CIFFA

Exercises:
Essentials of Freight Forwarding

Table of Contents
International Payments, Part 1
Exercises 1.1 (Question) ............................................................................................................ 7

Exercises 1.2 (Question) ............................................................................................................ 9
Exercises 1.3 (Question) ...........................................................................................................12
Exercises 1.1 (Answer) .............................................................................................................15
Exercise 1.3 (Answer) ...............................................................................................................21
International Payments, Part 2

Exercises 2.3 (Preface) .............................................................................................................29
APPENDIX ‘A’ ...........................................................................................................................62

APPENDIX “B” ..........................................................................................................................71
Export Packaging and Warehousing

Commercial Documentation and Regulatory Compliance

Exercises 4.3 (Question) .........................................................................................................103
Exercises 4.1 (Answer) ...........................................................................................................120
Cargo Insurance

Exercises 5.2 (Preface) ...........................................................................................................140
Exercises 5.3 (Preface – Determining the Insured Value and Premiums)................................142
Exercises 5.3 (Preface – Duty and Taxes) ..............................................................................145
Exercises 5.3 (Insured Value and Premiums) (Question) ........................................................147
Exercises 5.4 (Preface – Insurability, Exclusions of Coverage, Insurance Certificates) ...........148
Cargo Security and Dangerous Goods
Exercises 6.1 (Cargo Security) (Question) ..............................................................................177

Exercises 6.2 (Dangerous Goods) (Question) .........................................................................179
Exercises 6.3 (Cargo Security) (Question) ..............................................................................182
Exercises 6.4 (Dangerous Goods) (Question) .........................................................................183
Exercises 6.1 (Cargo Security) (Answer).................................................................................185
Exercises 6.2 (Dangerous Goods) (Answer) ...........................................................................189
Exercises 6.3 (Cargo Security) (Answer).................................................................................194
Exercises 6.4 (Dangerous Goods) (Answer) ...........................................................................195
Costing and Quoting

Exercises 7.4 (Air Export) (Question) ......................................................................................203
Exercises 7.5 (Ocean Export) (Question) ................................................................................207
Exercises 7.6 (Air Import) (Question) ......................................................................................211
Exercises 7.7 (Ocean Import) (Question) ................................................................................215
Exercises 7.4 (Air Export) (Answer) ........................................................................................226
Exercises 7.5 (Ocean Export) (Answer) .................................................................................229
Exercises 7.6 (Air Import) (Answer)........................................................................................232
Exercises 7.7 (Ocean Import) (Answer) ..................................................................................235
Alternative Transport Solutions

Exercises 8.10 (Question) .......................................................................................................249
Exercises 8.11 (Preface) .........................................................................................................252
Exercises 8.11 (Shipment Information) ...................................................................................257
Exercises 8.11 (Question) .......................................................................................................263
Exercises 8.6 (Answers) .........................................................................................................274
Exercises 8.10 (Answer) .........................................................................................................279
Exercises 8.11 – Calculations (Answer) ..................................................................................282
Exercises 8.11 (Answer) .........................................................................................................297
Questions International Payments, Part 1
Exercises 1.1 (Question)

1. List the four modes of settlement available in international transactions.
2. List three instances when it is not advisable or possible to sell to a foreign buyer
on an open account.
3. Explain the process of a documentary collection and list the two important
documents involved.
4. What are the exporter’s disadvantages when choosing a documentary collection

to receive payment for his goods?
5. When using documentary collection as the method of payment on an ocean

freight shipment, how would you consign the bill of lading?
6. Define a bill of exchange.
7. What is a sight bill of exchange?
8. What is a term bill of exchange?
9. On a bill of exchange, who is the drawee and who is the drawer?
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10. Briefly define the following terms:
Drawer: _______________________________________________________
Drawee: _______________________________________________________
Tenor: ________________________________________________________
Remitting bank: ________________________________________________
Collecting bank: ________________________________________________
Direct collection: _______________________________________________
What is meant by “acceptance”?
What is meant by “documents on acceptance”?
Under documentary collections a ____________ trust has been established
between the _______________ and the _______________.
Also, the _________________ must contract an adequate ___________
_________________ in order to secure the abroad accounts receivables.
An air waybill _________ be consigned ______________ because
it is a ______________________ document.
The ________________ usually pays the banks’ fees for documentary

collections.
Name the two basic types of documentary collections.
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1. Complete a direct bank collection form letter.
Shipper: United Seed Company Ltd.

125 Portage Street
Winnipeg, Manitoba
R2V 4G1, Canada
Buyer: Empire Grain Importers Ltd.

1 Main Street
FK17, Grangemouth, Scotland
Consignment: 1 x 20-ft container of canola seed, 15,300 kg.

Shipped Montreal February 5, 2017.
per mv K.D. Obukhova to Liverpool.
Value EXW Winnipeg: CAN $150,000.00
Canadian bank: Bank of Nova Scotia
U.K. bank: Barclays Bank, London
Terms of payment: 90 days sight
Questions:
i) What kind of documents would you send with the direct bank collection letter?
ii) Complete the direct bank collection form for the ocean shipment in this
assignment, including the bill of exchange.
You have to consider that the ocean carrier should only release the container after the
buyer accepted the bill of exchange presented to him by Barclays.
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Always Quote Reference Number
THE BANK OF NOVA SCOTIA DIRECT D.C. 1152 /18572
Ontario International Banking Centre COLLECTION Date _______________________

181 University Ave., Suite 1916
Toronto, ON Canada M5H 3M7
Mail to: (Collecting Bank) Drawee: (Name and Address)
WE ENCLOSE THE FOLLOWING DRAFT(S) AND/OR DOCUMENTS FOR COLLECTION AND REMITTANCE AFTER FINAL PAYMENT ONLY. PLEASE HANDLE THIS COLLECTION AS IF RECEIVED DIRECTLY
FROM THE ABOVE OFFICE OF THE BANK OF NOVA SCOTIA TO WHOM YOUR ACKNOWLEDGEMENT. ALL REPORTS AND PAYMENT IS TO BE DIRECTED ALWAYS QUOTING THE ABOVE REFERENCE
NUMBER. THIS COLLECTION IS SUBJECT TO THE UNIFORM RULES FOR COLLECTIONS (1995 REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 522.
From Drawer (Name and Address) Drawers Ref. No. Tenor Currency & Amount
Covering shipment of:
Vessel or Carrier Bill of Lading No.

ENCLOSED DRAFTS BILLS OF LADING INVOICES INSURANCE CERTIFICATE PACKING AIR
CERTIFICATE OF ORIGIN LIST WAYBILL
ORIGINAL HH COMMERCIAL CUSTOMS CONSULAR
FIRST MAIL
SECOND MAIL
OBSERVE INSTRUCTIONS MARKED “X” BELOW
DOCUMENTS  DELIVER AGAINST PAYMENT  DELIVER AGAINST ACCEPTANCE  HOLD FOR ARRIVAL OF GOODS
PROTEST  PROTEST NON-PAYMENT PROTEST NON-ACCEPTANCE  DO NOT PROTEST
ALL CHARGES  FOR ACCOUNT DRAWER  FOR ACCOUNT DRAWEE  WAVE CHARGES IF REFUSED BY DRAWEE
INCLUDING EXCHANGE,  INCURE NO CABLE EXPENSE  COLLECT THE BANK OF NOVA  DO NOT WAIVE CHARGES
STAMP, TAXES, ETC. SCOTIA CHARGES OF $23.00 WITHOUT FURTHER INSTRUCTIONS
INTEREST  COLLECT INTEREST AT ______________ % PER ANNUM FROM ______________________TO ______________________

 FOR DELAY IN PAYMENT COLLECT INTEREST AT ____________ % P.A. FROM  DO NOT WAIVE WITHOUT
DUE DATE LISTED, APPROXIMATE ARRIVAL OF PROCEEDS AT DEST. FURTHER INSTRUCTIONS
 ALLOW DISCOUNT OF ______________________ IF PAID _____________________________________________________
FATE ADVICES
BY AIRMAIL  ACCEPTANCE  NON-ACCEPTANCE  NON-PAYMENT
BY CABLE  ACCEPTANCE  NON-ACCEPTANCE  NON-PAYMENT
REMIT PROCEEDS  AIRLINE  PRIME BANKERS DRAFT ON  TORONTO (Cdn. funds)  NEW YORK (U.S. funds)
IN THE CURRENCY
OF THE  CALBE/TELEX/SWIFT  AT DRAWERS EXPENSE  AT DRAWEES EXPENSE
COLLECTION BY
LOCAL CURRENCY 
IN THE EVENT FOREIGN EXCHANGE IS NOT IMMEDIATELY OBTAINABLE, A PROVISIONAL DEPOSIT IN LOCAL CURRENCY MAY
BE ACCEPTED WITH DRAWEE’S WRITTEN UNDERSTANDING TO ASSUME ALL EXCHANGE PRICES TO EXPECT FULL SETTLEMENT IN THE CURRENCY OF THE
COLLECTION. DO NOT SURRENDER DRAFT UNTIL FINAL SETTLEMENT FOR FACE AMOUNT IS RECEIVED FOR REMITTANCE.
IN CASE OF NEED   WHO WILL ENDEAVOUR IN HAVING DRAFT

REFER TO HONOURED AS DRAWN
 WHOSE INSTRUCTIONS MAY BE
ACCEPTED IN EVERY RESPECT
SPECIAL INSTRUCTIONS
PREPARED BY (NAME OF FORWARDER)
SIGNATURE
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SPACE BELOW FOR ACCEPTANCE STAMP FORWARDING BANK’S

DUE _______________________ NUMBER
______________________________ 20 __________
_________________________ AFTER DATE, FOR VALUE RECEIVED.
PAY TO THE ORDER OF _____________________________________________ THE SUM OF
_______________________________________________ DOLLARS $ ________________ RECEIVING BANK’S

NUMBER
TO ________________________________
________________________________
________________________________ ______________________________
2017 Page | 11
Shipper: Canadian Manufacturing Inc.

20 Royal York Rd.
Mississauga, Ontario
L5S 2R5, Canada
Buyers: Osterreichische Fabrikationsbetrieb GmbH

Vorarlberg Str.
Linz
4020, Austria
Consignment: 1 crate of barbeque parts, 675 kg - 2.5 m3

February 5, 2017, AC AWB 014-1234 4321
Value EXW Montreal: CAN $31,000.00
Canadian bank: Bank of Nova Scotia
Austrian bank: Wiener Handelsbank AG, Vienna
Terms of payment: Cash against documents
For this air freight shipment you have the option to either use the traditional bank
channel or you suggest a different, possibly a more efficient manner of following
shipper’s C.O.D. instructions, especially considering that it is air freight and time is
of the essence.
Questions:
i) If you use a direct bank collection method, how would you consign the air waybill?
ii) How would you forward the completed direct bank collection letter?
iii) What kind of documents would you send with this direct bank collection letter?
iv) What other option do you think you may have to comply with shipper's instructions
for you to arrange for the C.O.D.? Explain.
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Ontario International Banking Centre COLLECTION Date _______________________

Covering shipment of:

FIRST MAIL
SECOND MAIL
DOCUMENTS  DELIVER AGAINST PAYMENT  DELIVER AGAINST ACCEPTANCE  HOLD FOR ARRIVAL OF GOODS
PROTEST  PROTEST NON-PAYMENT PROTEST NON-ACCEPTANCE  DO NOT PROTEST
ALL CHARGES  FOR ACCOUNT DRAWER  FOR ACCOUNT DRAWEE  WAVE CHARGES IF REFUSED BY DRAWEE
INCLUDING EXCHANGE,  INCURE NO CABLE EXPENSE  COLLECT THE BANK OF NOVA  DO NOT WAIVE CHARGES

FATE ADVICES
BY CABLE  ACCEPTANCE  NON-ACCEPTANCE  NON-PAYMENT
IN THE CURRENCY
OF THE  CALBE/TELEX/SWIFT  AT DRAWERS EXPENSE  AT DRAWEES EXPENSE
COLLECTION BY
LOCAL CURRENCY 

SIGNATURE
2017 Page | 13

DUE _______________________ NUMBER
______________________________ 20 __________

NUMBER
TO ________________________________
________________________________
________________________________ ______________________________
2017 Page | 14
Answers International Payments, Part 1
Exercises 1.1 (Answer)

1. List the four modes of settlement available in international transactions.
1. Advance payment.
2. Open account.
3. Documentary collection.
4. Documentary credit (or letter of credit).
2. List three instances when it is not advisable or possible to sell to a foreign buyer
on an open account.
1. When there are currency restrictions, import permits or quotas or
where open accounts are prohibited.
2. In countries where political instability or economic instability make
it an unreliable way of receiving payment for your goods.
3. When you feel that the buyer will not pay as agreed.
3. Explain the process of documentary collection and list the two important
documents involved.
The exporter engages a bank to do the collecting at destination via a
corresponding bank. All shipping documents and a bill of exchange are
given to the bank who will not release the goods to the importer until they
have collected the commercial invoice amount or obtained an accepted
term bill of exchange.
The two important documents are the bank collection form and the bill of
exchange.
4. What are the exporter’s disadvantages when choosing a documentary

collection to receive payment for his goods?
The bank acts as a collection agency. The goods will arrive at destination
and if the importer cannot pay, the exporter will have to decide if he pays
to bring back the goods or try to sell them to another client, possibly at a
loss.
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5. When using documentary collection as the method of payment on an ocean

freight shipment, how would you consign the bill of lading?
Consigned: to order blank.
6. Define a bill of exchange.

An unconditional order in writing where one party undertakes to pay
another party a named sum of money at presentation or at a given date.
7. What is a sight bill of exchange?
A bank draft payable upon presentation.
8. What is a term bill of exchange?

A bank draft payable at a specified later date. It is accepted by the signature
of the drawee.
9. On a bill of exchange, who is the drawee and who is the drawer?

Drawee: the party that has to pay.
Drawer: the party that wants the money.
10. Briefly define the following terms:

Drawer: The party requesting payment or issuing the bill of exchange
(exporter).
Drawee: The party specified in the bill of exchange from whom payment is
demanded (importer).
Tenor: The time allowed to the importer for payment of an accepted bill of
exchange.
Remitting bank: The bank acting on behalf of the exporter.
Collecting bank: The bank in the importer’s country, collecting payment.
Direct collection: There must be trust between the exporter and importer
and no restrictions in the country of import. Payment
against presentation of documents.
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11. What is meant by “acceptance”?

The drawee accepts the bill of exchange, thereby agreeing to pay at the
date of maturity of the bill of exchange. Acceptance is done by the
drawee, signing over the face of the bill of exchange the word “accepted”
along with the date.
12. What is meant by “documents on acceptance”?

The collecting bank (drawee’s bank) releases the transport documents to
the drawee, after the drawee has properly accepted a term bill of
exchange.
13. Under documentary collections a mutual trust has been established
between the exporter and the importer. Also, the _exporter _must contract
an
adequate _credit insurance policy in order to secure the abroad accounts
receivables.
14. An air waybill _must_ be consigned _to a party or bank because
it is a _non-negotiable_ document.
15. The _importer__ usually pays the banks’ fees for documentary collections.
16. Name the two basic types of documentary collections.

1. Documents against payment.
2. Documents against acceptance.
2017 Page | 17
Question i) You must send, as a minimum, the freight controlling document i.e.,
the bill of lading and a commercial invoice. Additional documents, like
insurance policy or packing list, etc. depend on buyer's specifications.
The bill of lading should be consigned to order.
Question ii) Refer to completed direct bank collection form.
2017 Page | 18
Ontario International Banking Centre COLLECTION Date February 4, 2017

Barclay’s Bank Empire Grain Importers Ltd., 1 Main Street,
London FK17 Grangemouth, Scotland
90 days CAN $150,000.00
United Seed Company Ltd.
125 Portage St., R2V 4G1 Covering shipment of:
Winnipeg, Manitoba, Canada 1 x 20-ft canola seed 15,300 kg
BILLS OF LADING INVOICES INSURANCE CERTIFICATE PACKING AIR
101
ENCLOSED DRAFTS

K.D. OBUKHOVA
FIRST MAIL
1 2/3 1 2 _ _ _ _ _ _
SECOND MAIL
1 1/3 1 1 _ _ _ _ _ _
DOCUMENTS DELIVER AGAINST PAYMENT  DELIVER AGAINST ACCEPTANCE  HOLD FOR ARRIVAL OF GOODS
PROTEST  PROTEST NON-PAYMENT PROTEST NON-ACCEPTANCE  DO NOT PROTEST
ALL CHARGES  FOR ACCOUNT DRAWER  FOR ACCOUNT DRAWEE  WAVE CHARGES IF REFUSED BY DRAWEE
INCLUDING EXCHANGE,  INCURE NO CABLE EXPENSE COLLECT THE BANK OF NOVA  DO NOT WAIVE CHARGES

FATE ADVICES
BY CABLE  ACCEPTANCE  NON-ACCEPTANCE  NON-PAYMENT
IN THE CURRENCY
OF THE  CABLE/TELEX/SWIFT  AT DRAWERS EXPENSE  AT DRAWEES EXPENSE
COLLECTION BY
LOCAL CURRENCY 

PREPARED BY (NAME OF FORWARDER) CIFFA Forwarder’s Signature

CIFFA Forwarder SIGNATURE
2017 Page | 19

__________________________ DUE 90 days after NUMBER
Sight
February 4, 2017 c.c. 1152/18572
_____ __________ AFTER DATE, FOR VALUE RECEIVED.
PAY TO THE ORDER OF The Bank of Nova Scotia THE

SUM OF
____One hundred fifty thousand CAD DOLLARS $150,000.00 CAD_________ RECEIVING BANK’S
NUMBER
TO Empire Grain Importers Ltd. United Seed Co. Ltd.
Grangemouth, Scotland
________________________________ Exporter’s/Drawer’s Signature
2017 Page | 20
Exercise 1.3 (Answer)
1.
Question i) The AWB must be consigned to the collecting bank (Wiener

Handelsbank) or in your option to your agent in Linz with appropriate
instructions.
Question ii) Since this is an air freight shipment, you cannot, of course, forward
the direct bank collection form separately by mail. The direct bank
collection letter should travel with the shipment in an envelope
attached to the air waybill.
Question iii) There should at least be a commercial invoice included. Additional

documents would be subject to buyer’s prior specification.
Question iv) Instead of using the bank channel, you could use your agent in Linz
to collect as C.O. D., i.e., a bill of exchange for CAN $31,000.00 made
out to Canadian Manufacturing Inc. Especially for air freight this
would be the more efficient way. You and your agent could collect a
fee - at least the equivalent what both, the Canadian remitting bank
(BNS) and the collect bank (Wiener), would charge.
This method to use your agent is safe in this case when terms of
payment are cash against documents. In case a term is involved you
may prefer the bank channel because you would have to collect first
the signature of acceptance on the bill of exchange and later when the
term is due, present the bill of exchange for payment.
2017 Page | 21
Date February 4, 2017

Ontario International Banking Centre COLLECTION
Wiener Handelsbank AG Osterreichische Fabrikationsbetrieb GMBH
Vienna, Austria Vorarlberg Str., 4020, Linz, Austria
Sight CAN $31,000.00
Canadian Manufacturing Inc. Covering shipment of:
20 Royal York Rd. 1 crate barbeque parts 675 kg
Mississauga, Ont., L5S 2R5, Canada Vessel or Carrier Bill of Lading No.
AC AWB 014-1234 4321

FIRST MAIL
1 _ _ 2 _ _ _ _ _ 1
SECOND MAIL
1 _ _ _ _ _ _ _ _ _
DOCUMENTS  DELIVER AGAINST PAYMENT  DELIVER AGAINST ACCEPTANCE  HOLD FOR ARRIVAL OF GOODS
PROTEST  PROTEST NON-PAYMENT PROTEST NON-ACCEPTANCE  DO NOT PROTEST
ALL CHARGES  FOR ACCOUNT DRAWER  FOR ACCOUNT DRAWEE  WAVE CHARGES IF REFUSED BY DRAWEE
INCLUDING EXCHANGE,  INCURE NO CABLE EXPENSE COLLECT THE BANK OF NOVA  DO NOT WAIVE CHARGES

FATE ADVICES
BY CABLE  ACCEPTANCE  NON-ACCEPTANCE  NON-PAYMENT
IN THE CURRENCY
OF THE  CABLE/TELEX/SWIFT  AT DRAWERS EXPENSE  AT DRAWEES EXPENSE
COLLECTION BY
LOCAL CURRENCY 


CIFFA Forwarder CIFFA Forwarder’s Signature
SIGNATURE
2017 Page | 22

__________________________ DUE NUMBER
February 4, 2017 c.c. 1152/18572
_____AT SIGHT__________ AFTER DATE, FOR VALUE RECEIVED.
PAY TO THE ORDER OF The Bank of Nova Scotia THE

SUM OF
____Thirty One Thousand CAD DOLLARS $31,000.00 CAD_________ RECEIVING BANK’S

NUMBER
TO Osterreichische Fabrikationsbetrieb Canadian Manufacturing Inc.
GmbH, Linz
________________________________ Exporter’s/Drawer’s Signature
2017 Page | 23
2017 Page | 24
1. What are the main reasons why a letter of credit may be chosen as a form of
International payment?
2. Name some advantages of a letter of credit.
3. The letter of credit deals with documents and not with goods, what risk does
this pose to the buyer?
4. What kind of risks is the exporter exposed to under the usance letter of credit?
5. Name (5) five main parties involved in the letter of credit.
6. Which party instructs the bank to open a letter of credit?
7. Which party draws up and issues the letter of credit and then makes payment
according to the conditions outlined in the letter of credit?
8. Which party receives payment as stipulated in the letter of credit?
9. Does the advising bank take on any payment obligations to the beneficiary
under a letter of credit?
10. What does the Uniform Customs and Practice for Documentary Credits (UCP)
outline?
11. What is the current version of the UCP rules used by commercial bankers and
commercial parties in the execution of a letter of credit?
12. What is the bank’s responsibility under Article 5 of the UCP 600 rules?
2017 Page | 25
13. Is a CIFFA freight forwarder liable for his/her documentation in a letter of credit
transaction?
14. As a CIFFA freight forwarder it is your responsibility to comply with the

requirements of the letter of credit. What will the failure to do so result in?
15. As a CIFFA freight forwarder what is a good way to avoid any lack of attention
or mistakes going through the documentary requirements?
16. The UCP 600 rules provide room for some interpretation; as a CIFFA freight
forwarder what should you do if you are in doubt?
17. What date do the banks look for if the credit prescribes an on board bill of lading
and a latest shipping date?
18. Under the UCP 600 rules, which date do you use to present the documents to
the paying bank?
19. If a bill of lading indicates a place of receipt different from the port of loading,
what should be included in the “on board notation”?
20. Under the UCP 600 rules, Article 23, is a house air waybill acceptable?
21. Unless specified by name in the letter of credit, is a house bill of lading
covered in the UCP 600 rules?
22. Is it possible to assign to another party all or part of the proceeds of a

drawing/payment under a credit?
23. As a CIFFA freight forwarder you should guard yourself against the risk of non-
payment. How can you ensure payment from your client?
24. Name (3) three types of letter of credit.
25. What is the difference between a revocable and irrevocable letter of credit?
2017 Page | 26
26. If there are spelling errors in the credit instructions, what should the CIFFA
freight forwarder do?
27. Name some of the most common errors and/or deficiencies in the execution of
a letter of credit.
2017 Page | 27
2. Using the diagram below, and the numbers assigned to each step, describe a typical letter of credit procedure.
2017 Page | 28
Exercises 2.3 (Preface)

For this exercise you are required to deal with a letter of credit in an air export shipment.
The idea is for you to learn how to recognize and select from a letter of credit the pertinent
instructions or details you need in order to complete an air waybill and the draft correctly.
In view of the fact that the draft is made out to the order of the beneficiary, the beneficiary
- i.e., you for the beneficiary - must endorse that draft.
UCP 600
You can find the UCP 600 Articles in the Appendices of the CIFFA Essentials of Freight
Forwarding textbook. You are not expected to memorize the rules, however it is essential
that you familiarize yourself with these Articles, especially Articles 19-24 pertaining to
transport documents. These Articles will be referenced throughout this section. There is
no need for an explanation on how to complete the air waybill for an air freight shipment.
Just observe the requirements of Article 23 in the UCP 600 for an air transport document.
2017 Page | 29
1. Export Air Freight Shipment Sold against Letter of Credit
a) Complete the air waybill strictly based on the instructions contained in the
letter of credit.
Shipment:
51 cartons of barbeque parts.

Total weight: 883 kg
The dimensions of each carton: 0.48 m L x 0.48 m W x 0.48 m H
Available flight: Air Canada, from Toronto to Tokyo
Date shipped: January 24, 2017
Rate: CAN $4.00/kg/vol.
b) Establish the chargeable weight and the air freight payable. Use both
figures in your air waybill. (Refer to conversion tables in Appendix “B”).
c) Special task:
There are two special documentary items in the air freight letter of credit
which you are to discover and then make a comment on how to handle the
items.
Question: which are these two items and what would you propose to do?
General comment: usually shippers expect you to complete and furnish any and
all documents required in a letter of credit.
Normally, you would use a neutral form for the commercial invoice generated by
your computer system or perhaps you still use an overlay system. Generally, there
is no need to use shipper's stationary.
In this activity you are not required to complete the commercial invoice. This
comment is made so you know how to deal with the subject of a commercial
invoice, packing list, etc.
d) Complete the draft in accordance with the instructions of the letter of credit.
Sign the draft.
2017 Page | 30
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Req by: TOR AUTOLCT In: AUT PRT 1/1/17 07:40 page 1
INC CA 911030-00830-000 Que: CA TOR LCT ADMR pri: 150 Dup: N
Msg Type: Received Pos Dup: Pri: Time Created: 1/1/17 01:33
Completion: Message Active Exception:
Correspondent: 0039388 II Amount: 58,000.00

Name: SANWA BK LTD., OSAKA Owner Office: TOR/LCT
Address: Unavailable for this MSG
City: Cntry: PC:
Parent ICN: Input test: N Swift OSN:30ROT202081

Service: SWF Ref: 30SANWJPJSAXXX68675 Sequence:2081
Test Result: Tested
TO ROYAL BANK OF CANADA - Toronto OSN 02081

ONTARIO, CANADA RECEIVED 0135/30
3 RN 30SANWJPJSAXXX68675
SENT 1536/30
FROM SANWJPJSAXXX
SANWA BK LTD. OSAKA
N/A
OSAKA JAPAN
CIF # 0339388 II UID:
MT 700 ISSUE OF DOC CREDIT

PRIORITY 02
27 / SEQUENCE OF TOTAL: 1/1
40A/ FORM OF DOCUMENTARY CREDIT:

IRREVOCABLE
20 / DOCUMENTARY CREDIT NUMBER 41 2360927-209
31C/ DATE OF ISSUE: 170101

CANADA
31D/ DATE AND PLACE OF EXPIRY: 170201

CANADA
2017 Page | 31
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Req By: TOR AUTOLCT In: AUT PRT 1/1/17 07:40 Page 2
50 / APPLICANT:
YAMAMOTO BARBEQUE CORP
OSAKA
59 / BENEFICIARY:
CANADIAN MANUFACTURING INC.
5678 MISSISSAUGA RD.
MISSISSAUGA
CANADA
ICN: CA 911030-008830-000 Que:CA TOR LCT ADMR Pri: 150 Dup: N

32B / AMOUNT: 58,000.00 US DOLLAR
41D / AVAILABLE WITH ... BY ...

ANY BANK
BY NEGOTIATION
42C / DRAFTS AT ...
SIGHT
42D / DRAWEE:
SANWA BANK LTD.
OSAKA
43P / PARTIAL SHIPMENTS: ALLOWED
43T / TRANSHIPMENT: ALLOWED
44A / PORT OF LOADING/AIRPORT OF DEPARTURE

TORONTO AIRPORT
44B / PORT OF DISCHARGE/AIRPORT OF DESTINATION

OSAKA INTERNATIONAL AIRPORT
44C / LATEST DATE OF SHIPMENT: 170125
45A / DESCRIPT OF GOODS AND OR SERVICES

BARBEQUE PARTS
CIP OSAKA
INSURE TO BE EFFECTED BY SHIPPER
2017 Page | 32
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Req By: TOR AUTOLCT In: AUT PRT 1/1/17 07:40 PAGE 3
46A / DOCUMENTS REQUIRED:

+CLEAN AWB CONSIGNED TO THE SANWA BANK LTD
MATSUBARA BR MARKED FREIGHT PREPAID
NOTIFY THE APPLICANT AND KINTETSU EXPRESS
+SIGNED COMMERCIAL INVOICE IN TWO COPIES

+INSURANCE POLICY OR CERTIFICATE IN DUPLICATE
ENDORSED IN BLANK FOR 110-0/0 OF THE INVOICE VALUE
INCLUDING: INSTITUTE CARGO CLAUSE A (ALL RISK)
INSTITUTE WAR CLAUSE
INSTITUTE STRIKES RIOTS AND CIVIL COMMOTIONS
CLAUSES
CLAIMS TO BE PAYABLE IN JAPAN IN THE CURRENCY OF
THE DRAFT
+CERTIFICATE OF ANALYSIS IN TWO COPIES
47A / ADDITIONAL CONDITIONS:

AIR WAYBILLS MUST INDICATE THE NUMBER OF THE
CREDIT. ONE SET OF NON-NEGOTIABLE DOCUMENTS MUST
BE ATTACHED TO AIR WAYBILL
71B / CHARGES:
ALL BANKING CHARGES OUTSIDE OF JAPAN FOR SHIPPERS
ACCOUNT
48 / PERIOD FOR PRESENTATION:

DRAFTS MUST BE PRESENTED FOR NEGOTIATION WITHIN 16 DAYS
AFTER THE DATE OF AWB OR OTHER DOCUMENTS, BUT WITHIN
THE CREDIT EXPIRY
49 / CONFIRMATION INSTRUCTIONS: WITHOUT
78 / INSTRUCTIONS PAY/ACCEPT/NEGOT BANK:

T.T. REIMBURSEMENT IS ACCEPTABLE
NEGOTIATING BANK MUST SEND DOCUMENTS TO US IN TWO
CONSECUTIVE REGISTERED AIRMAILS AND DRAFTS TO DRAWEE
BANK
2017 Page | 33
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Req By: TOR AUTOLCT In: AUT PRT 1/1/17 07:40 PAGE 4
SPECIAL INSTRUCTIONS TO THE ADVISING BANK: IN

SETTLEMENT YOU ARE AUTHORIZED TO DEBIT OUR TOKYO
ACCOUNT WITH YOU
57D / ADVISE THROUGH BANK:

THE ROYAL BANK OF CANADA
MAIN BRANCH
72 / SENDER TO RECEIVER INFORMATION:

THIS CREDIT IS OPERATIVE AND SUBJECT TO UNIFORM
CUSTOMS 2007 REVISION PUBLICATION 600
MAC AUTHENTICATOR RESULT/FBCBEB8D

SAC AUTHENTICATION SUCCESSFUL CURRENT KEY
END OF MESSAGE
2017 Page | 34
Shipper’s Name and Address Shipper’s Account Number Not negotiable

Air Waybill:
Issued by:
_________________________________________________________________
Copies 1, 2, ands 3 of this Air Waybill are originals and have the same validity.
It is agreed that the goods described herein are accepted in apparent good order and
condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT
ON THE REVERSE HEREOF. THE SHIPPER’S ATTENTION IS DRAWN TO THE
NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY. Shipper may increase
Consignee’s Name and Address Consignee’s Account Number
such limitations of liability by declaring a higher value for carriage and paying a
supplemental charge if required.
Issuing Carrier’s Agent Name and City Accounting Information
Agent’s IATA Code Account No.
Airport of Departure (Addr. Of First Carrier) and Requested Routing
To By First Carrier Routing and To By To By Currency CHGS WT/VAL Other Declared Declared
Destination Code Value for Value for
Carriage Customs
$
Airport of Destination Flight/Date For Carrier Use Only Flight/Date Amount of
Insurance INSURANCE – If carrier offers insurance, and such
Insurance is requested in accordance with the
conditions thereof, indicate amount to be insured in
figures in box marked “Amount of Insurance”.
Handling Information:
SCI
No. of Gross kg Rate Class Chargeable Rate/Charge Total Nature and Quantity of Goods
Pieces Weight Weight
RCP Commodity Item No. (incl. Dimensions or Volume)
Prepaid Weight Charge Collect Other Charges
Valuation Charge
Tax
Total Other Charges Due

Agent Shipper certifies that the particulars on the face hereof are correct and that insofar as
any part of the consignment contains dangerous goods, such part is properly
Total Other Charges Due described by name and is in proper condition for carriage by air according to the
applicable Dangerous Goods Regulations.
Carrier
Signature of Shipper or his Agent

Total Prepaid Total Collect
Currency Conversion Rates CC Charges in Dest. Currency

Executed on (Date)at (Place) Signature of Issuing Carrier or its Agent
2017 Page | 35

DUE _______________________ NUMBER
______________________________ 20 __________

NUMBER
TO ________________________________
________________________________
________________________________ ______________________________
2017 Page | 36
For this exercise you are required to deal with a letter of credit (L/C) in an ocean export
shipment. The idea is for you to learn how to recognize and select from a L/C the pertinent
instructions or details you need in order to complete the bill of lading (B/L) and the draft
correctly.
In view of the fact that the draft is made out to the order of the beneficiary, the beneficiary
– i.e., you for the beneficiary – must endorse that draft.
UCP 600
You can find the UCP 600 Articles in the Appendices of the CIFFA Essentials of Freight
Forwarding textbook. It is essential that you familiarize yourself with these Articles,
especially Articles 19-24 pertaining to transport documents. These Articles will be
referenced throughout this section.
Banks will accept the signature of the B/L issuer also for the on board purpose.
Guide for Completing Marine B/Ls (on Basis of a L/C)
This is intended for the novice forwarding student, who attempts to complete a B/L, for a
L/C, the first time. Never forget, however, that for any real-life L/C, you must strictly and
only follow the specific instructions for each particular L/C separately. This guide only
covers those boxes in the B/L for which you must pick up the data and instructions from
the L/C. All other boxes are not relevant in this context. Refer to the B/L at the end of the
guide for the location of the box numbers.
BOX 1: SHIPPER
Insert the name of the beneficiary as shown in the L/C, usually in line 59. Always use the
spelling of the name, address, including the postal code, only as shown in the L/C, even
if it is incorrect or misspelled, and in variance with shipper’s stationery. If there are
variances, regardless how minor, all other documents required under the L/C must be
consistent and show the same version.
When the need arises, put aside the shipper’s stationery and instead use your computer-
generated form or your overlay type form. Both are generic types of forms and the bank
will accept them unless prohibited in the L/C.
2017 Page | 37
BOX 2: CONSIGNEE
Under the words “Required Documents”, usually in line 46A, a L/C specifies how the B/L
is to be made out. It may say, for example, “to order” or “to order of shipper”. Insert exactly
what the L/C prescribes at line 46A.
BOX 3: NOTIFY
Under the words “Notify ...”, usually in line 46A, the L/C specifies whom to notify, usually
the applicant. Again, you must follow the particular instructions in the L/C. The name
and address of the applicant is in line 50. If an address is incomplete or missing, use only
whatever is provided in line 50. Never insert the word “applicant”. If the L/C doesn’t
contain any notify address, insert buyer’s name or address.
SPECIAL COMMENT - BOXES 4, 5, 7, 8, 9
To complete these boxes correctly, you must be strictly guided by the type of B/L required
in the L/C.
Articles 19 to 24 of UCP 600 specify different requirements for the 6 types of transport
documents. The following covers only two types of the B/L.
- Marine/ocean B/L
- Combined transport B/L.
Note that a marine or ocean B/L is prescribed probably in more than 95% of all ocean
L/Cs. You may substitute a forwarder’s transport document when the L/C requires a
marine/ocean or combined transport B/L, etc., provided you complete that forwarder’s
transport document exactly in the same way as the UCP 600 requires you to prepare a
marine/ocean or combined transport B/L, etc. Below you can find, for each of the boxes
4 to 9, a comment for both marine/ocean B/L and a combined transport B/L. It is up to
you to read the L/C and choose the correct option.
BOX 4: PRE-CARRIAGE BY
Insert either “truck” or “rail”. There is no direct instruction in the L/C.
Marine/Ocean B/L
For a port-to-port (loading port/discharge port) B/L you do not need to complete box 4.
When you have a marine/ocean B/L but the container is delivered not at port but at an
inland container terminal or to the consignee’s door (place of receipt or box 5), complete
box 4 with “truck/rail”.
2017 Page | 38
Combined Transport B/L

The most common occasion will arise when the L/C requires, in line 46A, by name a
“combined through transport B/L”.
Not all B/L forms may use in print the title “combined through transport B/L”, nor is this
required as per Article 19 of UCP 600. Whenever a “combined through transport B/L” is
required, all you need to do is complete box 4 as explained above, plus box 5 and box 9
if need be. Article 19 of the UCP 600 defines a Multimodal Transport Document as
covering at least two different modes of transport. Therefore, you must identify the second
mode of transport, usually “truck/rail”. The vessel is the other mode of transport. You will
notice that boxes 4 and 9 carry an asterisk in the B/L form which is defined at the bottom
of the B/L form: “applicable when document issued as combined through B/L”.
BOX 5: PLACE OF RECEIPT
This usually means the inland container terminal (CY) of the carrier, but there are some
possible exceptions required in a L/C, e.g., “Ontario” instead of the actual name of a city.
Marine/Ocean B/L
The name of the place/port etc. specified in a L/C in line 44A saying
“loading/dispatch/taking” in charge from can never be put in box 5. That named place/port
etc. in line 44A, if a marine/ocean B/L is specified, can only be put into box 7 (port of
loading). However, you put in addition to the required name of place or port in box 7, in
box 5 the name of the container terminal (city) at which the container was received. This
is acceptable as per Article 20 of UCP 600 provided shipment is (a) containerized and (b)
covered by one through B/L.

For this type of B/L the name of the place specified in line 44A of a L/C must show in box
5. (Note of caution: This is only valid if the L/C referring to a combined transport B/L does
not mention the word “onboard”. If the word “onboard” appears in conjunction with a
named combined transport B/L, the rules for a marine/ocean B/L automatically apply.)
BOX 7: PORT OF LOADING
Marine/Ocean B/L
You must show here the named port of line 44A in a L/C.
In fact, before doing anything, you must request a copy of the L/C from the shipper and
then check first if line 44A (and line 44B for discharge port) is in fact a port, and second,
if there is a carrier providing there is actually a service from the required port (of loading)
to the required port (of discharge). If there is a carrier you should check if the rate of that
carrier tallies with your prior quotation, if any.
2017 Page | 39
In the event you cannot find the required service, you have basically two options.
Option 1
Request amendment through the shipper to match the actual port(s) served.
Option 2
Sometime it may be possible to persuade a carrier to issue you the required B/L for the
L/C even though that B/L then does not correspond to the actual service.
For instance, a carrier may agree to show Montreal in box 7 when vessels sail from
Halifax. You have to investigate this possibility at time of booking with a responsible
person at the agent of the carrier so that you have no let down at time the actual B/Ls are
issued by the carrier.

