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Bookings with steamship lines may be placed with steamship agents, or may be negotiated by freight brokers or forwarders. On shipments moving on a uniform through export bill of lading, the shipper may request the railroad to make booking and other necessary arrangements at port, which the railroad will do through its foreign freight agent; payment of ocean freight is necessary in this instance, before delivery of the through export bill of lading.
THE FREIGHT FORWARDER The exporting company, unless its business justifies maintaining an export office at one or more ports, usually employs a forwarder to attend to the details connected with clearance, securing cargo space, delivering goods to the vessel, obtaining ocean bill of lading, and attending to the formalities of consular invoice or certificate of origin when required by country of destination. There are two types of freight forwarders-domestic and foreign. The domestic freight forwarder is one engaged in the business of combining the shipments of different shippers and forwarding them as consolidated shipments to domestic destinations, taking advantage of the lower rates applying to larger shipments. The foreign freight forwarder is one engaged in clearing and shipping goods to and from foreign countries, performing the necessary services of documentation essential on all export shipments. Freight forwarders often engage in both types of operations. When used in this discussion, the term refers to freight forwarders engaged primarily in foreign trade. A large volume of cargo is booked through these agencies. If the volume is sufficient to justify an individual steamship bill of lading, such document is obtained; however, if shipment is to be combined with several others, the forwarding agent takes out a bill of lading in his name, covering the whole shipment, and issues private receipts or bills of lading to the shippers. These show name of the foreign correspondent to whom the combined shipment has been made, and who will make distribution of the several items in the shipment. Forwarding agents exist all over the world, and any concern in this business is usually in touch with correspondents in other countries, who make up their own combination as do American forwarders.
ADVANTAGES OF FREIGHT FORWARDERS
As has been noted, forwarding agents are helpful to inland shippers in the combination of small shipments and in the preparation of the documents required. Some offer other facilities, such as sending goods forward "freight collect" when the steamship companies generally require prepayment. Others will sometimes dispatch goods on c. o. d. terms, sending to their foreign correspondents manufacturers' invoices, to be collected abroad, plus charge involved. Others discount manufacturers' bills, or usually discount the draft with a foreign-exchange banker, on the strength of the manufacturers' rating in agency books—making a small charge for their trouble, as forwarding agents are not bankers, and few have sufficient capital to warrant this type of business. It is advisable for exporters to obtain itemized statements of accounts to guard against error or abuses.
The forwarder does not charge a flat fee for his services. The fee depends upon the nature of the shipment. Some shipments necessarily require more attention than others.
If the shipment has been made on an order bill of lading, it must be endorsed to the forwarder before he can obtain the goods. The exporter delivers the original domestic railroad bill of lading to the forwarding agent, with an "Instruction sheet," on which the exporter has given all the information necessary for the forwarder to make out ocean shipping papers. Shipments moving on a uniform through export bill of lading, where the railroad performs the functions of a forwarder, do not follow this procedure. The forwarder will then arrange for ocean shipment on the first available steamer. Upon arrangement with a steamship company, a freight contract covering shipment is made. This is a contract between the exporter and forwarder, stating the amount of cargo, ocean freight rate, and approximate date of sailing; there is also a line for the steamship company's acceptance.
On arrival of the shipment, the forwarder obtains a shipping permit from the steamship company, which grants permission to deliver the material to the pier or dock; it is also called delivery order.” When the shipment is delivered to the steamship company at the dock, the receiving clerk issues a dock receipt. The steamship bill of lading is issued on surrender of the receipt granted at the dock; this is the final receipt. Before the ocean bill of lading is delivered, it is necessary to furnish the United States customhouse clearance, which is obtained from the collector of customs. After the forwarder has delivered the shipment, either as an individual shipment, or as a combined shipment, composed of a group of individual shipments, the next movement is up to the steamship company. Freight forwarders accept both domestic and export shipments and operate through all ports. i The Transportation Division of the Bureau of Foreign and Domestic Commerce has for some years maintained lists of freight forwarders, engaged in foreign trade. The Division does not rate or guarantee the integrity or financial responsibility of those shown; it merely lists the names of persons engaged in the business. The exporter should use the available private channels for investigating their rating.
