MBA Presentation in International Traffic Management

2. Traffic Management, as defined purchase and control of transportation services for a shipper or consignee, or both

3. Traffic Management, as defined Involves the usual humps and bumps (problems and dilemmas) encountered in the movement of goods from the country of export to the country of import

4. Traffic Management, as defined is concerned with the identification of the problem/s and offering solution/s on matters concerning cargo movement and clearance

6. Cargo – handling system by links

11. Customs Functions and their Vulnerability to Corruption

12. Customs Functions and their Vulnerability to Corruption

13. Customs Functions and their Vulnerability to Corruption

14. Customs Functions and their Vulnerability to Corruption

15. Customs Functions and their Vulnerability to Corruption

16. Customs Functions and their Vulnerability to Corruption

17. Customs Functions and their Vulnerability to Corruption

18. Strategies to Reduce Corruption in Customs

19. Strategies to Reduce Corruption in Customs

20. Strategies to Reduce Corruption in Customs

22. Strategies to Reduce Corruption in Customs

24. What is Freight Forwarder? commission agent performing on behalf of the exporter/importer routine such as loading/unloading of goods, storage of goods, arranging transport, obtaining payment, etc.

25. Today, a freight forwarder plays an important role in international trade and transport. The services that a freight forwarder renders may often range from routine and basic tasks such as the booking pf spare or customs clearance to a comprehensive package of services covering the total transportation and distribution process.

26. Forwarders are known by different names in different countries, such as “customs house agent”. “clearing agent,” customs broker” shipping and forwarder agent’ and in some cases acts as a “principal carrier”’ that is, the main carrier. But one aspect of their activities which is common to all of them, whatever the name they use, is that all set their services only.

27. SCOPE OF FREIGHT FORWARDING SERVICES ON BEHALF OF THE CONSIGNOR (EXPORTER) The forwarder, in accordance with his shipping instructions, would: Choose the route, mode of transport and a suitable, would: Books space with the selected center. Take delivery of the goods and issue relevant documents such as the Forwarders’ Certificate of Receipt, the Forwarders’ Certificate of Transport, etc. (these documents will be deal with in more detail in the module on Freight Forwarding Documents).

28. Study the provisions of the letter of credit and all Government regulations applicable to the shipment of goods in the country of export, the country of import, as well as any transit country; he would also prepare all the necessary documents. Pack the goods (unless this is done by the consignor before handling them over to the forwarder), taking into accounts the route, the mode of transport, the nature of the goods and applicable regulations, if any the country of export, transit countries and country destination. Arrange warehousing of the goods, if necessary. Weight and measures the goods

29. Draw the consignor’s attention to the need for insurance and arrange for the insurance of goods, if required by the consignor. Transport the goods to the port, arrange for customs clearance, related documentation formalities and deliver the goods to the carrier Attend to foreign exchanges transactions, if any Pay fees and other charges including freight. Obtains the signed bills of lading from the carrier and arrange delivery to the consignor. Arrange for transshipment en route if necessary.

30. Monitor the movement of goods al the way to the consignee through contacts with the carrier the forwarders’ agents abroad. None damages or losses, if any, the goods. Assist the consignor is pursuing claims, if any, against the carrier for the loss of the goods or for damage to them.

31. ON BEHALF OF THE CONSIGNEE (IMPORTER) The forwarder, In accordance with his shipping instructions, would Monitor the movement of goods on behalf of the consignee when the consignee controls freight, that is, the cargo Receive and check all relevant documents relating to the movement of the goods. Take delivery of the goods from the carrier and, if necessary, pay the freight costs. Arrange customs clearance and pay duties, fees and other charges to the customs and other public authorities.

32. Arrange transit, if necessary. Deliver the cleared goods to the consignee. Assist the consignee. If necessary, In pursuing claims, if any, against the carrier for the loss of the goods or any damage to them. Assist the c0onsignee, If necessary, in warehousing and distribution

33. OTHER SERVICES In addition to these services the forwarder may also provide, depending upon the requirements of his customer, other services arising during transit operations and also special services such as consolidation or groupage services (grouping individual consignments arising in connection with project cargoes, turnkey projects (supplying equipment, plant etc. ready, for operation), etc. He may also advise his customer on consumer needs, new markets, competitive situations, export strategy, appropriate trade terms to be included in foreign trade contracts acts and in short in all matters relating to his business.

