Page 209 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Global merchandise trade has been growing at CAGR 10.3% (value terms) during 2001-2005,
which was the highest average growth rate of world merchandise trade in the last three to four
decades. The high merchandise trade has pushed container traffic worldwide. In 2005, it is
estimated that world merchandise trade has witnessed an excellent growth rate of 13% in volume
terms and container traffic has registered an estimated growth rate of 13.89%. Containerisation
accounts for over 50% of world merchandise trade and is expected to go up further. During 2001-
2005, world container traffic has increased at CAGR 9.2%.

9.10 Role of Intermediaries in Shipping Industry

Freight Forwarders: Freight forwarders typically act as a shipper’s agent during the shipping
process. Freight forwarders select the mode and carrier for their clients’ shipments, provide
and process documentation, and make freight, terminal, and handling payments on behalf
of their clients. In operational terms, forwarders primarily focus on consolidating or
combining many small shipments into a single large shipment, which can then be shipped
at a lower cost. Typically, a freight forwarder will purchase unit(s) from a carrier and sell
space within the unit(s) to several shippers. The cost charged for this space is significantly
less than the cost of an entire unit and thus allows small shipments to be processed
efficiently.
A forwarder can engage a number of intermediaries on both ends of the cargo movement
to enable door-to-door service. Door-to-door movement of cargo can reduce transportation
costs and give control of the shipment to the exporter.

NVOCCs: Non-vessel Operating Common Carriers (NVOCCs) buy space from ocean
carriers for consolidated shipments from a variety of clients. NVOCCs specialize in less
than-container load (LCL) shipments and perform many of the same functions as freight
forwarders. Unlike forwarders, however, NVOCCs are common carriers that use
containers rather than vehicles or vessels. NVOCCs are frequently the customers of
freight forwarders and the clients of ocean carriers. A typical situation might involve a
NVOCC combining a partial load from Durban bound for Antwerp from Forwarder A
with a partial load bound for Antwerp from Forwarder B, and subsequently hiring an
ocean carrier to move the loaded container from Durban to Antwerp.

Note As transport costs for loaded and empty containers are often the same, NVOCCs try
to find backloads for empty containers returning to port from inland locations, which
allows NVOCCs to obtain revenue on the return of empty containers to port while enabling
the flow of goods.

Customs Brokers: Customs brokers escort goods through the customs process and have
experience with local customs regulations and trade practices. Brokers ensure compliance
with laws and verify that customs documentation has been completed.

Export Packers: Export packing firms supply packaging materials and services for overseas
shipments. Export packers specialize in packing for maximum shipment cost efficiency
and typically are familiar with any agricultural restrictions and quarantines that pertain
to packaging material.
Typical clients of packers are producers that are capable of marketing products locally
but that lack the expertise to correctly protect their goods for international movement.
Packers are also employed by exporters that require specific packaging of their goods
for transport.

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