ASSIGNMENT

OF
EXPORT MARKETING

ON
DOCUMENTATION PROCESS & ITS IMPORTANCE IN EXPORT/IMPORT MARKETING (documentation process of any exporting company of India)

SUBMITTED TO: Mr. Ravi kumar Assit. Prof. (U.S.B.S) SUBMITTED BY: Amanpreet kaur Roll No.-2503 MBA(Marketing)

UNIVERSITY SCHOOL OF BUSINESS STUDIES TALWANDI SABO

1

Sr. no. I II III

Particulars Introduction to Export marketing Features of export marketing Introduction to documentation, benefits &functions Process of documentation Types of documentation Conflict law Common export import documents Types of invoice Origin certificates Types of bills Role of export documentation Top ten exporters of india Documentation of Turbo-EMS Modular ERP
Software Solution for Managing Operations of Small & Big Exporters

Page no. 3 3-6 7-10

IV V VI VII VIII IX X XI XII XIII

10-11 12-38 38-41 41-48 49-51 52-56 56-60 61-62 63-67 67-71

XIV XV XVI

Documentation for textiles industries Conclusion References

71-72 73 74

INTRODUCTION TO EXPORT MARKETING

Export marketing means exporting goods to other countries of the world. It involves lengthy procedure and formalities. In export marketing, goods are sent abroad as per the procedures framed by the exporting country as well as by the importing country. Export marketing is more complicated to domestic marketing due to international restrictions, global competition, lengthy procedures and formalities and so on. Moreover, when a business crossed the borders of a nation, it becomes infinitely more complex. Along with this, export marketing offers ample opportunities for earning huge profits and valuable foreign exchange. Export marketing has wider economic significance as it offers various advantages to the national economy. It promotes economic / business / industrial development, to earn foreign exchange and ensures optimum utilization of available resources. Every country takes various policy initiatives for promoting exports and for meaningful participation in global marketing. Global business is a reality and every country has to participate in it for mutual benefits. Every country has to open up its markets to other countries and also try to enter in the markets of other countries in the best possible manner. This is a normal rule which every country has to follow under the present global marketing environment. In the absence of such participation in global marketing, the process of economic development of the country comes in danger. Export marketing is a systematic process of developing and distributing goods and services in overseas markets. The export marketing manager needs to undertake various marketing activities, such as marketing research, product design, branding, packaging, pricing, promotion etc.

DEFINITIONS OF EXPORT MARKETING

1) According to B. S. Rathor Export marketing includes the management of marketing activities for products which cross the national boundaries of a country. 2) Export marketing means marketing of goods and services beyond the national boundaries.

FEATURES OF EXPORT MARKETING

The main important features of export marketing are as follows.

SYSTEMATIC PROCESS LARGE SCALE OPERATIONS DOMINANCE OF MULTINATIONAL CORPORATIONS CUSTOMER FOCUS TRADE BARRIERS TRADING BLOCS THREE FACED COMPETITION

1) Systematic Process Export marketing is a systematic process of developing and distributing goods and services in overseas markets. The export marketing manager needs to undertake various marketing activities, such as marketing research, product design, branding, packaging, pricing, promotion etc. To undertake the various marketing activities, the export marketing manager should collect the right information from the right source; analyze it properly and then take systematic export marketing decisions. 2) Large Scale Operations Normally, export marketing is undertaken on a large scale. Emphasis is placed on large orders in order to obtain economies in large sole production and distribution of goods. The economies of
4

large scale help the exporter to quote competitive prices in the overseas markets. Exporting goods in small quantities is costly due to heavy transport cost and other formalities. 3) Dominance of Multinational Corporations Export marketing is dominated by MNCs, from USA, Europe and Japan. They are in a position to develop world wide contacts through their network and conduct business operations efficiently and economically. They produce quality goods at low cost and also on massive scale. 4) Customer Focus The focus of export marketing is on the customer. The exporter needs to identify customers needs and wants and accordingly design and develop products to generate and enhance customer satisfaction. The focus on customer will not only bring in higher sales in the overseas markets, but it will also improve and enhance goodwill of the firm. 5) Trade barriers Export marketing is not free like internal marketing. There are various trade barriers because of the protective policies of different countries. Tariff and non-tariff barriers are used by countries for restricting import. The export marketing manager must have a good knowledge of trade barriers imposed by importing countries. 6) Trading Blocs Export trade is also affected by trading blocs, certain nations form trading bloc for their mutual benefit and economic development. The non-members face problems in trading with the members of a trading bloc due to common external barriers. Indian exporters should have a good knowledge of important trading blocs such as NAFTA, European Union and ASEAN. 7) Three faced competition In export markets, exporters have to face three-faced competition, i.e., competition from the three angles from the other suppliers of the exporters country, from the local producers of importing country and from the exporters of competing nations.

8) Documentation Export marketing is subject to various documentation formalities. Exporters require various documents to submit them to various authorities such as customs, port trust etc. The documents include Shipping Bill, Consular Invoice, and Certificate of Origin etc. 9) Foreign exchange regulations Export trade is subject to foreign exchange regulations imposed by different countries. These regulations relate to payments and collection of export proceeds. Such restrictions affect free movement of goods among the countries of the world. 10) Marketing mix Export marketing requires the right marketing mix for the target markets, i.e. exporting the right product, at the right price, at the right place and with the right promotion. The exporter can adopt different marketing mixes for different export markets, so as to maximize exports and earn higher returns. 11) International marketing Research Export marketing requires the support of marketing research in the form of market survey, product survey, product research and development as it is highly competitive. Various challenges, identification of needs and wants of foreign buyer in export marketing can be dealt with through international marketing research. 12) Spreading of Risks Export marketing helps to spread risks of business. Normally export firms sell in a number of overseas markets. If they are affected by risks (losses) in one market, they may be able to spread business risks due to good return from some other markets. 13) Reputation Export marketing brings name and goodwill to the export firm. Also, the country of its origin the gets reputation. The reputation enables the export firm to command good sales in the domestic market as well as export market.

INTRODUCTION TO DOCUMENTATION
The export process is made more complex by the wide variety of documents that the exporter needs to complete to ensure that the order reaches its destination quickly, safety and without problems. These documents range include those required by the South African authorities (such as bills of entry, foreign exchange documents, export permits, etc.), those required by the importer (such as the proforma and commercial invoices, certificates of origin and health, and pre-shipment inspection documents), those required for payment (such as the South African Reserve Bank forms, the letter of credit and the bill of lading) and finally, those required for transportation (such as the bill of lading, the air way bill or the freight transit order). Documentation requirements for export shipments also vary widely according to the country of destination and the type of product being shipped. Most exporters rely on an international freight forwarder to handle the export documentation because of the multitude of documentary requirements involved in physically exporting goods and it is strongly recommended that you also make use of a freight forwarder to help you work your way through the maze of documentation. Click here for a list of freight forwarders that you can approach to help you.