34. SPECIAL CARGOES Transportation of project cargoes This essentially involves the movement of heavy machinery, equipment, etc., for the construction of large projects such as airports, chemical plants, hydro-electric plants, oil refineries, etc., from manufacturers to construction sites. The movement of such cargoes has to be carefully planned in order to ensure timely delivery and may require the use of heavy cranes, oversize trucks, special types of ships, etc. This is a specialized field for freight forwarders.

35. Garment hanging services Garments are carried in hangers hung on racks in special containers and, at the destination, they are transferred directly from the containers to stores for display. This avoids the need for processing the garments which would have been necessary had they been stuffed inside containers and at the same time provides protection from the weather, dust, etc..

36. Overseas exhibition Freight forwarders are usually appointed by organizers of exhibitions to transport exhibits offered by different exhibitors to the exhibition site in another country. The forwarders have to comply with the instructions of the organizers in regard to the form of transport to be used, the specific customs terminal in the country of destination, when the exhibits are to be delivered, the documentation required, etc..

37. FREIGHT FORWARDERS RELATIONSHIP WITH VARIOUS PARTIES

38. SERVICES OF A FREIGHT FORWARDERS Adviser/Consultant Packing- Choice of type of packing Routing- Choice of itinerary and means of transport Insurance - Type of coverage needed for the goods Customs regulations - Clearing in and outbound Transportation Documentation - Accompanying documents (Carriers) Letter of Credit stipulations - Banking requirements

39. Organizer for: Import/Export and transit consignments Consolidations - groupage shipments Special and heavy transport -Project Cargoes

40. Imports Unloading of cargo - from carrier’s means of transport Breaking bulk of consolidations Customs clearance

41. Exports Pick-up Packing and Marking Freight/space booking – with carrier Delivery to carrier Issue of transport documents – freight Escorting documents Supervising departure Dispatch advice – to customer Customs clearance

42. Transit Taking samples Repacking Storage in bond (under customs control) Re-forwarding

43. SERVICES OF A FREIGHT FORWARDER

44. THREE BASIC FUNCTIONS OF PACKAGING Protection Preservation Presentation

45. GUIDELINES ON THE CHOICE OF PACKAGING Some broad guidelines to be followed in the choice of packaging technique include the considerations which follow. Goods should be well stowed within the package, evenly distributed and properly secured. Items completely filling the case or carton contribute to the strength of the whole package. Items which do not completely fill the package must be cushioned against shock or vibration. There must be adequate International bracing or securing using battens (bars of wood) or dunnage (mats, wood shavings, etc.).

46. Where the consignment consists of a number of small packages, it is preferable to consolidate them into one load by strapping and securing them to a wooden pallet base ( a portable platform for storing loads). The assembly of cargo into the largest practical unit consistent with the handling weight and dimension requirements reduces the danger of theft to a minimum). There is also the advantage of reduced handling stresses, as larger units require the use of mechanical handling equipment rather than crude manual techniques. Pallet packaging is quite suitable for goods carried in containers although they may also be carried by conventional methods. In this case, however, there is the risk of breakage during transfer, or on forwarding and handling operations.

47. In selecting the appropriate type of package, account should be taken of the probability of cargo being “overstowed” along with other packages in warehouses and cargo holds.

48. Appropriate strapping and banding techniques should be used for all packages.

49. The regulations of destination country as well as those of any transit countries should be checked in order to ensure that they do not prohibit certain types of packaging material, particularly material which is harmful to the environment.

50. The re-use of second–hand cartons or cases should be avoided as they are more liable to collapse or and may invite pilferage (stealing in small quantities) if the contents become exposed.

