Internship

Report
SPRING 2012
 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 1950’s, 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 department’s 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 Nagel’s 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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are Commercial Invoice, Packing List and FCR (Forwarder’s 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 Nagel’s 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, shipper’s 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 20’container 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 MAXIMUM VOLUME

CUSTOMER

20ft standard container 16300kg 25cbm

 40ft standard container 19000kg 55cbm

40ft High Cube container 19000kg 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.’” 2
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 child’s 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+ Nagel’s 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.

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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 In Transit •Reaches port - unloading

•Port authorities and
customs and loaded to
carrier.
•Flow of information -
documentation from
origin to destination
•Flow of product - the
actual commodity
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, that’s 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 importer’s 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 that’s 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 world’s 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 world’s 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 Nagel’s 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 don’t 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 won’t 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

importer’s 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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is a website that is provided where the information can be plugged in and then with each drop-

down 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.