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Development of seamless rail-based intermodal transport services in Northeast and Central Asia
Report on Transport Facilitation procedures and documentation in Republic of
Korea
1. Introduction
A mission to the Republic of Korea was conducted by a staff member and a consultant of the
UNESCAP Transport Division for the express purpose of collecting information on border
crossing procedures and documentation in the ROK. The NRL expert from ROK working
with the Transport Division assisted the mission team in arranging meetings with the relevant
government agencies and freight forwarding organizations, as well as organizing travel
within the ROK.
The mission was conducted from 11-14 April 2016, during which period visits were made to:
The Busan Port Authority in Busan City;
The Hanjin Container Terminal and the rail sidings at Busan New Port North;
The Korea Customs Service at Busan New Port;
The Busan Port Authority at Busan New Port
The Ministry of Oceans and Fisheries in Sejong City
The Korean International Freight Forwarders Association in Seoul
This report outlines and reviews the main points of discussion at all meetings,
1. Meeting with Busan Port Authority, Busan City
Meeting held at the headquarters of the Busan Port Authority (BPA) at 1000 hours on 11
April 2016. Present at the meeting were: Park Ho-Chul, Senior Director, BPA; Park JI-Seon,
Assistant Manager, BPA; Chun Dong-Hee, Assistant Manager, BPA; Park, Jeongsu, NRL
Expert, UNESCAP Transport Division; Fedor Kormilitsyn, Economic Affairs Officer,
UNESCAP Transport Division; and Peter Hodgkinson, Consultant UNESCAP.
(i) Connection of Busan Port to Vladivostok and the TSR
Busan Port is handling an increasing volume of cargo to/from Vladivostok, either for loading
to/from the Trans-Siberia Railway (TSR) or for transfer between northeast China and ROK or
between Chinese origins and destinations. For example, automobiles for Moscow move from
Busan via Vladivostok and the TSR, while cargoes originating in Heilongjiang Province of
China move by rail to Vladivostock and thence by sea to Chinese ports via Busan, for
distribution to other Chinese provinces. The latter cargo flow occurs because the rail
distance between the origin in Heilongjiang Province and Vladivostok is only 300 km,
whereas the rail distance to the nearest Chinese port (Dalian) is 1,000 km. Chinese rail rates
are too expensive to transport cargo directly by rail.
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In another case, China is importing logs from Russia for furniture manufacture and re-export
from Harbin. Proximity to the TSR should suggest an advantage for transport of furniture in
containers by rail, but the reality is that the Russian rail tariff is too high. The tariff for
transport of a 40ft container from Harbin to Finland is about US$ 4,000 by rail and only US$
500 by sea. By comparison, transit time by rail is about 14 days, but sea transit time is twice
this number of days. In this case also containers are transported from Harbin to Finland via
Vladivostok and Busan, demonstrating that the cargo is more price, than time, sensitive.
(ii) Border crossing problems
Substantial delays are occurring in ports and at land borders within the Northeast Asia to
Europe corridor, owing to inconsistencies in the application of customs regulations between
neighbouring countries. These problems are compounded by the failure of a majority of
governments to introduce EDI (Electronic Data Interchange) and the single window concept
across their borders. It is considered that governments are slow to take these initiatives
owing to concerns about transparency, but that if these problems can be overcome, there
will be a WIN-WIN situation for all concerned.
(iii) Problems related to imbalanced cargo flows
The imbalance of westbound and eastbound cargo volumes constrains the cost
effectiveness of the TSR and limits the ability of rail to match cheap sea tariffs. Russia and
the CIS countries do not generate sufficient export volume.
(iv) BPA views on customs procedures and documentation issues
People transporting goods are the people who must declare goods. In the case of goods
arriving in Vladivostok, the shipping line must declare the cargo manifest. Then the party
arranging the rail transport must prepare and submit the relevant documents. For dangerous
goods special certificates may be required and transit times will be long.
The BPA Senior Director considers that document processing at borders can be accelerated
if information is generated as part of a single window base which is made available
electronically to all ports and border posts throughout the route. It was suggested that the
cargo manifest should be used as the single information base
Consignments must be declared as bonded cargo for inland destinations, for which the
originating customs authority will issue an “under bond” transportation certificate and will
affix customs seals which cannot be broken until the consignment arrives at its final
destination – unless it is stopped en-route for inspection.
