Knowledge Module 1 Learner Guide

SAQA 96368 Knowledge Module 1

Inadequate infrastructure is a major deterrent for Africa to achieve its full growth potential.
Hence, meeting the demand for key infrastructure, both physical and social is a priority area
for the countries in the region. Various reports indicate that inadequate transport
infrastructure adds around 30-40 percent to the costs of goods traded among African
countries.

Since Africa is home to 16 landlocked countries, poor and underdeveloped transport
infrastructure limit accessibility to consumers, hamper intra-regional trade and drive-up
import and export costs. A better transport and logistics infrastructure provide efficient
transport services to other sectors apart from mining and natural resources, resulting in a
better standard of living for its citizens by bringing agricultural and manufacturing products
to market.

Although African Governments, financial institutions and the private sector have played
instrumental role in boosting regional integration, the levels of continental integration have
remained relatively low. Intra-regional exports stood at 17.7 percent of the total exports of
Africa in 2016, increasing from 11.7 percent in 1996.

This is almost insignificant compared to 55.2 percent of intra-regional exports in case of
America, 59.4 percent in Asia, and 68.7 percent in Europe. Infrastructure insufficiencies play
a major role in hindering Africa from fully reaching its potential – trade and growth. What
specific type of infrastructure directly affects international freight forwarding operations?

Roads

Roads dominate the transport sector in most African countries, covering 80-90 percent of
passenger and freight traffic. The World Bank has estimated that about US$ 200 billion of
trade in Africa is carried by the region’s trunk road network comprising stra tegic trading
corridors linking deep seaports to economic hinterlands.82 Globally, road transportation is the
mode that has expanded the most over the last 50 years, both for passengers and freight
markets. This represents a dramatic change in the built environment with the massive
addition of road infrastructures supporting urban mobility and connecting cities.

82 https://www.tralac.org/images/docs/12896/connecting-africa-role-of-transport-infrastructure-exim-bank-
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The spatial cover of road transportation is extensive, but its scope remains local and regional.
Growth in road freight transport has been fuelled mainly by trade liberalisation. The growth
of the loading capacity of the vehicle has improved, and vehicles have been adapted to freight
market segments such as perishables, fuel, construction materials, and containers. An array
of problems, such as the growth of fuel consumption, increasing environmental externalities,
traffic congestion, and safety (accidents), have also emerged.83

Rail

Most of the railway lines in Africa were constructed by mining companies during the colonial
times in order to connect mines and other natural resources to ports. The total rail network
size for Africa as a whole is 82,000 km, and 84 percent of which are operational, with the
remainder closed due to war damage, natural disasters, or general neglect and lack of funds.
Most of the rail lines are low-speed, small-scale, undercapitalised networks carrying low axle
loads. Except for the Republic of South Africa and few countries in North Africa, most rail
networks in Africa lag behind those in most other regions in the world. Economic,
technological, and institutional conditions in the regionhave further aggravated the situation,
resulting in outdated rail infrastructure.

The geographical nature of the continent with large number of landlocked countries and small
sized economies necessitates development of high-capacity and efficient rail network.
According to the International Union of Railways, trains in Africa carried about 133 billion
tonne-kilometres of freight in 2016, decreasing from 136.5 billion in 2015. Out of that, 85
percent was in the Republic of South Africa, which has a modern network. Africa’s share in
total global tonne-kilometres of freight was just 2 percent in 2016. African rails carried 654
million passengers, with passenger kilometres of 23.0 billionin 2016. There are various drivers
that could create further opportunities for railway development in Africa. Growing
urbanisation and industrialisation in the region will pose new transportation challenges which
are better suited to be handled by railways.

83 https://transportgeography.org/?page_id=1756

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Africa, being home to a variety of natural resources could use railways to transport large
volumes of goods such as bulk minerals and commodities. 84

Although railways are a product of the industrial revolution, they have been affected by
continuous innovations, technical, regulatory, and commercial changes, which have improved
their capacity and efficiency. Rail transportation is thus as important in the 21st century as it
was in the late 19th century. One innovation relates to the quality of the rail infrastructure,
particularly rail tracks (e.g., better steel, concrete ties), which determines the operational
characteristics of their use, such as speed, permitted weight, maintenance, and resilience to
the environment.

The global trend involves the closure of unprofitable lines as well as the elimination of several
stops. Over the last 50 years, with the downsizing of rail transportation, while traffic was
moving to other modes, rail companies abandoned lines (or sold them to local rail
companies), removed excess terminals and warehousing capacity, and sold off some
property.

In addition to energy efficiency (the fuel efficiency of locomotives has increased by 68%
between 1980 and 2000) and lighter equipment, the usage of double-stack cars has
revolutionised rail transportation with additional fuel efficiency and cost reductions of about
40%.
Depending on the service and type of commodity carried, rail can be 1.9 to 5.5 more energy-
efficient than trucking. Unit trains, carrying one commodity-type only, allow scale economies
and efficiencies in bulk shipments, and double stacking has greatly promoted the advantages
of rail for container shipments.85

Ports

Ports are points of convergence between two geographical domains of freight circulation
(sometimes passengers); the land and maritime domains. While the maritime domain can
involve substantial geographic coverage related to global trade, the land domain is related to
the port’s region and locality. The term port comes from the Latin portus, which means gate
or gateway. Historically, ports emerged as safe harbours for fishing, and those with
convenient locations became trade hubs, many of which of free access and designed to
protect trade.

84 https://www.tralac.org/images/docs/12896/connecting-africa-role-of-transport-infrastructure-exim-bank-

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85 https://transportgeography.org/?page_id=1759

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Image: Port of Ngqura known as COEGA in South Africa.

As such, they became nexus of urbanisation, with several becoming the first port cities playing
an important role in the economic welfare of their regions. Today, many of the most
important cities in the world owe their origin to their port location. The port is
a multidimensional entity at start anchored within geography, but also dependent on its
operations, governance structure and embedded within supply chains.

As terminals, ports handle the largest amounts of freight, more than any other type of
terminals combined. For handling freight, port infrastructures jointly have to accommodate
transhipment activities both on ships and inland and thus facilitate convergence between
land transport and maritime systems. In many parts of the world, ports are the points of
convergence from which inland transport systems, particularly rail, were laid. Most ports,
especially those that are ancient, owe their initial emergence to their site as the great majority
of harbours are taking advantage of a natural coastline or a natural site along a river. All the
main port constraints have a significant impact on their operations, which are part of the port
performance continuum.

• Maritime access, which refers to the physical capacity of the site to accommodate
ship operations. It includes the tidal range, which is the difference between the high
and low tide, as normal ship operations cannot handle variations of more than 3
meters. Channel and berth depths are also very important to accommodate modern
cargo ships. A standard Panamax ship of 65,000 deadweight tons requires more than
12 meters (40 feet) of depth. However, about 70% of world ports have depths of less
than 10 meters and are unable to accommodate ships of more than 200 meters in
length. Many ports are also impacted by sedimentation, particularly ports in river
deltas. This requires continuous dredging, which adds to the costs of port operations.
Some river ports may be impacted by periods of flooding and drought, while other
ports may be impeded or closed during winter because of ice conditions.

• Maritime interface. Indicates the amount of space that is available to support
maritime access, namely the amount of shoreline that has good maritime access. This
attribute is critical since ports are linear entities. Even if a port site has excellent
maritime access, namely deep-water waterways, there may not be enough land
available to guarantee its future development an expansion.

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• Containerisation has expanded the land consumption requirements of many ports. It
is therefore not surprising to see that contemporary port expansion projects involve
significant capital investments to create artificial port facilities providing more room
for this interface.

• Infrastructures and equipment. The port site must have infrastructures such as piers,
basins, stacking or storage areas, warehouses, and equipment such as cranes, all of
which involve high levels of capital investment. In turn, these infrastructures consume
land which must be available to ensure port expansion. Keeping up with the
investment requirements of modern port operations has become a challenge for
many ports, particularly considering containerisation, which requires substantial
amounts of terminal space to operate. Modern container terminals rely on a unique
array of infrastructure, including portainers, stacking yards serviced by gantry cranes,
and the vehicles used to move containers around the terminal, such as straddle
carriers. Container ports have also developed infrastructure to handle refrigerated
containers (reefers) with separated stacking areas. Many terminals are also
becoming automated, particularly for stacking areas that can be serviced
by automated cranes and vehicles.

• Land access. Access from the port to industrial complexes and markets ensure its
growth and importance. This requires efficient inland distribution systems, such as
fluvial barges, rail unit trains, and roads handling intense heavy truck traffic. The land
access to ports located in densely populated areas is facing increasing congestion. For
instance, the ports of Los Angeles and Long Beach have invested massively to develop
the Alameda rail corridor to promote inland access and reduce truck congestion. A
similar trend has taken place in Europe where ports such as Rotterdam and Antwerp
have been involved in the setting on an inland barge and rail shuttle services.

