2. Exporter Port/ Custom/ Port/ Custom/ Importer
Cargo
warehouse Loading Loading warehouse
Ship
To send the goods from Exporter’s warehouse to Importer’s warehouse
To send $$ from Importer to Exporter
3. 1. Incoterms 2010
2. Shipping Documents
3. Cargo Insurance
4. Payment Modes/ Letter of Credit
5. Import/ Export Procedures
4. • Incoterms – International Commercial Terms
• ICC – International Chamber of Commerce, 1936
• Revised in 1953, 1967, 1976, 1980, 1990, 2000 and 2010
• Spells out responsibility of both the importer and
exporters
• Documentations
• Cost
• Risk
• Uniform set of rule, reduces misunderstanding and
dispute, overcome diversity of interpretation
• BUT, it is NOT LAW
5. 1 Ex Works EXW
2 Free Carrier FCA
3 Carriage Paid To CPT
4 Carriage and Insurance Paid To CIP
5 Delivered at Terminal DAT
6 Delivered at Place DAP
7 Delivered Duty Paid DDP
8 Free Alongside Ship FAS
9 Free on Board FOB
10 Cost & Freight CFR
11 Cost Insurance & Freight CIF
6.
7. Sea, Air, Truck, Rail Only Sea Freight
Ex Works EXW Free Alongside Ship FAS
Free Carrier FCA Free on Board FOB
Carriage Paid To CPT Cost & Freight CFR
Cost Insurance &
Carriage and Insurance Paid To CIP Freight CIF
Delivered at Terminal DAT
Delivered at Place DAP
Delivered Duty Paid DDP
8. Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
9. Incoterms 2010
Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
10. Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
11. Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
12. Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
13. Invoice Cert-of-Origin Import Permit Loading Custom/ Duties Unloading
Packing List Transportation Port Charges Freight Transportation Port Charges
14.
15. Sea, Air, Truck, Rail Only Sea Freight
Ex Works EXW Free Alongside Ship FAS
Free Carrier FCA Free on Board FOB
Carriage Paid To CPT Cost & Freight CFR
Cost Insurance &
Carriage and Insurance Paid To CIP Freight CIF
Delivered at Terminal DAT
Delivered at Place DAP
Delivered Duty Paid DDP
16. Cost of Goods 10,000
Packing and Mark Up 500
EX WORKS 10,500
Transport, Port Charges 500
FAS 11,000
Loading Cost 500
FOB 11,500
Ocean Freight 1,000
CFR 12,500
Cargo Insurance 500
CIF 13,000
19. You are the exporter. Your factory is situated 100km from
the port. Products can be moved by rail to port for loading.
Port facilities are good. Insurance is easily arranged. Your
country is stable. Ship are available for shipment. What
delivery terms would you suggest for sales of your products
to each of the following countries?
Country A Country C
Good infrastructure Good port facilities
Efficient inland transportation Excellent inland transportation
Known for labour dispute Buyer not reliable
Country B Country D
Excellent inland transportation None of the above disadvantages
Port congestion from 10 to 90 days Country is stable
Buyer is reliable
20.
21. Basic Type of Documents
- Carriers
- Bill of Lading
- Air Way Bill
- Seller
- Invoice
- Packing List
- Certificate of Origin
- Buyer
- Application of Shipping Guarantee (if necessary)
22. • Bill of Lading
• Bill of exchange
• Issued by shipping company
showing that goods are
loaded
• Evidence of contract
• Negotiable document
• Document of title
• Common types of B/L
• Clean
• Dirty
• Stale
• Through/ Tran-shipment
• Combine transport
• Master
• House
23. Shipping Documents
Air Way Bill
– For air consignment
– Issue by carrier and
authorized agents
– Evidence of contract
– Not a negotiable document
– Not a document of title
– Proof of receipt/ booking
(not loading)
– Certificate of insurance (if
requested)
– Handling, dispatching and
delivering the consignment
24. • Bill of Lading • Air Way Bill
• Bill of exchange • For air consignment
• Issued by shipping company • Issue by carrier and
showing that goods are authorized agents
loaded • Evidence of contract
• Evidence of contract • Not a negotiable document
• Negotiable document • Not a document of title
• Document of title • Proof of receipt/ booking (not
• Common types of B/L loading)
• Clean • Certificate of insurance (if
• Dirty requested)
• Stale • Handling, dispatching and
• Through/ Tran-shipment delivering the consignment
• Combine transport
• Master
• House
25. • Invoice
• Indicates the value of the cargo and relevant details
relating to payment
• Custom duties, insurance claims, declaration of permits
and L/C negotiation
• Type of invoice:
• Commercial Invoice
• Proforma Invoice
• Consular Invoice
• Custom Invoice
• Non-commercial value Invoice
26. • Packing List
• Indicates the content and description of the cargo
(aka Weight measurement list, Cargo manifest, Cargo certificate)
• Use for permits, customers, insurance claims
• Essential contents:
• Description
• Measurement
• Quantity
• Weight
27.
