Container Shipping Basics (Part 2)

Preface

Having understood the basic knowledge of containers, this article will focus on its core operational link – the delivery and receipt of goods.

We will first clarify the fundamental differences between Full Container Load (FCL) and Less than Container Load (LCL) in terms of responsibility and operations, and explain the crucial role of freight forwarders in this process. Subsequently, we will systematically introduce the diverse delivery and receipt locations and methods for containerized cargo, distilling the theoretical 16 combinations down to the most core models in maritime practice: CY/CY (Yard to Yard) and CFS/CFS (Station to Station).

Through this article, you will quickly grasp the key concepts and practical core of containerized cargo delivery and receipt.

Part 01: Container FCL and LCL

Container transport is a method where break-bulk cargo is consolidated into a single transport unit (the container) using vessels and other transport equipment. The cargo flow path in container transport differs from traditional general cargo transport. While traditional general cargo transport uses ports as the locations for cargo exchange and transshipment, container transport can also establish sites for cargo exchange and transshipment inland.

Container transport has altered the traditional cargo flow path. During the flow of containerized cargo, its forms can be divided into two types: Full Container Load (FCL) and Less than Container Load (LCL).

1. Full Container Load (FCL)

FCL refers to containerized cargo where the merchant is responsible for packing and counting the goods, filling out the packing list, and applying the seals. Typically, there is only one shipper and one consignee.

International conventions or national maritime laws do not have special provisions for FCL delivery. Carriers usually assume responsibility for receiving the FCL cargo in a condition where the container body is intact and the seals are complete, and delivering it in the same condition, based on the printed clauses on the front and back of the bill of lading and additional clauses on the front (such as "Said to Contain", "Shipper's Load and Count and Seal" etc., known as "Unknown Clauses"). In current maritime transport practice, liner companies are primarily engaged in FCL cargo business.

2. Less than Container Load (LCL)

LCL refers to containerized cargo where the carrier's container freight station (CFS) is responsible for packing and counting the goods, filling out the packing list, and applying the seals. Typically, the quantity per shipment is small, so the cargo inside a container carrying LCL involves multiple shippers and multiple consignees. The carrier is responsible for receiving the LCL cargo where the apparent condition of each piece is good and delivering it in the same condition. In current transport practice, LCL cargo business is mainly undertaken by LCL consolidators.

Freight forwarders can engage in LCL cargo business, but their capacity changes when doing so. The participation of freight forwarders in LCL cargo business provides fast and efficient transport services for small lots of cargo, solving issues such as the transport of small consignments after container liner transport largely replaced traditional general cargo liner transport.

When freight forwarders or LCL consolidators engage in LCL transport, firstly, it allows liner companies to avoid dedicating manpower, material resources, funds, time, risks, and liabilities specifically for small consignments, as the forwarders/consolidators directly handle clients and small shipments. Secondly, it expands the scope and business space for freight forwarding enterprises, allowing them to gain returns by providing good service for small lots. Finally, it meets the trade, technical, economic, and distribution requirements of shippers for small consignments through LCL consolidation services.

Part 02: Container Cargo Delivery/Receipt Locations and Methods

1. Delivery/Receipt Locations for Containerized Cargo

The delivery point in cargo transport refers to the location where, according to the contract of carriage, the carrier and the cargo party exchange goods, divide liability risks, and costs. As international conventions or national laws often impose mandatory legal norms, carriers cannot reduce their liability through contractual means; however, cost issues can be agreed upon separately by the parties. In container transport, depending on actual needs, the delivery location is not fixed.

Current delivery locations for goods in container transport include: ship's rail or hook/tackle, container yard (CY), container freight station (CFS), and other mutually agreed locations ("door").

• Container Yard (CY): A place for the delivery, receipt, and storage of empty containers and loaded containers, and also where containers are transshipped between different transport modes.

• Container Freight Station (CFS): A place for the delivery, receipt, and storage of LCL cargo, and also where LCL cargo is packed into and stripped from containers.
  A CY and a CFS can also be co-located.

2. Delivery Methods for Containerized Cargo

Based on the different delivery locations, theoretically, 16 delivery methods can be derived through permutation and combination for containerized cargo. In different delivery methods, the container transport operator and the cargo party bear different responsibilities and obligations, and the scope and content of the transport operator's organization also differ.

