International shipping by sea

International shipping by sea

With a strong agent system in major port areas of the world, contracts signed with reputable shipping lines such as Wan Hai Line, Cosco, T.S Line, Heung-A Shipping. Hung A Logistics provides sea freight services at competitive prices, on schedule, fully meeting the needs of transporting goods to inland ports by truck.

1. What is Full Container Load (FCL)?

FCL is the abbreviation from the English words: Full Container Load, means using a whole container for cargo shipping.

Full container load means that the customer (or shipper) rents a whole container to transport the cargo. Shipper is responsible for loading the cargo, while Consignee is responsible for unloading cargo from the container. When the products are homogeneous (the same) and enough to fill full at least one container, this is the most economically efficient option.

This method has been favored in international transportation for a long time. The term FCL has been used for quite a while and is commonly used until today.

2. FCL shipping process:

- Shipper will proactively contact the transport company to hire FCL services and one or more empty containers. Then the cargo will be carefully packed and loaded into the container. Before the shipping process begins, the container will be carefully sealed to ensure cargo safety.

- The entity or person using FCL services will pay the transportation fees and other charges for customs procedures, customs clearance, terminal handling charge, fuel surcharges, etc.

- The transport company will be responsible for delivering the cargo to the provided address without unloading them during transportation, ensuring the safety and security of the cargo.

- Additionally, the transport company will be responsible for managing, monitoring, and taking care of the cargo at the warehouse, loading container onto the vessel, unloading at the destination port, and finally paying for above services.

3. Analysis of FCL shipment operations:

3.1 For FCL shippers:

  • Rent containers, pick them up at the port and bring them to the warehouse for loading.
  • Provide necessary information to the shipping line to issue bill of lading.
  • Load cargo into containers, secure the cargo to ensure safety during transportation without shifting.
  • Calculate and label cargo, marking products so the consignee can easily identify the product type.
  • Completing customs procedures.
  • Settle container lifting costs at the port, terminal handling charge and other related costs, if any.

3.2 For FCL carriers:

  • Issue bill of lading for the shipper and preparing cargo manifest for the cargo.
  • Load containers onto vessel and arrange them safely before the vessel begins the transportation process.
  • Unload containers from the vessel and move them to the destination port.
  • Execute delivery order and delivery containers to the consignee with valid bill of lading at the container yard.

3.3 For FCL consignees:

  • Prepare necessary documents to present to the shipping line/customs upon receiving arrival notice from carriers.
  • Complete customs clearance procedures for the shipment.
  • Transport containers to the warehouse, unloading cargo, and return containers to the designated location.
  • Complete payment of container fees, D/O fees, and other related costs, if any.

4. What is LCL - Less than Container Load shipment?

LCL is the abbreviation from the English words: Less than Container Load, means the small shipment, also known as consolidated cargo, combined cargo, is a shipment that is not enough volume to fill a full container.

LCL are shipments consolidated in one container where the consolidator (carrier or forwarder) is responsible for loading and unloading cargo into and and out of the container. When shipping cargo, if the products do not fill an entire container, the shipper can choose LCL shipping.

The consolidator gathers individual shipments from various shippers, organizes, classifies, and combines them to load into the container, seals the container according to export regulations, completes customs procedures, loads the container from the port storage yard onto the vessel, unloads the container at the destination port storage yard, and delivers it to the consignee.

Usually, consolidators, who collect LCL cargo are Freight Forwarders (FWDs).

Previously, LCL was abbreviated from the phrase "less than (railway) car load," used in railway transportation; the term LCL means different shippers with small quantities of cargo are combined to transport efficiently in the same railcar.

LCL shipping is defined as a shipment that is not efficient enough to fill a container for transportation. It is combined with other shipments to the same destination in a container at the Container Freight Station (CFS)

Therefore, for export or import where the cargo do not fill a container, shippers can choose LCL shipping to optimize shipping costs.

5. LCL sea shipment benefits:

5.1. Cost savings:

Shippers who are individual or businesses have small quantities of cargo that do not fill a container should choosing LCL shipping services to save shipping costs and be more effective.

For Freight Forwarding companies, if customers place a booking with small cargo volumes that do not meet the minimum required for a full container, they can co-loading through another Freight Forwarder (known as Master Consol or Master Consolidator) who directly consolidates LCL shipments to save shipping costs.