Border clearance procedures should involve quarantine inspection first, followed by customs
declaration and inspection (if required), then collection of customs duties. This is the
procedure applied by the ROK authorities. The introduction of EDI will be essential for the
instantaneous dissemination of the single data set to multiple border control authorities. It
was noted that EDI had been applied in ROK since 1995.
It was suggested that UNESCAP should propose a format for a single data base and then
conclude an MOU with the participating countries for application of this system.
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2. Visit to Busan New Port North Container Terminal (12 April 2016)
(i) Port facilities
The existing container terminals at Busan New Port are:
The North Container Terminal with a total berth length of 4,300 metres and a design
capacity of 5.7 million TEU per year. This terminal can accomodate 13 vessels at a
time and is divided into three sections, one operated by Hanjin and the other two by a
joint venture between DP World and Samsung. Container stacks in this terminal are
worked by high capacity RMGs (rail mounted gantry cranes).
The South Container Terminal with a total berth length of 3,600 metres,
accommodating 11 vessels at a time, can handle 3.52 million TEU per year. This
terminal is divided into two sections, both operated by Hyundai Corporation.
Container stacks are worked by straddle-carriers.
Photo 1: Terminal 1, Busan New Port Photo 2: Terminal 2, Busan New Port
(ii) Port rail connections
Both terminals are rail served, although only the North Terminal regularly receives and
despatches trains at present. Korean Railways (Korail) operates container trains mostly
between Uiwang ICD near Seoul and Busan. Trains, comprising 33 wagons (66 TEU), are
hauled by electric locomotives to the Busan New Port station, about 6km north of Terminal 1
(See Figure 1 below). At this station, traction is changed to diesel and trains are hauled
directly (and intact) into the loading/unloading tracks at Terminal 1. There are 4 such tracks,
each with a length of about 1,000 metres. None is electrified, even for the first few metres,
meaning that trains cannot be placed or extracted by mainline electric locomotives.
The railway loading/unloading sidings at Terminal 2 are understood to be outside of the port
boundary, which will impose additional constraints on the competitiveness of rail.
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Source: Busan Port Authority, Busan Port Information Brochure (2016)
Figure 1: Layout of Busan New Port, showing rail access and loading/
unloading tracks
The rail sidings at Terminal 1 are worked by 4 RMGs (Rail Mounted Gantry cranes).
Containers are lifted from rail wagons to yard trailers for movement to container stacks
behind the berths. This system involves at least two container lifts between wagons and the
container stacks, as compared with only a single lift for containers brought in directly by
Busan New Port
Railway Station
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road. In some cases, where yard trailers are unavailable, containers are grounded beside
the railway tracks and require an additional lift to reach the stacks (as illustrated in Photo 3).
Clearly the multiple handling imposed on containers moved to the port by rail puts rail at a
competitive disadvantage with road transport. This factor, coupled with the short haulage
distance to/from Seoul, would largely explain the loss of mod al share by rail.
Photo 3: Container transfer from Photo 4: Four siding tracks under
wagon to stack the RMGs
3. Meeting with Korea Customs Service, Busan New Port
Meeting held at the offices of the Korea Customs Service, near Busan New Port at 1545
hours on 12 April 2016. Present at the meeting were: Kwon Oh-ju, Senior Customs
Inspector, New Port Import Facilitation Section, Korea Customs Service; Chun Dong-Hee,
Assistant Manager, Overseas Business & Cooperation Department, BPA; Park, Jeongsu,
NRL Expert, UNESCAP Transport Division; Fedor Kormilitsyn, Economic Affairs Officer,
UNESCAP Transport Division; and Peter Hodgkinson, Consultant UNESCAP.
Main points of discussion
(i) Customs procedures: imports
1. When import consignments arrive for clearance at the port, Customs require just two
documents: a sea import cargo manifest and a discharged cargo declaration.1 Both
documents are provided in electronic format to customs by shipping lines, 24 hours
before vessel arrival in the case of manifest data.
