Cargo, when transported around the world is faced with many risks, regardless of the shape and size. Be it the weather or human error, cargo loss is revenue lost for exporters and importers. This is where marine insurance will be crucial. Marine insurance will typically insure losses against physical damage to cargo on the move or in storage.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>
But what is marine insurance exactly?

In many ways similar to regular insurance, marine insurance is designed to meet the needs of the shipping industry. It helps to protect against loss or damage of cargo including the cost of moving it, or liability to a third party occurring during a shipment. It can be extended to cover losses on inland transport either by inland waters, road or rail.

How will marine insurance offer protection for your cargo?

Marine insurance policies tend to cover commonly defined packages. If you are looking for a fully comprehensive cover you may need what is called “Institute Cargo Clause (All Risks) – ICC (A)” which pretty well covers every risk you’re like to encounter. The alternative is to look for a plan that lists out specific risks that will be covered.

And these come in two main varieties.

ICC (B) covers a long list of named risks or perils such as fire, ship loss, unloading in the wrong place when your ship gets into trouble and the usual natural phenomenon such as earthquakes and volcanic eruptions.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" alt="" width="300px">You would also likely be covered for things such as water getting into your cargo or your contained being lost at sea for whatever reason.

The third, and simplest cover, - ICC(C) focuses on disasters such as explosions, fires, lost ships or jettisoned the cargo.

There will be times when different levels of cover seem appropriate and you will be able to decide what works for you on any given consignment. Importantly, a shipper and consignees need to be very aware on a case by case basis what level of cover they have brought as there are considerable differences between the policies that are on sale.

Obviously the policy will include the full terms that govern your contract but you may want to check the exact meaning of terms such as General Average - is a useful [website](http://www.duhaime.org/LegalDictionary/Category/MaritimeLawDictionary.aspx) &nbsp;full of maritime legal terms.

With the right insurance protection, not only will your cargo be well protected, your investment in your cargo, and protection will be well rewarded.

In the event that your shipment is lost, marine covers ensure that you do not lose out completely on the revenue you would have earned through the lost cargo. Moreover, you will have peace of mind, knowing that your cargo is well protected in the event of any eventuality that could occur.

So check out the insurance being offered by providers on the Cogoport’s platform and enjoy the protection of your shipment with ease.

Looking to sign up with Cogoport’s service?

Marine Insurance 101: Everything You Need to Know

Rice Export from India: Insights with Expert

In order to know if GRI is a necessary evil or not, let’s first understand the true meaning of GRI.<h2>What is GRI?</h2>GRI stands for Global Reporting Initiative and it is an international organization which helps governments, businesses, and organizations communicate and understand the impact that they have on various social and political issues. These issues include climate changes, corruption, human rights and many more.GRI helps various organizations have a positive impact on the environment, society and in turn the economy of a country. For the same reason, more and more companies have started publishing an annual sustainability report.<h3><a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a></h3><h3>Why do companies and organizations find it useless?</h3>Some believe that these reports are more of a waste of time and don’t help in progress. Why? The following are a few of the reasons why organizations believe it is an impractical practice:<ul><li>These reports require extensive research which needs time as well as efforts.</li><li>GRI reports require complicated language.&nbsp;The use of complicated and the lengthy text reduces the understandability of the text.</li><li>The general audience will not waste their time into reading a report which lacks is difficult to understand. This is the reason sustainability reports sometimes fail to connect with the general audience.</li><li>Apart from GRI, there are many more standards for creating sustainability reports like International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB). People often get confused between these standards and mess up the report.</li></ul>However, to think that these reports are unnecessary and fail to add value to the business is wrong. GRI acts as a bridge between governments and businesses and enables them to make a positive contribution to Sustainable Developmental Goals.Let’s take a look at the benefits of reporting:There are some internal benefits that the companies and organizations can experience if they indulge in the practice of creating GRI reports. They are as follows:<ul><li>The biggest advantage of the GRI report is that it allows companies and organizations to get familiar with the risks and opportunities involved in their business.</li><li>The report identifies the effect of their financial performance on their non-financial performance and vice-versa.</li><li>Businesses can easily formulate a long-term management policy and plan.</li><li>The GRI report helps the organization work efficiently and reduce costs.</li><li>Companies can perform in compliance with the various laws, quality and performance standards, norms and codes.</li><li>Creating GRI reports allows companies to recognize and stay clear from possible environmental, social or governance failures.</li><li>It also makes the comparison between internal performance and between organizations and sectors easy.</li></ul>Apart from the internal benefits, there are also certain external benefits GRI reports. They are as follows:<ul><li>GRI reports help in environmental safety and helps organizations abide by social and governmental laws.</li><li>It helps in the betterment of a company and improves their brand reputation and loyalty.</li><li>Allows stakeholders to fully understand the core values of the organization and also their tangible and intangible assets.</li><li>Helps in the sustainable development of the organization.</li></ul><h3><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" alt="" width="300px"></h3><h3>Conclusion</h3>GRI reports are available on their website and can be viewed by anyone. The spreadsheet with links to all reports is also available. It is necessary for a company to understand its economic, environmental and social impact, to be able to improve it. These reports enable transparency and foster sustainable growth for businesses. No matter how cumbersome the reports are, GRI is a necessary evil which organizations need to embrace.

Global Reporting Initiative - Is It Necessary?

