Recommendations to improve the freight forwarding services for lcl cargoes at dong tai logistics and trading co., ltd

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN CONG TUAN MINH
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE THE FREIGHT
FORWARDING SERVICES FOR LCL CARGOES AT DONG TAI
LOGISTICS AND TRADING CO., LTD
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN CONG TUAN MINH
CLASS: GMA02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE THE FREIGHT
FORWARDING SERVICES FOR LCL CARGOES AT DONG TAI
GLOBAL LOGISTICS AND TRADING CO., LTD
Supervisors: Vu Thi Thu Hang
Division: Global Studies and Maritime Affairs
Faculty: Economics
HAI PHONG – 2015
Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
PREFACE
Internship is an activity help students have the opportunity to be familiar with
the actual working environment. For students who are studying in the universities, the
knowledge they are learned in class are heavily theoretical, not really close to reality
in which they go to work. Therefore internship is the time that the students can verify
their knowledge into practice from which they can discover the strengths and
weaknesses. So they can know what knowledge they should equip and what skills
required to meet the job demand. In addition, the internship also helps students to
experience the real working environment, creating confidence in the job search, as
well as future work, to help the students think critically and practically when
participate in the labor market. Besides, during the internship, the students will
probably have more relationships, there is a chance which can help you accumulate
more experience in the learning and it also helps a lot for your future work. Be
exposed to a professional working environment, the students will have the opportunity
to experience or to train skills, disciplines and attitude which is the basic background
when you go to work in the future.
Foreseeing the importance of training and high-quality workforce recruitment,
many companies have taken an advantage of cooperation with universities, organized
internship that help giving opportunities for students to get familiar to the real
working environment. Vietnam Maritime University has already applied this model
every year. Thanks to the help from the International School of Education, GMA
students are introduced to have internship in companies specializing in maritime,
logistics and warehousing. Therefore they can have the opportunity to apply the
knowledge learned in the university to the real work. This year I was introduced to
Dong Tai logistics and trading co., ltd- a company specializing in the field of logistics.
In this paper, I will present some recommendations to improve LCL cargoes freight
forwarding service at Dong Tai global logistics and trading co., ltd.
I declare that this report is my own work. It has not been submitted before. If
violated, I am solely responsible for and bear the punishments of the Institution and
University.
Student Name and Signature
Nguyen Cong Tuan Minh
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisors Vu Le Huy
and Nguyen Thi Thu Hang for the continuous support of my dissertation, for their
patience, motivation, and immense knowledge. Their guidance helped me in all the
time of research and writing of this thesis. I could not have imagined having a better
advisors and mentors for my study...
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
TABLE OF CONTENTS
Preface........................................................................................................................... i
Acknowledgement........................................................................................................ii
List of abbreviation.......................................................................................................v
List of tables................................................................................................................vi
List of figures.............................................................................................................vii
INTRODUCTION .....................................................................................................1
The importance of research ..........................................................................................1
Research structure.........................................................................................................1
Research object.............................................................................................................2
Research scope..............................................................................................................2
Research method...........................................................................................................2
CHAPTER 1: LITERATURE REVIEW..................................................................3
1.1 Overview about freight forwarding services and freight forwarder........................3
1.1.1 Freight forwarding services..................................................................................3
1.1.2 Freight forwarder.................................................................................................3
1.1.3 The important of freight forwarders.....................................................................4
1.1.4 Forwarder responsibilities and rights...................................................................5
1.1.5 Forwarder liability...............................................................................................6
1.2 Freight forwarding process for LCL cargoes..........................................................7
1.2.1 What is LCL cargoes?..........................................................................................7
1.2.2 Consolidator.........................................................................................................8
1.2.3 Necessary papers in freight forwarding for LCL cargoes.....................................8
1.2.4 General process of freight forwarding services for LCL cargoes.........................9
1.3 Legal basis framework..........................................................................................11
1.4 Factors affecting freight forwarding services for LCL cargoes.............................12
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
CHAPTER 2 EVALUATIONS FOR FREIGHT FORWARDING SERVICES
FOR LCL CARGOES AT DONG TAI GLOBAL LOGISTICS AND TRADING
CO., LTD................................................................................................................... 14
2.1 Introduction about Dong Tai global logistics and trading co., ltd.........................14
2.1.1 History and background.....................................................................................14
2.1.2 Partners..............................................................................................................16