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Portainer, APM Terminal, Port Newark (New York)

Rubber-Tired Overhead Gantry Crane (RTG), Halterm Terminal, Halifax

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Container Straddler, Port of Gothenburg, Sweden

Stacked Reefer Storage, Maher Terminal, Newark

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Reefer Racks, Porte Oceane Terminal, Le Havre

Economies of scale have incited the construction of larger ships, namely tankers, bulk carriers,
and containerships. Many port sites became unable to provide maritime access to cargo
operations. Since container terminals were constructed much more recently, they have
a better nautical profile as depth, and available space were fundamental factors in site
selection. There is thus a pressure to increase channel depth where possible, but this is a
costly and environmentally controversial endeavour. Berths and access channel depth have
become important constraints for maritime operations considering growing ship size.

There is also an array of problems related to port infrastructures. Ports along rivers are
continuously facing dredging problems, and the width of rivers is strongly limiting their
capacity since it provides constraints to navigation. Rarely a port along a river has the ability
to handle the new generation of mega-ships, namely Post Panamax containership. These
ships have put additional pressures on port infrastructures to accommodate growing
operational constraints in terms of volume and throughput. Ports next to the sea are
commonly facing a lateral spread of their infrastructures. Several ports have growth
problems forcing them to spread their infrastructures far from the original sites. Older port
sites associated with the centrality of cities are facing congestion problems where the
transport network has the least capacity to be improved.86

86 https://transportgeography.org/?page_id=3235

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Ports in Africa

There is a strong interdependence between maritime infrastructure and foreign trade in
Africa. Maritime transport is estimated to handle about 90 percent of Africa’s international
trade; this is comparable to global standards. According to UNCTAD, around 80 percent of
world trade and two-thirds of energy supplies are carried by sea. With a total coastline of
30,725 km, Africa has around 90 major ports and a number of other ports providing services
for fishing and tourism.

According to 2050 Africa’s Integrated Maritime Strategy, African owned ships account for
about 1.2 percent of world shipping by number and about 0.9 percent by gross tonnage.
African ports currently handle only 7.2 percent of worldwide seaborne cargo traffic and 4
percent of the global container traffic. A few African countries operate large shipping
registries. Liberia is the second largest ship registry behind Panama, with 219.4 million dead
weight tonnage and around 4170 vessels in 2017, representing 12 percent of the world’s
ocean-going fleet. This does not reflect local ownership, as none of the ships registered in
Liberia have domestic owners. African ports face challenges like underdeveloped
infrastructure and inefficient operations, including long cargo clearance time, under -
developed basic port and hinterland infrastructure, usage of outdated equipment and low
levels of automation, and container and cargo theft, resulting in significant revenue losses.

UNCTAD projects that world seaborne trade volumes will be expanding at a CAGR of 3.2
percent between 2017 and 2022. During the same period, trade in the major commodities
and containerised trade is forecast to grow by 5.6 percent and 5 percent, respectively.

Though total seaborne trade volume of Africa fell to 745.3 million tons in 2016 from 755.1
million tons in 2015, it is expected to increase in the coming years. Due to limited availability
of good locations for deep water ports, only a few international ports handle large cargo
volumes, resulting in long waiting times at the ports.

Inadequate infrastructure in seaports in Africa constraints the region’s competitiveness as 80
percent of the world’s trade is facilitated by sea ports linked to road and rail infrastructure.
With the expected increase in seaborne trade in the region, there is an increasing need for
innovation and development in the maritime infrastructure of Africa.

Airports

An airport is a facility where aircraft can take off and land. They usually consist of hard-
surfaced landing strips, a control tower, hangars and accommodations for passengers and
cargo.

The rapid expansion of air passengers and air freight flows fostered by globali sation has
increased the importance but also the strain in the global system of airports. Airports today
are bigger in the volumes of traffic they handle, their spatial extent, the distances that
separate them from the cities they serve, their costs and economic impacts, their social
importance, their environmental externalities, and the political controversies they engender.

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Ironically, the global importance of airports has exacerbated the local conflicts they provoke
in terms of required land, surrounding commercial and manufacturing developments, ground
traffic, and aircraft noise.

Indeed, a fundamental feature of airports is the degree to which they are embedded
at several scales:

• Global. Airports are key articulation points in the circulatory system of the global
economy. They mediate the flows of people and goods. The importance of an airport
in this regardis a function of its centrality and its intermediary. The former term refers
to a node’s role as an origin and destination gateway to a surrounding region, and the
latter term refers to the degree to which a node serves as an interchange between
different regions. The most important passenger and freight airports enjoy either
centrality within one of the world’s foremost city-regions, intermediary among key
markets, or both. Global outsourcing and offshoring have increased the importance
of intermediary on a global scale. For example, one factor propelling the growth of
Dubai as an air transport hub is the fact with ultra-long-range aircraft like the B787
and the A350, almost any two locations on earth can be linked via a stop at Dubai
International Airport.

• Regional / National. While globe-straddling flights have garnered a lot of attention
(e.g., Qantas Airways’ launch of the first nonstop flight between Australia and London
in 2018), most flights do not cross international boundaries, and an even higher
proportion (about 80 percent) stay within the same region. At this scale, the network
of airports helps tie together nations and regions.

For instance, the dense intra-regional network of flights through the nearly 300
airports with commercial services in Southeast Asia lace together the economies of
the Association of Southeast Asian Nations (ASEAN).

• Local. Airports, especially large ones, are defining features of the communities in
which they are set. A large airport generates thousands of jobs directly and thousands
more via forward and backward linkages. For Amsterdam’s Schiphol Airport, it was
estimated that 65,000 people were employed at the airport itself in 2013 and that for
every person employed directly, about one and a half more were employed in the
Greater Amsterdam Area by firms connected to the airport. These connections took
the form of forward linkages (i.e., businesses for which the airport is a supplier such
as local tourist attractions and logistics facilities) and backward linkages ( i.e.,
businesses for which the airport is a customer such as fuel suppliers and construction
firms).87

87 https://transportgeography.org/?page_id=3717

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OR Tambo International Airport in Johannesburg, South Africa

African airports in context 88

The performance of the African air transport industry lags behind those in the rest of the
world. According to the African Development Bank (AfDB), the contribution of air transport
could exceed seven times the contribution of road transportation in an economy’s growth.
Though Africa has over 4,000 airports and airfields, a significant number of them do not meet
International Civil Aviation Organisation (ICAO) standards and recommended practices. Also,
only a quarter of these airports have paved runways.

88 https://www.tralac.org/images/docs/12896/connecting-africa-role-of-transport-infrastructure-exim-bank-
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Intra-African air transport growth has been subdued to a large extent due to underdeveloped
infrastructure and partly due to the lack of a proper liberalisation policy among African
nations. The challenges faced by African air transport industry include poor airport
infrastructures, lack of physical and human resources, limited connectivity, and lack of transit
facilities. The International Air Transport Association (IATA) reports that though the share of
Africa in global aviation industry remains relatively small compared to other regions, it
supports 6.8 million jobs and contributes US$ 72.5 billion to the African economy.

The Function of Transport Terminals

In consideration of operational efficiencies, passengers and freight cannot travel individually
but in batches. Passengers must go to bus terminals and airports first, where they are
“assembled” into busloads or planeloads to reach their final destinations where they are
dispersed. Freight must be consolidated at a distribution centre, a port, or a rail yard before
onward shipment. Terminals may also be points of interchange involving the same transport
mode. Thus, a passenger wishing to travel by train from Paris to Rotterdam may have to
change trains in Brussels, or an air passenger wishing to fly between Montreal and Los Angeles
may have to change planes in Toronto. Terminals may also be points of interchange between
different modes of transportation and their respective networks.
Goods being shipped from the American Mid-West to the Ruhr in Germany may travel by rail
from Cincinnati to the port of New York, put on a ship to Rotterdam, and then placed on a
barge for delivery to Duisburg. Transport terminals, therefore, are central and intermediate
locations in the mobility of passengers and freight.

Terminal. Any location where freight and passengers either originate, terminate, or are
handled in the transportation process. Terminals are central and intermediate locations in
the mobility of passengers and freight. They often require specific facilities and equipment to
accommodate the traffic they handle.

Terminals may be points of interchange within the same modal system, which ensure
continuity of the flows. This is particularly the case for air and port operations with hubs
connecting parts of the network. Terminals, however, are also critical points of
transfer between modes. Buses and cars deliver people to airports, trucks haul freight to rail
terminals, and rail brings freight to docks for loading on ships. One core attribute of transport
terminals is their convergence function. They are obligatory points of passage, having
capitalised on their geographical location, which is generally intermediate to commercial
flows. Thus, transport terminals are either created by the centrality or the intermediary of
their respective locations.

The importance of a transport terminal is often a function of its size. Large transport
terminals, particularly ports and airports, confer the status of gateway or hub to their location
since they become obligatory points of transit between different segments of the global
transport system. Containerisation has favoured the emergence of a hierarchy of
terminals fulfilling different functions and added value, from the mega-gateway coordinating
the flows of a large market area to a small rail yard or truck depot servicing a local market.

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The same observation applies to passenger transport, where a specific hierarchy of terminals
is evident. There are large hub airports located in global cities, and connecting continents
down to the small local airport, having limited daily services to a few destinations.

Three major attributes are linked with the importance and the performance of transport
terminals:

• Location. The major locational factor of a transport terminal is obviously to serve a
large concentration of economic activities, representing a terminal’s market area.
Specific terminals have specific locational constraints, such as port and airport sites.
New transport terminals tend to be located outside central areas to avoid high land
costs and congestion.

