International Customs and Shipping Documents. Course Manual

Transcription

1 International Customs and Shipping Documents Course Manual

2 International Customs and Shipping Documents Certificate Index Part One 1. Enquiry Documents a. Costing sheet b. Pro Forma Invoice 2. Instruction Documents a. Shippers Letter of Instruction b. Bank Instruction c. Delivery Order 3. Transport Documents a. Ocean Bill of Lading b. House Bill of Lading c. Letter of Indemnity d. Mate s Receipt / Docks and Warehouse Receipt e. Manifest f. Release of Cargo g. Sea Waybill h. Digital Waybill i. Air Waybill j. Differences Between Air Waybills and Ocean Bills of Lading k. Rail Waybills l. Road Waybills m. Arrival Notification / Notice of Arrival n. Delivery Instruction / Delivery Note o. Certificate of Shipment p. Dock Receipt 4. Insurance Documents a. Insurance certificate b. Marine Insurance c. Trade Credit Insurance Part Two 5. Customs Documents a. Bill of Entry or Customs entry b. Commercial Invoice c. Destination Control Statement d. Consular Invoice e. Carrier Certificate f. Packing List g. Licenses 6. Inspection Documents a. Certificate of Origin b. Inspection Certificate c. Phytosanitary Certificate d. Certificate of Conformity e. Certificate of Value Documents ~ 2

3 f. Certificate of Health g. Fumigation Certificate h. Importer Security Filing - ISF 7. Finance Documents a. Bill of Exchange (Draft) b. Forward Exchange Contract 8. Standard Operating Procedures a. Introduction b. Seaport Procedures c. Airport Procedures d. Customs Law and Regulations (Ships) e. Customs Clearance f. Departure Formalities g. Required Documents h. Documents Received from Customer i. Documents Issued to Customer Introduction Import and Export documentation is far more than just shipping paperwork; it includes all of the important records of an international transaction. Using the correct trade terminology, clearly defining the transfer of interest and liability, selecting the right method of payment and sending the best quotation possible are the keys to effective exporting. After the sale has been made, proper and timely selection, preparation and distribution of documents are essential. Documents used in international trade are a reflection of the understanding of the agreement between the seller, the buyer, and third party service and regulatory agencies. Part One 1. Enquiry Documents COSTING SHEET A costing sheet enables an exporter to: Check that every expense has been covered in arriving at the export price. (Please note that the costing sheet is a guide only. We cannot be held responsible should you neglect to include a cost that is important to your export price. For this reason, we recommend that you sit down with your accountant or with a business partner and carefully consider all the costs that may impact upon your export price!) Provide a detailed record of the terms that have been quoted to the foreign buyer. Documents ~ 3

4 PRO FORMA INVOICE Many export transactions, particularly initial export transactions, begin with the receipt of an inquiry from abroad that is followed by a request for a quotation. The preferred method for export is a pro forma invoice, which is a quotation prepared in invoice format. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment. Details pertinent to the proforma invoice A complete and clear description of the goods The quantity of goods in question including the number and kinds of packaging involved The total price of the goods (and unit price where applicable) The currency in which the goods will be sold (e.g.us dollars) The likely delivery schedule and delivery terms The physical addresses of both the exporter (referred to as the shipper) and importer (sometimes referred to as the consignee) The payment methods, for example cash in advance or L/C The payment terms, for example 30 days on sight The Incoterm to be used Who is responsible for the banking fees and other related costs (Insurance and freight costs are covered by the Incoterm in question). The exporter's banking details The country of origin of the goods The expected country of final destination Any freight details such as the port of loading and discharge Any transhipment requirements Any other information relevant to the order Documents ~ 4

5 Documents ~ 5

6 2. Instruction Documents SHIPPERS LETTER OF INSTRUCTION The shipper s letter of instruction is a letter from the shipper / exporter instructing the freight forwarder how and where to send the shipment. The information provided in this form enables the freight forwarder to process the shipment and prepare the required documentation. The information provided on the form outlines the details of the agreement between the exporter and the importer for the specific shipment. Documents ~ 6

7 BANK INSTRUCTION When the exporter is selling on the basis of a letter of credit, the instructions stipulated in the letter of credit must be followed. However, if selling on the basis of sight or usance draft under documentary collection, bank instructions must be generated to secure payment for the goods. Information supplied would include description of cargo, name of vessel, date of shipment etc; a detailed list of all documents submitted; payment method etc Documents ~ 7

8 DELIVERY ORDER (D/O) A delivery order is a document from a consignor, a shipper, or an owner of freight which orders the release of the transportation of cargo to another party. Usually the written order permits the direct delivery of goods to a warehouseman, carrier or other person who in the course of their ordinary business issues warehouse receipts or Bills of Lading. According to the Uniform Commercial Code (UCC) a delivery order refers to an "order given by an owner of goods to a person in possession of them (the carrier or warehouseman) directing that person to deliver the goods to a person named in the order." A delivery order which is used for the import of cargo should not to be confused with delivery instructions. Delivery Instructions provides specific information to the inland carrier concerning the arrangement made by the forwarder to deliver the merchandise to the particular pier or vessel. Above: sample Delivery Order Documents ~ 8

9 3. Transport Documents OCEAN BILL OF LADING Bills of lading are best understood if considered as bills of loading. A bill of lading (BL - sometimes referred to as BOL or B/L) is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. The bill of lading is a contract between the owner of the goods and the carrier of the goods. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. The term derives from the verb "to lade" which means to load a cargo onto a ship or other form of transportation. Three main functions of a Bill of Lading 1. As Receipt for the cargo originated as a record of what was loaded, with containerisation practically the Seller will not see the Buyer and wants receipt that goods have been shipped. 2. As Evidence of a contract of carriage carrier should be bound by certain obligations concerning custody of the goods. These terms of carriage will not be in a charter party between the shipper and the Carrier so the bill is evidence of the contractual terms. Trite law that whilst it is evidence it is not necessarily the contract itself. 3. As a Document of Title goods sold in normal face to face business transactions allow for actual exchanges of goods for payment whereas shipping by its nature distances the Seller and Buyers. Seller wants quick payment especially FOB and CIF. Buyer wants to ensure goods match description before he parts with money. bill of lading provides alternative to actual transfer of goods payment is exchanged for the document. A bill of lading can be used as a traded object. The standard short form bill of lading is evidence of the contract of carriage of goods and it serves a number of purposes: It is evidence that a valid contract of carriage, or a chartering contract, exists, and it may incorporate the full terms of the contract between the consignor and the carrier by reference (i.e. the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement intégral) issued by the carrier sets out all the terms of the contract of carriage); It is a receipt signed by the carrier confirming whether goods matching the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport); and It is also a document of transfer, being freely transferable but not a negotiable instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instrument, it may be endorsed affecting ownership of the goods actually being carried. This matches everyday experience in that the contract a person might make with a commercial carrier like FedEx for mostly airway parcels, is separate from any contract for the sale of the goods to be carried; however, it binds the carrier to its terms, irrespectively of who the actual holder of the bill of lading, and owner of the goods, may be at a specific moment. Documents ~ 9

10 What does a Bill of Lading regulate? In short the carrier has three main areas of responsibility under the bill of lading: 1. The carrier s responsibility for correct description of the goods bill of lading are an essential part of most international trading of goods and any third party buyer will purchase in reliance to the description of the goods in the bill of lading. In effect a transfer of title is the equivalent of a transfer of the goods themselves 2. The carrier s responsibility to release the goods to the proper entitled party and at the proper location whoever presents a duly and properly endorsed b/ at the bill of lading destination (and assuming nothing else suggest bad faith) is prima facie entitled to take delivery of the goods. Release of cargo without receipt of a properly endorsed bill of lading compromised the carrier s position against the true owner of the goods. 3. The carrier s responsibility to care for the cargo while it is in his custody the duty to care of the goods is both regulated in law and follows from common sense. Documents ~ 10

