear” the goods through the Department of Customs
& Excise (i.e. to obtain their permission to bring the goods into the country). Evidence of this
clearance must then be presented to the party having custody of the goods. This party could be
Portnet, or a Customs licensed container depot in respect of goods imported in containers or
Spoornet when goods are imported by rail. On goods imported by sea, release must be obtained
from the shipping line, and, in the case of groupage shipments, from the groupage operator. Release
will only be granted by the shipping and groupage operator when they see evidence of Customs
clearance, evidence of the payment of wharfage to Portnet, and freight has been paid to them.
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After these steps have been completed AtheDimVpoArtNer Cor EhisDforwarder/clearing agent is in a position
to collect the goods.
Importation of goods into South Africa is governed by the Customs and Excise Act No. 91 of
1964, as amended.
AenllsiumrpeotrhtastmgouostdbsearceleparroepdebrylythdeecDlaerpeadrtamnRdenIttoSocKfoCllueMscttoamAnys and it is the responsibility of Customs to
duty that is payable.
Some commodities do not attract duty and may be imported duty free.
The types of duty which may be levied are Customs duty, ad valorem duty, countervailing duty,
antidumping duty and safeguard duty.
On behalf of the South African Revenue Services, Customs collect Value Added Tax (VAT) on
imported goods.
The types and rates of duty applicable to the many different commodities imported into the country
are set by the Minister of Finance on recommendations from the Department of Trade & Industry.
Certain goods are subject to a rebate of duty which means that they are partially or totally exempt
from duty. Industrial rebates are listed in Schedule No.3 to the Customs Act and apply to certain
imported goods used in prescribed manufacturing processes.
On other goods a drawback of duty can be claimed. A drawback of duty is a refund of duty which
has been paid at the time importation, on goods used in the manufacture of other specified
products, the latter being subsequently exported. The refund of duty takes place at the time of
exportation.
Goods are classified and described for Customs purposes in accordance with the internationally
accepted "Harmonised Commodity Description and Coding System". The classification procedure
links commodities to a series of numbers called "tariff headings". These are recorded in Schedule
No.1 to the Act, known as the Customs Tariff.
Imported goods are declared to Customs on a document called a “bill of entry”. The value for duty
purposes or Customs value is entered on this form together with the description of the goods, the
tariff heading, quantity imported, duty payable and many other details. Imported goods must be
declared to Customs within seven days of their arrival. The importer's code number must also be
declared on the bill of entry.
Customs require evidence of the shipped-on-board (SOB) date. For every date, and for most foreign
currencies, Customs determine a rate of exchange between the Rand and the foreign currency. The
rate of exchange applicable to the foreign currency of the supplier's invoice, on the shipped-on-
board date, is the one used for determining the value of the goods for inclusion on the bill of entry.
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The bill of entry is presented to CustomAs toDgeVthAerNwiCth EtheDtransport document (e.g. bill of lading),
importer's clearing instructions, supplier's invoice and import permit. On acceptance of the bill of
entry by Customs, goods are said to be cleared for home consumption, unless the clearance is into
a bonded warehouse.
Duty is applied to the Customs value which is taken as the "transaction value" or the "price actually
paid or payable" to the supplier, subject to certain conditions. The determination of the transaction
value can be a complicated process. RISK MA
The supplier's invoice is the key document in the determination of the Customs value and the
correct tariff heading. It is against the invoice that Customs verify that the details declared on the
bill of entry are correct.
It is important, therefore, that all relevant details are recorded on the supplier’s invoice.
The four most important documents required to clear and deliver imported shipments by surface
(i.e. sea, road and rail) are:
Supplier's Invoice The supplier’s invoice establishes the origin, value, and description of the
goods.
Importer's Clearing
Instructions The Customs Act [Section 29(1)(c)] specifically requires that importers
produce written clearing instructions with the bill of entry. The instructions
must indicate the clearance procedure desired, e.g. must duty be paid, or the
goods placed in bond, or should the goods be cleared under rebate etc. (See
Section 2.5 of this course with regards to clearing instructions on imports
transported by road.)