• Accessibility. Accessibility to other terminals (at the local, regional, and global scale)
as well as how well the terminal is linked to the regional transport system is of
importance. For instance, a maritime terminal has little relevance if it is poorly
connected to its market area through an inland transport system (rail, road, or barge).

• Infrastructure. The primary function of a terminal is to handle and tranship freight or
passengers since modes are physically separated. They have a nominal capacity,
which is related to the amount of land they occupy and their level of technological,
labour, and managerial intensity. Infrastructure considerations are essential as they
must accommodate current traffic and anticipate future trends along with
technological and logistical changes. Modern terminal infrastructures consequently
require massive investments and are among the largest structures ever built. Airports,
ports, and distribution centres are visible on remote sensing images. A utilisation rate
of 75 to 80% of design capacity is considered to be optimal since, above this level,
congestion starts to rise, undermining the reliability of the terminal facility. A terminal
rarely has a consistent utilisation, which is more than often characterised by periods
of high and low activity (daily, weekly, monthly).

The time a conveyance (bus, truck, train, or ship) is allowed to load or unload passengers or
freight at a terminal is usually defined as dwell time. For freight terminals, dwell time refers
to the amount of time cargo stays in a terminal yard or storage area while waiting to be
loaded. Dwell time can be operational, which reflects the performance of terminal
infrastructures and management, including the scheduling and availability of transport
services. It can also be transactional, which is usually linked with the performance of
clearance procedures (such as checking in and customs).

Finally, dwell time can be storage related, implying that the owner or the carrier of the cargo
deliberately leaves the cargo at the terminal as part of a transport or supply chain
management strategy. Intermodalism has incited new relations between transport terminals,
which are becoming nodes in integrated transport chains. This is particularly the case
between port, rail, and barge terminals. New forms of integration are also emerging, such as
between ports and airports.

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Freight terminals

Freight handling requires specific loading and unloading equipment. In addition to the
facilities needed to accommodate ships, trucks, and trains (berths, loading bays, and freight
yards, respectively), a wide range of handling gear and storage are required, which is
determined by the types of cargoes handled.

Freight transport terminals have a set of characteristics linked with core (terminal operations)
and ancillary activities (added value such as distribution). The result is that terminals
are differentiated functionally both by the mode involved and the commodities transferred.
A basic distinction is that between bulk, general cargo, and containers:

• Bulk refers to goods that are handled in large quantities that are unpackaged and are
available in uniform dimensions. Liquid bulk goods include crude oil and refined
products that can be handled using pumps to move the product along with hoses and
pipes. Relatively limited handling equipment is needed, but significant storage
facilities may be required. Dry bulk includes a wide range of products, such as ores,
coal, and cereals.

More equipment for dry bulk handling is needed, because the material may have to
utilise specialised grabs and cranes and conveyor-belt systems.
For specific bulk cargoes, some changes in their characteristics may be required to
ensure the continuity of the transportation process, such as its load unit or its physical
state (from solid to liquid or gas, or any combination).

• General cargo refers to goods that are of many shapes, dimensions, and weights, such
as machinery, processed materials, and parts. Because the goods are so uneven and
irregular, handling is difficult to mechanise. General cargo handling usually requires
labour.

• Containers are standard units that have had a substantial impact on terminal
operations. Container terminals have minimal labour requirements and perform a
wide variety of intermodal functions. They, however, require a significant amount of
storage space, which are simple paved areas where containers can be stacked and
retrieved with intermodal equipment (cranes, straddlers, and holsters). Depending on
the intermodal function of the container terminal, specialised cranes are required,
such as portainers (container cranes).

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Containerisation and the Changing Operational Characteristics of Transport Terminals

Types of Intermodal Terminals

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Intermodal Terminal Equipment

Container Transloading

A feature of most freight activity is the need for storage. Assembling individual bundles of
goods may be time-consuming, and thus some storage may be required. This produces the
need for terminals to be equipped with specialised infrastructures such as grain silos, storage
tanks, and refrigerated warehouses, or simply space to stockpile, such as for containers or
bulk commodities.

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Containerisation, because of its large volumes, has forced a significant modal and temporal
separation at terminals and thus the need for a buffer in the form of storage areas. In addition,
a variety of transloading activities can take place in the vicinity of terminals, particularly if
long-distance inland transportation is involved. Transloading, when suitable, enables to
reduce transportation and inventory costs.89

It is therefore no exaggeration to say that cargo logistics is the backbone of any country.
Logistics services are responsible for bringing our food, drinks, and other consumer goods to
supermarket shelves. Logistics is also how we get the petrol that goes in our cars, and how
South Africa as a growing economy is able to participate in the world economy through
imports and exports.

The transport logistics industry in Africa, and particularly in South Africa, is developing quickly,
offering numerous new opportunities, but there are, and probably always will be, a number
of difficult challenges to the industry. In the 10th State of Logistics Survey for South Africa, it
was suggested that South Africa needs to focus more on improving transport logistics
infrastructure, the high costs of logistics services, and the lack of skilled workers in the cargo
logistics industry as a whole.

Failure to address these issues in a rapidly growing economy could cause major issues not
only in the logistics game, but also in those industries which rely on cargo logistics to do their
business as well.

Infrastructure

The state of a country’s transport infrastructure (its roads, customs processes, sea and
airports, and other features), determine the efficiency with which it can do business and
therefore has a direct impact on the growth of the economy. A good infrastructure also
encourages investment from overseas, with international companies carefully assessing
whether an inefficient infrastructure will damage their bottom line.

This focus on improvement of infrastructure is aimed at improving the national transport
network, assisting in mobilising South Africa’s workforce, and making local trade easier and
more profitable.

However, with the economic crunch, we find ourselves in lately, it is becoming more difficult
for Government to find the resources to keep up with their commitment, prompting
involvement from the private sector which is helping to fill in the gaps where government
funding falls short.

High Logistics Costs

Fuel prices are by far the most volatile, unpredictable, and expensive cost in the logistics
process.

89 https://transportgeography.org/?page_id=3009

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Logistics providers also have vehicle maintenance, and tyre wear to consider when trucking
goods across South Africa. Contributing to high fuel costs are rough roads, traffic congestion,
and other problems that South Africa’s infrastructure present. Companies who do a lot of
cross-country trucking are also now being faced with the prospect of nationwide e-tolls in the
not-too-distant future, raising the costs of road use (and therefore the cost of living in
general). While the fuel price is relatively low at the moment, it probably will not stay that
way forever, and logistics providers are going to have to produce creative ways to keep their
prices affordable in an unstable and increasingly expensive local economy.

An Unskilled Workforce

Education continues to plague South Africa as one of the most stubborn and difficult
challenges to national prosperity and the fight against unemployment and will be all the more
important in the logistics industry in the future. Technology has made jobs on many levels of
the logistics industry into positions requiring basic computer skills and more, meaning that
hiring efficient staff for a logistics project is more and more difficult. South Africa is not alone
in this – 39% of freight businesses worldwide are struggling to recruit people with the skills
needed for a modern logistics operation.

This course is therefore directed at enabling you, the learner to become part of the much-
needed skilled workforce in this crucial sector of the economy.90

Topic 2.6: Approaches to multimodal surface freight import clearances [KT0206]

United Nations Convention on International Multimodal Transport of Goods

The 1980 United Nations Convention on International Multimodal Transport of Goods
facilitates the orderly expansion of world trade by determining rules relating to the carriage
of goods by international multimodal contracts.91 Multimodal transport means the carriage
of goods by at least two different modes of transport.

According to its provisions, a multimodal transport operator, defined as a person concluding
a multimodal transport contract and assuming responsibility for it, is held to issue a
multimodal transport document.

90 https://issuu.com/cmbmultimedia/docs/transtech_minimag
91 https://unctad.org/en/PublicationsLibrary/tdmtconf17_en.pdf

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It has to contain information on the goods transported under his responsibility and indicating
the name of the consignor and the consignee, as well as the intended journey route. The
multimodal transport document accredits for the receipt of the goods as described in the
document.

The responsibility of the multimodal transport operator for the goods under this Convention
covers the period from the time he takes goods in his charge to the time of their delivery. He
assumes liability due to loss of, damage to or delay in delivery of the goods, unless he proves
that he or his agents have taken every measure of precaution to avoid the damage.

The operator is not entitled to the benefit of the limitation of liability provided for in this
Convention if it is proven that the loss was caused intentionally or recklessly. Any action under
this Convention is time-barred if judicial or arbitral proceedings have not been instituted
within a period of two years from the moment of delivery or loss of the goods.

Why is it relevant?

By establishing liability rules applicable to international multimodal transport of goods, this
instrument ensures a fair balance of interests between operators that benefit from the
limitation of liability and users of their services that obtain compensation in case of loss.92

The basis for the convention came about as state parties recognised that:

(a) That international multi modal transport is one means of facilitating the orderly
expansion of world trade.

(b) The need to stimulate the development of smooth, economic, and efficient
multimodal transport services adequate to the requirements of the trade concerned.