What is a brand? The <a href="https://www.oxfordlearnersdictionaries.com/definition/english/brand_1">dictionary defines</a> it as “a type of product, service, etc. made or offered by a particular company under a particular name”. But there’s more to it. When a customer recognises your product/company easily, trusts it and is loyal to it, that’s what a brand is. In an overcrowded market, a brand is the best way to stand out.You don’t need to be a huge conglomerate to be a trusted brand. Many small and medium-sized businesses have managed to become household names, not just in their home markets but globally. This is true for exporters as well. Many exporters are now serious not only about expanding further into markets abroad but also about building an international brand identity.This blog takes a deep dive into the importance of building an international brand to grow your export business overseas. Read on to learn about:<ul><li>Brand awareness and what it means</li><li>How to build an international brand</li><li>How to increase brand awareness among foreign buyers</li><li>Social media strategies to build brand awareness&nbsp;</li></ul>‍<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a><h2>Branding benefits for your export business</h2>Why should I take the trouble to build an international brand? There are many reasons:&nbsp;&nbsp;<ul><li>Customers recognise your product more easily&nbsp;</li><li>They associate it with good quality and customer service</li><li>They are willing to pay more for it</li><li>Branding gives your company greater credibility</li><li>It drives new business – customers are more likely to trust a branded name&nbsp;&nbsp;</li><li>It attracts talent, boosts your company’s confidence</li><li>It increases brand awareness&nbsp;&nbsp;&nbsp;</li></ul><h2>What is brand awareness?&nbsp;</h2>Recognising a brand from visual indicators (logos, colours) is called brand recognition. Now take that a step further. When the customer not only recognises your brand but knows what kind of product you sell, at what price, your principles and values, and what kind of buying experience you offer, that is called brand awareness.To understand how brand awareness works, let’s take a look at some of the world’s top brands and their level of brand awareness:&nbsp;<ul><li>Coca-Cola: When you want a fizzy drink, do you automatically ask for a Coke? With Coke now synonymous with cola, it’s no wonder Coca-Cola is the most recognised beverage in the world with a brand value of $64.4 billion in 2020.</li><li>Apple: The half-bitten apple on your Macbook or iPhone is easily one of the most recognisable logos. Thanks to the brand awareness it has created, Apple can afford to price its products way ahead of its competitors.</li><li>Amazon: When you shop online, you probably go to Amazon – the world’s largest online retailer.&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Nike: This sportswear brand not only has one of the most easily recognised logos (the swoosh) but also an iconic motto (Just Do It).&nbsp;&nbsp;&nbsp;</li><li>Netflix: <a href="https://www.britannica.com/topic/Netflix-Inc">Set up in 1997</a>, Netflix has become a household name in the streaming and content business.&nbsp;&nbsp;</li><li>Marlboro: When it comes to cigarette ads, most of us remember the Marlboro Man series. Though the commercials are now outdated, Marlboro remains the top tobacco brand with a brand value of $26.8 billion.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Amul: Not as famous as its global competitor Nestle, but Amul is India’s top dairy brand and among the<a href="https://www.financialexpress.com/industry/amul-becomes-first-indian-dairy-company-to-be-in-rabobanks-global-top-20-list-nestle-leads/2069079/"> top 20 dairy companies</a> in the world. The<a href="https://amul.com/m/amul-topical-story"> Amul Girl</a>, who has featured in its ad campaigns for more than 50 years, is an advertising icon.</li></ul>‍<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/609972170f5957bc1f3c2dae_How%20to%20build%20an%20international%20brand.png" loading="lazy" width="auto" height="auto" alt="How To Build An International Brand for your exports business"></div></figure><h2>How to build an international brand</h2>So, how do you build an international brand? In the export business, this is a tough task. You might be a well-known brand at home. But, when you set foot on foreign territory, you are suddenly an unknown entity. The challenges of building a brand in a new export market can be daunting:<ul><li>You need to build trust among customers from scratch</li><li>Few customers will actively search for your brand. You have to reach out to them first</li><li>Website traffic in export markets tends to be low</li><li>Most importantly, there is no shortcut to building a brand in a foreign market&nbsp;&nbsp;&nbsp;</li></ul>That’s not to say it can’t be done. Here’s what it takes to build an international brand for your export business:&nbsp;1. Find a market: Step 1 is to find a market for your product. It doesn’t have to be the largest. What’s more important is that the demand for your product in that market is consistent and that this demand is not easily met by a rival. When considering a potential market, ask yourself:<ul><li>Is the demand consistent or growing?</li><li>Will I make a profit with the price I get?</li><li>Who are my key competitors? How do I stand out from them?&nbsp;</li><li>Will I face trade barriers exporting to that country?</li><li>Does this country have a climate conducive to business?</li></ul>For more details on finding foreign buyers for your product, read our blog<a href="https://www.cogoport.com/blogs/the-great-export-challenge-how-to-find-buyers-for-your-products"> here</a>&nbsp;‍<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>2. Deliver the goods: Can you consistently supply goods to that market within its laws and rules? Do your products meet local standards on safety, health, environment and so on? Only enter a market you know you can deliver to.&nbsp;3. Adapt: This might include changing your product name, logo and/or colours to adapt to cultural differences or to avoid causing offence even by accident. <a href="https://observers.france24.com/en/20100426-french-cheese-means-rotten-farsi-kiri-genitalia">French cheese brand Kiri</a> underwent a name change in Iran and became Kibi because the original name in Farsi meant rotten. As you can see, understanding cultural differences is key. Use local resources and hire specialists who will ensure you aren’t lost in translation.4. Be consistent: While you might need to embrace change in certain areas, make sure your core identity and principles remain consistent so that your customers know exactly what to expect when they buy a product from you, no matter where you are located.5. Pay attention to packaging: No matter how good your product, it might be defeated by faulty packaging. Find out if your target country has packaging requirements. For example, do they demand additional nutritional information on food packaging? Or, does the information have to be in the local language?&nbsp;6. Protect yourself: File the necessary trademark and patent protections to preserve&nbsp; your international property overseas.