Transport
Document Section 29(1)(c) of the Customs Act also requires importers to submit a
transport document with the bill of entry. In the case of seafreight imports
the transport document is the bill of lading, non-negotiable waybill or arrival
notification. For imports by rail the transport document is the rail
consignment note and for road imports it is the road consignment note or
vehicle/truck manifest.
Import Permit An import permit is required for a limited number of commodities. It is illegal
to import goods which are subject to permit, without first obtaining one from
the authorities in Pretoria. Permits are valid for one calendar year. When an
importer uses more than one port of entry, the main permit should be "split"
into smaller permits of smaller quantities.
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The bill of lading serves a number of purApoDseVs. IAt isNusCedEtoDclaim title to goods. It indicates at which
port freight is paid or payable. It gives the marks and numbers for the identification of goods. And
it is the transport document which indicates to Customs that the goods have been shipped, by sea,
from the country of export. To be accepted as a supporting document to the bill of entry, the bill of
lading must be (copy or original) be endorsed with the “shipped on board” date.
An original bill of lading is required to obtain release of goods from the shipping line. In the event
of an “original” not being to hand, releaseRcIaSn Kbe aMrraAnged with a Delivery Order, issued by the
Ship's Agent on the strength of a guarantee from the importer's bank. But the original bill of lading
must be produced by the importer before the bank guarantee will be cancelled.
Goods will only be released after the release copy of the bill of entry has been submitted to the
appropriate party (e.g. shipping line, Spoornet, or container depot). On seafreight shipments it is
also necessary for freight to have been paid to the shipping line, and payment commitments such
as wharfage to have been settled with the port authorities. Different release procedures apply to
break-bulk, LCL/groupage and full container load (FCL) cargoes.
It is preferable for goods which are imported by sea to be Customs cleared and ready for release
before the carrying vessel arrives at the port of destination. There are costly penalties for the late
clearance of imported cargo.
When goods are damaged, lost or incorrectly delivered, special procedures are followed in order to
protect the interests of the importer and other parties involved in the transport chain. Importers or
their agents must submit claims promptly and within prescribed periods to avoid those being time
barred.
Importers may clear their imported goods through Customs themselves. But most companies elect
to use clearing agents for their knowledge of the Customs Act, Customs Tariff and clearance
procedures. Agents provide representation throughout the country, and offer a variety of services
in a cost-effective manner, including credit facilities.
Many agents belong to the South African Association of Freight Forwarders, SAAFF, which provides
excellent assistance and know-how in dealing with the Government and other bodies involved in
the importation process necessary for freight to have been paid to the shipping line, and payment
commitments such as wharfage to have been settled with the port authorities. Different release
procedures apply to break-bulk, LCL/groupage and full container load (FCL) cargoes.
IMPORT DOCUMENTS -SOURCE AND/OR PREPARATION
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ADVANCED
The role of the forwarder/clearing agent is to successfully arrange for imported goods to be:
• Cleared through Customs
• Released by Portnet, by the shipping line, and, where applicable, by the groupage operator
and container unpack depot
• Collected and delivered to the impoRrteIrS. K MA
One striking characteristic of this “clearing” process is that it is “document-intensive”! Some of
the documents are prepared by the clearing agent; others are obtained from external sources.
Customs Documents
All these documents must be prepared by the clearing agent. Clearing agents employ
specialist entry clerks to carry out this function. Most of the entries will be prepared on
computer (i.e. not manually written out.)
• Customs Bill of Entry
The bill of entry is the document on which the importer declares goods and duties to
Customs, and applies for Customs clearance.
