Internship Report

SPRING 2012
Anisha Samuel

The internship position I have is with Kuehne and Nagel office located in Coppell, Texas. Kuehne and Nagel evolved from an international freight forwarder to a leading global provider of innovative and fully integrated supply chain solutions. 1 The company was found in 1890 by August Kuehne and Friedrich Nagel in Bremen, Germany. They started off consolidating freight in the sea ports of Germany and in 1950s, Alfred Kuehne started the international expansion with the first international office in Canada. From there on, the company has grown fast and now there are 1000 offices in over 100 countries with approximately 63000 employees. In these 120 years of existence, Kuehne and Nagel has become the number one global sea freight forwarder, and is in the top 3 for global air freight forwarding and also in the top 3 for contract logistics provider and in the top 6 for European rail and road provider. The internship position I hold is with the sea freight departments importing side. This office has accounts with few major retailers in both sea imports/exports and also in air import/exports. I was helping with importing of products for Kuehne and Nagels Office Depot account. There were ten objectives for me that was attained while working here. These objectives made my internship position a valuable work experience and also increased my knowledge in the sea freight process of supply chain. The ten objectives are: OBJECTIVE ONE: Understand critical sea freight documentation requirements and their impact on sea freight shipments. I understood that even to move something small like a nut or screw from China to U.S, documentation of what is being shipped, how much is being shipped, does the country fall in the certain category of place that U.S can ship from, and more questions should be answered for this small item to enter United States. The three main documentations required for checking if the items in a shipment are going to the right place with the right item
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www.kn-portal.com

are Commercial Invoice, Packing List and FCR (Forwarders Cargo Receipt). I use all these three documents to make sure the purchase order numbers in these copies provided by the exporters are the same. If the numbers are the same, I enter the purchase order numbers into the Kuehne and Nagels computer program. If the purchase order numbers are not the same or if some documents do not have the purchase order numbers or if one or two documents are missing from the exporter, I note it down. Then, I give the ones with the problem to my supervisor and she sends the exporter an e-mail requesting the new purchase order numbers or the required documents necessary for the shipment to be delivered at the right place with the right quantity. There are other documents that are very important for shipment like the Certificate of Origin, Certificate of Manufacture, Certificate of Inspection, Certificate of Certification, Certificate of Analysis, Certificate of Free Sale, Import License and Certificate of Insurance. There are other transportation documents like the bill of lading, shippers letter of instruction, shipments of dangerous goods and manifest. Kuehne and Nagel is a Non-Vessel-Operating Common Carrier which means they do not own any modes of transportation but issue its own bill of lading and acts as a carrier. The bill of lading is very important for an international transaction for three major reasons. Firstly, it is a contract between the shipping company and the shipper based on the Incoterms they agreed on. Second, it is a receipt for the goods. Once the shipping company signs for the goods, they ensure everything is in good condition. If some items are not in the mentioned condition, they are under soiled or foul bills of lading that reflect the condition of the goods the carrier received. The impact these documents have on the supply chain process is that the documents make it very long and complex to ship an item from international ports and I impact the documentation

process for the Office Depot account by opening an average of 20 files a day when there is high flow of shipments to United States that is handled by Kuehne and Nagel. OBJECTIVE 2: Learn basic sea freight operations. The purpose of this objective is to understand what type of containers are used and what kind of equipment are used during the whole freight operations and to know which vessel is selected for each shipment. There are four major container types, the 20, 40, 40 high and the 45 foot containers. I see which container is used while shipping. While using these containers on the U.S highways, a 40 container cannot have more than 44000lbs. of cargo weight to operate on the highway. A 20 container can have no more than 45,000 lbs. of cargo weight to operate on a highway. An interesting fact is that a 20 container has a heavier payload because of its tri-axle chassis and the fact that the 20container is 2425 lbs. lighter than the 40 container. Chassis are equipment used to carry the load on the highway and sometimes the drivers are penalized if they are carrying a heavy load. The following table shows how weight and balance are very important for containers and use of equipment like chassis and how these containers must balance on a vessel. In the International Logistics class, I have seen pictures of containers that are overweight or not placed in the balanced manner and a lot of mishap happens. The forwarder point out the dangers of overloading and asks the importers to ship less than the maximum weight. As I open a file for the Office Depot account, I see if the weight and volume are in the given range for the specified containers. CONTAINER TYPE WEIGHTS GIVEN TO THE CUSTOMER 20ft standard container 16300kg 25cbm MAXIMUM VOLUME