<h2>3 easy ways to create brand awareness</h2>So you’ve established an international brand. What’s next? You need to build brand awareness. To do this, you need to communicate with potential buyers, let them know you exist and that they need to buy your products. There are many ways to communicate with customers. But for a first-time exporter or a small business testing a foreign market, your budget will probably drive your choices. Here are three affordable options for you:&nbsp;&nbsp;&nbsp;‍<a href="[Tuesday 11:10 am] Raghav Sand https://app.cogoport.com/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" width="auto" style="width: auto; height: auto;"></a><ol><li>Localise your website: Your website is the face of your brand in a foreign market. And studies say customers are more likely to buy on a website in their native language. Website localisation doesn’t end with translation. Other localisation tactics include offering your target audience the option to buy in their own currency, or changing your website’s colour scheme for cultural reasons. For example, if you export bridal wear, remember that western countries associate the event with white while in China, the colour is red. Some popular website localisation tools include SDL Trados Studio, a computer-assisted translation (CAT) tool; <a href="https://www.xbench.net">XBench</a>, a quality assurance tool that verifies your website’s translation; and <a href="https://www.adobe.com/in/products/photoshop.html?sdid=SGDJMMG3&amp;mv=search&amp;ef_id=Cj0KCQiAwf39BRCCARIsALXWETwYFyMiPgU-NDPuT_SwGJWnWeJEMjJgiynNmhsStb3w2V_x-2gHP0QaAlNlEALw_wcB:G:s&amp;s_kwcid=AL!3085!3!444587836691!e!!g!!adobe%20photoshop!221441588!17534749028&amp;gclid=Cj0KCQiAwf39BRCCARIsALXWETwYFyMiPgU-NDPuT_SwGJWnWeJEMjJgiynNmhsStb3w2V_x-2gHP0QaAlNlEALw_wcB">Adobe Photoshop</a>, a desktop publishing (DTP) tool that helps you with your page layout.</li><li>Form local partnerships: Partnering with a trusted local business is a great way to build goodwill among the community and increase your brand awareness. You can co-sponsor local events (festivals, contests, etc), even donate to local charities. Customers tend to view businesses that give back more favourably than those that just sell. Thankfully, it’s not that difficult looking for a local business partner even if your exposure to your new market is limited. Trade directories like <a href="https://www.globaltrade.net">GlobalTrade.net</a> hosts listings of hundreds of businesses and companies in specific regions. You can also tap government institutions (embassies, export promotion councils) that help exporters network with businesses abroad. Additionally, there are government portals (<a href="https://fieo.globallinker.com/login">FIEO GobalLinker</a>, <a href="https://www.trade.gov/services-current-exporters">International Trade Administration</a>) that provide a platform for exporters to connect with entrepreneurs overseas. You can read our blog on digital tools to help run your import/export business <a href="https://www.cogoport.com/blogs/35-digital-resources-you-need-to-run-an-export-import-business">here</a>&nbsp;</li><li>Be social: Work the social media. This goes without saying. More than 3.8 billion of the world’s population uses Facebook, Twitter, Instagram, YouTube, LinkedIn or some other social network. Pick the platform best suited for your market rather than randomly using them all. Each of them works in a particular way:</li></ol><ul><li>Facebook: You can join one of many groups/communities relevant to your brand. This will not only give you an opportunity to spread the word about your business but help you gain valuable information on how things work in your new market and even generate leads that result in sales.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Twitter: With <a href="https://www.statista.com/statistics/970920/monetizable-daily-active-twitter-users-worldwide/">187 million daily active users</a>, Twitter is an obvious choice to market your brand. You can use its search engine to look for potential buyers (if you export liquor, look for users who tweeted about wine). By liking/retweeting their tweets and messaging them directly, you’ll build your own following.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Instagram: A picture is worth a thousand words, they say. Instagram – with over a <a href="https://www.statista.com/studies-and-reports/">billion monthly users</a> – is the answer if you export visually appealing products such as jewellery, furniture or clothing.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>YouTube: You can create your own videos or advertise. What’s great about YouTube ads is that they reach a very targeted audience – customers looking for a specific product in a specific location. Also, having your ads appear on a particular channel means access to the channel’s fan base.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>LinkedIn: You can join Campaign Manager, LinkedIn’s advertising platform, which guides you on setting up your ad campaign and even has a brand awareness feature.</li></ul><h2>Build an effective social media strategy</h2>Social media is key to brand awareness. Consider this: social marketers say increasing brand awareness is their biggest goal, ahead of generating sales and everything else. Here are some ways you can use social media to build a buzz around your brand:&nbsp;&nbsp;<ul><li>Post regularly. Your content must be engaging and visually appealing for you to get noticed, liked and shared. Instead of dishing out boring information, ask questions and start a conversation. Be quick to respond. Don’t use the same content across platforms. Different networks call for different tones. LinkedIn is serious but Twitter and Facebook allow you to be more casual.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Use hashtags. Hashtags are easy and a great way to make your posts searchable.</li><li>Tag others. It’s a simple yet brilliant strategy to get others talking about you.&nbsp;&nbsp;&nbsp;</li><li>Use paid ads. Facebook and Twitter ads help you get noticed and aren’t expensive.</li><li>Work with influencers. Get your brand displayed and discussed by influencers. For most exporters, celebrities might not be in their budget, but that’s okay. There are hundreds of influencers who are regular people with large, established followings who can be just as effective.</li><li>Don’t just be about the sales. Bombarding your audience with content focused solely on driving sales will turn them off. Engage them with stories, photos, videos and&nbsp; infographics.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Go viral. It’s easier said than done. But if you manage to create unique content that quickly catches on, your brand will be all over social media.</li><li>Watch out for bans. There might be restrictions on certain platforms in certain countries. China, for example, has banned Facebook, Twitter, Instagram and YouTube. But it has Weibo, a microblogging service that is extremely popular.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li></ul>And that’s how easy it is to create an effective brand awareness strategy. With a little time and effort, you could turn your export business into the next big brand on the global stage.