EXPORT DOCUMENTATION
In internal/inland trade, the commercial parties to a sales contract agree on a price based on the buyer taking over the goods at the seller's or supplier's warehouse, or on delivery by the seller to the buyer's warehouse, or delivery by the seller to a specified rail or road carrier. This is because it is simple for either buyer or seller to arrange to pay for all formalities involving the movement and insurance of the goods from one place to another in the same country. In international trade, the position is a little complicated. There are likely to be three separate contracts of carriage of the goods, i.e. from the seller's or supplier's warehouse to a place within the seller's country, from which there will be an international movement of the goods to a place of arrival within the buyer's country, with a possible internal carriage within the buyer's country to his warehouse.

THE BENEFITS OF DOCUMENTATION

Documentation is a key means of conveying information from one person or company to another, and also serves as permanent proof of tasks and actions undertaken throughout the export process. Documentation is not only required for your own business purposes and that of your business partner, but also to satisfy the customs authorities in both countries and to facilite the transportation of and payment for goods sold. One value of documentation is that copies can be made and shared with the parties involved in the export process (although you should always ensure that you make identical copies from an agreed-upon master - it is no use making changes without the other party's agreement and then presenting these as the "latest" copies). If the documentation is complete, accurate, agreed upon by the parties involved and signed by each of these of these parties (or their representatives), the document will represent a legally binding document.

FUNCTION OF EXPORT DOCUMENTATION

Export documentation may serve any or all of the following functions:

An attestation of facts, such as a certificate of origin Evidence of of the terms and conditions of a contract if carriage, such as in the case of an airwaybill

Evidence of ownership or title to goods, such as in the case of a bill of lading A promissory note; that is, a promise to pay A demand for payment, as with a bill of exchange A decalaration of liability, such as with a customs bill of entry A receipt for goods received.

BROAD CATEGORIES OF EXPORT DOCUMENTATION

There are five broad categories of documentation you will encounter when exporting. These are:

DOCUMENTS INVOLVING THE INPORTER

DOCUMENTS INVOLVING THE EXPORTER

1. DOCUMENTS INVOLVING THE IMPORTER

The proforma invoice The export contract The commercial invoice The packing list Letter of credit Certificate of origin Certificates of health Fumigation certificate Pre-shipment inspection certificate Transport documents

2) DOCUMENTATION REQUIRED TO EXPORT GOODS FROM SOUTH AFRICA Exporter registration form Letter of credit Commercial invoice Bill of entry export Form NEP ( no foreign exchange proceeds) Form E( repatriation of foreign exchange earnigs) Export permit

3) DOCUMENTS REQUIRED FOR TRANPORTATION Bill of lading Air way bill Freight transit order Road consignment note Export cargo shipping instruction

4) DOCUMENTS REQUIRED FOR PAYMENT Commercial invoice Letter of credit Transport documents

5) INSURANCE DOCUMENTS- MARINE INSURANCE PROCESS OF DOCUMENTATION Below is a list of basic documents used in export trade. These have been covered in detail in other sectors of this text. a) Invitation to quote b) Quote c) Pro forma Invoice d) Order confirmation/acknowledgement e) Bill of lading/short form bill of lading f) Airway bill g) Marine (other) insurance policy h) Commercial invoice i) Consular invoice

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j) Certified invoice k) Certificate of origin l) Packing list/weight note m) Specification sheet n) Manufacturer's analysis certificate o) Health, sanitary, phytosanitary, veterinary certificates p) Quality inspection certificate/certificate of value q) Independent third party inspection certificate r) Dispatch advice note s) Dangerous goods declaration t) Shipping or export consignment notes u) Documentary credit of payment drafts v) Export licenses w) Import licenses x) Exporter's commission advice to agent y) Customs and Excise export entry forms z) EU Movement documents EUR 1 Form a1) Other specifically requested documents Not all of these will be relevant depending on whether the exporter is from a developed or less developed country. Note: A great number of exporters find it more convenient to control the volume and variety

of paper work and related matters by designing a file folder that has printed on the covers the entire control procedure covering documentation, production of goods, payment, shipping instructions and so on. Each separate transaction is then allocated to a numbered filed folder. The documents are either required by the importer to satisfy the country's trade control authorities or to enable a documentary credit transaction to be implemented. Trade control

11

authorities want to ensure that each document controls the import of a good/commodity for sanitary/veterinary reasons, or to ensure no plant disease likely to affect the local seeds is imported from another country. The importer also wants to ensure that the exporter fulfills these requirements under documentary letter of credit operations in order for payment to be effected.

TYPES OF DOCUMENTATION

12

SHIPPING DOCUMENTATION TRANSPORTATTION DOCUMENTATION COMMERCIAL DOCUMENTATION

OFFICIAL DOCUMENTS

INSURANCE DOCUMENTATION

FINANCIAL AND FINANCING DOCUMENTS

EXPORT FINANCING DOCUMENTS

COLLECTION ARRANGEMENTS

LETTER OF CREDIT

13

1) SHIPPING DOCUMENTATION
A commercial invoice is generally required for exports other than documents. It represents a complete record of the transaction between exporter and importer:

Destination port of entry. Time, origin of shipment, names of shipper and receiver Detailed description: item name, grade, marking, Harmonized Tariff Schedule number, country of origin