11 Above: sample Bill of Lading Documents ~ 11

12 As a Negotiable document Bills of Lading are transferable Control over and ownership of the goods passes with the handing over of a bill of lading, i.e. transfer of ownership = negotiability A bill of lading is strictly not a negotiable instrument in the legal sense, i.e. equivalent to money; it represents the goods/cargo. There are two types of Negotiable Bills of Lading, 1. Order Bills of Lading a. Most bills used in International trade are Order Bills b. Front of the bill there is a box where the name of the Consignee should be provided or alternatively the instruction c. When Seller has not yet sold the goods he may indicate the notify party as the consignee and mark it to order of, or leave it to his, the shipper, order d. The Bill can then be signed at the back by that party endorsing it in favour of another or to that parties order. If the bill is merely negotiated by signing the back of the bill this equates to a blank endorsement. This converts an order bill into a bearer bill. 2. Bearer Bill of Lading (to order) a. This document allows the goods to be delivered to the holder of the bill. b. The name of the consignee may be stated as 'bearer' or a 'to order' bill may be negotiated in blank or an ordinary bill of lading may be endorsed in blank, in other words without identifying to whom the cargo would be delivered. Combined Transport / Through Transport Bill The Bill has the possibility to be converted into a combined transport bill. The Carrier maintains liability throughout and subcontracts, Carrier Haulage International and local laws and conventions apply where applicable, Hague Visby Rules The Bill of Lading must contain the following information: Name of the shipping company, Flag of nationality, Shipper's name, Order and notify party, Description of goods, Gross, net, tare weight; and Freight rate, measurements and weight of goods, total freight A bill of lading may be consigned to the order of the shipper. Where the word order appears in the consignee box, the shipper may endorse it in blank or to a named transferee. A bill of lading endorsed in blank is transferable by delivery. Once the goods arrive at the destination they will be released to the bearer or the endorsee of the original bill of lading. The carrier's duty is to deliver goods to the first person who presents any one of the original bill of lading. The carrier need not require all originals to be submitted before Documents ~ 12

13 delivery. It is therefore essential that the exporter retains control over the full set of the originals till payment is effected or a bill of exchange is accepted or some other assurance for payment has been made to him. In general, the importer's name is not shown as consignee. The bill of lading has also provision for incorporating notify party. This is the person whom the shipping company will notify on arrival of the goods at destination. The bill of lading also contains other details such as the name of the carrying vessel and its flag of nationality, the marks and numbers on the packages in which the goods are packed, a brief description of the goods, the number of packages, their weight and measurement, whether freight costs have been paid or whether payment of freight is due on arrival at the destination. The particulars of the container in which goods are stuffed are also mentioned in case of containerised cargo. The document is dated and signed by the carrier or its agent. The date of the bill of lading is deemed to be the date of shipment. If the date on which the goods are loaded on board is different from the date of the bill of lading then the actual date of loading on board will be evidenced by a notation on the bill of lading. In certain cases a carrier may issue a separate on board certificate to the shipper. Main types of bill Straight Bill of Lading In this importer/consignee/agent is named in the bill of lading, it is called straight bill of lading. It is a document, in which a seller agrees to use a certain transportation to ship a good to a certain location, where the bill is assigned to a certain party. It details to the quality and quantity of goods. Order Bill of Lading This bill uses express words to make the bill negotiable, e.g. it states that delivery is to be made to the further order of the consignee using words such as "delivery to A Ltd. or to order or assigns". Consequently, it can be indorsed (legal spelling of endorse, maintained in all statute, including Bills of Exchange Act 1909 (CTH)) by A Ltd. or the right to take delivery can be transferred by physical delivery of the bill accompanied by adequate evidence of A Ltd.'s intention to transfer. Bearer Bill of Lading This bill states that delivery shall be made to whosoever holds the bill. Such bill may be created explicitly or it is an order bill that fails to nominate the consignee whether in its original form or through an endorsement in blank. A bearer bill can be negotiated by physical delivery. Surrender Bill of Lading Under a term import documentary credit the bank releases the documents on receipt from the negotiating bank but the importer does not pay the bank until the maturity of the draft under the relative credit. This direct liability is called Surrender bill of lading (SBL), i.e. when we hand over the bill of lading we surrender title to the goods and our power of sale over the goods. Documents ~ 13

14 A clean bill of lading states that the cargo has been loaded on board the ship in apparent good order and condition. Such a bill of lading will not bear a clause or notation which expressively declares a defective condition of goods and/or the packaging. Thus, a bill of lading that reflects the fact that the carrier received the goods in good condition. The opposite term is a soiled bill of lading, which reflects that the goods are received by the carrier in anything but good condition. Documents ~ 14

15 Above : Negotiable combined transport bill of lading Documents ~ 15

16 Multi-modal Transport Documents Sea transportation brought about many innovations in international transportation of goods. Multi-modal or combined transport is one such innovation. Cargo today can be moved from an inland freight station in the exporting country to an inland destination in the importing country. Goods may be picked up and transported using different modes of transport. E.g. a consignment of garments may be containerised at a factory in Mysore, customs cleared at ICD Bangalore, moved by rail to Cochin, by sea to Dubai, by air to Frankfurt and road to Düsseldorf, all under a single transport document. In such an operation, involving one or more land legs and/or air or sea legs, one carrier makes itself responsible for the entire transport operation. The contracting carrier is referred to as a multi-modal or a combined transport operator (MTO). He is liable in contract to the shipper if the goods are damaged at any stage of the carriage. The multi-modal transportation document may be issued either in non-negotiable or negotiable form. The multi-modal transportation document (MTD), whether negotiable or non-negotiable, is prima facie evidence of the MTO taking charge of the goods for transportation. MTDs are of two types, the COMBIDOC evolved by the Baltic International Maritime Council (BIMCO) and FBL or FIATA MT bill of lading evolved by the International Federation of Freight Forwarders' Associations (FIATA). This document (FBL) has been approved by the International Chamber of Commerce (ICC) for the purpose of documentary credit. FIATA has evolved specific norms for the use of FBLs. Amendments to Bills of Lading (including duplicate sets) When shippers request amendments to bill of lading, agents must exercise their best judgement in acceding to such request. However, the following procedures should be followed: 1. The full set of original Bills of Lading must be returned for amendments. 2. When making the amendments, agents must carefully ensure that the cargo details on the bill of lading are still in conformity with the contents of the Dock Receipt. Duplicate set of Bills of Lading Sometimes a cargo owner reports he has lost his original bill of lading, but he still want to control the cargo. The recommended procedure is below, however varies from shipping line to shipping line: a. Verify party making the request - Ensure that the party making the request is in fact the Lawful holder of the bill of lading; and thus entitled to make the request. E.g. if request is from consignee, confirm with shipper that consignee should be entitled. b. Written request -The request must be made in writing and clearly identify the party making the request. c. Letter of indemnity (LOI) - In order to issue duplicate set of Bills, the requesting party needs to provide a LOI, counter signed by a first class bank, indemnifying the Shipping Line in full for any costs or liabilities arising. d. New Bills of Lading numbers - The replacement Bills must be issued with new bill of lading numbers, and be marked to show that they are replacements, using wording such as "Second original replacing Bill of Lading [identified by B/L number and date issued] which is now null and void" Documents ~ 16

17 e. to destination - An must be sent to the destination agent advising that a duplicate set has been issued and advising who to contact if Bills of Lading from the original set should surface. Release of cargo without Bill of Lading If cargo is released without original bill of lading the Shipping Line is in fundamental breach of the contract and cannot rely on the limitation of liability in the bill of lading terms; and they are not covered by their P&I Club insurance. The utmost care and diligence must be exercised when delivery orders are issued against a letter of indemnity or other suitable guarantee, as the Shipping Line does not have the benefit of Hague/Hague-Visby Rules limitations (since this is out of contract), but also because they are prejudicing their P&I cover. Recommended to check with shipper and receive his written confirmation that: 1. Bills are not held back due to lack of payment; 2. The party requesting the delivery, to shipper s knowledge, is the correct party entitled to the cargo; and 3. That shipper can accept release of the goods to the consignee without production of the original bill of lading. The party requesting delivery of goods without original bill of lading must issue a letter of indemnity and present a first class bank guarantee to back it up. It is still required that you obtain written approval from shipper prior to releasing the cargo. The letter of indemnity (LOI) must correspond to the particulars of the goods shown in bill of lading. The guarantee to deliver cargo without presentation of the original bills of lading must not only cover the principal but also specifically cover the liability of the agent, as in many countries the agent himself will have the responsibility independent from that of his principal and this must be reflected in the wording of the guarantee. The LOI and the bank guarantee must be kept in safe deposit and must only be released in exchange for the original bill of lading duly endorsed (if recovered afterwards). HOUSE BILL OF LADING A house bill of Lading is a bill of lading issued by a freight forwarder to a shipper as a receipt for the goods being shipped with other cargo as one consignment (usually as a full container load). The shipping company's (carrier's) bill of lading shows the forwarder as the consignor, and the name of forwarder's agent at the port of destination as the consignee. Although it is not a complete document of title, a house bill of lading has a legal standing similar to that of a normal (carrier's) bill of lading. If not specifically prohibited, it is capable of being negotiated and of acceptance by the importer's bank for payment under a letter of credit. Also called a forwarder's bill of lading. Documents ~ 17