2. Customs then check these documents for missing items or suspicious cargoes.
3. If it is decided that cargo is suspicious, X-ray scanning is used in the terminal.
4. If X-ray scans indicate possibility of illegal goods, container is brought to off-port
customs inspection site and is completely discharged for inspection.
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Samples of these documents are given in Attachment 1.
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5. If consignment consists of dangerous goods, agricultural products etc, other
documents, such as bills of lading, certificates of origin, commercial invoice and
packing list, etc, will be required.
6. If initial checks do not reveal anything suspicious, Customs check documents in the
terminal , and then do random inspection (of about 5% of arriving cargoes) to attempt
to match details on documents with actual cargo.
7. In fact, Customs can perform different types of inspection, including:
a) Inspect all cargo in a container;
b) Random inspection of part (e.g. 10%) of cargo in a container;
c) Get results of scientific tests
d) Scan with X-ray equipment
8. In summary, for 95% of incoming cargo, only an EDI and document check is
conducted; physical inspections are conducted for only 5% of imported cargo. EDI
checks apply to about 80% and other document checks to about 15% of import
cargo. In the case of the latter, scanned copies are sent to Customs by agents or
forwarders.
9. Importers are required to pay tax within 15 days after customs inspection, before
consignments may be cleared.
10. If containers are directed to the Customs inspection site, all cargo is removed and
inspected. If consignment is found to be illegal, Customs determine the penalties to
be applied.
(ii) Customs procedures: exports
Most export consignments are cleared at inland locations, such as Uiwang ICD, but some
are cleared sat the port. No documents need to be attached, but the Customs Export
Declaration form must be submitted.
4. Meeting with Ministry of Oceans and Fisheries and KMI
Meeting held at the office of the Ministry of Oceans and Fisheries in Sejong City at 1000
hours on 14 April 2016. Present at the meeting were: Nam Jaeheon, Director Port Policy
Division, Ministry of Oceans and Fisheries (MOF); Lee Hyungmin, Deputy Director, Port
Logistics Division, MOF; Kim Gyuserb, Deputy Director, Port Policy Division, MOF; Hwang
Sang-Ho, Director, Port Development Division, MOF; Yang Sung-hwan, Port Management
Division, MOF; Kim Eun-woo (Grace), Senior Reseacher, International Logistics Research
Department, Korea Maritime Institute (KMI); Kim Sara, Researcher, Port Investment &
Operation Department, KMI; Park, Jeongsu, NRL Expert, UNESCAP Transport Division;
Fedor Kormilitsyn, Economic Affairs Officer, UNESCAP Transport Division; and Peter
Hodgkinson, Consultant UNESCAP.
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Main points of discussion
(i) Presentation: UNESCAP Seamless Transport Project
The scope and objectives of the project were presented briefly by F Kormilitsyn.
(ii) Presentation: Yes! U-Port system (Lee Hyungmin, MOF)
Yes! U-Port is an integrated maritime and port logistics service model providing real time
monitoring and control of port assets. The model was developed under Project 21
Consolidated National Logistics Information Service, one of the e-government initiatives of
the Republic of Korea Government commencing in 2003.
Yes! U-Port comprises five separate, but connected, systems designed to:
(a) Support port operations including the arrival/departure procedures of vessels and
port facility management (Port-MIS or Port Management Information System)
(b) Locate the position of cargo from inland to the ocean (GCTS, or Global Cargo
Tracking System)
(c) Provide for vessel tracing and public order on the sea (GICOMS, or Vessel
Monitoring System)
(d) Provide for port security and safety and controlling entry of vehicles and persons to
ports (PSS, or Port Security System)
These four basic systems are integrated through a Shipping and Port Integrated Data Centre
(SP-IDC) and a Data Recovery Centre (DR) which backs up the information of the SP-IDC.
It has to be noted that while the PSS controls and records the entry of trucks and cargo to
ports, it does not cover the entry of trains to ports. These are covered by an independent
railway vehicle tracking system, which has not been integrated into the Yes! U-Port system.
Further, the Yes! U-Port system is not harmonized with the MIS systems of other countries.
While the ROK, China and Japan have been discussing standardization of information, no
agreement has yet been reached.