Quantity and value Type of export, reason for export Export control summary (No License Required, EAR exception, ITAR exemption, or license) Destination Control Statement When the transaction is not a sale (e.g., samples, gifts), a proforma invoice may be required instead (varies by destination country). It's very similar to a commercial invoice its primary role is for the exporter to advise the importer in advance of a potential future export. A shipment valued under$2500 and not requiring an export license or exception from export license does not have to be entered in the Automated Export System. So an invoice may not be necessary but is still good practice. There is no mandated form. There are publicly available templates

athttp://www.exportassistance.com/documents-forms

VALUATION The short answer is the selling price, or Fair Market Value if no money is changing hands. Noncommercial samples for research material can be valued as Samples with no commercial value; value for Customs purposes only: $xxxx with a nominal value. The United Nations Educational, Scientific and Cultural Organization's Agreement on the Importation of Educational Scientific and Cultural Materials provides for duty-free import of books, publications, and educational, scientific and cultural materials, including scientific instruments or apparatus for non-commercial use. This will be reflected in each country's import duty schedule, and may require advance approval and special labeling, as in Irish Tax and Customs' Relief from Customs Duty on the Importation of Educational, Scientific and Cultural Materials.
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DESTINATION CONTROL STATEMENT The commercial or proforma invoice and air waybill for all EAR exports must include at a minimum the following Destination Control Statement unless the items are EAR99 or being exported under license exception BAG or GFT: "These commodities, technology, or software were exported from the United States in accordance with the Export Administration Regulations. Diversion contrary to U.S. law prohibited." There may be reduced documentation requirements for shipments that don't require an Automated Export System (AES) record:

Subject to EAR (not ITAR) No license required, or EAR exception used Not shipping to Cuba, Iran, North Korea, Sudan, or Syria Not shipping through Canada to third destination that would require a license if shipped directly Value under $2,500 per Schedule B/HTS number 2) COMMERCIAL DOCUMENTS Of the documents described earlier, this section will single out some and describe them in detail. Pro forma invoice This is a form of quotation by the seller to a potential buyer. It is the same as Commercial Invoice except for the words "Pro forma Invoice" which appear on it. It may be an invitation to the buyer to place a firm order and is often required by him so that the authorities of the importer's country will grant him an import licence and/or foreign exchange permit. The pro forma invoice normally shows the terms of trade and price so that once the buyer has accepted the order there is a firm contract to be settled as stipulated in the pro forma. Details from the accepted pro forma must be transposed identically to the commercial invoice that goods are in accordance with the pro forma invoice. No pro forma invoices are used in settlements: in advance on consignment

15

subject to tender after an invitation to tender has been accepted by the seller. Commercial invoice The following details must appear on a commercial invoice used in international trade: Names and addresses of buyer and seller and date Complete description of goods. If payment is to be obtained by means of documentary letter of credit, this description of goods must exactly match the details in the documentary credit Unit prices where applicable and final price against shipping terms Terms of settlement e.g. under documentary credit or 30 days sight Documents against Acceptance Shipping marks and numbers Weight and quantity of goods Name of vessel if known or applicable.

Sometimes it is necessary to show to the customs authorities in the buyer's country: Seller's signature Origin of goods Ports of loading and discharge or places of taking in charge and delivery Details of freight and insurance charges specified separately where applicable. Certified invoice A certified invoice may be an ordinary signed commercial invoice specially certifying: a) That the goods are in accordance with a specific contract or pro forma b) That the goods are, or are not, of a specific country of origin c) Any statement required by the buyer from the seller.

16

There are also formal certified invoices which when submitted to the importing authorities will provide them with the necessary evidence to pass the goods through customs with a lower import duty or none at all. Combined certificates of value and origin (CVO) are used between members of the Commonwealth and special invoices for the other major trade areas such as the EU. All certified invoices must be signed and in case of combined certificates of value and origin they should be signed by a witness as well. Weight note This certificate may be issued by the seller or often by a third party - it indicates weight of goods, which should tally with that shown on all the other documents. Weighbridge tickets are sometimes produced for road or rail shipments. Banks will accept superimposed declaration of weight on shipping documents, unless credit calls for a separate or independent document. Packing list and specification These documents set out details of the packing of the goods. These are required by the customs authorities to enable them to make spot checks or more thorough checks on the contents of any particularly package. The packing list has no details of cost/price of the goods; the specification does have these details. Manufacturers analysis certificate The certificate states the ingredients and proportions revealed by an analysis of chemicals, drugs etc. Third party certificate of inspection This is a certificate declaring the result of an examination of the goods by a recognised independent inspection body. In order to protect himself from paying when substandard or worthless goods have been shipped an importer can call for an independent check or examination of goods before they are despatched.

17

This is important for the buyer as banks' liabilities and responsibilities under documentary credit are limited to documents and not goods represented by the documents. The usual independent body which serves buyers/sellers is the Socit Generale de Surveillance.

3) OFFICIAL DOCUMENTS
These are legion. This section looks at the following few official documents only for example purposes, a)EURI form b) TzL form c) Consular invoice d) Legalized invoice e) Combined invoice and Certificate of Origin f) Chamber of Commerce Certificate of Origin g) Blacklist Certificate h) Veterinary Certificate. EC documents EURI and TzL EURI form is used in respect of preferential exports from an EU country to a non EU country. The TzL is used for trade between EU member states, where the goods are being transported directly between member states and without passing through the territory of a non member country. Consular invoice Importing authorities of several countries require consular invoices to be produced before goods may be cleared through customs. These invoices are normally obtained by the exporter from the Embassy of the importing country and are submitted to the Embassy for stamping at a charge. Sometimes a Chamber of Commerce is required to certify on the Consular Invoice that the origin of the goods is as stated. This mainly happens in the South American countries. The selling price is mainly examined in the light of current market price to ensure that there is no "dumping" or
18

that importers are not syphoning money overseas or that the correct basis for levying import duty can be determined by the Customs Authorities. Legalised invoice Some countries require that commercial invoices should be legalised by their own embassy or consulate in the seller's country. Sellers produce their own invoices and have them stamped (visaed) by the buyer's embassy. This is normally required in the Middle East countries. Certificates of origin These constitute signed documents evidencing origin of the goods and are normally used by the importer's country to determine the tariff rates. They should contain the description of goods and signature and seal of the Chamber of Commerce. Blacklist certificate Countries at war or with badly strained political relations may require evidence that: a) The origin of the goods is not that of a particular country b) That the parties involved (manufacturer, bank, insurance company, shipping line etc.) are not blacklisted or, c) That the ship or aircraft will not call at ports in such a country unless forced to do so. Health, veterinary and sanitary certificates Sometimes these are required for official purposes in the purchase of foodstuffs, hides and skins, livestock and in the use of packing materials.

