ICC Digital Library Forum

I agree that documents should be examined with reasonable care. This should also apply to the issuing bank when receiving an L/C application. It should be possible to foresee possible difficulties with interpretation at this stage, but some banks give no more than a cursory glance at the detail of the application. If an issuing bank might have difficulty with interpretation of "units", it is reasonable to expect that the advising bank may have a similar difficulty.

Likewise the advising bank should pick up potential problems of interpretation and seek clarification from the issuing bank or at least advise the beneficiary of such, but it tends not to happen.

The beneficiary also has an opportunity to check the L/C before presentation, but too often relies on the banks getting the wording right before receipt by him. Additionally, he may not appreciate that terms which may be common in his/her trade, are not generally known to bankers.

Laurence
[edited 2/18/02 1:59:39 PM]
[edited 2/18/02 2:00:42 PM]

I am waiting for the flight to return to Toronto from Middle East.

"OPEN TOP" CONTAINERS TO SHIP OVERSIZED OR ODD SHAPED CARGOES

To economise on sea freight, the folklift trucks should be shipped in containers. If the height of a fully assembled forklift truck exists the height of the container (8 feet), then it has to be shipped in SKD mode in order to be able to be fitted into the container.

However, we also have "open top" container to allow a fully assembled forklift truck to extend its forklift out of the open top container but open tops are not so popular and another container cannot be put over an open top container. This may reduce the container stacking capability of a container ship and hence may affect her total cargo carriage capacity.

So to save seafreight, also for convenience and speedy delivery, the 3 forklift trucks may have to be shipped in 7 pieces. Assembly on arrival by a local agent should not be a problem, including re-alignments and testing for optimum performance. Services done by an authorised agent would not nullify the factory warranty either. The savings in seafreight should justify SKD shipment.

It is all a matter of sound commercial sense

T.O.
www.tolee.com

[edited 3/1/02 12:41:23 PM]

T.O.,

Thank you for this enlightening information; I have learned something. Of course, as I'm sure you'd agree, this is not knowledge one could reasonably expect a bank document checker to have, or -if they have it- to apply, in determining facial compliance.

Hope you found your trip abroad restful,

Best regards, Jeremy


[edited 2/26/02 10:56:50 AM: spelling error]

T.O.

Philip has not mentioned whether containerised shipment is a requirement of the L/C, so I was surprised when you said that "it has to be shipped in SKD mode in order to be able to be fitted into the container". If containerised shipment is required, there are other options. The 8' height restriction you mentioned is for one type of container, but there are others, including 9' high.

OTHER OPTIONS
Containerised shipment may not be the best option for this type of cargo. If there is a ferry service close to the required destination, this may be more appropriate. This would facilitate loading by simply driving the FLTs onto the ferry, or they could be loaded onto MAFI trailers for the same purpose.

There should be no reason why they could not be shipped in conventional stow vessels, or even on deck (L/C permitting).

Laurence

Laurence,

REASONABLE ASSUPMTION IS NECESSARY

We are assuming that the DC is covering long haul shipments using ocean/marine BL. And nowadays almost 90% of the maritime shipments are using containers for obvious reasons.

We do not assume local delivery such as by inland waterways, barges, tugboats, ferries, small tonnage vessels, railways, trailers etc. Of course road haulage is also possible. And the forklift trucks may be driven inland from the seller's warehouse to the buyer's premises. There are endless possibilities.

When we try to comment on a query, we have to make a reasonable assumption. Perhaps you may agree that "across the river" type of delivery is not a reasonable assumption when a DC is involved.

8-FOOT CONTAINER

We use 8-foot ISO container as an example because it is best known to members here who are mostly bankers. 8-foot container is also the most popular type.

Just for argument sake, a 9-foot container may not hold a fully assembled forklift truck that may be more than 9 feet high. That is another reason why we do not give 9-foot container as an example in order not to mislead members.