40ft standard container 40ft High Cube container

19000kg 19000kg

55cbm 60cbm

OBJECTIVE 3: Understand the evolution of containerized sea freight and liner shipping including changes in the industry and its role in international transportation and logistics. The containers are constantly evolving. One of the major evolutions was when Malcolm McLean in 1956 changed the cargo handling business by introducing the idea of a container. Before this innovation, one manifest of the S.S.Warrior showed the contents of 74,903 cases, 71,726 cartons, 24,0336 bags, 10,671 boxes, 2,880 bundles, 2,877 packages, 2,634 pieces, 1,538 drums, 888 cans, 815 barrels, 53 wheeled vehicles, 21 crates, 10 transporters, 5 reels and 1,525 undetermined.
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Each piece of the cargo was handled by a person and this is very time

consuming. The introduction of containers decreased the time for handling cargo as there is no more piece by piece cargo handling. One drawback with the evolution of container is security. I remember from the transportation class, how the container can be used to threaten the security of a country. A terrorist may plant a bomb, drugs maybe stuffed in a childs teddy bear, and the most interesting is how people smuggle in the other. All these pose as a threat because there is less handling of the cargo. I impact the process for the sea imports for the Office Depot account when I look at each piece count in each shipment documents and I match the piece counts match Kuehne+ Nagels system. For 9/10 times, the piece count is accurate but then there is always one that may have occurred due to human error. If the piece count does not match, I show it to my supervisor and she checks into in and fixes the problem.

www.ribbonfarm.com

OBJECTIVE 4: Understand the basic principles and concepts of international sea freight transportation including the flow and stages of sea freight shipment. My understanding of the flow and stages can be illustrated by a flow chart.

Inland transportation Port authorities and customs and loaded to carrier.

In Transit
Flow of information documentation from origin to destination Flow of product - the actual commodity

Reaches port - unloading and customs and brokeage Inland transportation to wharehouse and then to final customer.

Exporter

Importer

I impact this flow for the Office Depot account when I open a file for a shipment. When the shipment of the Kuehne + Nagel computer system is at a 1300 status which means the cargo is on the ship, thats when I can go in the system and open and see the documentations match up. I have learned 800 status is used to show the shipment has not yet been shipped. OBJECTIVE 5: Understand the role of the parties involved such as carriers, freight forwarders and logistics providers in international sea freight transportation. This objective clearly shows how the importer and the exporter are not the only important people involved in the supply chain but the different carriers and the people that makes sure the importers product gets to him/her safely without any mishap. The role of carriers like Hapag Lloyd, Maersk, OOCL, China Shipping and other carriers are very important for the visibility of the movement of cargo. The carriers that Kuehne and Nagel choose for transportation gives us the up-to date information of a container or shipment. I impact the tracking process of Office Depot shipments. For instance, if

there is a full container that has an estimated time of arrival (E.T.A) of April 25th, 2012 to Dallas and is using China Shipping carrier; I can go into their website on the 25th of April to see where the container is located. Sometimes the full container may be still on rail in transit or already in Dallas. The use of E.T.A is very important as thats how the paper work moves for that container or shipment and also shows me that we can only estimate the uncertainty of the future. The other party that is involved is a forwarding company or logistics providers. As I mentioned in the introduction, Kuehne and Nagel is the worlds number one sea freight forwarder and to be an intern for Kuehne and Nagel makes me proud. When fellow students or older friends ask where I work or is interning - I say, Kuehne and Nagel. Most of them give a blank stare. Then I make sure to say we are the worlds number one global sea freight forwarders and we are the people that work behind the scenes like in the movies. The importer and the exporter are the actors and forwarders or complete logistics providers like Kuehne and Nagel are the make-up artist, the costume designer, the set director and everyone else that makes sure the show goes on. OBJECTIVE 6: Gain a basic understanding of operation costs. As I learned in my accounting classes there are two types of operating cost fixed and variable costs. Investopdia.com defines operation cost as, Expenses associated with administering a business on a day to day basis. Operating costs include both fixed costs and variable costs. Fixed costs, such as overhead, remain the same regardless of the number of products produced; variable costs, such as materials, can vary according to how much product is produced.3 This objective shows even if I am a logistician, accounting is very important to keep us on track. The overhead cost of the office in Coppell is going to paying the electricity bill or paying the employees. The variable expense is when a Kuehne and Nagel sales person goes out and gets a new account for sea
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: http://www.investopedia.com/terms/o/operating-cost