2.1.3 Visions and orientations.....................................................................................16
2.1.4 Organizational structure.....................................................................................17
2.1.5 Personnel............................................................................................................ 19
2.1.6 Facility of Dong Tai global logistics and trading co., ltd...................................20
2.1.7 Main services and activities...............................................................................21
2.1.8 Company’s business results from 2011 to 2015.................................................24
2.2 Evaluations for freight forwarding services for LCL cargoes in Dong Tai global
logistics and trading co., ltd........................................................................................25
2.2.1 The process of freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd........................................................................................25
2.2.2 Evaluations for freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd........................................................................................32
CHAPTER 3: RECOMMENDATIONS TO IMPROVE THE FREIGHT
FORWARDING SERVICES FOR LCL CARGOES AT DONG TAI
LOGISTICS AND TRADING CO., LTD...............................................................38
3.1 Some challenges for company..............................................................................38
3.2 Goals and directions..............................................................................................38
3.3 Recommendations.................................................................................................39
CONCLUSION.........................................................................................................44
Reference / Bibliography............................................................................................45
Appendixes................................................................................................................. 46
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
LIST OF ABBREVIATIONS
CFS Container Freight Station
ICD Inland Clearance Depot
LCL Less than container loaded
FCL Full container loaded
B/L Bill of lading
D/O Delivery order
VCCI Vietnam Chamber of Commerce and Industry of Vietnam
FIATA Federation Internationale des Associations de Transitaires et Assimiles
(International Federation of Freight Forwarders Associations)
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
LIST OF TABLES
TABLE 1: Educational level of staff at Dong Tai global logistics and trading co., ltd
from 2010 to 2014.......................................................................................................20
TABLE 2: Business results of Dong Tai global logistics and trading co., ltd from
2011-2015...................................................................................................................24
TABLE 3: LCL cargoes freight forwarding services business result (2011-2014).....33
TABLE 4: Number of wrong customs declarations and delay time from them 2011-
2014............................................................................................................................ 35
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
LIST OF FIGURES
FIGURE 1: Freight forwarding process for import LCL cargoes on theory................10
FIGURE 2: Freight forwarding process for export LCL cargoes on theory................11
FIGURE 3: The organization of company..................................................................17
FIGURE 4: Revenue and profit of Dong Tai global logistics and trading co., ltd from
2011 to 2015...............................................................................................................24
FIGURE 5: Freight forwarding process for import LCL cargoes at Dong Tai global
logistics and trading co., ltd........................................................................................26
FIGURE 6: Freight forwarding process for export LCL cargoes at Dong Tai global
logistics and trading co., ltd........................................................................................30
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
INTRODUCTION
The importance of research
In the process of global integration as well as trade liberations with foreign
countries in all around the world, Ocean Shipping industry has developed not only in
scale but also in quality. Therefore, freight forwarding industry has contributed a
vital role to the increase in foreign trade by taking advantage of the efficiency of
mode of transport. It creates essential conditions to make sure that import and export
goods may arrive their destinations on time and helps to deliver goods appropriately
from sellers to buyers. Although this industry is just founded and developing in
Vietnam in a short period of time, it has gradually contributed to the improvement of
national wealthy by supporting import/export promotion and giving assist to
Vietnam’s shipping industry. Realizing the high demand of the market, Dong Tai
global logistics and trading Co., Ltd was founded and operated in the field of global
logistics and transportation services.
Although Dong Tai global logistics and trading limited company offers
freight forwarding services for both FCL and LCL cargoes, it is still a lack of
concentration on the freight forwarding for LCL cargoes. Besides, annually senior
students from universities in Hai Phong, who have an internship at Dong Tai global
logistics and trading co., ltd, often choose the topic related to freight forwarding
services for FCL cargoes or other services for their researches. Realize that
situation, I would like to choose the topic: “Recommendations to improve freight
forwarding services for LCL cargoes at Dong Tai global logistics and trading co.,
ltd for my dissertation.
Research Structures
1. Introduction
2. Chapter 1: Literature review
3. Chapter 2: Evaluations for freight forwarding services for LCL cargoes at
Dong Tai global logistics and trading co., ltd
4. Chapter 3: Recommendations to improves freight forwarding services for
LCL cargoes at Dong Tai global logistics and trading co., ltd
5. Conclusions
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
Research Object
Besides giving an introduction about Dong Tai global logistics and trading
co., ltd, the research object of this dissertation is to clarify the LCL cargoes freight
forwarding services, the current status of freight forwarding services for LCL
cargoes by sea at Dong Tai global logistics and trading co., ltd. From these activities
to analyze the strengths and weak points, the challenges and limitations of the
company with LCL cargoes freight forwarding services, and in the last part
suggestions and recommendations to solve will be proposed.