You simply show the name of the actual port of loading for the vessel service you have
chosen. The name of the loading port is irrelevant in the context of the L/C. For the L/C
the important box in terms of line 44A for combined transport B/L is box 5 (place of
receipt).
BOX 8: PORT OF DISCHARGE
Marine/Ocean B/L
You must show here the named port of the line 44B in the L/C.
In terms of general explanation, the same detail applies for box 8 as explained for box 7
(port of loading).
It must be clearly understood that the named place in line 44B should be an actual port.
In the event it is an inland destination beyond the discharge port you could not comply
when the L/C requires a marine/ocean B/L. In such a case an amendment is necessary.
Usually you cannot persuade a carrier to show in box 8 a foreign inland place.
Transshipment
This needs a special explanation because the UCP rule in Article 20b, c, is frequently or
easily misunderstood.
First, Article 20b clearly defines transshipment to be from vessel to vessel. Now 20c(ii)
says banks will accept a B/L evidencing a transhipment, even if transshipment is
prohibited in the L/C, provided shipment is covered by a container and is on a through
B/L.
2017 Page | 40
Since most shipments are in a container and on a through B/L, Article 20c is commonly
understood or interpreted that you would have no problem in case of a transshipment.
Unfortunately there are frequent problems.
The reason for these frequent problems is the style or format of all B/Ls.
When you have transshipment the carrier on the B/L identifies that transshipment by
completing box 8 with name of transshipment port whereas the port of final destination
you need shows up in box 9. Box 9 is described in all B/L as place of delivery.
But article 20 for a marine/ocean B/L requires that the port of destination shows up in box
8. If you could create a B/L form which describes box 9 as final port of discharge, the
bank would accept your transshipment B/L on the basis of article 20c.
For the great majority of container lines a transshipment takes place on most routes. The
feedering from transshipment port to port of final destination is usually a vessel also
owned/controlled by your carrier. Many carriers do not even bother anymore to identify
a transshipment port in the B/L.
If a transshipment is still identified by a carrier it is rarely a problem to persuade the carrier

to omit the transshipment port and simply show in box 8 the final port of destination as
discharge port.
The point is, whenever a L/C prohibits transshipment you have to ensure with the carrier
at time of booking that the carrier will indeed issue you the B/L you require for the L/C.
When a carrier is unwilling to omit the showing of the port of transshipment in the B/L,
there is sometimes another possible solution before requesting an amendment.
Try to persuade the carrier to show the fact of transshipment and the name of the port of
transshipment as a separate line in box 19 whereas you request the carrier to show in
box 8 the port you require in accordance with your L/C.

You simply show the name of the actual port of discharge for the vessel service you have
chosen. The name of the discharge port is irrelevant in regard to line 44B in the context
of the L/C. For the L/C the important box at destination is either box 8 or more often box
9 as place of delivery. You show the named place in line 44 b in box 8 if the named place
is a port and if the named place in line 44B is a place beyond the port of discharge, you
show that name in box 9 (place of delivery).
BOX 9: PLACE OF DELIVERY
This is normally a place of destination or delivery beyond the port of discharge.
2017 Page | 41
Marine/Ocean B/L
Since line 44B is required to be shown as port in box 8, port of discharge, there is
normally no need to complete box 9 for a marine/ocean B/L. However, if in
spite of the L/C requirement in line 44B the client wishes delivery of the container at an
inland place, you may complete box 9 (place of delivery) in addition to box 8 (port of
discharge).

Insert the name of the final destination provided it is other than the port of discharge in
box 9, corresponding to line 44B in the L/C. If the line 44B for combined transport calls
for an actual port of discharge, leave box 9, place of delivery, blank.
BOX 10: FORWARDING AGENT:
Insert the name of your forwarding company.
BOX 11: MARKS AND NUMBERS, QUANTITY OF PACKAGES
Insert, in detail, the container number, seal number, container size, and number of
containers, as well as any markings, if the L/C stipulated so.
BOX 12: DESCRIPTION OF PACKAGES AND GOODS
This is probably the most important box:
1) Description
a) You should use strictly the exact description or wording used in the L/C, usually in
line 45A. You must copy the description truly and faithfully with all mistakes, if any.
b) You should include any additional wording seemingly not pertaining to the
description block of line 45A, e.g., “warranted packed in seaworthy cases” or any similar
wordings even when it is obvious to you they are not really part of a description.
You can always insert additional descriptive information, as you are required for
hazardous goods or tariff rating purposes.
The descriptions in the B/L should match the L/C exactly. Note that according to UCP
600, Article 14e, only the commercial invoice must correspond exactly with the L/C. Other
documents may describe the goods in general terms not inconsistent with the description
in the L/C.
2017 Page | 42
The proviso “not inconsistent with” is really a dangerous phrase because it allows for a
judgmental assessment by the bank. Also, bear in mind that the UCP rules are for the
bank usage toward the documents. Always bear in mind that the journey of the cargo
also involves different authorities, such as customs, insurance company or surveyor that
might delay the shipment process or even reject some documents if the description on all
documents does not match. Therefore, you are well advised to stick rigidly to the L/C
description also for the B/L.
There are two possible occasions when you may wish to make use of the proviso of Article
37C:
 Descriptions of excessive length, which do not fit into existing B/L forms without an
attachment sheet. We recommend the use of a RIDER page where you can
include the complete compliant description. Carriers will also issue the same
RIDER page on their stationary paper.
 Descriptions, which contain the actual value of the shipment. In such cases some
carriers may wish to assess an ad valorem ocean freight rate. If and when the need
for these two occasions arises and no amendment is possible, you first need to
check with the carrier whether or not a higher ocean freight rate would apply and
you need to check with the bank in advance of booking, perhaps with a sample
B/L form your propose, if the bank accepts your version of the description. A simple
B/L sample may not be enough, you may have to send copies of the other
documents required so the bank can judge if they are consistent with each other.
2) Annotations per L/C
a) When a L/C uses the word “marked” or words to a similar effect, that is an order
for you to put the relative information in box 12. The full instructions are usually marked
“freight prepaid or collect”. In that case it is not good enough to complete only box 24 in
the B/L simply with the name of your city at origin or use the word “payable at destination”.
b) You also must show all important on board clauses. Carrier B/Ls frequently do not
provide for the required style of on board notation, therefore you have to ask the carrier
to add it in for you.
Marine/Ocean B/L
When it is a pure port-to-port B/L and you only complete box 7 (port of loading) and box
8 (port of discharge) you only need to mark in box 12 “on board (with a date)”. When you
completed in addition to box 7, box 5 (place of receipt), the style of the on board notation
in box 12 must be:
On board vessel XYZ. From loading port ABC (with a date).
You must repeat the name of the vessel and the name of the loading port even though
both are already shown in box 6 and box 8. The background explanation is in Article 20
a (ii).
2017 Page | 43
c) In the event the L/C demands that all documents show, for example, the L/C number,
it is in box 19 where you put it. Sometimes other “number” information is required to be
shown in the L/C, such as order numbers, import permits, customs tariff item, etc. You
must carefully scrutinize each L/C for such additional instructions and follow them
accordingly.
BOX 13 & 14: SHIPMENT WEIGHT AND VOLUME:
As in all previous B/Ls, insert the shipment gross weight and shipment volume. Always
check to see if there are any stipulations in the L/C regarding shipment weight or volume.
BOX 15: NUMBER OF ORIGINALS
This will almost always be 3 originals, with either 3 or 4 non-negotiable copies.
BOX 16: SIGNATURE
Refer to the Preface of this exercise for the specific format the signature authentication is
required to be acceptable under the UCP 600. Carrier’s B/Ls frequently do not provide
for the specific signature authentication required. Therefore, you have to instruct the
carrier in which exact manner he must authenticate the signature on the B/L.
BOX 99: ENDORSEMENT
This refers to the back of the B/L. Whenever a L/C requires that B/L in box 2 is made out
"to order" or "to order of shipper", that shipper must endorse the B/L. You do this by
typing the name of the shipper’s company on the top of the back of the B/L and sign your
name over the shipper's name.
2017 Page | 44
Carrier:
Shipper:
BILL of LADING
Carrier References: B/L-No.:
Multimodal Transport or Port to Port Shipment

BOX 1
Export References:
CONSIGNEE: (Non-Negotiable Unless Consigned to Order) Forwarding Agent:
BOX 2 BOX 10
Consignee’s Reference:
Notify Address (Carrier not responsible for failure to notify: see clause 20(1) hereof): Place of Receipt:
BOX 3
Place of Delivery:
Pre-Carriage by: BOX 4 Place of Receipt by Pre-Carrier: BOX 5
Ocean Vessel: BOX 6 Port of Loading: BOX 7
Port of Discharge: BOX 8 Place of Delivery by On-Carrier: BOX 9
Container Nos., Seal Nos., Marks and Nos. Number and Kind of Packages; Description of Goods Gross Weight (kg) Measurement (cbm)
BOX 11 BOX 12 BOX 13 BOX 14
Above Particulars as declared by Shipper. Without responsibility or warranty as to correctness by carrier (see clause 11(1) and 11(2)
Total No. of Containers/Packages received by Shipper’s declared value (see clause 7(1) and 7(2) Received by the Carrier from the Shipper in apparent good order and condition
the Carrier: hereof): (unless otherwise noted herein) the total number or quantity of containers or other
packages or units indicated in the box opposite entitled Total No. Of
Movement Currency
Containers/Packages received by the Carrier” for Carriage subject to all the terms and
conditions hereof (including the Terms and Conditions of the Reverse hereof and the
Terms and Conditions of the Carrier’s Applicable Tariff) from the Place of Receipt of
Charge Rate Basis WT/MEA/VAL Payment Amount the Port of Loading, whichever is applicable, to the Port of Discharge or the Place of
Delivery, whichever is applicable. One original Bill of Lading, duly endorsed, must be
surrendered by the Merchant to the Carrier in exchange for the Goods or a delivery
order. In accepting the Bill of Lading the Merchant expressly accepts and agrees to
all its terms and conditions whether printed, stamped or written or otherwise
incorporated, notwithstanding the non-signing of the Bill of Lading by the Merchant.
In Witness whereof the number of original Bills of Lading Stated below all of this tenor
and date has been signed, one of which being accomplished the others to stand void.
Place and Date of Issue:
Freight Payable at:

Number of original Bs/l: BOX 15
Total Freight Prepaid Total Freight Collect Total Freight
Signature by Carrier or Agent BOX 16
2017 Page | 45
GENERAL OBSERVATIONS
When in doubt, follow the principles below:
In most cases, it does not help at all to question the bank for explanation. Always keep in
mind that a bank is not experienced in any shipping matter at all. All the bank can do, and
is required to do under the UCP, Article 5, is to judge if all documents submitted appear
to be in accordance with the terms of the L/C. In fact, you may alert the bank to a problem.
Never forget that it is the bank’s money which is riding directly on their judgement of your
documents being L/C compliant, therefore the bank is bound to be conservative. Their
guidance is strictly the UCP 600. Whenever problems regarding compliance arise,
consult your experienced manager in your forwarding organization. If no solution seems
possible, your shipper must request an amendment. Amendments delay shipping, are
costly for your shipper and annoy buyers. Only ask shippers to request an amendment if
there is truly no other choice.
Questions to the advising bank should only pertain to an item on which it is possible for
the bank to make a clear decision. When preparing documents for a L/C, always insist to
do this by reading from the actual original L/C. Faxing or photocopying of L/Cs can cause
“errors” in spelling. You must insist, in the interest of the shipper, that shipper is furnishing
you the original or, if need be, you should insist to retrieve the original from the advising
bank holding the original copy of the L/C.
It is all right, however, to use a fax or photocopy of a L/C for consulting purposes.
2017 Page | 46
1. Export Ocean Shipment Sold against a Letter of Credit
a) Complete the ocean bill of lading strictly based on the instructions contained
in the letter of credit (see next 3 pages).
Shipment:
15 pallets of automotive filters.

Total weight: 11,500 lb
The dimensions of each pallet: 48 in L x 42 in W x 42 in H
Available vessel: Maersk Penang V. 123
Closing Toronto, Canada: January 31, 2017
Sailing Montreal, Canada: February 5, 2017
ETA Auckland, New Zealand: March 24, 2017
Maersk will transship in Singapore, but Maersk usually makes no reference of the fact of
transshipment in their bills of lading issued.
b) Check first if this shipment fits into a container and if it does, state size of
container required. Make up a container serial number and a seal number
to be used in the bill of lading.
c) Complete the draft in accordance with instructions in the letter of credit.

Sign the draft.
2017 Page | 47

Req By: TOR AUTOLCT In: AUT PRT 1/5/17 07:29 Page 1
ICN: CA 910212-025712-000 Que: CA TOR LCT ADMR Pri:200 Dup: N
Msg Type: RECEIVED Poss Dup: Pri:H Time Created : 1/4/17 22:11
Completion: MESSAGE ACTIVE Exception:
Correspondent: 0049817 II Amount: 38,460.30
Name: NATL BK OF NEW ZEALAND, H.O +AOS Owner Office: TOR/LCT
Address: UNAVAILABLE FOR THIS MESSAGE
City: Cntry: PC:
Parent ICN: Input Test: N Swift OSN: 12ROT297405

Service: SWF Ref:13NBNZNZ22AXXX47388 Sequence:7405
Test Result: TESTED
BANK OF MONTREAL
TORONTO, CANADA
RECEIVED 1/69417
SRN 13NBNZNZ22AXXX47388
SENT 1/5/12
FROM NBNZNZ22AXXX
NATL BNK OF NEW ZEALAND, H.O. +AOS
POB 1791
WELLINGTON NEW ZEALAND
CIF# 0049817 II UID:
MT 700 ISSUE OF DOC CREDIT PRIORITY 01
27 / SEQUENCE OF TOTAL
27A / FORM OF DOCUMENTARY CREDIT:

IRREVOCABLE
30 / DOCUMENTARY CREDIT NUMBER DCNTBWZ09268
31C / DATE OF ISSUE: 170101
31D / DATE AND PLACE OF EXPIRY: 170415

CANADA
2017 Page | 48
Req by: TOR AUTOLCT In: AUT PRT 1/5/17 07:29 Page 2
ICN: CA 910212-025712-000 Que: CA TOR LCT ADMR Pri: 200 Dup: N
50 / APPLICANT
AUTOMOTIVE SPARES N.C. LTD
PO BOX 4711
NEW PLYMOUTH
NEW ZEALAND
59 / BENEFICIARY
CANADIAN CAR CARE PRODUCTS LTD.
100 RAILROAD ST.
MISSISSAUGA, ONTARIO
CANADA
32B / CURRENCY CODE,AMOUNT

USD38,460.30
41D / AVAILABLE WITH ...BY...

ANY BANK
BY NEGOTIATION
41C / DRAFTS AT ...

DRAFTS AT 60 DAYS AFTER SIGHT
42D / DRAWEE:
THE NATIONAL BANK OF
NEW ZEALAND LIMITED
INTERNATIONAL BRANCH WELLINGTON
43P / PARTIAL SHIPMENTS: ALLOWED
43T / TRANSHIPMENT: ALLOWED
44A / PORT OF LOADING/AIRPORT OF DEPARTURE

ANY NORTH AMERICAN PORT
44B / PORT OF DISCHARGE/AIRPORT OF DESTINATION

AUCKLAND, NEW ZEALAND
44C / LATEST DATE OF SHIPMENT: 170215
45A / DESCRIPTION OF GOODS AND/ OR SERVICE:

FILTERS
2017 Page | 49
46A / DOCUMENTS REQUIRED:

FCA TORONTO
COMMERCIAL INVOICE IN DUPLICATE
INSURANCE BUYERS CARE
CERTIFICATE OF ORIGIN
FULL SET CLEAN ON BOARD MARINE BILLS OF LADING TO
ORDER AND BLANK ENDORSED MARKED FREIGHT COLLECT
71B / CHARGES:
ALL CHARGES OUTSIDE NEW ZEALAND FOR ACCOUNT OF
BENEFICIARY (INCLUDING ADVISING COMMISSION,
ACCEPTANCE COMMISSION AND DISCOUNT CHARGES FOR
TERM CREDITS.
48 / PERIOD FOR PRESENTATION

DOCUMENTS MUST BE PRESENTED WITHIN 20 DAYS FROM
DATE OF ISSUANCE OF THE TRANSPORT DOCUMENTS, BUT
NOT LATER THAN THE EXPIRY OF THE CREDIT
49 / CONFIRMATION INSTRUCTIONS: WITHOUT
53A / REIMBURSEMENT BANK:

PHILADELPHIA INTL BK, NEW YORK
I.C.S. CLEARANCE ACCOUNT
55 BROAD STREET NEW YORK NEW YORK
78 / INSTRUCTIONS PAY/ACCEPT/NEGOT BANK:

ONE COMPLETE SET OF DOCUMENTS IS TO BE FORWARDED BY THE
NEGOTIATING BANK AIRMAIL (THE REMAINING DOCUMENTS BY
FOLLOWING AIRMAIL) DIRECT TO THE NATIONAL BANK OF NEW ZEALAND
LIMITED, INTERNATIONAL BRANCH WELLINGTON, PO BOX 1791,
WELLINGTON NEW ZEALAND.
57D / ADVISE THROUGH BANK:

BANK OF MONTREAL
234, SIMCOE STREET 3RD FLOOR
TORONTO ON, CANADA
72 / SENDER TO RECEIVER INFORMATION:
THIS CREDIT IS OPERATIVE AND SUBJECT TO UNIFORM CUSTOMS 2007,
REVISION PUBLICATION 600
AUT AUTHENTICATOR RESULT:/CO8B

SAC AUTHENTICATION SUCCESSFUL CURRENT KEY
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Carrier:
BILL of LADING
Shipper: Carrier References: B/L-No.:
Export References:
Pre-Carriage by: Place of Receipt by Pre-Carrier: Place of Delivery:
Ocean Vessel: Port of Loading:
Port of Discharge: Place of Delivery by On-Carrier:
Container Nos., Seal Nos., Marks and Nos. Number and Kind of Packages; Description of Goods Gross Weight Measurement (cbm)
(kg)
Total No. of Containers/Packages received Shipper’s declared value (see clause 7(1) Received by the Carrier from the Shipper in apparent good order and condition
by the Carrier: and 7(2) hereof): (unless otherwise noted herein) the total number or quantity of containers or
other packages or units indicated in the box opposite entitled Total No. Of
Movement Currency Containers/Packages received by the Carrier” for Carriage subject to all the
terms and conditions hereof (including the Terms and Conditions of the
Reverse hereof and the Terms and Conditions of the Carrier’s Applicable
Tariff) from the Place of Receipt of the Port of Loading, whichever is applicable,
to the Port of Discharge or the Place of Delivery, whichever is applicable. One
Charge Rate Basis WT/MEA/VAL Payment Amount original Bill of Lading, duly endorsed, must be surrendered by the Merchant to
the Carrier in exchange for the Goods or a delivery order. In accepting the Bill
of Lading the Merchant expressly accepts and agrees to all its terms and
conditions whether printed, stamped or written or otherwise incorporated,
notwithstanding the non-signing of the Bill of Lading by the Merchant.
In Witness whereof the number of original Bills of Lading Stated below all of
this tenor and date has been signed, one of which being accomplished the
others to stand void.
Freight Payable at: Number of original Bs/l:
Total Freight Prepaid Total Freight Collect Total Freight Signature by Carrier or Agent
2017 Page | 51

DUE _______________________ NUMBER
______________________________ 20 __________

NUMBER
TO ________________________________
________________________________
________________________________ ______________________________
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1. What are the main reasons why a letter of credit may be chosen as a form of
International payment?
Open account unsatisfactory, documentary collection unsatisfactory,

foreign exchange issue in the importer’s country, political/economic
instability, exporter’s request and fair/equal sharing of risk.
2. Name some advantages of a letter of credit.

 The exporter is assured of payment as long as he/she complies
with the terms of the letter of credit;
 The letter of credit clearly defines the necessary documentation;
 Credit risk is transferred from importer to issuing bank;
 The exporter, with the help of a confirming bank, reduces the risk
of non-payment;
 The exporter minimizes collection time with the use of the letter of
credit; and
 The exporter’s foreign exchange risk is eliminated.
3. The letter of credit deals with documents and not with goods, what risk does
this pose to the buyer?
The risk of the exporter not shipping the goods as mentioned in the letter
of credit still persists.
4. What kind of risks is the exporter exposed to under the usance letter of credit?
The commercial risk of the issuing bank, political risk of the issuing
bank’s country and foreign exchange risk.
5. Name (5) five main parties involved in the letter of credit.

 The applicant (importer/buyer);
 The issuing bank;
 The beneficiary (exporter/seller);
 The advising bank; and
 The confirming bank.
6. Which party instructs the bank to open a letter of credit?
The applicant (importer/buyer).
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7. Which party draws up and issues the letter of credit and then makes payment
according to the conditions outlined in the letter of credit?
The issuing bank.
8. Which party receives payment as stipulated in the letter of credit?
The beneficiary (exporter/seller).
9. Does the advising bank take on any payment obligations to the beneficiary
under a letter of credit?
No.
10. What does the Uniform Customs and Practice for Documentary Credits (UCP)
outline?
A set of rules on the issuance and use of letters of credit.
11. What is the current version of the UCP rules used by commercial bankers and
commercial parties in the execution of a letter of credit?
UCP 600.
12. What is the bank’s responsibility under Article 5 of the UCP 600 rules?
Banks only deal in documents, not in goods.
13. Is a CIFFA freight forwarder liable for his/her documentation in a letter of credit
transaction?
A freight forwarder (as a member of CIFFA) is clearly liable for the

accuracy of the documents supplied within the definition of the CIFFA
Standard Trading Conditions (STCs), whereby in case of fraud (or gross
negligence) the protection of the STCs does not apply.
14. As a CIFFA freight forwarder, it is your responsibility to comply with the

requirements of the letter of credit. What will the failure to do so result in?
The exporter will not get paid, the exporter depends on you to prepare at
least the transport document without any fault.
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15. As a CIFFA freight forwarder, what is a good way to avoid any lack of attention
or mistakes going through the documentary requirements?
Make a photocopy of the letter of credit and highlight the important or

tricky portion of the credit - each clause once it has been completed and
double-checked.
16. The UCP 600 rules provide room for some interpretation. As a CIFFA freight
forwarder, what should you do if you are in doubt?
Contact the bank immediately, as it is their interpretation of the rules that

counts.
17. What date do the banks look for if the credit prescribes an on board bill of lading
and a latest shipping date?
The actual on board or sailing date.
18. Under the UCP 600 rules, which date do you use to present the documents to
the paying bank?
You must present at whichever date comes first, presentation deadline or

expiry (a presentation date can under no circumstances be later then the
expiry date).
19. If a bill of lading indicates a place of receipt different from the port of loading,
what should be included in the “on board notation”?
The on board notation must include the name of the vessel, the voyage
number and the port of loading.
20. Under the UCP 600 rules, Article 23, is a house air waybill acceptable?
No. The house air waybill is not acceptable because it is not a carrier
document
21. Unless specified by name in the letter of credit, is a house bill of lading
covered in the UCP 600 rules?
No. A house bill of lading is not a carrier’s document, it is signed by the

freight forwarder as an agent for the shipper and consequently is not a
contract of carriage.
2017 Page | 55
22. Is it possible to assign to another party all or part of the proceeds of a

drawing/payment under a credit?
Yes, as per UCP 600, Article 39.
23. As a CIFFA freight forwarder you should guard yourself against the risk of non-
payment. How can you ensure payment from your client?
By setting up a direct separate payment or credit schedule, depending on

the financial status of your client, you may want advance payment or
failing that, possibly abstain from handling a shipment.
24. Name (3) three types of letter of credit.
 Transferable letter of credit;

 Revolving letter of credit;
 Standby letter of credit;
 Usance letter of credit;
 Red clause letter of credit.
25. What is the difference between a revocable and irrevocable letter of credit?
If a letter of credit is revocable, the applicant has the right to modify or

even cancel the credit at any time, up to the shipping date without the
consent of the beneficiary. In the case of an irrevocable letter of credit
one cannot annul, revoke, recall, cancel, amend, alter or change anything
without the approval of the beneficiary or buyer.
26. If there are spelling errors in the credit instructions, what should the CIFFA
freight forwarder do?
There is no need to request an amendment, the forwarder merely writes

within the documents the name misspelled as indicated in the letter of
credit.
27. Name some of the most common errors and/or deficiencies in the execution of
a letter of credit.
Presentation after the expiry date, late bill of lading on board date,
description differs, documents missing, consignee information incorrect
and original credit missing.
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1. Using the diagram below, and the numbers assigned to each step, describe a typical
letter of credit procedure.
1. A contract of the sale of goods is agreed upon between an importer and

exporter. The contract finalizes, among other things, the amount and method
of payment.
2. The importer, providing necessary detailed information, instructs a bank (the

issuing bank) to issue a letter of credit in favour of the exporter. At this time
the importer becomes the applicant.
3. The issuing bank transmits the credit to the exporter through a bank (the
advising bank) in the exporting country. The issuing bank might ask the
advising bank to add its confirmation to the credit (the confirming bank). At
the time of acceptance of the letter of credit the exporter becomes the
beneficiary.
4. The advising bank informs the beneficiary of the details of the letter of credit,
who carefully checks the letter of credit for its requirements. The advising
bank informs the issuing bank of the acceptance of the letter of credit by the
beneficiary.
5. The beneficiary prepares the required documents and the shipment as called
for in the credit and ships the goods to the importer.
6. The beneficiary presents the required documents to the negotiating bank.
7. The negotiating bank confirms that the documents fulfil the terms of the letter
of credit, and if satisfactory, according to the terms, pays, accepts or
negotiates payment.
8. The negotiating bank forwards the documents to the issuing bank.
9. The issuing bank confirms the fulfilment of the letter of credit, transfers the
title to the applicant and makes reimbursement to the advising bank according
to the terms of the credit.
10. The issuing bank debits or secures payment from the applicant in the manner
agreed to prior to issuance of the letter of credit.
11. The issuing bank releases the documents to the applicant. The applicant uses
the documents to take delivery of the goods.
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1. a)
Shipper’s Name and Address Shipper’s Account Number Not negotiable
Canadian Manufacturing Inc. Air Waybill: 014-9874-1111

5678 Mississauga Road Issued by:
Mississauga, Canada AIR CANADA

_________________________________________________________________
Copies 1, 2, ands 3 of this Air Waybill are originals and have the same validity.
It is agreed that the goods described herein are accepted in apparent good order and
condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT
ON THE REVERSE HEREOF. THE SHIPPER’S ATTENTION IS DRAWN TO THE
NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY. Shipper may increase
Consignee’s Name and Address Consignee’s Account Number
such limitations of liability by declaring a higher value for carriage and paying a
supplemental charge if required.
Sanwa Bank Ltd.
Matsubara Br.
Osaka, Japan
Issuing Carrier’s Agent Name and City Accounting Information
CIFFA Forwarder
Toronto, Canada
Agent’s IATA Code Account No.
Airport of Departure (Addr. Of First Carrier) and Requested Routing
TORONTO AIRPORT
To By First Carrier Routing and To By To By Currency CHGS WT/VAL Other Declared Declared
Destination Code Value for Value for
Carriage Customs
OSA Air Canada CAD X X NVD $ NCV
Airport of Destination Flight/Date For Carrier Use Only Flight/Date Amount of
Insurance INSURANCE – If carrier offers insurance, and such
Osaka Intl. Insurance is requested in accordance with the
NIL conditions thereof, indicate amount to be insured in
Airport figures in box marked “Amount of Insurance”.
Handling Information:
Notify: the applicant, Yamamoto Barbeque Corp, Osaka and Kintetsu Express.
SCI
Attached:
No. of Gross kg Rate Class Chargeable Rate/Charge Total Nature and Quantity of Goods
Pieces Weight Weight
RCP Commodity Item No. (incl. Dimensions or Volume)
51 883 K 940 4.00 3,760.00 Barbeque parts

CIP Osaka
Insure to be effected by
shipper
letter of credit no.:
41 2360927-209
Prepaid Weight Charge Collect Other Charges
3,760.00
Valuation Charge
Tax
Total Other Charges Due Shipper certifies that the particulars on the face hereof are correct and that insofar as
Agent any part of the consignment contains dangerous goods, such part is properly
described by name and is in proper condition for carriage by air according to the
Total Other Charges Due applicable Dangerous Goods Regulations.
Carrier
CIFFA Forwarder Signature
Signature of Shipper or his Agent
Total Prepaid Total Collect
3,760.00 January 24, 2017, Toronto, Canada

Currency Conversion Rates CC Charges in Dest. Currency
Executed on (Date)at (Place) Signature of Issuing Carrier or its Agent
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b) Chargeable weight:
0.48 x 0.48 x 0.48 x 51 = 5.640 m3 x 1,000,000 ÷ 6,000 = 940 kg
Air freight charges: 940 kg x CAN $4.00 = CAN $3,760.00
c) Insurance policy - claims payable in U.S. Dollars in Japan.

Before starting, check with the underwriter's agent if the marine underwriter
is able to comply with this condition and mark the policy accordingly. Do
not take compliance for granted, always check with the party that makes the
actual decision.
Certificate of Analysis - shipper must supply this Certificate of Analysis.

Check with shipper that it will be in fact available at the time of presentation
to the bank.
d)

__________________________ DUE NUMBER
L/C number 41 2360927-209
January 24, 2017
_____AT SIGHT__________ AFTER DATE, FOR VALUE RECEIVED.
PAY TO THE ORDER OF Canadian Manufacturing Inc. THE

SUM OF
____Fifty Eight Thousand U.S. DOLLARS $58,000.00 USD_________ RECEIVING BANK’S

NUMBER
TO Sanwa Bank Ltd. Canadian Manufacturing Inc.
Osaka
________________________________ Exporter’s/Beneficiary’s Signature
2017 Page | 59

1. a)
Carrier:
MAERSK LINE BILL of LADING

Shipper: Carrier References: B/L-No.:
Canadian Car Care Products Ltd.

K 352318
100 Railroad St. Export References:
Mississauga, Ontario
CIFFA Forwarder, Toronto, On., Canada

TO ORDER
Automotive Spares N.C. Ltd. Toronto, Canada

PO Box 4711
New Plymouth, New Zealand
Place of Delivery:
Pre-Carriage by: CN Rail Place of Receipt by Pre-Carrier: Toronto,
Kanada
Ocean Vessel:Maersk Penang Voy. Port of Loading: Montreal, Canada
123
Place of Delivery by On-Carrier:
Port of Discharge: Auckland, New
Zealand
Container Nos., Seal Nos., Marks and Nos. Number and Kind of Packages; Description of Goods Gross Weight Measurement (cbm)
(kg)
Meau 999669-1 1 20 ft container said to contain 5,216 kg 20.813

Seal #: 07543 15 pallets of filters freight collect
Documentary credit no.
DCNTBWZ09268
Shipped on board Maersk Penang
V. 123 from loading port Montreal
February 5/12
Shipped load, stow and count
Total No. of Containers/Packages received Shipper’s declared value (see clause 7(1) Received by the Carrier from the Shipper in apparent good order and condition
and 7(2) hereof): (unless otherwise noted herein) the total number or quantity of containers or
by the Carrier: 1 other packages or units indicated in the box opposite entitled Total No. Of
Movement Currency Containers/Packages received by the Carrier” for Carriage subject to all the
terms and conditions hereof (including the Terms and Conditions of the
CY/CY USD Reverse hereof and the Terms and Conditions of the Carrier’s Applicable
Charge Rate Basis WT/MEA/VAL Payment Amount Tariff) from the Place of Receipt of the Port of Loading, whichever is applicable,
to the Port of Discharge or the Place of Delivery, whichever is applicable. One
original Bill of Lading, duly endorsed, must be surrendered by the Merchant to
the Carrier in exchange for the Goods or a delivery order. In accepting the Bill
of Lading the Merchant expressly accepts and agrees to all its terms and
conditions whether printed, stamped or written or otherwise incorporated,
notwithstanding the non-signing of the Bill of Lading by the Merchant.
In Witness whereof the number of original Bills of Lading Stated below all of
this tenor and date has been signed, one of which being accomplished the
others to stand void.
Toronto, Canada, February 6, 2017
Freight Payable at: Number of original Bs/l:
Destination 3
Total Freight Prepaid Total Freight Collect Total Freight Signature by Carrier or Agent
Signed by the Carrier, Maersk Lines
2017 Page | 60
b) Container stowage:
20-ft container inside dimensions: 232 in L x 90 in W x 90 in H
Pallet dimensions: 48 in L x 42 in W x 42 in H
Container: 232 L x 90 W x 90 H
Pallet: 48 42 42
= 4x2x2
= 16
Therefore, we can load 16 pallets into the 20-ft container. Since we only have
15 pallets, thus a 20-ft standard container is adequate.

__________________________ DUE NUMBER
L/C number DCNTBWZ09268
February 5, 2017
_____ 60 DAYS AFTER SIGHT_ AFTER DATE, FOR VALUE

RECEIVED.
PAY TO THE ORDER OF Canadian Car Care Products Ltd.____ THE

SUM OF
Thirty-eight thousand four hundred sixty 30/100 U.S. DOLLARS $38,460.30

USD_________ RECEIVING BANK’S
NUMBER
TO The National Bank of New Zealand Ltd. Canadian Car Care
International Branch Products Ltd.
Wellington
________________________________ Exporter’s/Beneficiary’s
Signature
2017 Page | 61
APPENDIX ‘A’
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Sample Instructions for Completion Applicable to the Irrevocable Documentary Credit
CANADIAN IMPERIAL BANK OF COMMERCE
1. Method of issuance - place an "x" in the appropriate box(es). Indicate as

Transferable only where it is intended that the Beneficiary may request the transfer
of the Credit or a part thereof to another party.
Note: The Bank will issue the Credit by Canadian Imperial Bank of Commerce,
Hong Kong Branch, if the Beneficiary is located in Hong Kong.
2. Expiry Date - indicate the last date on which drafts and/or documents may be
negotiated (usually, but not always in the country of the Beneficiary.) This date will
usually be a few days after the last date on which shipment may be made. The
extra few days allow the Beneficiary time to prepare and assemble the required
documents.
3. Applicant - indicate name, address and fax number (usually the importer).
4. Beneficiary - indicate name, address, contact name, telephone number, fax

number. If known, the name of the Beneficiary's bank may also be included.
Note: the Bank reserves the right to advise the documentary credit directly to the
Beneficiary through an Advising Bank of its choice. If it is imperative that the Credit
be relayed through the Beneficiary's bank, this should be noted in box 17 -
Additional Conditions.
5. Currency and Amount - indicate the full name of the currency. If the amount of
the Credit can be exceeded or reduced, indicate by what percentage.
6. Draft Requirements - indicate the term of draft(s), if required. (e.g. Sight, 60 days,
90 days, etc.). Note that the term of draft(s) has no bearing on the expiry date of
the Credit. Indicate if draft(s) are not required.
7. Partial Shipment(s) - place an "x" in the appropriate box. If left blank, partial
shipments will be prohibited.
Transhipment - place an "x" in the appropriate box. If left blank, transhipments will be
prohibited. Refer to current UCP which outlines the conditions under which banks
will accept documents indicating that transhipment may take
2017 Page | 67
8. place even though transhipment may be prohibited under the terms of the
Credit.
9. Shipment - insert the points of dispatch and destination if shipment is to be

effected by at least two different modes of transport, or insert the port of loading
and port of discharge if shipment is port to port. For all other modes of transport,
insert the shipment routing. Also, insert the latest date that the Beneficiary can
effect shipment in the country of origin, if known, under "Latest Shipment Date". If
a Forwarder's Cargo Receipt is required, a date inserted in the "Latest Shipment
Date" box will be interpreted as the date the goods are to be received by the
forwarder.
10. Covering - insert brief description of the commodity to be shipped (do not include
lengthy descriptions and details or attachments). If necessary, insert contract,
sales or order number(s) indicating whether they are the Applicant's numbers or
those of the Beneficiary. Details such as grades, quantity, base price, etc. should
be omitted.
11. Shipping Terms - a complete explanation of the shipping terms, including

detailed guidelines on the responsibilities of buyer and seller, are contained
in the current Incoterms, ICC Publication.
For port to port shipments - use only FAS (named port of shipment), FOB
(named port of shipment), CFR (named port of destination), CIF (named port of
destination), DES (named port of destination) and DEQ (named port of destination)
For Multimodal or all other modes of transport - use EXW (named place), FCA
(named place), CIP (named place of destination), CPT (named place of
destination), DAF (named place), DDU (named place of destination) and DDP
(named place of destination). Wherever possible include the specific version of
Incoterms (e.g. Incoterms 2000) referenced in the Sales Contract. Examples of
complete Incoterms are "CPT Toronto Incoterms 2000"or "FOB Hong Kong
Incoterms 2000".
Documents Required
12. Commercial Invoice - indicate number of copies required.
13. Canada Customs Invoice - indicate number of copies required.
2017 Page | 68
14. Transport Documents - indicate number of copies and type - "Marine Bills of
Lading (for port to port shipment only)", "Multimodal (Combined) Transport Bills of
Lading, Air Waybill", "Railway Bill of Lading", "Truck Bill of Lading". Note that a
"Forwarder's Cargo Receipt" is not a transport document under UCP.
Note: unless otherwise indicated, the Credit will be established as follows:
a. Multimodal (Combined) Transport Bills of Lading - Full set Multimodal

(Combined) Transport Bills of Lading consigned to shipper's order blank
endorsed marked "Notify (...Applicant's name and Address...)" and "Freight
Prepaid" or "Freight Collect".
b. Marine Bills of Lading - Full set on board Marine Bills of Lading consigned
to shipper's order blank endorsed marked "Notify (...Applicant's Name and
Address...)" and "Freight Prepaid" or "Freight Collect".
c. Forwarder's Cargo Receipt evidencing the date merchandise received for
shipment to Applicant marked "Notify (...Applicant's Name and Address...)"
and "Freight Prepaid" or "Freight Collect". If a date is inserted in the "Latest
Shipment Date" box it will be interpreted as the date the merchandise is to
be received by the forwarder.
d. Air Way bill consigned to Applicant marked "Notify (...Applicant's Name and
Address...)" and "Freight Prepaid" or "Freight Collect".
e. Railway Bill of Lading consigned to Applicant and marked "Notify
(...Applicant's Name and Address...)" and "Freight Prepaid" or "Freight
Collect".
f. Copy of Truck Bill of Lading consigned to Applicant and marked "Freight
Prepaid" or "Freight Collect".
g. Parcel Post Receipt addressed to Applicant.
Conditions other than those above must be clearly stipulated.
Insurance - if insurance is to be covered by Applicant, state such. If covered by

Beneficiary, indicate Insurance Policy/Certificate required together with the risks that are
to be covered and percentage of coverage required. Unless otherwise
2017 Page | 69
15. stipulated, insurance coverage must be for at least 110% of the CIF or CIP
value of the goods (Refer to current UCP).
16. Other documents - indicate any other documents that may be required including
the number of copies of each and content.
17. Additional Conditions - if the amount of the Credit represents a percentage of

the total cost of the goods, indicate this (e.g. represents 60% of invoice value, etc).
Any other special conditions may be stated here.
Note: In the absence of your instructions to the contrary, the Credit will be issued
instructing the negotiating bank to forward all documentation to CIBC in one
mailing.
18. Banking Charges - indicate which party (Applicant or Beneficiary) is responsible

for banking charges other than the Issuing Bank's charges. The Applicant is
responsible for the Issuing Bank's charges unless otherwise agreed. The
Advising Bank however retains the right to claim from the Issuing Bank any
charges which it cannot recover from the Beneficiary and these will be
considered as for the account of the Applicant (refer to current UCP).
19. Period for Presentation - under UCP, unless stipulated otherwise, banks will
accept documents up to 21 days after the date of shipment or until expiry date
(whichever is earlier) regardless of length of transport. The length of the voyage
should be considered when determining this figure.
http://www.cibc.com/ca/trade-finance-int/letters-credit/instr-compl-ltr-crd-appl.html
Note: This is a sample form only, referencing the old Incoterms.
2017 Page | 70
APPENDIX “B”
CONVERSION TABLES
LENGTH CONVERSION FACTORS
To INCHES FEET CENTIMETRES METRES

From (in) (ft) (cm) (m)
INCHES
N/A ÷ 12 x 2.54 ÷ 39.37
(in)
FEET
x 12 N/A x 30.48 ÷ 3.2808
(ft)
CENTIMETRES
÷ 2.54 ÷ 30.48 N/A ÷ 100
(cm)
METRES
x 39.37 x 3.2808 x 100 N/A
(m)
Examples:
- To convert inches (in) to feet (ft), the Conversion Factor is ÷ 12

 90 inches ÷ 12 = 7.5 feet
- To convert metres (m) to feet (ft), the Conversion Factor is x 3.2808