(c) The desirability of ensuring the orderly development of international multimodal
transport in the interest of all countries and the need to consider the special problems
of transit countries.

(d) The desirability of determining certain rules relating to the carriage of goods by
international multimodal transport contracts, including equitable provisions
concerning the liability of multimodal transport operators.

(e) The need that this Convention should not affect the application of any international
convention or national law relating to the regulation and control of transport
operations.

(f) The right of each State to regulate and control at the national level multimodal
transport operators and operations.

(g) The need to have regard to the special interest and problems of developing countries,
for example, as regards introduction of new technologies, participation in multimodal
services of their national carriers and operators, cost efficiency thereof and maximum
use of local labour and insurance.

92 https://legacarta.intracen.org/instrument/833443-united-nations-convention-international-multimodal-
transport-goods/

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(h) The need to ensure a balance of interests between suppliers and users of multimodal
transport services.

(i) The need to facilitate customs procedures with ~ due consideration to the problems
of transit countries.

Agreeing to the following basic principles:

(a) That a fair balance of interests between developed and developing countries should
be established and an equitable distribution of activities between these groups of
countries should be attained in international multimodal transport.

(b) That consultation should take place on terms and conditions of service, both before
and after the introduction of any new technology in the multimodal transport of
goods, between the multi modal transport operator, shippers, shippers' organisations,
and appropriate national authorities.

(c) The freedom for shippers to choose between multimodal and segmented transport
services.

(d) That the liability of the multi modal transport operator under this Convention should
be based on the principle of presumed fault or neglect.

For the purposes of the convention, in order to understand multimodal transport, one has to
have a key understanding of the definitions as follows:

1. "International multimodal transport" means the carriage of goods by at least two
different modes of transport on the basis of a multimodal transport contract from a
place in one country at which the goods are taken in charge by the multi modal
transport operator to a place designated for delivery situated in a different country.
The operations of pick-up and delivery of goods carried out in the performance of a
unimodal transport contract, as defined in such contract, shall not be considered as
international multi modal transport.

2. "Multimodal transport operator" means any person who on his own behalf or
through another person acting on his behalf concludes a multimodal transport
contract and who acts as a principal, not as an agent or on behalf of the consignor or
of the carriers participating inthe multi modal transport operations, and who assumes
responsibility for the performance of the contract.

3. "Multimodal transport contract" means a contract whereby a multi modal transport
operator undertakes, against payment of freight, to perform or to procure the
performance of international multimodal transport.

4. "Multimodal transportdocument" means a document which evidences a multi modal
transport contract, the taking in charge of the goods by the multimodal transport
operator, and an undertaking by him to deliver the goods inaccordance with the terms
of that contract.

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5. "Consignor" means any person by whom or in whose name or on whose behalf a
multimodal transport contract has been concluded with the multimodal transport
operator, or any person by whom or in whose name or on whose behalf the goods are
actually delivered to the multimodal transport operator in relation to the multi modal
transport contract.

6. "Consignee" means the person entitled to take delivery of the goods.
7. "Goods" includes any container, pallet or similar article of transport or packaging, if

supplied by the consignor.

8. "International convention" means an international agreement concluded among
States in written form and governed by international law.

9. "Mandatory national law" means any statutory law concerning carriage of goods the
provisions of which cannot be departed from by contractual stipulation to the
detriment of the consignor.93

Documentation

Issue of Multimodal Transport Documents

1. When the goods are taken in charge by the multimodal transport operator, he shall
issue a multimodal transport document which, at the option of the consignor, shall be
in either negotiable or non-negotiable form.

2. The multimodal transport document shall be signed by the multimodal transport
operator or by a person having authority from him.

3. The signature on the multimodal transport document may be in handwriting, printed
in facsimile, perforated, stamped, in symbols, or made by any other mechanical or
electronic means, if not inconsistent with the law of the country where the multimodal
transport document is issued.

4. If the consignor so agrees, a non-negotiable multimodal transport document may be
issued by making use of any mechanical or other means preserving a record of the
particulars stated in article 8 to be contained in the multimodal transport document.
In such a case the multimodal transport operator, after having taken the goods in
charge, shall deliver to the consignor a readable document containing all the
particulars so recorded, and such document shall for the purposes of the provisions
of this Convention be deemed to be a multimodal transport document.94

The convention referenced above is part of your learning material and has been provided
accordingly for more in-depth reference.

93 https://unctad.org/en/PublicationsLibrary/tdmtconf17_en.pdf
94 https://unctad.org/en/PublicationsLibrary/tdmtconf17_en.pdf

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Approaches to Multimodal Transport

Selecting the best mode of transportation for a shipment can be complicated. There are so
many factors to consider, such as, what is being shipped, how far it is traveling, and how
quickly it needs to reach its destination.
If one is trying to decide between intermodal and multimodal, one may be wondering what
makes them different and how one would know which to use. Below we take a closer look at
both options, what they are, their differences, their advantages and what to consider when
selecting one over the other.95

Understanding the difference between Intermodal and Multimodal transport

Intermodal and Multimodal – These two terms are often used loosely and interchangeably,
without many people understanding the meaning of the words or if there is a difference
between the two.

Here, we will discuss what they mean and what they represent in day-to-day shipping and
freight environment.

Definitions:

Intermodal – is the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport provider or entity
responsible, each with its own independent contract. Multiple carriers contracted to fulfil a
single journey.

Multimodal – is the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport provider or entity
responsible, but under a single contract.

95 https://www.shipag.com/blog/2017/08/intermodal-versus-multimodal-whats-difference-and-which-should-

you-
select/#:~:text=Intermodal%3A%20Intermodal%20transportation%20is%20the,journey%20from%20shipper
%20to%20consignee.&text=The%20legally%20responsible%2C%20contracted%2C%20carrier,multimodal%2
0transport%20ope rator%20or%20MTO .

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A Single carrier contracted to fulfil a single journey.

Simply put, the key functions of both terminologies are the same, but the differentiation lies
in the contract and responsibility of the movement.

Explanation:

Intermodal operation: Cargo moving from Leicester in UK to Pretoria in South Africa – Cargo
is packed in Leicester and moved by truck to the port of Felixstowe by a transport service
provider (could also be termed as an Intermodal service provider) under the employ of the
shipper.

From Felixstowe, the carrier takes responsibility of the movement of the cargo to the
discharge port in South Africa – say Durban.

From Durban port the consignee uses their transport service provider (could also be termed
as an Intermodal service provider) to move the cargo by rail from to Pretoria Rail Terminal
followed by a road move to their premises or a full road move from Durban port to their
premises in Pretoria.

The rail and road service may be provided by the same transport service provider or could be
done by two different service providers.

In this case, the carrier issues a Port-to-Port Bill of lading, and the whole operation is called
an Intermodal Operation as it involves several contracts:

• Between Seller or Buyer and Transport service provider for road/rail movement from
Leicester to Felixstowe

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• Between Seller or Buyer and Carrier for sea movement from Felixstowe to Durban
• Between Seller or Buyer and Transport service provider(s) for rail/road movement

from Durban to Pretoria

The costs/risks for such contracts will of course depend on the Incoterms® used for this trade.
Multimodal operation: Cargo moving from Leicester in UK to Pretoria in South Africa – Cargo
is packed in Leicester and moved by truck to the port of Felixstowe by a transport service
provider (could also be termed as an Intermodal service provider) under the employ of the
carrier.

Cargo moves from Felixstowe to the discharge port in South Africa – say Durban.

From Durban port a transport service provider (could also be termed as an Intermodal service
provider) under the employ of the carrier moves the cargo by rail from to Pretoria Rail
Terminal followed by a road move to the consignee’s premises or a full road move from
Durban port to consignee’s premises in Pretoria.

The rail and road service may be provided by the same transport service provider or could be
done by two different service providers.

Here, neither the seller nor the buyer are arranging any contracts other than their contract of
carriage with the carrier.

In this case, the carrier issues a Combined Transport Bill of Lading or a Multimodal Bill of
Lading, and the whole operation is called a Multimodal Operation and it involves a single
contract:

• Between Seller or Buyer and Carrier for sea movement from Felixstowe to Durban

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The costs/risks for such contracts will of course depend on the Incoterms® used for this trade.
More often than not, the above movements on the land leg are outsourced by the carrier to
transport service providers as a lot of the carriers do not have their own infrastructure to
carry out these movements. However, here the carrier enters into direct contract with their
service providers.96

Summary

Choosing between Multimodal and Intermodal transport is important for Shippers to
optimise routing and total shipping costs. Sometimes a combination of different transport
carriers is better to achieve best total shipping cost, but it requires more logistics
coordination. Using only a single carrier may achieve the best routing and require less
paperwork. Understanding the difference between Multimodal and Intermodal is important
when choosing a carrier for your cargo, but the terms are sometimes used incorrectly or
interchangeably.

Multimodal transportation

Multimodal transport (or combined transport) is per definition a combination of at least two
or more different modes to move your cargo from a place in one country to another country.
The main characteristic of multimodal transport is that even though it includes various modes
for transportation, it still falls under one single bill of lading. That means the carrier is fully
liable for the entire carriage even though it is performed by different modes of transport such
as Air, Rail, Road or Sea.