Research Scope
Research Subject: the ocean freight forwarding services for importing and
exporting LCL cargoes at Dong Tai global logistics and trading co., ltd
Research Scope: The ocean freight forwarding services for LCL cargoes at
Dong Tai global logistics and trading co., ltd from 2011 to 2014
Research Method
Analysis: The research’s data is collected by several ways.
 Interview forwarder staffs of the company
 Compare statistics from the company’s annual results reports
 Observe daily works or some practical cases
By these ways, comments and evaluations about the freight forwarding services
for LCL cargoes of the company can be proposed
CHAPTER 1: LITERATUAL REVIEW
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
1.1 Overview about freight forwarding services and freight forwarder
1.1.1 Freight forwarding services
According to the rules of the FIATA form of freight forwarding service,
Freight Forwarding Services means services of any kind relating to the carriage,
consolidation, storage, handling, packing or distribution of the cargoes as well as
ancillary and advisory services in connection therewith, including but not limited to
customs and fiscal matters, declaring the cargoes for official purposes, procuring
insurance of the cargoes and collecting or procuring payment or documents relating
to the goods.
Freight forwarding services was first mentioned in Vietnam Commercial
Law 1997. According to the article 163 of Vietnam Commercial Law 1997, freight
forwarding is commercial practices, under which the forwarders receive the goods
from the sender. After that they organize the transportation, storage, warehousing,
do the paperwork and other services related to the delivery to the recipient under the
mandate of the shipper, the carrier or other forwarders.
To put it briefly, freight forwarding goods is a set of operations and
procedures related to the implementation of transportation to move goods from the
shipper (consignor) to your destination (consignee). Forwarders can make the
service either directly or through an agent and hire the services of other third
parties.
1.1.2 Freight forwarder
A freight forwarder, forwarder, or forwarding agent is a person or company
that organizes shipments for individuals or corporations to get goods from the
manufacturer or producer to a market, customer or final point of distribution.
[ CITATION Ran12 \l 1033 ]. Forwarders contract with a carrier to transport the
shipments. A forwarder does not transport the goods but presents as an expert in the
logistics network. A forwarder contracts with shipping companies to move all kinds
of goods from raw agricultural products to manufactured goods. Freight can be
booked on a variety of shipping providers, including ships, airplanes, trucks, and
railroads. It is not unusual for a single shipment to move on multiple carrier types.
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
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And according to FIATA, "forwarder is the person who endeavored to goods
transported under trust contract and act for the benefit of the settler. The forwarder
also responsible for all the services related to forwarder contracts as storage,
warehousing, customs procedures, cargo check”.
Freight forwarding services are dedicated to making the shipping process a
lot easier and quicker for your company. A professional freight forwarder will act as
an intermediary between your company and the transport companies, handling
everything that is related to the shipping process.
The forwarder in some cases can be the shipper (when shippers conduct all
the freight forwarding work themselves) or ship owner (ship owners on behalf of
shippers perform freight forwarding services) or any other person have business
related to freight forwarding services.
Some services that forwarder staff often conduct
- Prepare transportation for the shipments
- Organize cargo transportation within the port
- Organize cargo handling
- Consult customers about cargoes transportation
- Conduct the sending or receiving goods procedure
- Implement custom clearance services
- Pay the costs, fees such as insurance, terminal handling charge
(THC), inventory cost…
- Consolidate and pack the cargoes
- Check the validity of the documents related to cargoes
transportation
1.1.3 The importance of freight forwarders
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logistics and trading co., ltd
A freight forwarder will usually be an agent more often than an active
carrier. By this way, a forwarder staff can be considered as third party logistics
provider who works to forward shipments. Freight forwarding positions participate
in booking and preparing space in warehouses, vehicles for shipments such as
vessels, trucks... and this shows the vital role of a forwarder in the relationship with
their customers.
Nowadays, forwarders play an important role in commercial as well as
transportations. Freight forwarders not only conduct the customs clearance
procedures or contact with the shipping company, but also implement all services of
transportation.