imports, he might get a commission. This is variable cost to the company as he/she is not getting a sale every day. I impact Kuehne and Nagels fixed operational cost as I am an intern who is getting paid and that is an overhead cost. OBJECTIVE 7: Understand the difference between controlled costs versus liability and the impact on operations. Controlled costs are costs that the management tries to take hold of to work efficiently without having to deviate from its actual cost. When the management sees there has been a change from the actual costs or routine, a liability is created. The way this applies to what I do is when there is a shipment that comes to port and if I dont open a file, for example if I overlook a LCL shipment and the shipment came on the 20th of April and my supervisor finds out this shipment was not opened until the 30th of April, then Kuehne and Nagel has to pay storage fee for that shipment. If I opened the file like I was supposed to, then it is a controlled routine but when the routine is broken, it becomes a liability for the company. This affects the operation in a negative way now as there is a loss on this truncation and now the company has to hassle through the procedures that they are used to doing in a systematic way. I impact the system by opening files by the estimated time of arrival so I wont mess the shipments up. OBJECTIVE 8: Understand the INCOTERMS 2010 and how they are used in the passing risks and costs. An International Commerce Term or commonly known as INCOTERMS, specifies the responsibilities of the exporter and the importer in an international transaction. The first set of terms was created in 1936 by the international Chamber of Commerce and through the years INCOTERMS have modified and the recent trade terms are INCOTERM 2010. There are eleven INCOTERMS that can be used depending upon what means of transportation can be used and how much control an importer or exporter wants. The INCOTERM that I mainly see for the Office Depot account is FOB INCOTERM. This is specifically for ocean transport. The risk and

costs are passed to the importer after the goods are placed on the ship by the exporter. It is the importers responsibility now to bring the cargo safely to the correct destination. OBJECTIVE 9: Learn basic U.S customs brokerage requirements. I learned the need for a broker. When cargo is imported or exported, the importer and the exporter must be under compliance of U.S customs and rules. The next objective talks about the paper work required to clear the customs before importing to the U.S. The interesting fact I learned is that there are other agencies involved in the process. When importing a consumable item into U.S, the Department of Agriculture sees that the item is of good quality, and can be imported from the country of origin. The other agency is the FDA (the Food and Drug Administration) as they can examine any food related or animal related cargo. FCC (Federal Communication Commission) is another agency that looks into what electronics can be imported. I impact the broker process indirectly when I check the purchase order numbers, the number of items and documentations before the shipment reaches the ports. Therefore, when the cargo is at the port there is no delay in getting in though the customs.

OBJECTIVE 10: Understand the documentations needed to complete U.S customs entry on international shipments. A broker needs the TSCA (Toxic Substance Control Act) document. This provides EPA with authority to require reporting, record-keeping and testing requirements, and restrictions relating to chemical substances and/or mixtures. Certain substances are generally excluded from TSCA, including, among others, food, drugs, cosmetics and pesticides.4 The other document that the broker looks at is the Harmonized Tariff Schedule of the United States (HTSUS). This shows the broker what category the imported cargo is licensed under for importing to America. The way the broker builds up the Harmonized Code is interesting. There
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www.epa.gov

is a website that is provided where the information can be plugged in and then with each dropdown choice, the product becomes more specific. Then the code is applied to the product. This was taught in International Logistics class in the customs clearance chapter. I impact the process again by looking for the proper documentation and if the information matches up.

This internship is a great learning experience in the transportation industry. Now I have a better picture of what is required for international imports to United States by ocean. The numerous documents, the container requirement, who is involved in the importing process, what terms are the importers using for trade, how the importing is done, how the costs factor in the process of supply chain -- these questions can be answered better, because I have a good understanding of how the process works for the Kuehne and Nagel Sea Imports. This internship is my first experience in the transportation industry. Working in the sea imports helps me understand the general way imports are carried out. Sea imports or exports have a longer transit time than air imports/ exports; therefore, I consider this as a stepping stone to work faster in the aviation side since I am an Aviation Logistics major. To know what I am doing before I do the process faster is a great learning curve. This internship experience compliments the certification in Logistics and Supply Chain Management that I am pursuing this semester. Overall, this internship is going to have a great impact on my career as Kuehne and Nagel is an international company and if I was to follow my career goals of working internationally, having an internship at Kuehne and Nagel is a great asset.