18 Above: sample House Bill of Lading Documents ~ 18

19 LETTER OF INDEMNITY What is a Letter or Indemnity? It is a written undertaking by a third party (such as a bank or insurance company), on behalf of one of the parties (the first party) to a transaction or contract, to cover the other party (the second party) against specific loss or damage arising from the action (or inaction) of the first party. Also called indemnity bond or a bond of indemnity. When would you need one? When a consignee or shipper looses an Original Bill of Lading, the shipping line needs guarantees that all parties will not take legal action against them in the event the Original Bill is used illegally to clear the cargo. Documents ~ 19

20 Above : sample Letter of Indemnity Documents ~ 20

21 MATE S RECEIPT / DOCKS AND WAREHOUSE RECEIPT A mate s receipt is a document signed by an officer of a vessel evidencing receipt of a shipment onboard the vessel. It is not a document of title and is issued as an interim measure until a proper bill of lading can be issued. The dock and warehouse receipt is a receipt to transfer accountability after the goods have been delivered by the domestic carrier to the port of shipment and left with the international carrier (vessel) for export. This receipt is issued by the international shipping company after the goods have been delivered by the ground carrier to the dock Above: sample Mate s receipt Documents ~ 21

22 MANIFEST A manifest is a transport document that serves as a tally-sheet, and gives a detailed summary of all bills of lading issued by a carrier (or its agent) for a particular voyage of a particular vessel or vehicle. For cargo carrying vessels or vehicles, a manifest lists its consignor, consignee, number, origin, destination, value, and other such information primarily for use by the customs authorities. The manifest contains the same details as mentioned on the bill of lading and is made up according to destination. It is used for many purposes: For submission to customs in connection with clearance of the vessel to and from the port. By the shipping agent as a record of the shipments made and as a reference document for numerous purposes in the day-to-day operations. By the ship as a record of cargo loaded on board, by destination. By the agents in the discharging port as a check list from which he can contact customers regarding the delivery of their cargo and also ascertain whether freight must be collected before delivery. By the agent for statistical purposes. Above: ship s cargo manifest Documents ~ 22

23 RELEASE OF CARGO Cargo may be released via release (historical reference was telex release), if a customer requests his cargo to be released at destination and hands in his original bills of lading, duly endorsed, at another shipping line office than the destination office needs an release notice from the office that received the original bills of lading. SEA WAYBILL A sea waybill is a non-negotiable receipt issued by the carrier. Where the cargo is likely to arrive before the formal documents or where the shipper does not insist on separate bills for every item of cargo carried (e.g. because this is one of a series of loads being delivered to the same consignee). Delivery is made to the consignee who identifies himself. It is customary in transactions where the shipper and consignee are the same person in law making the rigid production of documents unnecessary. A sea waybill is identical to a bill of lading, however it is also fundamentally different on a few, important points. A Waybill of Lading is a document issued to a shipper in exchange for his cargo. A Waybill is not negotiable and therefore cargo can only be delivered to a named consignee nominated by the shipper. The Sea Waybill holds two functions: 1. Evidence of a contract of carriage 2. Receipt for cargo A waybill or consignment note is a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods. Typically it will show the names of the consignor and consignee, the point of origin of the consignment, its destination, route, and method of shipment, and the amount charged for carriage. Unlike a bill of lading, which includes much of the same information, a waybill is not a document of title. Most freight forwarders and trucking companies use an in-house waybill called a House Bill. These typically contain 'Conditions of Contract of Carriage' terms on the back of the form. These terms cover limits to liability and other terms and conditions. Documents ~ 23

24 Above: sample Sea Waybill Documents ~ 24

25 Who uses waybills? Head offices shipping to group companies Where transfer time is short and goods will arrive before bill can move between shipper/bank/consignee Where sale operates on open account basis i.e. large suppliers or customers Non commercial transactions i.e. household effects, exhibits for museums EDI transactions Why would they use a waybill? No need to issue sets of certified copies No need for consignee to produce the Waybill to obtain delivery, the consignee only has to produce evidence of identity, pay the freight and other charges and take delivery Prevents fraud DIGITAL WAYBILL A digital waybill is an electronic version of a waybill, which has become very common as many shipments are ordered through the internet. The driving force behind the movement to the digital waybill has been the lowering of printing costs for shipping companies. The market has also benefited from cost savings through the reduction in telephone and fax costs due to the increased usage of the digital waybill. In some regions, it has been referred to as an e-waybill however this is not the industry standard. AIR WAYBILL The air waybill is the contract for carriage (bill of lading) for shipments made by airfreight. It is a nonnegotiable document, issued by the air carrier that specifies the terms under which the air carrier will be transporting the goods to their destination. The air waybill is normally issued by a freight forwarder acting as the agent for the airline who transports the goods, or an airfreight consolidator, who may use the airline to transport the goods of several companies under its own master bill of lading. The airline air waybill is known as the master air waybill or Mawb. If your shipment is consolidated with other cargo, the forwarder will issue his house air waybill. The house bills are then consolidated into the master air waybill. The most important things to know about the air waybill are: If you consign the air waybill directly to the buyer in the foreign country, the buyer can clear the goods immediately upon arrival at the destination port. If the air waybill is consigned to a third party (normally the buyer s bank), you can control possession of the goods until the buyer pays or signs a promissory note, or time draft, to pay at a later date. A minimum cost per kilo will be charged based on either weight or volume, depending on the density of the cargo. Documents ~ 25

26 Above : sample air waybill Documents ~ 26

27 DIFFERENCES BETWEEN AIR WAYBILLS AND OCEAN BILLS OF LADING The primary difference between the air waybills and ocean bills of lading is that ocean bills of lading can be made negotiable and air waybills cannot. Negotiable bills of lading are a common practice in international trade, designed to protect the seller by allowing them to consign the document to their order, instead of the consignee, or buyer. In this case, the seller may transfer the document to or through a third party, usually a bank, who then would collect the funds from the buyer before turning the documents over to them. The transit time in ocean freight may allow the bill of lading to be bought and resold, which in a sense, gives the document a distinct value. If you consign a bill of lading to the buyer directly, you have in a sense turned title to the goods over to them, which is not advisable unless you have been paid already or have assurance you will be paid. A negotiable bill of lading is most often used when a letter of credit is the payment mechanism. In other cases, ocean bills of lading may be consigned to the buyer s bank, if not negotiable, in order to control title to the goods. An air waybill is not negotiable, and is mostly consigned directly to the consignee. It is not negotiable or transferable because of the rather limited transit time. There is no time to transfer the title between parties in the limited amount of time it takes for the goods to arrive. RAIL WAYBILLS A receipt issued that indicates to the customer that his/her goods have been received and have been passed on for freight by railway. Rail waybills often include tracking numbers so that the customer can check the status of the shipment. ROAD WAYBILLS There is no standard transport document for road haulage. Road hauliers usually design their own waybills which serve as evidence of a contract of carriage and as receipts for consignment of goods. Shippers must ensure that hauliers are carefully instructed in the completion of waybills. ARRIVAL NOTIFICATION / NOTICE OF ARRIVAL Notice sent by a carrier or agent to the consignee (and to the notify party, if any) to inform about the arrival of the shipment and number of packages, description of goods, their weight, and collection charges (if any). This allows the consignee to prepare his documents for clearance in advance. This however is not a requirement of the shipping line to notify the consignee, the shipper is responsible for notifying the consignee. Documents ~ 27