 3.5 metres x 3.2808 = 11.4828 feet
VOLUME CONVERSION FACTORS
To INCHES FEET CENTIMETRES METRES

From (in3) (ft3) (cm3) (m3)
INCHES
N/A ÷ 1,728 x 16.3871 ÷ 61,023.744
(in3)
FEET
x 1,728 N/A x 28,316.847 ÷ 35.3147
(ft3)
CENTIMETRES
÷ 16.3871 ÷ 28,316.847 N/A ÷ 1,000,000
(cm3)
METRES
x 61,023.744 x 35.3147 x 1,000,000 N/A
(m3)
Examples:
- To convert cubic feet (ft3) to cubic inches (in3), the Conversion Factor is x 1,728
 120 ft3 x 1,728 = 207,360 in3
- To convert cubic metres (m 3) to cubic feet (ft3), the Conversion Factor is x 35.3147
 50 m3 x 35.3147 = 1,765.735 ft3
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MASS CONVERSION FACTORS
To METRIC
POUNDS SHORT TONS LONG TONS KILOGRAMS
TONS
(lb) (sh tn) (tn) (kg)
From (mt)
POUNDS
N/A ÷ 2,000 ÷ 2,240 ÷ 2.2046 ÷ 2,204.622
(lb)
SHORT TONS
x 2,000 N/A ÷ 1.12 x 907.1848 ÷ x 1.1023
(sh tn)
LONG TONS
x 2,240 x 1.12 N/A x 1,016.0470 ÷ 0.9842
(tn)
KILOGRAMS
x 2.2046 ÷ 907.1848 ÷ 1,016.047 N/A ÷ 1,000
(kg)
METRIC TONS
x 2,204.622 x 1.1023 x 0.9842 x 1,000 N/A
(mt)
Examples:
- To convert pounds (lb) to kilograms (kg), the Conversion Factor is ÷ 2.2046

 100 lb ÷ 2.2046 = 45.3597 kg
- To convert metric tons (mt) to short tons (sh tn), the Conversion Factor is x 1.1023
 500 metric tons x 1.1023 = 551.15 short tons
2017 Page | 72
Questions Export Packaging and Warehousing

1. What are the two basic functions that packaging serves?
2. What is palletizing or unitizing of cargo?
3. What is the most common economical container/package?
4. What is the main problem with using wood packaging when shipping items
internationally?
5. Canadian warehouses operate under the laws of bailment. This means the
warehouse operator is ……..
6. Name the three categories of warehouses.
7. Name three functions of a warehouse.
8. Name three advantages of a private warehouse.
2017 Page | 73

1. Name five types of packages used in ocean freight shipments.
2. Describe the importance of marks and symbols.
3. What are two standard sizes of pallets for ocean freight shipments?
4. What details do you have to verify prior to stuffing an ocean container and an
airfreight container?
5. What points do you have to remember when loading an ocean and air freight
container?
6. What measures should be taken to prevent damage and losses?
7. Name at least three different types of public warehouses.
8. What is a private warehouse? Describe.
9. What are the advantages and disadvantages of using a public warehouse?
10. What are the advantages and disadvantages of using a private warehouse?
11. What is the warehouseman’s liability?
12. Describe a warehouse receipt and explain the difference between negotiable
and non-negotiable receipt.
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For many aspects of export crating the forwarder must rely mainly on the expertise of a
properly qualified export crating company. The textbook covers some principles of export
crating, but as a desk person in freight forwarding you rarely need to apply this art
yourself.
However, there is one aspect of export crating you should be able to deal with regularly.
That is the matter of how to figure out on paper if and how a specific cargo quantity can
be stowed best into a container of which size and type.
Many of the cargo samples referred to in this assignment have already been dealt with in
the International Transportation and Trade Program, under Ocean Freight. Consider this
therefore a refresher. There is nothing better than to strengthen your confidence and
expertise in the subject of container stowage calculation.
Container Stowage Calculations
First, when planning a container stowage, you need to be careful and conservative when
considering inside dimensions, i.e., use the smallest of the range of each of the
dimensions. Remember that the door height of a container is a little less (about 2 inches)
than the inner height of a container.
When it comes to open-top containers and the loading of big pieces, never guess.
Consult the carrier’s individual container specifications to see if a "fit" is feasible.
Remember, you only find the actual inside dimensions of any container when the box is
sitting at the warehouse ramp of your client.
Check the specifications for the details of an open-top container and notice that due to
the different special shape of an open top container, the available inside dimensions for
length, width and height as well as door height/width are less than for a standard
container.
When making a recommendation of a container stowage, especially when measurements

of cargo/box look like a “tight fit”, point this out in advance to the client, in your very own
interest. It is not unusual that the client may actually have to experiment whether or not
the given cargo fits.
Now to the “fitting” or container stowage calculation or method itself: If you feel the need
to make little sketches to help, you do so. A container loading plan will assist the people
who are loading the container. Make sure to be accurate, and try to make the sketches
to scale.
To determine the container requirements, first, estimate, and then calculate to see how
the cargo will actually fit. This is where sketching or drawing a stowage plan becomes
helpful.
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It is always advisable to write at top of your working sheet the inside dimensions and size
of the container type you intend to use. For example:
20-ft standard container: L 232 in x W 90 in x 90 in H
40-ft standard container: L 474 in x W 90 in x 90 in H
When you do use the exact carrier container dimensions, you should never bother with
fractional inside container dimensions, round down to the nearest full number in inches
or centimetres. Similarly, it is wiser not to use fractional inches/cm of cargo but round as
appropriate, usually up.
Additionally, keep in mind the cargo weight. Examine the weight loaded per container
and decide if your loaded weight is within the prescribed payload of a 20-ft or 40-ft
container. In addition to payload permitted for the container itself you must check and
decide if the weight you loaded is within the limits of road regulation, i.e., road regulation
in Canada, any transit country like the U.S., or country of destination. 48,000 lb is not a
problem in Canada if shipped by rail or road. It is not a problem via a U.S. state directly
to U.S. port of loading, if by rail. It can be a problem if shipped by road through some
U.S. states (each state is different). New York State has especially low road limits. You
should also review permitted weights in the country of destination. For some destinations,
the rate for container delivery is dependent on the gross weight of the loaded container.
One word of caution: You should never fool around with the height of a cargo unit by
thinking you can put a package on its side. The only possible exception to this rule would
be if, from the contents of the cargo unit, it is obvious that there would be no problem.
Turning cargo on its side should only be considered if shipper is willing to give you written
instructions.
It is suggested you make up your other samples of uniform packages to train and test
your skills to calculate correct container stowage.
Stowage of Automobiles
Cars must be braced and secured inside the container. This work should only be done
by people with the proper professional expertise.
You should never consider mixing other cargo with cars inside a container. If you do,
there is always the risk that the cargo portion will move around during the voyage and
damage the cars.
If mixing is ever contemplated, one needs to build a wooden wall or bulkhead behind the
second car and perhaps even a deck on top of the cars. The space left in length after
two cars are loaded is usually too small to warrant the cost of building a bulkhead and
building a deck over the cars is even more risky. There is the potential for unusual stress
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through violent container/ship movements on the high seas so that such a deck, even if
well built, can cave in. Because of that you should compare a container not to a truck,
but perhaps to a roller coaster ride. Therefore do not contemplate mixing cars with other
commodities.
There is one possible exception to this non-mixing rule. This refers to household goods,
when the owner, in view of cost, may insist on such mixing, in spite of your technical
explanation. It would be a matter of company policy for each forwarder to decide how to
proceed with such a mix, provided the building of the bulkhead and the stowing of the
goods into such containers is strictly done by well-known reputable specialists in this field,
such as a moving firm. Please take note that a letter of instruction by the HHG owner is
of little value or protection for you if something goes wrong. Courts usually protect the
small guy. Your best safeguard is, as it is always, first class quality work.
Example: Pick-Up Trucks
Total shipment of 10 pick-up trucks, with the dimensions of 195 in L x 84 in W x 78 in H.
The calculation of stowage for cars is really no different than that for palletized cargo,
except that you only need to consider the length of the vehicle. Given the length of these
particular pick-up trucks and the following container dimensions, how many containers
would you need?
20-ft standard container: 232 in L x 90 in W x 90 in H = 1 pick-up truck

40-ft standard container: 474 in L x 90 in W x 90 in H = 2 pick-up trucks
Therefore, we would need 10 x 20-ft standard containers or 5 x 40-ft standard containers

(or a mixture thereof) to move the total shipment of pick-up trucks
Stowage: Averaging Method
In this case you do not have the single dimensions of each carton. You must make a
reasonable guess what volume in terms of m3 likely fits into one container and which size
of container is expected to be the most suitable. The type of commodity usually gives
you an idea. You should be aware of the fact that dense items would be in a relatively
small-sized cartons and pretty heavy or dense in relation to their volume. In other words,
dense items will stow well, making good use of inside container space.
Items that are un-palletized make for better use of inside container space. Using the
stated average inside container dimensions, make your estimate of how many m 3 of items
would fit into what size of container. Also, which container size is the correct one to
choose and how many containers you need.
In reality, you should however insist with your shipper to supply you with actual single
dimensions of cartons or whatever unit of cargo. You should normally refrain from making
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such estimates. When asking you to do this here, it is strictly a theoretical exercise to
sharpen your skills.
Example: Books
1,000 cartons of books x 0.1 m3 = 100 m3
20-ft standard container = 28-30 m3 of un-palletized cargo

40-ft container = 55-60 m3 of un-palletized cargo
Therefore, we would need 2 x 40-ft standard containers to move the total shipment of
books.
Stowage of Single Large and/or Heavy Items
The main point here is for you to recognize that there is a problem with both, weight and
dimensions. You know from your container specifications that all containers are only 8 ft
wide outside. Therefore, the inside width of all containers is less than 8 ft. Open-top
containers have an even less available width inside compared to a standard container.
There is a similar situation for the height. The standard outside height of containers is 8
ft 6 in, but after allowing for thickness of floor and roof, you have always less than 8 ft
inside height. Again, a special situation applies for open-top containers, as you may have
no choice but to uncrate a large item for container stowage.
Check your container specifications for inside dimensions of an open-top container, and
compare it to the crated and uncrated item.
Loading Procedure
Technically, you have a problem to load this unit through the door. First, the door is
neither wide, nor high enough. Second, you should realize that no regular forklift can
handle this combination of length and weight. Even if the unit were a little smaller and fit
through the door, you should never contemplate pushing it through the door into the
container. How can the receiver unload such a unit? Such units must be loaded through
the roof opening of the open-top container.
Bracing
It is essential that weight is evenly distributed within the container, i.e., a single heavy unit
must be centred in the container and then braced at both ends to prevent any shifting.
The centering and the woodwork required for bracing may prevent you in this case to load
the reels as well into the same container. For a decision, you should depend on the
expertise and advice of your export crater. If the cargo does not fit into an open-top
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container, you should examine other containers, e.g., flat rack, or possibly ship the cargo
as break bulk, on a conventional vessel.
Remember that there are two kinds of payload restrictions to consider, especially for
extremely heavy and dense equipment such as an industrial mould or die (usually
automotive industry). The standard allowable payload for a container is the maximum
weight you are allowed to load inside a container. This payload is the difference between
the gross weight of a container (container tare weight and load) and the container tare
weight, both of which are marked on the door of any container. This regular payload
assumes that you are spreading the cargo weight evenly over the entire inside length of
the container.
The second type of payload defines a maximum weight per running metre or foot of
container inside length. This maximum weight is usually 4,500 kg/m for a 20-ft container
and 3,000 kg/m for a 40-ft container.
Many steamship agencies may be unaware of this special restriction, nonetheless if you
are involved in a shipping situation in which the cargo does exceed the permitted weight
per metre, you are obliged to report this to your client and propose a suitable alternative.
The first choice should be to build a cradle or frame of heavy timber in order to redistribute
the concentrated weight of a die from its own length to the total length of the floor of the
20-ft container (usually open top).
In the event such redistribution still does not sufficiently reduce the weight of the die below
the indicated maximum per metre or if the work/expertise of building a cradle involving
securing it to the container floor is not available, the remaining alternative means first of
all a crating of that mould or die and shipping as conventional break bulk cargo, either
with a conventional vessel or, if need be, with RO-RO vessel service provided the RO-
RO vessel is equipped with ships trailers or mafi for loading/unloading the RO-RO vessel.
Stowage of Mixed Palletized Cargo for a Consolidation
The difference when loading mixed cargo is that you have to use a floor plan control by
adding the different length of the pallets, but stay within container inside length.
Remember that you have to use a second tier of pallets. When the length of pallets in
the bottom tier differs from the length dimensions in the second tier, it is the longer of the
two lengths you must use to arrive at the total length of floor space actually used up.
Another point is that you should make sure that the lightweight pallets of cargo get stowed
on top of the heavier pallets of cargo.
Metric versus Imperial Dimensions
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Canada is officially metric. Nonetheless, you will still find today that nearly in all cases
involving Canadian export, the traditional shipper will supply you with imperial
dimensions, i.e., feet and inches. In an import situation you probably deal with metric
dimensions, i.e., metres and centimetres.
It is strongly recommended not to convert the dimensions given to you by the client, at
least not for the purpose of a container stowage calculation. Caused by inevitable
rounding after any conversion, your results are likely to be inaccurate.
Since the whole thing is a matter of basic arithmetic, i.e., dividing, it should not make any
difference in which mode you work, even if you personally may feel uncomfortable with
the imperial dimensions or vice versa.
It is recommended to use the following solution:
1) If the client has given you the single dimensions of packages in inches, proceed
as follows:
Do not convert each single dimension from inches into centimetres. For the division in
L/W/H, simply stay in the inch mode. For the calculation of a cube, multiply the inches
with each other – the result is in cubic inches, divide the result by 1,728 (1 ft3 = 1,728
in3), divide ft3 by 35.31 (1 m3 = 35.3146 ft3). In other words, you only convert once, i.e.,
the end total. You should memorize the two conversion figures.
Example: 155 pallets, each 48 in x 42 in x 42 in
Multiply 48 in x 42 in x 42 in, then x 155 pallets = 13,124,160 in3.

Divide 13,124,160 by 1,728 (in3 in 1 ft3) = 7,595 ft3
Divide 7,595 by 35.3146 (ft3 per 1 m3) = 215.07 m3
2) If the client has given you single metric dimensions of a package, simply select a
conservative metric figure from your carrier’s container specifications for the
container inside dimensions and then proceed in the same style and manner as
explained earlier.
Fazit
Each case of container stowage planning you work out will have a different set of
dimensions. Always try to achieve maximum use of container dimensions by
interchanging length and width, even within one row if that achieves a better utilization of
space. The first pattern of sizes you choose may not necessarily be the best option
possible. Always double-check yourself by applying a different pattern of case placing.
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It is important for you to learn and understand the basic approach how to proceed
correctly from the start. Any of your working papers must be set up in such a clear and
transparent style that a colleague in your office can continue your file without any problem.
You will calculate 5 different versions of container stowage.
Use the following container specifications.
Average Inside Container Dimensions
Container Type Length Width Height Max.

Payload
20-ft standard 232 in 90 in 90 in 20,000 kg
40-ft standard 474 in 90 in 90 in 25,000 kg
40-ft high cube 474 in 90 in 102 in 25,000 kg
45-ft high cube 534 in 90 in 102 in 25,000 kg
20-ft open top 232 in 90 in 94 in 20,000 kg
40-ft open top 474 in 90 in 94 in 25,000 kg
20-ft flat rack 220 in 96 in 90 in 20,000 kg
40-ft flat rack 462 in 90 in 78 in 25,000 kg
Average Inside Volume Capacity

Container Type Palletized Cargo Volume Un-palletized Cargo
Volume
20-ft standard 25 – 28 m3 28 – 30 m3
40-ft standard 45 – 50 m3 55 – 60 m3
40-ft high cube 50 – 55 m3 65 - 70 m3
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1. Uniform palletized cargo in standard containers.
155 pallets of TV monitors, each pallet weighs 1,200 lb, the dimensions of each
pallet are L48 in x W42 in x H34 in.
How many containers of which size are required for this shipment? Work your
answer out WITHOUT using a drawing. Stay within payload the container’s
payload.
2. Un-palletized cargo with single dimensions of cargo units in standard

container.
10 Jeep Cherokees, each weighs 2,000 kg, the dimensions of each are L4.2 m
(165 in) x W1.79 m (70 ½ in) x 1.61 m (63 in).
How many containers of which size are required?
3. Un-palletized cargo based on a reasonable average volume per container

in standard containers. This applies when single dimensions of cargo
units are not available.
500 cartons of tents, total weight is 12,500 kg, total volume is 100 m3.
How many standard containers of which size are required?
4. Open-top container for a special package in weight and dimensions.
One transformer consisting of main unit and 3 reels of cable.

Main unit: Net measurement: L30 ft x W7 ft x H7 ft.
Weight: 22,000 lb.
Gross measurements if crated: L32 ft x W8 ft x H8 ft.
Weight: 24,250 lb.
Reels: 4 ft in diameter, width 2 ft.

Weight of each: 1,100 lb.
a) Can you load the “net” unit into an open-top container?
b) If yes, how? Through the door or the roof?
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c) Can you load the “gross” unit into an open-top container?
d) What is your comment in respect to the reels for loading with main
unit into the same open-top container?
A mixed palletized cargo in a consolidation container.
Consignee container consolidation:
You are requested to load the following consolidation in Montreal into a container
(all dimensions as LWH)
Ex Edmonton: 2 pallets of pressure gauges, each 48 in x 45 in x 44 in, 1,800 lb.
Ex Kitchener: 2 pallets of electric motors, each 45 in x 42 in x 42 in, 2,200 lb.
Ex Montreal: 2 pallets of filter sheets, each 42 in x 42 in x 42 in, 200 lb.
Ex Calgary: 2 pallets of assembly tools, each 46 in x 45 in x 42 in, 2,000 lb.
Ex Winnipeg: 2 pallets of fittings, each 44 in x 44 in x 40 in, 200 lb.
Ex Toronto: 1 crate of instrument panel, 8 ft x 5 ft x 6 ft, 1,150 lb.
a) What size container is required for the complete shipment?
b) Try to show how you arrived at your answer without making a drawing.
c) What is the total cube in ft3? In m3?
d) What is the total length used inside the container?
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A good warehouse layout can increase output, improve product flow, reduce costs,
improve service to customers and provide better employee working conditions. In the
following exercise, complete the diagram outlay:
Label the public warehouse layout in the order that would make this warehouse’s design
truly efficient. Choose your labels from the following list:
 Receiving area Product Flow

 Packaging area
 Staging area
 Order pick storage area
 Bulk storage area
 Shipping docks area
 Office
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Answers Export Packaging and Warehousing
1. What are the two basic functions that packaging serves?
Marketing and distribution.
2. What is palletizing or unitizing of cargo?
Assembling packages on a pallet base and securing the load to the pallet.
3. What is the most common economical container/package?
Fibreboard box.
4. What is the main problem with using wood packaging when shipping items
internationally?
Wood packaging may contain pests which are harmful to the importing
country, heat treatment is required (ISPM 15 compliance).
5. Canadian warehouses operate under the laws of bailment. This means the
warehouse operator is liable for damage or loss of goods arising out of his
negligence.
6. Name the three categories of warehouses.
Private, public and contract.
7. Name three functions of a warehouse.
Inventory control; purchasing; order entry; receiving and inspection;

redistribution; put-away; storage; replenishment; customer order
selection checking; packing and marking; staging; consolidation and
shipping; and clerical and administrative.
8. Name three advantages of a private warehouse.
 Control
 Flexibility
 Cost.
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1. Name five types of packages used in ocean freight shipments.

a) Fiberboard drums
b) Nailed wooden boxes
c) Crates
d) Wire bound boxes
e) Cleated plywood boxes
f) Cardboard (fiberboard) boxes
g) Steel drums
h) Barrels
i) Bales
2. Describe the importance of marks and symbols.

They identify the shipment/packages and give any special instructions on
the handling of the cargo.
3. What are two standard sizes of North American pallets for ocean freight
shipments?
40 in x 48 in, 40 in x 40 in, 48 in x 48 in.
4. What details do you have to verify prior to stuffing an ocean container and an
airfreight container?
Inspect the container to see if it’s watertight, check fittings/tie downs,

cleanliness, check door locks and seal, and basic general condition.
5. What points do you have to remember when loading an ocean and air freight
container?
Observe weight limitations, avoid mixing incompatible cargo, observe

hazardous material regulations, have all cargo and materials ready before
beginning, plan for the loading and always remember that the unloading
must be considered.
6. What measures should be taken to prevent damage and losses?

Pack the goods properly, secure the cargo to prevent shifting, use proper
dunnage and stowage materials. You should also place hazardous cargo
near the door. Always pack for the toughest leg of the journey.
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7. Name at least three different types of public warehouses.

a) General non-food warehouse
b) Refrigerated warehouse
c) Bonded warehouse
d) Household goods warehouse
e) Special commodity warehouse
f) Dangerous goods warehouse
g) Bulk storage warehouse
8. What is a private warehouse? Describe.

It is owned by a company and operated by their own personnel. It is
generally designed to meet the specific needs of the company. Provided
the volume is large, it means lower cost.
9. What are the advantages and disadvantages of using a public warehouse?

Advantages - no capital cost outlay, flexibility in required storage space.
Disadvantages - no control, communication is usually harder, the facility

might not be geared to a company’s specific needs.
10. What are the advantages and disadvantages of using a private warehouse?
Advantages - flexibility in the design, can meet specific needs, over a
period of time it may become less costly than a public warehouse.
Disadvantages - capital outlay, costs, it is a fixed asset.
11. What is the warehouseman’s liability?

Before a warehouse can be held liable, negligence must be proven.
Normally the liability is 100 times one month’s storage charge.
12. Describe a warehouse receipt and explain the difference between negotiable
and non-negotiable receipt.
Acknowledgment on the part of the warehouse operator for the receipt of

goods which are not his own and to place in storage in the warehouse.
Negotiable receipt - a document of title to the goods. The goods can only
be released upon the surrender of the negotiable receipt, properly
endorsed.
Non-negotiable receipt - a receipt for the goods, nothing else.
2017 Page | 87

1. Uniform palletized cargo in standard containers.
155 pallets of TV monitors, each pallet weighs 1,200 lb, the dimensions of each
pallet are L48 in x W42 in x H34 in.
How many containers of which size are required for the total shipment? Work
your answer out WITHOUT using a drawing. Stay within the container’s
payload.
Solution:
The first thing we notice is that the length and width add up to 90 in.
Remembering our “concept of 90”, we can calculate how many groups of
4 skids we can load on the floor of a 40- and 20-ft standard containers.
40-ft standard container:
On the floor of a 40-ft standard container:

474 : 90 = 5.26 or 5 groups of 4 = 20 pallets on the floor.
To determine how many we can stack, we divide the height of the

container with the height of our skid.
90 : 34 = 2.6 or we can stack 2 pallets high.
We have also used up 450 in of floor length. 5 x 90 in = 450 in.

This leaves us 24 in at the door and we cannot load another pallet at the
door.
Checking the weight, we find that:

40 x 1,200 lb = 48,000 lb = 21,773 kg, weight O.K.
We can safely load 40 pallets of TV monitors into a 40-ft container.
20-ft standard container:
On the floor of a 20-ft standard container:

232 : 90 = 2.6 or 2 groups of 4 = 8 pallets on the floor.
We already know that we can stack 2 high.
We have also used up 180 in of floor length. 2 x 90 in = 180 in.
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This leaves us 232 in – 180 in = 52 in at the door. Can we load another

pallet at the door? Easily!!
Checking the weight

20 x 1,200 lb = 24,000 lb = 10,886 kg. Weight is OK.
We can safely load 20 pallets of TV monitors into a 20-ft container.
40-ft high cube container:
We have already determined that we can load 20 pallets on the floor of a

40-ft container. How many can we stack in a 40-ft high cube container?
To determine how many we can stack, we divide the height of the

container with the height of our skid.
102 : 34 = 3 or we can stack 3 pallets high.
Therefore, we can load 60 pallets into a 40-ft high cube container.
Checking the weight, we find that:

60 x 1,200 lb = 72,000 lb = 32,659 kg. Weight is NOT O.K.
We will concern ourselves with loading 20- and 40-ft standards.
As we have 155 pallets to ship, we take our 40 pallets and divide that into
the number of pallets we have to ship.
155 : 40 = 3.875
As the result has a decimal place greater than 0.5 we are forced to “go to”
another 40.
We will need 4 x 40-ft standard containers to ship the 155 pallets of TV

monitors.
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2. Un-palletized cargo with single dimensions of cargo units in standard

container.
10 Jeep Cherokees, each weighs 2,000 kg, the dimensions of each are L4.2 m
(165 in) x W1.79 m (70 ½ in) x 1.61 m (63 in).
How many containers of which size are required?
We know that we can fit 2 Jeeps into a 40-ft standard container.

474 : 165 in = 2.87 (we cannot have 0.87 of a Jeep).
Take the number of Jeeps divided by the number we can load into a 40-ft
standard container and this will give us our container requirements.
10 : 2 = 5 x 40-ft standard containers required.
Do not even consider a 45-ft container just because it allows loading 3

vehicles. A 45-ft high cube container is a specialized piece of equipment.
Not every carrier owns this type of equipment, and it is not allowed on
every trade lane.
3. Un-palletized cargo based on a reasonable average volume per container

in standard containers. This applies when single dimensions of cargo
units are not available.
500 cartons of tents, total weight is 12,500 kg, total volume is 100 m3.
How many standard containers of which size are required?
All the information given is just total volumes and weights. As the cargo
is relatively light we do not have to worry about the weight.
We know that we can load 55 – 60 m3 of loose cargo into a 40-ft standard

container. We would take our total volume and divide it by 55 m3, as a
conservative estimate.
100 : by 55 m3 = 1.8 x 40-ft containers.

We cannot have 0.8 of a container, therefore we need 2 x 40-ft standard
containers.
We can easily load all this cargo into 2 x 40-ft standard containers.
NOTE:
It is always a dangerous approach to calculate the total available m3 of

inside airspace in a container and try to match this with your total cargo
2017 Page | 90
m3. This method might have tempted you to use just 1 x 40-ft HC plus 1 x
20 ft for the 100 m3 of tents. That would have been wrong and potentially
embarrassing.
This question emphasises that in a real life situation you should insist
with your client to supply you with actual carton dimensions if an accurate
or binding stowage calculation is required.
But if you have to make an estimate, the relative estimated size of a carton
would determine your estimate. The smaller the carton, the better the
possibility to use the available space efficiently. If you have cartons of
shoes, or other small sized cartons as you would have in a Far East import
container, you probably can load a 40 ft to between 55 or 60 m3.
A tent is probably a mid-sized carton, therefore guessing you might load

50 m3 per 40 ft is a very reasonable guess, and the right answer. Any
larger carton approaching the size of a pallet would cause more stowage
space loss similar to palletized cargo.
4. Open-top container for a special package in weight and dimensions.
One transformer consisting of main unit and 3 reels of cable.

Main Unit: Net measurement: L30 ft x W7 ft x H7 ft.
Weight: 22,000 lb.
Gross measurements if crated: L32 ft x W8 ft x H8 ft.
Weight: 24,250 lb.
Reels: 4 ft diameter, width 2 ft.

Weight: each 1,100 lb.
a) Can you load the “net” unit into an open-top container?
The un-crated transformer - the “net unit” can only fit into a 40-ft open-
top container. The crated transformer has a width of 8 ft, which is the
same as the outside width of 8 ft of any 40-ft standard or open-top
container. Therefore, the “gross unit” (crated) cannot fit into a
standard or open-top container.
e) If yes, how? Through the door or the roof?
Loading must only be done through the uncovered top. You cannot
load a unit of such length (30 ft) and weight (10 tons) through the door.
Overhead cranes, either in house or rented, will be required to load this
cargo. There is no forklift around capable of handling that length.
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f) Can you load the “gross” unit into an open-top container?
No!! As explained in answer a), the crated unit width is the same as the
outside width of a container. Further, you should always check the roof
opening with the carrier. The roof opening is generally 92 in wide.
g) What is your comment in respect to the reels for loading with main
unit into the same open-top container?
3 reels should be shipped separately as LCL cargo. The transformer

must be centred in the container and blocked and braced at both ends,
with some form of a small bulkhead at each end to prevent shifting. As
a result, there will be no or limited space left for any additional cargo
(reels).
5. A mixed palletized cargo in a consolidation container.
Consignee container consolidation:
You are requested to load the following consolidation in Montreal into a

container (all dimensions as LWH)
Ex Edmonton: 2 pallets of pressure gauges, each 48 in x 45 in x 44 in, 1,800

lb.
Ex Kitchener: 2 pallets of electric motors, each 45 in x 42 in x 42 in, 2,200 lb.
Ex Montreal: 2 pallets of filter sheets, each 42 in x 42 in x 42 in, 200 lb.
Ex Calgary: 2 pallets of assembly tools, each 46 in x 45 in x 42 in, 2,000 lb.
Ex Winnipeg: 2 pallets of fittings, each 44 in x 44 in x 40 in, 200 lb.
Ex Toronto: 1 crate of instrument panel, 8 ft x 5 ft x 6 ft, 1,150 lb.
a) What size container is required for the complete shipment?
1 x 20- ft standard container.
b) Try to show how you arrived at your answer without making a

drawing.
Each of the two pallet lots has a width that allows stowage/placement side
by side. The heights are such that stacking of cargo can be accomplished
2017 Page | 92
easily. The only exception is the Toronto crate, which does not allow for
either stowage of other freight beside it or on top of it.
To approach this problem you will gradually sum up the floor length used
in the container as we “load” from the “nose” (front) to the door. You
must remember, when we load cargo on top of other cargo, we do not use
any additional floor length or space.
Cargo Loaded Floor

Length
Used
1. Load Edmonton on floor at nose. 48 in x 45 in x 44 in; 48 in

side by side.
2. Load Kitchener on top of Edmonton. 45 in x 42 in x 42 48 in

in; side by side. No additional length used.
3. Load Calgary on floor next. 46 in x 45 in x 42 in; side by 94 in

side. We used an additional 46 in of floor length (48 in +
46 in = 94 in)
4. Load Winnipeg on top of Calgary. 44 in x 44 in x 40 in; 94 in

side by side. No additional length used.
5. Load Toronto next on floor, 8 ft x 5 ft x 6 ft. We used an 190 in

additional 8 ft (96 in) of floor length (94 in + 96 in = 190
in).
6. Load Montreal on floor next, 42 in x 42 in x 42 in; side by 232 in

side. 42 in of floor length is used
(42 in + 190 in = 232 in).
Total floor length used 232 in
The floor length used is that of a 20-ft container. We have been able to do
a stowage plan and calculation without the need of a drawing.
Fortunately, all the pieces of the puzzle fit well. This is not always the
case in your day-to-day operations. If you feel the need to do a “sketch”,
then please do. It is not important as to how one determines a stowage
plan, it is important that the result of the planning is correct.
2017 Page | 93
c) What is total cube in ft3? In m3?
Origin ft3 m3 Total Weight
Ex Edmonton 110 3.115 1,633 kg
Ex Kitchener 92 2.605 1,996 kg
Ex Montreal 86 2.436 181 kg
Ex Calgary 101 2.860 1,814 kg
Ex Winnipeg 90 2.549 181 kg
Ex Toronto 240 6.797 522 kg
TOTALS 719 20.362 6,327 kg
We have also checked that the cargo weight is within the allowable load
for a 20-ft standard container.
It is also advisable to make a chart similar to this when you are doing a
first estimate to see what size of equipment you might need.
d) What is the total length used inside the container?
As per answer b) we have used 232 in of floor space. The entire

container length.
2017 Page | 94
2017 Page | 95
2017 Page | 96
Questions Commercial Documentation and Regulatory Compliance
1. Who issues an export permit?

2. What is the Area Control List?
3. Name five items on the Export Control List.
4. Who supplies the blank consular invoice forms, and who certifies them?
5. Name the parties who can sign the certificate of origin.
6. Give the most important reason why a certificate of origin may be required.
7. Do goods shipped under the NAFTA need a certificate of origin? If so what
kind?
8. Name three items for which an import permit is required.
9. When moving exhibition goods to two or more different countries, what
document would you recommend to make import and export procedures
easier?
10. A client approaches your company and wants to export a stuffed (taxodermied)
bear via air freight to Hong Kong. What must you do prior to proceeding?
11. Where would you get information on documentary requirements for a given
country?
12. Name two purposes of a commercial invoice.
13. List items that should be shown on the commercial invoice.
14. What are the three most common errors made on commercial invoices?
15. Name two purposes for the packing list.
16. Who issues an import permit in Canada?
17. Above what value for an export shipment must you issue an export declaration
(CAED or B13A)?
18. What is the function of the B13A? Where or with whom is it filed?
19. What is the HS code? Give the full name.
2017 Page | 97
20. Can you apply for an export permit if the exporter is not residing in Canada but
the goods are of Canadian origin and exported through a Canadian port?
21. What international convention regulates the traffic of endangered species?
22. What is CRF?
2017 Page | 98
Complete the commercial invoice, export declaration, and certificate of origin for the
following shipment.
Exporter: Nokov Toys Inc.

999 Jane Street
Toronto, Ontario, L4T 2D4
Contact: John Smith
Telephone: 416-555-1234
Importer: Scam Toys

10 Oden Strasse-12
Hamburg, Germany 09877
Contact: Hans Zimmermeyer
Telephone: 011-49-987-5678
Shipment details:
Commodity: Barbina dolls

Value of the shipment: CAN $10,350.00
Number of cartons: 25, containing a total of 1,000 dolls
Weight of each carton: 35 kg
Dimensions of each carton: 12 in x 24 in x 35 in
HS code for the shipment: 9503.90.00.89
Terms of delivery: FCA Nokov Toys Inc., Toronto, Incoterms® 2010
Country of origin for the dolls: Canada
Pre-carriage: Transport Truck Lines, CAN $450.00
Mode of transportation: ocean freight via Commadore Lines
Transportation details: vessel name – S.S. Louis Voy# 99
sailing from Montreal, January 25, 2017
Note: if you find that there are minor details missing, just make up a reasonable figure
or date to complete the documents.
Special Note:
You have not been supplied with the HS number for this commodity. You will also not be
supplied with the HS number of the commodity in the following questions. This was
purposely omitted. The reason is that as professional forwarders, we should be able to
use all our resources to accurately complete an export declaration. As you are a
professional forwarder the task is also for you to establish the correct HS number that is
required. (For confirmation on the interpretation of HS codes it is advisable to consult
with your customs team).
2017 Page | 99
Commercial Invoice
1. Invoice Date 2. Sale Date 3. Invoice No. 4. Page
of
5. Consignee Name and Address 6. Other Address (e.g. buyer/bank)
7. Origin 8. Destination 9. Currency of Sale 10. Terms of Sale

(country/province) (country/state)
11. Point of Export 12. Pre-carriage By 13. Exporting Carrier and Vessel
14. Mode of Transport From Point of Export 15. Terms of Payment
16. 17. 18. 19. 20. 21. 22.

Number and Marks and Description of Item Quantity Unit of Unit Total
Kinds of Numbers Measure Price
Packages
23. Gross Weight 24. Net Weight 25. Sub-total
32. Signature 26. Packaging
27. Domestic Freight
28. International Freight

of Nokov Toys Inc. 29. Insurance
30. Other
33. Date 31. Invoice Total
2017 Page | 100

Canada Border Agence des services EXPORT DECLARATION PROTECTED (WHEN COMPLETED)
Services Agency frontaliers du Canada DECLARATION D’EXPORTATION PROTEGE (UNE FOIS REMPLI) C
 Original  Amended-Modifie  Void-Nul  Copy-Copie ______ of-de _____________
See completion instructions-PLEASE PRINT-Voir la facon de remplir le formulaire-EN LETTRES MOULEES S.V.P. Page of
1. Business no. 2. Export permit/licence no. (if applicable)-No du permis/de la licence d’exportation (s’il y a
lieu)No d’entreprise 123456789 RM 002
3. Exporter information (includes non-resident) – Renseignements sur l’exportateur (y compris les non-résidents)
Name – Nom
No. and street – No et rue City – Ville Province/state, country – Province/État, pays Postal Code – Code postal
4. Consignee information – Renseignements sur le destinaire

Name – Nom
No. and street – No et rue
City – Ville Province/state, country – Province/État, pays Postal Code – Code postal
5. Country of final destination – Pays de destination finale 9(a) Customs proof of report no. – N de la prevue de déclaration des douanes
o
6. Name of exporting carrier, freight forwarder, or consolidator-Nome du

transporteur, du transitaire ou du groupeur de merchandises a exporter
7. Transport document no. – No due document du transport

yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
8. Mode of transport from place of exit – Mode de transport à partier du bureau de aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, no de reference
sortie
 Highway  Rail  Marine  Air
Routier Ferroviaire Maritime Aérien 9(b) Goods inspected by customs – Marchandises inspectées par les douanes
 Other (specify)  Yes - Qui
Autre (précisez) ________________________________
10. Vessel name (if applicable) – Nom due bateau (s’il y a lieu) 11. Date of export (yyy/mm/dd) – Date de’exportation (aaaa/mm/jj)
12. No. packages – No de colis Kind of packages – Genre de colis 13. Place of exit – Bureau de sortie
Container no. – No de conteneur 14. Exporter reference no. (if applicable) – No de référence de l’exportateur (s’il y a lieu)
15. Conveyance identification no. (if applicable) – No d’identification du moyen de

transport (s’il y a lieu)
16. Origin - Origine 17. Item description – Description d’article 18. HS Commodity Code- 19. Qty. & unit of 20. Value F.O.B place of
Code de merchandise du measure Qté & exit Valeur f.à.b. bureau de
SH unité de mesure sortie
Country Province
Pays
21. Currency used for declared value – Devise de la valeur declare 22. Gross weight – Poids brut 23. Total value F.O.B place of exit – Valeur totale f.à.b.
bureau de sortie
24. Freight charges to place of exit, estimated if unknown (included in field 20) – 25. If goods are not sold, state reason for export (if applicable). If a lease or rental, state
Frais de transport jusqu’au bureau de sortie, estimé si inconnu (compris à la zone period – Si les merchandises ne sont pas vendues, motivez le’exportation (s’il y a lieu). S’il
20) s’agit d’une location ou d’un bail, précisez la periode.
26. Customs service provider information (if applicable) – Renseignements sur la fournisseur de services douaniers (s’il y a lieu)
Name – Nom
Area code and tel. no.
Indicatif regional et no de tél.
No. and street – N et rue
o
27. I hereby certify that the information given above and on the continuation sheet(s), if any, is true and complete.
Je certife qu les renseignements inscrits ci-dessus et sur les feuilles supplémentairs, s’il en est, son exacts et complets.
Name of person responsible for completion – Nom de la personne Company name – Nome de la compagnie
responsible de remplir le formulaire.
No. and street – No et rue City – Ville Province/state, country – Postal Code – Code 28. Status – Statut
Province/État, pays postal  Exporter Other
Exportateur Autre
Area code and tel. no. Signature Date
2017 Page | 101

1. Goods consigned from (Exporter’s business name, Reference No.

Address, country)
GENERALIZED SYSTEM OF PREFERENCES

2. Goods consigned to (Consignee’s name, address, (Combined declaration and certificate)

Country) FORM A
Issued in
(country)
3. Means of transport and route (as far as known) 4. For official use
5. Item 6. Marks 7. Number and kind of packages: description of goods 8. Origin 9. Gross 10. Number and date of
number and criterion weight or invoices
numbers other quantity
of
packages
11. Certification 12. Declaration by the exporter

It is hereby certified, on the basis of control carried out, that the The undersigned hereby declares that the above details and statements are
declaration by the exporter is correct. correct: that all the goods were produced in
____________________________
(country)
This area is generally where the local
and that they comply with the origin requirements specified for those goods in
Chamber of Commerce will certify the the Generalised System of Preferences for goods exported to
document, stamp, sign and date.
____________________________
(importing country)
______________________________ ___________________________
Place and date, signature and stamp of certifying authority Place and date, signature of authorised signatory
2017 Page | 102

following shipment.
Exporter: Canadian Manufacturing Inc.