International Brand Building For Export Business

If you are in the import-export business, chances are you have heard of Incoterms rules. The International Chamber of Commerce (ICC) defines Incoterms rules as “the world’s essential terms of trade for the sale of goods”, which “provide specific guidance to individuals participating in the import and export of global trade on a daily basis”. Since their introduction in 1936, the Incoterms rules are updated every 10 years. The latest update was carried out in September 2019, following which the ICC released Incoterms 2020. These came into effect on January 1, 2020.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>This blog throws a light on what Incoterms 2020 means for importers, exporters and international trade. It will cover the following subjects:<ul><li>What are Incoterms</li><li>A short history of Incoterms</li><li>Why Incoterms are important to international trade</li><li>The 11 Incoterms currently in use&nbsp;</li><li>Incoterms 2020: The key changes</li><li>Things to remember when using Incoterms in your business&nbsp;</li></ul><h3>What are Incoterms?</h3>Incoterm is an acronym for International Commercial Terms. The Incoterms rules are a globally recognised set of standards for the delivery of goods by all modes of transport (road, rail, air and sea). They are the terms buyers and sellers involved in international and domestic trade agree on. They are recognised by governments and legal authorities across the world.&nbsp;&nbsp;&nbsp;&nbsp;The Incoterms rules are the creation of experts brought together by the ICC. The ICC describes itself as “an institutional representative of more than 45 million companies in over 100 countries with a mission to make business work for everyone, every day, everywhere”. The Incoterms rules are a trademark of the ICC and are registered in multiple countries, including the United States, the United Kingdom, Australia, China and India.<h3>History of Incoterms</h3>The ICC was created in 1919, the year after the end of World War I. Its purpose was to create what global trade sorely lacked at the time: a system of rules to govern trade. The process started with an exercise in understanding the trade terms used by merchants then. The first findings, published in 1923, covered just six terms from 13 countries and reported discrepancies in interpretations. After more studies, the ICC published the first Incoterms rules in 1936, again with just six terms. These rules were not revised till 1953, primarily because of World War II. When the revised list was published, it had three additional terms. More revisions followed and that is how Incoterms 2020 came to be.<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a><h3>Importance of Incoterms in International Trade</h3>It is important for importers and exporters to familiarise themselves with the Incoterms rules, especially those associated with their business. This is because:<ul><li>Incoterms rules are universal and hence provide clarity and predictability to businesses</li><li>They state precisely and clearly what responsibilities, costs and risks lie with the seller and the buyer&nbsp;</li><li>They guide sellers and buyers on how to initiate and complete a range of transactions including packaging and labelling a shipment for freight transport, filing a purchase order, and preparing a certificate of origin</li></ul><h3>11 Incoterms Currently in Use</h3>The Incoterms rules provide globally accepted definitions and rules of interpretation for common commercial terms. These terms are better known by their three-letter acronyms. There are currently 11 Incoterms in use. Some apply to all modes of transport while some are specific to a particular mode. These are the 11 rules briefly explained:&nbsp;<ul><li>EXW (Ex-works): This means that the seller makes the goods available at a specified location, usually the seller’s factory. The buyer is responsible for onward transportation of the goods and bears the cost for the same.&nbsp;&nbsp;</li><li>DAP (Delivered At Place): The seller is responsible for delivering the goods to a designated place.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>FOB (Free on Board): The seller completes delivery when he loads the goods on a ship specified by the buyer at a named port. Hence, the seller is “free” of responsibility once the goods are “on board” the ship. Any liability for damage or loss thereafter passes to the buyer. This rule applies to goods transported by sea or inland waterway.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>FCA (Free Carrier): The seller delivers the goods to a carrier or an agent nominated by the buyer at the seller’s premises or another specified location.</li><li>FAS (Free Alongside Ship): The seller delivers the goods alongside the ship (on a barge or quay, for example). The buyer must load the goods on the ship. This rule applies only to sea transport.&nbsp;&nbsp;&nbsp;</li><li>CFR (Cost and Freight): The seller delivers the goods on a ship at the designated port and pays for cost and freight to bring the goods to the port.&nbsp;&nbsp;&nbsp;&nbsp;</li><li>CIF (Cost, Insurance and Freight): The seller delivers the goods on the ship at the named port and pays for cost, freight and insurance to transport the goods to the port.&nbsp;</li><li>CPT (Carriage Paid To): The seller delivers the goods to a named place and pays for carriage to that place.&nbsp;&nbsp;&nbsp;</li><li>CIP (Carriage and Insurance Paid To): The seller delivers the goods to a named place, pays for both carriage and insurance of the goods to that place.</li></ul><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" alt="" width="300px"><ul><li>DPU (Delivered At Place Unloaded): The seller delivers the goods at a designated place and unloads them, bearing the risks and costs of both. This is the only rule that requires the seller to unload the goods to complete delivery. The buyer takes care of any import clearance charges, taxes and duties.&nbsp;&nbsp;&nbsp;</li><li>DDP (Delivered Duty Paid): The seller bears the maximum responsibility here as he arranges for carriage and delivery of goods at a named place, and pays for import clearance as well as any duties and taxes that might apply.</li></ul><h3>Incoterms 2020: The Key Changes‍</h3>These are the key updates in Incoterms 2020 that differentiate it from Incoterms 2010:&nbsp;<ol><li>DPU replaces DAT: The term DPU (Delivered at Place Unloaded) has been added to the rules, replacing DAT (Delivered at Terminal). This change was necessitated by demands for delivery not just at a terminal but at a particular site, such as a factory.</li><li>Insurance cover under CIP and CIF: Incoterms 2020 provides for different levels of insurance cover under CIP (Carriage and Insurance Paid) and CIF (Carriage Insurance and Freight). The CIP rule now demands a higher level of insurance cover that is compliant with the Institute Cargo Clauses (A) or similar clauses. Under CIF, which is used in sea trade, Institute Cargo Clauses (C) remains the default level of coverage but the parties involved can opt for a higher insurance cover.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Precise allocation of costs: Incoterms 2020 provides greater clarity on cost allocations under article A9/B9 of the rules. This was based on feedback about rising disputes due to lack of clarity – for instance, sellers complained of back charged terminal handling charges due to ships changing their pricing.</li><li>Enhanced security: Amid growing demand for greater transport security for freight, including mandatory screening of containers, Incoterms 2020 provides more detailed security obligations. These can be found under articles A4 for carriage and A7 for export/import clearance. Security-related cost allocations can be found under article A9/B9.&nbsp;</li><li>Transport arrangements: Incoterms 2010 assumed the transportation of goods between the buyer and seller is carried out by a third party. The revised rules take into consideration the fact that the buyer and seller might use their own vehicles to transport the goods. Thus, Incoterms 2020 allows for the buyer’s own means of transport under the FCA rule and the seller’s own means of transport under the DAP, DPU and DDP rules.&nbsp;</li><li>Bill of Lading: The FCA (Free Carrier) rule has been revised with a provision that allows the trading parties to agree that the buyer will instruct the ship to issue an on-board bill of lading to the seller once the goods are loaded. The seller will then share this document with the buyer. In the past, ships are known to have refused to issue a bill of lading if the goods were received not directly from the seller but from an intermediary (say, a truck).</li></ol><h3>Using Incoterms 2020 in your business</h3>While you can continue to use Incoterms 2010, the ICC recommends using the latest version of the rules. If you plan on making the switch, here’s what you must look out for:&nbsp;<ul><li>Identify the Incoterms applicable to your business and read up on them</li><li>Make sure to mention the Incoterms edition (2010, 2020) you are using in your sales contracts to avoid misunderstandings at a later date</li><li>Check the updated costs for each relevant field (security, insurance, etc) as these could impact your overall expenses</li><li>Read the rules to know exactly where the transfer of risk and loss lies</li><li>Buy a copy of the Incoterms 2020 book from the ICC. You can buy it<a href="https://2go.iccwbo.org/incoterms-2020-eng-config+book_version-Book#" rel="noopener noreferrer" target="_blank"> here</a>. Look out for fake versions, as the ICC warns</li><li>You can also check out the<a href="https://2go.iccwbo.org/incoterms-2020-app" rel="noopener noreferrer" target="_blank"> Incoterms 2020 app</a> for a greater understanding of the rules and for the latest news, events and training opportunities</li></ul>

Incoterms 2020: Changes That you Need to Know

How India’s RCEP Decision Will Affect?

