Collaborate on Invoice Crowd for Logistics with Ease Using airSlate SignNow

Invoice crowd for Logistics

managing risk and transport and international trade okay what do we do well my one of my mentors who used to be the risk manager for safe marine sometime ago said to me there are three ways we manage risk we don't go into business and we ignore it we manage it through contract which is what I'm getting to deal with today or we take out insurance okay and I think we're going to have somebody else Francine Hutton will touch on that okay so I'm not going to deal with insurance I'm also not going to deal with ignoring risk although I know a lot of people do I've had a lot of clients who come to you in they're in trouble and they say look I'm in this trouble what's happened well have you done a risk assessment of you know of your contractual position why at what are your terms and conditions how have you been in business for the last year now I've just been doing business you know nothing's gone wrong previously so why should I change more importantly why should I spend money on lawyers to come and tell me what's wrong and then try and fix it through contracts just you know it's an expense unfortunately my wise colleague also said the only time you need insurance so when you don't have it so the only time you need standard trading conditions or you need to know what your contractual position is or you need a right of recourse when you don't have it so I'm going to deal with standard trading conditions I'm sorry it is going to be rather dry and boring but I think it's necessary it's gonna be very basic because people forget the basics and if you don't pay attention to the basics that's when you get into trouble I will look at transport documents and how they affect your lives and business and what documents you should use because people generate these documents and they don't really understand the implications of using certain documents in certain circumstances so let's start with your standard trading conditions okay standard trading conditions printed at the back of your transport documents Bills of if you're afraid for day everybody will subscribe to so the afternoon sir she afraid for his conditions I mean if you unpack those conditions at the back of a bill of lading which I think can be 24 to 30 clauses actually prints out if you do usual 12 font to between 35 and 40 a4 pages have you ever really started I mean if you try to read every provision and understand it I understand why people don't want to do that understand also why it's then very easy for people to say well as my what am i as client said as well I just borrowed from hits you know that he was using it isn't this similar or the same industry so I'll use it doesn't really work that way you've actually got to pay attention to what you doing okay so what are they nothing special about them standard contractual terms they are now you can't read that unfortunately it says I'm a man of few words maybe if we read more you would have a larger vocabulary so true so lots of people say to me ah that's fine I'm protected by my standard trading conditions somebody's coming to give me with a claim right and I said okay can you show me where they're in or how they were incorporated in your contract well yes my invoice okay see the very ball that says terms and conditions apply well that's too late why well you actually got to incorporate these terms at the time you contract okay now how many people you do business via email or telephone book or take cargo like that I've seen it a lot you know and no emails written or have a phone call followed up by an email it's important to get these terms and conditions in when your contract is concluded when is a contract concluded sorry legal jargon unconditional acceptance of an offer containing all the essential terms so when we're dealing with transport what are those essential terms well I'm gonna carry your cargo from A to B that's what the carrier does and you're gonna pay me for it so you have an exchange female can you take my cargo from South Africa to China yes there's my Freight rate that's it done dusted right if at that stage you don't have by the way I'm taking it subject to the following conditions or if you're a freight warden you're dealing with a customer you say you know by the way when I'm doing this business for you just be aware that I've got 40 pages of terms and conditions which apply so you've actually got to have it right up front and you can't have it I mean I've seen it some in emails now it's in my email when I email there it is and right below your signature page and the finest printers standard terms and conditions apply it's not good enough in our law and our law you've got it you've got it you've actually got it you can't hide away from these things people try and hide away because people don't want people to read they standard terms and conditions because if you look at them they disavow responsibility for practically everything so I'll do the work for you but if something goes wrong sorry don't look to me or if something goes wrong I'll pay you 10 cents in the red okay but you know you're not the only person out there who does business like that there's a reason you do business like that it's because if you don't limit your liability somehow you're not going to get insurance or insurance is gonna be very expensive that's the other thing you've got to bear in mind when you do business and you go and you buy insurance then every underwriter is going to want to look at your trading conditions and that's the basis in which they provide you with cover if you don't incorporate your terms and conditions