Ground rent vs demurrage-detention is there a difference..??
This is a question from Siddhartha
What is ground rent , is it different from demurrage and detention ?and who will collect ground rent ?
Storage could occur under below conditions :
- On import full container(s) at the port or inland terminal while it is under the custody of the shipping line before the container is released to the importer..
- On import full container(s) at a customs bonded warehouse where the importer or customs have requested it to be moved for the purpose of inspection etc..
- On empty containers at an empty depot where the shipping line is storing it for the purpose of utilisation for exports, but due to overstock, or lack of space on board the ship or lack of exports they are forced to keep the boxes under storage..
- On export full containers at the port or inland terminal while it is under the custody of the shipping line before the container is shipped on board.. This could generally happen if the exporter has already moved the container into the port, but has some documentary or other issues to sort out before it is shipped.. By contrast very less containers go into storage over exports as compared to imports..
- On transhipment containers (full or empty) at the port while it is under the custody of the shipping line awaiting a connecting vessel..
- On containers that are detained by Govt. authorities like Customs, Health, Police etc..
Storage is charged and collected by the entity that is storing the container in their facility for the shipping line or the exporter or importer..
Demurrage and detention is charged by the shipping line in accordance with the number of free days offered and as per the tariff set by the shipping line..
Storage is charged by the port, inland terminal or shipping line in accordance with the number of free days offered and as per the tariff set by them..
To summarise :
- Storage amount charged by the entity storing the container (full or empty) till it moves out of the facility
- Demurrage amount charged by the shipping line from the time of expiry of free days till it is moved out of port or terminal for unpacking
- Detention amount charged by the shipping line from the time the full container is picked up till it is returned empty to the depot nominated by the shipping line
- Once returned, till it is reused, the empty container can incur storage at the depot
So its more or less like a circle of life..
The National Chamber of Exporters (NCE), Exporters Association of Sri Lanka (EASL), and the Joint Apparel Association Forum (JAAF) welcomed market free initiatives to improve export competitiveness in a statement released yesterday.
Following is the full text of the statement:
We are delighted that the 2014 Budget presented to the Parliament by the President on 21 November 2013 has brought redress to the export sector, manufacturers and consumers. This bold and pragmatic policy decision taken has addressed a very long standing grievance of the industry which suffered due to unfair trade practices being used by strong parties.
The grievance of the exporter was the imposition of charges levied outside of the freight contract by various parties in the logistic chain. The origin of this issue traced back to 1990 s where the shipping lines arbitrarily and unilaterally introduced a separate Terminal Handling Charge (THC) which was in fact part of the freight until 1997, where exporters were able to negotiate market driven freight rates.
In the case of FOB shipments, the buyer paid the full freight. Since the imposition of THC in 1997, the importers and exporters are now burdened with over 42 different charges added on outside the freight by the rest of the supply chain services at their own will. The most affected were the SME exporters, garment exporters and the domestic consumer.
The failure was that while liberating the shipping policy, authorities did not introduce a system of checks and balances in the international trade services like in other countries. Exporters continuously protested since 1997 by seeking redress from various authorities to resolve this issue without success.
However, the importing community with no opportunity to seek redress, silently waited and the cost of all imports have increased not only in relation to industrial imports but in relation to essential commodities such as dhal, onion, green gram, garlic, etc. and added those charges in the final cost in the domestic market, which had a direct impact on the cost of living of the people of this country. Agony was that sometimes the concept of zero freight was also used while other charges are collected from the importer.
It is once again President Mahinda Rajapaksa who, displaying his capacity to take bold policy decision in the right direction, has taken the courage, time and the challenge to address this problem.
We are glad that having studied, analysed and with a proper understanding these new directions have been now announced on a fair and balanced judgment by pronouncing to bringing proper legislation to promote the shipping economy in a more structured manner and to prevent the monopoly pricing in the shipping trade.
Introduction of a fully-fledged Merchant Shipping Authority by introducing timely amendments to the Merchant Shipping Act to meet modern demands displayed the wisdom of the Government in identifying the need to harness the full potential benefits of improved connectivity through infrastructure development, far sighted hub regulation and realising all hub concepts enshrined in the Mahinda Chinthana the mid-term policy framework of the Government.
At the same time, in order to curb elements which are hindering export competitiveness, no charges other than freight and specified international charges for container cargo will be permitted to be imposed effective January 2014. Displaying a fair and balanced approach, the Government has recognised that the shipping industry has to be promoted and has offered a substantial tax reduction from 28% to 12% to boost shipping related activities making it at par with export revenue.
We see the clarity and consistency of the policy framework. We are certain that while exporters will benefit, the consumers of essential imported commodities will be in an advantageous position as this measure will have direct impact on the cost of living.