5678 Mississauga Rd.
Mississauga, Ontario, X1B 2B3
Importer: Preston Barbeque

967 Cleaver Avenue
Rotterdam, Netherlands, 09900
Shipment details:
Commodity: 374 barbeque parts

Number of wooden crates: 34
Total gross weight of the shipment: 2,000 kg
Total net weight of the shipment: 1,870 kg
Dimensions of each crate: 54 in x 42 in x 66 in
Terms of delivery: CPT Port of Rotterdam, Netherlands,
Incoterms® 2010
Factory price of each barbeque part: US $135.00
Mode of transportation: ocean freight
Ocean freight charges: US $3,000.00, door Toronto-CY Rotterdam
(inclusive of CAN $150.00 for pre-carriage)
Transportation details: Canadian Mediterranean Line, S.S. Star,
Voyage 14E, June 20, 2017
2017 Page | 103

Commercial Invoice
of

16. 17. 18. 19. 20. 21. 22.

Packages

of Canadian Manufacturing Inc. 29. Insurance
30. Other
2017 Page | 104

1. Business no. 2. Export permit/licence no. (if applicable)-No du permis/de la licence d’exportation (s’il y a lieu)
No d’entreprise 667786124 RM 003
Name – Nom

Name – Nom
o


8. Mode of transport from place of exit – Mode de transport à partier du bureau de aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, n o de reference
sortie
Autre (précisez) ________________________________

Country Province
Pays
bureau de sortie
Name – Nom
o
Exportateur Autre
B13A (4)
2017 Page | 105

1. Goods consigned from (Exporter’s business name,

Address, country)

Country) FORM A
Issued in
(country)
of
packages

____________________________
(country)
____________________________
(importing country)
______________________________ ___________________________
2017 Page | 106

following shipment.
Exporter: Great Glass Works of Kitchener Inc.

1234 Schwaben Ave.
Kitchener, ON, G6H 1S1
Importer: Francois Glass B.V.

321 Rue de la Fleur
Brussels, Belgium, 10098
Shipment details:
Commodity: glass figurines

Number of cartons: 24, each box contains 18 figurines
Dimensions of each box: 12 in x 24 in x 26 in
Total actual weight of shipment: 300 kg
Net weight of the shipment: 276 kg
Terms of delivery: FCA Great Glass Works, Kitchener, Incoterms® 2010
Pre-carriage: Cartage Company, CAN $125.00
Cost of each glass figurine: CAN $4.00
Mode of transportation: air freight
Transportation details: Lufthansa flight from Toronto on July 20, 2017, flight
LH365
2017 Page | 107

Commercial Invoice
of

16. 17. 18. 19. 20. 21. 22.

Packages

of Great Glass Works of Kitchener 29. Insurance
30. Other
2017 Page | 108

Name – Nom

Name – Nom
o


sortie
Autre (précisez) ________________________________

Country Province
Pays
bureau de sortie
Name – Nom
Exportateur Autre
B13A (4)
2017 Page | 109


Address, country)


Country) FORM A
Issued in
(country)
of
packages

____________________________
(country)
____________________________
(importing country)
______________________________ ___________________________
2017 Page | 110

following shipment.
Exporter: Rain & Shine

432 Avenue Road
Toronto, ON, M4Y 8Z3
Importer: Harrods of London

1 Nottingham Place
London, W11 1BB, United Kingdom
Shipment details:
Commodity: umbrellas
Number of cartons: 16, each carton contains 72 umbrellas
Total weight of the shipment: 425 kg
Net weight of the shipment: 400 kg
Dimensions of each carton: 36 in x 18 in x 16 in
Terms of delivery: CPT LHR London, U.K., Incoterms® 2010
Pick-up charges: CAN $100.00
Factory price of the umbrellas: CAN $1,200.00 per carton
Mode of transportation: air freight
Transportation details: British Airways, flight BA642, direct to London
on March 15, 2017
You have sold the freight to your customer at a rate of CAN $2.50/kg.
2017 Page | 111

Commercial Invoice
of

16. 17. 18. 19. 20. 21. 22.

Packages

of Rain & Shine 29. Insurance
30. Other
2017 Page | 112

Name – Nom

Name – Nom
5. Country of final destination – Pays de destination finale 9(a) Customs proof of report no. – No de la prevue de déclaration des douanes


8. Mode of transport from place of exit – Mode de transport à partier du bureau de aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, n o de reference
sortie
Autre (précisez) ________________________________

Country Province
Pays
bureau de sortie
Name – Nom
Exportateur Autre
B13A (4)
2017 Page | 113


Address, country)


Country) FORM A
Issued in
(country)
of
packages

____________________________
(country)
____________________________
(importing country)
______________________________ ___________________________
2017 Page | 114

following shipment.
Exporter: Ontario Baby Supplies Ltd.

147 Queen St.
Brampton, ON, L7P 3S9
Importer: Bebes R Ci S.A.

134 Norde Calle
Valparaiso, 2340000, Chile
Shipment details:
Commodity: baby formula

Number of cartons: 1,200, 12 tins of baby formula per carton,
37 ounces per tin
Weight of each carton: 30 lb
Net weight of the shipment: 15,130 kg
Terms of delivery: CPT Valparaiso, Incoterms® 2010
Factory price per carton: CAN $20.50
Mode of transportation: ocean freight
Freight charges to Valparaiso: CAN $7,000.00 (inclusive of CAN $750.00 for
domestic freight)
Transportation details: Dragon Lines, vessel S.S. Aldaris, voy # 56S,
November 5, 2017
2017 Page | 115

Commercial Invoice
of

16. 17. 18. 19. 20. 21. 22.

Packages

of Ontario Baby Supplies Ltd. 29. Insurance
30. Other
2017 Page | 116

Name – Nom

Name – Nom
o


sortie
Autre (précisez) ________________________________

Country Province
Pays
bureau de sortie
Name – Nom
o
Exportateur Autre
B13A (4)
2017 Page | 117


Address, country)


Country) FORM A
Issued in
(country)
of
packages

____________________________
(country)
____________________________
(importing country)
______________________________ ___________________________
2017 Page | 118

Additional Comments for the Answer to Question 4.
It should be noted that Canada has various free trade agreements set up with various
countries.
The proper document that should be completed in place of a certificate of origin is a

Canada – Chile Free Trade Agreement Certificate.
Copies of this form are available by ordering through the Migra’s Canadian Export Guide.
If you are involved in exports you are probably familiar with countries that require a special
certificate of origin.
It is advisable for those working in export to check the documentation requirements of

countries to which you are exporting for the first time before you dispatch the freight. You
could save yourself and your company a lot of embarrassment.
2017 Page | 119

Answers Commercial Documentation and Regulatory Compliance
1. Who issues an export permit?
The Export and Import Controls Bureau (EICB) authorizes, under the discretion of
the Minister of International Trade (Global Affairs Canada) the import and export of
goods restricted by quotas and/or tariffs.
2. What is the Area Control List?
The ACL is a list of countries for which export permits are required to export any
and all goods.
3. Name five items on the Export Control List.
Export controls are in place to regulate such goods as:

 Agricultural products: refined sugar, sugar-containing products and peanut
butter
 Textiles and clothing
 Military, strategic dual-use goods
 Nuclear energy materials and technology
 Missile, chemical or biological goods of non-proliferation concern
 Softwood lumber, unprocessed logs and certain other forest products
 Miscellaneous goods including goods of U.S.-origin, roe herring and certain
items with medical value
 All goods destined for countries on the Area Control List.
4. Who supplies the blank consular invoice forms, and who certifies them?
The consulate of the destination country.
5. Name the parties who can sign a general certificate of origin.
1. The exporter/shipper.
2. The forwarder as agent for the shipper/manufacturer.
3. The manufacturer.
4. The shipper’s/manufacturer’s legal representative. (The commissioner for
taking oaths witnesses the signature and stamps it and the Board of Trade or
Chamber of Commerce authenticate it).
6. Give the most important reason why a certificate of origin may be required.
To obtain preferred import status for the merchandise and possibly a lower rate
of duty.
2017 Page | 120

7. Do goods shipped under the NAFTA need a certificate of origin? If so what kind?
Yes, they need a North American Free Trade Agreement (NAFTA) certificate of
origin.
8. Name three items for which an import permit is required.
 Certain dairy products

 Certain agricultural products
 Certain textiles and clothing
 Certain carbon steels and specialty steels
 Specified endangered species of wild flora and fauna
 Any products thereof.
9. When moving exhibition goods to two or more different countries, what document would
you recommend to make import and export procedures easier?
A.T.A. Carnet.
10. A client approaches your company and wants to export a stuffed (taxodermied) bear via
air freight to Hong Kong. What must you do prior to proceeding?
Verify if an export permit as well as a CITES permit is required prior to shipment.
11. Where would you get information on documentary requirements for a given country?
Your company’s agent at destination, or Migra’s Canadian Export Guide.
12. Name two purposes of a commercial invoice.
1. It is the document against which the buyer (importer) pays the seller (exporter).
2. It is also the document used to provide information to:
 The government of the country of export
 The government of the country of transit
 The government of the country of import.
As the document used by the buyer (importer) that will assist in the clearance of
goods at the country of destination, it is also the basis for the Canadian Customs
entry and is used to determine duties and taxes so long as it meets certain
requirements.
13. List items that should be shown on the commercial invoice.
 Exporter’s name and address

 Importer’s name and address
 Description of the goods, H.S. # if possible
2017 Page | 121

 Weight of shipment
 Individual value of pieces along with the quantity of goods and the total value
 The currency of the transaction
 The terms of payment
 The terms of delivery
 MOST IMPORTANT - the commercial invoice should be dated and signed.
14. What are the three most common errors made on commercial invoices?
1. Missing currency designation.

2. Failure to sign.
3. Missing signature (although it is not always required).
15. Name two purposes for the packing list.
1. Identifies the location of goods within a shipment.

2. In the case of an insurance claim helps to identify the goods.
16. Who issues an import permit in Canada?
Global Affairs Canada.
17. Above what value for an export shipment must you issue an export declaration (CAED
or B13A)?
All shipments leaving Canada with a value above CAN $2,000.00.

Note: A B13A is not required if the final destination of the goods is in the United
States of America.
18. What is the function of the B13A? Where or with whom is it filed?
To provide governmental agencies with statistical information regarding what

goods are being exported to where, when and to whom. The document is filed
with Canada Customs and remains in Canada.
19. What is the HS code? Give the full name.
The Harmonized Commodity Description and Coding System (HS) (example below)
forms the basis of the Customs Tariff. The HS was developed and is maintained by
the WCO and it is the standard coding structure and related product descriptions
used in international trade to determine appropriate duty rates, negotiate trade
agreements, maintain trade statistics and identify goods and shipments that pose
risk to the health, safety and security in Canada.
2017 Page | 122

20. Can you apply for an export permit if the exporter is not residing in Canada but the
goods are of Canadian origin and exported through a Canadian port?
Yes, but then the agent acting on behalf of the exporter becomes responsible for
any offences committed respecting the permit.
21. What international convention regulates the traffic of endangered species?
The Convention on International Trade in Endangered Species of Wild Fauna and

Flora, referred to as CITES.
22. What is CRF?
Clean Report of Findings. An inspection certificate required by certain countries

to allow importation and is issued by certain organizations. The inspection is
done prior to the export of the goods.
2017 Page | 123

Commercial Invoice
Nokov Toys Inc.
999 Jane Street
Toronto, ON, L4T 2D4
January 10, 2017 January 5, 2017 EXE01-003 1 of 1

Scam Toys Same as Consignee

10 Oden Strasse-12
Hamburg, Germany, 09877

FCA Nokov Toys Inc.
Ontario Germany Canadian Dollars Toronto, Incoterms® 2010
Montreal, Canada Transport Truck Lines Commadore Lines

S.S. Louis, Voy# 99
Ocean, containerized Goods prepaid

16. 17. 18. 19. 20. 21. 22.
Number and Kinds of Marks and Description of Item Quantity Unit of Unit Total
Packages Numbers Measure Price
Scam
Barbina dolls 1,000 Pcs. 10.35 10,350.00
Toys
25 cartons Germany HS#: 9503.90.00.89
23. Gross Weight 24. Net Weight 25. Sub-total 10,350.00

875 kg 850 kg
32. Signature 26. Packaging N/A
27. Domestic Freight 450.00
Jane Doe 28. International Freight N/A
of Nokov Toys Inc. 29. Insurance N/A
30. Other N/A
33. Date January 10, 2017 31. Invoice Total 10,800.00
2017 Page | 124

See completion instructions-PLEASE PRINT-Voir la facon de remplir le formulaire-EN LETTRES MOULEES S.V.P. Page 1 of 1
1. Business no. No d’entreprise 123456789 RM 002 2. Export permit/licence no. (if applicable)-No du permis/de la licence d’exportation (s’il y a lieu)
Name – Nom Nokov Toys Inc.
999 Jane Street Toronto ON, Canada L4T 2D4
Name – Nom Scam Toys
10 Oden Strasse-12
Hamburg Germany 09877
Germany
6. Name of exporting carrier, freight forwarder, or consolidator-Nome du transporteur, du
transitaire ou du groupeur de merchandises a exporter Commadore Lines yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, no de reference
7. Transport document no. – N due document du transport
o
111111111
8. Mode of transport from place of exit – Mode de transport à partier du bureau de sortie
 Highway  Rail  Marine  Air
 Other (specify) Autre  Yes - Qui
(précisez) ________________________________
S.S. Louis 2017/01/25
25 Cartons Montreal, Canada
15. Conveyance identification no. (if applicable) – No d’identification du moyen de transport (s’il y a
lieu)
16. Origin - Origine 17. Item description – Description d’article 18. HS Commodity Code- 19. Qty. & unit of 20. Value F.O.B place of exit Valeur
Code de merchandise du measure Qté & f.à.b. bureau de sortie
SH unité de mesure
Country Province
Pays
ON Barbina dolls 9503.90.00.89 1,000 pcs 10,800.00
21. Currency used for declared value – Devise de la valeur declare 22. Gross weight – Poids brut 23. Total value F.O.B place of exit – Valeur totale f.à.b. bureau
Canadian Dollars 875 kg de sortie 10,800.00
24. Freight charges to place of exit, estimated if unknown (included in field 20) – Frais de transport 25. If goods are not sold, state reason for export (if applicable). If a lease or rental, state period – Si
jusqu’au bureau de sortie, estimé si inconnu (compris à la zone 20) les merchandises ne sont pas vendues, motivez le’exportation (s’il y a lieu). S’il s’agit d’une location
$450.00 ou d’un bail, précisez la periode.
Name – Nom CIFFA Forwarder Area code and tel. no.

Indicatif regional et no de tél. (416) 234-5100
1234 Islington Ave., #706 Toronto Ontario M8X 1Y9
Name of person responsible for completion – Nom de la personne responsible de remplir le Company name – Nome de la compagnie
formulaire. Jane Doe CIFFA Forwarder
1234 Islington Ave., #706 Toronto Province/État, pays postal  Exporter Other
ON, Canada M8X 1Y9 Exportateur Autre
Indicatif regional et no de tél. (416) 234-5100 Jane Doe January 22, 2017
B13A (4)
2017 Page | 125


Address, country)
Nokov Toys Inc.

999 Jane Street GENERALIZED SYSTEM OF PREFERENCES
Toronto, ON, L4T 2D4, Canada CERTIFICATE OF ORIGIN
Country) FORM A
Scam Toys
10 Oden Strasse-12
Hamburg, 09877, Germany Issued in CANADA
(country)
Ocean freight
Commadore Lines, Voy # 99
of
packages
1 Scam Barbina dolls 1,000 EXE01-003
Toys 25 fibreboard cartons pcs
#1-25 HS#: 9503.90.00.89
Date: 01/10/17
Generally, in this area is where a

Commissioner for Taking Oaths
will stamp, sign and date, verifying
the accuracy. Usually an
accredited individual in a
forwarder’s office.

_________Canada___________________
(country)
_________Germany___________________
(importing country)
_____Toronto, 01/20/17____________ ___Toronto, 01/19/17, Forwarder’s Signature_

2017 Page | 126

Commercial Invoice
Canadian Manufacturing Inc.
Mississauga, ON, X1B 2B3
June 15, 2017 June 1, 2017 PP-060101 1 of 1

Preston Barbeque Same as Consignee

967 Cleaver Avenue
Rotterdam, Netherlands, 09900

CPT Rotterdam,
Ontario Netherlands United States Netherlands, Incoterms®
Dollars 2010
Montreal, Canada Fishy Cartage Canadian Mediterranean Lines

S.S. Star Voy # 14E
Ocean 30 day sight Draft

16. 17. 18. 19. 20. 21. 22.
Packages
Preston
Barbeque parts 374 Pcs. 135.00 50,490.00
Barbeque
HS#:
34 crates Netherlands
8540.20.90.00
2,000 kg 1,870 kg
32. Signature 26. Packaging 1,300.00
Jane Doe 28. International Freight 2,850.00
of Canadian Manufacturing Inc. 29. Insurance N/A
30. Other N/A
33. Date June 15, 2017 31. Invoice Total 54,790.00
2017 Page | 127

Name – Nom Canadian Manufacturing Inc.
5678 Mississauga Rd. Mississauga ON, Canada X1B 2B3
Name – Nom Preston Barbeque
967 Cleaver Avenue
Rotterdam Netherlands 09900
Netherlands
Canadian Mediterranean Line yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, n o de reference
111111111
8. Mode of transport from place of exit – Mode de transport à partier du bureau de
 Highway
sortie  Rail  Marine  Air
Autre (précisez) ________________________________
S.S. Star, voyage 14E 2017/06/20
12. No. packages – N de colis
o
Kind of packages – Genre de colis 13. Place of exit – Bureau de sortie
34 Crates Montreal, Canada

16. Origin - Origine 17. Item description – Description d’article transport
18. (s’il y a lieu)Code-
HS Commodity 19. Qty. & unit of 20. Value F.O.B place of
Country Province SH unité de mesure sortie
Pays
ON Barbeque parts 8540.20.90.00 374 pcs 50,490.00
United States Dollars 2,000 kg bureau de sortie 50,490.00
$150.00

responsible de remplir le formulaire. Jane Doe CIFFA Forwarder
o
Indicatif regional et n de tél. (416) 234-5100 Jane Doe June 18, 2017
B13A (4)
2017 Page | 128


Address, country)

5678 Mississauga Rd. GENERALIZED SYSTEM OF PREFERENCES
Mississauga, ON, X1B 2B3, Canada CERTIFICATE OF ORIGIN

Country) FORM A
Preston Barbeque
967 Cleaver Avenue
Rotterdam, 09900, Netherlands Issued in CANADA
(country)
Ocean freight
Canadian Mediterranean Lines
S.S. Star Voy # 14E
5. Item 6. Marks and 7. Number and kind of packages: description of 8. Origin 9. Gross weight 10. Number and date
number numbers of goods criterion or other quantity of invoices
packages
1 Preston Barbeque parts 2,000 kg PP-060101
Barbeque 34 wooden crates
HS#: 8540.20.90.00
Date:
06/15/17
Generally, in this area is where

a Commissioner for Taking
Oaths will stamp, sign and date,
verifying the accuracy. Usually
an accredited individual in a

_________Canada___________________
(country)
_________Netherlands___________________
(importing country)

2017 Page | 129

Commercial Invoice
Great Glass Works of Kitchener Inc.
1234 Schwaben Ave.
Kitchener, ON, G6H 1S1
July 12, 2017 July 2, 2017 GGW-0715-X 1 of 1

Francois Glass B.V. Same as Consignee

321 Rue de la Fleur
Brussels, Belgium, 10098

FCA Great Glass Works
Ontario Belgium Canadian Dollars Kitchener, Incoterms®
2010
Toronto, Canada Cartage Company Lufthansa air cargo
Air Net 30 days

16. 17. 18. 19. 20. 21. 22.
Packages
Francois
Glass figurines 432 Pcs. 4.00 1,728.00
Glass
24 cartons Belgium HS#: 7013.99.00.95

300 kg 276 kg
Jane Doe 28. International Freight N/A
of Glass Works of Kitchener Inc. 29. Insurance N/A
30. Other N/A
33. Date July 12, 2017 31. Invoice Total 1,853.00
2017 Page | 130

Name – Nom Great Glass Works of Kitchener Inc.
1234 Schwaben Ave. Kitchener ON, Canada G6H 1S1
Name – Nom Francois Glass B.V.
312 Rue de la Fleur
Brussels Belgium 10098
Belgium
Lufthansa air cargo yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
7. Transport document no. – N due document du transport
o
111111111
 Highway
sortie  Rail  Marine  Air
Autre (précisez) ________________________________
2017/07/20
24 Cartons Toronto, Canada

Pays
ON Glass figurines 7013.99.00.95 432 pcs 1,853.00
Canadian Dollars 300 kg bureau de sortie 1,853.00
$125.00

o
Indicatif regional et n de tél. (416) 234-5100 Jane Doe July 18, 2017
B13A (4)
2017 Page | 131


Address, country)
Great Glass Works of Kitchener Inc.

1234 Schwaben Ave. GENERALIZED SYSTEM OF PREFERENCES
Kitchener, ON, G6H 1S1, Canada CERTIFICATE OF ORIGIN

Country) FORM A
Francois Glass B.V.
321 Rue de la Fleur
Brussels, 10098, Belgium Issued in CANADA
(country)
Lufthansa air cargo
Flight :LH365
5. Item 6. Marks and 7. Number and kind of packages: description of goods 8. Origin 9. Gross 10. Number and date of
number numbers of criterion weight or invoices
packages other quantity
1 Francois Glass figurines 432 pcs GGW-0715-X
Glass 24 cartons
HS#: 7013.99.00.95
Date: 07/12/17

will stamp, sign and date,

_________Canada___________________
(country)
_________Belgium___________________
(importing country)

2017 Page | 132


Commercial Invoice
Rain & Shine
432 Avenue Rd.
Toronto, ON, M4Y 8Z3
March 10, 2017 March 1, 2017 RS-067 1 of 1

Harrods of London Same as Consignee

Nottingham Place
London, W11 1BB, United Kingdom

CPT London, U.K.
Ontario United Kingdom Canadian Dollars
Toronto, Canada Fast Cartage British Airways
Air freight Net 30 days

16. 17. 18. 19. 20. 21. 22.
Number and Marks and Description of Item Quantity Unit of Unit Price Total
Kinds of Numbers Measure
Packages
Umbrellas
Harrods HS#: 9503.90.00.89 16 Ctns. 1,200.00 19,200.00
16 cartons U.K. Packed: 72

umbrellas per
carton
425 kg 400 kg
of Rain & Shine 29. Insurance N/A
30. Other N/A
33. Date March 10, 2017 31. Invoice Total 20,433.75
2017 Page | 133

Name – Nom Rain & Shine
432 Avenue Rd. Toronto ON, Canada M4Y 8Z3
Name – Nom Harrods of London
1 Nottingham Place
London United KIngdom W11 1BB
United Kingdom
British Airways yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
aaaa/mm/jj, heure – 24h, code du bureau de déclaration d’exportation, n o de reference
111111111
 Highway
sortie  Rail  Marine  Air
9(b) Goods inspected by customs – Marchandises inspectées par les douanes
Routier Ferroviaire Maritime Aérien
 Yes - Qui
 Other (specify)
Autre (précisez) ________________________________
2017/03/15
16 Cartons Toronto, Canada

Pays
ON Umbrellas 6601.99.00.00 1,152 pcs 19,300.00

Canadian Dollars 425 kg bureau de sortie 19,300.00
$100.00


Indicatif regional et no de tél. (416) 234-5100 Jane Doe March 12, 2017
B13A (4)
2017 Page | 134

Address, country)
Rain & Shine

432 Avenue Rd. GENERALIZED SYSTEM OF PREFERENCES
Toronto, ON, M4Y 8Z3, Canada CERTIFICATE OF ORIGIN

Country) FORM A
Harrods of London
1 Nottingham Place
London, W11 1BB, United Kingdom Issued in CANADA
(country)
British Airways
Flight : BA642
5. Item 6. Marks and 7. Number and kind of packages: description of goods 8. Origin 9. Gross 10. Number and date of
number numbers of criterion weight or invoices
packages other quantity
1 Harrods Umbrellas 425 kg RS-067
16 cartons
HS#: 6601.99.00.00
Date: 03/10/17


_________Canada___________________
(country)
_________United Kingdom_________________
(importing country)

2017 Page | 135

Commercial Invoice
Ontario Baby Supplies Ltd.
147 Queen Street
Brampton, ON, L7P 3S9
October 31, 2017 October 15, 2017 OBS-0863 1 of 1

Bebes R Ci S.A. Same as Consignee

134 Norde Calle
Valparaiso, 2340000, Chile

CPT Valparaiso
Ontario Chile Canadian Dollars
Montreal, Canada C.N. Rail Dragon Lines

S.S. Aldaris, Voy # 56S
Ocean On account
16. 17. 18. 19. 20. 21. 22.
Packages
Bebes R Baby formula

HS#: 1901.10.90.90 1,200 Ctns. 20.50 24,600.00
Ci S.A.
1,200 Packed: 12 tins per
Chile ctn.
cartons

16,330 kg 15,130 kg
of Ontario Baby Supplies Ltd. 29. Insurance N/A
30. Other N/A
33. Date October 31, 2017 31. Invoice Total 31,600.00
2017 Page | 136

Name – Nom Ontario Baby Supplies Ltd.
147 Queen Street Brampton ON, Canada L7P 3S9
Name – Nom Bebes R Ci S.A.
134 Norde Calle
Valparaiso Chile 2340000
Chile
Dragon Lines yyyy/mm/dd. time – 24hr, export reporting office code, reference no.
111111111
 Highway
sortie  Rail  Marine  Air 9(b) Goods inspected by customs – Marchandises inspectées par les douanes
Routier Ferroviaire Maritime Aérien
Autre (précisez) ________________________________
S.S. Aldaris 2017/11/05
1,200 Cartons Montreal, Canada

Pays
ON Baby formula 1901.10.90.90 1,200 cartons 24,600.00
Canadian Dollars 16,330 kg bureau de sortie 24,600.00
$750.00

o
Indicatif regional et n de tél. (416) 234-5100 Jane Doe November 1, 2017
B13A (4)
2017 Page | 137


Address, country)
Ontario Baby Supplies Ltd.

147 Queen Street GENERALIZED SYSTEM OF PREFERENCES
Brampton, ON, L7P 3S9, Canada CERTIFICATE OF ORIGIN
Country) FORM A
Bebes R Ci S.A.
134 Norde Calle
Valparaiso, 2340000, Chile Issued in CANADA
(country)
Ocean freight
Dragon Lines
S.S. Aldaris Voy. # 56S
5. Item 6. Marks and 7. Number and kind of packages: description of goods 8. Origin 9. Gross weight 10. Number and date
number numbers of criterion or other quantity of invoices
packages
1 Bebes R Baby formula 16,330 kg OBS-0863
Ci S.A. 1,200 cartons
HS#: 1901.10.90.90
Date:
10/31/17


_________Canada___________________
(country)
_________Chile_________________
(importing country)

2017 Page | 138

Questions Cargo Insurance
1. What is the meaning of utmost good faith?

2. Name two features of the term insurable interest.
3. Describe an insurance policy.
4. Describe an insurance certificate.
5. What is an open policy? Describe it.
6. Name examples of losses that may be excluded in an insurance policy.
7. FPA, what does it mean, what does it cover?
8. Risk of war, strikes, civil commotion, and mines are usually excluded on
marine cargo policies. How would you obtain coverage?
9. Can war risks be covered when cargo is on land?
10. What does inherent vice mean? Is this covered in an all risks policy?
11. What does warranted goods surveyed prior to loading mean?
12. How would you explain general average to a customer?
13. When general average has been declared for a vessel arriving at the ocean port,
what will an average adjuster require from you before your cargo is released?
14. Determine the:
i) CIP Toronto value, and

ii) the insurance premium on a shipment with the following charges:
Value of shipment FCA Hong Kong US $70,000.00

Ocean freight Hong Kong to Toronto US $1,050.00
Toronto terminals US $180.00
Local delivery US $155.17 (CAN $158.27)
Insurance rate is 0.75% of insured value.
Rate of exchange of USD to CAD is 1.02.
2017 Page | 139


The textbook defines insurable interest by quoting an excerpt from the Marine Insurance
Act 1992, Article 7 (2). Incoterms® 2010 are often used to establish when an insurable
interest attaches to the insured.
Export shipment from Canada: The following is a scenario that could happen in real life.
5 skids of paint from a Toronto manufacturer, sold FCA Toronto (Incoterms® 2010).
After the paint was loaded into the Cartage company truck, at the plant, the driver on the
way to the export terminal in Toronto has an accident on the expressway. His truck “jack-
knifes”, tips and crashes against the steel guardrail, busting the trailer doors open and
spilling paint cans all over the highway, closing it for hours in both directions.
For this exercise it is not important or relevant to determine the cause of the accident, but
to determine which party in this international transaction has an insurable interest.
Examining the Incoterm used in this transaction, it is obvious that there is no specific
named location. This leaves us with two possible situations:
Situation #1: If the buyer’s “nominated carrier” was moving the paint to the export terminal
Toronto, then the buyer bears the risk, and all associated costs. This means that the
buyer had an insurable interest in the goods. Please note that “nominated carrier” may
also mean “local forwarder”, or “forwarder’s agent overseas giving instructions to their
local agent” to collect the freight. The proper Incoterm for this situation would be FCA
Paint Factory Toronto, local forwarder, Incoterms® 2010.
Situation #2: The seller decides to use their own in-house trucks to deliver the cargo to
the export terminal. The only information provided to the seller are the booking details
for the move. In this situation the seller has yet to deliver the goods in accordance with
the Incoterm used. Thus, the seller has an insurable interest in the goods. The proper
Incoterm for this situation would be FCA Export Terminal Toronto, local forwarder,
Incoterms® 2010.
The given scenario might be a little extreme but it shows the importance of the need for
proper Incoterms in assigning insurable interest. Also note that there is “no obligation”
on either party to insure the cargo, but it is always advisable to do so. Imagine this
scenario in reverse, and you have a customer buying goods, FCA Paint Factory Stuttgart,
local forwarder, Incoterms® 2010, moving by truck for a vessel in Hamburg via the
autobahn. Your customer buying the goods has an insurable interest in the goods from
the moment they leave the factory in Germany.
You should always discuss with your customer not only the need for the accurate use of
Incoterms, but also the importance of insurance coverage and insurable interest. You
should be aware of the implications of each as it affects insurance. This refers back to
our Incoterms. As complicated as they may seem, we have seen that responsibilities are
clearly stated. DO NOT rely on the “information” written on the back of a bill of lading to
provide “coverage” for your customer.
2017 Page | 140

1. SINKS Company in Kitchener buys valves from TAPS Company in Taiwan.
Terms of delivery: FCA TAPS, Taiwan, Incoterms® 2010
4 skids @ 310 kg each, ocean export LCL, cargo value US $6,500.00.
a) Which party is obligated to insure this cargo?

b) To which party do you recommend insurance?
c) While awaiting the arrival of the collecting truck at TAPS, a
forklift driver crushes the cargo. Who bears the loss?
d) If CIFFA Forwarder’s Taiwan agent’s receiving terminal
(warehouse) burns to the ground and the valves are destroyed,
who suffers the loss?
2. CHIPS Company in Toronto sells electronic connectors to DATA Company in

Germany.
Terms of sale: CPT Frankfurt, Germany, Incoterms® 2010

20 skids @ 220 kg each, loaded in 1 x 40-ft container, value is
CAN $36,000.00.
a) Who is responsible for contracting and paying the freight

charges?
b) If the container is washed overboard and the whole shipment is
lost at sea, who suffers the loss?
c) Should the seller in Toronto insure the connectors?
d) Why or why not?
3. KLEANH2O Company in Winnipeg sells water filters to FRESH Company in

Chile.
Terms of sale: CIP Santiago, Chile, Incoterms® 2010

20 cartons each, dims 22 in x 24 in x 24 in @ 22 kg each, air export,
value is US $15,000.00.
a) Is the airfreight charge prepaid by shipper or collect to consignee?

b) If the truck burns up on Highway 1 en route to the airport, who
bears the loss?
c) Who must buy/provide cargo insurance?
d) What level of coverage is the obliged party to “take out”, and in
what amount?
2017 Page | 141

Exercises 5.3 (Preface – Determining the Insured

Value and Premiums)
The purpose of an insured value is to show an accurate value of goods at the point of
destination. This value is always higher than the value of goods at factory, because by
the time goods arrive at the destination money has been spent on various freight charges,
handling, insurance and even duty/taxes.
Example Question:
Calculate the insured value and determine the premium for the following shipment
on 110% of CIP value, and complete the certificate of insurance. The insurance
premium has been sold at 0.38% of insured value, all risk.
Seller: Compak Disks Ltd., Seoul, Korea

Buyer: Kay-Tell Distributors, Woodstock, Ontario
Commodity: Compact Disk Players
Price: US $95.00 each. Factory Korea.
Quantity: 600 players
Packaged: 600 cartons @ 46 cm x 36 cm x 24 cm @ 9 kg each
Terms of delivery: CIP Toronto, Incoterms® 2010
Mode of transport: ocean freight
Shipment details:
Loaded: door Seoul Korea, 1 x 20-ft standard TRVA 168932-5

Port of loading: Busan, Korea
Port of discharge: Vancouver, Canada
Delivery: CY Toronto
Vessel: S.S. Maruni, Voy: 803
Sailing: January 29, 2017.
Freight charges:
Inland cartage Korea: US $350.00

Ocean freight: CY Busan – CY Toronto, US $1,800.00
Documentation: US $75.00
2017 Page | 142

Step #1: Determine the “CIP” value of the shipment.
What is the “CIP” value? It is the sum of the cost of the goods, plus the freight charges,
to get the goods to the named destination, plus an estimated insurance premium.
Determine the estimated insurance premium:
Cost of the goods ................................... US $57,000.00

Cost of freight
Inland cartage Korea .............................. US $350.00
Ocean freight .......................................... US $1,800.00
Documentation ....................................... US $75.00
Total ....................................................... US $59,225.00
Our estimated premium will be the cost of the goods, plus freight charges, multiplied by
the insurance rate.
Estimated premium (EP.) = US $59,225.00 x 0.38% or US $59,225.00 x 0.0038

Estimated premium (EP.) = US $225.06
Our “CIP” value is:

Cost of the goods ................................... US $57,000.00
Cost of freight:
Inland cartage Korea .............................. US $350.00
Ocean freight .......................................... US $1,800.00
Documentation ....................................... US $75.00
Estimated premium ................................ US $225.06
“CIP” value is ......................................... US $59,450.06
The question asks the insured value on 110% of the “CIP” value.
Our insured value on 110% of “CIP” value = US $59,450.06 x 110% (or x 1.1)
Therefore, our insured value on 110% of the “CIP” value is: US $65,395.07
Our insurance premium, which is based on 110% of the “CIP” value is:
Insurance premium = (110% of “CIP” value) x the insurance rate

= US $65,395.07 x 0.38% (or 0.0038)
Therefore, our insurance premium = US $248.50
Summary:
Insured value is US $65,395.07; insurance premium is US $248.50.
2017 Page | 143

Comments: In this case the insurance underwriter allows the customer to essentially
insure the insurance. This is allowed for shipments that have the Incoterm “CIF” or “CIP”
stated. However, this is usually stipulated in an agreement between the buyer and the
seller. Generally, there is some form of statement in the purchase contract directing the
buyer to insure the goods at the CIF or CIP value plus a given percentage. If these
specific instructions are not given, then the minimum insurance requirements, as provided
by Incoterms® 2010, will prevail.
The generally accepted practice in calculating the insured value is: the cost of goods,
plus the cost of freight, multiplied by 110% (adding 10% the total). This figure becomes
the insured value to which the premium is applied. Examples would be “Ex-Works”,
“FCA”, “DAT” shipments where there is no obligation to insure the shipment, but parties
accepting the risk will want to insure their risk.
This does, however, vary from commodity to commodity. Fine fashion clothing where the
“mark-up” is 200% might be allowed to add this 200% to their cost of goods and freight,
in place of the standard 10%. These are case-by-case issues that a professional
forwarder will have to address as they arise.
It is quite normal to round to the nearest full $100.00 for cost and freight value, and round
up to the nearest full $1,000.00 for the insured value. The exception, of course, is for a
letter of credit, where the value is generally stipulated.
2017 Page | 144

Exercises 5.3 (Preface – Duty and Taxes)
The previous example shows the calculation of insurance premium on the movement
portion of the transaction, but what about the customs portion of the transaction? It is
possible to insure the duties and taxes paid out upon the importation of the goods.
The amount of money paid out in duties and taxes can be a large sum. Imagine if a large
amount was paid out and the goods arrive at the warehouse damaged beyond repair.
One would like to recover the money they have paid out. It is best then to insure the
customs portion of the transaction. All underwriters will usually grant a special premium
for the duty portion of the value for insurance, provided you declare the amount for
duty/taxes separately in your declaration. Usually that reduced premium for duty is about
1/3 of the cargo premium.
Example: Duty and Taxes Premium calculation
Using the details from the previous example, determine the insured value and insurance
premium for the customs portion of the shipment.
Quantity: 600 compact disk players

Value: US $95.00 each
Assume: rate of duty is 15%, rate of exchange is 1 USD = 1.02 CAD
: Brokerage charges inclusive of taxes = CAN $107.00
: Rate of insurance is 12%
Value for duty = 600 x US $95.00 = US $57,000.00

Canadian dollars = US $57,000.00 x 1.02 = CAN $58,140.00
Calculation:
Import duties = value for duty x rate of duty

= CAN $58,140.00 x 15% = CAN $8,721.00
Value for HST = value for duty + import duties

= CAN $58,140.00 + CAN $8,721.00 = CAN $66,861.00
HST on imported goods = CAN $66,861.00 x 13% = CAN $8,691.93
2017 Page | 145

Therefore, the amount of money paid out by the importer at time of import is:
Import duties .......................................... CAN $8,721.00

HST on goods ........................................ CAN $8,691.93
Brokerage............................................... CAN $107.00
Total ....................................................... CAN $17,519.93
The insured value for the customs portion is CAN $17,519.93.
Insurance premium = insured value x rate

= CAN $17,519.93 x 0.12 = CAN $21.02
Summary:
Amount of insurance for the duties and taxes is: CAN $17,519.93
Insurance premium paid is: CAN $21.02
2017 Page | 146

Exercises 5.3 (Insured Value and Premiums)

(Question)
1. Calculate the insured value at CIP + 10% and state total premium payable.
Show your detailed method of calculation for all steps.
4 x 40-ft containers said to contain Jeeps and tents
Value FCA Toronto ................................................................. CAN $105,000.00

Ocean freight Montreal-Lagos per 40-ft container .................. US $3,000.00
Canadian charges for inland freight from Toronto to Montreal,
container placing, container loading, handling per 40-ft cntr ... CAN $1,500.00
All risk marine premium rate at 0.35%

Use exchange rate 1 USD = 1.02 CAN
2. Determine the insured value at CIP + 10% and insurance premium for the
shipment described below:
Supplier: Winnipeg Windings Ltd.