1.1.4 Forwarder responsibilities and rights
The forwarders have to obey these following responsibilities and rights:
- Forwarders have the rights to get paycheck and other income.
Remuneration agreed by the parties and specified in the contract. Remuneration
levels can be determined by the absolute amount or proportion on commodity
prices. Remuneration levels agreed by the parties and depends on the content, the
complexity of the job freight forwarding customers entrust people do freight
forwarding services performed.
Beside remuneration, the logistics services customers can request payment of
reasonable expenses related to the performance of the service if this is agreed by the
parties in the contract.
- Fulfill all obligations under the contract; perform exactly everything in the
contract agreements
This is the most basic obligations of logistics services. The service implementation
must perform the work related to packaged goods, letters and symbols, delivery or
receipt of goods in accordance with the conditions agreed with customers. The
conditions may be recognized in signed contract between the customer service or
customer specific guidelines on the basis of the general provisions of the contract.
Forwarding workers have the right to refuse to comply with these instructions
which is inconsistent with the conditions of contract logistics services, signed with
customers or illegal guides.
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logistics and trading co., ltd
- In the course of performing the contract, if there is good reason for the benefit of
the customer, the other can be done with the customer's instructions, but the
forwarder must immediately notify the customer.
- After signing the contract, if it cannot perform the client's instruction, it must
notify the client to ask for further instructions.
- To fulfill its obligations within a reasonable time if the contract does not agree on
the duration of the obligation to the customer.
1.1.5 Forwarder liability
- Basis of liability
+ The Freight Forwarder’s Duty or Care
The Freight Forwarder is liable if he fails to exercise due diligence and take
reasonable measures in the performance of the Freight Forwarding Services, in
which case he shall compensate the Customer for loss of or damage to the Goods as
well as for direct financial loss resulting from breach of his duty of care.
+ No Liability for Third Parties
The Freight Forwarder is not liable for acts and omissions by third parties, such
as, but not limited to, Carriers, warehousemen, stevedores, port authorities and other
freight forwarders, unless he has failed to exercise due diligence in selecting,
instructing or supervising such third parties.
- The Freight Forwarder’s liability as Carrier
The Freight Forwarder is subject to liability as principal not only when he
actually performs the carriage himself by his own means of transport (performing
Carrier), but also if, by issuing his own transport document or otherwise, he has
made an express or implied undertaking to assume Carrier liability (contracting
Carrier).
However, the Freight Forwarder shall not be deemed liable as Carrier if the
Customer has received a transport document issued by a person other than the
Freight Forwarder and does not within a reasonable time maintain that the Freight
Forwarder is nevertheless liable as Carrier.
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logistics and trading co., ltd
- The Freight Forwarder’s liability as principal for other services
With respect to services other than carriage of Goods such as, but not limited to,
storage, handling, packing, or distribution of the Goods, as well as ancillary services
in connection therewith, the Freight Forwarder shall be liable as principal:
1. When such services have been performed by himself using his own facilities or
employees or
2. If he has made an express or implied undertaking to assume liability as principal.
- The basis of the Freight Forwarder’s liability as principal
The Freight Forwarder as principal shall be responsible for the acts and
omissions of third parties he has engaged for the performance of the contract of
carriage or other services in the same manner as if such acts and omissions were his
own and his rights and duties shall be subject to the provisions of the law applicable
to the mode of transport or service concerned, as well as the additional conditions
expressly agreed or, failing express agreement, by the usual conditions for such
mode of transport or services.
1.2 Freight forwarding process for LCL cargoes
1.2.1 What is LCL cargoes?
LCL stands for Less Container Load and LCL cargoes means the cargoes
which is not large enough to be fit in a container after loading. In other words, when
you load a LCL cargo into a container, it still has space left to load others. “If a
shipper does not have enough cargoes to accommodate in a fully loaded container,
they can arrange with a consolidator to book his cargo. This type of shipment is
called LCL shipment. The said consolidator arranges a full container (FCL) with a
main shipping carrier, and consoles the shipments of other shippers. Means the
freight forwarder who books a full container accepts goods from different shippers
and consolidates all such goods in to one container as a Fully Loaded Container –
FCL. The freight forwarder sorts out these goods at destination or at transshipment
points, meant for different consignees at different ports”.[CITATION How15 \l
1033 ]
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
1.2.2 Consolidator
Consolidator means a firm or people which groups all the cargoes from
different shippers together into one shipment. When the shipment is fit for a
container, it will be arranged, packaged and loaded in to the container.