The manufacturer, in determining routes, will consider both the fastest and the cheapest routes available, and dispatch his goods in time to catch the steamer desired. On the selection of ports will depend the frequency of sailing, as well as direct sailing. Some ports, of course, have more extensive and frequent services than others, and ports in different parts of the country enjoy peculiar facilities for special markets. The names and addresses of steamship companies, maintaining services in all parts of the world, are shown in various directories, newspapers, etc. Some ports and forwarding agents publish sailing lists from their ports; the chamber of commerce nearly
always has publications showing sailings, or the port directors or authorities of ports can furnish information on frequency of sailings.
CONFERENCE AND NONCONFERENCE RATES
Oversea transportation of goods is performed by two classes of carriers—liners and tramps. Liners engage in transportation of miscellaneous package and piece goods, and carry in part some bulk commodities. Their regularity of service is important, for they operate on a definite schedule between fixed points, are of greater size and speed than tramps, and are usually equipped for particular trades, with refrigerated space, and other facilities for trade over their particular routes. While tramp owners cooperate to some degree in a number of trades in the employment of their vessels, liner owners have adopted a rather comprehensive system of cooperation in the employment of their vessels and have largely stabilized their rates by forming conferences.
A “conference” is an association of lines in a particular trade for the purpose of limiting the competition of member lines with each other, and meeting the competition of nonmember lines and tramps. A shipping company may have lines in several trades and be a member of several conferences, but its engagements are independent of each other. These conference agreements restrict competition as to rates and sailings, and sometimes provide for the pooling of earnings; usually rates agreed on in conferences are uniform for all member lines, though exceptions are made in some trades, and lines with comparatively slow and indirect service are allowed to charge lower rates.
Some of the factors affecting rates on a given route are the competition of tramp and nonconference lines with conference lines, particularly in bulk commodities; volume of cargo available; distance to be traversed; supply and demand for ship tonnage; value of service, and port conditions. Particular rates are influenced mainly by what the traffic will bear. Rates are on various bases, often optional as to weight or measurement-for example, 2,240 pounds or 40 cubic feet, 100 pounds or 1 cubic foot; lumber, such as pine from the Gulf, per 1,000 feet; oil, per barrel, etc.
The tramp steamer, which generally is not a party to the conference schedules of rates, has its competitive effect on rates, in that, where speed is not demanded and the quantity of goods is large, as in the case of bulk commodities such as wheat, cotton, coal, ore, and lumber, the shipper may charter a ship for the purpose of delivery of his goods. “A ship may be chartered for a given time, a stated voyage, à voyage out or back; charter rates may be a certain sum per month or an agreed price per ton of cargo carried; contracts usually provide for number of days allowed for loading and unloading, or "lay days,"
. and that charterers shall pay demurrage if vessel is delayed beyond ley days.
OCEAN BILL OF LADING Ocean bills of lading are issued as straight bills of lading and order bills of lading. The former is a non-negotiable document by which
the transportation company acknowledges receipt of freight and contracts to move it; surrender of original copy is not required for delivery of freight except when necessary for identification. The order bill of lading is a negotiable document acknowledging receipt of freight and contracting to move it; surrender of the original properly endorsed is required on delivery of the freight. The ocean bills of lading are of two classes, “received for shipment” and “shipped,” or “on board." The former is issued for a named steamer in which space has been previously reserved, when goods are in the possession of the steamship company; the latter is issued only after the goods have been loaded on the vessel. English banks often stipulate "on board" bills of lading in issuing letter of credit. The ocean bill of lading is not only the final receipt from the carrier, but is a contract between the carrier and shipper. It may be used as a negotiable document and as a basis of a draft if drawn to order of shipper. Drafts or bills of exchange to which are attached shipper's invoice, ocean bill of lading, and insurance policy constitute methods commonly used in making foreign-trade financial settlement. A number of copies of the bill of lading
are necessary, of which at least two are negotiable if settlement is by draft. The shipper is usually required to prepay all freight charges before the steamship company surrenders the bill of lading.