28. • Certificate of Origin
• Certify where the product is produced or manufactures
• Endorse by chamber of commerce
Purpose
- Proof of country of produce – political reasons
- Claim tariff rebate - FTA
29. • Shipping Guarantee
• To clear cargo without original contract of carriage
document e.g. Original B/L
• Indemnify the carrier against any claim
• Protect the carrier against any fraud
• May require bankers guarantee as back-up
30.
31.
32. What is RISK?
- Of Damage – condition of cargo before vs after
- Of Loss – disappearance of cargo (i.e. stolen, hi-jack,
drop into the sea)
33. • Reasons for Insurance
• Protection against RISK
• Prevent financial loss
• Requirement by bank e.g. L/C term
• Selling on certain terms e.g. CIF
• Carrier’s limited liability
• Reduce business anxiety
35. • Exclusion Clause
• Unseaworthiness of the vessel
• Wilful misconduct
• Illegal act
• Done on purpose
• Insolvency of the carrier
36. • Claims Procedure
• Inform insurance company
• Cargo survey by inspection company
• Cost
• Cause
• Notify relevant parties
• Submission of documents
37. • Documents of Claims
• Company’s cover letter
• Original policy
• Shipping invoice
• Packing List
• Original B/L or AWB
• Survey report
• Landing account (aka unloading report/ discharge
report)
38.
39.
40. a. Advance Payment
b. Credit Account
c. Consignment Sale
d. Documentary Collection
e. Letter of Credit
41. • Document against • Document against
Payment (D/P) Acceptance (D/A)
• Supplier ship goods and • Supplier ship goods and
forward bill of exchange to forward bill of exchange to
buyer’s bank through his buyer’s bank through his
own bank own bank
• No credit involved • Credit period involved
• Buyer obtain title to goods • Buyer obtain title to goods
after payment before payment
• In case buyer default, only
legal action is possible
42. • Letter of undertaking by importer’s bank to pay
oversea exporter against exporter’s shipping
document
• Shipping document must adhere strictly to terms
and conditions of the L/C
• Exporter receive payment once documents are
accepted without discrepancy
43.
44. • Procedures
• Sales Contract
• Buyer open L/C
• Issuing bank sends L/C to Advising bank
• Advising bank sends L/C to seller
• Seller ships cargo
• Seller presents documents to negotiating bank for payment
• Negotiating bank checks and pay
• Negotiating bank forwards document to issuing bank
• Issuing bank checks and reimburse
• Buyer pays issuing bank
• Issuing bank releases shipping document to buyer
• Buyer uses shipping document to clear cargo
45. Established sales/ purchase contract
Exporter Port/ Custom/ Port/ Custom/ Importer
Cargo
warehouse Loading Loading warehouse
Ship
Advising/ Negotiating Issuing
Bank Bank
Send L/C to advising bank
Send L/C to seller Apply for L/C facilities
Description/ price/ quantity/ arrangement etc,
clearly stated
Any errors or dispute/ amendments to the L/C must be made at this stage
46. Ships cargo and receive documents Clear cargo with document
Cargo
Ship
Exporter Port/ Custom/ Cargo Port/ Custom/ Importer
warehouse Loading Ship Loading warehouse
Advising/ Negotiating Issuing
Bank Bank
Forwards documents and Importer pays bank and
Submits documents and
receive reimbursement receive document
receive payment from bank
from issuing bank
Once cargo is shipped, documents must be presented at immediately
All terms and conditions must be in order and consistent
All documents must be complete and in order
Any discrepancy, bank will NOT pay
47. • Different type of L/C
• Revocable
• Irrevocable
• Confirmed
• Unconfirmed
• Red Clause
• Revolving
• Transferrable
• Back-to-back
48. • Advantages • Disadvantages
• Secure • Over reliance on shipping
• Financial assistance documents
• Bank control and hold title to • No physical inspection of
goods goods
• Seller receive payment when • Bank not familiar with
all terms are fulfilled, even shipping practices
before buyer receive the • Subject to fraud
goods • Very costly
49. Exporter Port/ Custom/ Port/ Custom/ Importer
Cargo
warehouse Loading Loading warehouse
Ship
1. Book Vessel 1. Obtain Shipping Documents
2. Obtain Shipping Note 2. Declare import permit
3. Declare export permit 3. Surrender B/L and permit shipping
4. Arrange transport agent in exchange for delivery
5. Deliver goods to port order
6. Loading cargo onboard 4. Arrange transport
7. Ship issue mates receipt 5. Collect cargo from port
8. Mate’s receipt to exchange for B/L 6. Police inspection
7. Custom Check
8. Proceed to warehouse
50. Exporter Airport/ Custom/ Airport/ Custom/ Importer
warehouse Loading Loading warehouse
1. Flight booking 1. Carrier arrive at airport
2. Letter of instruction 2. CHA unload cargo
3. Agent issue HAWB/ MAWB 3. Consignee arrange with agent
4. Export permit to clear cargo
5. Launch cargo to GHA 4. Agent collect cargo from GHA
6. GHA load cargo into carrier 5. Import permit/ custom
declaration
6. Agent deliver cargo to
customer