Goods sold: CIP Port Sao Paulo, Brazil, Incoterms® 2010
Transformer and parts (break-bulk shipment)
Invoice value Winnipeg: CAN $110,000.00

Inland freight to New Orleans and port terminals: CAN $3,000.00
Export crating: CAN $1,000.00
Documentation, legalization, handling: CAN $1,100.00
Heavy lift charge port of New Orleans: US $2,000.00
Ocean freight to Sao Paulo, Brazil: US $5,315.00
All risk marine premium 0.28%

Use exchange rate 1 USD = 1.02 CAD
2017 Page | 147

Exercises 5.4 (Preface – Insurability, Exclusions of

Coverage, Insurance Certificates)
The following is to cover and explain some of the basic aspects of insurability and
exclusions of coverage, including an example of an insurance certificate and instructions
on the completion.
The section on Cargo Insurance touches only slightly on some of the fundamental issues.
These issues are of concern to a forwarder when dealing frequently with arranging marine
insurance cover. Therefore the forwarder, as an intermediary, needs to know exactly
what the position of a marine underwriter is so that he can give the proper explanation to
the client or shipper.
i) Nature of losses
All losses must be of a fortuitous nature which, loosely defined, means “of an
unpredictable nature”.
That is why the textbook tells you that an inherent vice - something predictable - IS
NOT insurable.
Another area in which you may be in conflict with the condition of underwriters that all
losses must be of a fortuitous nature is the aspect of proper packaging, which, of course,
includes export crating, proper stowage and bracing of container contents.
It is a standard part of any marine insurance policy or certificate that damage caused by
insufficient and unsuitable packing is excluded from coverage.
The determination of insufficiency of packaging is usually made by the surveyor appointed

by underwriters at destination. Frequently, insufficient packaging is self-evident.
In any case, whenever such surveyor report indicates the cause of loss or damage to be
the result of inadequate packaging, underwriters will not pay referring to their articles of
exclusion in the policy/certificate.
The reason for these exclusion clauses is, of course, that damage for improperly
packaged goods becomes as good as predictable and any such damage is no longer
fortuitous in nature. That is why it is so important that the forwarder, in any discussion
about any shipment he is about to handle and arrange insurance coverage for, keeps a
sharp eye open for any indication of insufficient export packing or any lack of expertise to
load, stow and brace a container properly.
In the event there are such indications, it is the freight forwarder’s duty to counsel the
client about the serious consequences which may result from improper packaging.
2017 Page | 148

Let us go a little beyond ordinary export packing or container stowage. Think about the
exposure of any cargo shipped on a flat rack container or an open-top container when the
tarpaulin is not replaced on the container due to the height protrusion of the cargo.
Regardless of whether such cargo is within or outside the container gauges, flat-rack
containers and open-top containers with extra height are usually stowed on board of the
container vessel on the upper (outside) tiers of the container racks. That kind of stowage
aboard the vessel exposes the container to all risk of weather and the seas.
When the forwarder knows that cargo will be shipped on a flat-rack or high-cube container
and he knows the specific commodity involved, which might be delicate machinery or
other equipment, he has the obligation to point out these possibilities and potential
influences to the client.
It could very well be that as a result of the freight forwarder’s explanation, the
quotation/suggestion for a flat-rack container, etc. is not accepted by the client. In which
case such refusal should really be a challenge to the forwarder to find another alternative
without such risk factors.
ii) Exclusion of Coverage
The exclusions discussed below all have their base on the principle of fortuity of losses.
You should become familiar with the various exclusions for the different cargo classes.
As we all know, all risk coverage is not necessarily “all risk”.
Further, we will examine some practical areas you may frequently have to deal with.
Vehicles
New vehicle underwriters will usually accept for ICC Clause (A) or all risk with the
following general restrictions:
If shipped RO-RO, coverage only applies while the new vehicle is in custody of a
public common carrier (truck or vessel). Marine coverage is usually not available
while vehicles are driven under their own power. In such a case the regular public
car liability insurance takes over.
Exception in coverage:
a) Usually underwriters will insist on a deductible. The deductible is determined by

the value of the car and to some extent by the kind of vessel you intend to use and
the destination. As a guide, you should generally allow for a deductible of 1%
value.
2017 Page | 149

b) The problem of predictable and/or pre-existing damage for any items that are
unpacked.
Therefore, in regard to vehicles, underwriters may, in addition to the deductible, insist on

the exclusion of obvious and expected losses. The kind of losses are known by their
abbreviation:
ROD = Rust, oxidization, discolourization
SCMD = Scratching, chipping, marring, denting
You will have the ROD/SCMD exclusion also on uncrated items of steel, machinery,
equipment, etc., for obvious reasons, of course.
How to Deal with Used Machinery/Equipment
It is always a problem to obtain an all-risk coverage for any used machinery or equipment.
In the event you hide the fact that there is used machinery, or even if you are unaware of
that fact, and the forwarder or the insured discover this fact, underwriters, in the event of
claim, would refuse the claim. In such a case the forwarder or his shipper have broken a
fundamental legal principle of marine insurance called “utmost good faith”.
The reason used machinery is a problem for the underwriter regardless of whether that
machinery is crated or not, is the fact that underwriters do not know the exact condition
of such used machinery prior to commencement of the transit.
It is possible to overcome this problem at least for larger shipments by arranging a pre-
shipment survey, at the expense of the insured, by an underwriter-appointed local
surveyor. The idea of the survey is to pinpoint exactly all existing conditions as well as
acceptability of the packing. A survey is a very detailed process for each single piece of
equipment and may include photographs.
The usual daily fee of a surveyor can vary between CAN $450.00 – CAN $650.00 per day
plus expenses for travelling, photos, etc.
In the event there are claims later at destination, and even if a detailed pre-shipment
survey was made, it is usually very difficult to determine at destination, which part is really
a new transit claim and which part is really a pre-existing condition.
The fact the pre-shipment survey and the damage survey at destination are usually in two
different languages, does not make the process of identifying, so-called new damage,
any easier.
It is for all these reasons that you will find that most underwriters will simply only accept
a coverage on basis of Institute Clause C, or what used to be called FPA, meaning
coverage for total loss only.
2017 Page | 150

When a forwarder is involved in selling his client insurance coverage for such shipments
of used machinery he is well advised to insist with the client that only a coverage on basis
of Institute Clause C or FPA is available.
In the event the forwarder fails to explain this situation in detail and there is a claim, the
forwarder may well find that the client or the insured may hold him responsible.
Geographical Limits
Many CIFFA forwarders’ open policies will have geographical limits. Often the policy will
state “from North America to the world, with some exceptions”. Caution is warranted
when shipping to and from areas with political or civil conflicts or where the infrastructure
is known to be of concern. There are legislative documents outlining geographical areas
of concern. You should always check with your underwriter if you are unsure.
Marine Certificate
The certificate of insurance is a document presented by the insurance company or

underwriter as evidence that insurance is in effect. Each underwriter and insurance
company have their own certificates but the information provided on the form is generally
the same.
Normally there are 6 copies of the certificate. The first 2 are considered the original and
duplicate. These can become part of the shipping documents and are to be used to make
a claim, if necessary. You must always keep in mind that an insurance certificate is a
negotiable document, and should not be treated lightly.
Referring to the marine insurance certificate on the following page, below is the procedure
to complete the certificate:
“A” Forwarder’s name, they are the insurance broker.
“B” Location where the certificate is issued, city and country, along with the date of
issuance.
“C” Complete name and address of the insured party.
“D” Certificate No.: supplied by underwriter, generally the forms are previously
numbered.
“E” Open Policy No.: This is the forwarder’s policy number assigned by underwriter.
“F” Name of any pre-carriage or local cartage company at origin.
“G” Location and country where insurance coverage is to begin.
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“H” The amount of insurance coverage spelled out in words.
“I” The amount of insurance coverage in figures, preceded by the unit of currency,
e.g., CAD – Canadian, USD – American, GBP – British Sterling
“J” Name of ocean vessel with voyage number or airline with flight number.
“K” Port or airport of departure.
“L” The scheduled date of departure. It is always best to write “on or about” prior to
the departure date.
“M” Settling agent information provided by the underwriter.
“N” City and country of seaport or airport of destination.
“O” Destination city and country of any inland destinations.
“P” Container numbers, bill of lading numbers, air waybill numbers.
“Q” Enter accurately number and type of packaging, a complete description of the
insured goods. You may reference invoice number, PO numbers, and letter of
credit number here.
“R” The city and country where any claims would be paid. It could be the origin,
destination or a third named country where a claims settling office would be
located.
“S” In this area you would enter any express warranties, e.g., warranted professionally
packed, or excluding, marring, chipping and oxidation, or no risk after discharge,
or any deductibles amounts that would apply.
“T” The forwarder would sign here in blue ink.
“U” The company’s signature, usually this signature is actually part of the certificate.
Please note that some underwriters do not demand an insurance certificate for every
shipment, e.g., air cargo, land transportation, customs duties. Usually some type of
monthly summary reporting form is used.
2017 Page | 152

S.O.S. MARINE UNDERWRITERS

Underwriters for: MAYDAY INSURANCE COMPANY LIMITED
1243 Islington Ave. # 706, Toronto, Ontario, M8X 1Y9, CANADA.
MARINE INSURANCE CERTIFICATE
BROKER “A” Issued at: “B” 20
THIS IS TO CERTIFY THAT:

Insured: CERTIFICATE NO: “D”
ORIGINAL: ORIGINAL AND DUPLICATE
“C” ISSUED, ONE OF WHICH
BEING ACCOMPLISHED,
THE OTHER TO STAND VOID.
Is insured subject to the conditions of Open Policy No. “E” against which the interest
hereunder has been declared.
Local Vessel or Conveyance Local Port or Place of Origin Insured Value (in words)
“H”
“F” “G” “I”
Currency Figures
Ocean Sea/Air Port of Date of Departure Claims Settling
Vessel/Aircraft Loading Agent
“J” “K” “L” “M”
Sea/Air port of Discharge Final Destination

“N” “O”
Marks/Numbers Number/Kind of Pkgs/Description of Goods Claims Payable at:
“P” “Q” “R”
Additional and/or Special Conditions:
“S”
CONDITIONS OF INSURANCE
Subject to Institute Cargo Clauses (A) or Institute Cargo Clause (Air), whichever is applicable or unless otherwise indicated above (*).
Including War, Strikes, Riots, and Civil Commotions as per Institute Clauses.
IMPORTANT
This Certificate is subject to the terms of the Open policy, provided, however, that the right of a bone fide holder of this Certificate for value
shall not be prejudiced by any terms of the Open Policy, which are in conflict with this Certificate.
SURVEY AND CLAIMS SETTLEMENT
In the event of loss or damage which may involve a claim under this insurance, notice must be given immediately to the above noted
Agents so they may appoint a Surveyor if required.
LIABILITY OF CARRIERS, BAILEES, OR OTHER THIRD PARTIES
It is the duty of the Assured and/or their Agents, in all cases, to take such measures as may be reasonable for the purpose of averting or
minimizing a Loss and to ensure that all rights against Carriers, Bailees, or other third parties are properly preserved and exercised.
In particular, the Assured, or their Agents, are required to follow the procedure as outlined.
This Certificate is not valid unless countersigned Signed on behalf of the Company
by the Assured or their authorized Agent.
“T” “U”
2017 Page | 153

1. For the example question used for Exercise 5.3 (Preface), write up the insurance
certificate for this shipment.
A blank insurance certificate is provided
2017 Page | 154


BROKER Issued at: 20

Insured: CERTIFICATE NO:
ORIGINAL: ORIGINAL AND DUPLICATE
ISSUED, ONE OF WHICH
BEING ACCOMPLISHED,
Is insured subject to the conditions of Open Policy No. against which the interest
Currency Figures
Sea/Air Port of Discharge Final Destination
IMPORTANT
2017 Page | 155

Cargo Insurance Guidelines

Open Policy No. 123456 (GGF-572) with Reputable Underwriter Inc.
Gotta Go Freight Inc. For Internal Use Only
The following terms are valid for shipments of new general merchandise shipped on
approved steamer, aircraft and/or other conveyances to and from places in the world
(except countries/places mentioned as, “On Application”).
Valuation will be: invoice cost + freight + 10%.

Duty and taxes, if applicable, should be declared and insured separately.
These rates are applicable only when goods are stowed below deck or containerized.
Oceangoing vessels are approved if classified “A1” American Record, “100 A1” or
“B.S.” Lloyd’s Register or the equivalent. Vessels over 15 years of age must maintain
a regular pattern of trading on an advertised schedule to load/unload at specified ports.
Also, bulk or combination carriers and mineral oil tankers exceeding 50,000 GRT must
NOT be over 10 years of age. (These requirements do not apply within the port area.)
Rates include war coverage OCEAN AIR TRUCK
World to World: All-Risk .35% .25% . 20%
F.P.A. (incl. total loss by theft or non-delivery) .175% N/A N/A
Duty _____ .12% .08% 12%
Minimum Premium per Certificate: $25.00

Minimum Premium per Declaration: $15.00 air, $25.00 ocean, $25.00
domestic shipment
These countries are considered “On Application” (effective July 7, 2008).

Call for approval and special rates for transit into or through these countries.
Afghanistan_CIS _Georgia_Somalia__Angola (incl. Cabinda)_Chechnya_ (incl.

Abkhazia)_Sri Lanka__Armenia_China (some interior destinations)_Haiti_Yugoslavia
__Azerbaijan_Colombia_Iraq_ Liberia_ Montenegro)__Bougainville_El
Salvador_Papua New Guinea_Zaire__Burundi_Ethiopia_Rwanda___
2017 Page | 156

The following goods are NOT considered “general merchandise”.

Call for approval and special rates for each shipment of these commodities.
Alcoholic Beverages _ Firearms/Ammunition_ Marble__ Accounts: Money notes/
_Food (Fresh or Frozen)_ Metal Pates/Sheets/Bars/Beams _ Currency/Securities_
Furniture_ Metals, Precious __Antiques _Furs and/or Leather_ Motor Vehicles
__Bagged Merchandise _Jewelry (costume & precious)_ Paintings __ Breakables _
Liquids _Personal Effects __Bulk Merchandise _ Livestock _Tobacco Products __
Drugs _ Lumber _Used Goods__
(Select the terms that best suit the client’s needs)
Gotta Go Freight Inc. - Cargo Insurance Service - Internal Document – December

2016
E-mail: [email protected]
CIFFA Freight Forwarding Company: Gotta Go Freight Forwarding Inc.
Gotta Go is a full service international freight forwarder and regular CIFFA member.
Gotta Go provides its customers with the opportunity to obtain insurance coverage on
imports and exports under its open cargo policy (see the Cargo Insurance Guidelines
above).
Export Electronics Inc. is a new importer (for one year) and exporter (very recent) of
cellular telephones and personal digital assistants (PDA).
 Export Electronics imports from Malaysia, India and the Philippines for Canadian
domestic distribution on a CIP Hamilton basis;
 Very recently they also obtained distribution rights to Mexico, Argentina, Chile,
Peru and Venezuela for its products and have begun to export to these countries;
 Each phone and PDA is packaged in a retail cardboard carton weighing 0.5 kg and
each order is palletized and shrink-wrapped by the shipping department at Export
Electronics with country specific language instructions and labels. Each phone is
valued at US $50.00 and each PDA at US $100.00.
 Export Electronics Inc. estimates exports by ocean freight and air freight for 2017
will average:
Ocean export: 50 shipments/year - average value per shipment: US $40,000.00

Air freight: 20 shipments/year - average value per shipment: US $10,000.00
2017 Page | 157

Scenario A: Gotta Go Freight Forwarding visits Export Electronics during the early days
of its South American distribution start-up to offer them freight forwarding services. Until
now, Export Electronics has not yet shipped by ocean export and has dealt with the
airlines directly for air exports. They have no cargo insurance, assuming that the carrier
will pay for any damages. On the third air export shipment, they encounter a problem.
Export Electronics shipped its first order to Argentina via air freight from
Montreal’s Trudeau International Airport (YUL) to Buenos Aires (BUE):
 100 cartons packaged on one shrink-wrapped pallet

 100 PDAs
 Commercial invoice value: US $10,000.00
 Actual weight: 100 @ 0.5 kg = 50 kg + 10 kg pallet = 60 kg
 Volume weight: 150 kg
 Air freight: CAN $5.00/kg (CAN $750.00)
 Terms of delivery: DAT Buenos Aires airport, Incoterms® 2010
When the goods were received at BUE by the importer, notations were made on the
AWB that 60 cartons were received (loose, not palletized) and that of the 60 cartons
received, 30 cartons were crushed.
1. Lost cartons valued 40 @ US $100.00: US $4,000.00

Labour cost of re-packaging goods for sale US $700.00
Replacement of damaged retail packaging US $500.00, including replacement
air charges.
2. Importer’s broker did file a “notice of claim” with the carrier within 24 hours of
receipt of the shipment.
3. Importer has short-paid EE’s commercial invoice by US $4,700.00 to recover the

amounts the importer is out of pocket [see: #1 above re: the 40 lost cartons and
the re-packing]
4. EE filed a claim in Montreal within 90 days after the AWB issue date with the
carrier for US $5,500.00. (Lost cartons + re-packaging/freight + labour + original
air freight charges)
Consider the facts above, the material covered in the program and your
knowledge to answer the following questions.
2017 Page | 158

1. What documents will Export Electronics need to submit for the claim to be
considered by the airline?
2. Will the carrier pay the claim? Why – why not?
3. If the carrier pays the claim, how much will be paid? What is the basis of the
calculation?
Note: exchange rate: 1 SDR = US $1.05
Scenario B: the Gotta Go sales representative works with her air & ocean export
managers and makes a presentation to Export Electronics for both inbound and outbound
air and ocean freight. Included in the presentation is a scenario of what would have
happened if they had utilized the services of Gotta Go for the air export, including cargo
insurance cover under Gotta Go’s open policy (refer to the Guidelines).
Gotta Go’s presentation covered the following:
Consider the facts above, the material covered in the program and your
knowledge to answer the following questions.
1. What type of insurance coverage would Gotta Go recommend to Export

Electronics under its open policy?
2. Calculate the insurance premium Gotta Go would have charged them for this air
freight shipment. (CIF + 10% x Premium)
3. Given that the claim is supported properly, what amount would the insurance
company pay to Export Electronics? Explain your answer.
4. What suggestions would Gotta Go make to Export Electronics to improve their

competitiveness and risk management on imports?
5. List some benefits Export Electronics would achieve if the CIFFA forwarder
provided insurance cover on imports and exports.
2017 Page | 159

Part of your duty as a freight forwarder is to handle the “intent to claim” by his customer.
Timely submission to carriers or the forwarder’s advice to the customer about submission
to carriers has to follow the process below. The handling procedures cover two scenarios:
1. Cargo insured by the forwarder (B).

2. Cargo insured under the customer’s own insurance (C).
Complete the flow chart on the following pages, putting the steps below in the right
order:
1. Customer carries own insurance.

2. File Intent to Claim with carrier.
3. Receive notice of claim from client.
4. Survey required.
5. Cargo insurance provided by forwarder.
6. Gather all required documents.
7. Intent to claim filed on time with carrier?
8. Follow up with insurer and customer to ensure payment received.
9. Send intent to claim and all other required documents to allow client to
process claim.
10. Seek management advice: option 1: claim with carrier;
option 2: assist client to claim with carrier.
11. Arrange survey.
12. Submit claim and required documents to insurance provider (follow internal
procedures).
2017 Page | 160

CARGO INSURANCE
START
CLAIMS HANDLING
PROCEDURES
No
Yes
No No
Yes Yes
B C END
2017 Page | 161

B C
Yes No
END
END
2017 Page | 162

Answers Cargo Insurance
1. What is the meaning of utmost good faith?
It is the full disclosure of all material facts to the insurance underwriter.
2. Name two features of the term insurable interest.
There must be an object exposed to an insurable risk. Insured party must

have some legal relationship to the object.
3. Describe an insurance policy.
An insurance policy is the contract between the insurer and the insured.
It states the perils against which the policy gives protection and in what
amount.
4. Describe an insurance certificate.
It is a document, which acts as the contract between the insurer and the
insured. The certificate provides details of insurance coverage as well
as transportation details and particulars of the shipment.
5. What is an open policy? Describe it.
An open policy is a contract between the insurer and insured prepared in

general terms covering specified goods on agreed conditions. Monetary
limits are applied to any one conveyance or location. The specified goods
are generally a wide range of goods to include as many shipments as
possible.
6. Name examples of losses that may be excluded in an insurance policy.

Wilful misconduct of insured party, losses caused by delay of shipment,
any inevitable loss, loss by inherent vice.
7. FPA, what does it mean, what does it cover?
Free of Particular Average, Cargo Clause “C”. Provides only minimum

coverage. Coverage of total losses only caused by marine perils. Also
covers general average losses. Partial losses are covered only if caused
by fire, stranding, sinking, and collision of the vessel.
2017 Page | 163

8. Risk of war, strikes, civil commotion, and mines are usually excluded on
marine cargo policies. How would you obtain coverage?
An express warranty or a specific additional agreement made with the
insurance underwriter, must be written into the insurance certificate. For
this additional coverage an additional premium is generally charged.
9. Can war risks be covered when cargo is on land?
Usually not unless an agreement is obtained with the insurance company.
10. What does inherent vice mean? Is this covered in an all risks policy?
A property within the cargo, which causes, or is liable to cause, loss or

damage to the cargo without any insurable peril occurring, e.g., cargo
which may spontaneously combust, or fruit, which may spoil over time.
11. What does warranted goods surveyed prior to loading mean?
During the loading of the container an insurance surveyor is on site to

inspect and guarantee the goods were in good condition and properly
loaded OR an independent surveyor will inspect the goods and complete
a written report, submitted to the insuring party, verifying the value and
condition of the goods prior to shipping.
12. How would you explain general average to a customer?

General average is a system founded on the principle of “justice to all”,
making good marine losses, voluntarily incurred, for the safety of the
entire venture, that is ship, freight, crew.
The essential ingredients are:

1) A common adventure: ship, cargo, freight must be imperilled.
2) The expense sacrifice must be extraordinary in nature: calling for the

tugboat assistance or throwing overboard of containers to save the
vessel.
3) The voyage must come to a safe end. Essentially, part of the cargo is
sacrificed in order to save the “rest” of the cargo. The costs of a general
average are shared proportionately among all who had cargo aboard the
ship. This includes those who lost cargo.
2017 Page | 164

13. When general average has been declared for a vessel arriving at the ocean
port, what will an average adjuster require from you before your cargo is
released?
If the goods are not insured, the average adjuster, prior to the release of
the goods, will require a cash deposit for the share of the estimated
average loss. If the shipment was insured, an unlimited underwriter’s
guarantee is required for the release of the goods.
14. Determine the:
i) CIP Toronto value, and
ii) the insurance premium on a shipment with the following charges:
Value of shipment
FCA local forwarder Hong Kong US $70,000.00
Ocean freight Hong Kong to Toronto US $1,050.00
Toronto terminals US $180.00
Local delivery US $155.17 (CAN $158,27)
TOTAL US $71,385.17
Est. ins. premium US $535.39

(US $71,385.17 x 0.75%)
Total CIP Toronto value US $71,920.56
Ins. premium = US $539.40 (US $71,920.56 x 0.75%)
Insurance rate is 0.75% of insured value.
Rate of exchange of USD to CAD is 1.02.
2017 Page | 165

1. SINKS Company in Kitchener buys valves from TAPS Company in Taiwan.
Terms of Sale: FCA TAPS, Taiwan, Incoterms® 2010
4 skids @ 310 kg each, ocean export LCL, cargo value US $6,500.00.
a) Which party is obligated to insure this cargo?
Under Incoterms® 2010 neither party is obligated to insure

the cargo.
b) To which party do you recommend insurance?
You would recommend marine insurance to SINKS Company,

as they have the most exposure to loss. They would have a
legal relationship to the cargo from the moment the goods
are loaded onto the receiving carrier at TAPS Company.
c) While awaiting the arrival of the collecting truck at TAPS, a forklift

driver crushes the cargo. Who bears the loss?
Goods are sold FCA TAPS Taiwan, Incoterms® 2010, the

insurable interest is still with the seller. The seller bears the
loss.
d) If CIFFA forwarder’s Taiwan agent’s receiving terminal

(warehouse) burns to the ground and the valves are destroyed,
who suffers the loss?
Goods are sold FCA TAPS Taiwan, Incoterms® 2010. The

goods have obviously been collected from TAPS Taiwan. As
such, the buyer has an insurable interest in the goods under
Incoterms® 2010 and the buyer will bear the loss.
2017 Page | 166

2. CHIPS Company in Toronto sells electronic connectors to DATA Company in

Germany.
Terms of delivery: CPT Frankfurt, Germany, Incoterms® 2010

20 skids @ 220 kg each, loaded in 1 x 40-ft container, value is
CAN $36,000.00.
a) Who is responsible for contracting and paying the freight charges?
Under Incoterms® 2010 CHIPS Company is responsible for

contracting the carrier and paying the freight charges.
b) If the container is washed overboard and the whole shipment is

lost at sea, who suffers the loss?
Under Incoterms® 2010, the buyer, DATA Company, has an

insurable interest in the goods and must bear the loss.
c) Should the seller in Toronto insure the connectors?
NO !!
d) Why or why not?
Under Incoterms® 2010 the risk, or insurable interest, has

transferred to the buyer once the cargo has been given to the
care of the first carrier. The seller does not have an insurable
interest in the goods.
3. KLEANH2O Company in Winnipeg sells water filters to FRESH Company in

Chile.
Terms of delivery: CIP Santiago, Chile, Incoterms® 2010

20 cartons each, dims 22 in x 24 in x 24 in @ 22 kg each, air export,
value is US $15,000.00.
a) Is the air freight charge prepaid by shipper or collect to consignee?
Under Incoterms® 2010, the shipper/seller is obligated to pay

the freight charges.
b) If the truck burns up on Highway 1 en route to the airport, who

bears the loss?
Under Incoterms® 2010, the risk, or insurable interest, is

transferred to the buyer when the goods are delivered to the
2017 Page | 167

first carrier. As such, the loss is borne by FRESH Company,

Chile.
c) Who must buy/provide cargo insurance?
Under Incoterms® 2010, CIP Santiago, Chile, the seller, or

KLEANH2O Company, is obliged to insure the shipment.
d) What level of coverage is the obliged party to “take out”, and in

what amount?
The seller is obliged to “take out” minimal coverage only.

Minimal coverage is FPA Total Loss Only coverage. The
amount of coverage is 110% of the invoice value of the
goods. In this case it would be 110 % of US $15,000.00 or in
the amount of US $16,500.00.
2017 Page | 168

1. Calculate the insured value at CIP + 10% and state total premium payable.
Show your detailed method of calculation for all steps.
4 x 40-ft containers said to contain Jeeps and tents
Value FCA Toronto ................................................................. CAN $105,000.00

Ocean freight Montreal-Lagos per 40-ft container .................. US $3,000.00
Canadian charges for inland freight from Toronto to Montreal,
container placing, container loading, handling per 40-ft cntr ... CAN $1,500.00
All risk marine premium rate at 0.35%

Value of goods FCA Toronto CAN $105,000.00

Ocean freight:
US $3,000.00 x 4 = US $12,000.00 @ 1.02 = CAN $12,240.00
Inland charges: CAN $1,500.00 x 4 = CAN $6,000.00
Total CAN $123,240.00
Estimated premium = CAN $123,240.00 x 0.35% (marine premium rate)

= CAN $431.34
110% CIP value = (CAN $123,240.00 + CAN $431.34) x 110 %

= CAN $136,038.47 (our CIP Value + 10%)
Insurance premium = (CIP Value + 10%) x premium rate
= CAN $142,131.72 x 0.35%

Insurance premium = CAN $476.14 (the amount paid for insurance)
Canadian Duty/Taxes
In Canada the correct value for duty is the so-called transaction value. This means
depending on the terms of delivery (Incoterms® 2010), value for duty can be either
the FCA value or the CIP value, but when having a CIP value, Revenue Canada
permits deduction of foreign freight charges before arriving at value for duty.
Practically, you are back to square one or the FCA value at foreign port of export.
Therefore, using the FCA value of goods as value for duty in the import sample of
the exercises does reflect the proper basis for establishing cost of duty/taxes.
2017 Page | 169

This is not a customs broker course, nor are you expected to know the exact
procedure for duty calculation. In a practical situation you would simply ask the
customs broker or your customs department clearing your shipment for this
information.
It is hoped that you were alert in spotting the difference between a value for duty
as opposed to a value for insurance without getting confused.
2. Determine the insured value at CIP + 10% and insurance premium for the
shipment described below:
Supplier: Winnipeg Windings Ltd.

Goods sold: CIP Port Sao Paulo, Brazil, Incoterms® 2010
Transformer & parts (break bulk shipment)

Heavy lift charge port of New Orleans: US $2,000.00
Ocean freight to Sao Paulo, Brazil: US $5,315.00
All risk marine premium 0.28%


Heavy Lift charge port of New Orleans: CAN $2,040.00
Ocean freight to Sao Paulo, Brazil: CAN $5,421.30
Total cost of goods, plus freight CAN $122,561.30
Estimated Ins. Premium (CAN $122,561.30 x 0.28%) CAN $343.17
CIP Value CAN $122,904.47
CIP Value + 10% CAN $135,194.91
Insurance Premium = CAN $135,194.91 x 0.28% = CAN $378.55
2017 Page | 170


BROKER CIFFA Forwarder Issued at: Toronto, Canada, January 18 20 17
Insured: CERTIFICATE NO: A-60952
Kay-Tell Disks Ltd. ORIGINAL: ORIGINAL AND DUPLICATE
65 Main Street ISSUED, ONE OF WHICH
Woodstock, ON, Canada BEING ACCOMPLISHED,
Is insured subject to the conditions of Open Policy No. CIFFA-987 against which the interest
Sixty-five thousand three
hundred and ninety five
Korean Trucking Seoul, Korea US $65,395.00
Currency Figures
SS Maruni Voy 803 Busan, Korea On or about Mayday Insurance
January 29, 2017 46 Bay St.
Sea/Air Port of Discharge Final Destination Toronto, ON
Vancouver, Canada Toronto, Canada
TRVA 168932-5 1-20 ft container said to contain 600 cartons of compact disk Toronto, Canada
players

Institute Cargo Clause “A”, all risk, inclusive of wars, strikes, civil commotions.
IMPORTANT
CIFFA Forwarder Signature Co. President Pre-Printed Signature
2017 Page | 171

Scenario A:
1. What documents will Export Electronics need to submit for the claim to be
considered by the airline?
Cover letter (dated, signed with statement of claim including dollar amount),
bill of lading, MAWB, pro-bills, commercial invoice(s) for entire shipment,
packing list, copy of delivery receipt (notated), repair invoice or other, copy
of claim or intent to claim.
2. Will the carrier pay the claim? Why – why not?
Yes – within timeframe, all notices and documents completed, clearly their
loss.
3. If the carrier pays the claim, how much will be paid? What is the basis of the
calculation?
Limited liability – 150 kg x 19 SDR = +/- US $3,000.00 x 70%/70 ctns @ 1.05

= +/- US $2,100.00
(40 cartons lost + 30 cartons damaged, so liability limited to 70 cartons)
Note: Exchange rate: 1 SDR = US $1.05
Scenario B:
1. What type of insurance coverage would Gotta Go recommend to Export

Electronics under its open policy?
2. Calculate the insurance premium Gotta Go would have charged them for this air
freight shipment. (CIF + 10% x Premium)
Estimated: $10,000 + 750.00 x 0.25% = $26.88; Actual: $10.750 + 26.88 x

110% = 11,854.57 x 0.25% = $29.64.
2017 Page | 172

3. Given that the claim is supported properly, what amount would the insurance
company pay to Export Electronics? Explain your answer.
Full amount of claim – not limited as airline payout could be.
4. What suggestions would Gotta Go make to Export Electronics to improve their

competitiveness and risk management on imports?
Change terms of delivery to FCA origin and take out cargo insurance
coverage.
5. List some benefits Export Electronics would achieve if the CIFFA forwarder
provided insurance cover on imports and exports.
Less administration, full coverage, claims handling assistance, claims

could be paid in Canada, treated like a customer.
2017 Page | 173

START
CARGO INSURANCE
CLAIMS HANDLING
Receive ‘Notice PROCEDURES

of Claim’ from
client
Intent to No File ‘Intent to

Claim filed Claim’ with
on time carrier
with
carrier?
Yes
Seek
management
Cargo Customer No
No advice: options:
insurance carries own 1. Claim with
provided by insurance? carrier 2. Assist
forwarder?
client to claim
with carrier
Yes Yes
B C END
2017 Page | 174

B
C
Survey
required
Send intent to claim
?
and all other required
documents to allow
client to process claim
Yes
Arrange survey
Follow up with client to
ensure claim
progressing
Submit claim and required

documents to insurance
Gather all required
provider (follow internal
documents
procedures)
END
Follow up with insurer and

customer to ensure
END
payment received
2017 Page | 175

2017 Page | 176

Questions Cargo Security and Dangerous Goods
Exercises 6.1 (Cargo Security) (Question)
1. Which Canadian Bill deals with terrorism and national security?
2. What is the name of the regulations involving international maritime security?
3. What is the name of Canada’s security program that helps reduce contraband,
smuggling, and terrorism?
4. What government agency administers the above program?
5. What do the Memoranda of Understanding in the above program focus on?
6. What is the similar program in the USA?
8. How does this program work?
9. Canada has a National Security Policy. What are the three (3) key elements
in this policy?
10. What are the three (3) core national security interests of this policy?
11. What are the key new measures that the government of Canada will invest in
to fulfill its security responsibilities and activities?
12. What is ACI?
13. When was marine mode ACI implemented?
2017 Page | 177

14. What are the three (3) main objectives of export reporting?
15. Who must report the exports?
16. What are the export reporting timeframes?
Vessel:
Aircraft:
Rail:
Other:
17. What are the four (4) methods of reporting?
18. When did the Canadian Government specify that the ISPS Code for port and
port facilities become operational?
19. What U.S. security initiative applies to maritime transportation?
20. Which Canadian ports are part of CSI?
21. What must a Canadian freight forwarder first sign to becomes part of the
Transport Canada Air Cargo Security Program?
22. What can you do to increase security at your facility?
23. What can you do to improve security access to your facility?
2017 Page | 178

Exercises 6.2 (Dangerous Goods) (Question)
1. What is the definition of dangerous goods?
2. What are two (2) other terms that may also mean dangerous goods?
3. What associations/agencies have devised regulations for the transportation of

dangerous goods?
4. What is the Canadian set of dangerous goods regulations?
5. What is the American set of dangerous goods regulations?
6. Name some transportation disasters involving dangerous goods.
7. For these three (3) activities: handling, offering for transport, transporting
dangerous goods; which one(s) could apply to the following persons?
Shipper/exporter/importer:
Freight forwarder:
Carrier:
8. What are the two (2) main responsibilities of freight forwarders regarding
dangerous goods?
9. Under what conditions can a person legally handle, offer for transport, or
transport dangerous goods?
10. In Canada, how long is a dangerous goods training certificate valid for?
Air mode:
Ground mode:
Ocean mode:
11. In Canada, are there any situations when a dangerous goods training certificate
would expire in a shorter period than in Question 10?
2017 Page | 179

12. In Canada, who must sign a dangerous goods training certificate to make it
valid?
13. Who is responsible for identification of a dangerous goods shipment?
14. In what two (2) ways are dangerous goods identified?
15. How many Classes of dangerous goods are there, and what do they relate to?
16. What are the nine (9) Classes/Divisions of dangerous goods?
Class 1:
Class 2:
Class 3:
Class 4:
Class 5:
Class 6:
Class 7:
Class 8:
Class 9:
17. What are the three (3) Packing Groups, and what do they relate to?
18. What degree of danger does each Packing Group represent?
i) Packing Group I:
ii) Packing Group II:
iii) Packing Group III:
19. Other than the “diamond-shaped” hazard labels, what other labels/marks are
there for the transportation of dangerous goods by air?
20. Other than the “diamond-shaped” hazard labels, what other

labels/marks/signs/placards are there for the transportation of dangerous goods
by ocean?
2017 Page | 180

21. What are the four (4) types of documents that may be used for dangerous goods
shipments?
22. Who is responsible to complete the above documents?
23. In Canada, what additional two (2) pieces of information must be indicated on the
transport document for dangerous goods?
24. What are the five (5) BASIC steps to follow during a dangerous goods
emergency?
25. Who/what is CANUTEC?
26. How do you contact CANUTEC during a dangerous goods emergency?
27. What two (2) reports may you have to make to Transport Canada regarding a
dangerous goods occurrence?
28. If found guilty of an offence under the TDGR, what punishment could be levied?
29. According to Transport Canada, how long must dangerous goods paperwork be
kept on file?
2017 Page | 181

Exercises 6.3 (Cargo Security) (Question)
1. i) Create a flowchart of all the companies involved in producing, shipping, and

transporting an Apple iPhone from the manufacturer to a Future Shop store in
Canada.
Apple Shenzhen, China, assembles the hardware, holds inventory, and handles the
picking, packing, and shipping. Parts are sourced from Singapore, Taiwan, and U.S.
ii) After completing your flowchart, list possible weak points regarding cargo security
(theft and terrorism).
iii) Which Canadian or U.S. security programs may help create a more secure
supply chain for the iPhone?
2017 Page | 182

Exercises 6.4 (Dangerous Goods) (Question)
1. Review the following excerpt from the International Air Transport Association’s
(IATA) Dangerous Goods Regulations and answer the following questions:
a) What details can you provide about UN1090?
* Not everyone will get all these details, and you are not expected to. You all
should get the first 4 or 5.
b) What details can you provide about Acetylene silver nitrate?
2. Review the following excerpt from the International Maritime Organization’s (IMO)
Dangerous Goods Code and answer the following questions:
*Not everyone will get all these details, and you are not expected to. You all
b) What details can you provide about UN1463?
*Not everyone will get all these details, and you are not expected to. You all
2017 Page | 183

IATA Dangerous Goods Regulations
Passenger and Cargo

Cargo Aircraft Aircraft Only
Ltd Qty
Class
oder
UN/ Div. EQ S.P.
ID Proper Shipping (Sub see Pkg Max Net Pkg Max Net Pkg Max Net see ERG
no. Name/Description Risk) Hazard Label(s) PG 2.7 Inst Qty/Pkg Inst Qty/Pkg Inst Qty/Pkg 4.4 Code
A B C D E F G H I J K L M N
1090 Acetone 3 Flam. liquid II E2 Y341 1L 353 5L 364 60 L 3H
IMO Dangerous Goods Code

Packing IBC
UN Proper Shipping Name Class Subsidiary Packing Special Limited Instruc- Provisions Instruc- Provisions
No. (PSN) or risk(s) group provisions quantities tions tions
divi-
sion
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
1219 ISOPROPANOL (ISOPROPYL ALCOHOL) 3 - II - 1l P001 - IBC02 -

1463 CHROMIUM TRIOXIDE, ANHYDROUS 5.1 6.1/8 II - 1 kg P002 PP31 IBC08 B2/B4
2017 Page | 184

Answers Cargo Security and Dangerous Goods
Exercises 6.1 (Cargo Security) (Answer)
1. Which Canadian Bill deals with terrorism and national security?

Bill C-36.
2. What is the name of the regulations involving international maritime security?

International Ship and Port Facility Security Code (ISPS Code).
3. What is the name of Canada’s security program that helps reduce contraband,
smuggling, and terrorism?
Partners in Protection (PIP).
Canada Border Services Agency (CBSA).
5. What do the Memoranda of Understanding in the above program focus on?

Intelligence; exchange of information; security and joint
training/information initiative.
6. What is the similar program in the USA?
Customs-Trade Partnership Against Terrorism (C-TPAT).
7. What government agency(ies) administer(s) the above program?

Customs and Border Protection (CBP) OR Department of Homeland
Security.
8. How does this program work?
In exchange for quicker trips through borders, businesses must take

significant steps towards policing themselves.
2017 Page | 185

9. Canada has a National Security Policy. What are the three (3) key elements
in this policy?
1. A high-level federal-provincial-territorial forum on emergencies.
2. The National Security Advisory Council will give the government
advice
on evaluating and improving the system.
3. A cross-cultural roundtable on security.
10. What are the three (3) core national security interests of this policy?
1. Protecting Canada and Canadians at home and abroad.

2. Ensuring Canada is not a base for threats to our allies.
3. Contributing to international security.
11. What are the key new measures that the government of Canada will invest in
to fulfill its security responsibilities and activities?
1. Enhancing intelligence capabilities.
2. Securing critical government information systems.
3. Fully implementing the RCMP Real Time Identification Project and
improving the national fingerprint system.
4. Implementing the Passport Security Strategy.
12. What is ACI?
 Advance Commercial Information;

 Key data on shipments must be transmitted electronically before
goods and conveyances arrive in the country;
 A targeting tool will detect high-risk shipments. Low-risk
shipments will be cleared more quickly.
13. When was marine mode ACI implemented?
April 19, 2004.
2017 Page | 186

14. What are the three (3) main objectives of export reporting?
 Control the export of strategic and dangerous goods, as well as

other controlled and regulated goods;
 Collect accurate information on Canadian exports;
 Control the outbound movement of goods in transit through
Canada.
15. Who must report the exports?