(iii) Statistics on Container Logistics (Kim Gyuserb, MOF)
Busan (19.47 million TEU), Incheon (2.53 million TEU) and Gwangyang (2.33 million TEU)
collectively account for 94% of the national throughput of international containers (25.68
million TEU) in the ROK in 2015. Three countries account for more than 50% of the
container trade through ROK ports. Of the national container trade volume, about 31% repre
sents trade with China, 13% trade with the USA and 12% trade with Japan.
Some 90.5% of Busan’s container throughput is transported by road and the balance (9.5%)
is transported by rail. The fact that nearly 50% of Busan’s container throughput is sourced
within a short road haul of the port largely partly explains why the road modal share is so
high, but with 22% of this throughput sourced within the Seoul region, a higher rail share
might reasonably be expected. For example, 22% of 19.47 million TEU is 4.28 million TEU,
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of which only about 450,000 TEU, or 10.5%, was rail-hauled in 2014. The rail distance to
Busan New Port from Uiwang ICD is about 428 km, which is an economic rail haul and
compares with a road haul of 380 km. In this situation, the rail share should be close to 50%
of the catchment volume, or about 2.1 million TEU.2
No railway service is offered between Uiwang ICD and Incheon Port, given the fact that 92%
of that port’s container throughput is sourced within the Seoul region.
In the case of Gwangyang Port, nearly 90% of the port container throughput is transported to
and from the port by road and the balance (just over 10%) by rail. Since 75% of port
container throughput is sourced within a short road haul of the port, it is hardly surprising that
the road share should be so high.
(iv) Status of Korea-China and Krea-Japan Sea-Land Intermodal Transportation (Kim
Eun Woo, KMI)
Presentation contained an outline of on-going analysis and discussions between the ROK
and China, and the ROK and Japan concerning the development of short-sea intermodal
transportation. The analysis and discussions focus on existing Ro-Ro ferry services between
3 ports in ROK and 7 ports in China (centring on Incheon-Qingdao), and between a single
port in ROK (Busan) and 2 ports in Japan.
In the case of ROK-China services, there are no truck operating area restrictions in ROK,
while in China the operating area extends from Shandong to Jiangsu Province. Some 10,000
truck operating licences have been issued for these services. In the case of ROK-Japan
services, there are no restrictions on truck operations within the Busan area.
Several new initiatives are being assessed, including: transportation of conventional road
trailers, instead of specialized transfer trailers, on Ro-Ro vessels; and transportation of rigid
trucks or prime-movers plus trailers by Ro-Ro services linking logistics centres in ROK with
those in China. The latter initiative targets the carriage of cosmetics and fresh food between
producing and consuming locations in either country.
The initiatives do not extend to railways, as it was claimed that the domestic operation in
China (Qingdao-Dalian??) of ferries equipped with rail decks demonstrated poor financial
results.
Among the commercial and/or policy initiatives agreed between ROK and China in order to
promote the development of intermodal Ro-Ro services are:
For ROK, a 40% reduction in the tariff warranty fee, exemption of cargo entry and
departure fees, and a new inspection office on the wharf at Incheon Port;
For China, implementation of One-Stop Service including quarantine and customs
inspection, as well as issuance of operating licences.
Among the initiatives agreed between ROK and Japan are:
2 Passage in italics represents the author’s analysis of the situation.
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For ROK, extension of the exemption described in Ordinance on Special Provisions
for Automobile Management until 31 December 2018
For Japan, addition of one more port (Hakata) to the agreement
Following the presentation, details of:
Road vehicle regulations applying between countries; and
Full documentation requirements for moving cargo between ROK and China and
ROK and Japan
were requested from the KMI representatives who agreed to provide same,
5. Meeting with Korea International Freight Forwarders Association
Meeting held at the office of the Korea International Freight Forwarders Association (KIFFA)
in Seoul at 1600 hours on 14 April 2016. Present at the meeting were: M.S.Cha, Vice-
Chairman, KIFFA; Kyeong-Gyu Cho, Director Business Division KIFFA; Teack-Gyoo Im,
Deputy General Manager Business Division, KIFFA; Hyun Kyung Lee (Stella), Manager,
Seojoong Logistics Co., Ltd (S J Logistics); Eun Ah Choi, Manager, Seojoong Logistics Co.,
Ltd (S J Logistics); Park, Jeongsu, NRL Expert, UNESCAP Transport Division; Fedor
Kormilitsyn, Economic Affairs Officer, UNESCAP Transport Division; and Peter Hodgkinson,
Consultant UNESCAP.