The most commonly used bill of entry is the SAD 500, titled “Bill of Entry (direct)”. (See
Annexure 1) A glance at this will tell you that there are many details which have to be
declared on the document. Some of the more significant details are:
➢ Description of the goods
➢ Tariff code (i.e. the tariff heading)
➢ Customs value
➢ Transport document number and other information relating to this document
➢ Customs duty and other amounts payable to Customs
➢ Custom code
➢ Purpose code
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The SAD 500 is used for a numbeAr oDf dViffeAreNntC“pErocDedures” at the time of importation. Each
“procedure” or purpose is identified by a “Purpose Code” which must be inserted in the box
situated in the top left-hand corner of the document.
• Procedures for which the SAD 500 is used:
✓ When duty is paid for/or admitted at the time of clearance, or when goods are duty
free. (Purpose code "DP") RISK MA
✓ When an importer is not going to use his goods immediately and elects to have them
cleared into a bonded warehouse. (Purpose code "WH"). This entry procedure is
useful when an importer wants to postpone payment of duty or anticipates a
reduction in the rate of duty applicable.
✓ For clearance into a bonded warehouse pending subsequent export. (Purpose code
"WE")
✓ When imports of raw materials for use in local manufacture, in certain specified
industries, are subject to a rebate under Schedule No.3 to the Customs Act. (Purpose
code "IR")
✓ For imported goods specified in Schedule No.4 to the Customs Act which are subject
to a General Rebate. (Purpose code "GR")
Customs endorse one copy only of the bill of entry with the words “release copy” or “release
authorised” (or similar). This is a very important document on containerised shipments
because it must be surrendered to the party holding the goods in order to obtain their
release for collection and delivery to the importer.
The party “holding” the goods could be the shipping line, depot operator, Portnet or any
other party required to acquit the manifest upon which the goods were listed on
importation.
When goods have been detained by Customs for examination, and subsequently released,
the release document is the Customs form DA 74 titled “Release Order for Goods Originally
Detained.” (See Annexure 1)
• Bonded Goods
Whilst goods may be cleared into bond on importation, using the SAD 500 form with purpose
code “WH”, the subsequent clearance of the goods out of a bonded warehouse is achieved
using the bill of entry form DA 600, titled “Bill of Entry (ex-warehouse) Imported Goods”,
with one of the purpose codes “XDP”, “XIR”, “XGR” etc. (See Annexure 1).
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Goods may be moved from one bAonDdeVd wAarNehCouEseDto another; and exported from a bonded
warehouse.
• Sight Entries
An importer, who is unable to give an adequate description of goods being imported, may
request Customs to allow an examination to take place under a Bill of Entry Sight (Form DA
e2x2a).m(SineaetAionnn.eDxuutryeis1)nTohtidseisclaarteedmopRnoraIaSrByilKlmoefaMEsnutrArey aSnigdhat.proper entry must follow after the
• Removal in Bond (RIB) Entries
Undeclared goods entering the country at a port such as Durban may be "removed in bond"
to another Customs controlled area such as Bloemfontein, for final clearance at the latter.
The bill of entry used for this purpose is the form DA 570. (See Annexure 1) No duty is
declared or made payable on a RIB entry.
• Provisional Payments
A "provisional payment" (P/P) or cash deposit may be made to Customs, to obtain early
release of goods in the event of commercial documents not being immediately available to
determine precisely the correct tariff heading and duty, or descriptive literature being
awaited for by Customs for the same purpose. Provisional payments are also made to cover
duty liabilities on goods which are imported on a temporary basis.
One has to apply for permission to make a provisional payment and this is done on the form
DA
70, titled “Application to Make Provisional Payment”. (See Annexure 1)
Provisional payments of the type described here are temporary outlays and must be
recovered from Customs. In industry parlance one “liquidates” a provisional payment. To
liquidate a provisional payment the importer/clearing agent has to meet the obligations
under which the P/P was permitted.
The provisional payment form is also used to pay penalties to Customs and these, of course,
are permanent outlays and are not refundable by Customs.
• Vouchers of Correction (VOC)
Corrections to bills of entry prepared on the form SAD500 are made on an entry called a
"Voucher of Correction". (Form DA 504).
