Air Cargo Export Procedures – Introduction
Air export freight forwarding process is, as you might understand, a collection of smaller or larger processes. Depending on the situation, it can vary from very simple to very complex. The article attempts to explain almost all the procedures involved. There might be readers who are completely new to freight forwarding. With this in mind, the article will clarify the relevant points albeit in details not too deep.
A Request to Air Freight Forwarders and Readers
The article will explain the topics under relevant subheadings, which will help it to be clear and precise. Readers are invited to post their questions and experts in the field are welcome to post their opinions, corrections and suggestions.
Freight Forwarding Procedure – What it is and what it is not
A freight forwarder provides various kinds of services, yet, it is better to explain freight forwarding procedures to make the phrase clear. There are services, that are beyond the capabilities of the cargo agent. There are areas of action, where the forwarder has no possibility for action.
Freight Forwarding – A simple Definition
A very simple definition of freight forwarding is : moving freight from one place to another. This can mean local transport or international . A local transport is inseparable for international movement.
Air Freight Forwarder – What he may and What he Can
The cargo agent can decide the airport of departure and also the airport of destination. In addition, he is authorised to choose the carrier (airline), unless agreed upon otherwise by the two parties to the contract.
The Air Cargo Agent Cannot Do These
A freight forwarding company cannot issue commercial invoices either for the shipper or for the consignee. This remains the task of the client authorised to draw up such documents. Similarly, the freight forwarder may not open the consignments without written permission from the owner of the freight.
Shipping Agent Cannot Change Incoterms
A freight agent may not change the terms of sale. The seller of the goods is the only entity authorised to do this. Hence, the forwarder can refuse to amend the incoterms fixed.
Dangerous Goods – Only Certified Packaging Company May Make Changes
The freight forwarder is not authorised to make changes to any package, which is classified as hazardous as per the Dangerous Goods Regulations (DGR). Only an entity certified for dangerous goods packaging and handling may do so. IATA publishes the official Dangerous Goods Regulations book.
Only The Shipper May Amend Shipping Documents – Never The Forwarder
The cargo agent may not make any changes to the documents issued by the shipper. Similarly, the forwarder will insure the freight only when he has a written request.
What is a Freight Forwarder – Understanding the Concept
A freight forwarder, simply put, is a company that moves freight from one place to another. This can be by road, by sea or by air. He negotiates with carriers (airline, haulage companies and shipping lines) and also with other freight forwarders to arrange transport of the goods.
Necessary Bureaucracy – Documents Needed for Air Shipping
The forwarder draws up several documents such as air waybill, freight manifest, consolidation list for moving the cargo. Here, it must be mentioned that e-freight is being pushed ahead by airlines.
The shipper sends the freight forwarder a request to pick up a consignment. This request is often called SLI (Shipper’s Letter of Instructions). The forwarder arranges the pick up, organises the airline booking and prepares a set of papers. He will prepare the air waybills, if necessary the freight manifest, the flight details and finally the invoices.
Handling Procedures : Air Export Processes in the Warehouse
When the consignment arrives at the warehouses, the staff attaches the air freight labels, does the export customs clearance and screens it. The air waybill is stamped (screening date and time and name of procedure), showing evidence of security measures taken to declare the freight secure for flying. The freight is then tendered to the airline.
Neutralising Freight : Protecting the Confidentiality of Business
What does neutralising freight mean in air cargo shipping? The shipper can source the product from a company (a manufacturer or a retailer) whom the former does not wish to disclose. The buyer does not have to know the source. In most of the cases, the buyer may not know from where or from whom the product was sourced. The identity of the initial supplier, such as labels, attached documents etc. will be removed from the packages, thus effectively neutralising the packets.
Customs Export Declaration – A Step Before Shipping By air
Depending on the regulations in the country of the shipper, there forwarder might have formalities to follow. In the European Union , an export declaration is needed, when the invoice value is equal to or above 1000EUR. This will depend on the country, where the shipper is located. In Bharat (India), there is a a pre-export customs clearance.
