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KEY PERFORMANCE INDICATORS FOR THE PRODUCTION OF TRANSPORT DOCUMENTS AND INVOICES

FOR MARITIME CONTAINER SHIPMENTS

A guide to best practice for carriers, shippers and third parties involved in the maritime container liner shipping trades

Quality companies who are sourcing overseas or exporting their goods recognize the importance that best practice and quality plays in their supply chains. The
growing importance of reliability and performance of manufacturers’ and retailers' supply chains and the need to improve efficiency in the chain is putting greater
demands on the liner shipping industry to improve its service performance, reliability and standardise the way it measures these.

In particular shippers feel that there is a need to improve performance in the area of invoicing and transport documents received from the carriers. As a
consequence of too many errors occurring in their invoices and the transport documents considerable man-hours are spent checking invoices, submitting revised
drafts or disputing invoices. Occasionally errors in the transport documents might result in damage to the cargo (due to inappropriate handling and stowage), delays
to the cargo (due to insufficient information about the cargo destination) and possibly delays in the transfer of goods to the buyer due to banks not transferring
payment because of errors in the documents.

The European Shippers’ Council (ESC) invited representatives of the liner shipping industry and the freight forwarding community to look into the problems with
shippers. The European Liner Affairs Association (ELAA) and CLECAT (the association of European freight forwarders) took up the challenge with the ESC. They
too recognised the issues and their members also suffered from their consequences. Jointly, the three organisations and members from each body developed a tool
to help shippers, freight forwarders (including 3PLs) and liner shipping companies reduce the errors in the production of transport documents and invoices and their
consequential effects.

The tool consists of a guide to the key performance indicators that should be measured and monitored along the ‘documentation process chain’ (presented below,
from the time when the tender is made or a spot market quote is sought, through to the issuing of an invoice), a definition as to what things should be included in the
performance measurements and some suggested best practice to help smooth the way to managing the processes and actions required to achieve error-free
documentation.

Of course, there will be far too many items of information, actions and documents to measure them all. Therefore it is expected that each party will refer to the KPIs
on an exceptional basis only (i.e. when freight is delayed, damaged or lost as consequence of mistakes in the documentation, or when an invoice is found to be
incorrect). For example, the tool can help identify where an action did not take place or happened but was below an acceptable and agreed standard. Preventing the
same thing from happening again would be achieved by monitoring more closely the actions, the performance standards being achieved and the application of best
practices.

The ability to perform all the actions to the desired standard could be incorporated within a Service Level Agreement with the contracted parties.

It is important to note, that everyone in the process has a responsibility to ensure they perform their actions to the standards agreed between the parties; everyone
has a responsibility to work together in common understanding of the processes and standards, and to correct practices that cause a performance failure.

Next Steps

 The first step now is to seek the opinion, comments and observations of a wider array of shippers, freight forwarders and carriers in order to determine any
refinements necessary to the tool currently proposed.
KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

 Secondly a level of support for this initiative is required in order to establish it as an industry tool and embed the principles and the tool itself into everyday,
common practice.

 It has been suggested that actual standards of performance should be developed for different operating scenarios and commodities, for example. Additionally a
further suggestion has been to lead the development of an actual guide to implementation of the KPIs into companies systems and operational practices. This
will largely depend upon the responses and comments we receive from this wider stakeholder consultation.

Please read carefully the Performance Indicators, definitions and suggested best practice and feedback your comments on the specific details of this document and
any more general comments and observations you may have.

On behalf of all those that have been involved in this project to date and those that are keen to continue, thank you for any input you can provide; all of it will be
gratefully received.

Nicolette van der Jagt


Secretary General
European Shippers’ Council

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

General Comments and Observations: (please use this space to provide general comments and observations)

Do you think this initiative is worth supporting?

Next Steps: (Please indicate what you believe should happen next)

WHAT FOLLOWS ARE THE KPIs, DEFINITIONS AND BEST PRACTICES PROPOSED FOR EACH STAGE OF THE ‘DOCUMENTATION PROCESS CHAIN’:

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs
FOR TENDERS:
Information which is truthful and sufficient at the time should be supplied by shipper, carrier and agent (expected compliance target = 100%)
Shipper to make tender request available to carrier before an agreed deadline (expected compliance target = 100%)
Carrier to submit response within an agreed time-frame (expected compliance target = 100%)
FOR SPOT RATE REQUESTS:
Shipper to submit using an agreed ‘request form’ (expected compliance target = 100%)
Carrier to respond to spot rate request within agreed time (e.g. 48 hours) (expected compliance target = 100%)
Defined
The Tender or Spot quotations refer to the first point of contact between a shipper and carrier over a given shipment or number of shipments in a given time-frame.
Best Practice
1
It is considered important to ensure clarity of tender and quotation documents. Where ever possible standard terms of shipment should be used, and correctly spelled.
Documents should:
- include and define payment terms
2
- note any tolerances in gross weight of cargo and dimensions
When returning the tender document with revisions, the carrier should not alter the original document format (the document ‘instructions for use’ should be adhered to)

Comments:

1
Standard shipment terms does not include Incoterms
2
It is important to include the weight of any dunnage, packing material etc which may affect the overall weight of the container and could result in the container becoming overweight. The tare of the
container should not be considered.