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As an example, should duty havAe bDeeVn uAndNerC-deEclDared on a SAD500, then a DA 504 would
have to be issued to correct the position and to bring the shortfall in duty to account. (See
Annexure 1)
Similarly, corrections to the form DA 600 are made on the Voucher of Correction, form DA
604. (See Annexure 1)
Portnet Documents RISK MA
All these documents are prepared by the clearing agent.
• Landing Delivery and Forwarding Order (LDFO)
The Landing Delivery and Forwarding Order (Landing Order or LDFO) is the document
submitted to Portnet Revenue on imported break-bulk and bulk shipments. It acts as an
instruction to deliver the goods to the consignee or release them for collection. It is the form
on which landing charges and wharfage are declared and made payable. It must be Customs
stamped which informs Portnet that the goods have been cleared for home consumption,
and may be released to the importer/consignee.
Many clearing agents have designed their own slightly modified Landing Order forms.
The document studied here reflects the official structure. Please refer to the marked
document in Annexure 2.
Block 1 This block can be ignored
Block 2 Portnet insert their “order” reference number here.
Blocks 3-5 This line is for the port of entry, the date the form is completed and the
reference number of the clearing agent or importer.
Block 6 Space for the name and full address of the consignee.
Block 7 The destination point must be recorded here.
Blocks 8/9 Railage may be prepaid before despatch or at destination. The choice must be
indicated as well as the account number the party responsible for paying the railage has with
Spoornet.
Block 10 Name of the incoming ship.
Block 11 Port of shipment.
Block 12/13 Bill of lading number and date.
Blocks 14-16 This line is for the value for wharfage purposes (the same as the Customs
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value), and the volume and weight/AmaDssVofAtheNcConEsigDnment (both very important details as
the harbour tonnage is determined from these).
Block 17 This set of boxes can be ignored.
Block 18 The marks and numbers as they appear on the goods are entered here. These
details are normally taken from the bill of lading and important for identifying the correct
goods when collecting the goods from RtheIhSaKrbouMr. A
Block 19 Number of packages (cartons, crates, drums, pallets etc) is recoded here.
Block 20 Space for a description of the goods.
Block 21 The mass of the packed goods is recorded here by line item. If there are three
different items described in block 20, there should be three different masses. Remember that
the harbour ton of some products is based on mass alone and each product needs to be
looked at separately.
Block 22 Space for the Customs bill of entry number.
Block 23 Space for the total mass of the goods. This should be the same as that recorded
in block 16.
Block 24 The total number of packages must be recorded in writing
Block 25 The value recorded in block 14 must be written out here.
Block 26 This section of the form is for the calculation of landing charges and wharfage.
Other charges such as late order charges, storage etc are also entered here.
For Landing Charges, the tonnage and the rate in Rands are inserted. For wharfage the value
and the percentage applicable are recorded.
Details relating to other charges will depend on the nature of the charge. For storage the
details would be days and the rate per day.
VAT must be applied and the total amount payable inserted.
In the event of importers successfully negotiating special concessions from Portnet, these
would be shown as a “rebate”. This seldom occurs.
The columns “commodity code” and “rate code” can be ignored.
Block 27 The account number which the party responsible for payment of the charges
(clearing agent or importer) with Portnet must be recorded here.
Block 28 Space for Portnet’s date stamp.
Block 29 Space for Customs date stamp.
Block 30 The party completing the document must sign it.
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ADVANCED
• Container Terminal Order (CTO)
On containerised cargo the Container Terminal Order replaces the Landing Order as an
advice on the importer’s/consignee’s delivery requirements. Wharfage is not declared on a
CTO but on a form T1423 called Cargo dues (Wharfage Clearance) (See section 2.2.3 below).
Containers are moved into and out of container terminals under the documentary authority
of a Portnet CTO in the case of termRinaIlsSsKituaMtedAin coastal ports, and a Spoornet CTO in the
case of inland terminals.
There are different CTO’s for exports and imports.
