comprehansive export documentation

1. International Trade
Documentations
Presented by : Vikas Gupta
Date : 12th June 2011

2. Introduction
International market involves various types of trade documents that need to
be produced while making transactions. Each trade document is differ from
other and present the various aspects of the trade like description, quality,
number, transportation medium, indemnity, inspection and so on. So, it
becomes important for the importers and exporters to make sure that their
documents support the guidelines as per international trade transactions.
A small mistake could prove costly for any of the parties. For example
 A trade document about the bill of lading is a proof that goods have been
shipped on board, while
 Inspection Certificate, certifies that the goods have been inspected and
meet quality standards
So, depending on these necessary documents, a seller can assure a buyer that
he has fulfilled his responsibility whilst the buyer is assured of his request being
carried out by the seller

3. What is Export Documentation
The paperwork that is required for an export sales
transaction
The means by which the shipping process is facilitated
and recorded.
Documentation is essential for moving goods through
the channels of distribution, transferring responsibility
or possession, clearing goods through customs, and
facilitating payment according to the agreed upon
terms

4. Purpose of Export Documentation
 Export documentation provides evidence that
the negotiated terms between the buyer and
the seller have been complied with
This is essential if the seller wishes to get paid
 Export documentation provides important
information that is used by the seller, the
freight companies, governments, and the
buyer

5. Steps in the Documentation process
 Receive the order under accepted terms & consult
with a banker or a freight forwarder.
 Begin organizing information for required export
documents and export license applications.
 Evaluate modes of transportation, requirements for
perishable products, and cost of various alternative
modes.
 Prepare goods for shipping (marking / labeling,
packing, consolidating / containerizing, insuring)
 Complete and forward required export documents

6. Steps in the Documentation
process…..
 Transport goods to port of export
 Complete Customs documentation
 Transfer goods to carrier
 Ship goods and forward appropriate export
documents
 Unload goods at foreign port.
 Clear customs.
 Transport goods from foreign port to intermediate
and/or ultimate consignee
Note: Responsibility for different steps in the documentation & shipping
process depends on the terms of sale & the method of payment and collection

7. The terms of Sale ... INCOTERMS
Understanding the Incoterms, also called the terms of sale, is the first step in
responding to a trade lead or starting to prepare a quote.
Definition: An international rule for pricing terms which represent different
levels of financial responsibility for the buyer and seller in an export transaction
The INCOTERMS establish :
 the geographical location where the buyer becomes responsible for the
goods
 payment of shipping, handling, insurance, inland freight, etc.
 the point where ownership of the goods or the title for the goods
changes ownership
Note: The terms of sale should always be followed by a physical location so
that the buyer cannot surprise the seller and select a costly or infeasible
location

8. The Thirteen INCOTERMS
 EXW : Exported when removed from Works
 FCA : Free Carrier
 FAS : Free Alongside Ship
 FOB : Free On Board
 C&F or CFR : Cost (of the Product) & Freight
 CIF : Cost, Insurance and Freight
 CPT : Carriage Paid To
 CIP : Carriage & Insurance Paid to
 DAF : Delivery At Frontier
 DES : Delivered Ex-Ship
 DEQ : Delivered Ex-Quay
 DDU : Delivered Duty Unpaid
 DDP : Delivered Duty Paid

9. EXW: Exported when removed
from Works
 EXW signifies a precise location where the product is made ready to the buyer.
 When offering a “EXW” quotation: the price includes only those costs involved up to
an agreed point of origin, usually the shipper’s factory. The shipper / seller places the
product at the control of the buyer at a concurred place, date, time, etc.
 EXW costs can include:
 Raw or processed product
 Standard packaging
 Pallets, banding, shrink-wrap, slip sheets, slings, one-ton-big-bags
 Special labeling
 Translation and printing
 Inspection certificates (Phytosanitary, Health, Quality, or Export License)
 Bracing or inspecting a container
 Export packaging