The holder of a business number for the purposes of exporting
commercial goods or who has the legal right to cause them to be
exported.
16. What are the export reporting timeframes?
Vessel: Not less than 48 hours before being loaded on the vessel.
Aircraft: Not less than 2 hours before being loaded on the aircraft.
Rail: Not less than 2 hours before the railcar containing the goods is
assembled to form part of the train for export.
Other: Immediately prior to exportation of the goods.
17. What are the four (4) methods of reporting?
 Canadian Automated Export Declaration (CAED);

 G7 EDI Export Reporting;
 Summary Reporting;
 Form B13A Export Declaration.
18. When did the Canadian Government specify that the ISPS Code for port and
port facilities become operational?
July 1, 2004.
19. What U.S. security initiative applies to maritime transportation?
Container Security Initiative (CSI).

20. Which Canadian ports are part of CSI?
Montreal, Vancouver, Halifax.
2017 Page | 187

21. What must a Canadian freight forwarder first sign to becomes part of the
Transport Canada Air Cargo Security Program?
Terms and Conditions.
22. What can you do to increase security at your facility?
Possible solutions:
Prevent unauthorized access - self-closing and self-locking doors and

gates; receptionist/personnel at main entry points; security key card
access for employees; all doors closed and locked; all external doors
designed to resist/prevent forced entry; security alarms on all external
doors; locking windows with bars or mesh and alarmed; ground floor
windows protected by anti-ram posts or physical barriers.
23. What can you do to improve security access to your facility?
Possible solutions:
Prevent unauthorized access; challenge unauthorized persons;

passwords for computer systems.
2017 Page | 188

Exercises 6.2 (Dangerous Goods) (Answer)
1. What is the definition of dangerous goods?

Articles and substances capable of posing a significant risk to health,
safety, property, or the environment.
2. What are two (2) other terms that may also mean dangerous goods?
Hazardous materials; restricted articles.
3. What associations/agencies have devised regulations for the transportation of

dangerous goods?
 United Nations (UN);
 International Atomic Energy Agency (IAEA);
 International Civil Aviation Organization (ICAO);
 International Air Transport Association (IATA);
 International Maritime Organization (IMO).
4. What is the Canadian set of dangerous goods regulations?
Canadian Transportation of Dangerous Goods Regulations (TDGR).
5. What is the American set of dangerous goods regulations?
Title 49 of the Code of Federal Regulations (49 CFR).
6. Name some transportation disasters involving dangerous goods.
 ValuJet air crash;

 Mont Blanc/Halifax explosion;
 Bow Mariner explosion and sinking;
 Mississauga train derailment;
 Kapitan Sakharov;
 Malaysian Airlines.
2017 Page | 189

7. For these three (3) activities: handling, offering for transport, transporting
dangerous goods – which one(s) could apply to the following persons?
Shipper/exporter/importer: handling, offering for transport, transporting.
Freight forwarder: handling, offering for transport, transporting.
Carrier: handling, transporting.
8. What are the two (2) main responsibilities of freight forwarders regarding
dangerous goods?
 Protect the supply chain from undeclared dangerous goods;

 Advise the shipper/importer/exporter of the correct procedures to
follow and verify that the shipper/importer/exporter has followed the
regulations.
9. Under what conditions can a person legally handle, offer for transport, or
transport dangerous goods?
The person must be adequately trained and hold a training certificate or be

in the presence and under the direct supervision of a person who is
adequately trained and holds a training certificate.
10. In Canada, how long is a dangerous goods training certificate valid for?
Air mode: 24 months

Ground mode: 36 months
Ocean mode: 36 months
11. In Canada, are there any situations when a dangerous goods training certificate
would expire in a shorter period than as stated in the previous question?
If the regulations applicable to the person’s duties change before the

training certificate expires.
12. In Canada, who must sign a dangerous goods training certificate to make it valid?
The employer and employee.
13. Who is responsible for identification of a dangerous goods shipment?

The shipper/exporter.
2017 Page | 190

14. In what two (2) ways are dangerous goods identified?

By Proper Shipping Name and by United Nations (UN) Number or
Identification (ID) Number.
15. How many Classes of dangerous goods are there, and what do they relate to?
9 Classes; they relate to the type of hazard they represent.
16. What are the nine (9) Classes/Divisions of dangerous goods?

Class 1: Explosives
Class 2: Gases
Class 3: Flammable liquids
Class 4: Flammable solids, etc.
Class 5: Oxidizers and organic peroxides
Class 6: Toxic and infectious substances
Class 7: Radioactive material
Class 8: Corrosives
Class 9: Miscellaneous
17. What are the three (3) Packing Groups, and what do they relate to?
Packing Groups I, II, and III; they relate to the degree of danger they
represent.
18. What degree of danger does each Packing Group represent?

Packing Group I: high danger
Packing Group II: medium danger
Packing Group III: low danger
19. Other than the diamond-shaped hazard labels, what other labels/marks are there
for the transportation of dangerous goods by air?
 Magnetized materials;
 Cryogenic liquids;
 Cargo aircraft only;
 Package orientation;
 Keep away from heat;
 Lithium battery;
 Environmentally hazardous substances mark;
 Limited quantities mark.
2017 Page | 191

20. Other than the diamond-shaped hazard labels, what other

labels/marks/signs/placards are there for the transportation of dangerous goods
by ocean?
 Elevated temperature;
 Marine pollutant;
 Fumigation warning;
 Danger is only used on trucks.
21. What are the four (4) types of documents that may be used for dangerous
goods shipments?
 IATA Shipper’s Declaration for Dangerous Goods;
 Bill of lading;
 Multimodal Dangerous Goods Form; and
 FIATA Shipper’s Declaration for the Transport of Dangerous Goods.
22. Who is responsible to complete the above documents?
The shipper/exporter.
23. In Canada, what additional two (2) pieces of information must be indicated on the
transport document for dangerous goods?
 24 hour number (for emergencies); and
 Emergency Response Assistance Plan and Number (if applicable).
24. What are the five (5) BASIC steps to follow during a dangerous goods
emergency?
1. Do not come in contact with any spilled or leaking material.

2. Isolate the package.
3. Notify your immediate supervisor or manager.
4. Notify the appropriate emergency services and CANUTEC.
5. Report the accident or incident to Transport Canada.
25. Who/what is CANUTEC?
The Canadian Transport Emergency Centre. Part of Transport Canada, and

will assist emergency response personnel in dealing with dangerous
goods emergencies.
2017 Page | 192

26. How do you contact CANUTEC during a dangerous goods emergency?
613-996-6666 (collect) OR *666 (cell phone).
27. What two (2) reports may you have to make to Transport Canada regarding a
dangerous goods occurrence?
1. An immediate report.
2. A written report within 30 days.
28. If found guilty of an offence under the TDGR, what punishment could be levied?
 Up to CAN $50,000.00 for the first offence;

 Up to CAN $100,000.00 for each subsequent offence;
 Up to 2 years imprisonment.
2017 Page | 193

Exercises 6.3 (Cargo Security) (Answer)
1. i)
Possible solutions:
 Parts from Singapore manufacturer, freight forwarder, trucks, steamship

lines, truck to Shenzhen assembly facility;
 Parts from Taiwan manufacturer, freight forwarder, trucks, steamship

lines, truck to Shenzhen assembly facility;
 Parts from U.S. manufacturer, freight forwarder, trucks, steamship lines,

truck to Shenzhen assembly facility;
 Finished iPhones from Shenzhen assembly facility, freight forwarder,

trucks, steamship lines, trucks to Canadian distribution centre; and
 Finished iPhones from Canadian distribution centre to Future Shop store.
ii)
Possible solutions:
 Any time the iPhone is in assembly or packing it is vulnerable; and

 Any time the iPhone is being transferred between parties, it is vulnerable.
iii)
Possible solutions:
 U.S. – Container Security Initiative (CSI), Automated Manifest System

(AMS), Customs Trade Partnership Against Terrorism (C-TPAT), TSA Air
Cargo Security (if applicable); and
 Canada – Advance Commercial Information (ACI), Partners In Protection
(PIP), Air Cargo Security (ACS) Program (if applicable).
2017 Page | 194

Exercises 6.4 (Dangerous Goods) (Answer)
1.
 United Nations Number UN1090;

 Proper Shipping Name is Acetone;
 It is a Class 3, Flammable liquid;
 It requires a Flammable liquid hazard label;
 It is a Packing Group II;
 EQ code is E2;
 As a limited quantity shipment on a passenger and cargo aircraft, the
shipper must use Packing Instruction Y341, with a maximum of 1L per
package;
 As a shipment on a passenger and cargo aircraft, the shipper must use
Packing Instruction 353, with a maximum of 5 L per package;
 As a shipment on a cargo aircraft only, the shipper must use Packing
Instruction 364, with a maximum of 60 L per package;
 There are no Special Provisions; and
 The Emergency Response Guide Code is 3H.
b) What details can you provide about Acetylene silver nitrate?
 It is forbidden by air.
2.

 Proper Shipping Name is Isopropanol (or Isopropyl alcohol);
 There are no Special Provisions;
 In limited quantities, the maximum of 1 L per package;
2017 Page | 195

 For packings (smaller packages), shipper must use Packing Instruction

P001, with no provision; and
 For intermediate bulk containers (large containers), the shipper must use
Packing Instruction IBC02, with no provisions.
b) What details can you provide about UN1463?

 Proper Shipping Name is Chromium trioxide anhydrous;
 It has Subsidiary Risks of 6.1, Toxic, and 8, Corrosive;
 There are no Special Provisions;
 In limited quantities, the maximum of 1 kg per package;
 For packagings (smaller packages), shipper must use Packing
Instruction P002, with a Provision of PP31; and
 For intermediate bulk containers (large containers), the shipper must use
Packing Instruction IBC08, with a Provision of B2/B4.
2017 Page | 196

IATA Dangerous Goods Regulations

Passenger and Cargo
Cargo Aircraft Aircraft Only
Ltd Qty
Class
oder
UN/ Div. EQ S.P.
ID Proper Shipping (Sub see Pkg Max Net Pkg Max Net Pkg Max Net see ERG
no. Name/Description Risk) Hazard Label(s) PG 2.7 Inst Qty/Pkg Inst Qty/Pkg Inst Qty/Pkg 4.4 Code
A B C D E F G H I J K L M N
1090 Acetone 3 Flam. liquid II E2 Y341 1L 353 5L 364 60 L 3H
IMO Dangerous Goods Code
Packing IBC
UN Proper Shipping Name Class Subsidiary Packing Special Limited Instruc- Provisions Instruc- Provisions
No. (PSN) or risk(s) group provisions quantities tions tions
divi-
sion
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
1219 ISOPROPANOL (ISOPROPYL ALCOHOL) 3 - II - 1l P001 - IBC02 -

1463 CHROMIUM TRIOXIDE, ANHYDROUS 5.1 6.1/8 II - 1 kg P002 PP31 IBC08 B2/B4
2017 Page | 197

2017 Page | 198

Questions Costing and Quoting
1. What basic knowledge should you have prior to quoting a customer?
2. What factors influence the price quoted?
3. Freight forwarders set their rates based on tariffs obtained from carriers. What
should a freight forwarder look at when quoting these tariff rates?
4. Why is it important to encourage the sharing of information throughout the

different departments in a freight forwarding company?
5. Apart from the obvious charges included in the freight costs, what should be
considered when quoting a customer?
6. When presenting alternative routing to a client, what are some considerations

one has to keep in mind?
7. Why is consolidation so important to a freight forwarder?
8. What is the factor against which the freight rate is calculated for different modes
of transport?
9. What are the typical weight ratios for air and ocean?
10. What are the standard rules for “rounding off” freight volumes?
11. When weighing and measuring cargo, the carriers make allowances for certain
weights and projections. Name at least two allowances.
12. Name areas in which a freight forwarder increases their revenue.
13. How is profit calculated on a revenue tonne?
14. To avoid a “bidding war” with a client, what are some things a freight forwarder
can do?
15. What is a break-even point when calculating profit?
16. Name some service revenue streams generated by a freight forwarder.
2017 Page | 199

1. A carrier quotes you a rate of US $60.00 per revenue ton. A crate of parts
weighs 850 kg and measures 1.3 m L x 1.2 m W x 0.70 m H. What will be the
ocean freight charged by the carrier?
2. You have 4 slabs of granite to ship. Each is strapped to a pallet. The shipping
dimensions of each pallet are 42 in x 48 in x 18 in, and the shipping weight of
each pallet is 710 kg. The carrier has given you a rate of US $75.00 per revenue
ton. How much will you pay the carrier?
3. You have a weekly consolidation service Hong Kong – Vancouver, with direct
costs as follows:
Ocean freight: US $1,650.00/40-ft standard container

Container loading in Hong Kong: US $8.00 per revenue ton
Vancouver unloading: CAN $10.50 per revenue ton
Exchange rate is US $1.00 = CAN $1.02
From past experience your marketing department has determined that you need
to load 50 m3 of cargo into a 40-ft standard container, in order to quote your
clients an all-inclusive rate of US $58.00 per revenue ton.
As we are not given any weights, we will have to base all our calculations
on the measure or volume of the freight, in other words, the m3.
a) Last week you only loaded 40 m3 in your container. What was your profit
or loss? Show your calculation.
b) This week you loaded 60 m3 in the container. What is your profit or loss?
Show your calculation.
2017 Page | 200

4. For a consolidation service from Montreal to Hamburg your costs are:

Container loading in Montreal: US $8.50/revenue ton
De-stuffing in Hamburg: US $9.50/revenue ton
Rate of exchange: US $1.00 = CAN $1.02
Base your answer on the fact that sales and marketing has declared when
loading 50 m3 you can quote CAN $80.00 per revenue ton.
a) This week you are loading 48 m3 in the container. What is the

profit/loss?
b) If you have 60 m3 in the container, what is the profit/loss?
2017 Page | 201

1. What is the most important purpose of a quotation?
2. What information should a quotation contain?
3. Once you have presented a quotation to a client, what is the most important
thing to remember to do?
4. Each quotation should have on it one or more provisos. What is a “proviso”?

State 4 or more examples of a “proviso”.
5. What system should you employ to ensure that you invoice the client as per
quotation?
2017 Page | 202

Exercises 7.4 (Air Export) (Question)
Your customer, Canadian Manufacturing Inc., will be sending barbeque accessories (non-
hazardous) to a new customer in Paris, France. The Purchasing Manager, Mr. John
Smith, has requested an air export rate for the following:
Commodity: barbeque accessories.

Dimensions: 4 pieces, 70 in L x 100 in W x 5 in H each piece.
Weight: 100 kg each piece.
Terms of delivery: CPT CDG airport Paris France, Incoterms® 2010.
Quote totals in Canadian Dollars
Your pricing desk provides the following buy rate. Your suggested sell rate is plus US
$0.25 on the air freight per kilo rate.
Note: for all exercises, use the following information:

 Make up the quote number;
 All rates are quoted on December 31, 2016 and the validity is to January 31,
2017; and
 Use the following contact information.
Canadian Manufacturing Inc. CIFFA Freight Forwarder

Tel. No.: (123) 123-1111 1234 Mississauga Rd.
Fax No.: (123) 123-1111 Mississauga, ON, A1B 2C3
e-mail: [email protected] Tel. No.: (123) 456-7890
Fax No.: (123) 456-7890
Cell. No.: (416) 123-4567
e-mail: [email protected]
When presenting a quotation, always show a detailed breakdown. Fluctuations

in fuel and currency will directly affect the calculation which may cause issues
in the final calculation for a customer.
2017 Page | 203

Buy rate:
CHARGES CURRENCY MINIMUM +100 KG +300 KG
Air freight CAD $4.50/kg $4.15/kg
Fuel CAD $0.15/kg $0.15/kg
Security CAD $0.08/kg $0.08/kg
CANADIAN LOCAL
CHARGES
Handling CAD $45.00 per shipment
B13A preparation $17.50 per shipment
NavCan fee $7.00 $0.07/kg
Pick up fee $50.00 $0.20/kg
Terminal handling charge $10.00 $0.04/kg
Prepare the following:
a) A cover letter/e-mail explaining your quote.
b) A quotation.
c) The total cost for the above shipment.
a)
2017 Page | 204

b)
To: From:
Attn:
Fax:
Phone:
Email:
Quote No.:
Quote Date:
AIR EXPORT RATE QUOTATION
Via: Mode:
From: To:
Destinations Curr. Min. +45 kg +100 kg +300 kg +500 kg +1,000 kg Fuel Security
Canadian Local Charges:
Rate Validity:
Transit time:
Insurance:
Remarks
1. Rates are subject to change with or without notice
2. Origin charges are to the account of the shipper
3. Weight/volume ratio : 6,000 cm3 or 366 in3 = 1 kg
4. Rates are subject to space and equipment availability
5. Rates do not include insurance, customs clearance, duties or taxes
Signature:
All business is accepted by Canadian International Freight Forwarders and its affiliates subject to the Standard Trading Conditions of the Canadian International Freight Forwarders Association Inc. dated June 16, 2016 (and any
amendments thereto) which define and limit the obligations and liabilities of the freight forwarder. In engaging the services of Canadian International Freight Forwarders and/or its affiliates, the customer accepts and agrees to
be bound by these conditions. Copies of the conditions can be obtained on request from Canadian International Freight Forwarders or from the Secretary, Canadian International Freight Forwarders Association Inc.
2017 Page | 205

c)
TOTALS IN CANADIAN DOLLARS
2017 Page | 206

Exercises 7.5 (Ocean Export) (Question)
Your customer, Canadian Manufacturing Inc., will be sending barbeque accessories (non-
hazardous) to a new customer in Basel, Switzerland. The Purchasing Manager, Mr. John
Smith, has requested an ocean export rate for the following:
Commodity: barbeque accessories.

Terms of delivery: CPT CFS Basel Switzerland, Incoterms® 2010.
Your pricing desk provides the following buy rate. Your suggested sell rate is plus US
$25.00 on the per cbm ocean freight rate.
Quote totals in Canadian Dollars.
Exchange rate: CHF (Swiss Franc) 1.00 = CAN $1.02

US $1.00 = CAN $1.02
Buy rate:
CHARGES CURRENCY MINIMUM LCL

Ocean freight USD $125.00 $125.00/cbm
FRC (fuel recovery USD $17.00 $17.00/cbm
charge)
CAF USD $5.00 $5.00/cbm
ORIGIN LOCAL
CHARGES
ACI CAD $30.00 per shipment
Handling charge CAD $60.00 per shipment
Export Declaration fee CAD $17.50 per shipment
Inland pick up CAD $150.00 based on the shipment request
DESTINATION LOCAL
CHARGES
Handling CHF 50.00 per shipment
Terminal handling CHF 10.00/cbm or minimum CHF 20.00
Customs clearance CHF 75.00 flat fee
Delivery CHF 150.00 based on the shipment request

b) A quotation.
c) The total cost for the above-mentioned shipment.
2017 Page | 207

a)
2017 Page | 208

b) and c)
TOTALS IN CANADIAN DOLLARS
2017 Page | 209

To: From:
Attn:
Fax:
Phone:
Email:
Quote No.:
Quote Date:
OCEAN EXPORT RATE QUOTATION

Via: Mode:
Origin: Destination:
Commodity:
Charges Currency Minimum LCL 20’ 40’ 40’ HC 45’ HC Reefer
Rates are subject to the following:

Origin Local Charges:
Destination Local Charges:
Insurance:
Validity:
Transit Time:
Provisos:
2. Rates are subject to change of GRI, PSS, BAF & CAF as per steamship lines or the industry
3. Rates are subject to space & equipment availability
4. Rates are inclusive of current GRI & PSS
5. For LCL, 1 CBM = 1000 kgs, Minimum chargeable is 1 CBM
Signature:
2017 Page | 210

Exercises 7.6 (Air Import) (Question)
Your customer, Canadian Manufacturing Inc., would like samples imported from a new
supplier in Hong Kong via air freight. The Purchasing Manager, Mr. John Smith, is
requesting air freight rates. This is the information he provides:
Chargeable weights: 550 kg and 1,000 kg.
Commodity: barbeque parts (non-hazardous).
Terms of sale: FCA air carrier Hong Kong, China to Door Toronto GTA
(delivery, handling in Canada to be paid for by
Canadian Manufacturing Inc. Duties and taxes to be
determined once the orders are secured).
Your pricing desk provides the following buy rates and requests you add US $0.25 to
the air freight rate.
Mr. John Smith wants the quotation all in USD.
Exchange rate: US $1.00 = CAN $1.00

Buy rate:
CHARGES CURRENCY 500 KG 1,000 KG
Air freight USD $4.75/kg $3.50/kg
Fuel USD $0.20/kg $0.20/kg
Security USD $0.05/kg $0.05/kg
ORIGIN CHARGES
Pick up fee USD $0.10/kg; $0.10/kg; min.
min. $50.00 $50.00
Handling USD $45.00 per $45.00 per shipment
shipment
Terminal handling charges USD $0.04/kg; $0.04/kg; min.
min. $10.00 $10.00
DESTINATION CHARGES
Handling CAD $45.00 per $45.00 per shipment
shipment
Terminal handling CAD $0.08/kg; $0.08/kg; min.
min. $45.00 $45.00
NavCan fee CAD $0.07/kg; $0.07/kg; min. $7.00
min. $7.00
Delivery CAD $0.30/kg; $0.30/kg; min.
min. $50.00 $50.00
2017 Page | 211

b) A quotation.
c) The calculations for totals for each weight break.
a)
2017 Page | 212

b)
To: From:
Attn:
Fax:
Phone:
Email:
Quote No.:
Quote Date:
AIR IMPORT RATE QUOTATION
Via: Mode:
From: To:
Origin Charges:
Rate Validity:
Transit time:
Insurance:
Remarks
Signature:
2017 Page | 213

c)
TOTALS IN U.S. DOLLARS

550 kg
1,000 kg
2017 Page | 214

Exercises 7.7 (Ocean Import) (Question)
Your customer, Canadian Manufacturing Inc., has found a new supplier in Hong Kong.
For landed cost purposes the Purchasing Manager (Mr. John Smith) is requesting
container rates on a FCA Ocean Carrier Container Yard Hong Kong, China basis for full
container loads to Door Mississauga. The following is the information he provides:
Total volume of containers: he has no idea as they are in the initial stages of
negotiation with their supplier.
Commodity: barbeque parts (non-hazardous).
Equipment: type: 20-ft std., 40-ft std., 40-ft HC.
Terms of sale: FCA Ocean Carrier Container Yard Hong Kong, China
(delivery, handling in Canada to be paid for by
Canadian Manufacturing Inc. Duties and taxes to be
determined once the orders are secured).
Your pricing desk is unable to negotiate competitive pricing and are awaiting
information pertaining to the total anticipated volume.
Mr. John Smith wants the quotation all in USD.
Exchange rate: US $1.00 = CAD $1.00
Sell rate: suggested sell rate is US $50.00 on the ocean freight

for a 20-ft std. and US $100.00 on the ocean freight for
a 40-ft std. and 40-ft HC.
Buy rate:
CHARGES CURRENCY 20 FT 40 FT 40 FT HC
Ocean freight USD $2,000.00 $2,400.00 $2,550.00
FCR (fuel recovery USD $250.00 $330.00 $330.00
charge)
CAF (currency USD Included Included Included
adjustment factor)
Carbon tax USD $4.50 $9.00 $9.00
CANADIAN
LOCAL CHARGES
Handling CAD CAN $60.00 per shipment
Terminal handling CAD Included
Delivery GTA CAD CAN $375.00 per container
2017 Page | 215

b) A quotation.
c) The calculation for totals for each container type in USD.
a)
2017 Page | 216

b)
To: From:
Attn:
Fax:
Phone:
Email:
Quote No.:
Quote Date:
OCEAN IMPORT RATE QUOTATION
Via: Mode:
Origin: Destination:
Commodity:
Insurance:
Validity:
Transit time:
Provisos:
Signature:
2017 Page | 217

c)
TOTALS IN U.S. DOLLARS
20-ft STD
40-ft STD
40-ft HC
2017 Page | 218

Answers Costing and Quoting
1. What basic knowledge should you have prior to quoting a customer?
One should know how to calculate the chargeable weights for air, ocean
and land transportation. A firm understanding of Incoterms is a necessity
as the responsible parties (buyer/seller) are clearly defined.
2. What factors influence the price quoted?
Routing; value of the goods; packaging; volume; contracts; weight;

dimensions; negotiating power with the carriers; credit.
3. Freight forwarders set their rates based on tariffs obtained from carriers. What
should a freight forwarder look at when quoting these tariff rates?
Be aware of the fact that temporary supply and demand issues can
significantly influence the carrier's price quoted (e.g., peak season
surcharges).
4. Why is it important to encourage the sharing of information throughout the

different departments in a freight forwarding company?
To gain a better understanding of the clients’ needs. You may only be

providing the customer with one service and this is an opportunity to gain
more business.
5. Apart from the obvious charges included in the freight costs, what should be
considered when quoting a customer?
The credit terms (freight forwarders are not banks) and time (remember
the amount of time spent faxing, e-mailing and on telephone calls all cost
money).
2017 Page | 219

6. When presenting alternative routing to a client, what are some considerations

one has to keep in mind?
Currency fluctuation; frequency of the carriers; hidden costs that are

included by carriers; the customer’s requirements (sometimes the time
sensitivity of cargo outweighs the cost).
7. Why is consolidation so important to a freight forwarder?
To obtain the benefit of bulk freight rates from the carrier; or for the
forwarder's own convenience when he is required to forward a number of
smaller shipments to the same destination".
8. What is the factor against which the freight rate is calculated for different modes
of transport?
The gross weight against the total volume, whichever is greater.
9. What are the typical weight ratios for air and ocean?
 1 m3 or 1,000 kg ocean (always check with the carrier); and

 6,000 cm3 or 1 kg air (always check with the carrier).
10. What are the standard rules for “rounding off” freight volumes?
a) Where parts of a centimetre occur, such parts below 0.5 cm are to be

ignored, and those of 0.5 cm and over are to be rounded up to the
next full centimetre.
b) When calculating cubes of individual packages, the calculation

should be taken to six places of decimals but then rounded off at the
third decimal for a single package.
c) For multiple packages of like dimensions, the cube on one package

to six decimals is to be multiplied by the number of packages and
then the total cube rounded off to three decimal places.
2017 Page | 220

11. When weighing and measuring cargo, the carriers make allowances for certain
weights and projections. Name at least two allowances.
Lifting aids, e.g., fitted hooks, lug eyes and rings, bumpers and exhaust
pipes on unpacked motor vehicles.
12. Name areas in which a freight forwarder increases their revenue.
Freight charges (buying at wholesale and selling at retail); stuffing; de-

stuffing; local cartage; packaging; marine insurance; warehousing;
customs brokerage, etc.
13. How is profit calculated on a revenue tonne?

By subtracting costs from revenue.
14. To avoid a “bidding war” with a client, what are some things a freight forwarder
can do?
One way to avoid such a predicament is to "stick to your guns”. Try to
sell the service aspect rather than to participate in eroding rate levels.
Another way is to look for a better mix of cargo in order to maximize the
load factor.
15. What is a break-even point when calculating profit?

Your break-even point is the amount of revenue tons you must load before
making a profit.
16. Name some service revenue streams generated by a freight forwarder.

Document preparation; insurance; handling fees; consulting; and special
requests by a customer, such as labelling, etc.
2017 Page | 221

1. A carrier quotes you a rate of US $60.00 per revenue ton. A crate of parts
weighs 850 kg and measures 1.3 m L x 1.2 m W x 0.70 m H. What will be the
ocean freight charged by the carrier?
Rate: US $60.00/m3/1,000 kg.
Volume: 1.3 x 1.2 x 0.7 = 1.092 m3
Weight: 850 kg.
Based on volume:
Charge = US $60.00 x 1.092 m3 = US $65.52
Based on weight:
Charge = US $60.00 x 0.850 = US $51.00
Charge will be based on volume = US $65.52
2. You have 4 slabs of granite to ship. Each is strapped to a pallet. The shipping
dimensions of each pallet are 42 in x 48 in x 18 in, and the shipping weight of
each pallet is 710 kg. The carrier has given you a rate of US $75.00 per revenue
ton. How much will you pay the carrier?
Rate: US $75.00/m3/1,000 kg.
Based on volume:
Volume of 1 pallet = [(42 x 48 x 18)/1728] : 35.3147 = 0.594653 m3
Total volume = 0.594653 m3 x 4 pallets = 2.378612 = 2.379 m3
Charge = US $75.00 x 2.379 m3 = US $178.50
Based on weight:
710 kg x 4 pallets = 2,840 kg/1,000 = 2.840 x US $75.00 = US $213.00
Charge = US $75.00 x 2.840 = US $213.00
Charge will be based on weight = US $213.00
3. You have a weekly consolidation service Hong Kong – Vancouver, with direct
costs as follows:

Container loading in Hong Kong: US $8.00 per revenue ton
Vancouver unloading: CAN $10.50 per revenue ton
Exchange rate is US $1.00 = CAN $1.02
2017 Page | 222

From past experience your marketing department has determined that you need
to load 50 m3 of cargo into a 40-ft standard container, in order to quote your
clients an all-inclusive rate of US $58.00 per revenue ton.
As we are not given any weights we will have to base all our calculations
on the measure or volume of the freight. In other words, the m3.
a) Last week you only loaded 40 m3 in your container. What was your profit
or loss? Show your calculation.
Total revenue = total volume loaded x freight rate

= 40 m3 x US $58.00/m3 = US $2,320.00 “A”
Total costs = ocean freight costs + loading costs + unloading costs
Ocean freight = US $1,650.00
Loading costs = 40 m3 x US $8.00/m3 = US $320.00
Unloading costs = 40 m3 x CAN $10.50/m3 = CAN $420.00 = USD

$411.77
Total costs = US $1,650.00 + US $320.00 + 411.77 = US $2,381.77 “B”
Total profit = total revenue “A” – total costs “B”

= US $2,320.00 – US $2,381.77 = - US $61.77
TOTAL LOSS THIS WEEK IS - US $61.77.
c) This week you loaded 60 m3 in the container. What is your profit or loss?
Show your calculation.
Total revenue = total volume loaded x freight rate

= 60 m3 x US $58.00/m3 = US $3,480.00 “A”
Total costs = ocean freight costs + loading costs + unloading costs
Ocean freight = US $1,650.00
Loading costs = 60 m3 x US $8.00/m3 = US $480.00
Unloading costs = 60 m3 x CAN $10.50/m3 = CAN $630.00 = US $617.65
Total costs = US $1,650.00 + US $480.00 + 617.65 = US $2,747.65 “B”
2017 Page | 223

Total profit = total revenue “A” – total costs “B”

= US $3,480.00 – US $2,747.65 = US $732.35
TOTAL PROFIT THIS WEEK IS US $732.35.
4. For a consolidation service from Montreal to Hamburg your costs are:

Container loading in Montreal: US $8.50/revenue ton
De-stuffing in Hamburg: US $9.50/revenue ton
Rate of exchange: US $1.00 = CAN $1.02
Base your answer on the fact that sales and marketing has declared when
loading 50 m3 you can quote CAN $80.00 per revenue ton.
a) This week you are loading 48 m3 in the container. What is the

profit/loss?
Total revenue = 48 m3 x CAN $80.00 = CAN $3,840.00 or US $3,764.71
Total costs
Less ocean freight: US $1,385.00
Less loading (48 m3 x US $8.50) US $408.00
Less unloading (48 m3 x US $9.50) US $456.00
Total profit (revenue – costs).................. US $1,515.71
b) If you have 60 m3 in the container, what is the profit/loss?
Total revenue = 60 m3 x CAN $80.00 = CAN $4,800.00 or US $4,708.88
Total costs
Less ocean freight US $1,385.00
Less loading (60 m3 x US $8.50) US $510.00
Less unloading (60 m3 x US $9.50) US $570.00
Total profit (revenue – costs) US $2,240.88
2017 Page | 224

1. What is the most important purpose of a quotation?

It is an opportunity to project the image of your company, sell your
company’s services and, most importantly, win new business.
2. What information should a quotation contain?

The reason for the quote; date of quotation; client’s name, to which party
the quote is addressed to; origin and destination of the cargo; routing and
mode of transportation; description/type of goods; the total weight,
volume, pieces of the shipment; what services your quotation included;
the currency used in the final figure; any provisos; validity date; whom to
contact for further information or booking; signature of the person
preparing the quotation.
3. Once you have presented a quotation to a client, what is the most important
thing to remember to do?
You should always follow-up with a phone call or visit.
4. Each quotation should have on it one or more provisos. What is a “proviso”?

State 4 or more examples of a “proviso”.
There is many provisos that can appear on a quotation. The MOST
IMPORTANT one is the proviso that references “your company’s
adherence to the Standard Trading Conditions as set out by CIFFA”.
Below are just a handful of provisos that may appear on a quotation.
Marine insurance not included, available upon request; all prices quoted
are based on currently valid tariffs and are subject to change with or
without notice; rates based on non-hazardous cargo only; rates valid for
30 days; customs duties, brokerage and taxes not included, available
upon request; cargo subject to dimensional verification; any special
handling or equipment requirements will be subject to additional charges;
2 hours free time to load, after which a waiting time charge will apply.
5. What system should you employ to ensure that you invoice the client as per
quotation?
Open an operational file, make sure that all the details are filled in
correctly, and when in doubt ask the sales and pricing department for a
copy of the quote supplied to the client.
2017 Page | 225

Exercises 7.4 (Air Export) (Answer)
a)
CIFFA Freight Forwarder

Mississauga, On., A1B 2C3
Tel.: (123) 456-7890
Cell: (416) 123-4567
Fax: (123) 456-7890
Email: [email protected]
December 31, 2016
VIA FACSIMILE: (123) 123-1111

Mississauga, On., X1B 2B3
Attention: Mr. John Smith
Dear Mr. Smith,
We would like to thank you for this opportunity to quote on your air export to Paris,
France. Please note that we have based our final costing on the dimensions and weight
that you have provided.
Our quotation shows the breakdown for costing on a CPT CDG Paris, France costing.
Should there be any variation in the dimensions or weight of your shipment we will
prepare a revised quotation. This quotation is valid up to January 31, 2017.
We would appreciate your feedback and will be more than willing to answer any
questions you may have.
Yours very truly,
Jane Doe
2017 Page | 226

b)
To: Canadian Manufacturing Inc. From: CIFFA Freight Forwarder

Attn: Mr. John Smith (Purchasing Manager) 1234 Mississauga Rd.
Fax: (123) 123-1111 Mississauga ON A1B 2C3
Phone: (123) 123-1111 Tel: (123) 456-7890
Email: [email protected] Fax: (123) 456-7890

Prepared by: CIFFA Freight Forwarder
Quote No.: AE 12345 Cell: (416) 123-4567
Quote Date: December 31 2016 Email: [email protected]
AIR EXPORT RATE QUOTATION

Via: Air Gateway Service Mode: Air
From: Canadian Manufacturing Inc. ,Mississauga ,Ontario To: Paris, France (CDG)
CPT CDG Paris, France
Paris CAD NA NA 4.75/kg 4.40/kg NA NA 0.15/kg 0.08/kg

Pick-up fee: CAN $0.20/kg or minimum US $50.00
Handling: CAN $45.00 per shipment
Terminal handling charges: CAN $0.04/kg or minimum US $10.00
B-13 Export Declaration: CAN $17.50 per shipment
NavCan: CAN 0.07/kg or minimum $7.00
Rate Validity: January 31, 2017

Transit time: 2-4 days Airport - Airport
Insurance: Available upon request
Remarks
Signature: Ciffa Forwarder
All business is accepted by Canadian International Freight Forwarders and its affiliates subject to the Standard Trading Conditions of the Canadian International Freight Forwarders Association Inc. dated June 16, 2016 (and any amendments thereto)
which define and limit the obligations and liabilities of the freight forwarder. In engaging the services of Canadian International Freight Forwarders and/or its affiliates, the customer accepts and agrees to be bound by these conditions. Copies of the
conditions can be obtained on request from Canadian International Freight Forwarders or from the Secretary, Canadian International Freight Forwarders Association Inc.
2017 Page | 227

c)
TOTAL costing based on the following shipment:

Chargeable weight: 400 kg.
Total charges CPT CDG airport, Paris, France
Origin pick up fee: CAN $0.20 x 400 = CAN $80.00 CAN $80.00
Origin handling fee: CAN $45.00 CAN $45.00
Origin terminal handling charges: CAN $0.04 x 400 = CAN $16.00 CAN $16.00
NavCan: CAN $0.07 x 400 = CAN $28.00 CAN $28.00
B13A Export Declaration: CAN $17.50 CAN $17.50
Air freight: CAN $4.40 x 400 CAN $1,760.00
Fuel: CAN $0.15 x 400 CAN $60.00
Security: CAN $0.08 x 400 CAN $32.00
TOTAL CAN $2,038.50
2017 Page | 228

Exercises 7.5 (Ocean Export) (Answer)
a)

Tel.: (123) 456-7890
Cell: (416) 123-4567
Fax: (123) 456-7890
December 31, 2016

Dear Mr. Smith,
We would like to thank you for this opportunity to quote on your ocean export to Basel,
Switzerland. Please note that we have based our final costing on the dimensions and
weight that you have provided.
Our quotation shows the breakdown for costing on a CPT Basel, Switzerland basis.
Should there be any variation in the dimensions or weight of your shipment we will
prepare a revised quotation. This quotation is valid up to January 31, 2017.
We would appreciate your feedback and will be more than willing to answer any
questions you may have.
Yours very truly,
Jane Doe
b) on the following page
2017 Page | 229


Phone: (123) 123-1111 Tel: (123) 456-7890

Quote No.: 1201001-AK (normally companies have an internal quote number) Cell: (416) 123-4567
OCEAN EXPORT RATE QUOTATION

Via: MLB Service Mode: Ocean
Origin: Mississauga, ON, Canada Destination: Basel, Switzerland
Commodity: barbeque parts (non hazardous)
Ocean Freight USD 150.00 150.00/cbm - - - _ _
FRC (fuel recovery) USD 17.00 17.00/cbm - - - _ _
CAF (currency AF) USD 5.00 5.00/cbm - - - _ _
Rates are subject to the following:

Origin Local Charges:
ACI CAN $30.00 per shipment
Handling charge CAN $60.00 per shipment
Export Declaration fee CAN $17.50 per shipment
Pick up fee CAN $150.00 per shipment
Destination Local Charges:

Handling CHF 50.00 per shipment
Terminal handling CHF 10.00/cbm or minimum CHF 20.00
Delivery CHF 150.00 based on the shipment
Customs clearance CHF 75.00 flat fee
Validity: January 31, 2017
Transit time: 25 days
Provisos:
2017 Page | 230

c)
TOTAL costing based on the following shipment:

Chargeable weight: 11.471 m3
Total charges CPT: CFS Basel Switzerland
Exchange rate: CHF (Swiss Franc) 1.00 = CAN $1.02

US $1.00 = CAN $1.02
CHARGES CURRENCY AMOUNT CAD
ORIGIN CHARGES
Origin pick up fee CAN $150.00 based on the shipment $150.00
request
Origin handling fee CAN $60.00 per shipment $60.00
ACI fee CAN $30.00 per shipment $30.00
B13A Export CAN $17.50 per shipment $17.50
Declaration
OCEAN FREIGHT
CHARGES
Ocean freight USD $150.00 x 11.471 = $1,720.65 $1,755.06
FRC USD $17.00 x 11.471 = $195.00 $198.91
CAF USD $5.00 x 11.471 = $57.35 $58.50
DESTINATION
CHARGES
Destination handling CHF 50.00 per shipment $51.00
Terminal handling CHF 10 x 11.471 = 114.71 $117.00
Delivery CHF 150.00 based on the shipment $153.00
request
Customs CHF 75.00 flat fee $76.50
TOTAL $2,667.47
2017 Page | 231

Exercises 7.6 (Air Import) (Answer)
a)

