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INTERNATIONAL TRADE LOGISTICS & DOCUMENTATION

ASSIGNMENT- Logistics details of Light Diesel Oil HS Code - 27101940


(Individual Assignment)

Introduction
Light diesel oil (LDO), a class of diesel whose density relatively light. It falls under class C category fuel having flash point above 66 degree Celsius. LDO is widely used in automobile and engines with an rpm less than 750, tractor and the diesel engine for high speed diesel engine fuel ships, mines, power generation, drilling and other equipment. LDO, is a blend of components from the distillation process of diesel. LDO is also referred to as distillate fuel or marked oil since it is marked with a coloring substance. A number of properties must meet standard requirements for a fuel to be classified as LDO. List of properties mentioned below: The water content of LDO must not exceed 0.25 percent of volume. The viscosity of LDO at 40 degrees Celsius must be a minimum of 2.5 centistrokes and a maximum of 15.7 centistrokes. LDO is required to have a Sulphur content of less than 1.8 percent by weight. Sediment levels must be below 0.1 percent by weight. Ash content must be less than 0.02 percent by weight. LDO must contain less than 1.5 percent carbon residue. The cetane number of LDO is 45. This measure of combustion quality can be up to 100 but most premium diesels are around 60. A higher cetane number means the fuel is of higher quality. The pour point is the lowest temperature that the fuel will flow. This quality is important for continued performance in the cold. The pour point for LDO is 12 degrees Celsius from November to February and 21 degrees Celsius for the rest of the year.

Value Chain of LDO


LDO logistics includes typically transportation of crude oil from the production sites to refineries and transportation and distribution of LDO to markets and customers. To understand logistics, we first understand value chain of crude oil (check figure 1.)

INBBOUND

PROCESSING

OUTBBOUND

Oil Value Chain

LDO Logistics

LDO logistics can be divided into 3 major procedures. Procedure details are mentioned below:

1. Inbound: Inbounds logistics typically consists of transportation of crude of production site to refineries.

2. Processing: Processing procedures contain the process of refining crude oil to extract Light Diesel Oil.

3. Outbound: After crude oil is converted into LDO, it must be transported and sold to end-users. This procedure comes under Outbound Procedures.

Inbound procedure are basically Midstream procedures whereas Processing and Outbound procedures comes under Downstream. Scope of this project will cover logistics procedures related to Downstream processes and it will focus on Light Diesel Oil.

Shipment Procedure
1. Buyer and Seller sign and seal this Contract including banking coordinates. 2. Buyers bank shall issue by swift wire transfer to Sellers/Fiduciary Bank, a non-operative, confirmed and irrevocable instrument (DLC/ SBLC/ BG) for the total cost of Cargo. 3. Seller loads vessel and gives to the Buyer all Loading Documents and Captains name. Vessels captain will provide NOR (Notice of Readiness) to the Buyer to confirm the product. 4. The Terminal Administrator authorizes Master of its loaded vessel to issue a full confirmed POP / NOR to Refinery discharge port facility. 5. The Harbour Master shall acknowledge the receipt of the NOR confirm from Captain of the vessel the issued NOR. The harbour Master shall send a confirmed POD to the vessel Captain for issuance of ETA after Quality and Quantity Inspection report.

6. The Seller shall prepare the Logistics, obtain security clearance and cause Vessel Master to proceed for Q and Q Inspection by a nominated Agency of the Buyer at a preferred location. 7. The terminal shall then fully Re-register a confirmable allocation in Buyers name. 8. Register all documentation in Buyers name. The documentation shall include valid BOL, Warrant of Title, CPA, Insurance and SGS report.

Transportation:
Oil logistics include transportation of crude oil from the production sites to refineries as well as transportation and distribution of oil products to the customers. Oil tankers serve the majority of the international trade of crude oil and oil products while pipelines are mostly used for domestic transportation. Rail and trucks are also used for shortdistance oil transportation. Larger tankers usually carry crude oil while smaller tankers carry refined petroleum products. Oil tankers are mainly equipped with diesel propulsion. As for pipeline transportation, crude oil is usually piped to refineries and oil products to large customers and distributors. The energy required for pipeline transportation depends inter alia on volumes, pipeline diameter and oil quality.