in your contract as and I'm gonna kind of try and give you some practical you samples at the end to try and tie all this theoretical mumbo-jumbo in but if you don't contract in terms your standard trading conditions you may have paid for insurance but they won't pay out your claim okay so how are you restricted by standard trading conditions well South Africa you've got this wonderful thing which we've inherited called freedom of contract I can contract out of basically anything except willful actions and of course the consumer protection act comes and does a whole lot of things but I think in shipping and logistics the consumer protection act really plays a role because most of us deal with people whose turnover is more than the threshold which I think and I'm sorry I'm a shipping line on the consumer protection law but I think it's about a million rare now might have got up to two million common law restrictions I've mentioned can't contract out of willful acts and then of course you've got international conventions and of course in South Africa we don't have Road or rail conventions but we do have when we shipping stuff we Hague and Hague there's be rules which exclude to a certain extent and ocean carriers liability or they limit an ocean carriers liability right so let's move on to transport documents but before we get there let's have a look at most most cargo has moved through freight forwarders okay most people don't go to shipping lines directly unless they're really big okay how many people are in the freight forwarding industry here okay good quite a few great so this will be relevant okay so what what what does it what's the first thing that appears in the standard terms and conditions freight forwarder usually some references when I'm dealing with you my customer one and this the customers also would be aware I can act as a principal or an agent okay does it mean the principle if I'm acting as a principal it means the buck stops with me so if something goes wrong you look to me as the person who you contracted with I have a little diagram which hopefully explains that if you're an agent you pass the buck I like to say you you're just an intermediary so your customer come student says my container was dropped my electronic TV sets which clive talked about which nobody's purchasing anymore no you know shattered so I'm terribly sorry but go see I'm sorry I always was trying user don't CMAC or go seek a line I know the care line people go seamers don't don't come speak to me because I was just contracting on your behalf or I was arranging this on your behalf so if you are a principal or if the person you're dealing with is the principal then that's who you will go to the forwarder then is the one who is responsible to its customer and it has subcontracted to the shipping lines whereas if an agent and a back passer who's bad to him to use but that's there will only be an intermediary okay please one thing I forgot to mention is if you have any questions or you want to take this in a different direction please interrupt me now I find it very I find it better if people interact now and ask questions and at the end and try and remember them right so under a contract of a fragment what are the risks and liabilities so the carrier will take your cargo take somebody's cargo and take from A to B and they'll be responsible for well to a limited extent if you read the back of a bill of lading for loss of damage the merchant who contracts pays Freight makes declaration of what's in the container the weight of the container very important nowadays we're carrying dangerous goods and they'll be responsible for paying other charges like detention and demerit okay now do you want to be a shipper so if you're doing the business of a freight forwarder do I want to be a shipper as far as the ocean carriers concerned or do I want to pass the back okay one container of calcium hypochlorite pool chemicals and that question in part is answered by well Who am I dealing with does my customer have I'm afraid for day the necessary wherewithal or insurance to you know if he gives me incorrect information and I pass it on to the shipping line because as far as the shipping line is concerned I'm going to be responsible but if I'm just acting as an agent well then it's my customers problem back to that all right so how do we how's this all standard terms and conditions all these exemptions how do they play themselves out in the shipping industry everybody seen that standard the live lading okay that's just the front as I said on the back printed out and they 35 pages of conditions okay that is importantly not always the contract and I'll explain why bit later but they are a number of functions for that document the Bill of Lading which you get okay tells you what goods the carrier has received okay and it is evidence of the contract of carriage say evidence my professor at university when I was doing shipping law a long time ago said drummed this into us he said everybody accepts that the Bill of Lading seems to be the contract of carriage but you've actually got to go behind that because this document is produced even only after the goods are shipped if you recall our contract is concluded way before then and the importance of this hopefully will register when I come to the example at the end it entitles the holder of the goods to possession it doesn't everybody says Oh bill of lading is a document of title it isn't issues of title are dealt with by sale contracts not by the Bill of Lading what it does though it does give right to possession and now this is very important in trade because where you are financing purchase of goods by means of