The Operating Company buys Freight from a supplier and then assigns individual freight tonnages to other contracts (P or S).

The Op company can use standard ITAS allocation/invoicing processes to Sell (back-to-back) their bought tonnage i.e. the Freight Order.

Commodities that represent freight are nominated with 'Type' = freight (ocean freight or container freight) in PHYSCODES/Commodity {cmy03_cmytype}.

The S01 configuration determines which TRADE numbering will be used, either standard P & S or the overrides for Freight.

Freight Purchases are created in TRADE. The seller would be a Shipping operation.  Standard M2M processes are applied thereby ensuring Risk and Position Management. The Freight Purchase will be setup with the Base Freight rate/price for the origin-destination/period agreed. If there is a supplementary premium/discount according to the journey executed, that detail will need to known to the ITAS operator when they execute an assignment of a tonnage i.e. they will be able to change the rate for that journey and the Port From-To.

GPLREP / Position Report will separate recognised Freight Trades into their own row.

There is NO Title Transfer Date requirement, freight trades are never owned.  The efficient way to administrate these TRADEs is to setup a specific Contract Terms that can be nominated as no TTD is requirement prior to Invoicing.

When freight is assigned, the assigned tonnage will split the freight purchase with the link to the assigned TRADE (P or S) [phys03_origcontract].

The freight purchase split will be marked as allocated (FRTCOST). The TRADE memorandum will be populated with a comment as to which TRADE the cost is assigned.  

Eventually all the negotiated tonnage will be assigned/written-off and the TRADE will need to be closed.

TRADE will enable (if any open tonnage) the “Create Freight Cost” feature. This will generate a Freight cost (cost code(s) nominated in PHYSCODES/Costs) for the target assigned TRADE(s) (purchase or sale). The targets are validated, e.g. must be open status. Other checks/questions will be executed on the From and To ports being applied for consistency.  The Cost Supplier will be the TRADE seller and a comment in the narrative indicates origin of the cost. The user will be warned if the target contract already has a similar coded freight cost.

‘Create Freight Cost’; the user will be prompted for ports of origin and destination (defaulting from the target contract), and price/freight rate (defaulting from the freight contract) and the quantity. The Purchase freight split will be updated with the ports and the price applied. The cost is linked to the Freight split record.  If the Freight Port codings are inconsistent with the assignment ports, the user is warned. The quantity will be used to split the freight purchase and will be used to calculate the cost on the target contract. If the weights agree, the cost will be created using the same units (for example 10 USD/PMT) else the cost will be created as a fixed amount.

When the Freight trade is Invoiced, additional legs will be created for the target TRADE cost and corresponding Cost Invoice actualisation. See examples below for more detail

There is an option on a Freight TRADE split to reverse the original assignment ‘Delete Freight Cost’.  The assignment reversal process will remove the target cost and will delete the Freight split record and return the tonnage and any invoice markings to its parent TRADE.

Errors and warnings are logged to MLP.

Example:

Scenario 1:

The freight contract is invoiced prior to freight assignment

P00100.000 is a freight purchase for 1,000 MT @ 150 USD/PMT from Maersk.

A PI raised by Maersk for 150,000 USD or % on account

100 MT is assigned to a sugar Sale S00020.A01.

Split P00100.001 is created and marked as allocated, and a 15,000 USD cost element is created for Sale S00200.A01 with its' invoice marking (Basis is the contract price i.e. not currently invoiced amount)

900 MT remains on P00100.000.

Scenario 2:

Freight is invoiced after the assignment of some tonnage (PINV and PINVGL only)

P00100.000 is a freight purchase for 1,000 MT @ 150 USD/PMT from Maersk.

100 MT was previously assigned to Sugar Sale S00020.A01 when P00100.001 was created

The cost on S00200.A01 will be marked as invoiced when P00100.001 is marked invoiced.

Book keeping entries for FRTCOST are basis 100% of cost with debit the P&L account for S00020.A01 per its' EXPense code and Credit the P&L account for the Freight Goods PURCHase EXP