EXPORT DOCUMENTATION

Documentation

Documentation requirements vary considerably by country, commodity, and situations.

Documents outline the sale, shipment, and responsibilities of each party so that the full transaction is understood and complete without delay or additional costs.

Factors to consider

Country of origin and destination Mode of transportation - truck, rail, ocean, air, pipeline Commodity - agriculture, livestock, safety/security Size-value, volume, weight, dimensions Parties to the transaction-shipper,agents, brokers, banks

Export Documents

Commercial Documents Regulatory Documents

Principal Auxiliary

Export documentation

Principal documents are

1. The Commercial Invoice,2. Packing List3. Bill of Lading/Air Waybill 4. Certificate of Inspection/Quality control5. Certificate of origin6. Bill of Exchange and7. Shipment Advice8. Insurance Certificate

Export documentation

The auxiliary documents are

1. Proforma Invoice

2. Intimation for inspection

3. Shipping instructions

4. Insurance Declaration

5. Application for certificate of origin.

6. Letter to bank of collection/negotiation of

documents

EXPORT DOCUMENTATION

These documents are prepared by the exporter Invoices - Commercial, Pro -forma Packing Lists - Dock, or Warehouse, Receipt Certificates of Origin (C/O Declaration of Dangerous Goods (DGD) Certificates - Insurance, Inspection Miscellaneous: Letters of Credit

Pro-forma invoice

It is an invoice sent to the buyer before the shipment, giving the buyer a chance to review the sale terms (quantity of goods, value, specifications) It also allows the buyer to work with their bank to arrange any financial process for payment. For example, to open a Documentary Credit (Letter of Credit), the buyer’s bank will use the pro-forma invoice as a source of information.

Commercial Invoice

It is prepared by the exporter and addressed to the importer, and is one of the first documents prepared when a transaction has been agreed upon. The invoice identifies the buyer and seller, describes the goods sold and all terms of sale, including IncoTerms, payment terms, relevant bank information, shipping details, etc. An invoice may be itemized to show cost of goods, freight, and insurance, or other special handling.

Document Functions Prepared by

Quotation

Sales Contract

An offer to sell goods and should state clearly the price, details of quality, quantity, trade terms, delivery terms, and payment terms.

An agreement between the buyer and the seller stipulating every details of the transaction. It is a legally binding document.

Exporter

Exporter and Importer

Commercial Documents

Document Functions Prepared by

Packing List

Inspection Certificate

A list with detailed packing information of the goods shipped. A report issued by an independent surveyor on the specifications of the shipment, including quality, quantity, and/or price, etc; required by certain buyer and countries.

Exporter

Inspection Company or Exporter

Commercial Documents

Document Functions Prepared by

Insurance Policy/ Certificate

An insurance document that has been taken out on the goods shipped, and it gives full details of the insurance coverage. An insurance certificate certifies that the shipment has been insured under a given open policy and is to cover loss of or damage to the cargo while in transit.

Insurance Agent or Insurance Broker

Commercial Documents

Document Functions Prepared byHealth Certificate

Document issued by the competent country when agricultural or food products are being exported, to certify that they comply with the relevant legislation in the exporter's country and were in good condition at time of inspection, prior to shipment and fit for human consumption.

Exporter / Inspection Authority

Commercial Documents

Document Functions Prepared by

Air Waybill (AWB)

Packing List

A kind of waybill used for the carriage of goods by air. This serves as a receipt of goods for delivery and states the condition of carriage but is not a title document or transferable/ negotiable instrument.

A list providing information needed for transportation purpose, such as details of invoice, buyer, country of origin, vessel/flight date, port/airport of loading, port/airport of discharge, place of delivery,container number, weight / volume of merchandise and the fullest details of the goods, including packing information.

Airline

Shipper

Transport Documents

Document Functions Prepared by

Documentary Credit

Bill of Exchange (B/E) or Draft

A bank instrument began at the request of the buyer, evidencing the bank's undertaking to the seller to pay a certain sum of money provided that specific requirements set out in the D/C are satisfied.

An unconditional written order, in which the importer addressed to the exporter to pay on demand or at a future date a certain amount of money to the order of a person or bearer.

Issuing Bank upon an application made by the Importer

Exporter

Financial Documents

Incoterms

• The terms of shipment and delivery, as well as the transfer of risk, between the buyer and seller.

• Incoterms were created by the International Chamber of Commerce (ICC) and are a registered trademark of the ICC.

• Incoterms are reviewed every 10 years to keep pace with the ever-changing world of international trade.