A good example for multimodal transport is Rail-Truck. Carriers like DHL or UPS are offering
such a solution for example along China’s Belt-and-Road initiative for goods to move from
Asia to Europe. Another example is Sea-Air which is less expensive than air but quicker than
shipping only.

When shippers choose multimodal transportation for their cargo, it means that an agent or
the carrier is responsible for the entire journey. Having only one contract minimises
coordination and communication expenses for you as a shipper, especially if something goes
wrong which leads to high efficiency in delivery time. With Multimodal it is easy for you to
track your containers because you only use once tracking interface instead of several ones.
Access to remote parts of the world with responsibility and liability of the movement with
only one carrier is another reason to choose Multimodal transportation. Multimodal is
considered to be a timelier, cost-saving shipping resource.

For instance, take a freight between Hamburg to Shanghai under Multimodal transportation.
After the cargo is packed in the containers. the carrier sends their own designated trucking
company to pick up the containers in Hamburg and bring it to the Hamburg Port and after it
can be brought to Shanghai, it is then brought to its final destination again by a trucking
company that works under the carrier. The carrier takes full responsibility from the point of
pick-up to the drop-off at the final destination. One contract serves the entire stretch.

96 https://www.shippingandfreightresource.com/difference -between-intermodal-and-multimodal-transport/#

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Intermodal transportation

Intermodal transportation is a combination of two or more modes of transport in order to
move cargo from a place in a country to another place to a different country. The main
characteristic of intermodal transport and the biggest difference to multimodal transport is
that every part of the process it is contracted with a different provider.

Let us use an example that includes rail, truck, and ship! Someone (maybe you) wants to move
cargo from Munich to Singapore. In the beginning, a truck (hired by you) would bring you
an empty container to pick up the cargo. Once you fully loaded the container with freight in
Munich, the truck takes the container to a railroad yard to move your container to Hamburg.
It is then put on a container ship; your carrier takes on full responsibility until your shipment
reaches Singapore. At the destination, a truck ( also hired by you) picks up your container
from the container terminal and delivers your cargo to you (the consignee) where the
containers are unloaded. In this case, it is an Intermodal Operation as it involves several
contracts, between different transport service providers (truck, rail, sea) and between the
buyer and seller.

With Intermodal transportation, you can choose carriers on your own and leverage the lowest
possible rates for each transport. It gives you better access to equipment and good control
over transit schedules capacities. Looking at sustainability you can even choose
environmentally friendly options to reduce CO2 emissions. Intermodal increases your
flexibility, especially with handling, loading, and unloading cargo at different ports.

When doing intermodal transportation, it is easy to chase the best terms separately with each
company. However, this means more overhead for shippers, as they need to keep track of
several contracts with different providers. The shipper is also responsible for handling the
coordination of delays, as one company will not be aware of the delays that another company
might be having.

Multimodal or Intermodal – Which is Better?

If you choose multimodal transport, it means that you sign a contract with only one carrier
that covers the entire journey of their shipment, regardless of the number of transport modes
involved. The contracted carrier issues a Combined Transport Bill of Lading or a Multimodal
Bill of Lading. The advantages include:

▪ The ability of the shipper to hold one carrier liable for the movement of their freight.
▪ One contact for tracking a shipment.
▪ One responsible entity for meeting delivery requirements

With intermodal transportation, you sign multiple contracts – one with a freight forwarder or
ocean carrier, one or more with a trucking company, and one or more for rail transportation.
Each carrier issues a separate Bill of Lading in intermodal shipping.

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The advantages include:

▪ The ability to select carriers for each leg of the shipment based on price or service.
▪ Being able to stop the shipment at any point for any reason.
▪ More flexibility in carrier selection when equipment or space issues arise.

Both Intermodal and Multimodal transport have their own advantages and disadvantages
with only one thing that sets the two transport modes apart: For Multimodal you sign only
one contract, for Intermodal more than one. The two modes of transport optimise delivery
times, reduce inventory costs, and keep the level of freight costs under control. However,
many people tend to lean towards multimodal transportation because it can provide shippers
with a timelier, cost-saving shipping resource. Multimodal freight can also be easier to
manage since it is through a single contract, unlike intermodal that is covered by various
contracts. Intermodal shipping can provide shippers with lower costs and more predictable
pricing, but obviously needs more effort to control and manage.97

When advising a client por customer on which of these to use, the following questions would
be greatly helpful:

Why would you select one over the other?

Here are several questions to consider when selecting between intermodal and multimodal:

• Do you want multiple independent contracts with multiple carriers?
• What is the total cost difference between both options?
• How will each option impact inventory turn and costs?
• How much time savings is involved in one option versus the other from transit time

and administrative coordination?
• What is the environmental impact of each option?
• How much paperwork will end up being involved in each?98

With a clear understanding of the above, we can now have an overview of the import
clearances in the context outlined above.

Work Carried Out by The Clearing/Compliance Function in a Forwarding Operation

Essential activities carried out by the clearing/compliance function for air and surface
forwarding operations.

97 https://container-xchange.com/blog/multimodal-intermodal/
98 https://www.shipag.com/blog/2017/08/intermodal-versus-multimodal-whats-difference-and-which-should-

you-
select/#:~:text=Intermodal%3A%20Intermodal%20transportation%20is%20the,journey%20from%20shipper
%20to%20consignee.&text=The%20legally%20responsible%2C%20contracted%2C%20carrier,multimoda l%2
0transport%20ope rator%20or%20MTO .

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Importation of goods – clearing/compliance process

1. Importer must 2. Documentation 3. Compliance 4. Customs
have a customs f or the shipment with all relative clearance process
code number must be in place authority body
rules, regulations,
permits

5. Cargo releas e 6. Cargo 7. Cargo delivery 8. Final document
process collection process process batch

9. Payment to 10. Final f ile check
supplier process f or compliance
and f ile 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 relevant
department of the Customs Administration in the country of import e.g., the Customs and
Excise Department under SARS in South Africa. This essentially entails obtaining 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 the Port Authority, or a Customs
licensed container depot in respect of goods imported in containers or Transnet Rail (NB-
These names change from time to time) 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 and/or terminal handling charges (THCs) to the Port Authority, and freight has
been paid to them. After these steps have been completed the importer or his
forwarder/clearing agent would normally be in a position to collect the goods.

Importation of goods into South Africa is governed by the Customs legislation which is
updated from time to time.

All imports must be cleared by the Customs & Excise department, and it is the responsibility
of Customs to ensure that goods are properly declared and to collect any duty that is payable.
Some commodities do not attract duty and may be imported free of duty.

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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 (SARS), 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.

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’.
Currently, these are recorded in Schedule No.1 to the Customs Act and are 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.

The Customs Authority determines the applicable rate of exchange and dating thereof e.g.,
between the Rand and another foreign currency. The rate of exchange applicable to the
foreign currency of the supplier's invoice, is the one used for determining the value of the
goods for inclusion on the bill of entry.

The bill of entry is presented to Customs together with the transport document (e.g., bill of
lading), importer's clearing instructions, supplier's invoice, and import permit (where
applicable). On acceptance of the bill of entry by Customs, goods are cleared under particular
customs procedure which is aligned to the purpose for which the goods are brought into the
country. See the SARS Customs Procedure Code Chart.99

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.

99

https://www.sars.gov.za/AllDocs/ Documents /custo msandexcise/CPC%20Chart %20October%202019%20n.pdf

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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 Customs legislation specifically requires that importers
Instructions 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.

Transport Customs legislation also requires importers to submit a
Document transport document with the bill of entry. In the case of
sea freight 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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Chapter 3 | Organisation of the Company [KM-01-KT03]

The Topic Elements to be covered in the chapter referenced above include:

Topic Topic Element/Heading Knowledge Theory
3.1 Different structures of an organisation within freight KT0301

3.2 forwarding and clearing environment KT0302
3.3 KT0303
Types and functioning of sea freight carriers and agents
Principles of security and confidentiality in
organisations

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By the end of this chapter, you should be able to demonstrate an understanding of the
following Internal Assessment Criteria or Learning Outcomes relevant to this topic:

No. Learning Outcome IAC
IAC0301
1 Identify and explain the roles played by different
structures and organisations within freight forwarding IAC0302
and clearing environment

2 Explain why security and confidentiality is important for
effective function of these organisations

***

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Topic 3.1: Different structures of an organisation within the freight forwarding
and clearing environment [KT0301]

All organisations are driven and affected by the people that lead, manage, and operate within
them i.e., within their given structures. In a sense, these people constitute ‘Human Capital’
within these organisations, meaning they are a vital ‘human resource’ that can lead to the
organisation’s ultimate success or failure.

Human capital management plays a big part in ever increasing competitive global market.
People, the way they work, how they behave, what they do, or do not/cannot do can make
or break an organisation. “People are a company’s best asset” without a doubt – a happy
worker is a productive worker in any work environment.

Human Resource (HR) Management in days gone by was looked upon as a “necessary evil” to
a company; it did not make a visible profit as such and generally took a large amount of
management. Thankfully, this outlook or mind-set has changed over the past number of years
and companies have come to the realisation that HR management can make a big difference
in the service levels and service excellence they give their customers if the correct tools are
in place.