letter of credit the banks we've got lots of money I understand well once some sort of security over the goods before they make payment so okay in those circumstances it's important that you choose a document which is going to give the bank the comfort of the security in having the right to go to the shipping line and say whilst I hold this document and I've got nothing to do with the sale contract whatsoever I'm not the purchase of the seller I'm just an intermediaries in who's financed this transaction I can hold this document yeah there's security for those goods and then importantly right it transfers rights and obligations including titles why is that important we'll find out later as well the practical example but well let me help let me just move on I think to a C Weibull and then then we'll get to why I started why it's important to know what document to use in relation to trifle to sue okay see you a bill okay sorry go back one step the problem with the Bill of Lading of course is that you have to have it at the port of discharge when you get there because it's a fundamental requirement in shipping that the carrier is not going to release those Goods to you unless you produce that bill of lading because if you don't have that or you don't and they release the goods and somebody else comes along just happened before it says hey by the way we might go to see what at least released it to Joe Bloggs I'm sure he was the person was entitled least to then the carrier's liable without reserve okay there's no defense to that claim and there pni club is not going to cover them for that loss so in trade today it's often very difficult to get that document which is only printed ordered after the goods alerted and bought the vessel through to the shipper through banking channels to the receiver when vessels are traveling so quickly with such volumes of cargo between ports okay so what happened then is people thought well let's develop a document which doesn't require it to be handed over to the carrier at the port of discharge so we don't have this problem and that's what this that's that's the sea level so it acts as a receipt of good it's evidence of the contract of carriage but it doesn't pass rights or obligations why is this important okay sir writes one of those rights and obligations is a title to sue what lawyers like is that means we can recover but it's also what your insurance companies want okay because when they pay you out on a claim they're going to want to know that they've got a right to go and recover what they've paid you so in terms of our law and many jurisdictions in the world when a bill of lading is transferred certain obligations and rights go with it including title to sue but a see you able know a Seaway bull doesn't transfer rights and obligations so in terms of South African law the shipper on a Seaway bill is the only person who has titled too soon but in English law it's the consignee okay so it's all very dry and you're wondering why this is important so I'm hoping let's interject with an example I have a client who exports large quantities of fruit from South Africa and they sell this fruit on a consignment basis can will deal a bit with Incoterms later but what that means is that when the fruit gets into the states they have contracted with their receivers over there who go into the market and they sell the goods and they get a percentage of the profit back but those receivers don't take responsibility for the goods and for such time as they are landed in America get to their warehouse okay so the farmers in South Africa have risk and title rights they their cargo all the way through to when it finally gets to the market in America so as a standard practice the shipping line issued them with bills of lading they passed those bills of lading on they're customers in America caca gets there and it is fruit juice it's no longer fruit the temperature on the reefers hasn't been set correctly and they can't sell it all they can sell it for a very reduced amount okay and now we have to go and sue somebody for that the shipping line unfortunately under the Bill of Lading but we not we don't have the Bill of Lading because we've passed it on to the receivers in America so they can get delivery of the goods they're the consignees but the receivers in America are not the people who've suffered the loss because I only take risk once the goods get to destination are sold so you have this difficulty yeah where you have provided you you've transferred your rights to sue when you shouldn't do okay now how would you correct that well luckily for us in England you can sue it in a representative action but to be on the safe side you know perhaps you should use a see Weibull and where the shipper retains title but it's not that simple because if you're going into another country which doesn't have the same law as us that the shipper retains title to sue and the rights might be going to place which exercises you know long english jurisdiction then you lose that right again the long and the short of it is it's important to know where you trading to what law applies and in the context of your trade what documents you should be using an issuing it's important to know when you're advising your customer as well because people freight forwarders will issue their own as we will see NVOCC bills okay so let's get back to that so we've all seen okay this is the ocean bull issued by the shipping line to its customer okay its customer could be if your freight forwarder is acting as an agent the actual owner of the worshipper of the cargo or if the freight forwarder is acting as a principal the shipping line as far as its