Shipping is the process of organizing and monitoring the transport of goods from origin to destination.
This can be arranged by the seller, manufacturer, importer or exporter, or can be outsourced to a logistics service provider, who then acts on behalf of the shipper. Shipping relates to the logistics information processes of industries and traders and to the freight forwarding functions of transport companies.
Important issues when organizing transport are:
- transport costs,
- the time window for delivery,
- preferences for certain modes of transport,
- relationships with company systems for purchasing or production,
- arrangements for special products,
- possible routes,
- flexibility of the transport arrangements, and
- requirements for transport equipment to be used.
Goods are usually transported following a purchase agreement between a seller and a buyer. Increasingly goods are also shipped as internal movements of parts and finished products within multinational companies (it is estimated that this covers some 70% of international transport). An important part of a trade agreement is the conditions agreed between the parties on their responsibilities, liabilities and costing arrangements for transport and delivery. The International Chamber of Commerce has developed a set of standard terms of delivery, known as the INCOTERMS, which are widely used.
Shipping can be very complex, as it may involve various private parties (e.g. buyer, seller, exporter, importer, shipping lines, warehouses, terminals, freight forwarders, Customs brokers) and authorities (Customs, port authorities, health authorities, etc.). All these parties need to be timely informed about the progress and events in the transport chain. It is often difficult to trace and track goods whilst in movement. In international shipping many cross-border Goods Specific Requirements and procedures have an impact on the physical transport and its management. Good communication between the parties in the transport chain is essential for the smooth operation of the shipping of goods. It is hence very important that international data exchange standards are used, thus facilitating and simplifying the complex shipping process.
Main trade facilitation issues in shipping are:
- compliance with product-related regulations for the preparation of the consignment, its packaging and the transport equipment used,
- preparing proper documentation to accompany the goods or to pass to parties in the transport chain, such as waybills, certificates of country of origin, certificates for agricultural goods,
- passing relevant detailed information about the consignment to the parties that organize and execute (part of) the transport so that they can comply with regulatory requirements and procedures,
- dealing with changes to the planned transport and hence changes in the required documents, for example when changing the mode of transport used,
- dealing with changes in ownership of and responsibilities for the goods and transport, and
- ensuring the security of goods during transport.
Solutions to the above issues are: adherence to International Conventions from international authoritative bodies such as the World Customs Organization and International Transport Organizations; the introduction of harmonized and standardized documentary requirements; cross-border transit arrangements; use of modern Information Technology in the form of Port and Airport Community Systems and shipping portals; and logistics information systems that allow information exchange throughout the transport chain.