Organisational structure can significantly influence an organisation’s performance. A recent
survey of logistics professionals revealed that centralised structures accommodated logistics
system integration better than decentralised structures. Also, centralised organisations spent
a lower percentage of net sales on logistics costs and information system support costs than
decentralised firms. On the other hand, no significant differences were identified between
centralised and decentralised firms in terms of information system performance. Information
system support needs were addressed comparably regardless of organisational structuring.
However, while centralised and decentralised firms exhibited similar capabilities in terms of
effectiveness (reaching goals), centralised firms appeared to be more efficient (resource
utilisation).100

Human Resource functions nowadays days include many things that need managing with
considerable thought and planning such as:

• Corporate governance – keeping good control of strategic items.
• Equity – ensuring equity is achieved within the work environment.
• Labour policy framework aligned tothe law – ensuring a policy is in place and ensuring

the company adheres to the law.
• Job design and analysis – ensuring the job people are employed to do is well designed

for productivity & efficiency and also reviewing the design on a consistent basis to
ensure maximum service levels are achieved.

100 https://www.emerald.com/insight/content/doi/10.1108/09574099410805199/full/html

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• Performance management – ensuring people at all levels are performing to standard
or better, managing non-conformances effectively, reviewing and implementing
improvements on a consistent basis.

• Assessing competence – monitoring each person’s skills and development and making
applicable adjustments.

• Planning and people development – ensuring people have a development plan
aligned to job requirements and working towards continual improvement.

• Training and skills development – making sure training and skills development
programmes are run effectively, not only job specific but also including ‘soft skills’ like
building work relationships, literacy, body language, speech, etc.

• Career management – giving employees guidance on the way forward in building a
career and seeing it through.

• Employee wellness – Seeing to the well-being of the employees – work related,
environmentally, emotionally and aligned to the OHS Act/Labour Act.

• Executive search & recruitment – making sure that those “at the helm” are of the
right calibre and meet the corporate requirements of leadership and management.

• Succession planning – taking care and planning for the advancement of staff internally
moving from the lower ranks into upper positions, thus developing a corporate culture
of sustainability.

• Setting business strategy – reviewing, analysing and implement business strategies
that improve all HR aspects within the work environment.

One aspect where HR plays a part in international trade competitiveness these days is the
actual job functions, processes, and procedures. A very good and effective tool to increase
productivity, reduce errors, ensure timelines are kept and benchmarks maintained, get
effective reports for future planning, and ultimately give excellent customer service is a
Quality Management System (QMS).

The reason for this is that a QMS maintains and improves productivity, reduces errors,
ensures customer service excellence, and handles non-conformances effectively – managers
are channelled by the system to take responsibility.

Some countries now are advising their traders NOT to trade with companies internationally
that are not accredited by a reputable QMS organisation. If you look at this scenario a little
closer you will find that companies without a QMS will not be awarded tenders and other
possible business, so it is therefore in the interests of any freight forwarding organisation to
implement this kind of control.

Quality Management Systems in Freight Forwarding And International Logistics

According to Business Week magazine, a quality management system (QMS) is defined as the
“organisational structure, procedures, processes and resources needed to measure the
effectiveness of producing goods and services to clients and customers.” The purpose of QMS
is to develop and maintain an organisational system, which provides quality assurance and
audit through every area of an organisation while optimising productivity. These processes
benefit an organisation and lead to customer satisfaction.

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In the QMS of each organisation is recorded the systems, policies, and procedures used to
manage each operation which is carried out within that organisation. These records consist
of formally structured documents, known as “Standard Operating Procedures”.

Within the Freight Forwarding and Logistics environment (in common with many other
service-related industries) the most widely applied QMS is “The International Organisation
for Standardisation ISO 9001:2015 series”, which describes standards for a QMS addressing
the principles and processes surrounding the design, development and delivery of a general
product or service. Organisations can participate in a continuing certification process to ISO
9001:2015 to demonstrate their compliance with the standard, which includes a requirement
for continual (i.e., planned) improvement of the QMS. In order to be certified as being
compliant with the ISO 9001:2015 standard, the organisation needs to subject itself to a
continuous audit process which is undertaken by a body which has been accredited to carry
out such audits by ISO.

ISO 9001:2015 specifies requirements for a quality management system when an
organisation:

a) needs to demonstrate its ability to consistently provide products and services that
meet customer and applicable statutory and regulatory requirements, and

b) aims to enhance customer satisfaction through the effective application of the system,
including processes for improvement of the system and the assurance of conformity
to customer and applicable statutory and regulatory requirements.

All the requirements of ISO 9001:2015 are generic and are intended to be applicable to any
organisation, regardless of its type or size, or the products and services it provides.

A preview of the ISO 9001:2015 standard is provided herewith below:

Introduction

0.1 General

The adoption of a quality management system is a strategic decision for an organisation that
can help to improve its overall performance and provide a sound basis for sustainable
development initiatives.

The potential benefits to an organisation of implementing a quality management system
based on this International Standard are:

a) the ability to consistently provide products and services that meet customer and
applicable statutory and regulatory requirements.

b) facilitating opportunities to enhance customer satisfaction.

c) addressing risks and opportunities associated with its context and objectives.

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d) the ability to demonstrate conformity to specified quality management system
requirements.

This International Standard can be used by internal and external parties.
It is not the intent of this International Standard to imply the need for:

• uniformity in the structure of different quality management systems.
• alignment of documentation to the clause structure of this International Standard.
• the use of the specific terminology of this International Standard within the

organisation.

The quality management system requirements specified in this International Standard are
complementary to requirements for products and services.

This International Standard employs the process approach, which incorporates the Plan-Do-
Check-Act (PDCA) cycle and risk-based thinking.

The process approach enables an organisation to plan its processes and their interactions.

The PDCA cycle enables an organisation to ensure that its processes are adequately resourced
and managed, and that opportunities for improvement are determined and acted on.

Risk-based thinking enables an organisation to determine the factors that could cause its
processes and its quality management system to deviate from the planned results, to put in
place preventive controls to minimise negative effects and to make maximum use of
opportunities as they arise (see Clause A.4).

Consistently meeting requirements and addressing future needs and expectations poses a
challenge for organisations in an increasingly dynamic and complex environment. To achieve
this objective, the organisation might find it necessary to adopt various forms of improvement
in addition to correction and continual improvement, such as breakthrough change,
innovation, and re-organisation.

In this International Standard, the following verbal forms are used:

• “shall” indicates a requirement.
• “should” indicates a recommendation.
• “may” indicates a permission.
• “can” indicates a possibility or a capability.

Information marked as “NOTE” is for guidance in understanding or clarifying the associated
requirement.

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0.2 Quality management principles

This International Standard is based on the quality management principles described in
ISO 9000. The descriptions include a statement of each principle, a rationale of why the
principle is important for the organisation, some examples of benefits associated with the
principle and examples of typical actions to improve the organisation's performance when
applying the principle.

The quality management principles are:

• customer focus.
• leadership.
• engagement of people.
• process approach.
• improvement.
• evidence-based decision making.
• relationship management.

0.3 Process approach
0.3.1 General

This International Standard promotes the adoption of a process approach when developing,
implementing, and improving the effectiveness of a quality management system, to enhance
customer satisfaction by meeting customer requirements. Specific requirements considered
essential to the adoption of a process approach are included in 4.4.

Understanding and managing interrelated processes as a system contributes to the
organisation's effectiveness and efficiency in achieving its intended results. This approach
enables the organisation to control the interrelationships and interdependencies among the
processes of the system, so that the overall performance of the organisation can be
enhanced.

The process approach involves the systematic definition and management of processes, and
their interactions, so as to achieve the intended results in accordance with the quality policy
and strategic direction of the organisation. Management of the processes and the system as
a whole can be achieved using the PDCA cycle (see 0.3.2) with an overall focus on risk-based
thinking (see 0.3.3) aimed at taking advantage of opportunities and preventing undesirable
results.

The application of the process approach in a quality management system enables:

a) understanding and consistency in meeting requirements.

b) the consideration of processes in terms of added value.

c) the achievement of effective process performance.

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d) improvement of processes based on evaluation of data and information.
Figure 1 gives a schematic representation of any process and shows the interaction of its
elements. The monitoring and measuring check points, which are necessary for control, are
specific to each process and will vary depending on the related risks.
Figure 1 — Schematic representation of the elements of a single process

0.3.2 Plan-Do-Check-Act cycle
The PDCA cycle can be applied to all processes and to the quality management system as a
whole. Figure 2 illustrates how Clauses 4 to 10 can be grouped in relation to the PDCA cycle.
Figure 2 — Representation of the structure of this International Standard in the PDCA cycle

NOTE: Numbers in brackets refer to the clauses in this International Standard.

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The PDCA cycle can be briefly described as follows:

• Plan: establish the objectives of the system and its processes, and the resources
needed to deliver results in accordance with customers' requirements and the
organisation's policies and identify and address risks and opportunities.

• Do: implement what was planned.
• Check: monitor and (where applicable) measure processes and the resulting products

and services against policies, objectives, requirements, and planned activities, and
report the results.
• Act: take actions to improve performance, as necessary.