(i) Current status of KIFFA Bill of Lading (KIFFA)
KIFFA grew out of the Korean Air Cargo Association which was established in 1969
and the Korean Multimodal Transport Association which was established in 1992
The KIFFA Bill of Lading has been in use since 1997 and is based on the FIATA Bill
of Lading with some small differences
The KIFFA B/L is used by 450 companies, and the FIATA B/L by 300 companies
In common with the FIATA B/L, the KIFFA B/L assigns responsibility of the
forwarding company for the goods from the time they are taken into its charge at the
place of receipt to the time they are delivered to the consignee at the place of
delivery
Unless written notice of loss or damage to goods is given to the forwarder by the
consignee within a specified period of time after delivery, handing over of the goods
to the consignee is prima facie evidence of delivery of the goods by the forwarder as
described in the B/L
The FIATA and KIFFA B/Ls differ in their specification of the time allowed for notice
of loss or damage: 6 consecutive days after delivery in the case of the FIATA B/L and
3 consecutive days after delivery in the case of the KIFFA B/L
The FIATA and KIFFA B/Ls also differ in respect of limitation of liability of the
forwarder for loss or damage to the goods:
- The FIATA B/L limits forwarder liability to an amount not exceeding twice
the freight charges under the contract for multimodal transport (in
accordance with UNCTAD/ICC Rules)
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- The KIFFA B/L limits forwarder liability to an amount not exceeding the
freight charges under the contract for multimodal transport (in accordance
with UNCTAD/ICC Rules)
(ii) Experience of one forwarder in transporting cargo on Northeast Asia-Europe
routes (Presentation by Hyun Kyung Lee, SJ Logistics)
SJ Logistics is involved in cargo transportation on the Trans-China, Trans-Mongolia
and Trans-Siberia railways, as well as through Central Asia
The company’s primary focus is on container transport, but it is also involved in bulk
and project cargo transport
A major problem flagged was that transit customs procedures are applied at every
border crossing point.
Source: Presentation by SJ Logistics, Seoul, 14 April 2016
For example, in the case of cargo moving from the ROK to Tashkent (see map above),
containers are off-loaded at one of three Chinese ports: Lianyungang, Qingdao or Rizhao.
Here they undergo transit customs clearance before being loaded to rail for the journey to
Tashkent. En route, they are stopped at the following border crossing points, where they
again undergo transit customs clearance: Khorgos (Heurgoeus), China; Altynkol
Kazakhstan; Sary-Agach (border between Kazakhstan and Uzbekistan). Normally, transport
of containers from Seoul to Tashkent is estimated to take 25 days, of which 6-8 days would
be needed for transit customs clearance in port and at borders.
Border crossing procedures, together with normal time allowances, are given in
following diagram
Busa
n
Dostyk
Lianyungang
Sary-Agach
Alashankou
Tashkent
Incheon
Astan
a
Heurgoeus
Almaty
Altynkol
JinanWuwei
Ocean
Rail
Border control post
Astana
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Source: Presentation by SJ Logistics, Seoul, 14 April 2016
Border crossing procedures involve cross-checking physical consignment with documents,
mostly with the assistance of X-ray scanners, as well as checking of container seals. For the
Trans-China route, most difficulty was reported with Kazakhstan Customs whose regulations
are considered to be “strict” and “conservative” and whose penalties are very severe when
requirements are not met.