Open Sea Transport: Oil tankers for open-sea transport are categorised by the Dead Weight Ton (DWT), i.e. the total weight or mass of cargo, fuel, fresh water, ballast water, provisions, passengers and crew. Larger tankers usually carry crude oil while smaller tankers are used for refined petroleum products. Tankers of less than 100,000 DWT can transport both crude oil and petroleum products. LDO uses smaller tankers, also known as General Purpose which range from 10 to 25,000 tons.Oil tankers have usually a diesel propulsion system. The specific fuel consumption depends the oil tanker size; larger ships use less fuel per ton-km compared to smaller tankers. Specific fuel consumption and CO2 emissions for various oil tanker sizes; a tanker above 200 k DWT consumes 42% less fuel per tonkm compared to a tanker between 75 and 120 k DWT. The annual availability of an oil tanker depends on speed, loading and service time. A typical speed for an oil tanker is 14 knot = 7.2 m/s [4]. Loading and unloading takes typically 24 hours [5]. The average productivity of tankers, given as tons of oil carried per DWT per year, has decreased from 7.7 ton per DWT\y in 2000 to 6.7 ton per DWT\y in 2008, with 7.1 and 7.5 in 2006 and 2007, respectively. The average age of the oil tankers has also decreased over the past decade. In general, it is higher in developed countries.

Oil Pipelines: - Pipelines are the most efficient method to transport oil products. Pipelines are used to move crude oil from the wellhead to gathering and processing facilities and from there to refineries and tanker loading facilities. Product pipelines ship gasoline, jet fuel, and diesel fuel from the refinery to local distribution facilities. Crude oil is collected from field gathering systems consisting of pipelines that move oil from the wellhead to storage tanks and treatment facilities where the oil is measured and tested. From the gathering system the crude oil is sent to a pump station where the oil delivered to the pipeline. The pipeline may have many collection and delivery points along route. Booster pumps are located along the pipeline to maintain the pressure and keep the oil flowing. For LDO processing the delivery points are refineries, where the crude oil is processed into products. After crude oil is converted into refined products like Light Diesel Oil in our case, pipelines are used to transport the products to terminals for movement to stations. In addition to LDO, products pipelines are used to ship gasoline, other diesel fuels, home heating fuel, kerosene, and jet fuel. Because product pipelines are used to move many different products, the different types of products are shipped in batches. Batching is used to move two or more different liquids through the same pipeline. The liquid are transported in a series of batches. The adjoining batches mix where they come into contact. This mixed stream may be sent to refinery for re-refining, sold as a lower valued product. Many products pipelines have standard product specifications. This allows one company to ship LDO over the line and get not be concerned whether he receives gasoline from that same batch. Its all the same quality. Individual additive packages are added at the distribution terminals.

Rail/ Trucks Transportations: - Rail and Truck transportations are primarily used for short distance inland transportation.

Storage
Crude oil and LDO are stored in tanks for shipment to other locations or processing into finished products. But Crude oil and LDO use different types of tanks: Floating Roof Tank: - Crude oil is stored in external floating roof tanks. Floating Roof Tanks comprises an open- topped cylindrical steel shell equipped with a roof that floats on the surface of the stored liquid. The roof rises and falls with the liquid level in the tank. As opposed to a fixed roof tank there is no vapour space (ULLAGE) in the floating roof tank. In principle, this eliminates breathing losses and greatly reduces the evaporative loss of the stored liquid. There is a rim seal system between the tank shell and roof to reduce rim evaporation.

Fixed Roof Tank: - Fixed Roof Tanks are used for storing LDO. The fixedroof tank is the least expensive to construct and is generally considered the minimum acceptable equipment for storing liquids. A typical fixed-roof tank consists of a cylindrical steel shell with a cone- or dome-shaped roof that is permanently affixed to the tank shell. Storage tanks are usually fully welded and designed for both liquid and vapor tight, while older tanks are often have a riveted or bolted construction and are not vapor tight.

A breather Valve (pressure-vacuum Valve), which is commonly installed on many fixed-roof tanks, allows the tank to operate at a slight internal pressure or vacuum. This Valve prevents the release of vapors during only very small changes in temperature, barometric pressure, or liquid level, the emissions from a fixed-roof tank can be appreciable.