For the LCL shipping service, shipper only pay for the space they use in a container, instead of paying for full container; which is considered the most outstanding benefit of this service.

5.2. Time-saving:

Thanks to the LCL shipping service, shipper don't need to wait until they have enough cargo to fill a container before shipping. They can use LCL consolidation services to combine their cargo with others to fill a container quickly. This results in faster shipping, saving time.

5.3. Cost-saving on storage:

Keeping cargo in the warehouse and waiting to gather enough for a full container incurs storage costs. Using LCL shipping services to ship cargo immediately helps shippers save on storage costs.

6. LCL shipment shipping process

6.1 LCL sea IMPORT shipment process:

After receiving cargo information, agreeing on the price, and completing the contract, the purchasing staff or documentation staff begin preparing the necessary information, including: Foreign Trade Contract....

Normally, when importing LCL cargo, businesses often hire a FWD and provide necessary documents during the receiving process. Therefore, the LCL sea import process that businesses import on their own or hire FWD will proceed as follows:

Step 1: Gather customer and supplier information:

The required information includes: Certificate of Origin (CO), Certificate of Quality (CQ), product catalog to proceed with importing cargo, depending on the type of imported cargo requiring various import permits, the documentation department must perform different tasks based on the foreign contract terms on payment, warranty, and delivery time. Then, hire FWD services because if a business handles it independently, additional costs will be higher than hiring FWD services. Moreover, experienced service companies quickly handle arising problems, providing peace of mind.

The documentation staff will contact the agent at importing country to provide cargo information, the contact person receiving the cargo, the shipping company to coordinate the delivery time and address, and pack the cargo to send to the importing company in Vietnam, represented by FWD.

Step 2: Complete documentation process and necessary information:

After the cargo return to warehouse, FWD agent will verify the cargo information, dimensions, weights, NCC standards, and requirements from Vietnamese businesses to issue a Bill based on the Packing list and invoice. The agent must also request original documents such as C/O, C/Q to be sent along with the cargo to FWD or sent in advance, depending on the requirements and each case. Usually, businesses prepare invoices, packing lists, and contracts before sending them to FWD. Once all the necessary information about the cargo is available, the cargo will be customs cleared at shipper’s customs and shipped on the vessel to the importing country.

Step 3: The business confirms the information, proceeds with the manifest declaration

FWD's agent will send the original bill to the FWD company in the importing country and request a manifest declaration on the customs system using a available template. Even for LCL shipment, FWD must provide complete Container numbers, seal numbers, and the number of packages loaded there for the vessel to identify and report on the status of the transported cargo on the ship.

Step 4: FWD receives arrival notice and get the Delivery Order (D/O).

When the cargo is imported to the CFS warehouse, carrier will send arrival notice via letter, email, phone, fax, etc. FWD must obtain the D/O for documentation, when picking up the cargo must present the following documents: B/L (Master Bill issued by the shipping line) and an introduction letter along with the local charge fee in Vietnam.

Step 5: Proceed customs clearance for imported cargo

Cargo arriving in Vietnam must undergo inspection and customs declaration. After the declaration is classified, FWD informs the customer to pay import taxes and VAT for customs clearance.

The documentation required for customs clearance includes:

  • Classified customs declaration (via internet).
  • HBL (House Bill) and MBL (Master Bill)
  • Delivery request letter
  • Introduction letter for receiving cargo
  • Invoice, Packing list, D/O, C/O, C/Q, and other documents if any.

Based on classified results, actions are taken accordingly: green lane means customs clearance cleared, yellow lane involves customs inspection based on documentation, and red lane requires physical inspection and document verification. Once the cargo are inspected, they will be released into the system, marked with a barcode by FWD.

Step 6: FWD receives the cargo from the CFS warehouse and delivers them to the customer.

The cargo are cleared with a customs stamped, FWD's Operation staff will present a warehouse release note with a barcode to collect the cargo from the warehouse. Then consignee will be informed to prepare their warehouse to receive the cargo.

Step 7: Deliver the cargo to the customer for payment and return the documents to the customer.

After delivering the cargo and completing the delivery receipt (if any), the accounting department issue a statement of account/debit note and/or an invoice to the customer based on the contract or agreement.