Oral Export Declaration in Germany – Export Release Without MRN
In Germany, when the invoice value is below 1000EUR and the shipment is less than 1000 kg, the invoice suffice. This is called the Oral Declaration for Export. Article 137 of Commission Delegated Regulation (EU) 2015/2446 of 25. July 2015. The English Version Article 137. The German version of article 137.
German Regulation – Invoice value 1000EUR or above. Freight is 1000 kg or higher
If the value of the goods is 1000EUR or above, an Export Declaration is needed. This document will carry on the top right, a barcode showing the Movement Reference Number (abbreviated to MRN). The Export Declaration must be sent to the freight forwarder.
Conformity of the Freight to the Customs Documents
The number of pieces and the total gross weight on the Air Waybill must correspond to the data on the Export Declaration. Many freight forwarders are willing to submit the application to the local customs office of the shipper. If you are a shipper, and are not in a position to apply for the declaration, please talk to your freight agent. The details on the export declaration and on the air waybill must tally. In addition, the contents of the packages must be in conformity with the description in the freight documents
The Tasks of the Cargo Agent : People in Air Export Cargo Forwarding
The parties involved in the freight forwarding process
- The freight forwarder as shipping agent: he books, creates the air waybill and manifest
- The lorry company doing the haulage : responsible for the pick up of the freight and delivery to the warehouse
- The warehouse people that do the handling (labelling, document sorting, screening)
- The airline handling warehouse staff : they check the authenticity of the papers and freight, safety points,
- The apron personnel that does the loading of the freight into the aircraft
Contract – Shipper’s Letter of Instructions to the Forwarder
The SLI (Shipper’s Letter of Instructions) is a contract between the shipper of the goods and the freight forwarder. It is a legally binding document. The commercial invoice or the packing list etc. are not binding on the forwarder.
The Shipper’s Letter of Instructions contain
- The actual shipper (also called consignor), name and complete address
- The contact details (telephone number, email address etc.) of the shipper
- The name and address of the importer (also called consignee)
- The contact details of the importer
- The name, address and contact details of the “final consignee”, if any.
- The details of the notify party if any
- The total number of packages
- Packaging material : has wood been used used?
- If wood has been used, please read the article on wood packaging material
- The type of packages (carton, pallet, crate, roll)
- The external dimensions of the packages with units (cm, in, mm etc.)
- Dimensions in the following form : unit x Length x Width x Height cm/in
- The total gross weight of the shipment, with unit (kg, lbs)
- The clear description of the goods (not just “spares”, “machinery parts”)
- Pick up date and time-frame, include lunch break
- If a tail-gate lorry is needed, please mention
- Is a pallet jack required? Please note it on the SLI
- If shipment falls under Dangerous Goods, please mention UN Number, Class, nett weights
- Incoterms : Use the full format. E.g. EXW, name of place or DAP, named place
- Include any special instructions
- Any mandatory declaration needed on the SLI (the forwarder can help you with this)
- Signature and date (valid at times even without these)
Shipper, Consignee and Notify – A Short Clarification
Shipper is the name and address of the party shipping the goods. This is the entry on the Air Waybill (AWB). The same detail will be entered into the Customs Bill of Entry
Consignee is the importer of record in the country of import. This is the company that pays the duties and the taxes. In the US, section 484 of the Tariff Act, 19 U.S.C §1484 defines the term importer of record. The definition in Bharat (also known as India), the definition of importer is laid down in Chapter 1, Section 2 of the Customs Act, 1962.
Final Consignee, if mentioned, is the actual company that receives of the shipment. Usually the consignee and the final consignee are the same company.
Understanding Third Party Shipments in International Trade
In a third party shipment, the final consignee will be another company. In this case the shipper will not know who the final consignee is. This is because in the deed of sale the shipper is not a party to the contract.
The manufacturer of the goods sells his product to a company. The buyer sells the product to his client abroad. There are two independent contracts involved in this scenario.