Under carrier haulage conditions, the shipping line completes the CTO on instructions
received directly from the exporter or importer, or via an agent. The CTO is then submitted
to Portnet/Spoornet for authorisation after which the shipping line arranges the movement
of the containers to or from the terminal.
When merchant haulage applies, the importer or exporter, or the forwarder, completes the
CTO, has it authorised and makes the necessary transport arrangements.
There must be a separate CTO for each and every container. For hazardous goods there is a
special CTO marked with a big red cross (X).
It is mentioned here that South Africa’s inland container terminals are under the control of
Spoornet. At City Deep and Pretcon (Pretoria) Portnet still have a presence but at the other
inland terminals all the normal Portnet functions are handled by Spoornet.
The CTO document is produced in a set of seven copies, the distribution of which is colour
coded. Not all the copies are exactly the same. The intended distribution is not necessarily
being followed at every terminal but, for the purposes of this study, the intention is as
follows:
1st white Portnet Revenue
2nd white Portnet’s client’s accounting copy (e.g. Safmarine, importer, agent)
Green Control copy held by the transporter (Roadwing, Cross Country, Freight
Dynamics)
Blue Importer
Yellow Container depot or park to which the empty is delivered
Purple Freight Dynamics (Portnet cartage) or trucking company’s driver
Brown Portnet’s client’s operational copy
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ADVANCED
Where additional copies are required, photocopies are made.
At a Spoornet-controlled terminal, the position would be:
1st Portnet Revenue
white
RISK MA
2nd
white Spoornet’s client’s accounting copy (e.g. Safmarine, importer, agent)
Green Held by Spoornet for control purposes
Blue Importer
Yellow Container depot or park
Purple For the haulier for control purposes
Brown Spoornet’s client’s operational copy
Completion of an import CTO is as follows. Please refer to the marked copy an “IMPORT”
CTO in Annexure 3.
Block 1 The name of the importer or the importer’s agent, and preferably the
address as well, is entered here.
Block 2 This block is for the consignee which may be the same as the importer or may be
another party. If the on-carriage is to be by rail and not road, the rail destination
must be inserted.
Block 3 This section has three options:
1. Landing order
2. Transport order
3. Combined order
If the document is used only as a landing order (1), it means that no instruction is being given
to Portnet regarding the delivery of the container.
When the document is marked “2”, then the CTO is a delivery instruction only to Portnet.
A combined order (3) is both a landing order and a transport order.
Block 4 This block is for the Portnet “Sequence Identification Number” (SIE) which
is obtained from Portnet.
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Block 5 This space is foAr tDheVreAfeNrenCceEnDumber of the party completing the
Block 6
Block 7 document.
Block 8
This space is used to record the Spoornet Intac number (i.e. the FTO
Block 9 document number), supplied by them, when delivery is by rail.
i.
ii. This block is to record the container park or yard to which the empty
iii.
Block 10 container must be returneRd aIftSerKunpMackAing.
Block 11
Block 12 The “wharfage payable” section is provided to advise Portnet which party is
Block 13 responsible for the payment of wharfage. This can be either the container
Block 14 operator or the importer/agent although it is generally the latter. The gross mass
Block 15 of the container (tare plus contents) must be recorded in kg.
Block 16
When the container is to be on-forwarded by rail, the person completing the
Block 17 CTO must indicate:
whether railage will be prepaid before despatch or paid at destination
whether railage will be paid in cash or debited to a ledger account
the ledger account number if applicable
When railage is to be debited to a ledger account at destination (i.e. “to pay”),
the name of the party holding the ledger account must be recorded.
The name of the container operator/shipping line is entered here. Companies like
Safmarine and P&O Nedlloyd have their names pre-printed in this space.
This space can be used to record the collection date and time (am or pm).
The mode of transport to be used to carry the container from the terminal is
recorded here.
If collection of the container is by rail, the truck number can be inserted in this
block.
