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Thursday, March 4, 2010


Apropos my recent one on overloading hazard of container, received many queries. The weight at one place was wrongly mentioned as 24000 tonnes instead of 24000 kgs. That was about the standard intermodal container, known as TEU in shipping parlance (Twenty foot equivalent unit) – of course there is Forty foot equivalent unit sometimes described as two TEU – which are usages describing the capacity of container ships and container terminals and units handled at ports. Some unconfirmed estimates put the figure of containers in use at 17 million. If that was on under declaring weight, here comes one on complete misdescription, in air cargo.

Two TEUs on a truck

For understanding this easily, here is a lengthy introduction on air carriage where these containers are not used. Most of the consignments are palletised and there is a different version of container. More commonly known as ULD (Unit Load Device) is a pallet or container used to load luggage, freight and other things on wide body lf the aircraft. These ULDs allow large quantity of cargo to be bundled into single units.

air container

To those not so well versed in these, the carriage document issued by the Air carrier (cousin of Lorry receipt !) is known as Airway Bill (AWB) – this is the receipt issued by Air carrier as an evidence of contract of carriage. This primarily differs from Bill of Lading as this is no document of title to goods and not negotiable.

As it is, this business is much sophisticated and well connected on the net. The AWB has a tracking number which can be used to check the status of delivery, and current position of the shipment. The number consists of a three digits airline prefix issued by IATA and a 8 digit number of which 7 are the serial numbers. This document is also issued in sets of three generally. The first copy is retained by the issuing carrier or their appointed agent. The 2nd copy by the receiving carrier or their appointed agent. The 3rd copy is used as Proof Of Delivery (POD).

The goods in the air consignment are consigned directly to the party (the consignee). There could be a simple AWB but wait it is not very simple also; many a times there is often involvement of a freight forwarder or consolidator and there are documents known as HAWB / MAWB. Typically AWB serves as receipt of goods, contract of carriage which includes conditions of carriage (terms and conditions!)

Don’t get carried away by the sophistication – there is compulsive need for insurance. Do you know how much the carrier would pay in case of loss / damage or non delivery ? This is determined by various conventions. India is a signatory to the Warsaw Convention of 1929, which is an International Agreement governing the liability of the air carrier in respect of international carriage of passengers, baggage and cargo by air. The liability of the carrier is limited to a sum of 250 francs per kilogram, This in effect is a reference to the gold standard, a monetary system in which the standard economic unit of account is a fixed weight of gold. In Air carriage, there is provision for declaration of value to the carrier, which would entail payment of higher freight. When this is not done and where the carriage is as per Warsaw convention, the carrier in respect of loss or damage to cargo limits their liability to 250 French Gold francs per kg. For easy understanding this 250 French Gold franc would approximately represent US $ 20 (computed on the basis of US $ 542.22 per ounce of gold). In Indian Rupees, it would be Rs.918/- per kg (@ 45.90 per USD).

When goods are transported internationally, they go through the Customs. In India we have Customs Act 1962 which not only determines the rate of duty payable but also the type and nature of goods that are allowed to be transported. In case of all imports, Bill of Entry is filed by the Importer or through a CHA and after assessment involving quantification of duty, the amount is paid by the importer. Customs would check and examine the goods – there is something known as green channel clearance as well. When it comes to Export, they exporter should have Import Export Code issued DGFT and has to file a Shipping Bill based on which assessment / verification would be done by Customs. Though the structure of duty would be at variance, there is more or less the system of Customs check prevalent in all countries.

Recently an innocuous consignment weighing two tonnes ‘telecom equipments’ was to be carried by Emirates Airlines from Nairobi to Bangkok. Thai authorities seized them at Bankok’s Suvarnabhumi airport and were startled with the actual consignment.

This consignment had been misdeclared to the carriers as ‘telecom shipment’ but was something highly valued in grey market – illegal one at that. Yes it consisted of 239 African elephant tusks and was on its way to Laos but was discovered at a transit cargo warehose. The carriers proclaimed that it is strictly against their policy to carry any illegal cargo to any country. UAE is a signatory to the convention on International Trade in Endangered Species.

Tusks look beautiful on elephant but not in your drawing room. Curiously symbolizing profligate luxury as well as purity, ivory has for uncounted millennia been procured from vast distances and masterfully carved into objects of rare beauty. Since elephant tusks are its chief source, and since Man is the elephant's only serious predator, ivory is at the root of the African elephant's threatened extinction..."

There have been ruthless poaching of pachyderms at many places internationally (remember Veerappan) – quite frequent in African land including parts of Kenya. Though there is convention on International Trade in Endangered Species banning trade in ivory in 1989 many countries have done little to enforce the ban. Ivory is not a commodity but is formed from dentine and constitutes the bulk of the teeth and tusks of animals such as the elephant, hippopotamus, walrus, mammoth and narwhal; but the trade is more of tusks of elephants. These are used to make ornaments and earlier used for billiard balls, carrom strikers, piano keys etc., The trade is more indicative of man’s lust for trophies and destroying even things which are not of great utility value.
Concluding on concealed the real thing and making misdeclarations, the ICC financial Investigation Bureau (FIB) recently reported of frauds worth of millions of dollars in what was purported to be shipments of higher grade sugar but consignments of suspicious and spurious quality. A documentary fraud aimed at exploiting the high demand for the white crystalline substance

Every body complains of the language, size, font and everything on the policy of insurance being archaic and unfriendly – are the terms of conditions of a Bill of Lading / AWB easier to read and understand !!
In case you liked this article, do drop your feedback

With regards – S Sampathkumar.



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