List of Documentations involved:


Firefighting checks (to be ensured for safe operation of tanker). Letter of Readiness to be issued to the Master to the tanker for starting of discharging operation. Tanker ULLAGE report to be prepared and exchanged with surveyors and tanker personnel and ensuring that the cargo brought by the tanker is quantified properly. Protest Letter to be given to Master of tanker in case there is difference in quantity assessed with respect to the Bill of lading quantity Empty Certificate after checking the tanks on the tanker to be given to Surveyor and the tanker Master.

Stake Holders:
Shipping Agents: Acts on behalf of shipping company. Transporter: Provides transportation facility. Ships Master/ Captain: Endorses receipts of good on board the ship. Customs: Permits import or export of goods, and collect import/export duty Draught Surveyors: Person who determines weight of goods. Quality Surveyors: Person who determines the quality of goods on board vessel during loading and unloading. Bank: Liaison for transfer of funds and also act as guarantor.

CUSTOMS PROCEDURE
The 'person in charge of conveyance' (Shipping Agent) has to follow prescribed procedure: a. Arrival at customs port Captain of a vessel entering India shall call customs port only. b. Import Manifest / Report- Person-in-charge (Shipping Agent) of vessel, has to submit Import Manifest / Report. The import manifest in case of vessel is required to be submitted prior to arrival of a vessel. IGM can be submitted electronically through floppy where EDI facility is available. c. Import manifest should be filled before arrival of ship aircraft. So that maximum possible formalities are completed before vessel arrives. This also enable importer to file Bill of Entry in advance. d. Grant of Entry Inwards by Customs Officer - Unloading of cargo can start only after Customs Officer grants Entry Inwards. Such entry inwards can be granted only when berthing accommodation is granted to a vessel. e. Carrier responsible for shortages during unloading - If the goods are short landed, the carrier is liable to pay penalty upto twice the amount of duty payable on such short landed goods.

Typical Port Operations for Light Diesel Oil:-

1. Pre Arrival: a. The shipping agent gets its vessel-profile registered before calling to the port. b. The port acknowledges the request by allocating an identification code called VCN. 2. Arrival: a. Shipping agent pays marine dues advances to captain. b. Shipping agent files IGM with custom c. Shipping agent arranges P.O. booking with custom d. Plan shore tank receiving sequence. e. ULLAGING of shore tank by surveyor. f. Receipt of request for bunker from master of the vessel. Bunker arrangement is co-ordinated by shipping agent g. Immigration clearance if needed 3. Steaming and Birthing: a. Berthing and fasting takes place. b. Connection of unloading arms. c. Ship captain gives NOR. d. Surveyor boards the tanker and checks the ULLAGING of tanks including slop tanks and calculates the gross quantity including free water. e. Bill of landing, last port ULLAGE report and quality certificate are prepared f. Verification of documents and quantity arrived. g. Shipping agent and custom officers role h. Get copy of IGM and IGM no. 4. Pump Operations a. Communicate with shore control b. Lining up receiving tank at shore c. Pumping permission and pumping plan d. Receiving load port/ tanker sample e. Check tanker log book entries f. Check and fill in safety check list 5. Pre discharge activities. a. Compare ships discharge and shore receipt. b. Confirm program of COW. Cow is method in modern tankers to clean their oil tanks , during the discharge , with the crude oil itself , under inert gas blanket c. Shipping agent books pilot for outward sailing

d. Shipping agent arranges fresh water & bunker e. Confirm compliance of bulk discharge and stripping f. Centrifugal pumps are used to handle bulk cargo. If tank level is low it is job of reciprocating pump and educators to empty the cargo tanks.

6. Post discharge activities. a. Calculation of rob and free water b. Reconcile with shore receipt quantity c. Joint signature of all ULLAGE reports (custom endorsement by shipping agent afterwards) d. Draining and disconnection of unloading Arms e. Evacuating of jetty slop tank f. Closing shore tank inlet valve g. Exchange of signed documents h. Port clearance from custom and outward sailing permission from captain. i. Surveyor disembarks j. Tanker sails as per timing, cast off supervised by captain. k. Tank dipping by surveyor l. Get test result, compare with B/L m. Evaluate unloading loss and prepare shore receipt n. Get custom endorsement and give PO booking to custom for receiving and withdrawal related to shore tanks and keep records.