In the past, the goods were often sorted at the time of onboarding while loading smaller shipments.
However, the introduction of containerized shipping ensured goods can only be organized and classified before onboarding.
In this guide, you’ll understand the role, significance, and impact of CFS in international shipping and supply chain.
- Meaning of Container Freight Station
- Benefits of Container Freight Station
- Types of Container Freight Stations
- How Container Freight Station Works
- The Main Receiving Services of CFS
- What is CFS Port Area?
- Container Freight Station Requirements
- Procedures for Setting Up CFS
- How doe CFS Compare with ICD
- How Container Freight Station and Container Yard Compare
- Comparison between CFS and Bonded Warehouse
- CY/CY and CFS/CFS Terms of Bill of Lading
- Functions and Responsibilities of CFS
- Container Freight Station Fees
Meaning of Container Freight Station
Container Freight Station is commonly known as CFS.
It refers to a warehouse where cargo belonging to different importers and exporters is consolidated and deconsolidated before exporting or importing.
In simple terms, CFS is a space for storing consignments before loading and after loading the cargo.
For LCL shipments, the CFS is often owned by a terminal or shipping line with a warehouse near the port.
The entity owning the CFS, in this case, is responsible for customs assessments and clearance protocols.
In LCL, shipments belong to different clients.
Thus the cargo is loaded in a single container and brought to CFS for consolidation before dispatching to an ultimate destination.
Several import-export transactions occur in this station both at the point of origin and destination.
In principle, CFS is thus categorized as origin CFS and destination CFS.
All the dealings are often processed through customs authentications in a customs notified area.
The main link between CFS and other entities involved in the transaction is a Customs Agent.
Benefits of Container Freight Station
In general, container freight station is an essential part of import-export logistics in various ways such as the following;
- Ideally, CFS plays a vital role in in facilitating intermodal transport. This helps in cost savings and better control of inventory
It is also essential in optimizing the process of sending smaller consignments to their respective destinations.
Consolidation of LCL shipments into larger containers.
This makes it easy for freight of the same or different clients being transported towards same destination.
- CFS creates a centralized location for both exporters and importers to send and receive their products, respectively.
It serves as a staging area for imports-exports.
- Goods at the CFS are often consolidated into containers. While at it, each vessel receives a unique ID number.
This number is vital in assisting you in tracking the containers as well as the product.
- In CFS, an appropriate list is generated and maintained. This includes the importer/exporter name, Customs agent name/house, and the product.
The data also captures port of loading/unloading the cargo, truck number, size, quantity, and shipping line, among others.
This is essential since it helps in preventing loss of cargo and confusion in the entire process.
- Since goods shipped are containerized, it becomes difficult for them to get damaged.
It offers greater cargo security, efficient and timely loading, unloading, stuffing, and de-stuffing.
In essence, it helps in facilitating a smooth transaction process between the exporter and the importer.
- Technically, CFS serves as a central point for consolidating smaller shipments. This is vital in reducing empty container movement hence making LCL shipments relatively cost-effective.
- CFS is also essential since it enhances automation for loading and unloading of containers at the docking point.
- In many instances, custom clearance protocols are hardly required in CFS. The importance of this is it enhances convenience by freeing you from the would-be daunting customs process.
- It also helps in decongesting the ports and terminals. And this is critical because it averts delays and inconveniences that would arise due to congestion in ports and terminals.
- CFS stations have both Foreign Trade Zone (FTZ) and Non-Foreign Trade Zone (Non-FTZ) components.
Essentially, many shippers often take advantage of keeping their commodities in-bond on a customs form.
It allows the shipper to defer taxes and duties payment until it is consumed in a manufacturing process or sold to customers.
- CFS is ideal for time-sensitive air-freight shipments.
In this aspect, it facilitates the fast and direct movement of such consignments from airport and delivery to various destinations.
And this happens within a short time-frame.
- This facility provides an extra layer of security hence reducing the risk of damage or theft of shipments.
Goods are shipped directly from port to the CFS warehouse.
- It enhances supply chain efficiency. This is particular for business, which involves frequent exportation and importation of goods that need short term storage.
Types of Container Freight Stations
CFS is categorized into two types, and they include the following;
a) Origin CFS
This refers to a container freight station situated in the country where the shipment is originating from.
Origin CFS is where consolidation of freight takes place before the items are shipped to the respective destination station.
b) Destination CFS
This is the type of CFS in destination country where deconsolidation of freight takes place.
