Countryman & McDaniel -  The Logistics - Customs Broker & Hull Attorneys

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Follow Each Step In The International Process.

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The International Logistics Chain

Follow The Series of Steps Below

From Manufacturer To Product Delivery

The Industry Tutorial - Generally Pertains To Both Air & Ocean



- click on your area of interest to follow each step in the industry process

- or follow the page below to study each step in order

The Manufacturer

The Buying Agents

The Local Freight Forwarders

The Consolidator

The Origin Customs

The Banking Institutions

What Is A Letter of Credit?

Letter Of Credit Flow Chart

Guide To Export Documentary Credits

The Origin Ports

The Non-Vessel Operator Common Carrier & Its Agents (NVOCC)

Arrival Notice Agents -- Special Note - No Liability For Cargo Loss

The Steamship Operator

The Destination Customs & other Governmental Regulatory Agencies

The Customhouse Brokers

The Rail Lines/Trucking companies including entities offering Intermodal operations/services, and this group would include all Third Party entities

The Destination warehouse/distribution entities either controlled and/or owned by the Importer or independent of the Importer

SEE ALSO: Parties To The Shipping Contract


The International Logistics Chain

The Manufacturer

• Must manufacture the goods to the specifications of the Importer and do so in a timely manner and to the specifications outlined in the Letter of Credit and Sales/Purchase Orders.

• Must ensure compliance with governmental export requirements and must obtain an Export license or supply the inputs for this license to be issued. They must also assist the Importer vis-a-vis compliance to their government's Customs' requirements.

• Responsible for obtaining quota allocations for the goods he is producing, if in fact there is a quota in the country of destination. This could be an area for reform in the APEC economies since the manufacturer must "buy" the quota allocation from the "government or export control agency." This means a "new" manufacturer must buy all or some of another manufacturer's quota which is sold to the "new" manufacturer at a profit by the manufacturer holding the original allocation (there are exceptions to this). The "new" manufacturer must secure this allocation in order to manufacture and ship quota items during a calendar year.

• May work through or under the control of a Buying Agent who may assume some or all of the technical responsibilities, i.e., banking, export licensing, et al.

• May make bookings directly with steamship carriers and handle in-country shipping coordination including local trucking/rail to the piers/container yards or may be responsible for working directly with a local Freight Forwarder for documentation or even consolidation, etc.

• Possible Trade Barriers:

• The lack of quota or share of the quota which has obvious implications for the Importer.

• What they obtain under the quota may be too small, and this would have obvious implications and/or complications for the Importer.

• Late production or partial shipment may be an issue.

• Non conformance to export licensing requirements and/or Letter of Credit requirements is a common experience when dealing with manufacturers overseas.

• A lack of ocean carrier space and/or equipment based on seasonal aspects of the market would, of course, complicate their ability to move freight forward.

• The lack of technological support to communicate directly with the steamship carriers, freight forwarders, consolidators, brokers, governmental agencies, and the Importer.

• The lack of revenue to support the technological advancements needed and to maintained trained staff.

Back To Index

 Buying Agents:

 • Not always involved in the process and may be out of the picture if the importer deals directly with the manufacturer and/or through their own foreign buying office.

• Interfaces directly with the importer of record and/or their foreign buying office or representative.

• Negotiates the terms of sale, and all particulars including Letter of Credit terms and conditions, etc.

• If involved, may be responsible for assisting in obtaining quota if applicable, may assistance in the preparation of the Letter of Credit and guarantee Letter of Credit compliance, may be responsible for preparation of the Export license and other documents as required, may handle all communications with the manufacturer, shipping companies, local freight forwarders, truck/rail contacts, etc. and quality control, or may second these functions to either the manufacturer or an intermediary such as a Consolidator, NVOCC (Non Vessel Operator Common Carrier), or Consolidator/NVOCC.

• Collects on the Letter of Credit and distributes cash to the manufacturer and others in the country of origin and connected with the transaction.


• Possible Trade Barriers:

• Really the same as those indicated under the Manufacturer, albeit the Buying Agents may themselves be a barrier to a seamless transaction since they are really just brokers to some degree although some are involved in areas such as quality control.

• Usually under FOB terms of sale this link is handled by the manufacturer, paid for by them, and then this cost is passed on in the price of the goods. There are, of course, countless exceptions, i.e., if Intermodal is developed in the origin country the steamship carrier will in all probability have tried to involve themselves and may even operate the Intermodal piece.

• Charges based on weight/cube or on a per unit basis.

• Possible Trade Barriers:

• Untimely delivery of containers to the manufacturer and/or untimely delivery of the containers to the steamship piers.

• Lack of ocean carrier equipment.