Consolidator’s job is to find customers who want to export their LCL cargoes. At
destination port, the consolidator representatives will unload container, break bulk
the shipment into different shipments of different shippers and send them to the
consignee correctly.
In fact, the destination of all LCL shipments in the container are not the
same. Many times, they are just the container transportation in the same route, then
they will reloaded before moving on. The reloading process usually happen at hub
ports such as Singapore, Hong Kong… At these ports, LCL cargoes will be sorted
and sent to their final destination
1.2.3 Necessary papers in forwarding LCL cargoes
 Bill of lading
A document issued by a carrier, or its agent, or forwarders, to the shipper as a
contract of carriage of goods. It is also a receipt for cargo accepted for
transportation, and must be presented for taking delivery at the destination.
A bill of lading contains a lot of information such as: consignor's and
consignee's name, names of the ports of departure and destination, name of the
vessel, dates of departure and arrival, itemized list of goods being transported with
number of packages and kind of packaging, marks and numbers on the packages,
weight and/or volume of the cargo, freight rate and amount. It serves as a proof of
ownership of the cargo, and may be issued either in a negotiable or non-negotiable
form. In negotiable form, it is commonly used in letter of credit transactions, and
may be bought, sold, or traded; or used as security for borrowing money. A bill of
lading is required in all claims for compensation for any damage, delay, or loss; and
for the resolution of disputes regarding ownership of the cargo.
Two main types of bill of lading: master bill of lading (issued by shipping lines)
and house bill of lading (issued by the forwarders)
 Commercial invoice
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Document required by Customs to determine true value of the imported
goods, for assessment of duties and taxes. A commercial invoice (in addition to
other information), must identify the buyer and seller, and clearly indicate the date
and terms of sale, quantity, weight and/or volume of the shipment, type of
packaging, complete description of goods, unit value and total value, and insurance,
shipping and other charges (as applicable).
 Delivery order
Delivery order is a document written by a carrier to the port authorities to
release a shipment to the named delivery party on payment of the specified freight
charges (maybe shippers or forwarders).
 Arrival notice
Notice sent by a carrier or agent to the consignee (and to the notify party, if any)
to inform about the arrival of the shipment and number of packages, description of
goods, their weight, and collection charges (if any).
 Cargo manifest
A shipping document used by customs officer reviewing a particular transport
vehicle's intended trip that summarizes all bills of lading that have been issued by
the carrier or its representative for that particular shipment. For example, a cargo
manifest might be used for shipments made by sea, air or land, and will generally
show the shipment's cosigner and consignee, as well as listing product details such
as number, value, origin and destination.
 Packing list
Itemized list of articles usually included in each shipping package, giving the
quantity, description, and weight of the contents. Prepared by the shipper and sent
to the consignee for accurate tallying of the delivered goods. Also called bill of
parcels, packing slip, or unpacking note.
1.2.4 General process of freight forwarding services for LCL cargoes in theory
 Import cargoes
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Recommendations to improve freight forwarding services for LCL cargoes at Dong Tai global
logistics and trading co., ltd
Receive import- related
documents
Take D/O
Customs declaration
Receive cargoes at port
Deliver cargoes to
customers
Figure 1: Forwarding process for import LCL cargoes on theory
After signing the contract, the company will quickly implement the following
procedures necessary to complete their job duties.
- Sales department will receive import-related document from customer. They
will transfer it to documentary staffs and forwarders.
- Forwarder staff will come to the shipping agent to take D/O
- Documentary staffs will prepare documents for customs clearance including
customs declaration and conduct inspection if being requested.
- After that, forwarder staff will pick up cargoes at port and transport to the
warehouse and hand over to customer after exchanged D/O for delivery note
at warehouse’s office
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 Export cargoes
Prepare documents
Customs declaration
Receive shipment
Load the shipments into
container
Deliver the shipment
onboard
Figure 2: Forwarding process for export LCL cargoes on theory
- First of all, documentary staffs will prepare documents related to the
shipments such as weight, amount, and name of the shipments…
- From those documents, documentary staffs of the company will conduct
customs clearance procedures for the shipment.
- After finished customs procedures, forwarder staffs will receive the
shipments from the customers and start loading them into the container
- Then forwarder staff will ask port employees to load the container on board
after they are filled up.
1.3 Legal basis framework
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