4) INSURANCE DOCUMENTS
The following are insurance documents required in international trade:

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a) Letter of insurance b) Insurance company's open cover certificate c) Lloyds' open cover insurance d) Insurance policy. Letter of insurance It is normally issued by a broker to provide notice that an insurance has been placed pending the production of a policy or a certificate. Sometimes this takes the form of a cover note. The above documents do not contain details of the insurance being effected and therefore are not considered satisfactory by banks which normally require evidence of an insurance contract in documents required under a documentary credit. Broker's certificates, and cover notes are issued by a third party and not the insurer so that in the event of any claim, it would be made against the broker. Insurance certificates These are issued by insurance companies to embrace either open covers or floating policies. The systems of open cover and floating policies are similar in that: a) Once the system has been arranged, the insured party is covered for all his shipments on the terms and for the risks agreed. The insured will declare to the insurance company the value and details of each shipment and will receive a pre-printed insurance certificate made valid and the document will show the risks covered and be presigned by the insurer. b) Under English Law, no action will be obtained on a contract of insurance evidenced solely by an insurance certificate. So, any action to be taken against insurers can only be on production of a policy to be sued on.

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5) TRANSPORT DOCUMENTS
Airway bill The IATA airway bill (sometimes called an air consignment note or air freight note) is often issued in a set of 12 of which 3 are commercially important, the remainder being copies for airline purposes. The three important documents are: a) For the issuing carrier b) For the consignee c) For the shipper. The waybill is a receipt only and not a document of title and the goods are delivered to the named consignee without further formality once customs clearance has been obtained. If the third original document is in the hands of the shipper this can be surrendered to the airline before delivery is made to the consignee. There might be an arrangement for payment whereby the bank might wish to have a lien over the goods until payment is effected by the importer. The goods will, therefore, be consigned to a correspondent bank (provided that the correspondent bank is agreeable to this) and in such a case the bank will release the goods or documents as instructed. The document should bear the airline stamp with date of dispatch and flight number, and be signed on behalf of the airline. Combined transport bill of lading As a natural sequel to unitization of cargo it has become increasingly customary for the "unit load", especially where the cargo has been packed in a container of 20 feet in length, to be shipped on one contract of carriage from a "place of taking in charge" to a "place of delivery". This is known as a "combined" or "multi-modal" transport, and is a substitute for the traditional port-to-port bill of lading. Its name is combined bill of lading "combined transport bill of lading" is used. When such a document is required under a documentary credit it does not make sense for such credit to specify ports of loading and discharge, or to prohibit transshipment as the essentials are the places of taking in charge and delivery.
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House bill of lading These documents are issued by freight forwarders for their own services. This exhibit is the form recommended by The Institute of Freight Forwarders Limited for trading members of the Institute and bears the IFF Standard Trading Conditions. Under the Carriage of Goods by Sea Act 1971, any sea waybills, data freight receipts, house bills, forwarding agents' receipts or similar non-negotiable documents, not being bills of lading or title documents, are nonetheless, subject to the Hague Rules relating to bills of lading where the non-negotiable documents provide evidence that they relate to contracts of carriage of goods by sea. Rail consignment note With the growth of freight liner traffic the volume of goods being exported by rail through to final continental destination is increasing. Consequently, the carrier's receipt, or duplicate copy, frequently accompanies the other documents. Goods will be released to the consignee, upon application and normal proof of identify, by the rail authorities at destination or by delivery direct. Control over the goods would be arranged in the same way as for an air consignment. The rail consignment note should bear the stamp of the station of departure and the date of departure. Road waybill (CMR) The CMR (Convention Merchandises Routers) consignment note is an internationally approved and recognized non-negotiable transport document used when goods are travelling by road through or to countries which are parties to the CMR. The contracting countries are Austria, Belgium, Bulgaria, Czechoslovakia, Denmark, Finland, France (including overseas territories), Federal German Republic, German Democratic Republic, Gibraltar, Greece, Hungary, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, United Kingdom (including Northern Ireland) and Yugoslavia. As well as its function as a receipt and delivery document, the note provides written evidence that goods are being carried under the terms of the CMR.

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Bills of lading This document is the receipt given by the shipping company to the shipper for goods accepted for carriage by sea. If in negotiable form it also conveys title to the goods and the goods will only be released by the shipping company at destination against surrender of a signed original of the bill of lading. Finally, the bill of lading evidences a contract of carriage.

FUNCTIONS OF BILL OF LADING:

One of the oldest documents used in international trade is the bill of lading. Today, the bill of lading is still an important document which is used in virtually all circumstances when goods are being shipped overseas by container or conventional vessel. The functions of a bill of lading are thefollowing:

(a) A document of title this distinguishes a bill of lading from all other transport documents. Transfer of an original bill of lading also means that ownership of the goods passes to another party. This is why a bill of lading is an extremely valuable document, and must be kept securely at all times. The negotiability of a bill of lading depends on how it is completed .

(b) A contract of carriage the bill of lading is evidence of a contract of carriage between the consignor and the shipping line. One of the main conditions of the contract of carriage allows the shipping line to raise charges for the freight.

(c) A receipt for the goods the shipping line checks the goods as they are loaded and then issues the bill of lading, which is therefore a receipt for the goods. If there are no clauses on the bill of lading, it is known as a clean bill of lading. In many cases, cargo might be damaged or packing inadequate, and the bill of lading is then claused accordingly e.g. leaking drum, inadequate packing. This then means the bill of lading is a claused bill of lading and this causes a lot of problems to the shipper.

Unlike any other transport document, the bill of lading allows the exporter to have almost total
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control of the shipment even when it is thousands of miles away. The consignee cannot obtain the goods without an original bill of lading; the consignor can retain the original bill until.

There

are

many

types

of

bill

of

lading

as

follows

(a) shipped bill of lading;(b) received bill of lading;(c) through bill of lading;(d) house or groupage bill of lading;(e) clean bill of lading;(f) combined transport bill of lading;(g) negotiable bill of lading;(h) FIATA multimodal transport bill of lading.

LEGAL FRAMEWORK BILLS OF LADING

Relevant

legislation

The law which governs the use of bills of lading is the Shipping (Liability of Shipowners and Others) Act1996.Goods at sea are usually subject to the Hague-Visby Rules or the Hamburg Rules. The Hague-VisbyRules were introduced in Ireland through the Shipping (Liability of Shipowners and Others) Act 1996.

Limitation of liability Under the Hague-Visby rules for maritime transport, the limitation of liability is the greater of 666.67special drawing rights (SDR) per package or 2 SDRs per kilo.

PROCEDURES FOR BILL OF LADING

Information required There are many types of bill of lading. The main pieces of information required are:(a) the parties involved (consignor, consignee and notify party);(b) ports of loading and discharge and place of delivery;(c) name of vessel and voyage reference number;(d) description of the goods this is often just the number of a container and some brief information;

e.g. Container XXLU 4908761 said to contain 180 cartons footwear;

24

(e) volumetric measurement (m3) and gross weight in kilos;

(f) number of original bills of lading;(g) details of freight payment prepaid or forward;(h) marks.