We, on behalf of the export community, would like to place our sincere appreciation and congratulations to the President, the Treasury and all other policy makers, officials and the Government for announcing a balanced, farsighted budget and taking a fair and a professional approach to strengthen the competition laws of Sri Lanka which has been lagging since 1977 when the economy was opened. This will certainly help to eliminate present day anticompetitive practices and bring in discipline and justice to the export sector and address the most long outstanding grievance of the exporters.
Exports of liquefied natural gas are contracting for a second year, diminishing the number of available cargoes at a time when companies from Vitol Group to Glencore Xstrata Plc (GLEN) are expanding their trading teams.
Global exports in the first eight months were 5 percent lower than a year ago, according to data from Poten & Partners Inc., a New York-based shipbroker. Thirty-five companies now trade LNG in Europe, from fewer than 10 a decade ago, said Douglas Ferguson, a managing director at Webber Chase Ltd., which recruits for the commodities industry.
Banks and trading houses are expanding in the $150 billion LNG market, lured by volumes that jumped 38 percent in the past five years. While demand is still growing as nations favor cleaner fuels, the number of spot cargoes stagnated at about 25 percent of the total since 2011. Rising domestic demand, fewer-than-expected Angolan shipments and disruptions in Nigeria and Egypt have cut the number of tradable sources, meaning nobody s making a fortune trading LNG, Vitol Chief Executive Officer Ian Taylor said last month.
With output from Angola still limited, it is very difficult for newcomers to source reasonably priced flexible cargoes, said Yves Vercammen, the general manager at the trading and shipping unit of Eni SpA (ENI), which has long-term contracts for LNG from Algeria, Nigeria and Qatar. On the other hand, there is a growing financial trading market that LNG traders definitely need to be in now. Price Boost
Spot and short-term imports, defined as contracts lasting four years or less, reached a record 25.4 percent of total trade in 2011, from 16.3 percent in 2009, before dropping to 25 percent last year, according to the International Group of LNG Importers, or GIIGNL, a Paris-based industry group. The ratio probably will be little changed in 2013, Javier Moret, head of LNG origination at RWE Supply & Trading, predicted in September.
The lack of cargoes is boosting prices, with LNG for delivery to northeast Asia in the next four to eight weeks averaging $18.10 per million British thermal units in the week ended Nov. 11, or 30 percent more than a year earlier, according to data from World Gas Intelligence in New York.
Traders, producers and consumers are meeting in Paris today for the three-day World LNG Summit, with representatives from more than 120 companies as well as government officials.Exponential Growth
About 150 people are involved in LNG trading and origination in Europe, according to Webber Chase s Ferguson. The biggest teams are at London-based BP Plc (BP/), Paris-based Total SA (FP) and Moscow-based OAO Gazprom (GAZP) while Citigroup Inc. (C) and Bank of America Corp. (BAC) are the biggest banks transacting the fuel, he said. Glencore hired traders from Morgan Stanley in September.
Although there are a finite number of vessels, the number of LNG traders and originators has grown exponentially in recent years, Ferguson said by e-mail from Singapore. The trading market was non-existent a decade ago but we have seen many new entrants challenge the monopoly of the majors in this capital intensive, but potentially ultra-high-reward industry.
Traders can profit from the difference in costs between regions. LNG for delivery to southwest Europe cost $12.60 per million Btu in the week ended Nov. 11, compared with $18.10 in northeast Asia, according to WGI assessments.
Angola LNG, the only production plant with no long-term contracts, is operating at about 20 percent capacity and will ship three more cargoes this year, on top of five since it started in June, Oil Minister Jose Maria Botelho de Vasconcelos said in an interview this month. The $10 billion facility expected to load at least 13 cargoes this year, George Kirkland, vice chairman at operator Chevron Corp. (CVX), said Aug. 2.Force Majeure
Supplies to Nigeria LNG s Bonny Island plant were disrupted this year by leaks in a pipeline caused by people trying to steal fuel and a three-week blockade of the terminal because of a dispute over levies. A six-month force majeure, a legal clause that excuses a supplier from meeting its delivery commitments because of events beyond its control, was only lifted in April.
Egypt stopped supplying gas to the Segas LNG plant because of rising domestic demand, Sherif Haddara, chairman of state-run Egyptian General Petroleum Corp., said in February. Egyptian LNG, the country s second liquefaction plant, diverted half its gas to the domestic market, BG Plc, which buys from the facility, said in May.
Exporters worldwide produced at about 85 percent of capacity in 2013, Andrew Walker, BG s vice president for global LNG, said today at the World LNG Summit.