• Lack of space on vessels.

• Incomplete documents.

• Congestion on pier delivery day.

• No ability to interface directly with freight forwarders, consolidators, manufacturers, ocean carriers, etc.

• Lack of technology to handle communications and documentation.

• Lack of revenue stream to support technological advances needed to maintain trained staff sufficient to the task.

 Back To Index

Local Freight Forwarders

• Responsible for the preparation of the document packet to be forwarded to the local authorities, Customs in the foreign country, the banks, and the Importer. May also be responsible for coordinating local truck/rail and may be asked to book space on vessels and have containers dispatched to the manufacturer.

• Receives a fee for services.

• Possible Trade Barriers:

• Untimely and incomplete preparation and forwarding of documents, poor coordination of local truck/rail operators.

• Lack of space on vessels and lack of equipment for same.

• Congestion at the piers on vessel load-out day.

• Container Freight Station problems with coordination of containers, documentation, etc.

• Lack of the technology to interface directly with ocean carrier terminals, truckers, brokers, etc.

 Back To Index


• If involved, responsible for receiving freight and issuing the Forwarder's Cargo Receipt (a negotiable document), ensuring the goods received are in good order, that all marks and numbers are complete, that the shipment is staged and ready for loading, that the document package is complete, a booking is made with the steamship carrier and truck/rail arranged to the pier/shipside, and that the importer, manufacturer, buying agent, et al., are informed of all particulars of the receipt of the goods and eventual shipment from the consolidator's facilities.

• In addition they must supply and distribute all information/documents necessary for compliance with the Letter of Credit and/or sales agreement/P.O.

• Possible Trade Barriers:

• Untimely coordination with steamship carrier and/or truck/rail company.

• Incomplete or inaccurate preparation of the document package or incomplete distribution of this document packet.

• Poor communications with the manufacturer, local truck line/rail company, shipping company, banking institution, or importer.

• Lack of ability to get space bookings in the heavy shipping season: which means they could not get containers dispatched to the manufacturer and/or to their own Container Freight Station. This is largely based on their relationship or lack of same with the shipping company.

• Lack of the technology to receive, hold, and move cargo and transmit documents to the ocean carriers and Importers, and to communicate with banks, manufacturers, truck and rail lines, etc.

 Back To Index

Origin Customs:

• Responsible for issuance of quota, Export License control, document control, coordination with manufacturer, shipping companies, et al.

Possible Trade Barriers:

• Untimely completion of documents by brokers and/or manufacturers, and/or Importers of record.

• Changes in procedures and staffing restrictions, etc.

• Lack of technology to transmit documents and information vis-a-vis those documents, lack of experience in handling sophisticated documents packets, and a lack of trained staff to handle all of the above.

• Lack of funding to improve technology and to maintain a trained staff.

 Back To Index

Banking Institutions:

• Responsible for assisting the manufacturer and importer with all financial documents, with assuring there is compliance to all Letter of Credit terms and conditions, that payment is timely after compliance with LC requirements, etc. is assured, that all documents are forwarded on a timely basis to the importer and/or a designated agent of the Importer so delays at destination are avoided and subsequently payment to the manufacturer/buying agent is also delayed.

Possible Trade Barriers:

• Untimely handling and issuance of documents by origin customs, manufacturer, buying agent, et al.

• Lack of attention to details of the Letter of Credit.

• Poor communications with the manufacturer and/or Importers.

• Slow payment to the manufacturer (this can be most crucial since most manufacturers need cash flow to be very timely, since many are cottage industry level and simply survive order by order).

• Late or partial shipments by the manufacturer may be a difficulty.

• Lack of trained staff sufficient to handle the task.

 Back To Index

Origin Ports (actually applies to Destination Ports as well):

• Responsible for shore-side operations, maintenance of facilities, development of technology that will enable it to accommodate vessels and operations suitable to its trade, management and administration of all of the above, pricing for its services and/or real estate and/or development, development of connecting linkage for highway/road access and intermodal linkage may even be a responsibility of the Ports dependent on local circumstances.

When evaluating Port responsibilities it must be understood that not all Ports are operating Ports and some may have developed or be subject to a strategy that simply calls for land development and nothing more.

Possible Trade Barriers:

• Lack of understanding of their clients' strategies and future needs including operational, infrastructural, technological, administrative, and service needs.

• Lack of market knowledge regarding trends and overall trade movements for their economy and regional economies, et al.

• They may also suffer from a lack of professional staff and management, or funding sufficient to keep up with needed improvements on technological basis.

• Port congestion caused by poor access to Intermodal connectors, rail, etc., or even and direct connections to their National Transportation System.