10. FCA {Free Carrier (named place)}
FCA signifies a precise location where the product is turned over to a carrier
or person who will ensure carriage, and the goods are cleared for export.
When offering a “FCA” quotation: the price includes those costs involved
up to that agreed point, including transportation and loading if required
FCA costs can include ( in addition to the EXW costs):
 Loading on board carrier
 Transportation to the carrier
 Insurance coverage to carrier (optional)

11. FAS : Free Alongside Ship
FAS signifies a precise ocean port location where the product is turned
over to a carrier, and the goods are cleared for export
When offering an “FAS” quotation: the shipper/seller places the
product alongside the vessel
FAS costs can include ( in addition to the FCA costs):
 inland transportation (from your plant to the port)
 port charges (including Terminal Handling or Receiving Charges, or
stevedore, wharf age, forklift, off-load, etc.)

12. FOB : Free On Board
When offering an “FOB” quotation: the shipper / seller places the
product over the ship’s rail. FOB only applies to sea or water
transportation
The costs associated with FOB include:
 loading on board ship
 heavy lift charges
These costs are correct in theory, but actually the loading and heavy lift
charges will be included in the shipping cost from the port to the final
destination which the buyer will pay

13. C&F : Cost & Freight
C&F signifies that the seller loads the product on board a carrier, clears the
goods for export, arranges and pays the ocean freight and other charges.
The risk during carriage is transferred to the buyer, and the goods change
hands when they pass the ship’s rail at the port of shipment. (the final
destination)
The charges associated with CFR include (in addition to the FOB costs):
 Ocean Freight
 Fuel Adjustment Factor
 Currency Adjustment Factor
 Destination Delivery Charges or Container Service Charges

14. CIF : Cost Insurance & Freight
CIF signifies that the seller loads the product on board a carrier,
clears the goods for export, arranges and pays the ocean freight
and other charges.
The seller insures the shipment, and the goods change hands
when they pass the ship’s rail at the port of shipment
Costs associated with CIF include (in addition to C&F);
 Marine cargo insurance

15. Frequently used Documents in
International Trade
The following is a list of documents often used in international trade:
 Air Waybill
 Bill of Lading
 Certificate of Origin
 Combined Transport Document
 Draft (or Bill of Exchange)
 Insurance Policy (or Certificate)
 Packing List / Specification
 Inspection Certificate

16. Air Waybills

17. Introduction
Air Waybills make sure that goods have been received for shipment by air. A
typical air waybill sample consists of three originals and nine copies.
 The first original is for the carrier and is signed by a export agent;
 The second original, the consignee's copy, is signed by an export agent;
 The third original is signed by the carrier and is handed to the export agent
as a receipt for the goods
Air Waybills serves as:
 Proof of receipt of the goods for shipment
 An invoice for the freight
 A certificate of insurance
 A guide to airline staff for the handling, dispatch and delivery of the
consignment.

18. Principal requirement for an Air
Waybill
 The proper shipper and consignee must be mention.
 The airport of departure and destination must be mention.
 The goods description must be consistent with that shown on other documents.
 Any weight, measure or shipping marks must agree with those shown on other
documents.
 It must be signed and dated by the actual carrier or by the named agent of a
named carrier.
 It must mention whether freight has been paid or will be paid at the destination
point.

19. Bill of Lading (B/L)

20. Introduction
Bill of Lading is a document given by the shipping agency for the
goods shipped for transportation form one destination to another
and is signed by the representatives of the carrying vessel
Bill of landing is issued in the set of two, three or more. The
number in the set will be indicated on each bill of lading and all
must be accounted for. This is done due to the safety reasons
which ensure that the document never comes into the hands of
an unauthorised person.
Only one original is sufficient to take possession of goods at port
of discharge so, a bank which finances a trade transaction will
need to control the complete set

21. Basic Features
The bill of lading must be signed by the shipping company or its
agent, and must show how many signed originals were issued
It will indicate whether cost of freight/ carriage has been paid or
not :
 Freight Prepaid: Paid by shipper
 Freight collect: To be paid by the buyer at the port of
discharge
The bill of lading also forms the contract of carriage

22. Basic Features
To be acceptable to the buyer, the B/L should :
 Carry an "On Board" notation showing the actual date of
shipment, (Sometimes however, the "on board" wording is in
small print at the bottom of the B/L, in which cases there is no
need for a dated "on board" notation to be shown separately
with date and signature.)
 Be "clean" have no notation by the shipping company to the
effect that goods/ packaging are damaged.