28 Above: sample Arrival Notification Documents ~ 28

29 DELIVERY INSTRUCTION A delivery instruction or delivery note is a document accompanying a shipment of goods that lists the description, and quantity of the goods delivered. A copy of the delivery note, signed by the buyer or consignee, is returned to the seller or consignor as a proof of delivery. A delivery instruction provides specific information to the inland carrier concerning the arrangement made by the forwarder to deliver the merchandise to the particular pier or vessel. CERTIFICATE OF SHIPMENT A certificate of shipment is a document issued by a freight forwarder with the following purpose: confirmation that the goods have been despatched overseas fulfilment of proof of despatch requirements for VAT purposes The certificate of shipment contains details of the consignment including name and address of shipper and consignee receiving or clearing agent at destination (in some cases) routeing name of vessel, ports of loading and discharge and final destination terms of delivery (Incoterms) description of the goods marks, weight and measurement exporters invoice number and date The certificate of shipment is used particularly for trade within Europe. It has value for the exporter, but is not a replacement for the standard transport documents such as a bill of lading or air way bill. DOCK RECEIPT A dock receipt is a document, stamp or message issued by the carrier or terminal operator to confirm that the container has arrived at the terminal or container yard ( the dock ). The dock receipt states the time of arrival to the terminal and confirms that the container was received in good order and condition (if not, carrier must make sure to make notation on the receipt. Documents ~ 29

30 4. Insurance Documents INSURANCE CERTIFICATE An insurance certificate is proof of insurance. Insurance is a risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by event(s) beyond the control of the insured party. Under an insurance contract, a party (the insurer) indemnifies the other party (the insured) against a specified amount of loss, occurring from specified eventualities within a specified period, provided a fee called premium is paid. Above : sample Certificate of Insurance Documents ~ 30

31 MARINE INSURANCE The standard all risk marine insurance policy covers losses incurred due to perils of the sea, fire, explosion, collision, derailment, overturn, wind, earthquake, flood or collapse of docks. Additional coverage can be added such as theft, pilferage, non-delivery, fresh water damage, oil damage, damage due to sweat and condensations, breakage, leakage, etc. In addition, a clause in the insurance free of particular average means that the insurance will cover partial losses in addition to total losses. General Average is a coverage found on most policies. It represents a loss to the carrier based on the value of the goods on board. For example, if an ocean vessel requires a tug to pull it off of a sand bar; those companies that have cargo on the ship will pay the cost of tug services. This fee will be charged against the cargo and the goods may not be claimed at the destination without presenting either evidence of insurance coverage or a cash deposit representing the proportional amount of the claim due for the goods. Where to Purchase Marine Cargo Insurance Most international freight forwarders will provide marine insurance under their blanket policy. The cost may be higher due to the fact that their policy must be able to cover a multitude of products and coverage. One of the advantages of purchasing insurance through the forwarder that handles the shipment is that the transaction is well known to them and they already have most of the paperwork on file. The second means of obtaining air cargo and ocean marine insurance is through an independent agent or marine insurance broker. The agent or broker often represents insurance companies that specialise in ocean and air cargo insurance. The insurance agent can offer a range of coverage options. Depending upon the size and scope of the shipper s operation, the marine insurance policy will come in the form of an open cargo policy or a special marine policy. Open Cargo Policy Open cargo policies are used when the shipper has a continuous flow of goods being shipped over a period of time. The open cargo policy contains no expiration date and provides automatic coverage when needed. The policy is customarily issued on a warehouse-to-warehouse basis which provides the shipper continuous coverage throughout the normal course of transit. Open cargo policies can also be tailored to meet a shipper s many specific needs, such as returned or refused shipments, warehouse exposures outside the scope of the policy, inland transit and shipments sold on terms other than under CIF/CIP. Since the policy provides automatic coverage, it usually lists the insured party s name, the cargo covered, the insuring conditions, areas of the world that coverage is granted and the insurance rates. The shipper is required to submit a monthly report of all shipments that have occurred under the policy and pay a premium on those shipments at the agreed upon insurance rates. Depending on the shipper s needs, the open cargo policy may offer the broadest possible insurance terms for the lowest price. Special Marine Policy The special marine policy is designed to provide coverage to individual shipments. This policy provides the same coverage available under the open cargo policy. However, it does not provide automatic coverage. Once the shipment has been completed and coverage has ceased, this policy automatically terminates. Documents ~ 31

32 Filing a Claim In the case of international shipments, the importer (consignee) will most likely be the first to discover any damage to, or loss of, a shipment. The importer must thoroughly inspect each shipment and note any signs of damage or loss on the delivery receipt. Even if no outward evidence of loss or damage exists, it is important to inspect the entire shipment as soon as possible for any hidden damage. The consignee, or insured, must contact the nearest claim agent so that a survey of damage can be arranged. The carrier or carrier s agent should be notified of the time and location of the survey so that he or she can be represented. When filing a claim the insurer may request some or all of the following documents: Non-negotiable copy of the bill of lading or air waybill (both front and back) Certificate of insurance or declaration of insurance Copies of letters of claims filed with carriers Correspondence or verbal advice from carriers Commercial invoice Packing list Evidence of loss or damage Delivery receipt Inland waybill Consignee s receiving report Customs documents Confirmation of non-delivery by carrier Survey report Valued inventory Repair estimates (if applicable) Other (as specified by the insurer) Carriers Limited Liability Air and ocean carriers provide limited liability coverage while a shipment is in their possession. The bill of lading states the liability that the carrier assumes. It is critical that the shipper understand that the carrier is not responsible for such perils as Acts of God. When filing a claim with a carrier, the shipper must prove the cause of loss that the loss occurred while in the carrier s possession and that the carrier is directly liable for the loss. Documents ~ 32

33 Above: sample certificate of marine insurance Documents ~ 33

34 TRADE CREDIT INSURANCE Trade Credit Insurance is an insurance policy and a risk management product offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy. Trade Credit Insurance can include a component of political risk insurance which is offered by the same insurers to insure the risk of non-payment by foreign buyers due to currency issues, political unrest, expropriation etc. Trade credit is offered by vendors to their customers as an alternative to prepayment or cash on delivery terms, providing time for the customer to generate income from sales to pay for the product or service. This requires the vendor to assume non-payment risk. In addition to increased risk of non-payment, international trade presents the problem of the time between product shipment and its availability for sale. The account receivable is like a loan and represents capital invested, and often borrowed, by the vendor. But this is not a secure asset until it is paid. If the customer's debt is credit insured the large, risky asset becomes more secure, like an insured building. This asset may then be viewed as collateral by lending institutions and a loan based upon it used to defray the expenses of the transaction and to produce more products. Trade credit insurance is, therefore also a trade finance tool. Documents ~ 34

35 Part Two 5. Customs Documents BILL OF ENTRY OR CUSTOMS ENTRY A bill of entry is a formal declaration describing goods which are being imported or exported. The bill of entry is examined by customs officials to confirm that the contents of a shipment conform with the law, and to determine which taxes, tariffs, and restrictions may apply to the shipment. This document must be prepared by the importer or exporter, with many companies hiring a clerk specifically to handle the process of preparing bills of entry. A typical bill of entry includes a description of the goods in the shipment, including details and the quantity of the goods, along with an estimate of their value. Customs officials reserve the right to inspect the shipment to determine whether or not it is consistent with the bill of entry, and discrepancies can be grounds for legal proceedings. Once a bill of entry has been reviewed and the shipment has been inspected, it can be cleared for sale or transfer. If there is a problem, customs may opt to confiscate the goods. Many nations have specific laws about how bills of entry should be formatted and presented. It is important to have accurate documentation, or goods can be held up in customs. This can cause an inconvenience in some cases, and spoilage or destruction of the goods in others; a shipment of fruit, for example, will not hold up through a lengthy retention by customs while details of the shipment are worked out. Main types of entry are: 1. Consumption entry: for goods to be offered for sale (consumption) in the importing country, 2. Formal entry: that is required to be covered by an entry bond because its aggregate value exceeds a certain amount, 3. Informal entry: that is not required to be covered under an entry bond because its value is less than a certain amount, 4. In-transit entry: for the movement of goods from the port of unloading to the port of destination under a Customs bond, 5. Mail entry: for goods entering through post office or courier service and below a certain value, 6. Personal baggage entry: for goods brought imported as personal baggage, 7. Transportation and exportation entry: for goods passing through a country en-route to another country, and 8. Warehouse entry: for the goods stored in a bonded warehouse. Called also customs declaration, duty entry, or just entry. Documents ~ 35