51. To improve the handling of bigger volumes of cargo, the design of the package should match the dimensions of the product so as to save packaging and freight costs. From the shipper’s point of view, it is describe that the following considerations should be borne in mind in order to minimize the cost of freight: in respect of measurement of the cargo, the package should be of minimum dimension; there should be optimum utilization of space within the package; and goods attracting different freight rates should not be packed together in one package, in case the carrier charges freight for the whole package at the rate applicable to the highest –rated commodity.

52. It is essential that waterproof wrapping for the contents and waterproof lining for packages should be provided, particularly when the packages are likely to remain in an unprotected area, such as the customs area.

53. Over –packaging in the name of protective packaging should be avoided, in order to make optimum use of the carrying capacity. This is particularly important in air transport where packages are consolidated into pallets, igloos (see 4.5.2.2) or containers.

54. Powered or granular material should be packed preferably in flexible multi wall bags which are adapted to the requirements of the material, taking into account its chemical and physical characteristics.

55. In the case of pressed bales (canvas packages of merchandise), it is advisable to use in inner wrap of waterproof paper below an outer or primary cover of fiberboard, material, over which heavy jute or a similar cover can be provided before strapping.

56. In designing or choosing a suitable package, it may be useful to consult, whenever possible, the consignee and obtain reports from his end about the packaging of specific products moving on specific routes. It would also be advisable to ascertain from consignees to what extent handling gear, port equipment, etc., are available at the port of destination, what inland –transportation facilities are available and if the goods have to be moved to inland centres.

57. In export packing, consideration should be given to the “presentation” aspect of the package: the design, colour, embellishment of the packages, which could produce a favourable reaction in the export market and improve the competitiveness of the product.

58. INFORMATION REQUIRED FOR PACKAGING The type of packaging required depends on the: Nature and type of goods; Volume; Weight; Number of packages; Types of packages; Mode of transport; and Final destination.

59. TYPES OF PACKAGING FOR BREAK BULK CARGO The exporter or seller is usually responsible for packing the goods for break bulk cargo, whereby a consolidated consignment is broken down on delivery for distribution to individual consignees. The types of packaging required for any product varies with the nature and volume of the product as well as the method of transport it is carried over. Generally the following types of packaging are used:

60. Bagged cargo The commodity itself has to be robust to withstand outside pressure and compression, for the bags will only hold the contents in one place and will not provide protection against external damage. Such commodities might typically be fertilizers, grain, (rice, maize, wheat, etc.), seeds, dried, fruit, sugar, coconut, coffee, flour, fresh vegetables, frozen offal (meat from carcasses), flour copra, small items such as shells, raisins, etc., mail, salt, mineral sands and ores, meal (fish, seed, copra, etc.,) dried blood, dried milk (casein etc.).

61. Fibreboard boxes and cartons Fibreboard boxes and cartons are very widely used for the sake of economy and efficiency. Although comparatively cheap, they are able to withstand normal transport hazards and protect the contents against loss and damage. They may be particularly suitable in the case of goods carried in containers from the point of origin to the destination provided the goods are not fragile. But if the containers have to be unloaded at the port of discharge for further transport to their final destination, they may have to be place on pallets and securely strapped in order to protect them from pilferage and damage. Depending upon the nature of the commodities, cartons of the right type of suitable strength and sizes should be used.20

62. Wooden cases These have stood the test of time and their main advantage is that they have the wall strength to support superimposed loads. They are more expensive than the carton – type packing due to the cost of wood. Wooden cases are particularly suitable when the goods are carried by conventional methods and, when they are sensitive to heat, dampness, etc., The goods may require protection by way to packing with layers of insulating materials, tar papers, sealed plastic covering etc.. There are different types of wooden cases, including those made of plywood, which are being increasingly used by exporters.

63. Wooden crates These are suitable for wooden packages built like a skeleton. The open crate can be used when the contents are sufficiently resilient to require a minimal form of packing to facilitate handling and stowage. Sometimes, it is used as an outer package to consolidate fireboard boxes or give cartons extra protection. The skeleton crate is often used for the carriage of large pieces of machinery.