Save time, save money. We at Cogoport take this old catchphrase very seriously, as you might have figured out from our efforts to have all your online requests answered instantly or, at least, in the shortest possible time.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>Our<a href="https://www.cogoport.com/rate-discovery" rel="noopener noreferrer" target="_blank"> Discover Rates</a> tool is a prime example of a time-saver. It gets you<a href="https://www.cogoport.com/rate-discovery" rel="noopener noreferrer" target="_blank"> multiple freight rates and quotes from trusted freight forwarders within seconds</a>, helping you make an informed decision about the best option for your shipment. Within this tool, we have included a special money-saving feature as well. The “Start Special Rate Request” option is designed to help you negotiate and customise the best freight rates for your shipment, preferably with the shipping line of your choice.Just as you would negotiate for better rates and prices with a traditional freight forwarder or service provider, Cogoport’s Special Rate Request feature helps you do the same on an online platform.<h3>What You Get with Special Rate Request</h3><ol><li>Customised rates: Are the freight quotes you requested on Discover Rates too high? No problem. Click on Start Special Rate Request and punch in your requirements. These will be forwarded to 600 service providers and you will receive a personalised quote within six business hours. It’s that easy.</li><li>Shipping line of your choice: If you like doing business with a particular shipping line and a general request on Discover Tools does not return a quote from them, you can use the Special Rate Request feature to get that as well.</li><li>All the free days you want: You can also negotiate the number of free detention days you require. Detention is the per-day charge you pay for use of a container outside a port after the allotted free detention period.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li></ol><h2>Special Rate Request in 5 easy steps</h2><h3>Step 1: ‍</h3>Click on Discover Rates on the navigation bar to your left.<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f6cc07a6d18c11432a54f87_Discover%20Rates.png" alt="5f6cc07a6d18c11432a54f87_Discover%20Rates.png"><a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a><h3>Step 2:</h3>In the search field on your right, pick your shipping option and enter the origin port, destination port, container size/type/commodity/weight, container count and incoterm. Our intuitive drop-down lists make this process super easy. Now, hit search.<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f6cc1756dbfe5739df2ec92_Search%20rate.png" alt="5f6cc1756dbfe5739df2ec92_Search%20rate.png"><h3>Step 3: </h3>‍Explore instant freight rates and quotes from various shipping lines, along with transit times, stops if any, and free detention days. If you need something more specific to your business, such as extra destination free days, a specific shipping line, or a filed rate (a contracted rate applicable for a fixed period of time), then click on Start Special Rate Request on the bottom right of your page.<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f6cc0ceb91b70d290f993f8_Rate%20Discovery.png" alt="5f6cc0ceb91b70d290f993f8_Rate%20Discovery.png"><h3>Step 4:</h3>The Create Enquiry box pops up. Fill in the required fields, including your preferred freight rate, shipping line and free detention days at destination. Click on Submit Your Requirements and you’re set.&nbsp;<img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f6cc0ecc37b887203663b76_request.png" alt="5f6cc0ecc37b887203663b76_request.png"><h3>Step 5: </h3>‍You’llreceive a personalised quote within six business hours.&nbsp;Simple, isn’t it? Our Special Rate Request feature is not just about personalised quotes. It is about empowering importers and exporters and giving them greater control and say over how they ship their goods and what they pay for it. And, as we mentioned earlier, it’s about helping them save both time and money.