36 Above sample Bill of Entry Documents ~ 36

37 COMMERCIAL INVOICE A commercial Invoice is a document required by customs to determine true value of the imported goods, for assessment of duties and taxes. While there is no international standard for the contents of invoices they should include: 1. Full name of seller, including address and telephone number, on letterhead or printed form. 2. Full name of buyer and buyer s address (or, if not a sale, the consignee). 3. The place of delivery (for example, Ex Works, FOB port of export, CIF). 4. The sale price and grand total for each item, which includes all charges to the place of delivery. Assists, royalties, proceeds of subsequent resale or use of the products, and indirect payments, if any, must also be included in the sale price. If it is not a sale, list the fair market value, a statement that it is not a sale, and that the value stated is For Customs Purposes Only. 5. A description of the product(s) sufficiently detailed for the foreign Customs authorities to be able to confirm the correct Harmonized Tariff classification, including the quality or grade. 6. The quantities (and/or weights) of each product. 7. A date for the invoice (on or around the date of export). 8. The currency of the sale price (or value) (U.S.$ or foreign). 9. The marks, numbers, and symbols on the packages. 10. The cost of packaging, cases, packing, and containers, if paid for by the seller, which is not included in the sales price and being billed to the buyer. 11. All charges paid by the seller, separately identified and itemised, including freight (inland and international), insurance, and commissions, etc., which is not included in the price and being billed to the buyer. 12. The country of origin (manufacture). 13. Shipper s signature and date. 14. CHECK WITH THE BUYER OR IMPORTER BEFORE FINALISING THE INVOICE TO CONFIRM THAT NO OTHER INFORMATION IS REQUIRED. Documents ~ 37

38 Above: sample Commercial Invoice Documents ~ 38

39 DESTINATION CONTROL STATEMENT The exporter is required to place the destination control statement on the commercial invoice, on the ocean or air waybill of lading, and the shipper s export declaration. The destination control statement can be as simple as These goods are licensed by (the country of origin) for export to (name of country)". CONSULAR INVOICE Certain countries require a consular invoice to control and identify goods. A consular invoice is usually prepared from the information in the commercial invoice, but it must be signed by a representative of the country of destination stationed at that country s embassy or consulate located in the exporting country. One reason for requiring such invoices is that the country of destination may deduct certain charges from the price of the goods in order to determine the value for customs duties. If the commercial invoice does not contain all of the information necessary, the foreign customs service would be unable to complete the duty assessment. The consular invoice lists the specific items about which that country requires information. The consul charges a fee for this service. CARRIER CERTIFICATE A Carrier Certificate is an official document drawn by a shipper stating its intent to transport goods across borders. The certificate assigns legal custody of such goods to an individual or entity that is presented to customs authorities. PACKING LIST The packing list is a document that lists the materials found in each package. It indicates: The type of package The net weight (the actual weight of the goods) The legal weight (the weight of the goods plus any immediate wrappings that are sold with the goods) The tare weight (the weight of a container and / or packing materials without the weight of the goods it contains) The gross weight (the full weight of the shipment, including goods and packaging) The package s measurements (length, width and height) Also shows the references, the buyer s purchase order number and the sellers order/invoice number assigned by the buyer and seller. Prepared by the shipper and sent to the consignee for accurate tallying of the delivered goods. Also called a bill of parcels, packing slip, or unpacking note. Documents ~ 39

40 The packing list is used to identify the parcels as belonging to the particular consignment under the said Invoice. Above : sample Packing List LICENSES Countries levy import and export duties on specific items and also based on countries of origin. The management of duties and tariffs is managed through Trade Laws and Policies. Besides imposing duties, countries also restrict and manage the import and export of items with the help of Licenses to Import and Export. Documents ~ 40

41 Types of Licenses 1. Open General Licensed Items While normal items and traded goods like textiles, consumer durables, handicrafts, electronic items, food articles, drugs etc are generally allowed to be imported and exported by all countries freely without restrictions. 2. Imports against Specific Import Licenses Many items like second hand capital equipment, plant and machinery, engines etc are traded, transferred and imported normally by developing and under developed economies. Such second hand machinery and goods are allowed to be imported into the receiving countries only through specific license obtained for the said purpose. Such license would set forth conditions required to be met by the importer to prove the residual life of the machinery etc. Import of Fire Arms and Ammunitions are always covered under specific licenses in most of the countries. 3. Import - Quantity Restrictions or Quota Some countries like USA do allocate quantity restrictions for import of items like textile on certain countries and exporters would have to adhere to the quota norms, which are periodically reviewed and amended as required. 4. Export Licenses A license that a government issues to an exporter granting permission to sell certain goods to a given country. Because countries have different trade agreements with other governments, and sometimes do not allow any trade with some nations, export licenses ensure that exporters are adhering to all applicable laws. 5. Negative List Most countries maintain a negative list of items which prohibit import and export of certain items like animal hides and other wildlife, precious wild life, live stock, narcotics and many more sensitive items. RELEVANT TRANSPORT AND INSPECTION DOCUMENTS Transport and inspection documents may be requested by customs as required. These will typically include the bill of lading / air waybill and certificate of origin amongst others. Documents ~ 41

42 6. Inspection Documents CERTIFICATE OF ORIGIN A certificate of origin is a document that certifies a shipment's country of origin. It is used between members of a trading block or where special privileges are granted to goods produced in certain countries. Certificate of origin is commonly issued by a trade promotion office, or a chamber of commerce in the exporting country. This is signed by the exporter, and, the agency that is used to performing this service (again, for a fee) and certifies to the best of its knowledge that the products are products of the country specified by the exporter. Certificates of origin must be distinguished from country of origin marking. Many countries re-quire that both the products themselves and the labels on the packages, specify the country of origin. The country of origin certificate may be in addition to or in lieu of that requirement. Also called a declaration of origin. Documents ~ 42

43 Above : Sample certificate of origin Documents ~ 43

44 INSPECTION CERTIFICATE Some importers may require that the goods be inspected by an independent inspection company prior to shipment. The purpose of the inspection is to attest that goods are what the exporter is specifying they are. Inspection certificates are issued by and obtained from the independent testing organisation. If a customer requests this document, agree to it - but see that they cover the administrative and inspection fee. Also, ask them to recommend an independent inspection agency to perform the review at your end. If they don't have one, refer to your import/export team (e.g., banker, logistics expert, accountant and lawyer) for a suitable contact. An inspection certificate can be furnished directly to a buyer, a buyer s government or direct to a buyer s bank. In the case of presenting to a buyer s bank, that is precipitated by the request of a letter of credit payment transaction that spells out specifically an inspection certificate is required in order to fulfil payment obligations. Generally, a manufacturer furnishes the certificate or the report. A number of countries governments have ongoing relationships with international inspection companies to verify the quantity, quality, and price of shipments imported into their countries. Countries requesting or requiring pre-shipment inspection certificates (PSIs) vary year to year and are based on a shipment above a certain value. In some countries, however, an inspection certificate is required regardless of the value be sure to inquire. If a disagreement arises with the outcome of the inspection process, a resolution should be negotiated with the inspection company. In some instances, the exporter and inspection company must work together to resolve the issue. PHYTOSANITARY CERTIFICATE Many countries require these certificates for the import of plant and plant products e.g. seeds, bulbs, cut flowers, etc. If a phytosanitary certificate is required, the necessary arrangements must be made e.g. field inspections carried out on plants during the growing season. Phytosanitary certification is used to attest that consignments meet phytosanitary import requirements and is undertaken by an NPPO (National Plant Protection Organisation). A phytosanitary certificate for export or for re-export can be issued only by a public officer who is technically qualified and duly authorised by an NPPO. A phytosanitary certificate for export is usually issued by the NPPO of the country where the plants, plant products or regulated articles were grown or processed. Phytosanitary certificates are issued to indicate that consignments of plants, plant products or other regulated articles meet specified phytosanitary import requirements and are in conformity with the certifying statement of the appropriate model certificate CERTIFICATE OF CONFORMITY Some countries demand that all goods require a certificate of conformity. The certificate of conformity confirms that the goods comply with standards issued by the importing Documents ~ 44