6.2. Sea export (LCL) process:

LCL sea export process involves the following steps:

Step 1: Negotiate and sign the international sales contract:

Both parties discuss to reach an agreement on the content of the international sales contract, including important provisions regarding cargo, delivery terms according to Incoterms, and responsibilities of each party.

Based on the terms of the signed contract, shipper knows their responsibilities in the following steps.

Step 2: Apply for an export license:

Case 1: There is no need to apply for an export license for common cargo or services permitted by the relevant authorities.

Case 2: Obligatory to apply for an export license for cargo under special government regulation. For example, to export items like pharmaceuticals, seeds, wood, antiques, explosives, etc., must apply for a license from the management ministry.

Details on the cargo requiring an export license can be found in Decree 187 of Government.

Applying for a license is is important and takes time, businesses need to prepare carefully.

Once the license is obtained or for items do not require an export license, you can skip Step 2 and proceed the next step.

Step 3: Payment Confirmation

One of the critical aspects in exporting cargo is payment. Problems in payment bring pose high risks for shippers. The payment confirmation procedure is one of the essential tasks when an organization executes an international trade contract based on the terms specified in the agreement.

Step 4: Prepare cargo for export

After receiving the deposit payment from the consignee, shipper plans to check the packaging, and loading schedule of the cargo.

Step 5: Arrange space with the carrier (Charter a vessel)

This task is usually determined by delivery conditions, costs, and transferring risks of cargo. Shipper’s responsibilities for chartering a vessel fall under Incoterm 2000/2010/2020 Group C, D.

Basically, arranging the main transportation involves the following steps:

1. Contact the shipping agent to get information about schedules and fees

2. Choose the shipping line, shipping route, and register for cargo transportation, hire necessary services such as loading and unloading and cargo transportation to the port

3. Arrange for delivery to the shipping agent, the carrier signs the delivery receipt.

Step 6: Packing and transporting to the port

After receiving the Booking note, shipper will package the cargo and transport them to the warehouse as specified on the Consol's Booking note.

Note: For LCL cargo, careful packaging and labeling with shipping marks are required. Prepare and submit to the port the Verified Gross Mass (VGM) declaration. Cargo must be unloaded before the closing time, otherwise, otherwise they will easily miss the vessel (not being loaded onto the vessel despite completing the procedures).

If specialized inspections are required (quarantine, fumigation, etc.), sampling will also be conducted in this step.

Step 7: Customs clearance for LCL sea export

Prepare the documents for export procedures, including:

  • Foreign trade contract
  • Commercial invoice (INV)
  • Packing list (P/L)
  • Warehouse receipt (issued by the port when the cargo is unloaded at the port in step 6)
  • Introduction letter.

After customs clearance, submit the customs declaration to the shipping line for signing the actual export with customs supervision.

With FOB terms, shipper’s obligation is basically fulfilled when the customs declaration is cleared & cargo are loaded onto the vessel. In case of exporting under C condition, proceed with the following steps.

Send Shipping Instruction to the shipping line, confirm draft BL, receive original B/L (if any)

After the cargo has been unloaded at the port and customs procedures completed, send details to make a Bill or Shipping Instruction to the shipping line before the Cut-off Time. It is advisable to request their confirmation to ensure they have received it before the deadline.

Based on the SI information, the shipping line will send a draft Bill of Lading. You should check carefully and coordinate with the shipping line for any necessary additions or corrections.

Note: For LCL shipments, customers will receive a House Bill of Lading, not a Master bill as FCL shipments.

Step 8: Other steps in the sea LCL export process:

Purchasing insurance, obtaining the C/O and other documents as customer’s requested

Once bill of lading available, it is advisable to promptly send the soft copy of the documents to notify consignee that the cargo has been loaded onto the vessel.

Additionally, proceed with completing necessary procedures to obtain other required documents as specified in the contract, such as:

  • Marine Insurance Policy
  • Certificate of Origin (CO)
  • Phytosanitary or Veterinary Certificate.
  • To ensure accuracy, send a draft and the final soft copy to the consignee for them to check and confirm. Make any necessary additions or corrections early rather than late.

Step 9: Send documents to foreign buyer:

Upon having the complete set of documents, send the original documents to shipper as per the agreed quantity in the sales contract. Also, provide them with scanned copies via email for them to prepare for the necessary import procedures.