The name of the incoming ship, the voyage number, and the ports of shipment
and discharge are entered into the four spaces provided.
In this space a description of the goods must be given together with the container
number and seal number. The tare weight of the container may be recorded in
this space as well.
The size of the container must be declared by crossing the appropriate box.
(Students will be familiar with the terms 1C 1CC from earlier sections of the
course) “Special” refers to “open top”, “reefer” “flat rack” etc and the size of such
container must be recorded.
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Block 18 The mass of the contenAts iDs wVritAtenNinCthEisDcolumn.
Block 19 A cross is used to indicate whether the container is an FCL, LCL or empty (MT).
Groupage boxes would be recorded as “FCL”.
Block 20 If the container is a reefer container which requires temperature control, the
Block 21 temperature settings are to be recorded here. Use of the word “minus” is
preferred to the symbol “ –R“.I(SWKriteMminAus 8ºC and not – 8ºC)
This section of nine spaces can be ignored.
Block 22 The Portnet stamp is placed here. It will be noticed that only the two white copies
have this block. Nevertheless, Portnet should and may stamp every copy.
Block 23 The Container Operator’s Stamp must be obtained before Portnet will accept a
CTO. Safmarine have this space pre-printed with their logo.
Block 24 From Portnet’s point of view, this section for harbour charges need not be filled
in as all the other details on the document will enable them to calculate the
applicable charges and to raise an invoice. However, importers generally need to
know what disbursements are being made on their behalf by their clearing agents
and it is usual for terminal handling charges and any other applicable charges to
be inserted here. The type of charge and the amount is normally sufficient. (e.g.
THC R410.00) The headings “Sub-code” and “Rate code” can be ignored.
Any rate reduction negotiated with Portnet would be shown as a “rebate”.
Block 25 It is necessary to record the wharfage clearance number on the CTO. At some
ports the date of the wharfage clearance may be required as well as the bill of
entry number and date.
Block 26 It is also necessary to insert the account number which the party paying Portnet
has with Portnet.
Block 27 The name of the person completing the CTO, the date and place of completion
and that person’s signature are recorded in the three spaces provided.
It was mentioned earlier that not all the copies of the CTO are the same. The differences are
not major and are there mainly to enable the various parties to record collection and
delivery details.
(YOU NEED TO STUDY A SAMPLE CTO SET -IT HAS NOT BEEN INCLUDED AS AN ANNEXURE.)
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White ADVANCED
copies
Blue copy The two white copies are identical but have no record of the container
movements.
Yellow
copy The blue copy is for the importer/consignee (receiver of the container for
Brown unpacking) to record the time and date received, and the time and date the
copy
Purple transport company should return for collection of the empty. When the empty
copy
Green is collected, the ttrhaenspcoonrttRacionImeSrpKainsyMnisortAeqrueiareddy,tothreecroerdistheprtoimviesioannd date. If,
Copy on collection, for the
importer/receiver to record a second collection time.
The yellow copy has certain sections blacked out. The container yard/park is
required to record the time and place the empty is received. This information is
automatically copied onto the purple and brown copies. It does not appear on
the blue copy kept by the importer.
The brown copy has all the information entered on the yellow and blue copies.
The same as the brown copy.
The green copy has the consignee’s time and date record of receiving the
container for unpacking and the instruction to collect the empty but not the
other collection and delivery details.
All the coloured copies have provision for the driver number, hauler number and semi-trailer
number.
It needs to be emphasised again that not all ports are processing the CTO in exactly the same
manner. Similarly, clearing agents are not all completing the document in the same way. And in
certain cases, shipping lines have printed their own CTO’s with slight modifications to the Portnet
format. There are no hard and fast rules but students should feel confident that their knowledge
of how to complete the CTO, and its purpose, will not let them down.
Another issue to remember is that the present system will change as and when Portnet
progresses its EDI developments.
• Wharfage Clearance (Cargo Dues)
A wharfage clearance is used to declare the wharfage payable to Portnet on imported
containerised shipments.
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