Theoretically, the delivery methods for containerized cargo are as follows (abbreviated list for brevity, translating the core concept):

(1) Door to Door: The transport operator receives the goods at the shipper's factory/warehouse and is responsible for delivering them to the consignee's factory/warehouse. Typically FCL/FCL.
(2) Door to CY: The transport operator receives the goods at the shipper's factory/warehouse and is responsible for delivering them to the CY at the port of discharge or an inland CY. Typically FCL/FCL.
(3) Door to CFS: The transport operator receives the goods at the shipper's factory/warehouse and is responsible for delivering them to the CFS at the port of discharge or an inland CFS, where they are stripped for delivery to individual consignees. Typically FCL/LCL.
(4) CY to Door: The transport operator receives the goods (FCL) at the CY of the port of loading or an inland CY and is responsible for delivering them to the consignee's factory/warehouse. FCL/FCL.
(5) CY to CY: The transport operator receives the goods (FCL) at the CY of the port of loading or an inland CY and is responsible for delivering them to the CY at the port of discharge or an inland CY. FCL/FCL.
(6) CY to CFS: The transport operator receives the goods (FCL) at the CY of the port of loading or an inland CY and is responsible for delivering them to the CFS at the port of discharge or an inland CFS, where they are stripped for delivery. FCL/LCL.
(7) CFS to Door: The transport operator receives the goods (consolidated as LCL) at the CFS of the port of loading or an inland CFS and is responsible for delivering them to the consignee's factory/warehouse. LCL/FCL.
(8) CFS to CY: The transport operator receives the goods (consolidated as LCL) at the CFS of the port of loading or an inland CFS and is responsible for delivering them to the CY at the port of discharge or an inland CY. LCL/FCL.
(9) CFS to CFS: The transport operator receives the goods (consolidated as LCL) at the CFS of the port of loading or an inland CFS and is responsible for delivering them to the CFS at the port of discharge or an inland CFS (where they are stripped for delivery). LCL/LCL.
(... and others including Tackle to Door, Tackle to CY, etc., involving ship's hook, but these are less common in practice.)

Understanding these 16 theoretical delivery methods helps clarify the division of cargo delivery responsibility and cost allocation between the carrier and the cargo party in container transport. Naturally, not all 16 methods are encountered in practice.

Part 03: Main Methods for Delivery/Receipt of Maritime Containerized Cargo

In container transport, depending on the actual delivery location, there are various methods for cargo delivery/receipt. In different methods, the liabilities and obligations of the container transport operator and the cargo party differ, as does the scope and content of the transport operator's organization. Containerized cargo can be delivered traditionally at the ship's side, as FCL at a container yard, as LCL at a container freight station, or under multimodal transport at the shipper's warehouse or factory. Since containerized cargo can be delivered at four locations, theoretically there should be 16 methods. However, delivery at the ship's side is now rare, and delivery at the shipper's factory/warehouse involves multimodal transport. Therefore, in maritime container liner transport practice, liner companies usually carry FCL cargo and handle delivery at container yards, while LCL consolidators carry LCL cargo and handle delivery with the cargo party at container freight stations.

Often, books list 9 delivery methods (Door-to-Door, Door-to-CY, Door-to-CFS, CY-to-Door, CY-to-CY, CY-to-CFS, CFS-to-Door, CFS-to-CY, CFS-to-CFS), which is not fully comprehensive. Some books mention only 4 methods (CY-to-CY, CY-to-CFS, CFS-to-CY, CFS-to-CFS), which also does not closely match practice. For instance, in practice, if a carrier receives FCL cargo at a CY, it is under the condition of an intact container and seals. If the carrier delivers LCL cargo at a CFS, it is under the condition of the apparent good order of the goods inside the container. Therefore, CY/CFS significantly increases the carrier's liability and is thus now largely non-existent.

Therefore, the main methods for the delivery/receipt of maritime containerized cargo in practice are:

• CY/CY: This is the method typically used by liner companies.

• CFS/CFS: This is the method typically used by LCL consolidators.