Negotiate Best Rates for Cargo: Cogoport

If you are an exporter or importer, there are two words guaranteed to fill you with dread – demurrage and detention. These charges associated with the late return of containers to shipping lines can leave you with a huge bill you neither anticipated nor budgeted for. Demurrage and detention are also a lot more common than you might think and there is a high probability you might run into them. Hence, it is important to be aware of these charges and plan your shipment to avoid them as much as possible. As a first step, you may read this guide, which will tell you:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<ul><li>What is demurrage and detention?</li><li>What are their causes and impact?</li><li>How can you calculate demurrage/detention?</li><li>How can you avoid demurrage/detention?</li><li>Why are they controversial?</li><li>How are they different from port storage charges?</li></ul><a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a><h2>What is Demurrage?</h2>Demurrage is what you pay for use of a container within a port or terminal beyond an allotted free time, which averages 4-5 days. Demurrage is charged per day per TEU (twenty-foot equivalent unit, which is the capacity of a 20-foot container). The fee increases in intervals of a few days. Charges vary across shipping lines and ports. But they can easily average $100 per container per day.Demurrage time in export: The period from when a full container enters a terminal till it is loaded on a ship for export.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demurrage time in import: The period from when a full container is discharged from the ship till it leaves the terminal.&nbsp;&nbsp;<h2>What is Detention?</h2>Detention is what you pay for use of a container outside a port or terminal beyond the allotted free time. It is also charged per day, per TEU. The free time averages 3-5 days. Detention is sometimes referred to as per diem (Latin for “per day”).Note: Remember, if the container sits on a chassis (trailer), you will usually also be charged a per-day fee for the chassis, which can be higher than the daily detention rate.Detention time in export: The period from when an empty container is picked up from the terminal/container yard/depot for loading till the full container enters the terminal for export.&nbsp;&nbsp;&nbsp;&nbsp;Detention time in import: The period from when a full container leaves the terminal after import till the time the empty container is returned to the terminal/container yard/depot.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h3>Who Charges it?</h3>Containers are owned or leased by shipping lines, hence demurrage and detention are charged by them. There are two reasons why they do so:<ul><li>To encourage importers/exporters to ensure a quick turnaround of the containers</li><li>As compensation for use of the containers</li></ul>Before the charges kick in, shipping lines are required to provide a reasonable free time to allow:<ul><li>Loading of the container and delivery to the ship for export</li><li>Pick-up of the full container after import, its unloading and return of the empty container to the nominated container yard</li></ul>The free time typically depends on the trade, equipment/commodity type and, at times, the specific port-pair involved.&nbsp;&nbsp;&nbsp;&nbsp;<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" width="auto" style="width: auto; height: auto;"></a><h3>What Causes Demurrage and Detention?&nbsp;&nbsp;</h3><ul><li>Circumstances beyond your control – bad weather, labour strikes, terminal congestion, shortage of trucks/trailers, the Covid-19 pandemic.&nbsp;&nbsp;</li><li>Customs clearance delays. For example, your containers are held up by customs for inspection and examination.</li><li>Delays due to incorrect or incomplete documentation. Such documents have to be amended, which requires time.</li><li>Late receipt or loss of documents. For example, the exporter is late in sending the documents to the importer.&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Sailing delays. Shipping lines have closing dates for the delivery of export shipments at the terminal. In the event of a delay in vessel departure, your container could be held up at the terminal for longer than the allotted free time.</li><li>Late release of shipment at destination. A common reason for this is shipping lines holding on to cargo because they haven’t received their payment in full.&nbsp;&nbsp;&nbsp;</li><li>Delay because cargo receiver can’t be reached. There have been instances of cargo being abandoned.</li></ul><h3>How does it affect you?</h3><ul><li>Demurrage and detention can prove very expensive. There have been instances where shippers have paid more than 20 times the value of a container in such fees.</li><li>Demurrage and detention are the result of delays, and delays can create trouble all through your supply chain.&nbsp;&nbsp;</li><li>They cause confusion. Charges vary across shipping lines and ports. If you ship across the world, these differences can be difficult to keep track of. For example, import detention charged by two shipping majors for a 20-foot container at ports in India ranges from Rs 2,970 to Rs 4,000 per day for the first seven days and six days, respectively, after the free time. Similarly, there are wide variations in charges across ports – from $196.88 a day per TEU at Los Angeles to $6.46 per day per TEU at Busan, South Korea.&nbsp;</li></ul><h2>How to Calculate Demurrage and Detention</h2>Let’s say your 20-foot export container was at the terminal for 15 days before it was shipped. You are allowed five days of free time and the shipping line’s demurrage tariff increases every seven days. Here’s a simple formula to calculate how much you will pay:Free time: 5 daysTime for which demurrage will be charged: 10 daysDay 6-12 demurrage per day: $50Your total demurrage fee for days 6-12: $350Day 13-19 demurrage per day: $75Your total demurrage fee for days 13-15: $225Total demurrage for 10 days: $575&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h2>The Demurrage/Detention Controversy&nbsp;</h2>Demurrage and detention is a sensitive topic in international trade. Importers and exporters have long accused shipping lines of unfair practices, leading to institutions such as the International Federation of Freight Forwarders Associations (FIATA and the United States Federal Maritime Commission introducing best practices guides to ensure shippers are not subject to unfair, unreasonable charges. Demurrage and detention are sore points because:<ul><li>Fees have increased considerably in the last few years</li><li>This has coincided with a reduction in free time</li><li>The FIATA guide cites reports of shipping lines charging demurrage on containers transported by merchant haulage while waiving the charges for containers moved by carrier haulage during port congestion. (Merchant haulage is when the importer appoints a haulage provider while in carrier haulage, the carrier nominates the haulage provider)</li></ul>On this backdrop, some of the recommendations of the FIATA include:<ul><li>A cap on demurrage and detention. Instead of charging delay fees for an indefinite period, FIATA suggests that shipping lines fix a maximum limit, which could ideally be the value of the purchase price of a brand new container.