Tel.: (123) 456-7890
Cell: (416) 123-4567
Fax: (123) 456-7890
December 31, 2016

Dear Mr. Smith,
We would like to take this opportunity to thank you for including us in your RFQ (request
for quotation).
Please find attached a detailed quotation that is valid until January 31, 2017. In order
to simplify the calculations we have shown each weight break separately and indicated
the total USD rate. Please keep in mind that confirmation of the actual rate is based
upon the weights and dimension we receive and any variation will directly affect the
rate.
If you have any questions or comments with respect to the above, please do not
hesitate to contact us.
Yours very truly,
Jane Doe
2017 Page | 232

b)

Phone: (123) 123-1111 Tel: (123) 456-7890

AIR IMPORT RATE QUOTATION
Via: Air Console Service Mode: Import Consolidation

From: FCA Air Carrier Yard Hong Kong To: Toronto GTA
Toronto USD N/A N/A N/A N/A $5.00/kg $3.75/kg $0.20/kg $0.05/kg
Origin Charges:
Pick-up fee: US $0.10/kg or minimum US $50.00
Handling: US $45.00 per shipment
Terminal handling charges: US $0.04/kg or minimum US $10.00
Destination Charges:
Handling: CAN $45.00 per shipment
Terminal handling: CAN $0.08/kg or minimum CAN $45.00
Navcan fee: CAN $0.07/kg or minimum CAN $7.00
Delivery: CAN $0.30/kg or minimum CAN $50.00
Rate Validity: January 31, 2017

Transit time: 3-4 days Airport - Airport
Insurance:
Remarks
amendments thereto) which define and limit the obligations and liabilities of the freight forwarder. In engaging the services of Canadian International Freight Forwarders and/or its affiliates, the customer accepts and agrees to be bound
by these conditions. Copies of the conditions can be obtained on request from Canadian International Freight Forwarders or from the Secretary, Canadian International Freight Forwarders Association Inc.
2017 Page | 233

c)
550 kg
Origin pick up fee: US $0.10 x 550 = US $55.00

Origin handling fee: US $45.00
Origin terminal handling charges: US $0.04 x 550 = US $22.00
Airfreight charges: US $5.00 x 550 = US $2,750.00
Current fuel charges: US $0.20 x 550=US $110.00
Security charge: US $0.05 x 550 = US $27.50
Destination handling: CAN $45.00
Terminal handling: CAN $45.00 min
NavCan: CAN $0.07 x 550 = CAN $38.50
Destination delivery GTA: CAN $0.30 x 550 = CAN $165.00
TOTAL: US $3,303.00
1,000 kg
Origin pick up fee: US $0.10 x 1,000 = US $100.00

Origin handling fee: US $45.00
Origin terminal handling charges: US $0.04 x 1,000 = US $40.00
Airfreight charges: US $3.75 x 1,000 = US $3,750.00
Current fuel charges: US $0.20 x 1,000 = US $200.00
Security charge: US $0.05 x 1,000 = US $50.00
Destination handling: CAN $45.00
Terminal handling: CAN $0.08 x 1,000 = CAN $80.00
NavCan: CAN $0.07 x 1,000 = CAN $70.00
Destination delivery GTA: CAN $0.30 x 1,000 = CAN $300.00
TOTAL: US $4,680.00
2017 Page | 234

Exercises 7.7 (Ocean Import) (Answer)
a)

Tel.: (123) 456-7890
Cell: (416) 123-4567
Fax: (123) 456-7890
December 31, 2016

Dear Mr. Smith,
We would like to take this opportunity to thank you for including us in your RFQ (request
for quotation). Attached, please find a detailed quotation that is valid until January 31,
2017.
In order to simplify the calculations, we have broken down each container costing and
provided the USD rate. Please keep in mind that upon receipt of the information on
actual dimensions and weight of you cargo we will be able to base our costing on your
exact shipment.
If you have any questions or comments with respect to the above, please do not
hesitate to contact us.
Yours very truly,
Jane Doe
b) on the following page
2017 Page | 235


Phone: (123) 123-1111 Tel: (123) 456-7890

OCEAN IMPORT RATE QUOTATION

Via: MLB Service Mode: Multimodal
Origin: FCA Ocean Carrier Container Yard Hong Kong Destination: Mississauga Door
Commodity: Barbeque Parts (non-hazardous)
Ocean Freight USD _ _ $2,050.00 $2,500.00 $2,650.00 _ _
FRC (Fuel recovery) USD _ _ $250.00 $330.00 $330.00 _ _
CAF (currency AF) USD _ _ Included Included Included _ _
Carbon Tax USD _ _ $4.50 $9.00 $9.00 _ _

Handling CAN $60.00 per shipment
Terminal handling Included
Delivery GTA CAN $375.00 per container

Validity: January 31, 2017
Transit time: 24 days – Port to Port with weekly frequency
Provisos:
2017 Page | 236

20-ft STD
Ocean freight: US $2,050.00

Fuel recovery charge: US $250.00
Carbon tax: US $4.50
Handling charge: CAN $60.00
Delivery GTA: CAN $375.00
TOTAL: US $2,739.50
40-ft STD

TOTAL: US $3,274.00
40-ft HC

TOTAL: US $3,424.00
2017 Page | 237

2017 Page | 238

Questions Alternative Transport Solutions
1. What ability sets the true international freight forwarder apart from carriers and
customs brokers?
2. What is the most important action a forwarder can take in choosing the correct
transportation alternative?
3. How do you keep informed about occurrences in foreign countries, which may
require that you look for an alternative?
4. What client needs must you identify, and take into account before deciding on
transportation alternatives?
5. Name the basic elements you must take into account when working out a possible
alternative?
6. Prior to offering an alternative to your client, and after assessing the information
that your client has provided, what “other” important element must you take into
account?
7. What occurrences may force you to look for an alternative?
8. Your 40-ft container shipment from Toronto is booked with an ocean carrier that
has a rail interchange agreement with Canadian National Railway. The planned
routing is to rail the container to the Port of Montreal, then by ocean to Antwerp.
One day prior to the planned loading of the container, at the seller’s warehouse,
C.N.R. workers declare a strike, and walk-out, thereby halting all C.N.R. rail
traffic, coast to coast.
What alternative could you offer your customer?
2017 Page | 239

9. The port of Vancouver is closed because of a strike. Name two suitable ports which
are able to accommodate container vessels and should be considered as an
alternative.
10. You have regular ocean shipments to Frankfurt, Germany, which you usually
route through Bremerhaven, and then inland to Frankfurt. Suddenly, the
shipping lines have suspended service to Bremerhaven due to severe
congestion. What other ports are available as alternatives.
11. List advantages air freight has over ocean freight other than speed.
12. A customer has called and has indicated that they have a shipment to Madrid,
Spain. Madrid is an inland destination. What are two ports that you can use as
a gateway to Madrid?
13. What possible disadvantages are there when traffic intended for a Canadian
destination is routed through an American port?
14. When looking for an alternative for your client who thinks ocean freight
movements are too slow and air freight is too fast, what alternatives could you
offer your client? Why?
2017 Page | 240

1. Is it more common to move containers from Eastern to Western Canada and vice
versa by rail than by truck? Give at least two reasons why.
2. You have to move 120 cartons by air from point A to point B. Gross weight is 600 kg,
volume 4.5 m3. Which of the two following alternatives would you choose?
a) You can move it under the general cargo rate at CAN $4.00/kg chargeable
weight.
b) You can load the cartons, at your own expense, into a ULD type LD3, for which
the cargo is CAN $2,000.00 lump sum up to 600 kg (pivot weight) and CAN
$2.50/kg for each kg chargeable weight over 600 kg.
3. What are the prime guideline when assessing any alternative for a client?
4. When looking only at alternative routes and modes of transportation, what must be
your foremost concerns?
5. Because of problems of routing traffic through U.S. ports, you have decided to route a
40-ft container of consolidation freight via Vancouver. The container contains 52 m3 of
freight, and weighs 11,400 kg, ex Taipei and is intended for the Toronto area. We have
two choices:
1. MLB Taipei-Toronto.
All-inclusive cost: US $3,100.00
Estimated transit time: 25 days.
2. To Vancouver only, unloading in Vancouver then re-shipping by truck to

Toronto.
Ocean freight to Vancouver: US $1,750.00
Transfer/reloading in Vancouver: CAN $6.50/m3
Trucking: CAN $8.00/100 lb
Estimated transit time: 24-25 days
a) What is the cost for each route? Show calculation.
b) What route would you choose? What might cause you to use the
other route instead?
2017 Page | 241

1. What should you consider when deciding transportation alternatives? Name

3.
2. You are moving 80 cartons from Montreal to London, U.K. by air. Total weight
is 500 kg and total volume 5.5 m3.
Which alternative would you choose to move this freight?
a) Move by air at the rate of CAN $3.50/kg chargeable weight.
b) ULD with pivot weight of 600 kg for CAN $2,200.00 and CAN $2.00/kg
for each chargeable weight over 600 kg.
2017 Page | 242

1. Name possible alternative ports for traffic going to Switzerland?
2. Your customer has called complaining that his freight must always wait until the
Sunday night flight from YUL to MXP. The customer has deemed that they must
have accessibility to daily flights as they are losing potential business.
You have inquired as to how the cargo is packaged. You have been able to
determine the following:
Every shipment consists of 180 cartons, dimensions of each carton are 14 in x

12 in x 12 in and the weight of each carton is 15 lb. When the customer moves
the freight, they will unitize 60 cartons onto a plastic skid, resulting in a shipment
consisting of 3 skids (this is how they have been shipping the product to the
USA). The dimensions of the plastic skid are 48 in x 42 in x 6 in and weighs 10
lb.
You have also determined that there are daily flights utilizing an A340 aircraft,
yet the Sunday flight utilizes a B767-300 Freighter. The maximum height for
the lower deck pallets is 64 inches. The daily A340 has no upper-deck capacity.
What would you recommend to the customer?
2017 Page | 243

1. You have to move 120 cartons of spare parts by air from Calgary to Hong Kong.
Each carton weighs 9 kg and has dimensions of 46 cm x 30 cm x 30 cm. Based
on price, what is the least expensive alternative to offer your client?
a) You can move it under the General Cargo Rate at CAN $2.95/kg
chargeable weight.
b) You can load the cartons, at your own expense, into a ULD-type
LD3, for which the cargo is CAN $2,000.00 lump sum up to 600
kg (pivot weight) and CAN $2.50/kg for chargeable weight over
the pivot weight.
2017 Page | 244

1. You have an urgent shipment of car engine parts from Montreal to Libreville,
Gabon. The shipment consists of 5 small crates with a chargeable weight of
828 kg. You have already identified two possible alternatives.
Alternative 1
Montreal – New York – Libreville

(Direct freighter, Air Gabon via JFK)
Freight rates:
Montreal – JFK: express truck, CAN $14.50/100 lb.
JFK – LBV: +500 kg - US $10.08
Alternative 2
Montreal – Paris – Libreville

(Own consolidation to Paris, then your French agent’s consolidation to
Libreville)
Freight rates:
YUL – CDG: +300 kg - CAN $3.26
CDG – LBV: +500 kg - EUR 6.83

EUR 1 = CAN $1.39
a) Calculate the freight charges for alternative 1.
b) Calculate the freight charges for alternative 2.
c) Based solely on freight charges, which alternative would you offer

your customer?
d) You have concluded that the Montreal - New York – Libreville

alternative is actually 1 day faster in scheduled transit time,
however both alternatives meet the customer’s requirements for
delivery dates. What would you consider a “safer/more secure”
routing?
2017 Page | 245

1. Your regular customer has approached you asking for an ocean freight rate for
10 cartons of hand tools, from Calgary to Dusseldorf, Germany. The carton
dimensions are 18 in x 12 in x 12 in, and each carton weighs 6 kg. You have
been able to determine the following:
a) Ocean freight:
Pre-carriage: CFS Calgary – CFS Montreal: US $85.00/m3
(minimum 2 m3)
Ocean freight: CFS Montreal - CFS Dusseldorf: US $165.00/m3
(minimum US $275.00)
b) Air freight:
Terminal Calgary – Terminal Dusseldorf: minimum:
CAN $120.00
- 45 kg – CAN $9.80
+ 45 kg – CAN $8.08
+ 100 kg – CAN $4.00
Transit time: 4 business days
What might you recommend to your customer?
2017 Page | 246

1. A re-seller of mining machinery, located in Sturgeon Falls, Ontario, calls a

CIFFA Forwarder, inquiring about shipping a used Frobenius 165XL Grader, to
San Antonio, Chile. The overall dimensions of the Grader are 26 ft x 8.5 ft x 7
ft, and it weighs 36,000 lb. As an astute forwarder, you ask the company to
send you a schematic drawing of the Grader such that you can visualize the
piece you have been asked to ship. Upon examining the drawing, you notice
that the front bucket, which is removable, is 8.5 ft wide, 4 ft high and 3 ft deep.
The remaining portion of the grader is only 6.5 ft wide and 7 ft in height.
You have been able to determine the following:
a) Trucking Grader from Sturgeon Falls to the Port of NY/NJ CAN

$6,000.00 all in.
b) Container drayage Sturgeon Falls from Toronto: CAN

$1,400.00.
c) Break bulk ocean freight NY/NJ – San Antonio: US $115.00/m3
d) Terminal charges NY/NJ to be US $6.00/2,000 lb.
e) Ocean freight CY Toronto – CY San Antonio US $3,500.00/40-ft

Standard or High Cube.
What will you recommend/discuss with your customer? Provide monetary

alternatives.
2017 Page | 247

1. Your customer has approached you informing that they have 5 skids of widgets
to move from their regular supplier in Tokyo Japan, to a manufacturing facility
in Berlin, Germany. Each skid is 1.211 m3 and weighs 195 kg. Your customer
is concerned about price as well as transit time. You are able to determine the
following:
(1) LCL Ocean Freight: CFS Tokyo – CFS Berlin (over Hamburg). Rate at
US $115.00/m3
Scheduled transit time is 28 - 30 days from sailing Tokyo.
(2) LCL Ocean Freight: CFS Tokyo – CFS Vancouver. Rate at US

$85.00/m3. Scheduled transit time is 11-12 days from sailing Tokyo.
(3) Air Freight: Terminal NRT – Terminal TXL (Berlin). Rate at +100 kg –
YEN 1,472.00/kg. Scheduled transit time is 2-4 business days.
(4) Air Freight: Terminal YVR – Terminal TXL. Rate at + 100 kg – CAN
$4.54/kg. Scheduled transit time is 3-5 business days.

YEN 1.00 = 0,0122 CAD
Determine the best option to offer your customer, with the given information.
Keep in mind their concern about price and transit time.
2017 Page | 248

1. Your customer, Entropy Inc., in Toronto, has a large number of wankel engine
parts for a geo-thermal project in Murmansk, Russia. The company is operating
under a strict time line, as these were parts that were not ready at the time of
the initial shipment and the project is in jeopardy of being delayed and a penalty
clause may apply. Entropy Inc. has asked for your help, and advice!
Entropy Inc. has provided you with the following shipment information:
320 cartons, the dimensions of each carton are 18 in x 12 in x 12 in and each

carton weighs 12 kg. Entropy Inc. is willing to unitize the cargo onto 10 pallets,
with a pallet dimension of 42 in x 48 in x 54 in, with each skid weighing 394 kg
(this includes the weight of the pallet).
Cargo is ready to ship April 2.

Cargo must arrive on site by May 22.
You have been able to determine the following:

EURO 1.00 = CAN $1.39
LCL Cargo
Local cartage Toronto: CAN $2.53/100 lb

Ocean Freight: CFS Toronto – CFS Helsinki: US $85.00/m3
Trucking CFS Helsinki – Door Murmansk: US $4,000.00
Sailing details:
Closing Toronto every Wednesday.
Scheduled sailings Halifax the following Monday.
Transit time to Helsinki approximately 19 days from sailing.
LCL cargo is transshipped in Gothenburg.
Allow 12 days for trucking to Murmansk (inclusive of 4 days to transfer cargo).
FCL Cargo
Local container drayage Toronto: CAN $325.00

Ocean Freight: CY Toronto – CY Kotka: US $1,800.00/20 ft,
US $2,175.00/40 ft
Container trucking Kotka – Murmansk: US $5,285.00
2017 Page | 249

Sailing details:
Closing Toronto every Tuesday.
Scheduled sailings Montreal the following Thursday.
9 days transit to Bremerhaven, must allow an additional 1 day to transfer the
cargo.
Weekly sailings from Bremerhaven every Friday.
Transit time to Kotka approximately 6 days.
Allow 8 days for container delivery to Murmansk (inclusive of 1 day to transfer
cargo).
Air Cargo
Local cartage Toronto: CAN $2.53/100 lb

Air Freight: YYZ – SVO: CAN $8.00/kg
SVO – MMK: EUR 6.00/kg
Flight availability:
YYZ – SVO: 747 freighter every Sunday, capacity is not a problem.
SVO – MMK: one flight daily, A340 service, cargo allocation 1 – LD7 pallet per
flight.
Allow 1 day for transfer in Moscow.

Allow 1 day for delivery to door Murmansk, no Saturday or Sunday delivery
available.
Using the above information, what advice will you, the professional freight
forwarder, offer Entropy Inc. Use the following month calendars to assist in
evaluating alternatives.
APRIL
SUN MON TUE WED THURS FRI SAT
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30
2017 Page | 250

MAY
SUN MON TUE WED THURS FRI SAT
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
2017 Page | 251

We recommend that you do this exercise after you have completed the Costing and
Quoting section of the program.
The following task is an excellent exercise to prepare for something you might like to call
a “worst case scenario”.
It is suggested to use the following guidelines:
1. Container Stowage Calculations
Whenever such a need or request arises it is the stowage calculation, which should be
number one on your agenda.
Remember the result of a container stowage calculation determines the number/size/type

of container(s) required for a given situation. The number/size/type of container(s) in turn
determines the element of freight costing regardless whether any rates are supplied as
part of the assignment or whether you have to obtain such rates from the appropriate
carrier in a real-life situation.
Your time table
Do take your time when making a container stowage calculation. Do not rush, but think
carefully and proceed methodically. Remember drawings may be helpful.
Once you have completed the stowage calculations for all consignments in this exercise,
it is suggested that you double-check your approach, calculations and results for inherent
possible mistakes.
Remember the stowage calculation is so to speak the foundation of the house you are
building. When the foundation is built correctly it will support the superstructure of
container size and freight costing. Your next step is to proceed with the actual costing.
2. Costing
a) Use of spread or working sheets
The section on costing/quoting provided you with a sample of a spreadsheet to

organize your costings. Try and develop your own spreadsheet for this exercise.
The point is that you must learn to prepare the appropriate kind of working sheet
for each task separately and as you judge it most useful.
2017 Page | 252

The secret of success in this kind of task is an orderly, systematic, legibly written
approach. The request for a clear and legibly written style is primarily for your own
benefit so your own messy figures columns and notes do not confuse you. Once
you have learned to master this approach, any task, no matter how complex or
dissimilar in its specific detail or circumstance, would represent little problem for
you.
b) Separate export spreadsheet
For this exercise you need to prepare a separate spreadsheet just for the export
portion of the task.
Use one page, start with the long side (11") across the “top”, create a column for
both routes (Hong Kong and Rotterdam) side by side - listing for both routes all
the required costing elements step by step. Write down for each step or line of
your listing the exact required details of container size or volume in cubic metres,
applicable rates, name of currency and rate of exchange used and then list the
appropriate freight or charge per step in one uniform currency. Decide now
whether to use Canadian or U.S. Dollars, then simply total the listed freights or
charges in the currency chosen for a grand total in dollars. It is strongly
recommended to write down the listing of items in a descending order of their
natural occurrence in shipping, i.e., from point of origin step by step to point of
destination.
Once you have completed this export spreadsheet, you again must double check
for omissions, rates, currencies and extensions.
It is for your own benefit to prepare such spreadsheets legibly and in a clear
transparent style. You should prepare your spreadsheets in such a way so that
someone else - skilled in freight forwarding - but unfamiliar with the particular
case/shipment can follow your figures and calculations easily. This would be
necessary, for instance, in case you would be sick and someone else in your office
has to take over your file and finish your work.
c) Separate import spreadsheet
For this exercise you need to prepare another separate spreadsheet just for the
import portion of the task. For the import shipments the required suitable layout of
the spreadsheet must be in a totally different format from the export shipment.
This import spreadsheet should have on one page, starting again with the long
side of the paper (11"), eight separate columns side by side for each of the four
required Canadian destinations, i.e., four columns for Rotterdam and four columns
for Hong Kong. Put these 8 columns to the right of the page leaving enough room
on the left side to list the proper details of costing. Again, list the various costs in
the order of occurrence as explained under 2b) for the export spreadsheet.
2017 Page | 253

3. Shipping Timetable
Prepare two separate timetable working sheets. One for export, one for import. Use the
calendar page provided and determine the various schedule details explained in the
assignment. Again, prepare this timetable step by step by listing on the right side of the
page the ports or points of transit. Then show in the middle of the page opposite the
named ports or places the actual days of transit or duration of work for each segment.
Then identify on the left side of the page again for each segment the actual day of the
week. Make sure you allow properly for weekends, especially for transshipment work.
Then you add up the number of days in the middle of the page and the total will be the
total number of estimated days of transit.
You must, of course, prepare one shipping schedule for each of the two routings.
Transfer these total dates of transit to your spreadsheets, especially for import. Now you
should have on one spreadsheet both the time and cost factors and you make the
appropriate correct selection of the fastest route in accordance with the shipper's
instructions.
4. Quotation
In regard to this exercise, make a careful assessment in your own mind of the conditions
requested by the shipper. Do not simply consider throwing out everything you do not like
or items you may feel uncomfortable with.
You must learn to assess:

 if the required services are available;
 if you can arrange for these services; and
 if the price of the services required as covered by your quotation includes
a reasonable return or remuneration for you as freight forwarder.
Remember, for most segments you must rely on your subcontractors chosen by you
and/or other agents for their respective performance and their liability towards your client
and/or yourself. Therefore, for you to assess the standard of quality of your subcontractor
or your agents based on available information or usual experience is part of this process
of preparing a quotation.
You must also keep in mind you are required to earn your living as freight forwarder for
your employer. You must be able to secure business under competitive conditions and
still earn a reasonable dollar for your employer.
When trying to decide if you can and should accept shipper’s required conditions, you
must consider in your mind if you can reasonably either supply the conditions in part by
yourself or if you can arrange to meet the conditions with the help of others you choose
or if you can figure out a way to control the aspects the shipper requires. You do not
2017 Page | 254

necessarily have to accept every single condition. It is obviously in your favour if you can
accept as many conditions as possible without undue risk. In this context it is important
for you to realize that you as freight forwarder can never control the sailing time of any
vessel. Therefore you should never promise any definite time/date of delivery at
destination. As forwarder you supply merely a schedule of sailings with estimated times
of arrival. Always add the little all-important word "about" when referring to a vessel arrival
date.
"Undue" is a big word. There is no business without risk and a business to be undertaken
must balance your expected gross profit with your risk or exposures along with your ability
to control conditions/circumstances.
Now make a calculation of your expected gross profit and consider your time you would
likely spend looking after this shipment.
Also try to assess the money value of any risk or condition you plan to accept. Once you
have these figures in front of you, then make a decision what kind of quotation you want
to make. Some of the choices in style of quotation available to you would be:
a) One lump sum amount including a fee.
b) Itemized costing plus a separate fee, i.e., items of costing marked up or not,
depending on your own decision.
There are no rules which style is best or right. Best is what you can successfully and
competitively sell to a client. Answers will differ for each personality and/or shipment.
Terms and Conditions
In any quotation you do or as an imprint on your letterhead, you must clearly refer to the
fact that you (your employer) only works on the basis of Standard Trading Conditions, a
copy of which is in your textbook. In addition, you should clearly spell out which cost
items are not included and which specific conditions of the shipper you do not accept.
Outline of Quotation
Before you actually set out to compose the actual letter of quotation you will find it helpful
to prepare for your own guidance and clarification notes on an outline, which is another
working paper containing the essential elements you must cover in headline form. Do it
separately, of course, for export and import. The main points to be covered would be as
follows (for both):
1. Explanation of available choices in routing.

2. Your recommendation of a route.
3. Shipping time schedule.
4. a) Actual dollar freight quote.
b) Separate insurance quote with your comments on exclusions of coverage, if
any.
2017 Page | 255

5. Special points: acceptance/declining of required condition or possibly a short

remark emphasizing that you would act in this business strictly as an agent. Any
other general clause, which restricts or limits your quotation in any way, should be
spelled out here under special conditions.
2017 Page | 256

Exercises 8.11 (Shipment Information)
The Cheap 'n' Cheerful Clothing Company in Toronto is a nationwide chain of inexpensive
but fashionable clothing stores. They have four major distribution centres: Vancouver,
Edmonton, Toronto and Montreal. The retail outlets’ cash registers automatically trigger
shipping orders at the distribution centres. Timely deliveries are crucial to this company,
which keeps inventories at a bare minimum.
In an effort to stay competitive, they have decided to set up a factory on the island of
Mahe in the Seychelles, where there are no taxes, plenty of cheap labour and the beaches
are the best in the world. Once the plant is set up, fabric will be shipped there for cutting
and sewing, and the finished product will be shipped to Canada.
The Seychelle Islands are in the Indian Ocean, north of Madagascar and east of Kenya.
There is a port at Victoria on Mahe Island and only two shipping lines serve this tiny island.
One is West Africa Lines, which serves Europe via the Suez Canal, and the other is West
Asia Lines, which serves the Far East. Both handle only 20-ft containers and break-bulk
cargo on a weekly basis. Seychelle Airlines is the only airline serving the island with
weekly flights to Bombay, India and Athens, Greece. Neither the air, nor ocean carriers
serve North America.
Access is possible only by re-loading and transshipping via Europe or Asia, through your
agents.
The Cheap 'n' Cheerful Clothing Co. (CCC for short), will be shipping an emergency
power generator, textile machinery and a start-up supply of textiles to set up their plant.
Their production manager has volunteered to move there for five years and will be
shipping his personal effects as well. You are invited to make a proposal on the export
movement, as well as the import traffic of finished garments. You should not work on the
basis of price alone, but must consider the customer's needs as well. The following
details the goods to be shipped to and from Mahe, as well as CCC's terms and conditions.
2017 Page | 257

The Cheap 'n' Cheerful Clothing Co.

Toronto, Ontario
Invitation to Quote
EXPORT
A) 1 crate emergency power generator

Dimensions: 21 ft long
7 ft wide
6 ft high
Gross weight: 10,000 kg
CIP value: CAN $50,000.00
B) 12 boxes cutting tables (knocked down)

Dimensions each: 18 ft long
7 ft wide
6 in high
Gross weight each: 100 kg
C) 684 cartons industrial sewing machines

Dimensions each: 15 in long
12 in wide
14 in high
Gross weight each: 20 kg
CIP value each: CAN $500.00
D) 1 crate personal effects to contain books, clothing, personal computer,

sound equipment, TV, VCR, compact discs, video cassettes, kitchen
utensils, table ware, sofa, bed, chairs.
Dimensions: 9 ft long
7 ft wide
6 ft high
Weight: 1,000 kg
E) 120 rolls fabric

Dimensions each roll: 45 in long
12 in wide/high
Weight each roll: 15 kg
CIP value each roll: CAN $250.00
The above cargo is available now at CCC's warehouse in Toronto.
2017 Page | 258

Cheap 'n' Cheerful Clothing Co.

Toronto, Ontario
Invitation to Quote
IMPORT
F) Product: men’s and ladies' shirts
Weekly quantity: 750 dozen
Packing: 5 dozen to a carton
Dimensions each carton: 24 in long

18 in wide
24 in high
Gross weight each carton: 20 kg
CIP value each carton: CAN $300.00
Distribution: one shipment every week to either Vancouver, Edmonton,

Toronto or Montreal, as needed.
TERMS AND CONDITIONS
1) Please quote one lump sum rate in Canadian Dollars for the export shipment
Toronto/Mahe. Describe your routing. Cargo must arrive latest July 1, 2017.
2) Please quote your import rate and transit time from Port Victoria, Mahe to terminal
Vancouver, Edmonton, Toronto and Montreal in Canadian Dollars. Describe your
routing. Please note that total transit time from origin to destination must be the
shortest possible.
3) Please quote marine insurance and describe coverage offered.
4) If an import shipment is delayed while in your possession, you must airfreight at

your own expense.
Sincerely,
Jane Brown
Traffic Manager, Cheap ‘n’ Cheerful Clothing Co.
2017 Page | 259

Since there is no direct service to or from Mahe, you send a message to your agents in
Hong Kong and Rotterdam asking for trans-shipping costs. Following are the best rates
they quote you:
A) From Hong Kong to Mahe:

break-bulk: US $80.00/m3
containers: US $1,200.00/20-ft container
From Mahe to Hong Kong:

containers: US $1,000.00/20-ft container
Frequency of service: every Monday, Hong Kong and Mahe

Transhipping charges including unloading and re-loading containers, terminal and

handling charges: US $20.00/m3
B) From Rotterdam to Mahe:

containers: US $800.00/20-ft container
From Mahe to Rotterdam:

containers: US $500.00/20-ft container
Frequency of service: every Friday, Rotterdam or Mahe

Transhipping charges including unloading and re-loading containers, terminal and

handling charges: US $20.00/m3
2017 Page | 260

Following are the best intermodal ocean freight costs to/from Canada with the fastest
shipping line:
A) Toronto to Hong Kong: US $2,000.00/20 ft container

US $3,000.00/40-ft STD or O.T. container
Frequency of sailings: every Monday
Toronto to Rotterdam: CAN $1,500.00/20 ft container

CAN $2,500.00/40-ft STD or O.T. container
Frequency of Sailings: every Wednesday
Above rates include container positioning at shipper's door.
B) Hong Kong to Vancouver: US $1,000.00/20-ft container

US $1,500.00/40-ft container
C) Hong Kong to Edmonton: US $1,500.00/20-ft container

(via Vancouver) US $2,800.00/40-ft container
D) Hong Kong to Toronto: US $2,000.00/20-ft container

or Montreal:(via Vancouver) US $3,000.00/40-ft container
Frequency of sailings from Hong Kong is every Wednesday

Transit time to Vancouver: 14 days
Edmonton: 16 days
Toronto: 21 days
Montreal: 22 days
E) Rotterdam to Montreal: CAN $1,200.00/20-ft container

CAN $2,000.00/40-ft container
F) Rotterdam to Toronto: CAN $1,500.00/20-ft container

(via Montreal) CAN $2,500.00/40-ft container
G) Rotterdam to Edmonton: CAN $2,000.00/20-ft container
H) Rotterdam to Vancouver: CAN $2,500.00/20-ft container

Frequency of sailings from Rotterdam is every Thursday
Transit time to:

Montreal: 7 days Toronto: 9 days
Edmonton: 14 days Vancouver: 17 days
2017 Page | 261

I) Marine Insurance Cost:
Institute Cargo Clauses A: CAN $0.25/$100.00 insured value.
Institute Cargo Clauses B: CAN $0.20/$100.00 insured value.
Institute Cargo Clauses C: CAN $0.15/$100.00 insured value.
IMPORTANT NOTES AND HINTS
1. Give one day for transhipping operations (unloading and reloading) in both Hong
Kong and Rotterdam. Saturday/Sunday are not working days.
2. Exchange rate: US $1.00 = CAN $1.40
3. 1 m3 = 35.3146 ft3
1,728 in3 = 1 ft3
4. Use following container inside dimensions:

Container L W H
20 ft = 232 in 90 in 90 in
40 ft = 474 in 90 in 90 in
2017 Page | 262

1. Make a container stowage calculation for items A-E and separately for item F
(import).
Result should determine the container size or type required and how many
containers for the export shipment, resp. import shipment.
Show for each container:
a) What you are intending to load, per container.

b) Number of containers for each item A-F.
2. Calculate the m3 or ft3 for each item A-F.
3. Compare the cost of moving the shipments via Rotterdam and via Hong Kong.
Then compare the total transit times. Do not forget the time required to
unload/re-load at the transshipment port and take into account the connection
dates. Which route or combination of routes is ideal?
4. Now you are ready to make your quotation to CCC. Pay attention to all the
terms and conditions previously outlined. Do not forget to mention any of your
own terms and conditions on your offer. How much profit margin have you
included?
5. Which term(s) and condition should you NOT agree to? Why?
6. Assuming that during transshipping of the import shipment, your agent

accidentally omits to load 1 carton into the container. At an air freight cost of
US $3.00 per kilo, what is your cost exposure? Should you absorb it? Or should
you bill CCC?
7. Assume that the shirt container is delayed at the transhipment port of Rotterdam
or Hong Kong due to shortage of vessel space.
(a) Whenever anything out of the ordinary happens, especially when you act
as an agent, what is really your first duty?
2017 Page | 263

Hint: you find a reference to the required answer in the CIFFA STCs,
Article 5. You need not know clauses in the STCs, but the fundamental
principle of this clause you must know and always act upon.
(b) Express or calculate your liability in actual dollar terms based on the
CIFFA STCs.
8. Assuming that the shirt container is delayed at the transshipment port because
you forget to send handling instructions to your agent, what is your liability to
CCC under CIFFA STCs? How much does it work out to?
9. CCC needs an emergency shipment of 100 dozens shirts by air freight to their
Toronto distribution centre within a week. Your options are to airfreight via
Athens or via Bombay by Seychelle Airlines. TACT rate is US $4.00/kg of
chargeable weight and the route is Mahe/Athens/London/Toronto or
Mahe/Bombay/Los Angeles/Toronto. Transit time is 3-4 days either way.
However, you have a consolidation every three days from Hong Kong direct to
Toronto. TACT rate Mahe/Bombay/Hong Kong is US $1.00/kg chargeable
weight. Your cost from Hong Kong to Toronto is US $2.00/kg of chargeable
weight and you can get the shipment in six days.
How would you route this shipment? What will you charge CCC? What is your
profit?
MAY 2017
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
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2017 Page | 264

JUNE 2017
1 2
3 4 5 6 7 8 9
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JULY 2017
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2017 Page | 265

Answers Alternative Transport Solutions
1. What ability sets the true international freight forwarder apart from carriers and
customs brokers?
A true international freight forwarder has the ability to think in
ALTERNATIVES. Sometimes freight forwarders are considered
“architects of transportation.”
2. What is the most important action a forwarder can take in choosing the correct
transportation alternative?
It is important that the international forwarder identifies the true needs of
the customer. This is achieved by asking the customer questions about
their freight, past, present and future requirements and business
demands.
3. How do you keep informed about occurrences in foreign countries, which may
require that you look for an alternative?
Through your foreign agent, the news media, Internet news agency or
CIFFA eBulletins.
4. What client needs must you identify, and take into account before deciding on
transportation alternatives?
a) The safety and security of the cargo.
b) Reasonable transportation costs.
c) Scheduled delivery of the cargo at destination.
5. Name the basic elements you must take into account when working out a
possible alternative?
 Mode of transport;
 Cost;
 Time sensitivity;
 Government restrictions;
 Packaging;
 The cargo itself;
 Urgency of the shipment;
 Value of goods;
 Perishability of the goods;
 Hazardous or non-hazardous cargo.
2017 Page | 266

6. Prior to offering an alternative to your client, and after assessing the information
that your client has provided, what other important element must you take into
account?
You must always take into consideration what the client is willing to pay.
7. What occurrences may force you to look for an alternative?

 Labour disputes (strikes, lockouts, work slowdowns);
 Port congestion;
 Overbooked carriers;
 Hostile situations (war, revolution, political instability);
 Natural disasters;
 Climate.
8. Your 40-ft container shipment from Toronto is booked with an ocean carrier that
has a rail interchange agreement with Canadian National Railway. The planned
routing is to rail the container to the port of Montreal, then by ocean to Antwerp.
One day prior to the planned loading of the container, at the seller’s warehouse,
C.N.R. workers declare a strike, and walk out, thereby halting all C.N.R. rail
traffic, coast to coast.
What alternative could you offer your customer?
Due to the close proximity of Toronto to Montreal, your best alternative
would be to truck the container from Toronto to Montreal. This is
generally done at an additional charge. You would first check with the
ocean carrier to determine that they are willing to do this. Should they
refuse to truck the container to Montreal, you may be required to use your
own drayage company to perform the trucking. Either way there will be
additional charges that you should discuss with your shipper and make
them aware of the labour situation and how you would propose to
overcome this unexpected event and additional charges.
This is an example where, if the professional freight forwarder was aware

of domestic events that may affect their performance, they may have
opted for a carrier that has an interchange agreement with Canada’s other
railway, Canadian Pacific Railway. These types of potential labour
situations are quite often printed in local newspapers, as well as
broadcast via CIFFA newsletters.
9. The port of Vancouver is closed because of a strike. Name two suitable ports
which are able to accommodate container vessels and should be considered as
an alternative.
Prince Rupert, Tacoma/Seattle or San Francisco/Oakland.
2017 Page | 267

10. You have regular ocean shipments to Frankfurt, Germany, which you usually
route through Bremerhaven, and then inland to Frankfurt. Suddenly, the
shipping lines have suspended service to Bremerhaven due to severe
congestion. What other ports are available as alternatives.
Antwerp, Rotterdam, Hamburg.
11. List advantages air freight has over ocean freight, other than speed.
 Can move goods with less costly packaging;
 Perishable goods move quickly;
 High-value goods can have security, if arranged;
 Sensitive cargo can be moved with extra care;
 Lower insurance premium;
 Less chance of damage;
 A low inventory is possible, in some cases, depending on the
location, it may be cheaper than other modes of transportation.
12. A customer has called and has indicated that they have a shipment to Madrid,
Spain. Madrid is an inland destination. What are two ports that you can use as
a gateway to Madrid?
Spain has two coasts. The Atlantic to the north, the Mediterranean to
the south. For example, ports that you might use might be Bilbao to the
north, Valencia to the south.
13. What possible disadvantages are there when traffic intended for a Canadian
destination is routed through an American port?
There is always the risk of a U.S. Customs inspection as well as delays
in transferring the cargo to the correct on-carrier.
14. When looking for an alternative for your client who thinks ocean freight
movements are too slow and air freight is too fast, what alternatives could you
offer your client? Why?
a) Sea – road.
b) Sea – air.
c) Air – road.
Any combination should offer a quicker transit time than exclusively sea,
however the costs will be more than sea alone and conversely, any
combination will be less costly than airfreight alone.
2017 Page | 268


1. Is it more common to move containers from Eastern to Western Canada and
vice versa by rail than by truck? Give at least two reasons why?
It is more common to move containers from Eastern Canada to the West
Coast, and from the West Coast to Eastern Canada by rail because it is
less expensive, and the transit time is generally faster.
2. You have to move 120 cartons by air from point A to point B. Gross weight is
600 kg, volume 4.5 m3. Which of the two following alternatives would you
choose?
a) You can move it under the general cargo rate at CAN $4.00/kg chargeable
weight.
b) You can load the cartons, at your own expense, into a ULD type LD3, for
which the cargo is CAN $2,000.00 lump sum up to 600 kg (pivot weight)
and CAN $2.50/kg for each kg chargeable weight over 600 kg.
Chargeable weight = 750 kg.
Option a) 750 kg x CAN $4.00 = CAN $3,000.00
Option b) CAN $2,000.00 + (150 kg x CAN $2.50/kg) = CAN $2,375.00
We would choose option (b) as it is the least expensive.
3. What are the prime guideline when assessing any alternative for a client?
 How the cargo is packaged;
 Is the cargo time sensitive or not; and
 What the client is willing to pay.
4. When looking only at alternative routes and modes of transportation, what

must be your foremost concerns.
The transit time of the cargo.
5. a) MLB Taipei-Toronto = US $3,100.00 = CAN $4,030.00
Ocean to Vancouver, unloading in Vancouver, then trucked

to Toronto.
O/F US $1,750.00 CAN $2,275.00
2017 Page | 269

Transfer CAN $338.00

Trucking CAN $2,010.58
Total CAN $4,623.58
b) Based on cost alone, one would choose the MLB routing.