23. Main parties involve in Bill of
Lading
 Shipper
 The person who send the goods
 Consignee
 The person who take delivery of the goods
 Notify Party
 The person, usually the importer, to whom the shipping company or its agent
gives notice of arrival of the goods
 Carrier
 The person or company who has concluded a contract with the shipper for
conveyance of goods

24. Requirements of the credit as well
as compliance with UCP 500
The bill of lading must meet all such requirements:
 The correct shipper, consignee and notifying party must be shown
 The carrying vessel and ports of the loading and discharge must be stated
 The place of receipt and place of delivery must be stated, if different from port of
loading or port of discharge
 The goods description must be consistent with that shown on other documents
 Any weight or measures must agree with those shown on other documents
 Shipping marks and numbers and / or container number must agree with those
shown on other documents
 It must state whether freight has been paid or is payable at destination
 It must be dated on or before the latest date for shipment specified in the credit
 It must state the actual name of the carrier or be signed as agent for a named carrier

25. Certificate of Origin

26. Introduction
The Certificate of Origin is required by the custom
authority of the importing country for the purpose
of imposing import duty.
It is usually issued by the Chamber of Commerce and
contains information like seal of the chamber, details
of the good to be transported and so on

27. Principal requirement for a
Certificate of Origin
The certificate must provide that the information required by the credit and be
consistent with all other document, It would normally include:
 The name of the company and address as exporter
 The name of the importer
 Package numbers, shipping marks and description of goods to agree with
that on other documents
 Any weight or measurements must agree with those shown on other
documents
 It should be signed and stamped by the Chamber of Commerce

28. Combined Transport
Document

29. Introduction
Combined Transport Document is also known as Multimodal Transport
Document, and is used when goods are transported using more than one mode
of transportation. In the case of multimodal transport document, the contract
of carriage is meant for a combined transport from the place of shipping to the
place of delivery. It also evidence receipt of goods but it does not evidence on
board shipment, if it complies with ICC 500, Art. 26(a).
The liability of the combined transport operator starts from the place of
shipment and ends at the place of delivery. It need to be signed with
appropriate number of originals in the full set & proper evidence which
indicates that transport charges have been paid or will be paid at destination

30. Principal requirement in a
Multimodal Transport document
Multimodal transport document would normally show :
 That the consignee and notify parties are as the credit
 The place goods are received, or taken in charges, and place of final
destination
 Whether freight is prepaid or to be collected
 The date of dispatch or taking in charge, and the "On Board" notation, if any
must be dated and signed
 Total number of originals
 Signature of the carrier, multimodal transport operator or their agents

31. Commercial Invoice

32. Introduction
Commercial Invoice document is provided by the
seller to the buyer. Also known as export invoice
or import invoice, commercial invoice is finally
used by the custom authorities of the importer's
country to evaluate the good for the purpose of
taxation.

33. Principal requirement in a
Commercial Invoice
The invoice must :
 Be issued by the beneficiary named in the credit (the seller)
 Be addressed to the applicant of the credit (the buyer)
 Be signed by the beneficiary (if required)
 Include the description of the goods exactly as detailed in the credit
 Be issued in the stated number of originals (which must be marked
"Original”) and copies
 Include the price and unit prices if appropriate
 State the price amount payable which must not exceed that stated in the
credit
 include the shipping terms

34. Bill of Exchange

35. Introduction
A Bill of Exchange is a special type of written
document under which an exporter ask importer a
certain amount of money in future and the importer
also agrees to pay the importer that amount of
money on or before the future date. This document
has special importance in wholesale trade where
large amount of money involved.