AN EXAMPLE OF "LATERAL THINKING" BY EDWARD DE BONO

Last but not least, Laurence, this is an example of "lateral thinking", with our mind not confined to conventional carriage by out-of-date haulage means.

TAX ADVANTAGE BY SKD SHIPMENTS

From our experience, many motor vehicles, including forklift trucks, are deliberately shipped in SKD mode although they may also be stowwed in the containers.

Why? Because import tax is much higher for fully assembled vehicles. Mercedes sedans shipped to Malaysia are all in SKD or CKD modes to avoid the otherwise very high import tax. SKD or CKDs creat jobs for the local people and the politicians favour it with lower tax.

As a consultant, we do not see a transport issue purely from transport perspectives alone. We also consider the transaction as a whole and choose the best option to bring maximum profits for our clients, which transactions are all about. This is the reason why we used the word "must" in our last posting.

www.tolee.com

[edited 3/1/02 11:42:44 PM]

T.O.

I agree that reasonable asumption is necessary. Most wheeled cargo is shipped by ferry, so this is why I made the reasonable suggestion that this is one option which should be considered. Ferries are not confined to local routes. I have used them worldwide.

For many years 8' was the standard height for containers, but this changed, if memory serves, about the late 1970's such that by the early 1980's the 8'6" height became the standard and therefore the most popular.

I do not accept that conventional stow vessels, by their nature are out of date. Indeed, some of the most modern vessels afloat are of this type. I merely suggested that it could be another option for consideration.

Laurence

Laurence,

MOST WHEELED VEHICLES ARE NOT CARRIED BY CONTAINERS OR FERRIES

In fact, talking about "wheeled vehicles", we should mean motor vehicles, or otherwise known as "motor cars", that contribute to the bulk of the "wheeled vehicles".

In that case the bulk of them are not at all shipped by ferries or containers of any footage, 8', 8.5', or 9' if you will.

Over 80% of motor cars (no data to support this percentage) are shipped by dry cargo ships tailor made for carriage of motor cars exclusively, the "vehicle carriers" (according to the official name used in Lloyd's publication in our library). They have no windows except in the superstructure and may be owned by the car makers. But they are ocean vessels and certainly not "ferries" as you have named them in your posting.

A VEHICLE CARRIER NAMED 'TOYOTA'

When I was living in Hong Kong, my house was at waterfront of North Point, overlooking the Victoria Harbour. On a Sunday morning, I might see a vehicle carrier passing by bearing a large advertisement on her sides "TOYOTA" about the size of a tennis court. The motor cars are not packed in containers. They are driven in during loading and and out during discharge and secured by fittings and lashings during the sea voyage to ensure no "motor car accident" inside the vehicle carrier in a bumppy voyage.

The cars are with "raw" (that means no) packing, but coated with a protective coating to withstand the high sea weathering, heat and moisture. On arrival and before delivery to the customers, the milky white coating would be removed to expose the mirrow finish paintwork inside.

According Lloyd's cargo handling equipemnt publications in our library, each of such carrier may carry over 6,000 motor cars. It is fitted with roll-on/roll-off ramps. As the hoistable decks allow height adjustments, it is most suitable for carriage of higher wheeled vehicles, such as the forklift trucks.

Then a smart member may ask:" What about the return voyage? An empty ship?" The Japanese are not stupid people. On the return voyage, the hoistable decks can be accommodated to take other dry cargoes on her return trip to Japan.

Now most Japanese motor cars on sale in North America are made either in Canada or in USA to save seafreight and import tax in order to survive in a very competitive North America market. So for the North America market there is no need for such vehicle carriers and hence we see them less nowadays.