• The latest edition is the Incoterms 2010 which are effective January 1, 2011

New changes

The number of categories reduced from four to two in new Incoterms – 2011

These two categories are : Terms for any mode or modes of transport Term for sea and domestic waterway transport

These Consists of following terms CIP - CARRIAGE AND INSURANCE PAID TO CPT - CARRIAGE PAID TO DAT - DELIVERED AT TERMINAL FCA - FREE CARRIER EXW - EX WORKS All of these terms need to specify the port or destination

CIP - CARRIAGE AND INSURANCE PAID TO The Seller pays for moving the goods to destination. From the time

the goods are despatched. Seller, however, purchases the goods insurance.

CPT - CARRIAGE PAID TO The Seller pays for moving the goods to destination. From the time

the goods are transferred to the first transporter, the Buyer bears the risks of loss or damage.

DAT - DELIVERED AT TERMINAL The Seller delivers when the goods, once unloaded from the arriving means

of transport, are placed at the Buyer's terminal. The Seller bears all risks involved in bringing the goods to and unloading

them at the terminal at the named port or place of destination. DAP - DELIVERED AT PLACE The Seller delivers when the goods are placed at the Buyer's clearance The

Seller bears all risks involved in bringing the goods to the named place.

FCA - FREE CARRIERThe Seller delivers the goods, cleared for export, to the transporter selected by the Buyer. The Seller loads the goods if the carrier pickup is at the Seller's premises. From that point, the Buyer bears the costs and risks of moving the goods to destination. EXW - EX WORKS The Seller's only responsibility is to make the goods available at the Seller's premises. The Buyer bears full costs and risks of moving the goods from there to destination.

CFR - COST AND FREIGHT The Seller clears the goods for export and pays the costs of moving the goods to destination. The Buyer bears all risks of loss or damageCIF - COST INSURANCE AND FREIGHT The Seller clears the goods for export and pays the costs of moving the goods to the port of destination. The Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo insurance.

METHODS OF PAYMENT IN INTERNATIONALTRADE: For exporters, any sale is a gift until payment is received. Exporters want to receive payment as soon as possible, preferably as

soon as an order is placed or before the goods are sent to the importer.

For importers, any payment is a donation until the goods are received.

Importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

CASH IN ADVANCE / PREPAYMENTS: With cash-in-advance payment terms, the exporter can avoid

credit risk because payment is received before the ownership of the goods is transferred.

Foreign buyers are also concerned that the goods may not be sent if payment is made in advance.

LETTERS OF CREDIT: Letters of credit (LCs) are one of the most secure instruments available to international traders.

An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents.

The buyer pays his or her bank to render this service. An LC also protects the buyer because no payment obligation arises

until the goods have been shipped or delivered as promised.

OPEN ACCOUNT: An open account transaction is a sale where the goods are

shipped and delivered before payment is due, which is usually in 30 to 90 days.

This option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter.

TYPES OF LETTER OF CREDIT Irrevocable and revocable letters of credit Revocable can be changed or cancelled by the bank that

issued it at any time and for any reason. An irrevocable letter of credit cannot be changed or

cancelled unless everyone involved agrees. Irrevocable letters of credit provide more security than revocable ones.

Transferable letters of credit : A transferable letter of credit can be passed from one

beneficiary (person receiving payment) to others. They are commonly used when intermediaries are involved

in a transaction.

Revolving LC It is used for regular shipments of the same commodity to the

same importer. It can revolve in relation to time or value. If the credit is time revolving once utilized it is re-instated for

further regular shipments until the credit is fully drawn. They are useful to avoid the need for repetitious arrangements

for opening or amending letters of credit.

Transport Documents used in International Trade

In international trade, the goods move from the warehouse of the exporter to the warehouse of the importer.

The goods may move by land water or air or a combination of one or more of these modes.

In international trade, such transport documents are more in number and it is very important to know the significance of each type of document.

Bill of Lading This is a transport document, which represents the movement

of goods by water. A Bill of Lading is a formal receipt given by a ship owner or

their authorized agents stating that the goods mentioned therein (quantity, quality, description etc.) are shipped on a specified date and vessel and are deliverable to the person mentioned therein or to his order after payment of all dues of the shipping company.

Air Waybills (AWBs) are consignment notes for air-freight. They act as a receipt for the goods “in apparent good order

and condition” and are also evidence of a contract between the exporter and the carrier(s).

Unlike Bills of Lading, AWBs are not documents of title, so that the holder does not necessarily have ownership of the goods. The consignee can claim the goods on arrival merely by quoting the AWB number.