0.3.3 Risk-based thinking

Risk-based thinking (see Clause A.4) is essential for achieving an effective quality
management system. The concept of risk-based thinking has been implicit in previous editions
of this International Standard including, for example, carrying out preventive action to
eliminate potential nonconformities, analysing any nonconformities that do occur, and taking
action to prevent recurrence that is appropriate for the effects of the nonconformity.

To conform to the requirements of this International Standard, an organisation needs to plan
and implement actions to address risks and opportunities. Addressing both risks and
opportunities establishes a basis for increasing the effectiveness of the quality management
system, achieving improved results, and preventing negative effects.

Opportunities can arise as a result of a situation favourable to achieving an intended result,
for example, a set of circumstances that allow the organisation to attract customers, develop
new products and services, reduce waste, or improve productivity. Actions to address
opportunities can also include consideration of associated risks. Risk is the effect of
uncertainty, and any such uncertainty can have positive or negative effects. A positive
deviation arising from a risk can provide an opportunity, but not all positive effects of risk
result in opportunities.

0.4 Relationship with other management system standards

This International Standard applies the framework developed by ISO to improve alignment
among its International Standards for management systems (see Clause A.1).
This International Standard enables an organisation to use the process approach, coupled
with the PDCA cycle and risk-based thinking, to align or integrate its quality management
system with the requirements of other management system standards.
This International Standard relates to ISO 9000 and ISO 9004 as follows:

• — ISO 9000 Quality management systems — Fundamentals and vocabulary provides
essential background for the proper understanding and implementation of this
International Standard.

• — ISO 9004 Managing for the sustained success of an organisation — A quality
management approach provides guidance for organisations that choose to progress
beyond the requirements of this International Standard.

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Annex B provides details of other International Standards on quality management and quality
management systems that have been developed by ISO/TC 176.

This International Standard does not include requirements specific to other management
systems, such as those for environmental management, occupational health and safety
management, or financial management.

Sector-specific quality management system standards based on the requirements of this
International Standard have been developed for a number of sectors. Some of these
standards specify additional quality management system requirements, while others are
limited to providing guidance to the application of this International Standard within the
particular sector.

A matrix showing the correlation between the clauses of this edition of this International
Standard and the previous edition (ISO 9001:2008) canbe found on the ISO/TC 176/SC 2 open
access web site at: www.iso.org/tc176/sc02/public.

1 Scope

This International Standard specifies requirements for a quality management system when
an organisation:

• a) needs to demonstrate its ability to consistently provide products and services that
meet customer and applicable statutory and regulatory requirements, and

• b) aims to enhance customer satisfaction through the effective application of the
system, including processes for improvement of the system and the assurance of
conformity to customer and applicable statutory and regulatory requirements.

All the requirements of this International Standard are generic and are intended to be
applicable to any organisation, regardless of its type or size, or the products and services it
provides.

NOTE 1 In this International Standard, the terms “product” or “service” only apply to
products and services intended for, or required by, a customer.

NOTE 2 Statutory and regulatory requirements can be expressed as legal requirements.101

The administration of any business is really important, but even more so in a freight
forwarding and clearing operation due to the high volume of documentation, exchanged
physically or electronically that needs to be controlled, the number of ‘third parties’ involved
that one may have no control over, and the need ensure that excellent customer service is
consistently achieved.

With regards the documentation, the fundamentals remain the same whether you are
moving cargo via air freight, surface freight (road, rail, sea). You will generally always need
the following:

101 https://www.iso.org/obp/ui/#iso:std:iso:9001:ed-5:v1:en

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1. A commercial invoice from the supplier
2. Packing list
3. Transport document
4. Customs documents (both sides – import/export)
5. Any document “mode of transport” specific
6. Any document “product specific”
7. Any document “country specific”
8. Any document for any relevant authority bodies

At the early stages in a career in freight forwarding, it is good to keep in mind the following
with regards international trade:

• There is always a process to follow.
• There are always documents required within the process.
• There are always authority bodies regulating the process and the documents required.
• There are always time frames and deadlines to work towards.
• 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.

Exporters and importers rely heavily on the freight forwarding and clearing agent for advice
and expertise – their knowledge of the shipping process is generally not adequate, so you
therefore as a forwarding and clearing organisation need to ensure you are on pace with the
latest rules, regulations, methods, etc. within the shipping process. Importers and exporters
obtain the services of freight forwarders and clearing agents, but this does not abdicate them
from being ultimately responsible for complying with all the rules and regulations.

As a forwarding and clearing organisation there is much to administer, organise and control
when moving cargo and many third parties involved, so act immediately throughout the
process and pay attention to detail all the way through.

Key performance areas

Obviously throughout the freight forwarding process whether imports or exports, there are
KEY PERFORMANCE areas that need to be monitored and attention to detail needs to be given
if you are to reduce risk and cost and give excellent service. Freight forwarding has many third
parties involved in the process, which makes monitoring the key performance areas a MUST
and not optional.

The freight forwarding fundamental cycle is basically the same whether dealing with imports
or exports but within the process lays a number of functions that are carried out. The diagram
below will help you see the basic fundamental flow of the freight forwarding process.

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Thus, is ordered to make sure that all these processes are carried our effectively, a freight
forwarding company will organise itself into departments according to functional roles. This
may be illustrated in the form of an organogram.

The diagram below is only illustrative and each company uses a structure most idea l or
uniquely suited to is strategic operations:

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Freight forwarding and clearing is strictly To administer and control freight
controlled by DATE AND TIME, you must forwarding & clearing operation
therefore ensure things are done timeously - takes precision work – things must
considering the many third parties involved in be done right the first time and
the process that you have NO control over. communication must be a priority

Topic 3.2: Types and functioning of sea freight carriers and agents [KT0302]

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Sea carriage

Until the emergence of modern national states, the law governing maritime commerce had
been largely uniform in the Western world. In the 18th and 19th centuries, however,
legislative enactments and judicial decisions in pursuit of narrowly conceived national
interests gradually displaced in various countries the venerable and uniform law of the sea
and gave rise to sharp conflicts of laws. The movement of goods from country to country was
thus hampered at a time when advancing technology and the spreading Industrial
Revolution were about to lead to an expansion of maritime commerce on a world scale.
Beginning with the last decades of the 19th century, it has become increasingly apparent that
these conflicts of laws might be overcome by means of international conventions. The law of
merchant shipping was quite naturally one of the first branches of private law to attract
attention for possible international regulation.

The movement for uniformity culminated in the signing in 1924 of the International
Convention for the Unification of Certain Rules of Law Relating to Bills of Lading (“Hague
Rules”). The convention was merely intended to unify certain rules of law relating to bills of
lading and only with regard to damages occurring to hull cargo other than live animals. All
bills of lading covered by the convention are subject to certain standard clauses defining the
risks assumed by the carrier, which are absolute and cannot be altered by contrary
agreement, and the immunities the carrier can enjoy, unless the parties agree otherwise.

In general, clauses relieving the carrier from liability for negligence in loading, handling,
stowing, keeping, carrying, anddischarging the goods or that diminish his obligation to furnish
a seaworthy vessel are declared null and void. The carrier, however, is relieved from liability
for negligence in navigation or in the management of the vessel and from the absolute
warranty of seaworthiness. The convention was originally intended to apply to all bills of
lading issued in any one of the contracting states.

Most maritime nations have ratified or adhered to the convention, and others, such as Greece
and Indonesia, have enacted domestic legislation incorporating the rules agreed upon in
Brussels. Some adhering nations, including Germany, Belgium, Turkey, and the Netherlands,
have incorporated the rules of the convention into their commercial codes. Others, including
South Africa, the United States, Japan, Great Britain, and most members of the British
Commonwealth, have enacted the rules in the form of special statutes known as Carriage of
Goods by Sea Acts. Still others, including France, Italy, Egypt, and Switzerland, have given the
convention itself the force of law and, in addition, have enacted domestic legislationmodelled
on the convention.

In addition to the 1924 of the International Convention for the Unification of Certain Rules of
Law Relating to Bills of Lading (Hague Rules), there are several other International
Conventions that govern the carriage of goods by sea such as:

• 1968 Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol,
• 1978 United Nations Convention on the Carriage of Goods by Sea (the Hamburg

Rules),

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• 1991 United Nations Convention on the Liability of Operators of Transport Terminals
in International Trade (Vienna rules),

• 2008 Convention of Contracts for the International Carrying of Goods Wholly or Partly
by Sea (Rotterdam Rules).

In order to comprehend the functioning of sea freight carriers and agents, it is important to
get an understanding of the definitions of what a carrier is.

According to the Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol
1968,102 following definitions or words are employed, with the meanings set out below:

(a) 'Carrier' includes the owner or the charterer who enters into a contract of carriage
with a shipper.

(b) 'Contract of carriage' applies only to contracts of carriage covered by a bill of lading
or any similar document of title, in so far as such document relates to the carriage of
goods by sea, including any bill of lading or any similar document as aforesaid issued
under or pursuant to a charter party from the moment at which such bill of lading or
similar document of title regulates the relations between a carrier and a holder of the
same.