One might choose another route if the MLB is through a U.S.
port. This route could be an all water route to Montreal and
then railed or trucked to Toronto.
2017 Page | 270

1. What should you consider when deciding transportation alternatives? Name

3.
 Safety of the cargo;
 Reasonable transportation costs; and
 Scheduled delivery.
2. You are moving 80 cartons from Montreal to London by air. Total weight is
500 kg and total volume 5.5 m3.
Which alternative would you choose to move this freight?
a) Move at the rate of CAN $3.50/kg chargeable weight.
b) ULD with pivot weight of 600 kg for CAN $2,200.00 and CAN $2.00/kg
for chargeable weight over 600 kg.
Volume weight = 5.5 m3 x 1,000,000 = 916.7 kg = 917 kg

6,000
Volume weight is greater than the actual weight, thus charges are based
on volume weight
Alternative a)
917 kg x CAN $3.50 = CAN $3,209.50
Alternative b)
ULD charges for first 600 kg = flat rate .................... CAN $2,200.00
Charges on next 317 kg = 317 kg x CAN $2.00 ........ CAN $634.00
Total charges ............................................................. CAN $2,834.00
All other factors being equal, you would move this cargo using the ULD
alternative.
2017 Page | 271

1. As Switzerland is landlocked, any of the major Northern European ports

would provide a suitable alternative to service this country.
Antwerp, Hamburg, Bremerhaven, Rotterdam, Le Havre, and possibly

even some Mediterranean ports, such as Fos, Marseille, and Genoa.
2. First, determine what the customer is presently actually shipping. Each

shipment is 3 identical skids. Let’s examine one skid. They have 60
cartons loaded onto a plastic pallet.
How are these 60 cartons loaded onto the plastic pallet? There are 5
layers of 12 cartons. Each carton has a height of 12 in so the height of the
cargo is 60 in (which should fit into a lower deck pallet) but we must
include the height of the skid, which is 6 in, thus the unitized skid
dimensions become 48 in x 42 in x 66 in.
The present manner, in which the customer is unitizing their freight, can
only be handled with upper deck pallets.
The astute forwarder might recommend that they eliminate the top layer
of each unitized skid, create an extra skid, such that their cargo can load
into a lower deck pallet, which has daily capacity.
2017 Page | 272

1. Actual weight = 120 x 9 kg = 1,080 kg.
Volume weight = 46 x 30 x 30 x 120 cartons = 828 kg.

6000
Charges based on actual weight
Alternative a) 1,080 kg x CAN $2.95 = CAN $3,186.00
Alternative b) CAN $2,000.00 + (480 kg x CAN $2.50/kg)

= CAN $3,200.00
We would offer alternative a) as it is the least expensive.
2017 Page | 273

Exercises 8.6 (Answers)
1. a) Calculate the freight charges for alternative 1.
Trucking charges Montreal – JFK = 1,825 lb x CAN $14.50 = CAN$264.63

100 lb
Air freight JFK – LBV = 828 kg x US $10.08 = US $8,346.24

(CAN $8,513.17)
Total charges alternative 1 = CAN $264.63 + CAN $8,513.17

= CAN $8,777.80
b) Calculate the freight charges for alternative 2.
Air freight YUL – CDG = 828 kg x CAN $3.26 = CAN $2,699.28
Air freight CDG – LBV = 828 kg x EUR 6.83 = EUR 5,655.24

(CAN $7,860.78)
Total charges alternative 2 = CAN $2,699.28 + CAN $7,860.78

= CAN $10,560.06
c) Based solely on freight charges, which alternative would you offer

your customer?
Based solely on freight charges Option #1 is clearly the least expensive.
d) You have concluded that the Montreal - New York – Libreville

alternative is actually 1 day faster in scheduled transit time,
however both alternatives meet the customer’s requirements for
delivery dates. What would you consider a “safer”/more “secure”
routing?
Even though alternative 1 is the least expensive, it offers the forwarder

little or no control at the cargo transfer point in New York. Alternative 2
offers the forwarder control at the point of origin and the transfer point in
Paris. By utilizing their Paris agent, the forwarder can monitor and can
easier communicate with their partner in regards to the smooth and
continuous movement of their cargo.
2017 Page | 274

1. First determine shipment total volumes and weights:

Total volume = 0.425 m3 Total weight = 60 kg
Ocean Freight
Pre-carriage = 0.425 m3 x US $85.00 = US $36.13
BUT THE MINIMUM CHARGE IS FOR 2 m3.
Pre-carriage = US $85.00 x 2 = US $170.00
Ocean freight = 0.425 m3 x US $165.00 = US $70.13
BUT THE MINIMUM CHARGE IS US $275.00
Total ocean freight charges = US $170.00 + US $275.00

= US $445.00 (CAN $453.90)
Air Freight
Actual weight = 60 kg, volume weight = 0.425 m3 x 1,000,000 = 71 kg

6,000
Air freight = 71 kg x CAN $8.08 = CAN $573.68
At this point, you could offer to your client that for about an extra CAN
$120.00 they can get their freight to the destination in 4 business days as
opposed to 21 days. This will no doubt be attractive to your client,
however, by declaring a higher chargeable weight of 100 kg to the airline
you are able to offer your client an air freight rate that will be less than the
ocean freight rate.
Air freight = 100 kg x CAN $4.00 = CAN $400.00
This is an example of a minimum ocean shipment where it may be less

expensive to move the cargo by air freight. The client originally asked for
ocean freight, yet the forwarder was able to offer an alternative with a
faster transit time at a lower rate.
2017 Page | 275

1. Determine the charges of moving the Grader as 1 break bulk piece.
The total volume of the Grader = 26 ft x 8.5 ft x 7 ft = 1,547 ft3

= 43.806 m3
Trucking charges Sturgeon Falls – Port NY/NJ = CAN $6,000.00
Terminal charges NY/NJ = US $6.00 x 36,000 lb

2,000 lb
= US $108.00 (CAN $110.16)
Ocean freight NY/NJ – San Antonio = US $115.00 x 43.806 m3

= US $5,037.69 (CAN $5,138.44)
Total ocean charges break bulk = CAN $6,000.00 + 110.16 + 5,138.44

= CAN $11,248.60
As you are an astute forwarder, you have reviewed the drawings provided,
and realize that by removing the front bucket, the Frobenius 165XL Grader
can be loaded into a 40-ft standard container. You should now determine
an alternative to offer your customer, and the associated cost.
Container placement Sturgeon Falls = CAN $1,400.00
Ocean freight CY Toronto – CY San Antonio = US $3,500.00

(CAN $3,570.00)
Total 40 ft container freight Door Sturgeon Falls – CY San Antonio

= CAN $4,970.00/40 ft
Now we have monetary ALTERNATIVES to offer our client.
We can offer our client that by removing the front bucket, the Grader can
load into a 1 x 40-ft container, and they could save approximately CAN
$6,278.00 in shipping charges.
This is an example where one must examine the additional costs of

dismantling and re-assembling a machine against the freight savings.
These costs may well be greater than the freight savings offered. The
astute forwarder will offer these alternatives to their client, and let the
client, who ultimately pays the freight, decide.
2017 Page | 276

1. First determine totals for each mode of transport:
Ocean freight:
Total volume = 1.211 m3 x 5 skids = 6.055 m3
Total weight = 195 kg x 5 skids = 975 kg
Air freight:
Total weight = 975 kg
Volume weight = 6.055 x 1,000,000 = 1,009.5 kg
6,000
All air freight charges will be based on the volume weight.
Determine the freight charges for each alternative determined.
a) Ocean freight: CFS Tokyo – CFS Berlin

Ocean Freight = US $115.00 x 6.055 m3 = US $696.33 (CAN
$710.26)
b) Ocean freight: CFS Tokyo – CFS Vancouver

Ocean Freight = US $85.00 x 6.055 m3 = US $514.68
(CAN $524.97)
c) Air freight: NRT - TXL

Air freight = YEN 1,472.00 x 1,009.5 kg = YEN 1,485,984.00
(CAN $18,129.00)
d) Air freight: YVR - TXL

Air freight = CAN $4,54 x 1,009.5 kg = CAN $4,583.13
There are now 3 ALTERNATIVES we can offer the client.
1. All ocean: CAN $710.26, transit time approx. 29 days.
2. All air: CAN $18,129.00, transit time approx. 3 days.
3. Sea-air combination:
(ocean freight Tokyo – Vancouver) + (air freight YVR – TXL)
= CAN $524.97 + CAN $4,583.13 = CAN $5,108.10,
Transit time approx. 16 days.
2017 Page | 277

As the client was concerned about price and transit time we are able to
present to the client a SEA-AIR combination, where the transit time is half
of a sea-only transit, at a price that is about 3 times less than an air-only
transit.
It is always best to present all these alternatives to the client and let them
decide as to how they wish to proceed. Recall, we must always be aware
of what the client is willing to pay.
2017 Page | 278

1. First determine the anticipated time lines for our 3 ALTERNATIVES based
on the cargo being ready for pick-up on April 2, using the calendar
provided.
LCL Cargo
Delivered to CFS Toronto by Wednesday, April 7. (Closing date).

Cargo sails Port of Halifax Monday, April 12.
Cargo arrives CFS Helsinki Friday, April 30.
Cargo transfers CFS Helsinki, and arrives Door Murmansk May 12.
FCL Cargo
Delivered to CY Toronto by Tuesday, April 6 (closing date).

Cargo sails Port of Montreal Thursday, April 8.
Cargo arrives Port of Bremerhaven Friday, April 16.
Cargo sails Port of Bremerhaven Friday, April 23.
Cargo arrives CY Kotka Wednesday, April 28.
Cargo transfer CY Kotka, and arrives door Murmansk Thursday, May 6.
Air Cargo
Cargo tendered to airline Friday, April 2.

Cargo departs YYZ Sunday, April 4.
Cargo arrives SVO Monday, April 5.
Cargo transfers Tuesday April 6.
SVO – MMK: Only 1 – LD7 pallet allocated for cargo or mail, per daily flight.
Due to our pallet dimensions of 42 in x 48 in x 54 in., only 4 of our pallets
per day will fly to Murmansk.
SVO - MMK - 4 pallets April 7.
SVO - MMK - 4 pallets April 8.
SVO - MMK – 2 pallets April 9.
Final delivery of cargo to door Murmansk Monday, April 12.
All 3 of our ALTERNATIVES meet the customers delivery requirement of

May 22, and both ocean freight options do allow for up to a week delay en-
route.
2017 Page | 279

Next we determine the charges associated with each ALTERNATIVE.
LCL Cargo
Total shipment volume = 630 ft3 (17.840 m3)

Total shipment weight = 3,940 kg (8,687 lb)
Cartage charges will be based on the actual weight of the shipment.

Cartage charges = CAN $219.78
Ocean freight = 17.840 m3 x US $85.00/m3 = US $1,516.40
(CAN $1,546.73)
Trucking to Murmansk = US $4,000.00 (CAN $4,080.00)

Total charges LCL cargo = CAN $5,846.51
FCL Cargo
Container drayage = CAN $325.00

Ocean freight = US $1,800.00/20 ft container (CAN $1,836.00)
Drayage to Murmansk = US $5,285.00 (CAN $5,390.70)
Total charges FCL cargo = CAN $7,551.70
Air Cargo
Actual cargo weight = 3,940 kg

Volume weight = 2,974.43 kg
Air cargo charges will be rated on the actual cargo weight of 3,940 kg.
Local cartage charges = CAN $219.78

Air freight charges YYZ – SVO = CAN $31,520.00
Air freight charges SVO – MMK = EUR 23,640.00 (CAN $32,859.60)
Total air freight charges = CAN $64,599.38
Summarizing all charges we have the following:
LCL Cargo = CAN $5,846.51

FCL Cargo = CAN $7,551.70
AIR Cargo = CAN $64,599.38
Based on reasonable transportation costs, moving the cargo as LCL

cargo would appear to be the better alternative, however, we must also
consider the safety and security of the cargo.
2017 Page | 280

Moving the cargo as LCL freight, the cargo is handled many times en-
route. The cargo is: loaded onto a truck in Toronto, off loaded at the CFS
in Toronto, loaded into a container to Gothenburg, off-loaded from the
container in Gothenburg, loaded into a container to Helsinki, off-loaded
from the container in Helsinki, loaded onto a truck for Murmansk, off-
loaded at door Murmansk. Each pallet is handled at least 8 times during
the voyage.
A shipment of this size, 17.840 m3, and of this importance, potential

monetary penalties, there exists the possibility of damage to the cargo,
possibly a split shipment and maybe even pilferage. It would be prudent
of the forwarder to make the customer aware of these possibilities, and
recommend that in the best interest of safety and security of the cargo,
the customer ships this cargo loaded into 1 x 20-ft container. The cargo
is only handled twice, once at the shipper’s door to load, and then again
at the consignee’s door. Furthermore, the container will also be sealed
and any evidence of tampering with the cargo will become quickly evident.
Ultimately it will be the customer’s decision as to which alternative they

choose and at what price. Your role as a forwarder would be to make your
customer aware of the advantages and disadvantages of each alternative.
2017 Page | 281

Exercises 8.11 – Calculations (Answer)
1. Stowage Plan
You should decide that Generator A) must be loaded in 40-ft O/T
container by itself for balancing of weight and bracing, the stowage plan
for the rest is as follows:
A) Generator First Container 1 x 40 ft
B) Tables Second Container 1 x 20 ft
No. of Boxes Dimensions used
W 84 in x 1 = 84 in
H 6 in x 12 = 72 in space left on top for 18 in
L 216 in x 1 = 216 in space left in length 16 in
= 12 tables W = 1,200 kg
Add fabric rolls both on top of tables in space left and in length in space
follows:
On top of tables rolls dimensions used
W 12 in x 7 = 84 in
H 12 in x 1 = 12 in now in total with table 84 in
L 45 in x 4 = 180 in
28 rolls W = 420 kg
Add in length at end of tables (rolls upright)
rolls dimensions used

W 12 in x 7 = 84 in
H 45 in x 2 = 90 in
L 12 in x 1 = 12 in now in total with table 19 ft (226 in)
14 rolls W = 210 kg
Total rolls in this second container = 42 rolls.
We will load the remaining balance of 78 rolls into the container

with the sewing machines.
2017 Page | 282

2nd container - 20 ft length taken 19 ft
Plan for third container = 1 x 40 ft
C) 684 cartons of sewing machines
cartons dimensions used

W 12 in x 7 = 84 in }
H 14 in x 6 = 84 in } 672 cartons
L 15 in x 16 = 240 in }
Now add into remaining length another 12 cartons using further

15 in
in L (W 12 in x 6 + H 14 in x 6 + L 15 in x 1)
i.e. total 684 cartons – weight = 13,680 kg

so far length taken 255 in = 21 ft 3 in
D) 1 crate personal effects

into length 9 ft 0 in W = 1,000 kg
So far length taken = 30 ft 3 in
E) Balance of 78 rolls into remaining length
Rolls dimensions used

W 12 in x 7 = 84 in
H 12 in x 6 = 72 in this calculation shows you have space for up to
84 rolls but you use only 78 rolls left.
L 45 in x 2 =90 in
Length 7 ft 6 in – 1,170 kg
40 ft total length taken 37 ft 9 in W = 15,850 kg
2017 Page | 283

RE-STOWAGE IN ROTTERDAM/HONG KONG
A) Generator
Due to its length of 21 ft when only 20-ft containers are available,

generator must travel break-bulk.
B) Tables
Due to length of 18 ft = 1 x 20 ft
boxes
i.e. W 7 ft x 1 = 84 in
L 18 ft x 1 = 216 in
H 6 in x 12 = 72 in = 12 tables with L = 18 ft
Add rolls on top and at end.

42 rolls = 1 ft
First 1 x 20 ft
Total length taken = 19 ft
C) Sewing machines
cartons
W 12 in x 7 = 84 in
H 14 in x 6 = 84 in
L 15 in x 15 = 225 in = 18 ft 9 in
-------------------------------------------------- = 630 cartons only, balance of 54
cartons (see (D) below).
Second 1 x 20 ft total length taken 18 ft 9 in
D) Personal effects length = 72 in floor length used = 9 ft 0 in
E) Add on top 54 cartons of (C) by turning cartons
cartons
W 14 in x 6 = 84 in
H 15 in x 1 = 15 in on top of existing (P/E) 72 in = total 87 in H
L 12 in x 9 = 108 in = 9 ft = covers 54 cartons ex (C)
2017 Page | 284

Add for (E) remaining rolls of fabric into the remaining length of 10 ft (78
rolls)
rolls
W 12 in x 7 = 84 in could hold 98 rolls but you only need 78 rolls
H 12 in x 7 = 84 in
L 45 in x 2 = 90 in
Third 1 x 20 ft length taken 19 ft

SUMMARY CONTAINER TYPE/QUANTITIES
FROM ROTTERDAM/HONG KONG – MAHE 3 x 20 ft
LISTING OF ft3 & TOTAL WEIGHT PER ITEM EXPORT Value CAN $
A) Generator 882 ft3 10,000 kg 50,000.00
B) Tables
12 boxes 63 ft3 each 756 ft3 1,200 kg 2,000.00
C) Sewing machines
684 each 1.458 ft3 998 ft3 13,680 kg 342,000.00
D) Personal effects 378 ft3 1,000 kg 25,000.00
E) Fabric
120 rolls each 3.75 ft3 450 ft3 1,800 kg 30,000.00
3464 ft3 27,680 kg 449,000.00
98.09 m3 27,680 kg
EXPORT SHIPPING SCHEDULE
Required Arrival Mahe July 1, 2017
VIA ROTTERDAM
Closing Toronto 14/5 Monday

slg Toronto 15/5 Tuesday
ETA Rotterdam + 14 days 29/5 Tuesday
Transit in Rotterdam + 1 day 30/5 Wednesday
ETS Rotterdam following Thursday 31/5 Thursday
ETA Make + 21 days 21/6 Thursday
Transit time 38 days
2017 Page | 285

Cargo available Mahe 24/6 Sunday
A) If shipped 1 week later from Toronto, arrival to Mahe would be 28/6/17

availability at plant July 1st.
B) If delayed in Rotterdam for 2nd, sailing on 7/6/17, ETA Mahe would be 28/6/17
and availability at plant. Choosing slg Toronto 15/5 offers therefore a little
safety margin
VIA HONG KONG
Closing Toronto 10/5 Thursday

slg Toronto 13/5 Sunday
ETA Hong Kong + 21 days 3/6 Sunday
Transit in Hong Kong 1 day 4/6 Monday
ETS Mondays 10/6 Sunday
ETA Make + 14 days 24/6 Sunday
Transit time 45 days
Cargo available in Mahe 25/6 Monday
Date of availability/readiness not specified. Assume delivery per 11/5 possible to

benefit from lower cost.
2017 Page | 286

COSTING COMPARISON
(for freight charges only)
2 x 40 ft plus 1 x 20 ft (Generator separately)
Via Rotterdam Via Hong Kong
Tor-Rot Tor-Hong Kong

2 x 40 ft 2 x 40 ft
@ CAN $2,500.00 CAN $5,000.00 @ US $3,000.00
1 x 20 ft = US $6,000.00 @US $1.40
@ CAN $1,500.00 CAN $1,500.00 US $8,400.00
1 x 20 ft
Transhipment Rotterdam US $2,000.00 @ US $1.40
98.09 m3 @ US $20.00 US $2,800.00
US $1,961.80 @ US $1.40
US $2,746.52 Transhipment Hong Kong
98.09 m3 @ US $20.00
Reshipping (non-unitized) US $1,961.80 @ US $1.40
US $2,746.52
a) 3 x 20 ft @ US $800.00
US $2,400.00 @ US $1.40 Reshipping (non-unitized)
US $3,360.00
a) 3 x 20 ft @ US $1,200.00
b) B/B 24.976 m3 @ US $40.00 US $3,600.00 @ US $1.40
US $999.00 @ US $1.40 US $5,040.00
US $1,398.60
b) B/B 24.976 m3 @ US $80.00
Totals CAN $14,005.12 US $1,998.00 @ US $1.40
US $2,797.20
Totals CAN $21,783.72
Insurance premium is in addition for both routes. Amount of insurance premium

does not affect comparison because the amount of premium is the same for both
routes simply because CCC supplied you with one price CIF Mahe.
2017 Page | 287

INSURANCE FOR ALL RISK (clause A)
Value CIP Mahe CAN $449,000.00

+ 10% CAN $44,900.00
Insured value CAN $493,900.00 x 0.25% (premium) = CAN $1,234.75

Recommendation
Route
Rotterdam due to lower overall cost, with at least 2 sailings with reshipping
opportunities.
Handling
Generator must be shipped in a separate open top container with weight evenly
distributed and generator braced.
It is important that any of your recommendations are consistent with the details of
your proposal to CCC.
IMPORT
Stowage 20 ft 750 doz: 5 = 150 cartons

each 24 in L x 18 in W x 24 in H
900 ft3 - 25.485 m3 – 3,000 kg
Container inside 232 in L x 90 in W x 90 in H (at door)
The secret here is not to fit cartons by using the same width of cartons into the
width of the container but a mix of the sizes of 18 in and 24 in to best utilize the
given width of container of 90 in. The following samples will demonstrate this.
First using a uniform pattern:
W = 18 in x 4 = 72 in
H = 24 in x 3 = 72 in = 108 cartons only - NO GOOD
L = 24 in x 9 = 216 in
You could add a fourth layer by reversing cartons meaning you now use 24 in as
width, 18 in as height, length remains 24 in.
2017 Page | 288


W = 24 in x 3 = 72 in } 27 additional
H = 18 in x 1 = 18 in plus previous height of 72 in } cartons in
now new total height 90 in } fourth layer
L = 24 in x 9 = 216 in
Total: 108 + 27 cartons = 135 cartons or 22.936 m3 - STILL NO GOOD
Because now you still have a balance of 15 cartons “left 'over”, it does not make
sense to consider shipping such a small quantity separately as break-bulk.
You should also realize that 15 cartons only have a volume of 90 ft (2.548 m3) and
looking at the used space so far of 22.936 m3 it is fair to assume that there must be
another solution to stow the complete quantity of 150 cartons.
Now try using a mixed pattern of cartons, i.e. use some cartons with a width of 1 in
and then add to that width of 18 in other cartons using 24 in as width.
It would look like this:
cartons cartons dimensions used

W 2 x 18 in + W 2 x 24 in = 84 in (W)
H 3 x 24 in + H 3 x 24 in = 72 in (H)
L 9 x 24 in + L 12 x 18 in = 216 in + (L)
cartons used: 2 x 3 x 9 = 54 + 2 x 3 x 18 = 108 = 162 cartons possible
You only need 150 cartons. So when mixing different width it is possible to
improve the total quantity of cartons to be stowed.
QUOTATION/PRESENTATION TO CCC
BASIC IDEA OR OUTLINE
By making a rough outline with all main points you wish to cover, you would find
it much easier to develop or draft from this outline a full letter text by simply
following your points in the right order.
Export
1) Explain choice of routing (timing-price) pointing to Rotterdam.
2017 Page | 289

2) Why to ship the generator in separate open top container.
3) Decline liability for any set delivery time at a destination or for any delay
beyond your control as a freight forwarder.
4) Offer net cost in lump sum form as requested. Add a separate handling fee
of US $150.00 per container and all risk insurance premium.
Import
1) Explain choice of routing (timing-price) pointing to Montreal/Toronto via

Rotterdam and to Vancouver/Edmonton via Hong Kong.
2) Decline liability for any fixed delivery time at a destination or for any delay
beyond your control as a freight forwarder.
3) Offer net cost in lump sum form as requested. Add a separate handling fee
of US $150.00 per container and all risk insurance premium.
Add standard trading clause, present tariffs, subject to change etc. without notice
(a reference to the STCs if printed on your letterhead, then no repetition in the text
of the quotation is necessary).
AFTER PROFIT EXPORT
Handling fee 3 x US $150.00 = US $450.00

Commission 1 1/4%
on ocean freight
Tor-Rdm CAN $6,500.00 = CAN $81.25
Total CAN $531.25
PROFIT IMPORT
Handling fee per

container + week = CAN $150.00
plus possible profit share from your Rotterdam agent
PRESENTATION TO:
THE CHEAP 'N CHEERFUL CLOTHING CO. TORONTO
2017 Page | 290

Re: Project Mahe Seychelles Islands
We thank you for your enquiry and submit the following explanation and
quotation to you. This presentation is in two parts:
1) For your export to Mahe

2) For your import from Mahe
General Vessel Services
There are no direct or any transhipment services on a through bill of lading either
to or from Mahe. Mahe is only served by a steamship line either from Rotterdam
or from Hong Kong offering only 20-ft containers as well as facilities for acceptance
of break-bulk shipments.
This means all cargoes must be transloaded from container arriving in Rotterdam
from Canada into 20-ft containers for Mahe. Your generator must be shipped break-
bulk due to its length of 21 ft.
The same situation of transloading applies to containers arriving in
Rotterdam/Hong Kong from Mahe for outgoing containers from Canada.
There are regular weekly sailings available from/to Toronto to/from Rotterdam or
Hong Kong and again there are weekly sailings from Rotterdam to Mahe or from
Mahe to Hong Kong.
Vancouver and Edmonton are best served with transshipment in Hong Kong
whereas Montreal/Toronto is better serviced with transshipment via Rotterdam.
Transit-Sailing-Times
Export Toronto via Rotterdam-Mahe About 38 days
Import Mahe-Rotterdam-Toronto About 36 days

Mahe-Rotterdam-Montreal About 34 days
Mahe-Hong Kong-Vancouver About 37 days

Mahe-Hong Kong-Edmonton About 39 days
The transit times are estimated only and are calculated on the basis of current
published sailing schedule dates of the steamship lines concerned.
The calculation assumes that transit re-handling in Rotterdam/Hong Kong can be

done in one/two working days, so that cargo always reaches first available
2017 Page | 291

scheduled sailing to Mahe or in case of import from Rotterdam/Hong Kong to

Canada.
At this point we must point out that we have, of course, no control over the sailing
time of vessels, delays, weather etc.. Therefore we cannot accept any liability to
deliver at destination at a specific date or within a given period of time.
We are only responsible for our own negligence and that of our agent (name) in
Rotterdam/Hong Kong, but we are not responsible for the action of any other sub-
contractor we may choose on your behalf.
Generator
There is one special area of handling to which we must draw your attention.
For your protection and safety of cargo during voyage, we judge it mandatory that
the generator is to be loaded by itself in a separate 40-ft O/T container to permit
even weight distribution over the total floor length of the container and allow
appropriate bracing inside the container to prevent the generator from moving.
Our freight calculation has therefore considered this aspect.
Freight Charges
Export
For the five items of cargo you specified we have pleasure in quoting you for one
shipment as requested in lump sum form from door Toronto to CPT Mahe with
transloading in Rotterdam.
CAN $14,005.00
We have calculated that with a separate 40-ft open top container for the generator,
we require in total 2 x 40-ft plus 1 x 20-ft containers to Rotterdam and 3 x 20-ft from
Rotterdam to Mahe, whereby the generator would be shipped from Rotterdam as
break-bulk.
An all risk insurance coverage is available at a rate of 0.25% of insured value.

Insured value is usually CIP value plus 10%. On that basis, your insured value
would be as follows:
CIP Mahe CAN $494,000.00

+ 10% CAN $49,400.00
-----------------------
Insured value CAN $543,400.00
2017 Page | 292

Premium @ 0.25% CAN $1,358.50
In addition, we propose an overall export handling and coordination fee of CAN

$150.00 per container.
Import
Your weekly shipments of 750 doz. shirts or 150 cartons can be loaded in 1 x 20
ft.
We have pleasure in quoting as requested in lump sum form all charges
From door Mahe to CPT Toronto CAN $2,614.00

CPT Montreal CAN $2,914.00
with transloading in Rotterdam.
CPT Vancouver CAN $3,514.00

CPT Edmonton CAN $4,214.00
with transloading in Hong Kong.
There is a lower rate of CAN $3,414.00 available for Edmonton via Rotterdam upon
request, but transit time would be 3 days longer than offered now. In addition we
propose an import handling and coordination fee of CAN $150.00 per container.
All risk insurance coverage is available at a rate of 0.25% of insured value. Insured
value is usually CIP value plus 10%. On that basis, your import insured value per
shipment of 20 ft would be
CIP value CAN $45,000.00

Plus 10% CAN $4,500.00
----------------------
Insured value CAN $49,500.00
Premium @ 0.25% CAN $123.75
Canadian duty & taxes should be declared in addition for insurance purposes,
having a special premium of only 0.12%.
Above prices are based on today's rates and current conditions of transport with
carriers and organizations of our choice, and are subject to change with or without
notice.
2017 Page | 293

We are very interested in handling this traffic for you, and we hope you find our
offer attractive and competitive.
Always with pleasure at your service, we remain,
Yours very truly,

Your CIFFA FORWARDER
2017 Page | 294

COST CALCULATION IMPORT FIGURES IN CANADIAN DOLLARS
EXCHANGE RATE 1.25 VIA ROTTERDAM VIA HONG KONG
From/in Rotterdam Hong Kong VAN EDM MON TOR VAN EDM MON TOR
1) Ocean freight US $500.00 US $1,000.00 700 700 700 700 1400 1400 1400 1400
from Mahe
2) Transhipment for 25.485 m3 @ US $20 714 714 714 714 714 714 714 714
per m3 in. US $509.70 US $509.70
3) Ocean freight from Rotterdam Hong Kong to

a) Vancouver CAN $2,500.00 US $1,000.00 2500 - - - 1400 - - -
b) Edmonton CAN $2,000.00 US $1,500.00 - 2000 - - - 2100 - -
c) Toronto CAN $1,500.00 US $2,000.00 - - 1500 - - - - 2800
d) Montreal CAN $1,200.00 US $2,000.00 - - - 1200 - - 2800 -
TOTALS 3914 3414 2614 2914 3514 4214 4914 4914
2017 Page | 295

Import Sailing Schedules TRANSIT (# of days)

Rotterdam
ETS Mahe Friday 1/7 Monday 44 41 34 36 37 39 45 44
ETA Rotterdam + 21 days 2/7 Tuesday
Transit Rotterdam 1 day 3/6 Monday
ETS Rotterdam Thursday 6/6 Thursday
ETA Montreal + 7 days 13/6 = 34 days Thurs INSURED VALUE
ETA Toronto + 9 days 15/6 = 36 days Sat $49,500 @ 0.25% = $123.75
ETA Edmonton + 14 days 20/6 = 41 days Thurs Declare duty and taxes separately and in addition.
ETA Vancouver + 17 days 23/6 = 44 days Sun
Hong Kong
ETS Mahe Monday 13/5 Monday
ETA Hong Kong + 21 days 3/6 Monday
Transit Hong Kong 4/6 Tuesday
ETS Hong Kong Wednesday 5/6 Wednesday
ETA Vancouver +14 days 19/6 = 37 days Wed
ETA Edmonton +16 days 21/6 = 39 days Fri
ETA Toronto + 21 days 26/6 = 44 days Wed
ETA Montreal + 22 days 27/6 = 45 days Thurs
2017 Page | 296


1. Details of stowage calculation for item A-E are spelled out in preceding
pages of the solution.
Details per Container
First 40 ft
A) Generator Vol.: 882 ft floor length 21 ft
Total 882 ft 21 ft
Second 40 ft
B) Sewing machines Vol.: 998 ft floor length 21 ft 3 in

C) Personal effects Vol.: 378 ft floor length 9 ft
D) 78 rolls fabric Vol.: 292.5 ft floor length 7 ft 6 in
Total 1,668.5 ft 37 ft 9 in
Third 1 x 20 ft
E) Tables Vol. 756 ft floor length 18 ft

F) 42 rolls of fabric Vol. 157.5 ft floor length 1 ft
Total 913.5 ft 19 ft
Stowage Plan Import 20 ft
AA) Shirts Vol.: 900 ft floor length 18 ft
2017 Page | 297

3. Rotterdam/Hong Kong freight comparison refers to both exports and

import.
Refer to separate working sheets.
Export: Rotterdam cheaper. Transit via Rotterdam 38 days

versus Hong Kong's 45 days.
Import: A mix. Logical for geography involved
Montreal/Toronto cheaper/faster via Rotterdam
Vancouver/Edmonton cheaper/faster via Hong
Kong.
4. Quotation: Refer to previous pages.
5. Forwarders should not commit themselves for a final delivery date at

destination, neither should they agree to be responsible for any delay
while goods are in transit. Any such transit delay is totally out of control
of forwarder. This must be clearly spelled out.
6. Omitting to load one carton is clearly negligent handling of your agent, a

matter under your control as a forwarder. Your agent should be
responsible for cost of airfreight, i.e. 29 vol kg @ US $3.00 per kg =
US $87.00.
Definitely do not invoice CCC.
At worst, if your agent is unwilling or uncooperative you may have to

either split the cost or absorb it.
7. a) Your very first duty is to inform your client of this delay, especially
when you have declared yourself as an agent. You have an ongoing duty
to keep your client advised at all times.
Your motto to guide you should be the text based on clause 5 of the
Standard Trading Conditions.
“Respecting any wishes of your client, keeping your client informed on an

ongoing basis of all details of any transaction as it progresses . . . is your
best protection”.
Therefore if you offered your services as an agent and if you specifically

highlighted the fact that you are not liable for a delay, the vessel delay is
beyond your control and of no consequence to you, provided you
2017 Page | 298

informed the client. Without passing on the information you can be found
liable even as an agent.
If a forwarder does accept to deliver at a specific deadline at destination,

forwarders liability under STC, clause 35.D.ii is a maximum of twice the
freight.
b) If the forwarder offered for Vancouver for 1 x 20 ft freight of CAN

$3,514.00, forwarder’s liability could be as much as CAN $7,028.00.
One more reason to clearly decline to accept such liability in writing

before you accept an order for shipping. In fact, it would be smart to
refuse to handle such business if that problem is not resolved in favour of
forwarder. You cannot have such an enormous risk (weekly!) hanging
over your head for a simple vessel delay.
8. The principle answer is that you are always responsible for the
consequences of your own negligence. However, your financial exposure
is limited by the terms of the STC. The STC contains two possibilities.
Let's figure out both possibilities for 1 x 20 ft shirts to Vancouver.
a) General liability including negligence:
2 SDR per kg. 250 cartons @ 20 kg

= 3,000 kg @ 2 SDR = 6,000 SDR
@ CAN $2.13 (per May 5, 1995) = CAN $12,780.00
b) For delay : twice your freight charge

(clause 35.D.ii) = CAN $3,514.00 x 2 = CAN $7,028.00
Your negligence caused a delay so you are potentially liable for

CAN $7,028.00.
Kommentar
Remember, you cannot cover yourself against your own mistakes by

simply raising fees. This would be silly most of the time. The solution lies
with a conscientious and diligent work procedure in your office, preferably
routinely controlled by someone else in your office.
You can limit your liability in your offer to CCC, but in regard to delay, it
can only be any aspect beyond your control.
This means to repeat you are on the hook for your negligence and that of
your agent overseas.
2017 Page | 299

9. 100 dozens shirts: 5 = 20 cartons

each 24 in x 18 in x 24 in = 120 ft 3,398 m3, 400 kg or 567 vol kg
TACT Mahe/Athens/London Toronto @ US $4.00

or Bombay/Los Angeles/Toronto US $2,268.00
a) 4 days
VIA HK Mahe/Hong Kong/TACT @ US $1.00 US $567.00

H.Kong-Toronto consolidation @ US $2.00
US $1,134.00
US $1,701.00
b) 6 days
Offer route via Hong Kong consolidation. Better control.

Mark-up rate by US $0.50 kg US $283.50
c) Offer either US $3.50 kg/6,000 cm3 or US $1,984.50
Profit : Mark-up US $283.50

5% on $1,134.00 US $56.70
US $340.20
Share with Hong Kong agent 50/50.
Commission of 5% for Mahe/Hong Kong applicable but probably not

collectible/accessible for you or your Hong Kong agent.
You could use the route via the consolidation service you have from
Hong Kong and charge still full TACT rate US $4.00/kg. That's all right
for the exam only, in reality you always should reduce your rate if a
consolidation is involved compared to full TACT. How much is
discretionary.
2017 Page | 300

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Exercises:

Essentials of Freight Forwarding

Exercises 1.1 (Question) ............................................................................................................ 7

International Payments, Part 2

Exercises 2.1 (Question) ...........................................................................................................25

APPENDIX ‘A’ ...........................................................................................................................62

Export Packaging and Warehousing

Exercises 3.1 (Question) ...........................................................................................................73

Commercial Documentation and Regulatory Compliance

Exercises 4.1 (Question) ...........................................................................................................97

Exercises 5.1 (Question) .........................................................................................................139

Cargo Security and Dangerous Goods

Exercises 6.1 (Cargo Security) (Question) ..............................................................................177

Costing and Quoting

Exercises 7.1 (Question) .........................................................................................................199

Exercises 8.1 (Question) .........................................................................................................239

Exercises 1.1 (Question)

4. What are the exporter’s disadvantages when choosing a documentary collection

5. When using documentary collection as the method of payment on an ocean

6. Define a bill of exchange.

7. What is a sight bill of exchange?

8. What is a term bill of exchange?

9. On a bill of exchange, who is the drawee and who is the drawer?

10. Briefly define the following terms:

Remitting bank: ________________________________________________

Collecting bank: ________________________________________________

Direct collection: _______________________________________________

What is meant by “acceptance”?

What is meant by “documents on acceptance”?

Under documentary collections a ____________ trust has been established

between the _______________ and the _______________.

Also, the _________________ must contract an adequate ___________

_________________ in order to secure the abroad accounts receivables.

An air waybill _________ be consigned ______________ because

The ________________ usually pays the banks’ fees for documentary

Name the two basic types of documentary collections.

Exercises 1.2 (Question)

1. Complete a direct bank collection form letter.

Shipper: United Seed Company Ltd.

Buyer: Empire Grain Importers Ltd.

Consignment: 1 x 20-ft container of canola seed, 15,300 kg.

Value EXW Winnipeg: CAN $150,000.00

Canadian bank: Bank of Nova Scotia

U.K. bank: Barclays Bank, London

Terms of payment: 90 days sight

Always Quote Reference Number

THE BANK OF NOVA SCOTIA DIRECT D.C. 1152 /18572

Ontario International Banking Centre COLLECTION Date _______________________

Covering shipment of:

Vessel or Carrier Bill of Lading No.

ORIGINAL HH COMMERCIAL CUSTOMS CONSULAR

OBSERVE INSTRUCTIONS MARKED “X” BELOW

INTEREST  COLLECT INTEREST AT ______________ % PER ANNUM FROM ______________________TO ______________________

IN CASE OF NEED   WHO WILL ENDEAVOUR IN HAVING DRAFT

PREPARED BY (NAME OF FORWARDER)

SPACE BELOW FOR ACCEPTANCE STAMP FORWARDING BANK’S

_________________________ AFTER DATE, FOR VALUE RECEIVED.

PAY TO THE ORDER OF _____________________________________________ THE SUM OF

_______________________________________________ DOLLARS $ ________________ RECEIVING BANK’S

Exercises 1.3 (Question)

1. Complete a direct bank collection form letter.

Shipper: Canadian Manufacturing Inc.

Buyers: Osterreichische Fabrikationsbetrieb GmbH

Consignment: 1 crate of barbeque parts, 675 kg - 2.5 m3

between the _ and the _.

Also, the _______ must contract an adequate _

An air waybill _ be consigned ______ because

INTEREST  COLLECT INTEREST AT % PER ANNUM FROM TO __________

_______________________________ DOLLARS $ RECEIVING BANK’S

INTEREST  COLLECT INTEREST AT % PER ANNUM FROM TO __________

_______________________________ DOLLARS $ RECEIVING BANK’S

INTEREST  COLLECT INTEREST AT % PER ANNUM FROM TO __________

_ ______ AFTER DATE, FOR VALUE RECEIVED.

INTEREST  COLLECT INTEREST AT % PER ANNUM FROM TO __________

_AT SIGHT______ AFTER DATE, FOR VALUE RECEIVED.

Thirty One Thousand CAD DOLLARS $31,000.00 CAD_____ RECEIVING BANK’S