Number of bills of lading Most shipping lines issue two or three original bills of lading and several copies. The originals and copies are all stamped accordingly. In Figure 10 the bill of lading has copy non-negotiable printed across the middle. The number of originals which exist is inserted in a box on the bill of lading.

The original bill of lading is a valuable document; the copies are used for various administrative tasks such as invoicing and customs formalities.

WHAT TO DO WITH A BILL OF LADING

Open account The shipping line issues and signs the original bills of lading when the goods are on board the vessel. When consignor and consignee are trading on open account (see , Methods of export payment), there are the following stages: (a) The original bill is sent to the exporter. Depending on the relationship with the shipping company and the terms of sale, payment of the freight and FOB charges might be demanded before the bill is released. (b) The exporter sends the original bills of lading to the consignee. Without the original bill of lading the consignee cannot receive the consignment. (c) The consignee presents the original bill of lading to the shipping company or their agent in the port of destination, and accepts delivery of the goods. If the freight is payable at destination, the consignee has to pay the freight before the goods are released. The consignee has the option of endorsing the bill of lading which means the title to the goods passes to another party.

25

Letter of credit transactions Bills of lading are an integral part of letter of credit transactions (see Finance for export), and the sequence of events is somewhat different: (a) The original bills are sent to the exporter. Depending on the relationship with the shipping company and the terms of sale, payment of the freight and FOB charges might be demanded before the bill is released. For letter of credit transactions, the box consignee often has the words to order. The box notify party can either be the importer, the freight forwarder or a bank. The exporter endorses the bill of lading.

(b) The shipping line advises the notify party of the impending arrival of the goods. (c) The exporter sends the original bills of lading to the nominated bank together with all the other documents required by the letter of credit.

(d) The opening bank transfers the bills of lading to the party nominated in the notify party box. This party endorses the bills of lading and hands it on to the importer.

(e) The importer then takes delivery of the goods upon arrival. Banks normally insist on having the full set of original bills in their possession.

TYPES OF BILLS OF LADING

Shipped bill of lading This is one of the most common forms of bill of lading . The bill, when signed, confirms that the goods are on the vessel and have been shipped on board.

Received bill of lading The received bill of lading confirms that the goods have been received for shipment. Frequently received bills of lading are issued by the shipping lines agents; the goods have not necessarily been shipped, but are required by the exporter for finance. Problems can sometimes arise with the received bill of lading in that the shipping line might become embroiled in disputes about loss or damage to the cargo before the goods are on the vessel. Equally, the shipper can become confused by the division of responsibilities between the
26

shipping lines agent and the shipping line.

Through bill of lading/combined transport bill of lading The through bill of lading is growing in popularity, and is widely used when containers are transferred from one shipping line to another or moved from the port inland. The Ocean carrier takes responsibility for the transhipment and selection of the on carrying vessel. The through bill of lading covers the complete journey, and means the shipping line can quote one freight rate to cover the whole journey. The combined transport bill of lading, similar to the through bill of lading, is widely used when more than one mode of transport is used, e.g. road and sea or rail and sea.

House bill of lading Freight forwarders frequently group several consignments for the same destination together in one container referred to as groupage or consolidation (see ,Transport and International distribution).T he shipping line issues one shipped bill of lading to the forwarder who then issues separate house bills of lading to each consignor. These bills of lading (unless a FIATA multimodal transport bill of lading) do not have the same legal force as a shipping line bill, and might be unacceptable to the bank for a letter of credit transaction.

Clean bill of lading A bill of lading which remains unclaused is a clean bill of lading. This means the shipping line accepts their full liability under the Hague-Visby Rules .

Negotiable bill of lading Most bills of lading are negotiable which means they can be endorsed and ownership of the goods then passes to another party. Bills of lading which are non-negotiable usually have the words non-negotiable prominently displayed.

FIATA multimodal transport bill of lading The FIATA bill of lading has been created to solve the problems encountered with house bills of lading. Freight forwarders who meet certain criteria belong to FIATA (International Federation
27

of Freight Forwarders Associations) and can issue FIATA bills of lading.

These bills of lading are acceptable under the ICC Rules Uniform Customs and Practice for Documentary Credits (ICC 500and have the ICC logo in the right-hand corner, see Chapter 5, Methods of export payment). The main advantage of the FIATA bill of lading is that it can be used for various combinations of transport, including road. It also allows shippers to use freight forwarders door-to-door groupage services even if the shipment is against a letter of credit.

PROBLEMS WITH BILLS OF LADING

Examples

There are hundreds of legal precedents which have framed custom and practice regarding bills of lading. All these cases have arisen when something went wrong, and the dispute ended up in the courts. The delivery of cargo without bills of lading remains the largest single cause of claims against both liner andport agents. Shippers should always ensure their customer overseas has: (a) the original bill of lading; (b) the correct bill of lading.

The alternative when a bill of lading is lost is to obtain a letter of indemnity, to which special rules attach (see(c) below). Further details of the legal minefield surrounding bills of lading are in Schmitthoff sExport Trade: The Law and Practice of International Trade Clive M Schmitthoff (Publisher: Stevens).Common problems arising with bills of lading are: (a) Stale bill of lading a stale bill of lading is a bill which arrives at the port after the goods have arrived. The delay inevitably means the cargo cannot be released, and there are demurrage charges to be paid before the goods are released. If a bill of lading is not presented within the time limit stipulated (normally 21 days after shipment), banks also regard the bill of lading as stale.

(b) Claused bill of lading when the shipping line wants to amend any of the clauses in the bill of lading, some comments are added to the document. This can occur when the goods are damaged, wet, or when the number of items does not tally with the number stated on the bill of lading. The bill of lading then becomes a claused bill of lading. A claused bill might be rejected by a bank.
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(c) Loss of bills of lading one of the commonest problems with bills of lading is their loss, often in the postal system. This can be avoided if the shipping line issues two or three originals, and one original bill is held by the shipper as an insurance policy in the event of loss. It is usual practice to send the original bills of lading under separate cover on successive days to minimise the danger of loss of these important documents in the post. Courier companies are an alternative. If an original bill of lading is irretrievably lost, the shipping line will only issue a duplicate if it is given a letter of indemnity by the consignee (or shipper) which will cover its potential liability in case anyone ever presents the original bill in the future. Most shipping lines have strict rules about releasing goods without a bill of lading. The usual option is to deliver cargo against a letter of indemnity. The indemnity means that the carrier can obtain compensation for any amounts of money which it might have to pay to the holder of the original bill of lading. Because of the potential liabilities which can arise with an indemnity there are several rules to follow;

(i) The exporter must provide written authority for the issue of a letter of indemnity. The wording of the letter and the security should also be formally agreed.