This happens before every individual shipment is dispatched to the respective rightful customer.
How Container Freight Station Works
CFS is crucial in both the embarking and disembarking process of the goods from the point of origin to destination.
Therefore, it works from a different perspective, depending on the point of export or destination.
Here are the general procedures followed by CFS in these two existing contexts;
Role of Container Freight Station in Import
Ostensibly, CFS serves as an extended part of the port.
As you import products, they can be delivered directly to the CFS rather than sending them to the port or container terminal.
In essence, this helps in reducing congestion at the port considerably.
Here is a practical example;
Company X from US is expecting a shipment from Chinese-based Company Y.
The exporter or seller prepares all the relevant shipping and customs documents accordingly and notifies the relevant entities.
Once the shipments dock at the port, they are transferred to CFS, and ensuing processes followed.
- The consignment received at the US port is verified by the customs department and subsequently stacked at the station.
- The agents/ importers must file the relevant documents accordingly before taking the consignment to CFS.
- The CFS disembark the items from the containers.
- The customs agent or importer must file a Bill of Entry with customs. After that the items are evaluated, and payment for duty or tax is made.
- At post customs clearance, the department issues an “out of Charge” order. Goods are thus released from CFS with a gate pass issued to you.
Role of Container Freight Station in Export Business
As mentioned, CFS is in charge of cargo consolidation and stuffing it in containers before shipping.
Of course, the entire process is vital in reducing congestion at the port of origin and ensuring efficient cargo shipping.
In export, CFS works a bit differently, and here is the process from a practical example perspective;
Company X from US has cargo shipped to Company Y in China.
- The exporter/supplier loads the goods inside a truck and delivers it at the nominated CFS together with the shipping bill.
- The shipment then undergoes the loading and carting process.
- The items will then be scanned and substantiated in the warehouse before stuffed inside containers.
- The container is sealed as a security measure by the customs representative and sent out of CFS to the port.
- Once the goods get to the port, they are shipped to the destination’s port through the preferred shipping line.
The Main Receiving Services of CFS
CFS has a set of receiving services provided between receiving cargo from exporters and stuffing them into containers.
CFS plays a fundamental role in various shipping and supply chain processes.
Some of the receiving services and responsibilities of this particular facility include the following;
- Receiving and dispatching the cargo
- Receiving and consolidating LCL shipment for export
- Moving empty containers from a specified container yard to the respective CFS
- Issuing shipping orders and dock receipts
- Physical movement inside and outside the CFS facility
- Stuffing, sealing as well as marking the containers for easy and accurate labeling and identification.
- Typical sorting and stacking of goods in containers in pre or post-shipment.
- Drayage of containers from the container yards (CY) to a CFS
- Preparing a feasible plan for container’s internal load.
- Storage of containers
- Providing shipping order or dock receipts
- Consolidation and deconsolidation of cargo, especially in LCL shipments
What is CFS Port Area?
Generally, the CFS is expected to handle break-bulk cargo originating/terminating in the immediate hinterland.
In other instances, this facility may also deal with rail borne traffic to and from inland zones.
Therefore, the minimum area requirement for a CFS should be at least one hectare.
Container Freight Station Requirements
Typically, different countries have various policies surrounding requirements for container freight stations within their jurisdiction.
The responsible body in most countries always look into the following requirements for CFS;
1) Feasibility Report
There is a feasibility study or survey that must precede establishing of a CFS.
A copy of the same report is attached to the application for setting up this particular facility.
Technically, the facility must demonstrate its economic viability to the government and efficiency to users and the intermodal transport system.
It should also meet a specified level of traffic volume depending on the underlying factors.
2) Land Requirements
In most countries, CFS within major cities should cover at least one acre of land.
Those projected outside limits of major cities should be at least three acres.
The applicant, however, must have legal rights over the land proposed for CFS development.
In case the land is leased, a lease agreement should be provided, and it should entail the lease period.
3) Design and Layout
The design and layout of the CFS should conform to modern designs with most of the art-of-the-art equipment.
The mechanical/electrical facilities should also meet the required international standards.
The lay-out needs a seamless flow of vehicles, containers, and cargo through the container freight station.
The design for a CFS should largely incorporate several features. Some of these features include;
- Container yard
- Boundary wall
- Public amenities
4) Equipping CFS
The CFS should project to have the most modern handling equipment for loading and unloading of containers.