• Lack of funding and/or revenue stream to support the technological advancements and to maintain trained staff sufficient to the task.

 Back To Index

Non-Vessel Operator Common Carrier (NVOCC):

• May also function as a consolidator (see points listed under Consolidator: receives goods and prepares documents).

• Basically ships cargo under their own rate structure and buys wholesale or low retail and resells space at low retail or better.

• Usually a non-asset based company.

• If involved, prepares the Forwarder's Cargo Receipt which substitutes for the Original Bill of Lading in the initial stages of the transaction, creates their own B/L and issues it for banking purposes and Letter of Credit compliance, may arrange local truck/rail and makes the booking and arranges steamship carrier equipment to be dispatched to the manufacturer and/or to their own Container Freight Station.

• Communicates directly with the Importer, possibly Customs, origin and destination transportation entities, and/or the Importer.

* Liabilities for cargo loss & damage limited by either contract or international convention.

* Co-loader/Consolidator/Neutral NVOCC (Wholesale)

A Co-loader/Consolidator is a neutral Ocean Intermediary or NVOCC / ICA who does not service the retail market, but offers wholesale rates to smaller NVOCC / ICAs and freight forwarders who may not have sufficient cargo volume to command competitive rates. Like other NVOCC's / ICAs, airlines or custodial carriers, Co-loader/Consolidators issue air waybill / ocean bill of ladings and are held to the same standards, in many cases, as airlines or custodial carriers.

In other words, a co-loader is an NVOCC (ocean) or IAC (air) which loads its freight with another consolidator ( another NVOCC or IAC) who holds higher volume to a particular destination or who is in a position to ship faster. The co-loader relationship envisions one NVOCC/IAC dealing with another &endash; both have carrier responsibility.

* ARRIVAL NOTICE AGENT>> Many NVOCC's (see above) do not have a company office at destination to conduct the process of releasing their cargo to the consignee. Accordingly, the NVOCC nominates an "Arrival Notice Agent" to issue a paper "Arrival Notice" to the consignee, informing that it's cargo has arrived. The Arrival Notice Agent collects freight charges & and the original NVOCC bill of lading (when requied) from the consignee. Upon accomplishment of these tasks, the "Arrival Notice" can be issued.

The "Arrival Notice" informs of cargo location & availablity. It is usually given to the importers' appointed Customs Broker in order to complete the Customs Entry process. To this extent, the Arrival Notice Agent can be thought of as a mailbox for the NVOCC.

"SPECIAL LIABILITY NOTE: This Arrival Notice Agent usually is paid about US$40 for the simple task of issuing the Arrival Notice. The Arrival Notice Agent is not a carrier, did not issue a shipping contract, has no responsibility for the cargo and has no contractual connection with either the shipper or the consignee. The Arrival Notice Agent is named on the Master Bill of Lading (stemship bill of lading issued to the NVOCC) as a matter of convenience -- so the custodial carrier (steam ship) will know who to notify of vessel arrival on behalf of the NVOCC. Remember, the ultimate consignee has no direct connection with the steam ship line. The NVOCC is the customer of the steamship line.

Still, inexperienced, non-maritime lawyers have often joined this Arrival Notice Agent in lawsuis for cargo damage -- by mistake. This is because non-maritime lawyers misunderstand why the name of the Arrival Notice Agent appears in the shipping documents. The Arrival Notice Agent is NOT A PROPER PARTY TO A CARGO LOSS OR DAMAGE LAWSUIT. To pursue a U.S. lawsuit against an Arrival Notice Agent is malicious & has often resulted in the imposition of sanctions by U.S. courts. The uniform rule within the major freight forwarding associations for lawsuits against an Arrival Notice Agent is to never pay a cash settlement for the resolution against an Arrival Notice Agent. Instead motions for dismissal & sanctions are sought. The US$40 realized by the the Arrival Notice Agent deserves nothing less.

Possible Trade Barriers:

• See comments under Consolidator & Steamship Carrier points.

 Back To Index

Steamship Line:

• May be conference (rate agreement) or rate non-conference (non-rate agreement) members and may derive additional income from consolidation, rail/truck operations including Intermodal operations, warehouse/distribution, etc.

• Obviously an asset based company.

• Responsible for vessel availability, schedule integrity, space and equipment on the vessels, all landside operations unless seconded to agents (stevedores, husbanding agents, terminal operating companies) and, of course, for all the attendant costs associated with vessel operations.

• Customer service, documentation, and all other administrative and managerial detail involved with the vessel and shore-side operations.

• Dependent on their own strategy they may be directly involved in intermodal operations (origin and destination), distribution, etc.