(ii) The owner of the cargo (often the exporter) must authorise the release of the cargo in writing. Unscrupulous people have obtained valuable cargoes by sending forged faxes which have led to the release of goods.

(iii) Ensure that the letter of indemnity is countersigned by a first class bank. Some people have issued forged bank indemnities - delivering valuable cargo against a rubber stamp is not advisable.

(iv) Ensure that the indemnity has an adequate time limit. The usual statutory period is six years plus one additional year as a precaution making a total of seven years.

(v) Ensure that the indemnity matches the quantity and value of the cargo. Indemnities issued might be unlimited (because the shipping line is wary of consequential loss) or for a specified
29

amount usually a multiple of the CIF value of the goods (see Chapter 2, How to price for export). When all the original bills of lading are lost, and the shipment is subject to a letter of credit, the shipping line will usually agree to the issue of another bill of lading against a bank endorsed indemnity. Most carriers insist on keeping the bank indemnity valid for ten years.

(d) Discrepancies there are errors with bills of lading which mean they do not reflect the terms of the letter of credit and so are rejected by the bank. For example: the goods might be shipped after the expiry date of the letter of credit; or (i) the wrong type of bill of lading might be used; or (ii) presentation of the bill might be late; or (iii) the bill might not give a consistent description of the goods.

Short form bills of lading One of the three functions of a bill of lading is to provide evidence of the underlying contract of carriage by sea which comes into being with the reservation of space on board a ship. The shipping company's terms are usually given in full on the reverse, but with the short form bill this is not the case. The essence of the "short form" is the complete removal from the reverse of the bill of lading of the "small print" which gives details of the contract of carriage. Article 19(b) (ii) of the Uniform Customs and Practice for Documentary Credits, defines such short form bills of lading as "bills of lading issued by shipping companies or their agents which indicate some or all of the conditions of carriage by reference to a source or document other than the bill of lading". In a number of countries, including the UK, the use is being encouraged of a short form bill of lading common to a number of different shipping companies. This is not pre-printed with the name of the shipping company, so the "name of the carrier" has to be typed in with the other data relating to the specific shipment. This type of document is known as the "common short form bill of lading". Banks wilt accept such bills of lading when presented under documentary credits unless the credit specifies otherwise.

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Bills of lading (Liner) These are issued by shipping companies in respect of goods carried on regular line vessels with scheduled runs and reserved berths at destination. Such means of transport has possible advantages over tramp vessels which do not necessarily adhere to a very strict schedule and may make unscheduled calls at various ports on the way to the ultimate destination. Shipping lines serving the same routes or destinations may form a conference, within which agreements are made over such matters as the terms and conditions of bills of lading, freight rates, and sometimes of sailing and use of berthing facilities. Non-negotiable sea waybills The processing of bills of lading is slow since they may have to pass through several hands. Therefore, these documents may not be received by the consignee before arrival of the vessel. The non-negotiable sea waybill was developed to avoid delay in handling of goods at destination, and has been adopted by a number of shipping lines as an alternative to bills of lading. It resembles the air waybill, as the goods are delivered to the named consignee without any need to hand over the waybill. Mate's receipts Rarely seen in trade circles, and rightly so, for this is merely a receipt for goods shipped abroad. Not being a document of title, it should be exchanged for the set of bills of lading by the shipper at the offices of the shipping company.

6) Financial and financing documents

The financial documents, bills of exchange and promissory notes are listed below. A short description then follows: a) Bill of exchange drawn in foreign currency and payable at sight b) Bill of exchange drawn in sterling and payable at sight c) Bill of exchange accepted payable at 30 days' sight d) Promissory note
31

e) Inspection and sampling order f) Delivery order g) Warehouse receipt h) Trust receipt. Bills of exchange The legal definition (Bills of Exchange Act 1882, Section 3) of a bill of exchange is an unconditional order in writing, addressed by one person (drawer) to another (drawee), signed by the person giving it (drawer), requiring the person to whom it is addressed (drawee) to pay on demand, or at a fixed or determinable future time, a certain sum in money to, or to the order of, a specified person (payee), or to bearer. The words in brackets do not appear in the Act, but have been inserted for clarity. Bills of exchange are widely used in international trade, partly since they are convenient vehicles for collecting payment from traders abroad. Finance may be arranged in a number of ways using bills of exchange, both for the buyer (drawee) and for the seller (drawer). Bills of exchange which have been dishonoured may be used in their own right as the basis for legal action. After payment, the discharged bill of exchange is retained by the drawee as evidence of payment, in other words it becomes a receipt for the money. It is the practice in some European countries for banks to avail bills of exchange by adding the bank's name to the bill; this raises the status of the document as the availing bank has guaranteed payment at maturity. Promissory notes Whilst not bills of exchange, these are largely subject to the same rules and are used for a somewhat similar purpose, the settlement of indebtedness. Instead of being drawn like a bill of exchange by the person expecting to be paid, they are made by the person who owes the money, in favour of the beneficiary. A simple way of looking at a promissory note is to consider it an IOU. When due, it is presented for payment by the holder, who may be the payee or someone to whom the promissory note has been negotiated. Inspection and sampling order
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When banks are protecting consignment stocks for foreign exporters to, say, the UK, or if they are lending to a UK importer against a pledge of goods, the goods are usually warehoused in the bank's name pending sale to buyers. Prospective buyers frequently need to inspect and sometimes sample the goods before buying them, and it is necessary to be able to authorise a warehouse to permit this to take place. Assuming that the overseas seller or UK importer authorises sampling and/or inspection, a bank may issue such an order on a warehouse and hand it to the prospective buyer.