Global LNG exports, including reloads from import terminals, were equivalent to almost 209 billion cubic meters of gas in the first eight months, compared with 220 billion a year earlier, the Poten data show. Shipments fell 0.6 percent in 2012, the first annual drop in the data starting in 2002. Trade contracted 1.9 percent last year, the first decline in three decades, GIIGNL estimates.Wonderful Colleagues
There are very few freely tradable sources, therefore we will bid on every single one of them, Vitol s Taylor said at a conference in London on Oct. 1, sitting on a panel with Gunvor CEO Torbjorn Tornqvist and Alex Beard, the head of Glencore s oil unit. The trouble is our wonderful colleagues here on the platform will also bid on every single one of them.
Supply will fail to keep pace with consumption until at least 2015, according to Bank of America. Regasification capacity, a proxy for demand, will expand as much as five times faster than production capacity next year, and prices in Asia may reach a record in the next several months, the bank said in a report Nov. 13.
Japan, the biggest buyer, shut most of its atomic plants after the Fukushima disaster in 2011 and South Korea, the second-biggest consumer, decided in May to halt two nuclear reactors. Import capacity in China, India, Singapore and Malaysia is increasing, boosting demand for cargoes, Bank of America said.Capacity Increase
Global production capacity will increase by 130 billion cubic meters by 2018 as 12 new liquefaction plants open, the Paris-based International Energy Agency said in a report last week. There were 89 liquefaction plants operating at the end of last year with annual capacity of 384 billion cubic meters.
Supply will be boosted from 2015 as projects from Australia to the U.S. start producing, GIIGNL said in June. Trade will increase 31 percent by 2018, from last year s levels, the group said. International trade in LNG reached 236.6 million tons in 2012, from 171.1 million tons in 2007, GIIGNL estimates.
Interest has been growing particularly as participants find new uses for LNG, said George Stein, the New York-based managing director of Commodity Talent LLC, a recruitment company. Interest on Wall Street has grown as well as interest in the large merchant trading firms. Banner Year
Demand for traders with experience in the Atlantic is rising as companies in London seek to get everything in place so that 2015 can be a banner year, said Ferguson of Webber Chase. A senior trader can earn $300,000 to $500,000 a year and as much as $1 million if they meet earnings targets, he said.
The LNG market is valued at more than $150 billion, according to Rob West, an analyst at Sanford C. Bernstein in London. That s based on the 240 million tons traded last year at an average price of $13 per thousand cubic feet. Demand will reach 480 million tons by 2035, Bernstein said in a September report.
While previously only companies with stakes in liquefaction plants bought and sold the fuel, more trading houses are now transacting cargoes, said Laurent Maurel, the senior vice president for strategy, markets and LNG at Total.
Successful LNG trading businesses typically take at least two years to build, Ferguson said. A handful of trading houses and an even smaller number of investment banks have got it right by developing innovative LNG businesses without spending billions of dollars in investments. Source: Bloomberg
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Proper package labeling for your export shipment can mean the difference between items reaching final export destination in perfect shape, and reaching it with damages or not arriving at all. The following labeling tips and guidelines will give your packages an excellent chance on their travel overseas.
1. Label your containers or boxes with all the required information.
For export shipment, this includes but not limited to, volume and/or weight, shipper s mark, consignee s mark, handling instructions and cautionary signs (for example the symbol of a glass, the word glass , and the phrase this side up, or an arrow pointing up), order number, country of destination, country of origin, and size of the case and number of package if there are more than one containers or boxes.
2. Don t include additional information that s not required.
If content specification is not required then avoid providing such extra information. Identifying valuable items in a container or box can invite vandals as well as thieves. Use coded marks unless local laws does not allow it.
3. Don t use packages with old labels.
It is certainly environmentally friendly to reuse and recycle, but all old marks, advertising, addresses should be removed or obscured permanently to avoid confusion on the part of the freight forwarder, carriers, and handlers.
4. Make sure all labels are clear and permanent.
Your labels should be large enough to be read, and all information should be printed in the appropriate language. Labels for your shipment should be resistant to outdoor elements and waterproof.
5. Label more than one side of your box or container.
Transfer points and destination marks, as well as consignee marks should appear in at least three sides of your package. Directly confirm shipping requirements with your carrier or freight forwarders.
6. Use international carriage symbols.
Exporters can get self-adhesive labels with international symbols. These are cautionary signs and symbols providing freight forwarders, handlers, and carriers with instructions on proper manipulation of packages. Some of the most common symbols include: umbrella with raindrops (meaning to keep dry); and wine glass (meaning fragile). There are also less plain and simple symbols, such as a penguin inside a box with diagonal line across it (meaning do not freeze), and a penguin inside a box (meaning keep frozen). When an international shipment needs transfers through various nations with different languages, these global symbols can act as the universal language that keep your shipment safe.
This year Britain has a much larger barley crop than usual, due to a we autumn in 2012. In October, one cargo of 50 000 tonnes of barley was loaded for shipping to the world s top importer of the grain, Saudi Arabia. The country is expected to import 7.5 million tonnes in 2013/14, slightly lower than the previous season. The UK also exports barley to Tunisia and Libya.
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