The steamship lines provide for a minimum bill-of-lading charge, usually $10 or less, for transporting small shipments.
LIABILITIES OF SHIPOWNERS
Unlike railways accepting shipments, the liability of shipowners is limited. The Harter Act, passed by Congress in 1893, limited the liabilities of the shipowner; and the ocean bills of lading exempt the carriers from every liability possible under terms of existing legislation. Because of the difference of laws of various nations and the resulting inconvenience and confusion, efforts were made to secure uniformity of laws and bills of lading between countries. Rules providing for a more equal division of the risks of transportation between cargo interests and carriers were embodied in a draft convention (appendix E) at Brussels in 1922, ratified by the Senate of the United States on May 6, 1937, with the reservation that should conflicts arise between the convention and the Carriage of Goods by Sea Act approved April 14, 1936, the provisions of the act should prevail. The Carriage of Goods by Sea Act supersedes the Harter Act in every respect from the time the goods are loaded until they are discharged from the ship; in other matters the Harter Act is still law. The Carriage of Goods by Sea Act makes several important changes; it imposes a liability of $500 per package or customary freight unit, with the parties free to agree to a higher figure if they desire; the necessity of giving notice of loss and damage as a condition to bringing suit is abolished (notice has importance only as a matter of evidence); institution of suit must be within 1 year of delivery or the date when delivery should have been made; the burden of proof concerning alleged negligence resulting in damages is changed—the carrier is now required to show that the damage falls within one of the excepted causes and assumes the burden of proving that it did not by its own negligence contribute to the result.
The protection afforded by marine insurance to cover loss or damage to goods while water-borne is desirable because, under the United States Statutes and valid clauses in the contracts of affreightment, vessels and owners are held not to be liable for any damage sustained from marine perils, frequently called perils of the sea. However, vessels and owners are responsible for loss and damage caused by their negligence, fault, or failure properly to load or discharge the merchandise. Perils such as theft and pilferage, breakage, leakage, etc., can be included in a marine policy for an additional premium, if the owner so desires. Marine insurance may be placed directly with an insurance company, or through a broker or freightforwarding company. There are several forms of insurance policies. The degree of protection given by them is in accordance with the wishes of the shipper, and the cost of the insurance increases as the risk assumed by the underwriter increases. As the property is usually insured for the benefit of the consignee, and as he pays the premium, he should inform the exporter or seller of the type or degree of protection desired. The consignee or buyer frequently arranges for all insurance, and, in such case, definite instructions should be given to the exporter or seller not to arrange for insurance.
Insurance brokers have had wide experience as to the most desirable forms of policy for certain voyages or certain types of merchandise, and an exporter will usually find it advantageous to consult an insurance broker and allow him to place the policies. The broker, because of his experience, can frequently obtain more favorable rates. The services rendered by the broker, including the collection of any claims, are rendered without charge to the exporter, as the insurance companies pay a commission to the brokers for all business brought to them. If an exporter is financing his shipments through documentary bills, he will find it necessary to carry marine insurance, not only against the total loss of a shipment, but against claims for partial loss, as well as claims for general-average” contributions, which may become due to the shipowner from his shipments. (See fig. 8.)
PERILS OF THE SEA
Marine insurance is not intended to cover ordinary perils involved in the transportation of merchandise, but is limited to protection against marine risks commonly termed "perils of the sea.” These policies include protection against fire, although this is not strictly a peril of the sea. As noted above, an exporter can obtain a policy covering perils not included in the class known as perils of the sea, provided he makes special arrangements and pays the additional premium required. It is extremely desirable to have protection against general-average contributions, for it frequently happens that these contributions are due from cargo which arrived at destination in sound condition, but which will not be delivered to the consignee until security is deposited for the payment of the contribution, when it is finally fixed. It is the custom for marine policies to provide protection against general-average contributions unless special request is made that such protection be omitted.