WE PRACTICE 'KISS' RULE FOR EFFECTIVE COMMUNICATIONS AND HENCE USE LAYMEN TERMS

To post views in Discussion Forum, we do not wish to dwell too much on technical issues on transport as after all, this is a DC forum. Hence we do not assume that the DC in the query is talking about carriage by a vehicle carrier. And for easy communication, we use the term 8' container as it is better known amongst the banker members.

www.tolee.com

[edited 3/1/02 11:25:43 PM]

Laurence,

To keep our posting within reasonable length, we would like to response separately on the "container height" issue raised by you after commenting on the "vehicle carrier" issue earlier on.

HEIGHT OF POPULAR CONTAINERS

The traditional (or earlier) containers are 8-ft high only made of either aluminium or FRP (fibre-glass reinforced plastic). Now most of the containers are made of aluminium and of 8.5 feet in height as you have mentioned. According to their usage, they are classified as dry cargo, hi-cube, reefer, tank and open top. For tanks and open tops, the height is only 4 feet 3 inches. For width it is 8 feet across the board. The lengths are either 20 ft or 40 ft.

We do not include odd size containers, including some modified ones, since due to odd sizes, they may not be easily stacked or lashed together with the standard ones. For this reason, shipment with these containers would be most probably on deck, which is not allowed in most DC, including the one in the query.

On deck shipment may also increase the insurance premium and for certain cargoes it may be even under exclusions clauses in certain insurance policies, nullifying later claims.

If we have to ship in on deck mode, then from common sense point of view, why not we use standarad open top containers to achieve the same result but with less trouble and risk? The open top container may be covered with tarpaulin (waterproof canvas sheet) to protect the cargoes stowed insdie from dust, rain, sea water or direct sunlight during the voyage. Only that the top is soft (canvas) rather than hard (metal).

INSIDE DIMENSIONS

When we refer to carriage of forklift trucks in containers, it is meaningless to argue whether the container is 8’ or 8.5’ high as these are the external dimensions only. The inside dimensions for 8’ and 8.5 ft containers vary from 3 ft 4 in (the lowest, 40 ft half high open top) to 7 ft 10 in (the tallest 40 ft dry cargo hi-cube). So they are all less than 8 ft tall anyway.

In reality, we have to take into the consideration of the height of the door opening as well. The "door frame" at the top of the container makes the internal dimensions even shorter. The forllift truck may not be able to pass the door frame at the top of the container.

Then the height of 8ft or 8.5 ft containers vary from 3 ft 4 in (40 ft half high open top) to 7ft 5-3/4 in (40 ft reefer). But the 40 ft reefer container is designed and used for carriage of frozen or chilled meat and hence it is not suitable for carriage of forklift trucks.

That means if we wish to load a forklift truck into the tallest container popularly available, the height is limited to 7 ft 5.5 in (40ft dry cargo hi-cube), or not even 8 ft.

NO POINT FOR US TO ARGUE ON 8 FT OR 8.5 FT CONTAINER

We hope now it is clear that there is no point arguing 8 ft or 8.5 ft. container. That is also the reason why we use the more popular term 8ft container, known amongst banker members and not 8.5 ft. container, which cannot help anyway.

We think further clarification is necessary. Otherwise members would be misled to think that an 8 ft high forklift truck could be shipped into an 8 ft or 8.5 ft hi-cube container, which is a mission impossible. That is why the 3 forklift trucks in the query must be shipped in 7 pieces.

If a BL shows that 3 forklift trucks (assuming of 8 ft or taller in height when fully assembled) are shipped in 3 pieces in 8.5 hi-cube containers, this appears to be a footprint to indicate a fraudulent BL.

Perhaps Jeremy would agree that bankers should know more about transport practices in order to do their document examination work well. The informations expressed here are not too technical and can be obtained if bankers care to ask the freight forwarders or carriers.

Bankers should not play golf only with bankers.

www.tolee.com

[edited 3/1/02 11:39:57 PM]

I also believe that it was acceptable. I very much advocate the view stressed by Jeremy re. the reasonable care adopted by the banker - documentary checker when checking documents for compliance with the letter of credit terms and conditions.

Pavel Andrle