For instance, some of the handling equipment include;
- Lift truck loaders
- Rail-mounted yard gantry crane
- Reach stacker
- Rubber-tired yard gantry crane
You must also work out the costing and tariff structure as part of the feasibility studies.
Establishing the ideal inventory and tracking system in locating cargo and container is paramount.
Every functional unit of CFS needs to be up to date.
Moreover, setting up online information regarding all functional units would be more effective.
Procedures for Setting Up CFS
Setting up CFS is quite demanding in most countries.
There are several interventions, which must be put in place regarding the procedures for establishing this facility.
In general, though, a company interested in establishing a CFS needs to present its proposal to the respective agency in a particular country.
Some of the general procedures include the following;
Applying – You need to draft an application and fill in all the details accordingly.
In many instances, applications are often done online nowadays.
Once the application/proposal is received, it is evaluated by the relevant officials to determine whether it meets the required conditions.
Technically, the proposal for establishing a CFS is considered based on the stipulated guidelines and cleared on merits of responsible body.
Once the proposal is approved, you’ll receive a letter of intent from the responsible body.
You’ll then be required to set up the facility within the specified time-frame from the approval date.
However, an extension can be offered upon request and approval from the concerned body.
Once a letter of intent is issued, the facility is notified as a container freight station.
After the facility is set up, a notification declaring it as a customs area is issued.
But it has to meet and satisfy all the stipulated conditions related to development of infrastructure & facilities.
How doe CFS Compare with ICD
Customs Freight Station and Internal Cargo Depot are both facilities for handling and storing containers.
Ideally, CFS and ICD are the same, only that the latter appears to be an Indian concept.
Unlike CFS, which is located close to the ports, ICD is located relatively further away from the ports and terminals.
The idea of ICD is to enable importers and exporters to handle their cargo comparatively close to their warehouses and factories.
And this is common, especially when factories and warehouses are much far from the ports and terminals.
It is for this reason that the ICD, in some instances, is also referred to as dry port.
Also, ICD is an independent customs point like those available at ports and airports.
This facility has its automated system, enabling it to examine shipments, assess, and process paperwork.
By contrast, customs facility at the CFS is an extension of the main customs station at the port.
In essence, CFS examines goods, but processing and assessment of paperwork occur at the specific customs station the CFS is attached to.
How Container Freight Station and Container Yard Compare
Container Yard is a zone within container terminal or port or dry port where FCL containers are stored.
Such FCL containers are stored in CY after offloading from the vessel in case of imports.
They can also be stored in CY before loaded on a ship in case of exports.
CY facility is a dedicated area for FCL containers, whereas CFS deals with LCL and FCL containers.
CFS, on the other hand, is a warehouse where goods for different importers and exporters are consolidated and deconsolidated.
This happens before exporting or after importation, respectively.
The location of a container yard is within the port.
On the contrary, the location of a CFS is close to the port or a terminal.
Ideally, CFS picks containers and shipments from a CY to facilitate FCL and LCL shipping.
The role of a CY is to align containers for loading on ships and storing off-loaded shipments.
The storage duration lasts until they are transferred to a CFS, rail yard, or handed over to the customer.
Tentatively, both CFS and CY have cut-off dates.
It thus means there is a need for a container to be delivered to make scheduled sailing.
Comparison between CFS and Bonded Warehouse
Bonded warehouse refers to a space authorized by the customs department to provide storage services for imports and exports with deferred duty payment.
The conception of this idea was a measure of insulating trader’s experiences cash-flow issues.
Technically, the bonded warehouse’s essence is to provide traders more time to raise enough money needed for duty.
Alternatively, it allows them to get sufficient time to find buyers for specific items.
The importer can push the duty payable to the customer by transferring the title of goods.
In case you fail to find a buyer, you can export the items without paying duty on it.
Some of the elements where CFS and bonded warehouse differs include the following;
· Type of Storage Goods
In a bonded warehouse, the types of goods stored include the following;
- Imported items await completion of customs procedures and preparation to get into the market.
- Transited shipments awaiting exportation to the third country
- Goods awaiting export but with completed customs clearance.
On the other hand, the types of goods that can be stored in a customs freight station include the following;
- Imported goods without complete customs clearance
- Exported goods with completed customs procedures. The goods can as well be registered with customs declaration waiting for physical inspection in CFS.
Leasing Period for Warehouse
In bonded warehouse, the lease term hardly exceeds 12 months from date of delivery.