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs
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Itinerary of sailing as defined below
(target standard = all itinerary items to be updated daily and a 100% target of accuracy of information)

ETS and ETA


(all ETS and ETA details will be recorded and kept up to date, 100% of the time).

Defined

The ships itinerary is defined as a record of the following for each voyage
- Transhipments
- Ports of call
- The Routing
- Transit time
- ETS’ and ETAs
G Best Practice

hhv The carriers and, where appropriate, the portals, should establish a system of regularly updating the vessel itinerary in order that a shipper should always have the latest
information upon which to choose an appropriate service to suit his/her needs.

Comments:

3
It is accepted that measuring whether or not the itinerary has been accurately recorded will be very difficult but not impossible to do.

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs

BOOKING ACCEPTANCE:
Shipper to submit complete information (including contract reference where applicable, vessel name and voyage number and cargo details). (expected compliance target
= 100%)
4
Carrier to confirm receipt with a booking reference number within a time agreed (e.g. 2 working days or 2 hours ). (expected compliance target = 100%)

5
SHUT-OUTS (i.e. missed voyage or roll-over) :
Carrier to inform booking party of missed voyage immediately(expected compliance target = 100%).
Carrier to confirm substitute voyage (re-booking of cargo) immediately (expected compliance target = 100%)
Defined
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[All terms used are considered to be commonly known terms of shipment .
Best Practice

The following items should be recorded and checked before accepting a booking:
- Special requirements of shipper, agent carriers, ports/terminals, Authorities etc
- special requirements against the ETS and ETA.
- requirement for over-height containers.

Comments:

4
A two day confirmation target may be appropriate for dangerous goods, for example, but many carriers advertise a two hour rate. It has been noted that airlines can
give immediate confirmation for electronic bookings and therefore some shippers may also consider this a reasonable expectation.
5
This refers to any cargo that has not been loaded onto the vessel for which a booking had already been accepted.
6
These will be more clearly defined in a planned ‘Glossary of terms

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs

Shipper must submit the latest instructions at an agreed time before the vessel ETS. (expected compliance target = 100%)
Instructions should be clear and understandable and show the booking reference to which they refer. (expected compliance target = 100%)
Carrier to make transport documents (e.g. Bill of Lading) available at an agreed time after vessel departure from port of loading (e.g. within 48 hours). (expected
compliance target = 100%)
Shipper to confirm acceptance of transport document and any modifications required at an agreed time after receipt of first (draft) copy (e.g. 24 hours). (expected
compliance target = 100%)
Carrier to submit final version of transport document no later than 24 hours after confirmation by the shipper of its correctness. (expected compliance target = 100%)

(if no changes made to draft and no re-keying involved, acceptance of draft becomes automatic)

Defined

The creation of transport documents


Best Practice

The following items especially should be reported or identified:


- Exact conditions on the L/C
- Exact description of the goods
- Gross weight
- Special handling needs
- Parties to notify on arrival

Once these items and any other shipping instructions have been checked and approved by the shipper and carrier, the draft transport document may be accepted.

Comments:

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs

Not applicable
t Defined

Measures to be based on what conditions were set in the forming of the booking and within the special instructions.
Best Practice

During the course of the voyage it is advised that shippers, carriers and agents compile a report of the KPIs being measured and the results. Compilation of such a report
represents a good management practice and will facilitate discussion of the results with the other parties in the chain.

Monitoring should ideally be done on the basis of ‘Exceptions-reporting’.

Comments:

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KPIs, DEFINITIONS AND BEST PRACTICE: THE DOCUMENTATION PROCESS CHAIN

QUOTATION/ SCHEDULES BOOKING SHIPPING MONITORING INVOICE


TENDER/ INSTRUCTIONS

KPIs

Carrier to send invoice to shipper (or assigned agent) within an agreed time after the vessel sailing (expected compliance target = 100%)

Shipper to validate invoice or advise of discrepancies within an agreed time after receipt. (expected compliance target = 100%)

Shipper (or appointed agent) to identify the number of invoices containing discrepancies over an agreed period.
Defined

To ensure the invoice matches what was agreed when the quotation/tender was accepted.

Best Practice

Clarity: the invoice should incorporate the same language / terminology as was used when establishing the ‘itinerary’ and ‘booking’.
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It is considered unacceptable for any invoice to be rejected and returned without genuine justification

Carrier to respond to a returned-invoice in ‘good time’

Comments:

7
It has been alleged that some shippers or agents might consider rejecting an invoice for the purposes of further delaying payment beyond the normal payment
terms. This and any similar reason for rejecting invoices is not acceptable, causing extra cost and inefficiency within the process

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