(c) 'Goods' includes goods, wares, merchandise, and articles of every kind whatsoever
except live animals and cargo which by the contract of carriage is stated as being
carried on deck and is so carried.

(d) 'Ship' means any vessel used for the carriage of goods by sea.

(e) 'Carriage of goods' covers the period from the time when the goods are loaded on to
the time they are discharged from the ship.

Then, according to the 1978 United Nations Convention on the Carriage of Goods by Sea, the
following definitions bear relevance and comparison to the above:103

1. "Carrier" means any person by whom or in whose name a contract of carriage of
goods by sea has been concluded with a shipper.

2. "Actual carrier" means any person to whom the performance of the carriage of the
goods, or of part of the carriage, has been entrusted by the carrier, and includes any
other person to whom such performance has been entrusted.

3. "Shipper" means any person by whom or in whose name or on whose behalf a
contract of carriage of goods by sea has been concluded with a carrier, or any person
by whom or in whose name or on whose behalf the goods are actually delivered to
the carrier in relation to the contract of carriage by sea.

102 https://www.jus.uio.no/lm/sea.carriage.hague.visby.rules.1968/doc.html
103 https://unctad.org/en/PublicationsLibrary/aconf89d13_en.pdf

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4. "Consignee" means the person entitled to take delivery of the goods.

5. "Goods" includes live animals; where the goods are consolidated ina container, pallet,
or similar article of transport or where they are packed, "goods" includes such article
of transport or packaging if supplied by the shipper.

6. "Contract of carriage by sea" means any contract whereby the carrier undertakes
against payment of freight to carry goods by sea from one port to another; however,
a contract which involves carriage by sea and also carriage by some other means is
deemed to be a contract of carriage by sea for the purposes of this Convention only
in so far as it relates to the carriage by sea.

7. "Bill of lading" means a document which evidences a contract of carriage by sea and
the taking over or loading of the goods by the carrier, and by which the carrier
undertakes to deliver the goods against surrender of the document. A provision in the
document that the goods are to be delivered to the order of a named person, or to
order, or to bearer, constitutes such an undertaking.

Furthermore, in this convention, reference to the carrier or to the consignee means, in
addition to the carrier or the consignee, the servants or agents, respectively of the carrier or
the consignee.

Therefore, in essence, a carrier is a firm that transports goods or people via land, sea, or air.
And in particular a Sea/Ocean Carrier is a/an enterprise that offers service via sea/ocean
transport. An Agent is an enterprise authorised to transact business for, or in the name of,
another enterprise.104

104 https://www.inboundlogistics.com/cms/logistics-glossary/

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Just to name a few, the following are some of the major global sea freight carrier companies
in the world:

• AP Moller Maersk (Maersk Line) 105
• MSC 106
• Hapag-Lloyd 107
• CMA CGM 108
• Safmarine 109

Factors influencing the formation of freight rates on maritime shipping markets110

The role of maritime shipping in maritime policy and in the overall development of every
country is very important. Its main task is to satisfy varying, by volume changeable and by
characteristic elastic, demand for maritime transport.

To regulate supply and demand, the shipping market uses different economic mechanisms,
and every turn of a cycle on the shipping market brings new possibilities and threats, so in a
span of only several months the shipowner’s cash flow can change significantly, which means
that the market value of his fleet can fluctuate millions of dollars. It is said that maritime is a
skill game and that playing with cycles depends on the possibilities to recognise, or even
better, predict ups and downs on the freight market. Those who can recognise when all other
“players” on the market are wrong have the best odds.

From an economic point of view, every maritime cycle is unique and to understand the state
of the market it is necessary to develop systematic explanation of how the cycles on the
freight market are generalised. In world practice, the supply and demand model is used for
that. That technique is often used by economists to analyse wide consumption on the market.

The freight rates are influenced by market flows depending on the cargobeing trade and they
are expressed in the form of indices for each different market segment (Radonja et al., 2011:
321). Of many factors which influence the maritime shipping market, five factors influence
the demand for maritime transport, and five factors influence the supply on the maritime
shipping market. The factors influencing the demand for maritime transport are:

• world economy,
• international maritime trade,
• average achieved profit,
• political events and,
• transport costs.

105 https://www.maersk.com/
106 https://www.msc.com/
107 https://www.hapag-lloyd.com/en/home.html
108 http://www.cma-cgm.com/
109 https://www.safmarine.com/

110

https://www.researchgate.net/publication/284170614_Factors_influencing_the_formation_of_freight_rates
_on_maritime_shipping_markets

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On the supply side is:
• world fleet and its productivity,
• shipbuilding,
• shipbreaking and,
• freights.

The relationship between these variables and the way they mutually function is shown in in
the diagram below, consisting of three components (Stopford, 2009: 114): 1) demand,
representing the model A, 2) supply, representing the model B and 3) freight market shown
in model C, connecting the other two by regulating the cash flow between those two sectors.
The way in which this mechanism functions is very simple. On the demand side there is world
economy which through a series of different industries’ activities creates goods that require
maritime transport. The development in partial industrial sectors can modify the general
growth trend, as can the changes of shipping distances, creating the final demand for
maritime services.

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Source: Stopford, M.: Maritime economics, Rutledge, Taylor & Francis Group, 2000, pg. 116.
On the supply side there is merchant fleet which represents a fixed shipping capacity market
(Domijan-Arneri, 2014: 141). In a certain period of time only a part of that fleet can be used
for trade, while in that time some ships can be decommissioned or used as a depot. The fleet
can be expanded with new buildings or limited by shipbreaking. The amount of fleet transport
ensures but also depends on the productivity of the management of ships in partial speed
and in waiting time.
Finally, shipper’s policies, banks and legal regulators all influence the development of supply
on the market. The central place in the diagram (the shipping market model) is occupied by
freight(s), which represent the equilibrium between supply and demand. This connection
between the market balance and the freight is one of the most important economic
connections in the shipping model and is controlled by the shipowners who decide how to
react in a certain situation. This model gives the cycles on the shipping market a characteristic
pattern of uneven ups and downs.

For a more in-depth analysis of this topic, please consult the following resource: A. Jugović et
al. / Scientific Journal of Maritime Research 29 (2015) 23-29

The Freight Market Make-up

The following table gives an idea of which types of vessels may be found in the different areas
of the freight market:

Shipping market segments by vessel type

Bulk Transport Specialised Transport Liner Transport
(mainly tramp) (mainly tramp, some liner)
Bulk carriers Forest Product Carriers Containerships
Crude oil tankers Veg-oil tankers Multipurpose ships
Ro-Ro carriers
Product tankers Chemical Carriers Ro-Ro freight carriers
Combos Gas Carriers Ro-Ro trailer carriers
LPG Carriers
LNG Carriers
Reefers

Car/vehicle carriers
Ro-Ro carriers

Tramp Shipping Services

Until the 1950s the sea transport business had two main segments, the network of regular
liner services, who carried small cargo parcels of cargo on defined routes- liner services, and
tramp shipping which serves to carry irregular cargoes which did not fit in with the regular
liner services. These two services were defined as being distinguished by the organisation
structure rather than the ships used, as follows:

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“A liner service implies a fleet of ships under common ownership or management which
provides a fixed service at regular intervals between named ports and offers themselves as
general carriers of any goods requiring shipment between those ports.
A fixed itinerary, inclusion in a regular service and the obligation to accept cargo from all
comers and to sail, whether filled or not, on a date fixed by a published schedule; these, and
not the size and speed of the ship are what distinguish the “liner” from the “tramp” – the ship
which can be hired as a whole, by the voyage or the month, to load such cargo and to carry it
between ports as the charterer may require.”

Although the distinction between “tramp” and “liner” as described above still remains, what
is of more importance nowadays is to recognise that the market is more segmented in terms
of the specialised cargoes which are offered and the specialised ships used to convey them,
as shown in the table in the previous section above (Shipping market segments by vessel
type).

Liner Shipping Services

Shipping Line Conferences

Liner shipping is when a shipping line has a regular advertised service between any two points.
The liner shipping business was transformed after 1960 by the introduction of containerships.
Containerships are one element in a global transportation network of unprecedented speed
and security. Sea containers are interchanged between ocean vessels, railcars, and trucking
chassis. Global point-to-point transportation firms and alliances are increasingly common and
there is some question as to the continued relevance of shipping conferences in this inter -
modal competitive environment. Indeed, non-conference carriers have become more
prevalent in recent years and are carrying a greater proportion of freight than they did in the
past.

Further, the United States Shipping Acts of 1984 and 1998 have weakened the ability of
conferences to police their own members by mandating that firms have the right of
"independent action" on rates and that they are permitted to negotiate large quantity
"service contracts" with customers outside the conference price-fixing agreement. The
European Commission has also regulated conferences more severely since the late 1980s.
Additionally, exporters and importers are increasingly organised on an international level and
have expressed their concerns about the conference system with increasing force. With their
prodding, the Organisation for Economic Cooperation and Development is currently
reviewing liner conference pricing policies and other practices. The current decade is likely to
see some very interesting developments in the area of international shipping conferences.

Since the 1990s there have been increasing moves on the parts of the Governments of
international trading nations to discourage the formation and continuation of Conferences,
especially where this has involved price collusion on the part of participating lines.

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