45 country. Features of a certificate of conformity are (a) The certificate has to be obtained prior to shipment. (b) Many countries appoint an exclusive organisation worldwide to issue certificates of conformity. These organisations frequently verify consignments before issuing a certificate of conformity. (c) Goods arriving at a frontier without a certificate of conformity are likely to be impounded or confiscated. Russia, Belarus, Kazakhstan, Moldova and Romania all require certificates of conformity. Exporters should remember that the certification companies charge for this service, and should allow for these costs when preparing quotations. CERTIFICATE OF VALUE The exporter confirms that the certificate containing the true and full statement of the price for the goods and that there is no other understanding between the exporter and the importer about the purchase price. (Many countries depend on import duties for a large part of their national revenue and may insist on a certificate of value.) CERTIFICATE OF HEALTH Some countries require a health or sanitary certificate when animals, animal products, fish, plants and food products are skilled. These certificates confirm that the goods are free from disease or pests (insects), and that products have been prepared in such a way that they reach prescribed standards. Normally, these certificates are issued by the Department of Agriculture. FUMIGATION CERTIFICATE This document is required as proof that the packing materials e.g. wooden crates, wood, wool etc, second-hand clothing or certain commodities have been fumigated or sterilised. Certificates are issued by specialists containing details such as purpose of treatment, articles concerned, temperature range used, chemicals and concentration used etc. Documents ~ 45

46 IMPORTER SECURITY FILING - ISF The new ISF requirements stipulate that an importer of goods, or a representative thereof, must submit an ISF prior to their cargo arriving in the United States. This filing must be submitted electronically no more than 24 hours after the departure of a ship carrying cargo destined for the U.S. An ISF must include the seller and purchaser of the goods being shipped; the importer of record or Foreign Trade Zone applicant identification number; the consignee number; the manufacturer of the goods; the party to whom the goods are being shipped; the country in which the goods originated the Commodity Harmonized Tariff Schedule; the container stuffing location and consolidator. In addition, the rule requires Importer Security Filing for shipments consisting entirely of foreign cargo remaining on board and shipments consisting entirely of goods intended to be transported in-bond for immediate exportation. Documents ~ 46

47 7. Finance Documents BILL OF EXCHANGE (DRAFT) The function of the Bill of Exchange in International Trade: The bill of exchange performs many functions in international trade including: Facilitates the granting of trade credit in a legal format by permitting payments on agreed future dates. Provides formal evidence of the demand for payment from a seller to a buyer. Provides the seller with access to finance by permitting them to transfer their debts to a bank or other financier by merely endorsing the bill of exchange to that bank or financier. Permits the banker or financier to retain a valid legal claim on both the buyer and the seller. In certain circumstances a bank or financier may have a stronger legal claim under a Bill than the party that sold them the debt. Permits a seller to obtain greater security over the payment by enabling a bank to guarantee a drawee's acceptance (guarantee to pay on the due date) by signing or endorsing the Bill. Allows a seller to protect their access to the legal system in the event of problems, while providing easier access to that legal system. How the Bill of Exchange is used in international trade: A bill of exchange can either be payable immediately or at some future date. If a Bill is payable immediately, it is usually issued payable at sight. The term "at sight" means that a buyer should pay once they have sighted the Bill that is once the demand for payment has been made. If a Bill is payable at some future date, it must facilitate the calculation of the actual due date. For example bills of exchange may be drawn payable at 60 days sight, at 60 days from bill of lading Date etc. Banks should be used as agents for the collection of the Bill. Guaranteed Bills of Exchange: To provide greater payment security a seller may look to have a bill of exchange guaranteed by a buyer's bank. A guaranteed bill of exchange is one drawn on and accepted by the buyer and to which, the buyer's bank has added its guarantee that the Bill will be paid at maturity. The security to a seller comes from a bank giving an undertaking to effect payment on a certain date regardless of the financial standing of a buyer on that date. Documents ~ 47

48 Above : Sample bill of exchange Documents ~ 48

49 FORWARD EXCHANGE CONTRACT What is it? A forward exchange contract - also called a forward currency contract - is an agreement between you and your bank in which the bank agrees to buy or sell a certain amount in a foreign currency at a fixed rate of exchange on, or during a period up to, a particular date. As an exporter entering an export contract in a foreign currency, a forward exchange contract allows you to determine at the time you sign the contract the exchange rate which will apply to future payments from your buyer. How does it work? In a forward exchange contract, your bank quotes a forward exchange rate for buying a specified foreign currency from you and for paying you in your local currency. A fixed forward exchange contract states the type and amount of foreign currency the bank will buy the agreed exchange rate and the specific date on which you ll pay the foreign currency to the bank. A forward option contract states a period of time, rather than a specific date, during which the bank will exchange the foreign currency for local currency. Documents ~ 49

50 8. Standard Operating Procedures INTRODUCTION This section provides a general description of the usual process for importing and transporting goods into countries. It also describes the documents required for obtaining these authorisations. During a shipment, additional legal forms and documents will be required in order to comply with international regulations. Some of these forms are standardised international documents. Others will be self-made formats recommended for use in particular operations. Although most international formats are standardised (and hence non-negotiable), it is possible that some States will ask for specific documents and clearances not described in this document. A logistician s first responsibility will be to identify local procedures and facilitation measures for importing goods and moving them within the country. SEAPORT PROCEDURES Ports normally have all necessary facilities for handling ships, carrying out customs inspections and storage of cargo: possessing the necessary equipment and machinery for loading and unloading operations. There is increasing use of modern transport technology such as containerisation, cargo often moves inter-modally through a port. The port's Documents ~ 50

51 functions then become mainly limited to transit operations whereby cargo moving in unitised form does not have to be packed or unpacked at the port. The main formalities connected with the handling of goods by port authorities in the export or import trade are as follows: 1. Before any cargo is landed, a copy of the cargo manifest must be delivered to the port authorities. 2. When cargo is discharged from the ship, it must be tallied. 3. The out-turn report, which is prepared based on such tally, is compared with the vessel's import general manifest to ascertain whether the full manifested cargo has been discharged. There may be short-landed or over-landed cargo. 4. Wharfage at the prescribed rates is levied on all goods landed and shipped. 5. Goods not removed from the custody of the port authorities within the free storage period allowed are charged rent at the prescribed rate. 6. Rent may be waived or reduced under the following circumstances. 7. After the expiry of "free time" rent is charged at prescribed rates on cargo that may ultimately be sold at public auction. 8. Rent is charged on any un-manifested cargo not removed within the prescribed time after delivery of the "Out-Turn Report. 9. However, in the case of goods landed in a damaged condition for which a claim is made against the carrier, some extension of free time may be allowed to enable a survey of the damaged cargo to be made. 10. A similar concession may also be permitted in the case of goods damaged subsequent to landing and for which an "Application for Survey" has been received by the port authorities. 11. No rent is charged on goods detained by the Customs authorities for special examination, chemical tests, etc. 12. No rent is charged when removal of goods is delayed due to no fault or negligence on the part of the importers. 13. Areas used for the landing and storage of imported goods must be declared as Customs Areas under a Customs Act. 14. The discharge of some hazardous cargo may be permitted only in mid-stream into barges, or at berths or anchorages specially reserved for that purpose. If necessary, such cargo must be stored in specially designated areas. 15. Examination of cargo by Customs will be permitted only if the consignee or clearing agent produces to the port authorities the delivery order issued by the shipping agent together with the Bill of Entry prepared on behalf of the consignee. 16. In the case of containerised cargo, containers may be unstuffed in the port area before the cargo is presented for examination by Customs. Alternatively, containers may be taken to an inland container depot, or warehouse, or factory of the consignee where they are unstuffed and delivered to the consignee after completing Customs formalities. 17. Carting or transporting of export cargo, if it is Break Bulk, is permitted at the berth where the ship is ready to load. In the case of containerised cargo, carting is permitted to the location assigned to the shipping line by the port authority. Documents ~ 51