concerned it's the freight forwarder who's its customer so what's going to be recorded on this bill of lading or should be if you are acting as a principal is your details not your customers because the freight forwarder will issue its own hospital or envy us what we call non vessel owning common carrier NVOCC bill and this is the bill of lading which gets handed over to the customer okay and so when you are issuing your documents or your hospital to the customer it's also important to know is what type of document must I issued to my customer am I get an issue a bill of lading and I get issue see you able it's important to know what your customers business is okay so why do we why it's important to have this because you want to know what your contractual terms are and you want to know that if something goes wrong you have a right of recovery we're okay I'm just going to deal with Britain code terms briefly because it's it's there is a fallacy that these are Freight terms I've seen people say quite freights you know freight rates ex-cia for X C BT but Incoterms or sale terms okay how they're important in relation to transport businesses because they delineate for the seller or the shipper of the goods what type of or what he's responsible for in relation to the carriage of the goods okay so as you move from X works all the way down to your delivered terms the obligation of the seller or shipper increases so in X works the seller says well - is buy come collect my goods but in a delivered contract DDP at the bottom the seller has to arrange carriage all the way to the port of discharge where the buy is and sometimes to an intermediary storage facility or even sometimes to the the buyers premises and this becomes important in relation to as we will see what transport document should be used depending on what your sale terms are because as your obligation to provide carriage increases right transport so does the risk because the seller then we'll assume risk of loss or damage to the goods okay all the way through to the port of discharge if he is contracting on delivered terms okay so I'm just going to scroll through this quickly because what I really want to discuss is two or three cases that I had fairly recently my customer was a freight forwarder he arranges importation of goods for his customer from in South Africa from China he goes through to my client and my client says can you arrange these goods transport these Goods no I can do that because I move great because I have a steady flow of volume of cargo with a shipping line I can get you a really preferential a good preferential rate okay so what my client does is he goes through to the shipping through to his agent in China and says look my customers importing these television sets this is the shipper of those television sets they must be loaded on board X shipping lines they must be shipped sorry with the shipping line and he quotes in that regard a contract number yes with a shipping line because that's where he's he's gained hit that preferential rate the agent in China does what he's told and he earns a $50 fee for the for the pleasure of booking the cargo and then when the TV gets set his TV sets get here they're not in a very good condition and customer says well who's responsible for this I say well were you acting as an agent or a principal looks it means his well and I said well can I see the transport documents which were issued so he gives me the shipping lines bill of lading and on the shipping lines bill of lading my clients name appears as the shipper and consignee so I go great fantastic right where's your hospital of lading so he looks at me oh oh you mean what my Chinese agent issued said yes you know hopefully your hospital know the bill of lading which is presented in this case was the Chinese agents Belov lading nowhere does it mention my customer or my client right in those circumstances and that is the bill of lading which was used to import the goods and clear the goods into South Africa and I say well why did you do this in circumstances where you are telling me that you are accepting freight and acting as a principal says no well because if my Chinese agent issues their bill and they're quite happy to do so I don't have any risk because my customer will know he's got to go to China it's great it's fantastic for me I said well you know unfortunately you there's a rather dogged and and fairly clever lawyer on the other side for your customer who's come through and said I don't know who this Chinese person is I didn't contract with him why are you giving me this document okay said my customer I think you've got a problem because if you look at the email exchanges is you know it was you who he contracted with at the end of the day then my customer had to pay out for those television sets wasn't protected by standard trading conditions okay because he couldn't rely on the Chinese guys handling conditions and didn't get paid by his underwriters because they said he didn't contract on East and trading conditions he didn't issue his hospital as he was supposed to do okay another example of why it's important that you get it right different client Fred Ford and it seems to be a trend that when Goods come from China people like using their Chinese agents Belov lading also wasn't television sets this time it was cosmetics arrived in South Africa no nothing wrong with him yeah but for some reason my clients customer decided he didn't need the goods so he left them in storage that's what you do you know for a year didn't bother to collect them there was of course whole lot of banter as between the shipping line and my cus my client ins and his customer as