64. Bales For certain trades, the use of hessian-wrapped bales is suitable, particularly when the product permits, pressure baling or compression by banding. It is, however, vulnerable to pilferage, damage by handling using looks, etc..

65. Drums, barrels, casks These are generally used for liquids such as latex, chemicals, whisky, detergents, oil molasses, casings, paints, powders, granules and other solids such as chemicals, cement, some ores and scrap metal.

66. Shrink wrapping Dry chemicals, granular and powered substances in bags cannot be easily strapped on to a pallet. When these items have to be unitized, bags are stowed on the pallet and interlocked; a polythene sheet of suitable gauge in then draped over the bags. This unit is then passed through a tunnel oven where polythene is heat-sealed tight, binding the bags to the pallet to form a good unit load.

67. Lift vans When household goods such as tables, chairs, cupboards, glassware, brassware, etc., have to be moved, especially from one country to another, they have to be packed in “lift vans” which are unit loads specially built for the purpose. They are generally made of wood, lined with waterproof material on all sides and additional metallic proofing on the roof to prevent damage by rain and sun. These units are made to be handled by forklift trucks and packed in ISO 20 foot containers

68. Preservation against corrosion Machinery when being packed for export by sea has to be preserved against humidity and corrosion. All the open parts are chemically treated and sometimes greased. The best preservation is to vacuum –seal the machine. The machine is covered by high-density polythene which is draped over the unit and heat –sealed. A vacuum pump then draws the air out of the polythene and the machine is preserved for as long as one year under vacuum. In lift vans and other packaging, silica gel in sufficient quantity is used, depending on the volume of the package.

69. Special cargo There are also various other type of packages designed for special commodities moving by different forms of transport. For examples, there are special types of packages for air shipments of commodities like fresh vegetables, meat etc.. Again the unit load device (ULD) system adopted for air transport includes containers of metal and fibre-glass as well as light-weight pallets. In regard to shipments of ready –made clothes, the latest development, garments on hangers (GOH), is that they are carried on hangers inside containers for delivery in the same condition as they left to the consignees’ premises to the department stores at their destination.

70. Special cargoes fall into the following categories: a. Bulk commodities- heavy equipment, machinery, etc.. Bulk commodities like ore and food grains, heavy equipment and machinery, locomotives and structures, do not require packing. They require suitable vessels with suitable handling gear and the like.

71. b. Goods of high value. Goods of high value such as gold and platinum in all forms, coins, jewelry, live animals, legal banknotes, securities, at present are mostly moved by air. The need special care and protection. Direct delivery to the vessel and direct collection upon arrival of the vessel is advisable.

72. c. Perishables and refrigerated cargo Perishables and refrigerated cargo like fruits, fresh vegetables, cheese and meat, are usually carried in suitable ventilated packages in temperature –controlled holds or in thermal containers. Loading or unloading operations is respect of such cargoes have to be carried out quickly or on a priority basis when the vessel calls at the port, and this is an aspect to which freight forwarders need to pay special attention.

73. d. Live animals. The carriage of live animals requires special arrangements, such as the erection of cages, the provision of necessary attendants as well as the right type and amount of animal food. Possible quarantine regulations in the controls of origin and destination must be taken into consideration.

74. e. Dangerous /Hazardous cargo This kind of cargo requires special packing, marking and labeling, which is a task undertaken by the shippers themselves.

76. DANGEROUS OR HAZARDOUS CARGO Dangerous and hazardous goods require special packing, marking and labeling. Prior to the adoption of the International Convention for the Safety of Life at Seas, there was no uniform set of rules applicable to packing or labeling such as goods. Many countries had their own law and regulations.

77. The following are the name IMO classes applicable to the carriage of dangerous goods in all ships. Class 1 – Explosive Class2 – Gases, compressed, liquefied or dissolved under pressure Class3 – Flammable (that is, inflammable) liquids Class 4.1 – Flammable solids Class 4.2 – Substances liable to spontaneous combustion Class 4.3 – Substances which, in contact with water, emit flammable gases Class 5.1 – Oxidizing substances

78. Class 5.2 – Organic peroxides Class 6.1 – Poisonous (toxic) substances Class 6.2 – Infectious substances Class 7 – Radioactive materials Class 8 – Corrosive Class 9- Miscellaneous dangerous substances, that is any other substance which is or may be of such a dangerous character that these rules should apply to it.