Delivery order This is an order on a warehouse instructing it to deliver goods to the bearer or a party named in the order. Banks issue such orders when goods stored in their name are to be delivered to a buyer or are to be reshipped and have to leave a warehouse. Warehouse receipt This is a receipt for goods issued by a warehouse. The document is not negotiable and no rights in the goods can be transferred under it. Delivery orders may be issued against the receipt for the goods which relate to it. Trust receipt When a bank wishes to release documents of title, or the goods themselves, to a customer of undoubted integrity, whilst still retaining its security rights in those goods and/or the proceeds of their sale, it may obtain a completed trust receipt from its customer to whom a loan has been made. This is an acknowledgement of the pledge of the goods to the bank and an undertaking of the customer to take the documents as trustees for the bank and to: a) arrange for goods to be warehoused in the bank's name, or b) arrange for processing of the goods and their return to the warehouse in the bank's name, or

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c) arrange for sale of the goods and to pay all sale proceeds without deduction to the bank immediately on receipt or within a short, stated period of time.

7) Export financing There are various methods used in the international sale of goods to
pay the purchase price. These are as follows: Drafts covering exports These may be on sight basis for immediate payment or drawn to be accepted for payment 30, 60 or 90 days after sight. Drafts directed to a bank for collection are accompanied by shipping documents consisting of a full set of bills of lading in negotiable form, airway bills of lading, or parcel post receipt, together with insurance certificates, commercial invoices, consular invoices and any other documents that may be required in the country of destination. Sales against cost advances These are used where credit is doubtful, exchange restrictions difficult, or unusual delays may be accepted. They are very little used today. Sales on a consignment basis No tangible obligation is created by consignment sales. In countries with free port or free trade zones, it can be arranged to have consigned merchandise placed under bonded warehouse control in the name of a foreign bank. Sales can then be arranged by the selling agent and arrangements made to release partial lots out of the consigned stock against regular payment terms. The merchandise is not cleared through customs until after the sale has been completed. The two most common methods are payment under a collection agreement and payment under a letter of credit, also called a documentary credit. In both cases, banks are used as intermediaries and the shipping documents are used as collateral security for the banks. In the case of a collection agreement the bank in the buyer's country is squarely responsible for effecting payment, whereas in the case of a letter of credit this responsibility falls on the bank in the country of the seller.
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Usually, in international sales, the seller draws a bill of exchange either on the buyer or on a bank. This bill is usually payable a certain number of days after sight, e.g. 90 days after sight.

8) COLLECTION ARRANGEMENTS
Where a collection arrangement is organised the seller hands the shipping documents including the bill of lading to his own bank, the remitting bank, which passes them on to a bank at the buyer's place, the collecting bank. The collecting bank then presents the bill of exchange to the buyer and requests him to pay or to accept the bill. When the buyer has complied, the collecting bank releases the shipping documents to the buyer, who is then able to receive the original bill of lading that enables him to obtain the goods from the carrier on arrival of the ship. The collecting bank is liable to the seller if it releases the shipping documents to the buyer without having received finance from him.

9) LETTERS OF CREDIT
These are of particular importance. A letter of credit arrangement will be agreed upon in the contract of sale. The buyer instructs a bank in his own country (the issuing bank) to open a credit with a bank in the seller's country (the advising bank) in favour of the seller, specifying the documents which the seller has to deliver to the bank for him to receive payment. If the correct documents are tendered by the seller during the currency of the letter of credit arrangement, the advising bank pays him the purchase price or accepts his bill of exchange drawn on it, or negotiates his bill of exchange, which is drawn on the buyer. Whichever method used is pre-arranged between the seller and the buyer. Types of letters of credit Letters of credit can be revocable or irrevocable, confirmed or unconfirmed. Whether the credit is revocable or irrevocable depends on the commitment of the issuing bank. Whether it is confirmed or unconfirmed depends on the commitment of the advising bank. These commitments are undertaken to the seller, who is the beneficiary under the credit.

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There are four main types of letters of credit, namely, the revocable and unconfirmed letter of credit, the irrevocable and unconfirmed letter of credit, the irrevocable and confirmed letter of credit, and the transferable letter of credit. The revocable and unconfirmed letter of credit: Neither the issuing nor the advising bank is committed to the seller and as such the credit can be revoked at any time. This type of credit affords little security to the seller that he will receive the purchase price through a bank.

The irrevocable and unconfirmed letter of credit: In this case, the authority that the buyer gives to the issuing bank is not revocable and the issuing bank is obliged to pay the seller provided that he has tendered the correct document before the expiry of the credit. If the issuing bank defaults, the seller can sue them in the country where the bank has a seat. In some circumstances, the seller can sue the issuing bank in his own country if there is a branch office. From the point of view of the seller this type of letter of credit is a more valuable method of payment than a revocable and unconfirmed letter of credit. The irrevocable and confirmed letter of credit: In this type of credit, the advising bank adds its own confirmation of the credit to the seller. Thus, the seller has the certainty that a bank in his own country will provide him the finance if the correct documents are tendered within the time stipulated. The confirmation constitutes a conditional debt of the banker, i.e. a debt subject to the condition precedent that the seller tenders the specified documents. A confirmed credit that has been notified cannot be cancelled by the bank on the buyer's instructions. See the following case: Case 12.9 Equitable Trust Co. Of New York vs Dawson Partners Ltd. (1926) Lord Summer said "There is no room for documents which are almost the same or which will do just as well". In this case, Dawson Partners Ltd. bought a quantity of vanilla beans from a seller
36

in Batavia (Jakarta). They opened a credit in his favour through Equitable Trust Co, instructing them to provide finance on presentation of certain documents, including a certificate of experts. Equitable Trust Co. paid on tender of a certificate by a single expert The seller was fraudulent and had shipped mainly rubbish but the expert who inspected the cargo failed to notice it. It was held that, Equitable Trust Co, had paid contrary to Dawson Partners' instructions and could not debit there. Transferable: The parties to a contract of sale may agree that the credit is transferable. The seller can use such credit to finance the supply transaction. The buyer opens the credit in favour of the seller and the seller (who in the supply transaction is the buyer) transfers the same credit to the supplier (who in the supply transaction is the seller). This type of credit is used when a person buys goods for immediate resale and wishes to use the proceeds of resale to pay the original seller. The doctrine of strict compliance Under this doctrine, the seller, to obtain payment, must tender documents which strictly comply with specifications by the buyer, otherwise the correspondent bank will refuse to honour the credit. The banks which operate the documentary credit act as agents for the buyer, who is the principal, and as such they should not pay against documents that are different from those specified. Lord Summer emphasised the importance of this requirement in Equitable Trust Co. of New York vs Dawson Partners Ltd. (1926). Fraud in letter of credit transactions Letters of credit have been described by an English judge as "the life-blood of commerce" and as such the defence of the bank that it will not honour the credit because fraud has occurred is accepted rarely and with reluctance. Such a fraud may occur if the shipment of the goods is fraudulent or if the bills of lading tendered under the credit are falsified or forged. Where there is a mere suspicion by the bank that fraud has occurred, refusal to honour the credit is not accepted. Such refusal will only be accepted if it is proved to the satisfaction of the bank that the