This concludes the LCL sea export process in terms of cargo handover. At the same time, shippers should also pay attention to the consgignee's payment terms as stipulated in the contract.

7. How to calculate LCL sea shipping rates?

HUNG A LOGISTICS APPLIES SHIPPING CHARGEABLE RULES ACCORDING TO THE FIATA INTERNATIONAL AGREEMENT.

7.1. The unit of calculation for LCL sea freight:

Weight of the shipment (unit: KGS, metric tons - MT)

Actual volume of the shipment (unit: CBM - cubic meter).

Depending on the shipping line, route, and transportation method, conversion rules apply:

LCL sea freight are usually calculated where 1 CBM = 1000KG, depending on the shipping line.

Handling fees at CFS warehouses are typically calculated where 1 CBM = 500KG, depending on the CFS warehouse.

7.2 How is the LCL chargeable sea freight calculated?

Comparing tons (MT) or CBM, THE HIGHER VALUE IS USED;

MT is a unit to measure the weight of the shipment.

CBM is a unit to measure the volume of the shipment.

For example, if the cargo weighs 2000 kg and has a volume of 3 CBM

+ Volume of shipment: 3 CBM

+ Weight of shipment: 2000kg = 2 tons = 2MT

⇒ The shipping charge is calculated as 3 RT (W/M) x LCL shipping rate.

RT (Revenue Ton); W/M (Weight or measurement): Is the intermediate unit for calculating LCL shipping charge.

FT stands for Freight Ton, used similarly to RT (Revenue Ton), a unit to calculate the freight charge for LCL by comparing the prices calculated based on CBM volume and MT weight; the higher-priced method is applied to the cargo.

Some notes:

The minimum weight for calculating sea freight (LCL cargo) is 1 RT (or 1 W/M). This means if the cargo is CBM=MT= 0.5, it still needs to be rounded up to 1 RT to calculate the sea freight.

In some distant routes or inland ports, the minimum charge is calculated as 2 or 3 CBM. In this case, if the shipment is 1 CBM on these routes, it still incurs sea freight charges based on 2 or 3 CBM.

8. Steps to calculate the LCL shipping cost:

Step 1: Measure the Length, Width, Height of the cargo in meters (m) to calculate the volume of this cargo .

For example: If the dimensions of a cargo are Length: 3.2m x Width: 1.2m x Height: 2.2m, then the volume of this cargo will be: 3.2 x 1.2 x 2.2 = 8.45 CBM.

Step 2: Weigh the cargo to determine the weight in metric tons (MT).

For example: You weigh the cargo and find out the weight is 1.2 tons (1,200 KGS).

Step 3: Based on the LCL shipping cost

Quoted by the consolidating company, you calculate the cost in two units - volume and weight.

For example: If the freight rate quoted by the shipping company is 12 USD/ton, then the shipping cost for this cargo will be:

– Shipping cost based on CBM volume is: 8.45 CBM x 12 USD = 101.4 USD or :

– Shipping cost based on MT weight is: 1.2 tons x 12 USD = 14.4 USD

Step 4: Compare the costs between the two methods and choose the higher cost. The higher cost will be applied to the cargo.

In the example above, the shipping cost based on volume CBM is higher than the cost calculated based on weight MT, so the shipping cost for this cargo will be: 101.4 USD.

Another exercise on calculating shipping costs for a more complex LCL shipping may involve

In case of you need to send some cargo from Vietnam to the United States; This LCL shipment has a route from Ho Chi Minh City (SGN) to Los Angeles (LAX) to Chicago (CHI):

Gross weight (GW): 8,000 KGS

Measurement (Volume): 10.00 CBM

Calculate the shipping cost for this LCL cargo, knowing that:

1) O/F (Ocean freight): 10 USD/CBM

2) Trucking fee: 56 USD/CBM

3) THC: 4 USD/CBM

4) DDC: 3 USD/CBM

5) Fumigation documentary fee: 7 USD/set

6) Local charge in Los Angeles (PIER PASS): 4 USD/CBM

7) Clean truck fee: 2 USD/CBM

8) Customs charge (for inland): 35 USD/shipment

9) Warehouse surcharge: 2 USD/CBM

10) Inbound Documentation: 10 USD/shipment

11) Forklift fee: 5 USD/CBM

The method for calculating the shipping cost for this LCL shipping is as follows:

The gross weight (GW) and volume from Ho Chi Minh to Los Angeles remain unchanged for freight calculation. However, when the cargo are transported domestically from Los Angeles to Chicago, the volume must be converted as per the regulations for domestic transportation in the U.S. Formula for converting volume is as follows: 1 CBM (m3) = 363 KGS.