79. Packaging for Dangerous cargoes The IMO Code has very specific instructions regarding packaging of dangerous goods: (a) The packaging of dangerous cargoes in good condition; Well made and in good condition; Of such a character that any interior surface with which the contents may come in contact is not dangerously affected by the substance being conveyed; and Capable of withstanding the ordinary risks of handling and carriage by sea.

80. (b) Where the use of absorbent or cushioning materials is customary in the packing of liquids in receptacles that material shall be: Capable of minimizing the dangers to which the liquid may give rise; So disposed as to prevent movement and ensure that the receptable remains surrounded; and Where reasonably possible, of sufficient quantity to absorb the liquid in the event of breakage of the receptacle.

81. (c) Receptacles containing dangerous liquids shall have the allege (an amount by which a container falls short of being full, through evaporation or whatever) at the filling temperature sufficient to allow for the highest temperature during the course of normal carriage.

82. Different types of shipping services Conference liner service Non-conference lines Non-vessel operating common carrier (NVOCC) Tramp service

83. Customs Traffic Management Scenario Many customs brokers and importers are complaining the bureaucratic red tape in customs. Most particularly, they deplore the practice by which many signatories are required to secure the release of their shipments from customs custody. Customs, on the other hand, insist that these are safety measures aimed at ensuring that proper duties and taxes are collected. What measures will you propose to speed up the cargo clearance and at the same instill customs control in the spirit of trade facilitation and yet not sacrificing customs control and mandate?

84. Customs Traffic Management Scenario Customs boarding formalities is essential in port operations. This happen when customs authorities board incoming vessels and aircrafts and assume jurisdiction over the entrance, clearance, discharge, loading and other port/airport activities. In many ports around the world however, this practice has long been aborted. Customs no longer board vessels and aircrafts. Shipping and airline associations want this best industry practice in the world also applied in the Philippines. As a stakeholder, how will you reconcile your function/s as a customs officer with that of re-engineered customs port/airport operations ?

85. Customs Traffic Management Scenario The Bureau of Customs recently implemented the collection of the cargo security fee for the scanning of shipments that will undergo the mandatory examination at the port/airport prior release from customs. The customs examiners are afraid that this scheme will eventually make physical examination as irrelevant in view of the machine aided physical inspection and might ease them out in the cargo clearance procedure. How do you view this latest development ?

86. Customs Traffic Management Scenario The Bureau of Customs is confronted with the main problem of meeting its collection target this 2007. However, reports have it that our collections from January to June is down by more than 20%. You are now tasked by the leadership of customs to offer workable solutions not only to meet but surpass this year’s collection target. What would be your workable solutions and explain.

87. Customs Traffic Management Scenario The post entry audit mechanism is relatively new in the Bureau of Customs. Under this practice, import entries and their supporting documents are required to be kept by the importer-broker within a certain time frame, say three years, from the date of importation and expect a visit from customs auditors to look into their records and practice of importation. Also, the finality of liquidation takes place after three years from the date of final payment of duties and taxes. How do see the efficiency of this practice in the Philippine Customs Service ? Explain your answer.

88. Customs Traffic Management Scenario One of the reasons behind the Lateral Attrition Law and the Rationalization Law is that many customs functions are oftentimes redundant. In many parts of the world, customs officers are performing multi tasks. In United States alone, the customs officer who boarded the vessel is expected to be the one to examine the goods, classify and appraise the merchandise, collect duties and taxes and authorize the release of cargoes. Are you receptive to the idea of a multi tasks customs officer. ? Why or why not.

89. Customs Traffic Management Scenario The Philippines is a signatory of various multilateral, regional and bilateral trade agreements. Most of these trade negotiations are aimed toward relaxing trade policies and reduction of the rates of import duties. When these happen, customs collection suffers. How can we as an agency counter the negative effects of trade liberalization?