</li><li>Extension of the free time period</li><li>Encouraging a shift to more environment-friendly modes of inland transport (barge, rail) by extending detention free time&nbsp;&nbsp;&nbsp;&nbsp;</li><li>A level-playing field for shippers who opt for merchant haulage. Many shippers prefer merchant haulage over carrier because it allows them to directly negotiate rates with the haulage provider as opposed to accepting carrier-quoted prices under carrier haulage.&nbsp;</li></ul>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a><h2>How to avoid Demurrage and Detention</h2>With the exception of bad weather, strikes and other unforeseen events, demurrage and detention are largely avoidable. All it takes is a little planning on your part. Some useful tips:<ul><li>Dispatch your cargo well in advance. Allow yourself some buffer time.</li><li>Plan loading/unloading time with an eye on possible delays.&nbsp;</li><li>Make sure your documents are in order.</li><li>Perform customs pre-clearance and be aware of cut-offs. For example, shipments to the US require a cargo declaration on the Automated Manifest System (AMS), which must be completed 24 hours before departure from the port of origin.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Inform your trading partners – inland transport service providers, customs agents, freight forwarders, banks and so on – about shipping schedules in advance.</li><li>Be informed yourself. Read your carrier contract carefully, understand the regulations and customs procedures at your port of destination.</li><li>Track your cargo in-transit. With Cogoport, you can track your shipment, check its status and get regular updates till delivery on the<a href="https://www.cogoport.com/" rel="noopener noreferrer" target="_blank"> Cogoport Dashboard</a>.&nbsp;&nbsp;</li><li>Have a Plan B ready. If you’re dealing with a particularly congested port, this could mean finding an alternate port, having a back-up trucker if time schedules get tight, or making arrangements for off-dock storage of your cargo that would work out cheaper than demurrage and detention.&nbsp;&nbsp;</li></ul><h3>An interesting perspective</h3>When you agree to a freight rate with a certain free time for demurrage and detention, payment for that time is actually included in the freight rate. Many shipments do not incur demurrage and detention as everything works out well. Yet, if you have 10 days combined of free time and use only five days in total, the shipping line does not refund you for the five unused days that you have already paid for. For some importers and exporters, it could therefore be interesting to get a discount up-front on the base freight rate for the days not used. Or, they could reach an agreement with the shipping line that demurrage and detention will apply only when the total number of used demurrage and detention free days for a period of time – say, 60 calendar days – exceeds the total free time purchased in the base freight rate. This means that if you save five days on one shipment and have an overrun of six days on the next shipment, you are liable for only one day of demurrage and/or detention, as the case may be.<h3>Don’t forget to negotiate</h3>Did you know you can negotiate for extended free time with shipping lines? So, the next time you make a booking with a shipping line, don’t just accept their freight quote. Work out a better deal for yourself with extra free time. That said, shipping lines are known to offer extended free time only to customers moving large volumes of cargo or to “large shippers” (800 containers or more in a year).Try <a href="https://www.cogoport.com/blogs/cogoports-special-rate-request-negotiate-best-freight-rates-for-cargo" rel="noopener noreferrer" target="_blank">Cogoport’s Special Rate Request</a> tool to negotiate for extra detention free days.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h2>What is Port Storage Charge? How is it different from Demurrage?&nbsp;</h2>Importers and exporters must be careful not to confuse demurrage and detention with port storage charges. A port storage charge is almost identical to demurrage in definition – it is what you pay to have your container stored at a port/terminal beyond an allotted free time, which average 3-7 days. It can apply on:<ul><li>Full containers waiting to be shipped</li><li>Full containers waiting for import clearance</li><li>Empty containers stacked at the port/terminal</li></ul>However, unlike detention, which is charged by the shipping line, a port storage charge is collected by the port either directly from the customer or from the shipping line, which passes it on to you, usually with a margin. It is a set charge published in the port’s tariff list and is usually valid for a year. With the exception of a few countries (such as Japan) that treat port storage and demurrage as the same, the two charges are almost always separate. Hence, you can end up paying both on the same shipment.‍<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto" style="width: auto; height: auto;"></a><h3>Why do Ports Charge Port Storage?</h3>Because containers stacked at the port for long periods of time:<ul><li>Create a shortage of yard space</li><li>Adversely affect port productivity</li><li>Contribute to port congestion</li></ul>How can you avoid paying port storage?<ul><li>By planning ahead and following the tips on avoiding demurrage and detention listed above.</li><li>By having your carrier move your containers to a private container depot, where rents may be cheaper. However, the depot has to be a custom bonded area, or an area under a customs bond where goods cannot be moved in or out without the permission of customs authorities.</li></ul>Try <a href="https://www.cogoport.com/" rel="noopener noreferrer" target="_blank">Cogoport</a> today for hassle-free shipping. Our services – transparent freight quotes, trusted and verified freight forwarders, easy cargo tracking – can help you avoid nasty surprises in the way of huge demurrage and detention bills..