Therefore: 8,000 KGS is converted to 22.04 CBM (= 8,000:363).

The converted volume is indicated on the House Bill of Lading (House B/L) under the left corner of the 2 fields: Gross weight and Measurement: Revenue Tons: 22.04 CBM (varies by each House B/L form)

The shipping cost for this LCL shipment is calculated as follows:

From Ho Chi Minh to Los Angeles:

– Fumigation documentary fee = 7 USD

– THC = 4 usd/cbm x 10 cbm = 40 USD

– DDC = 31 usd/cbm x 10 cbm = 310 USD

– PIER PASS = 4 usd/cbm x 10.0 cbm = 40 USD

– Ocean freight (O/F) = 10 usd/cbm x 10 cbm = 100 USD

Total shipping cost from Ho Chi Minh to Los Angeles: 497 USD.

+ From Los Angeles to Chicago:

The shipment is converted from 8,000 KGS to 22.04 CBM.

– Clean truck fee = 2 USD/CBM x 22.04 CBM = 44.08 USD

– Trucking fee = 56 USD/CBM x 22.04 CBM = 1.234,24 USD

– Warehouse fuel surcharge = 2 USD/CBM x 22.04 CBM = 44.08 USD

– Forklift fee = 5 usd/cbm x 22.04 CBM = 110.2 USD

– Customs Charge (for inland) = 35 USD / shipment

– Inbound documentation fee = 10 USD /shipment

The shipment cost from Los Angeles to Chicago: 1,367.4 USD.

The total shipment cost for this shipment is: 497 USD + 1,367.4 USD = 1,864.4 USD.

9. Responsibilities of parties when shipping LCL cargo

9.1 Responsibilities of the shipper

  • Transport cargo from storage location to consolidator’s warehouse for consolidation.
  • Transfer necessary documents related to the cargo to the cargo consolidator.
  • Receive the bill of lading from the cargo consolidator.

9.2 Responsibilities of the carrier

  • The carrier of LCL shipping can be the actual carrier - shipping lines - or can be the organizer of the transportation without owning vessels.
  • Actual carrier: businesses specializing in the transportation of LCL shipping on behalf of a consolidator. They transport LCL cargo, sign the bill of lading for the shipper.
  • Organizer of LCL transportation: Typically logistics companies acting as cargo consolidators. In this capacity, they are responsible for the transportation process to the destination port.
  • Carriers of this type do not have their own transport means, so they must hire vehicles for transportation. They are responsible for loading containers onto vessel, signing bills of lading for consolidators.

9.3 Responsibilities of consignees

  • Arranging import documents and customs procedures for the shipment
  • Presenting a valid bill of lading to the cargo consolidators or their representative for cargo pickup.
  • Quickly receive cargo at the CFS warehouse.

10. Finding the most suitable consolidator

Finding a reputable and suitable LCL transport service company in the market is not easy, especially for first-time shippers who may face many uncertainties such as: Where to find a consolidator company? How much is the shipping costs? Whether the current rates are competitive? Is there any better service provider available? How to have many quotes to choose from?

Understanding the difficulties of shippers, Hung A Logistics Company was established to help them solve problems quickly and easily.

Shippers can:

  • Send shipments to multiple locations.
  • Receive quick 24/7 logistics transport quotes.
  • Always update on market prices and trends.
  • Help save time and logistics costs due to Hung A's competitive transport rates.

11. Some key notes when sending LCL cargo:

Finding and selecting a reliable and competent freight forwarder in various industries is not easy. Additionally, you need to establish pricing, compare, and discuss with customers before making a decision.