36. Persons involved in Bill of
Exchange
Following persons are involved in a bill of exchange:
Drawer: The person who writes or prepares the bill.
Drawee: The person who pays the bill.
Payee: The person to whom the payment is to be made.
Holder of the Bill: The person who is in possession of the bill

37. Types of Bill of Exchange
On the basis of the due date there are two types of bill of
exchange:
 Bill of Exchange after Date: In this case the due date is counted
from the date of drawing and is also called bill after date
 Bill of Exchange after Sight: In this case the due date is
counted from the date of acceptance of the bill and is also
called bill of exchange after sight

38. Insurance Certificate

39. Introduction
Also known as Insurance Policy, it certifies that goods transported
have been insured under an open policy and is not actionable with
little details about the risk covered.
It is necessary that the date on which the insurance becomes
effective is same or earlier than the date of issuance of the
transport documents. Also, if submitted under a LC, the insured
amount must be in the same currency as the credit and usually for
the bill amount plus 10 per cent

40. Principal requirement in a
Insurance Certificate
The requirements for completion of an insurance policy are as follow :
 The name of the party in the favour which the documents has been issued
 The name of the vessel or flight details
 The place from where insurance is to commerce typically the sellers warehouse or the port of
loading and the place where insurance cases usually the buyer's warehouse or the port of
destination
 Insurance value that specified in the credit
 Marks and numbers to agree with those on other documents
 The description of the goods, which must be consistent with that in the credit & on the invoice
 The name and address of the claims settling agent together with the place where claims are
payable
 Countersigned where necessary
 Date of issue to be no later than the date of transport documents unless cover is shown to be
effective prior to that date.

41. Packing List

42. Introduction
Also known as packing specification, it contain details about the
packing materials used in the shipping of goods. It also include
details like measurement and weight of goods.
The packing List must :
 Have a description of the goods ("A") consistent with the other
documents
 Have details of shipping marks ("B") and numbers consistent
with other documents

43. Inspection Certificate

44. Introduction
Certificate of Inspection is a document prepared on the request of seller
when he wants the consignment to be checked by a third party at the
port of shipment before the goods are sealed for final transportation.
In this process seller submit a valid Inspection Certificate along with the
other trade documents like invoice, packing list, shipping bill, bill of
lading etc. to the bank for negotiation
On demand, inspection can be done by various world renowned
inspection agencies on nominal charges

45. Negotiation of Shipping
Documents

46. Negotiation
Negotiation means the purchase by the nominated (negotiating)
bank of drafts and shipping documents under a complying
presentation by advancing or agreeing to advance funds to the
beneficiary
An exporter presents a draft (a bill of exchange) and shipping
documents specified in the letter of credit to a nominated bank or
any bank if there is no nominated bank, which becomes a
negotiating bank, to get paid

47. Instructions for opening
Letter of Credit
Items usually included in the instructions to open an L/C
 An Irrevocable letter of credit subject to Buyer’s country regulations
 The name and address of the beneficiary - in favor of exporter
 Whether the L/C is to be transferable or not
 Terms of payment such as at sight or usance
 Where negotiation or payment is to be effected
 Whether the payment is to be made in U.S. dollars or other foreign
currency
 What trade terms are to be used: FOB, CFR or CIF?

48. Instructions for opening
Letter of Credit
 Coverage of marine insurance: All Risks, WA, FPA, War Risks, Warehouse
to warehouse or any special coverage such as a rejection clause
 Whether partial shipments are allowed or not
 Whether transshipments are allowed or prohibited
 Presentation period / date: A period of time for presentation of
documents after shipment
 Ports of loading and unloading
 The latest shipping date
 The expiry date

49. Documents for Negotiation
Documents to be required for negotiation
Commercial invoice
Packing list
Marine insurance policy or certificate
Ocean bill of lading
Other documents requested by the buyer and
accepted by the seller