to why I wasn't doing this and you know and every month the shipping line would send a bill for detention and demurrage how much was that at the end of the day well it was over a million rand okay so and my customers keep going keep going no my clients were a coupon customers keep going well speak to that receiver you know he must damn well deal with this and when when they came to me it was nine ten months down the line I said I'd look unfortunately your name's the one in the bill of lading yeah all right Oh were you acting as a principal and aged oh no same story contracted with got a great rate for the shipping line you're a principal and where's your beloved lady all right just because we want to now go to your custom and say in the same way that the shipping line is coming to you and saying can I have a million rand please with attention to marriage let's see what your bill of ladings is about attention to marriage oh yes my beloved lady no the Chinese agent and this is where unfortunately I mean let's face it lawyers like it may see because it becomes expensive thing for us to try and sort the problem out because then we have to try and determine well what is your contract with your customer because you don't have a contract which clearly says like the shipping line I'm entitled to recover my marriage and detention charges so you have to use implied or tacit terms okay and you have to tell your client that mmm although the claim you're facing is probably rock-solid your recovery is uncertain and then you have to spend money on litigation and that is very very expensive so it is and then of course all right once again you know if you've got a credit risk insurance as the guys did your credit underwriters are only going to pay out if it's not a disputed claim all right or you get a judgment now of course the the receiver on this end kicked and screamed and put up a defense said well you know the Customs and Excise ex is that you can only keep goods for you know 30 days also in universe in account if it was a containerized cargo and then it's got to move to the state's warehouse and so they should have unpacked the container and so this he's to marriage and detention charges should never have accrued so we make for the defense so long in the short of it is my client had to go to the shipping line who was somewhat understanding and gave him a reduced cost you know but from million to whatever it was and he's not able to recover that from his customer because he didn't know what he's you know didn't pay attention to the contractual matrix ensure that the correct documentation was in place so when the container ends up in the beach all right as one of my colleagues horses make sure that when the music stops you've got a chair okay no I know that was very dry so I have to end off with some shipping humor and apologies to Michael heads I did phone him and ask him if he was going to use this clip just to wake you up again so the college thanks for coming in it's a great pleasure thank you this ship that was involved in the incident off Western Australia this week either one the front fell off yeah yeah that's not very typical I'd like to make that fine well how is it done typical well they're a lot of these ships going around the world all the time and very seldom there's anything like this happen I just don't want people thinking when tankers out safe was this tanker safe well I was thinking more about the other ones the ones that are safe here the ones the front doesn't fall off well if this wasn't safe why did it have 80,000 tons of oil and if I'm not saying it wasn't safe it's just perhaps not quite as safe as some of the other ones why well some of them are built so the front doesn't fall off at all wasn't this boot so the front would be falling obviously not how do you know well cuz the front fell off and 20,000 tons of crude oil spilled into the sea caught fire it's a bit of a giveaway I just like to make the point that that is not normal well what sort of stands do these oil tankers built all very rigorous maritime engineering standards what sort of thing well the front is not supposed to fall off for a start what other things well there are regulations governing the materials that they can be made on what materials all cardboards out and no cardboard derivatives like paper no paper no string no sellotape rubber no rubbers out they've got to have a steering wheel there's a minimum crew requirement what's the minimum crew oh well I suppose so the allegations that they're just designed to carry as much oil as possible the consequences are in the salud absolutely ludicrous these are very very strong vessels so what happened in this case well the front fell off in this case by all means but very unusual it's a because why did the front foot fall off well a wave hit it the wave hit a wave hit the ship is that unusual oh yeah at sea chance four million so what do you do to protect the environment and girls like the ship was towed outside the environment into another environment no no I've been towed beyond the environment not in the environment but from one environment to another environment now it's beyond the enviros not in an environment if they're bent it's beyond the environment well what's out there nothing's out there there must be something there is nothing out there all there is a sea and birds and fish and and 20,000 tons of crude oil and what else in a fire and anything else and the part of the ship that the front fell off but there's nothing else out there senator cause that you an elite void yeah morality environments perfectly safe Rattata true sorry not now that you're all awake again are there any questions