Example of a third party shipment
A = Manufacturer
B = Buyer
C = overseas company, client of B
A sells his product to B.
B sells that product to C abroad
B is the Importer of record and C is the receiving party of the goods. In certain cases C is the importer of record.
The Haulage – Picking Up the Air Shipment
Based on the information on the SLI, the forwarder picks up the goods and offloads it in his warehouse. He negotiates with the airlines and books the goods to the required destination. Depending on the distance, this might take just one day or more.
The Air Waybill – The Document That Accompanies The Shipment
Using an eleven digit number, the freight forwarder books the consignment on an airline. This number is unique and can be broadly divided into three parts.
The first three characters, called prefix, denote the airline. This can be an alpha-numeric in nature and then there are a total of eight digits (all numeric). The last digit is called the check digit.
Two Waybills – House Air Waybill and Master Air Waybill
Air export freight forwarding procedure includes documents that accompany the freight until its final delivery. Air waybills are a mandatory part of shipping by air.
The freight forwarder might choose to send the shipment to his partner agent in the country of destination. In such a case he has to generate two different sets of air waybills (AWBs).
The House Air Waybill (HAWB)
Here, the actual shipper and the actual consignees are mentioned. The contract is between the freight agent and the shipper. The AWB will show the shipper, the consignee, the notify party and the details of the shipment. The details include the dimensions, the weight, the volume in cubic metres (written as cbm), the chargeable weight and the description of the goods.
The Master Air Waybill (MAWB)
On the MAWB the shipper is the freight forwarder in the country of departure and the consignee is the freight agent in the country of destination. The contract is between the shipping freight forwarder and the carrier (the airline).
The Direct Air Waybill – also Called IATA Air Waybill
In this case there is only one waybill. Two contracts and compressed into one. The actual shipper and the consignee are mentioned on the waybill. The AWB header (right side top) shows the airline and its official address. On the left side, in the third box from the top, is mentioned the freight forwarder’s IATA registration code.
The Air Freight Label – Simple but Indispensable Factor
In Bharat (“India”), a missing label will invite penalty from the customs. The air freight label is an identity document attached to the freight and is usually attached to only one side of the air shipment.
What does the air freight label show?
- The name of the carrier (airline)
- The MAWB number as a barcode
- The HAWB number (this might be a separate label)
- The number of pieces
- The airport of departure
- The airport of destination
The warehouse staff of the airline will scan the barcode and the data is fed into the EDI interface of the airline. This is then fed into the tracking information page, which shows up on the tracking site of the airline.
Air Cargo Security Measures – Screening Procedures
Air cargo security awareness must be always high and measures have become stricter. Governments around the world have stepped up their measures to combat terrorism. Air cargo is no exception to these measures.
Air Freight Security Screening – Preliminary Method
Unless the shipper is a known shipper (a shipper certified by the competent security authority of the country), the consignment must be screened. X-Ray is the preliminary method.
Dark Alarm – Next Stage : ETD
When the packaging or the content is so dense that the x-rays do not penetrate the surface, the x-ray machine returns a dark alarm. Hence, the freight has failed the screening test. This means, other methods have to be used. Explosive Trace Detection, abbreviated as ETD is then used to trace explosive materials that could endanger the flight.
Shipping Agent Alerts Consignee Agent – The Pre-Advice or Pre-Alert
After all the procedures are over and the freight is tendered to the airline, the consignee agent has to be informed of the arrival of the freight. The shipping agent sends all the papers, such as air waybills,commercial invoices packing lists, freight manifest etc. This is called “pre-advice” or “pre-alert”
The Bill of Entry – Customs Clearance and Delivery to Consignee
The consignee agent draws up the Bill of Entry with the information available on the air waybill, the commercial invoice, packing list etc. He contacts the consignee and obtains the tariff code, called HS Code (Harmonised System Code). This is an eleven digit number. Using this number and the correct description of the goods, the freight agent or the broker clears the goods. The freight is ready for delivery