52 18. Like imports, exports attract demurrage after the expiry of free time but port authorities sometimes waive this charge in the case of special cargo. Ports may defer acceptance of export cargo if there is a delay in the arrival of the vessel. 19. When export cargo is taken to an inland clearance depot, Customs formalities are completed there and the cargo is stuffed into containers, which are then brought to the port for direct loading onto the ship. The same procedure may also be followed if containers are stuffed at the factory or warehouse of the shipper. AIRPORT PROCEDURES Many airports provide a full range of services to aircraft operators and ground handling agents to facilitate all aspects of air cargo operations. Typically, airport authorities designate specific areas - including office and/or warehouse space - for use by aircraft operators, handling agents and freight forwarders. In order to offer such services, airports not only need to have the necessary facilities for aircraft maintenance and cargo handling but must also provide infrastructure for receiving different types of surface transport (e.g. road and rail). Documents ~ 52

53 In addition to these services, airports normally provide secure storage for cargo ranging from perishables and general freight to high-value goods. Major international airports also provide facilities for Customs authorities to enable the examination of cargo and collection of duties, taxes and other levies. The main formalities connected with the handling of export/import cargo by airport authorities are as follows: 1. The original copy of the cargo manifest should accompany the cargo. This document must be produced to Customs. A copy should subsequently be given to the airport authorities if required. 2. After cargo is unloaded from the aircraft, tallying is carried out by the airline staff or handling agent. The out-turn report prepared on the basis of this tally is then compared with the airline's manifest to ascertain whether the full manifested cargo has been discharged. Cargo may be either short-landed or over-landed. 3. A terminal charge at the prescribed rate is levied on all goods landed and shipped. 4. Rent may be levied or waived as follows: 5. Rent will be levied on goods not removed from the custody of airport authorities within the permitted free storage period, even if this cargo is ultimately sold by public auction. 6. Rent will be charged on any un-manifested cargo not removed within the prescribed time after delivery of the out-turn report. 7. Charges may be waived on goods detained by Customs for special examination. 8. Locations used for the unloading and storage of imported goods must be designated as Customs Areas under a Customs Act. 9. Storage of hazardous cargo will be permitted only in locations specially designated for that purpose. 10. Examination of cargo by Customs is permitted only if the consignee or appointed agent produces to the airport authorities or handling agent the delivery order issued by the airline or airline's agents, together with the import declaration prepared on behalf of the consignee. Documents ~ 53

54 11. Containerised loads may be unstuffed at the airport before being presented for Customs examination. Alternatively, they may be taken to an inland container depot or warehouse nominated by the consignee where they are unstuffed and cleared by Customs prior to delivery to the consignee. 12. Cargo destined for export may be cleared by Customs and stuffed into containers at the shipper's factory, warehouse or designated inland depot. The containers are then taken to the airfield for direct loading onto the aircraft. 13. Larger airports usually provide facilities inside designated Customs Areas for transit cargo to be de-consolidated and consolidated with local export cargo. CUSTOMS LAW AND REGULATIONS (SHIPS) Basic customs laws or regulations applicable to the arrival and departure of ships and to imported or exported goods are more or less the same in most countries, although they may differ in procedural and documentary details. Several countries have enacted strict legislation for controlling and regulating imports and exports. Rules or regulations issued under such legislation will have to be followed in obtaining Customs clearances. Essentially, imports/exports and vessels carrying such goods are subject to the following procedures: ARRIVAL FORMALITIES The main arrival formalities are as follows: 1. A vessel entering a country from overseas must use a designated Customs Port as its first port of call. 2. A vessel can start unloading goods only after Customs have granted the necessary permit (called "Entry Inwards") following submission by the Master or Shipping Agent of an "Import Manifest" containing particulars of the cargo on board in the prescribed format. 3. The import manifest must be accompanied by other documents as may be required such as: a. Certificates of load line. b. Safety certificates for radiotelegraphy. c. Certificate of registration. d. Port clearance from previous port of call. e. Crew list. f. Stores list. g. Declaration of personal property of officers and crew. 4. In some countries, Customs authorities will accept the cargo manifest even before the arrival of the vessel under the so-called "pre-entry" procedure (pre-arrival clearance), final "Entry Inwards" being granted after the vessel has berthed. Documents ~ 54

55 CUSTOMS CLEARANCE 1. All imported cargo must be landed at a designated Customs port and should not be removed from Customs control without written permission of the Customs authorities. 2. Before permission is given to remove goods from Customs control, the owner or agent is required to submit a Bill of Entry, Customs Declaration or Inward Permit, as may be required by law, in the prescribed form to enable Customs authorities to examine the goods. The Bill of Entry includes details such as value, quantity; description of goods, name of vessel, port of shipment, and such other particulars as may be prescribed by the Customs authorities. These particulars must tally with those contained in the relevant import manifest. 3. The Bill of Entry (Customs Entry) must be accompanied by all supporting documents required by Customs such as invoices, import licenses, certificates of origin, bills of lading and marine insurance certificates. When goods are destined for warehousing, application for permission to warehouse those goods and a bond must accompany the Bill of Entry (Customs Entry). 4. Customs authorities are empowered to examine all imported goods. The examination may be physical (visual inspection, counting, weighing, measuring, chemical test, Documents ~ 55

56 etc.) or documentary (involving examination of relevant documents such as invoices, bankers' notes, insurance policies and forms listing the quantity and description of goods). 5. If goods are dutiable, either Customs tariffs must be paid at the time or the importer must give a bond to guarantee payment of the duty. 6. If goods are not removed within the prescribed period after the arrival of the importing vessel, they are liable to be sold at public auction by the port authorities who will recover from the sale proceeds all charges due to them, including Customs duty. 7. Customs authorities are entitled to recover from the importer any shortfall in duty levied or erroneous refund of Customs duty, in accordance with prescribed procedures. 8. In cases where import licenses are required, Customs authorities will check the legality of the imported goods against those licenses. Shipment Inspection Held by Customs Held by Government Agency Released? No On hold? Yes Data Entry Goods Received / Dispatched to? Awaiting instructions On hold for Clearance Bonded Warehouse Inventory On hold duty to be paid Return to Sender In & Out Inventory Documents ~ 56

57 DEPARTURE FORMALITIES 1. Export goods can be loaded onto a vessel only after the necessary permit "Entry Outwards" has been issued by Customs, and after documents duly endorsed by Customs have been delivered by the exporters to the Master or person in charge of the ship. 2. A vessel which has brought in imports or has loaded exports can leave the port only when written permission, known as "Port Clearance, is granted by the Customs authorities. Documents ~ 57

58 3. Application for Port Clearance must be made in good time before planned departure. This application must be accompanied by the Export Manifest showing particulars of the cargo loaded and such other documents as may be required by Customs. Examples include the vessel's certificate of registration, load line certificate, safety certificates for radio telegraphy and safety equipment, inward clearance certificate, income tax clearance certificate (if proceeding to a foreign port with export cargo) and certificate of payment of all dues issued by the port authority. 4. In many countries, most goods are freely exportable. Only a limited number of specified items or commodities are subject to export control. REQUIRED DOCUMENTS In the field of freight forwarding, there is no international uniformity of documents or documentary procedures. Nevertheless, efforts have been made by the International Federation of Freight Forwarders (FIATA) to promote the use of standardised freight forwarding documents and thereby improve professional standards. FIATA has produced several documents, which correspond with layouts used by the UN Economic Commission for Europe (ECE). In the air transport sector, ICAO and IATA recommend a series of standardised documents that are used in most countries. 1. The Commercial Invoice This is a document issued by the seller to the buyer of the goods. It is often used by Customs authorities at the destination to determine the true value of the goods on which duties will be assessed. It also serves as the basis for consular documentation. Other documents to be signed by the shipper and handed over to the carrier if needed include: 2. Shipper s Declaration of Dangerous Goods 3. Shipper s Certification for Live Animals 4. Shipper s Certification for Arms and Ammunition 5. In addition, there may be other documents required by the Customs authorities of the exporting and importing countries, which should be submitted with the Waybill. DOCUMENTS RECEIVED FROM CUSTOMER 1. FIATA Forwarding Instructions (FFI).The customer passes this document to the forwarder thereby establishing a forwarder-customer contractual relationship for provision of transport from place A to place B. The customer is expected to furnish all relevant particulars regarding the goods to be dispatched and to enclose such documents as may be required. Documents ~ 58