Here are some considerations before choosing a service from any freight forwarder:

  • Ensuring the transportation time and transit time suit your requirements—pay attention to setting the total transportation and delivery/receipt time.
  • The total cost in LCL shipping includes all other stages in the supply chain
  • The geographical distance from the shipper to the export warehouse if you do not want to add the transportation fee from the shipper to the warehouse by a forwarder
  • The distance from the import warehouse to the consignee if you do not want the forwarder to arrange the delivery
  • Reviews and ratings from other customers on the delivery and service of freight forwarders.

12. Differences between Less than Container Load (LCL) and Full Container Load (FCL)

Besides the operational differences (responsibilities of senders) between LCL and FCL as analyzed in sections 3 and 9, LCL and FCL also have the following distinctions:

Shipping costs: LCL has higher freight charges than FCL and is calculated based on rate per unit volume or weight of cargo. Many fixed costs of LCL shipping are applicable regardless of whether there is more or less cargo in the container. However, compared to air freight, LCL shipping is still more economical for the shipper.

Shipping process: The shipping process for LCL cargo is more complex and time-consuming than FCL cargo. Cargo consolidators need to count different shipments from various shippers, consolidate a series of documents for just one container load, then arrange deliveries for each shipper. During customs clearance process, issues with a particular shipment could affect all shipment consolidated in that container, leading to delays in delivery time.

Risk to cargo: LCL cargo increase the risk to cargo compared to FCL cargo due to damage, odor contamination, and cargo loss when various types of cargo are packed together in one container.

13. Combined shipping method (FCL/LCL or LCL/FCL):

In shipping, there is a combination of container and less than container shipments, with two main types:

FCL/LCL: shipping full container, delivering some shipments less than container (one seller ship to two or more buyers).

LCL/FCL: shipping some shipments less than container in one container, delivering full container (some sellers ship to one buyer).

There are specific changes in responsibilities during this consolidation process.

Example: FCL/LCL. The shipper and carrier have the same responsibility as when sending FCL. This means the shipper must send the entire container, and the carrier will transport the entire container. However, at the destination port, the carrier and consignee are responsible as when receiving LCL.

EXPLORE MORE: TRANSPORTING FULL CONTAINERS SERVICE

14. International sea freight services (FCL & LCL) at Hung A Logistics:

Through the article above, you have learned how to distinguish between FCL and LCL. Besides, Hung A Logistics advises you to choose reputable and quality international sea freight services (FCL & LCL) to ensure the quality of cargo.

14.1 Value for customers

Hung A Logistics offers a wide range of services in the international sea freight industry, including transporting full containers (FCL), less than container load (LCL), breakbulk cargo, heavy haulage (oversized, overweight), and project cargo transport.

With a highly experienced and dedicated team, an extensive network of agents worldwide, through contracts contracts with major shipping lines, HUNG A LOGISTICS can completely provide the following services for your cargo, from the smallest shipment to large-scale projects:

1. Transporting full containers (FCL), less than container load (LCL) to all ports worldwide.

2. Personal cargo (non-commercial cargo).

3. Sea-Air combined transportation.

4. Comprehensive door-to-door delivery service.

5. Project cargo.

6. Customs clearance services for import and export cargo.

Hung A Logistics - Confidently bring reputable and quality service to customers

14.2. Contact information:

If you have any questions and/or enquiry, please feel free to contact our hotline directly or visit the official website of Hung A Logistics. Your satisfaction is our success!

VIET NAM OFFICES:

HEAD OFFICE AT HOCHIMINH CITY

HUNG A LOGISTICS CO., LTD

11 1ST floor, Nguyen Cong Tru Street, Ward Nguyen Thai Binh, District 1, Hochiminh city, Vietnam.

Telephone: +84-28-3821-6685

Hot line:    + 84-96-839-7465

Email: info@hungalogistics.comviet.tq@hungalogistics.com  (DVKH)

Web: www.hungalogitics.com

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Telephone: +84.24.39745572

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Web: www.hungalogitics.com

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Telephone: + 84-511-382-3538

Hot line:    + 84-96-839-7465

Email: info@hungalogistics.comviet.tq@hungalogistics.com  (DVKH)

Web: www.hungalogitics.com

HAI PHONG OFFICE

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Telephone: +84 2253 979099

Hot line:    + 84-96-839-7465

Email: info@hungalogistics.comviet.tq@hungalogistics.com  (DVKH)

Web: www.hungalogitics.com

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