• They may negotiate directly with rail lines, truck lines, etc. for equipment, space, pricing, service, etc., and along with these may address issues such as congestion, port access, Intermodal connectors, etc.

Possible Trade Barriers:

• Port congestion.

• Port access: Intermodal connectors included.

• Staffing: manpower needs may not be adequately addressed.

• Lack of technology, i.e., EDI, etc.

• Lack of schedule integrity.

• Changes in vessel rotation, vessel size, container size and availability.

• Lack of coordination with truck and rail entities.

• Lack of coordination with Governmental agencies, i.e., Customs, Agriculture, Port Authorities, etc.

• Flag changes.

• Inconsistent pricing (this usually would be a problem between carriers in a trade rather than a problem internally with a carrier).

• Lack of a revenue stream to maintain the technology as demanded by the market, and to maintain a staff sufficient to the task.

 Back To Index

Destination Customs & Other Governmental Regulatory Agencies:

 • Responsible for enforcement, tariff compliance, collection of duties, assistance to the Importer on what can and cannot be imported and at what duty rates, under what quota requirements, etc. They have a very positive side and if approached properly can be a great asset, and can be quite helpful in the through movement of goods.

• They are a possible revenue source for and government involved.

Possible Trade Barriers:

• Untimely handling of documents with brokers, forwarders, importers/exporters, steamship operators, et al.

• Lack of adequate staff to handle the volume and/or the sophisticated level of imports (there are manpower freezes in a number of countries).

• Lack of proper and adequate assistance to the Importer and manufacturer before exportation/importation takes place.

• Lack of coordination with origin Customs and other governmental agencies.

• Lack of technology for a direct interface between brokers, forwarders, steamship companies, ports and other governmental agencies.

• Inter-Agency rivalry.

• Lack of funding sufficient to maintain the technology demanded by the marketplace and by the volume they may be handling, and to maintain a trained staff.

 Back To Index

Customhouse Brokers:

 • Responsible for documentation and direct interface with Customs, Agriculture, and other governmental agencies. May possibly deal with rail/truck/distribution facilities, if the Importer so desires. The Customs broker has no carrier responsibility and is not responible for cargo custody or condition. The customs broker does not take posession of, or even see the cargo. The customs brokers liability is limited.

• Charges a fee for various services.

Possible Trade Barriers:

• Untimely handling of documents by importer/exporter, freight forwarders, consolidators, ocean carriers, etc.

• Lack of well-trained staff and also lack of well-trained Customs' staff to interface directly with them.

• Lack of technology to directly interface with clients, governmental agencies, etc., etc.

• Lack of sufficient revenue stream to support the maintenance of a trained staff, and the technological development demanded by the market they may be in.

*Destination Ports: (placed here to keep the sequence somewhat intact)

• See Comments under Origin Ports above and please note that Barriers are basically the same.

 Back To Index

Rail Lines/Trucking Companies - including entities offering Intermodal operations/services, and this group would include all Third Party entities:

• Responsible for interface with Customs Brokers, Steamship companies, warehouse/distribution facilities/companies, and in the case of line haul operations may interface with local trucking companies for local distribution.

• Responsible for scheduling and schedule integrity, equipment availability, equipment control, documentation, line and terminal facilities control and maintenance, technological support for their operations consistent with accepted industry standards for service and operations, i.e., EDI, direct interface with ocean carriers, brokers, etc.

Possible Trade Barriers:

• Lack of equipment to cover normal and peak periods.

• Poor fleet management, i.e., equipment control.

• Lack of sufficient direct communications with Importers, shipping companies, Brokers, et al.

• Lack of staffing sufficient to handle both normal and peak periods, etc.

• Lack of technology to complete direct interface for documentation, et al.

• Insufficient revenue stream to support the technological advancements needed, and for the maintenance of staff sufficient to the task.

 Back To Index

Destination Warehouse/Distribution Entities - either controlled and/or owned by the Importer or independent of the Importer:

• Possible need to interface with Customs and other government agencies.

• Responsible for coordination with rail/truck, direct interface with Importer and/or store level personnel, proper storage, adequate inventory and record keeping for all goods received and dispatched/distributed, equipment control and return on a timely basis of rail/truck/ocean carrier equipment, etc.

Possible Trade Barriers:

• Untimely distribution to importer and/or store level.

• Lack of coordination with rail/truck/ocean carrier.

• Improper record keeping.

• Lack of inventory control, inadequate facilities, staffing, and lack of technological development sufficient to handle the clients' needs, including updated computer systems would be an area of continuing concern.

• Capital to keep up with the increasing demands on the system.

SEE ALSO: Parties To The Shipping Contract

 Back To Index


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