Block container trains comprising 53 wagons (106 TEU) are now operated on a daily
frequency between Lianyungang Port and Khorgos (service commenced 15
December 2012). Transhipment between gauges at Altynkol is achieved by
Relative overall transit and border crossing delay times normally experienced on the
TSR and TMR routes are given in the following table:
Route Overall transit time (days)
Port or border delays (days)
Trans-Mongolia (Busan/Incheon-Tianjin-Ulaanbaatar)
12-17 6-7
Trans-Siberia (Busan-Vostochny-Moscow)
33 10-14
Source: Presentation by SJ Logistics, Seoul, 14 April 2016
Delays due to border control procedures are excessive in Tianjin and Vostochy owing
to complicated documentation requirements
In general, each consignment is accompanied by a FIATA B/L and a railway
consignment note (usually the SMGS form), in addition to multiple customs or other
border control forms
► Ocean from Busan/Incheon to Lianyungang/Qingdao(Jiaozhou)/Rizhao : 2~3 Days
► TCR service from Lianyungang/ Lianyungang/Qingdao(Jiaozhou)/Rizhao to Destination : 18~24 Days
► Total T/Time : About 25 Days
P.O.L
Lianyungang
Qingdao
Rizhao
Alashankou DostykDestination
KOR CHN CIS
2~3 days
1~2days
• Exporting from Korea
• Transit custom clearance at port
• Apply for block train • Issue railway bill• Imbalance/inspection
check
• Transit custom clearance at the border
• Checking Container/Seal
• Arrival
5~6days
• Transit custom clearance at border of KZH for all containers
• X-ray inspection
6~8days
5~6 days 1~2 days
AltynkolHeurgoeus
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While some documents are transmitted electronically, all consignments must in
addition be accompanied by hard copy documents
No difficulty in completing transport documents was reported, but the forwarder
complained of excessive border control documents, the requirements of which differ
markedly between neighbouring countries
Examples of completed documents were provided by the forwarder (see Attachment
2)
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Attachments
1. Korea Customs Service: documents required for initial screening
A. Shipping manifest
B. Discharged cargo declaration
2. S.J. Logistics Group: examples of completed documents
A. Certificate of Origin
B. Commercial Invoice
C. Ocean Bill of Lading
D. Railway (SMGS) Consignment Note
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Attachment 1: A. Shipping Manifest (Korea Customs Service )
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Attachment 1: B Discharged cargo declaration (Korea Customs Service)
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Attachment 2: A. Certificate of Origin (SJ Logistics)
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Attachment 2: B. Commercial Invoice (SJ Logistics)
1.Shipper/Exporter/Beneficiary 8.No. & date of invoice
9.No. & date of S/C
10.L/C issuing Bank
2.For Account & Risk of Messrs.
Remarks :
CONTAINER/SEAL NO.:
3.Notify Party
4.Port of loading 5.Final destination
INCHEON, KOREA ULAANBAATAR, MONGOLIA
6.Carrier 7.Sailing on / or about
June 10, 2016
11.Marks and numbers of 12.Description of goods 14.Unit-Price
PKGS (KRW)
BIBI SOFA 8 160,000 1,280,000
BIBI SOFA 8 160,000 1,280,000
WOOD SOFA 14 280,000 3,920,000
STEEL SOFA 11 300,000 3,300,000
WOOD CHAIR 8 150,000 1,200,000
WOOD CHAIR 4 150,000 600,000
LOWTAGE CHAIR 6 110,000 660,000
WOOD TABLE 10 94,000 940,000
STEEL CHAIR 32 35,250 1,128,000
WOOD CHAIR 11 150,000 1,650,000
WOOD TABLE BASE 2 180,000 360,000
WOOD TABLE BASE 2 250,000 500,000
WOOD TABLE BASE 20 49,000 980,000
WOOD TABLE BASE 4 420,000 1,680,000
WOOD TABLE BASE 20 45,000 900,000
WOOD TABLE BASE 2 750,000 1,500,000
WOOD TABLE BASE 4 170,000 680,000
WOOD TABLE BASE 2 185,000 370,000
WOOD TABLE BASE 11 275,000 3,025,000
WOOD TABLE BASE 8 76,500 612,000
///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
TOTAL 26,565,000
-
15.Amount
(PCS) (KRW)
COMMERCIAL INVOICES
SAME AS ABOVE
13.Quantity
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Attachment 2: C. Ocean Bill of Lading (SJ Logistics Group)
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Attachment 2: D. Railway (SMGS) Consignment Note (SJ Logistics Group)