The leasing contract can only be extended once for not more than 12 months only if there are plausible reasons.
In CFS, however, the warehouse lease term not more than 90 days from the date of delivery.
In case of any plausible reasons, they may extend the duration up to a maximum of 90 days after approval from the relevant body.
Customs procedures for bonded warehouse are categorized into different cases, which include the following;
- For items from foreign nations to be bonded
- For items brought from FTZ or inland from bonded warehouses
- For shipments dispatched from bonded warehouses for export in foreign countries
- For shipments delivered from bonded warehouses for import into non-tariff or inland zones
- For products to be transported to a different bonded warehouse
However, when it comes to CFS, there are two primary customs procedures, which include the following;
- For imported goods
- For exported goods
CY/CY and CFS/CFS Terms of Bill of Lading
Bill of Lading is a critical document in ocean shipping often issued to the shipper by freight agent or carrier.
It contains several details, including various terms of CY/CY and CFS/CFS.
The terms on Bill of Lading include the following;
Bill of lading
It refers to an FCL shipment collected at origin port’s container and delivered to a consignee at the destination’s port container yard.
In this case, it is the carrier’s responsibility to ship the consignment from CY at the port of origin to CY at destination port.
These shipments typically have one shipper and consignee. In some instances, they are also known as FCL/FCL shipments.
This refers to a consignment where items heading to a specific destination are consolidated at a container freight station.
It typically involves LCL shipments at the port of origin where they’re deconsolidated at CFS at destination port.
Thus often have multiple consignees and shippers. It may also be referred to as LCL/LCL shipments.
· CFS/CY (Pier to House)
It is a consolidation of LCL shipments at the port of origin, consolidating goods of different buyers.
The LCL shipment is delivered to a single consignee at port of destination container yard despite having multiple shippers.
· CY/CFS (House to Pier)
This refers to when the shipment is collected from the port of origin’s container yard.
It is then delivered to container freight station at destination port where its deconsolidation takes place.
CY/CFS often have multiple consignees and one shipper. They are also known as LCL/ FCL shipments.
Functions and Responsibilities of CFS
Container freight stations have become a sought-after facility in import-export.
This is mainly, as a result, increasing demand for LCL shipments.
Thus CFS plays several functions hence significant to the overall import-export process.
Knowing the functions and significance of CFS is one of the ideal ways of understanding CFS in-depth.
Some of these functions and responsibilities include the following;
- Evaluation and verification of import-export shipments by customs department for efficient customs clearance.
- Facilitating intermodal transportation of containers to port of origin and from port of destination.
- Organizing customs clearance procedures, which include classification, examination, and evaluation of products.
- Dealing with break bulking cargo originating or terminating in the close port or terminal hinterland. This is in addition to rail-borne traffic to and from inland areas.
- Tracking system for monitoring status and location of cargo and containers
- Temporary cargo storage services and laden or empty containers.
- Maintenance and repair of damaged containers
- Storing products safely until they are ready for shipping or picking
- Moving empty containers from container yards and laden containers to port of terminal.
Container Freight Station Fees
Ideally, the charges for CFS usually vary depending on different provides.
The charges also vary depending on the dimensions of the specific container.
Therefore, it is always advisable to inquire about the pricing from different providers.
This allows you to find the specific one, which suits your needs fits within your budget.
In many cases, freight forwarder consolidators usually have different contracts with warehouses.
Thus the specific container freight stations may charge different rates depending on the freight forwarder used.
Nevertheless, there are other additional CFS charges dependent on whether it is export or import activity.
Some of the export activities, which attract charges in CFS include cargo storage and container stuffing.
Also, charges for per-day ground rent for laden and empty containers may apply for export activities.
For import CFS, some of the activities that may attract charges include;
- De-stuffing and delivery
- Cargo storage
- Container scanning
- Cargo handling
The general and extra CFS charges include;
- Cargo shifting within CFS
- Container repairs
- Amendments in documents
- Container cleaning
- Transportation to and from CFS/Port
- Reefer handling
- Weight verification
As you can see from this guide, a container freight station is a fundamental shipping industry facility.
Over the last years, CFS has transformed the manner of storing and shipping consignments to and from different countries.
Most importantly, it has enhanced the efficiency in carrying out a wide range of import-export business.
Hopefully, you’ve learned meaningful information from this guide.
In case you have any questions or inquiries,feel free to contact us.
We’ll assist you in all matters of CFS and any related issues.