59 Above : Fiata forwarding instruction Documents ~ 59

60 2. FIATA Declaration for Transport of Dangerous Goods (SDT). A shipper will complete, sign and hand this document to a forwarder whenever the transport of dangerous goods is involved. This document provides detailed information about the classification of dangerous goods according to regulations governing the transport of such goods. Above : Shipper s dangerous goods declaration Documents ~ 60

61 DOCUMENTS ISSUED TO CUSTOMER 1. FIATA Forwarder's Certificate of Receipt (FCR) This is an official acknowledgement of goods received by the forwarder. The forwarder assumes responsibility for the dispatch and delivery to the consignee named in the document. The FCR should be handed to the consignor (customer) immediately after the consignment is received by the forwarder. 2. FIATA Combined Transport Bill of Lading (FBL) This is a through transport document used by international freight forwarders acting as combined transport or intermodal transport operators. The forwarder assumes responsibility not only for the performance of the contract but also for the acts and omissions of any third parties employed by him. 3. FIATA Warehouse Receipt (FWR) A warehouse receipt for use in the forwarder's warehousing operations; it is subject to any national law and applicable to standard trading conditions. 4. House Bill of Lading/House Air Waybill Usually applicable to consolidation services, the house bill of lading is issued in respect of sea freight while the house air waybill is issued in respect of airfreight. There is no uniformity in the terms and conditions of these documents, which vary from forwarder to forwarder. * While the FBL is a negotiable document, the FCR is not negotiable. The FWR is not negotiable unless marked otherwise. When a document is negotiable, it can be endorsed by the holder in favour of another party, thereby transferring his right to the goods referred to in the document. Documents ~ 61

62 Above: sample FIATA Warehouse Receipt Documents ~ 62

63 CONCLUSION Errors in documentation are very expensive. The first result of a mistake is delay to the consignment which might be held up in a warehouse under customs control. Wherever the delay, storage charges will become payable almost immediately, and these have a habit of rising disproportionately as the delay extends from days to weeks and perhaps even months. Most customs authorities have the reserve power to seize goods which have not been cleared of customs within a certain period. The other danger of delay is the loss of confidence by the customer. In addition, any delay in delivery may lead to a deferment in settlement of the order, so cash flow is then affected. Although such events occur every day, there is no need for exporters to expose themselves to these additional costs. Documentation must all be completed carefully, and checked before they are despatched. The job is not complete until your customer has physically received the consignment. End of course notes. Documents ~ 63

64 Thank you for completing the International Customs and Shipping Documents course with ShippingCollege. The course can be completed as a standalone certificate course or may be used as credits towards obtaining your Maritime Shipping Diploma. Students who have completed the International Customs and Shipping Documents Certificate course may choose to continue with the Clearing & Forwarding Diploma or the Maritime Shipping Diploma. The Clearing and Forwarding Diploma consists of 11 Pilot Certificate which includes International Customs and Shipping Documents. The Maritime Shipping Diploma consists of 7 Pilot Certificates which includes International Customs and Shipping Documents. To further your Clearing and Forwarding knowledge obtained in International Customs and Shipping Documents we suggest you consider enrolling for the International Trade Law and Sales Contracts Certificate course. The course includes the following modules: What is International Trade Law in International Trade Preparing an International Sales Contract Model Sales Contract Clearing and Forwarding Pilot Certificate courses These courses will cover the Clearing and Forwarding industry with a particular focus on International Contracts and Payments, Sea Freight and Customs. All our courses are online course. Complete all 11 Pilot Certificates and you may write your Clearing and Forwarding Diploma. You may either complete your Diploma as a single course (at a lower cost) or complete the Pilot Certificate courses individually to accumulate all your credits to attain your Diploma over a longer period. If you intend to obtain your Diploma we recommend you attempt the Pilot Certificate courses in the order they are listed below. Documents ~ 64

65 1. Clearing and Forwarding Terminology Certificate - Glossary of industry terms. Over 75 pages of industry terminology. 2. The Freight Forwarding Business Certificate - Role of Freight Forwarders, Capitalisation and Assets, Forwarders Business Structure, The Container Export and Import Transactions and more 3. Transport Modes Certificate - Intermodal Freight versus Multimodal Freight, What is Shipping, Airfreight, Road Transport, Rail Transport, Route and Transport Mode selection. 4. Shipping Role Players Certificate - Exporter and Importer, Ocean Carriers and Ship Owners, Shipping Agents, International Ocean Freight Forwarders, Inland Carriers, Ship Brokers, Cargo Brokers and more. 5. Vessels and Cargo Types Certificate - Vessel types, Cargo types, Break Bulk shipping, Bulk shipping, Tramp service, Liner service, Types of Containers, Loading and Unloading Containers, Container securing, Load securing in Containers and more. Documents ~ 65

66 6. Goods Classification and Duties Certificate - The Role of Customs and Excise, Goods Classification, Customs Administrations, Customs Bonded Warehouse, Duty Calculation for Imports, Non-tariff Barriers to Trade, Special Tariffs, VAT and International Trade 7. International Customs and Shipping Documents Certificate - Enquiry Documents, Instruction Documents, Transport Documents, Insurance Documents, Customs Documents, Inspection Documents, Finance Documents and more. 8. International Trade Law and Sales Contracts Certificate - What is International Trade, Law in International Trade, Preparing an International Sales Contract, Model Sales Contract. 9. Incoterms Certificate - Introductions to Incoterms, Selecting Terms, 2010 revision, Terminology, Rules for any Mode or Modes of Transport, Rules for Sea and Inland Waterway Transport. 10. International Payments Certificate - Methods of Payment, Documentary Collection, Letter of Credit, Uniform Customs and Procedures (UCP 600). Documents ~ 66

67 11. Forwarding Operations Certificate - Dangerous Goods overview, Groupage, Protection and Packaging of Goods, Weight to Volume comparisons, Freight Desk Operations, Detailing the Freight Costs. To further your Maritime Shipping knowledge obtained in International Customs and Shipping Documents we suggest you consider enrolling for the Shipping Role Players Certificate course. The course includes the following modules: Exporter and Importer Ocean Carriers and Ship Owners Shipping Agents International Ocean Freight Forwarder Inland Carriers Ship Brokers Cargo Brokers Customs and Excise Ports, Harbours and Terminal Operators Depots and Warehouses Strategic co-operation between Carriers Maritime Insurance and Insurers Maritime Shipping Pilot Certificate courses These courses will cover global shipping with a particular focus on containerisation and the liner industry. All our courses are online course. Complete all 7 Pilot Certificates and you may write your Maritime Shipping Diploma. You may either complete your Diploma as a single course (at a lower cost) or complete the Pilot Certificate courses individually to accumulate all your credits to attain your Diploma over a longer period. If you intend to obtain your Diploma we recommend you attempt the Pilot Certificate courses in the order they are listed below. Documents ~ 67

68 1. Shipping Terminology Certificate - Glossary of industry terms. Over 50 pages of industry terminology. 2. International Trade and Maritime Shipping Certificate - Early days of commercial shipping, International trade and freight shipping, Trade routes and shipping routes, World trade policies, Industry issues, Environment and shipping. 3. Containerisation Certificate - Liner trade, Container types, Freight and charges, Packing of containers, Load securing in containers, Container ship categories, Export and Import transaction and more. 4. Vessels, Cargo Types and Transport Modes Certificate - Vessel types, Cargo types, Break bulk shipping, Bulk shipping, Tramp service, Rail Transport, Road transport and Intermodal versus Multimodal. 5. International Contracts and Payments Certificate - International trade law, Contract of affreightment, Preparing and international sales contract, Incoterms, Methods of payment in international trade, Introduction to UCP600. Documents ~ 68