50. Examination of Letter of Credit
When a letter of credit is received, exporter must:
 Examine the conditions and documents specified in the L/C and determine
whether he can meet them or not.
 If there are any conditions he cannot meet, request his buyer to amend the
L/C before he starts manufacturing export goods.
 If the L/C calls for a time draft, have the L/C specify that the discount
interest for the time draft shall be for account of importer, when agreement
was a sight draft but L/C is opened with a time draft
 (4) Hold off shipping the order until he receives an amendments to the L/C
as requested

51. Common Discrepancies of LC
(1) Drafts
a. Draft amount is different from invoice
b. Draft tenor is different from the L/C
c. Wrong drawee
(2) Commercial invoices
a. Different merchandise description from the L/C
b. Invoices is not issued by the beneficiary
c. Insufficient copies are presented
d. Incorrect accountee's name and address are stated
e. Different prices from the L/C
f. Terms of trade such as FOB, CFR or CIF different from the L/C

52. Common Discrepancies of
LC….
(3) Packing List
a. Different description of merchandise from the L/C
b. Different number of unit, net weight and gross weight from the L/C
(4) Marine Insurance Certificate or Policy
a. Different coverage from the L/C
b. Insufficient coverage
c. Not the same currency as the L/C
d. Different merchandise description
e. The effective date later than the shipping date
f. Broker's cover note presented instead of insurance certificate or policy

53. Common Discrepancies of
LC….
(5) Ocean Bill of Lading
a. Less than a full set of original B/L is presented
b. The B/L not properly endorsed
c. The B/L not marked with "On Board“ notation, if B/L contains the indication “intended
vessel” or "Received for shipment"
d. In the case of CFR or CIF, the term "Freight Prepaid" is not marked
e. Merchandise description is different from the L/C
f. Different ports of loading and / or unloading from the L/C
g. Notations on the B/L that the merchandise or packages are damaged
h. The B/L indicates the "On Deck" shipment
i. Stale B/L : Not presented within time limit after shipment as stipulated in the L/C
j. Late shipment: The bill of lading date marked later than the shipping date specified in
the L/C

54. Negotiation with Discrepancies
In case discrepancies are found by negotiating bank, exporter must correct the
discrepancies.
If exporter cannot correct them such as the shipping date, then exporter should
a. request the issuing bank to amend the letter of credit to cover discrepancies
or authorize to pay in lieu of discrepancies
b. At the same time, inform the buyer of the discrepancies and request his
acceptance and amendment to the Letter of Credit.
c. Release shipping documents to issuing bank after the L/C is amended. Buyer’s
acceptance of discrepancies are not enough. The Letter of Credit must be
amended.
d. Do not send the shipping documents to the issuing bank on a collection basis.

55. Presentation of Documents
 Draft and all shipping documents must be presented to a negotiating bank
together with the original letter of credit.
 Presentation must be made within a specified period of time after shipment in the
L/C, but not later than 21 days after shipment
 A bank must determine whether or not presentation is a complying presentation
in 5 banking days In case discrepancies are found by negotiating bank, exporter
must correct the discrepancies
 If a nominated (negotiating) bank, a confirming bank, if any, or the issuing bank
determines that a presentation does not comply,
 it may refuse to honor or negotiate, then
 it must give a single notice to presenter no later than the close of the 5th
banking days

56. Presentation of Documents…
The notice must state
 The bank is refusing to honor or negotiate
 Each discrepancy
 The bank’s disposal of shipping documents:
 The bank is holding documents pending instructions from the
presenter or
 The issuing bank is holding documents until it receives a waiver from
the applicant & agrees to accept it or
 The bank is returning documents or
 The bank is acting according to the previous instructions from the
presenter

57. Presentation of Documents…
 If a bank does not follow these negotiation and notice provisions,
 The bank cannot claim that the documents do not constitute a
complying presentation.
 The bank must honor or negotiate.
 A document presented but not required by the Credit will be
disregarded.
 If a Credit contains a condition without stipulating the document to
indicate compliance with the condition,
 Banks will deem such condition not stated and will disregard it.