How To Avoid Demurrage And Detention Charges

It’s been a turbulent 2020 for shipping lines with <a href="https://www.joc.com/article/carriers-see-rise-booking-cancellations-no-shows_20200528.html" target="_blank">record booking cancellations and container no-shows</a>. While such operational troubles have always plagued carriers, the scale of the problem this year is unprecedented. The reason is the coronavirus pandemic, which has swept the globe and dealt a body blow to businesses and economies apart from exacting a brutal toll on human lives.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a>Last-minute cancellations and no-shows by shippers can play merry hell with shipping schedules, operations and finances. To stop this practice, shipping lines have many times in the past introduced <a href="https://www.joc.com/article/booking-cancellation-fee-making-comeback-led-hapag-lloyd_20161006.html" target="_blank">booking cancellation fees and no-show fees</a>, only to roll them back in the face of a backlash from shippers and lack of support from rival companies as a result of fierce competition. With Covid-19 taking a huge financial toll on their businesses, the world’s top container shipping companies such as<a href="https://www.joc.com/article/booking-cancellation-fee-making-comeback-led-hapag-lloyd_20161006.html" target="_blank"> Maersk</a>, MSC and Hapag-Lloyd have brought back booking cancellation and no-show fees.&nbsp;This blog explores the ongoing crisis in the container shipping industry and its implications, with insights into the following:<ul><li>What are booking cancellations and no-shows?&nbsp;</li><li>How big a problem are they?&nbsp;</li><li>Why do they happen?</li><li>What is carrier overbooking?</li><li>Impact of cancelled bookings</li><li>How Covid-19 has aggravated the problem</li><li>The shipping industry’s response</li><li>How you can avoid paying a cancellation fee</li></ul><h3>Booking Cancellations and No-shows</h3>Booking cancellation: A booking cancellation by a shipper becomes problematic for the carrier when it is done too close to the scheduled sailing. Carriers have a cut-off date and cut-off time for shippers. The cut-off date is the last date for cargo to be delivered at the port or terminal for loading. Similarly, the cut-off time is the latest time by which cargo must be received at a port or terminal for loading. Cancellations that come too close to the cut-off date and time can cause a sea of trouble for carriers, which we will discuss further down.&nbsp;<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto" style="width: auto; height: auto;"></a>No-show: A no-show is when a shipper does not inform the carrier that he will not be going through with his booking order and simply fails to show up with his cargo at the port or terminal. It is also called “downfall”. Hapag-Lloyd chief executive Rolf-Habben Jansen says 20% of booked containers are no-shows at cargo terminals, according to a report by The Wall Street Journal published in May. And, according to a study by the New Jersey Institute of Technology, downfalls cost carriers $4.4 billion a year.<h3>Why Cancellations, No-shows Happen</h3>Double bookings: Shippers are known to book multiple slots to a) ensure their cargo gets shipped when containers or vessel space are in short supply, or b) get the best possible freight rate. This is a major cause of cancellations and no-shows. Such bookings are called phantom bookings.Logistics problems: There might also be genuine reasons for a cancelled booking or no-show, such as production delays, regulatory setbacks, vehicle or equipment breakdown, or even something as simple as cargo being stuck in traffic.<h3>The Flip-side: Overbooked Ships</h3>Shippers argue that they are compelled to make multiple bookings because carriers overbook their vessels, the same way airlines overbook seats to ensure full flights. This leads to cargo getting rolled over, which means the shipment fails to get loaded on the ship it is meant to sail on and is accommodated on a vessel that sails on a later date. Shipping lines, on the other hand, defend their need to overbook, saying it stems from last-minute cancellations and no-shows by shippers, which have huge implications for their bottom lines. Carriers usually do not face a penalty for overbooking vessels or the problems arising from it. All in all, shipper no-shows and carrier overbookings are a vicious cycle the shipping industry is yet to find a way out of. The collective loss to the industry from no-shows and overbookings is reportedly $23 billion a year.<h3>Impact of Cancelled Bookings, No-shows</h3>On the shipper: There has so far been no negative impact. Attempts by shipping lines to impose cancellation or no-show fees have mostly failed. But this might change with the latest round of penalties in the current economic atmosphere.On the carrier: The impact is huge, say shipping lines. No-shows and last-minute cancellations mean ships sail at reduced capacity, lowering the profitability of the voyage. To fill up the vacancy, ships might lower freight rates close to the date of sailing.<h3>The Covid-19 Effect</h3>What is already a massive problem for the ocean freight business has been made worse by the coronavirus pandemic. The industry is struggling with:&nbsp;Record cancellations: Earlier this year, lockdowns imposed by countries to curb the spread of the virus resulted in cargo being stranded on ships and at ports and terminals for extended periods of time. In addition, demand plummeted, leading to cancellation rates touching record highs on most routes. According to Juergen Pump, North America president of container shipping company Hamburg Sud, a<a href="https://www.unescap.org/sites/default/files/pub_2484_CH5.pdf" rel="noopener noreferrer" target="_blank"> 15% cancellation rate</a> is the norm in the<a href="https://www.unescap.org/sites/default/files/pub_2484_CH5.pdf" rel="noopener noreferrer" target="_blank"> trans-Pacific region</a> (Asia and North America). But it rose to<a href="https://www.joc.com/article/carriers-see-rise-booking-cancellations-no-shows_20200528.html" target="_blank"> 40% in end-April before recovering slightly to 29% in mid-May</a>. In addition, Hapag-Lloyd’s Jansen predicted in May that the <a href="https://www.joc.com/article/carriers-see-rise-booking-cancellations-no-shows_20200528.html" target="_blank">share of no-shows would go up from the typical 20% to 35%-40%</a> in the following months.&nbsp;Blanked sailings: The cancellations prompted shipping lines to blank (cancel) scheduled sailings:<ul><li>In March, 2M, the alliance between Maersk and MSC, reduced capacity by 21% on its Asia-Europe operations</li><li>Hapag-Lloyd<a href="https://www.freightwaves.com/news/more-cargo-chaos-looms-as-carriers-slash-ocean-services" rel="noopener noreferrer" target="_blank"> cancelled 15% of scheduled sailings</a> on major routes, including Asia-Europe and trans-Pacific, a report in May said. “All of a sudden, India shut down,” the report quoted Jansen as saying. “Cargo flows, particularly exports, came to a standstill. From one week to another, your volume goes down by more than half and there is a significant impact.” Jansen was referring to the nationwide lockdown imposed by India at the end of March.&nbsp;&nbsp;</li><li>For the March-May period, London-based consultancy Maritime Strategies International projected a year-on-year reduction in total container volume of 17.8% on the Asia-Europe route, 15% on trans-Pacific (US West Coast), 13% on trans-Pacific (US East Coast), 12% on Asia-Middle East-India, 10% on Asia-Latin America and trans-Atlantic westbound lanes, 8% on intra-Europe and 5% on intra-Asia routes</li><li>Since April, carriers have announced over<a href="https://www.freightwaves.com/news/ocean-container-volumes-are-about-to-fall-off-a-cliff" rel="noopener noreferrer" target="_blank"> 120 blanked sailings</a> up to July, another report said</li></ul>Recovery prospects grim: Shipping lines expect a recovery from the July-September quarter. But a second wave of coronavirus infections in several countries has tempered optimism. India is still struggling to keep infections under control. According to Hapag-Lloyd’s Jansen, some shipping companies may go under if the downturn extends to the end of the year and beyond.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a><h3>Industry Response: Booking Cancellation Fees Return&nbsp;</h3>In the recent part, booking cancellation fees and no-show fees have been around since June 2019, when Maersk, the world’s largest shipping company, introduced its online booking tool Maersk Spot. Under it, shippers who cancel a confirmed booking pay a cancellation fee. Likewise, if the cargo gets rolled over, Maersk compensates the shipper. But in the current atmosphere of economic disruptions caused by Covid-19, there has been a more concerted effort by the world’s top shipping companies to implement these penalties in all seriousness:<ul><li>In March, with the world firmly in the grip of Covid-19, Maersk introduced a $200-per-container booking cancellation fee for dry and reefer cargo on select routes, applicable on cancellations made seven days or less prior to the estimated time of departure. The fee also applies to no-shows and reductions in the number of containers in a booking. In April, Maersk announced another set of booking cancellation fees of $50-$300 per container on a different trade route.</li></ul>Note: Maersk Spot bookings will be considered within their own terms and conditions.<ul><li>There have been similar announcements from Hapag-Lloyd, including a $25-per-container booking cancellation fee for export bookings from India, effective August 15. The fee applies to bookings “where no equipment has been picked up within seven calendar days to vessel departure”.</li><li>Additionally, the Mediterranean Shipping Company (MSC) has announced a $10-per-container (plus taxes) booking cancellation fee from all Indian gateway ports and inland container depots effective August 10 and from the United States effective August 29.</li></ul><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"><h3>How to Avoid Booking Cancellation Fees</h3>Cancellations and no-shows are often the result of booking in haste and without full knowledge of shipping schedules. To avoid paying the penalty:<ul><li>Plan your shipments well in advance to ensure there is no carrier shortage</li><li>Do your research thoroughly to look for the best routes and freight rates. Cogoport offers multiple instant freight quotes and up-to-date shipping schedules to plan your shipment better&nbsp;</li></ul><h3>What Happens to Your Booking on Cogoport?</h3>The impact of Covid-19 on the shipping industry has not spared Cogoport and it is compelled to charge its customers a booking cancellation fee of $25 per container. The objective behind this nominal fee is to help our customers by ensuring their shipments make it on to a container and a ship at the time of their choosing. Likewise, we aim to help our carrier partners sail at maximum capacity.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Booking cancellation fee: USD 25 per teu(Maersk Spot bookings will be considered within their own terms and conditions)Effective from: August 10, 2020Applicable on: All bookings, all carriers, all trade routes

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