37

documents tendered are fraudulent and the seller is a party to the fraud or knew of it. The following case sets this out: Case 12.10 United City Merchants (Investments) Ltd. vs Royal Bank Of Canada (1983). In United City Merchants (Investments) Ltd. vs Royal Bank of Canada (1983), Glass Fibres and Equipment Ltd., a British company, sold glass fibre forming plant to a Peruvian company, Payment was arranged under an irrevocable letter of credit issued by a Peruvian bank and confirmed by the Royal Bank of Canada at its London branch. Shipment was to be made from London on or before December 15th, 1&76, while v the Credit was open until December 31st, 1976, shipment of the installation was made on board the American Accord on December 16th, i. e., out of shipping time. The bills of lading were altered and backdated to December 15th. This alteration was made fraudulently by an employee of the loading agents without the knowledge of the sellers of the transfers of the credit. It was held that, the confirming bank (The Royal Bank of Canada) should have honoured the credit of the document.

CONFLICT OF LAW
Where a sale of goods transaction is made on the home market, little difficulty arises as problems that crop up are easily resolved by looking at the rules in The Sale of Goods Act (where the parties have not agreed otherwise). However, international sales pose the problem of conflict of law. The laws of the seller's country and those of the buyer's country may be different in some areas and the question arises as to where to sue and which law to apply. In the absence of treaty provisions, rules of Private International Law are used to resolve these problems. It is normally advisable to sue in the country where the defaulting party resides or is incorporated and has an office and property, in the case of a company. This is so because the defendant can be more easily compelled to go to court and answer the case than when he is out of the jurisdiction of the court. On the type of law to apply, the proper law of the contract, i.e., the law of the contract country having the closest connection with the contract is applied. Several factors are weighed in order to arrive at a conclusion as to which is the proper law of the

38

contract, viz: the lex focii lex loci solutions, lex situs, lex loci contracts, and the law of the country whose language, currency or flag (flying on the ship carrying the goods) is used. Lex Focii

This means the law of the country in which the case is tried. Lex Locii Solutions

This means the law of the country where the contract is performed. Lex Situs

This means the law of the place where the property is situated. Lex Loci Contracts

This means the law of the country where the contract is made. Various treaties have been signed in order to unify the law relating to international sales, thereby avoiding the difficult task of weighing various factors in deciding on what law to apply. The two Hague conventions signed in 1964 are perhaps the most important of such international agreements. These are the Uniform Law on the formation of contracts for the International Sale of Goods, and the Uniform Law on the International Sale of Goods. The uniform law on the formation of contracts for the international sale of goods The provisions of the convention relate to offer and acceptance. An offer is generally revocable until the offeree has despatched his acceptance. However, under the convention an offer is not revocable if it either states a fixed time for acceptance, or that it is irrevocable. This is different from the common law position where such a standing offer would be revocable if not supported by consideration. At common law, an acceptance which varies the terms of the offer is not valid. However, under the convention, the acceptance will only be invalid if the qualification consists of an additional or
39

different term which materially alter the terms of the offer unless the offeror promptly objects to the discrepancy. The convention rules also deal with the case of late acceptances which will be good unless the offeror notifies to the contrary. The uniform law on the international sale of goods This agreement consists of provisions dealing with the obligations of the seller and the buyer as to the time and place of delivery, the insurance and carriage of goods, the conformity of goods with the contract and the giving of goods title. Other rules deal with the passing of risk and the buyer's obligations as to payment and the taking delivery of the goods. These rules are in several respects different from the rules under the Sale of Goods Act. In particular, the uniform laws do not recognise the concept of the "condition" which exists under common law for the breach of which the buyer can reject the goods even though the breach causes him no loss. The uniform laws instead introduce a concept of "fundamental breach". Thus, in order to determine whether the buyer has a right to reject, one must examine the breach that has occurred together with its consequences. Rejection will be possible only if the breach is "fundamental", i.e. if a reasonable person in the position of the buyer "would not have entered into the contract if he had foreseen the breach and its effects". The two conventions have been given statutory effect in UK by the Uniform Law on International Sales Act 1967. Malawi, for example, has not passed any enactment to give legal recognition to the Hague conventions and as such the rules under it do not have legal effect here unless a seller and buyer expressly agree that these rules shall govern their contract. On April 11th 1980, another important convention - The United Nations Convention on contracts for the International Sale of Goods - was signed in Vienna. The intention of the convention was to supersede the Hague Conventions. The contract of international sale of goods reflects a complexity which is absent in the home market sale. This is so because this contract is entwined with other contracts, specifically the contract of carriage of goods, the contract of insurance and the letter of credit arrangement.

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These different transactions are often looked at as one entire activity unless something goes wrong somewhere, when the fault is isolated, thereby requiring separate analysis of the contract in question. Trade terms which have evolved over the years from the custom of merchants are used. These serve to outline the rights and duties of the seller and buyer. The most common of such trade terms are the FOB and CIF clauses. Although the meaning of these trade terms may vary slightly from one country to another, uniformity is obtained when the parties adopt the International Chamber of Commerce meaning of trade terms. The international sale also involves another complexity; the problem of jurisdiction and choice of law where rules as to obligations of the seller and the buyer are different in their respective countries. Although Private International Law rules help in dealing with this problem, there is need for the signing of treaties to try and provide ready rules on international sales which are uniform. This happened at the Hague in 1964. The United Nations Commission on International Trade Law is also busy promoting the convention of 1980. However, these efforts are wasted if countries do not pass national laws to give effect to the conventions as is the position in, for example, Malawi, with regard to the Hague conventions.

COMMON IMPORT/EXPORT DOCUMENTS( with detail explanation)

There are many documents involved in international trade, such as commercial documents, financial documents, transport documents, insurance documents and other international trade related documents. In processing the export consignment, documentation may be executed in up to four contracts: the export sales contract, the contract of carriage, the contract of finance and the contract of cargo insurance. It is therefore important to understand the role of each document and their requirements in the international trade.

A. Commercial Documents Document Quotation Functions Prepared by

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

Sales Contract

An agreement between the buyer and the seller Exporter

and
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stipulating every details of the transaction. It is a Importer legally binding document. It is therefore advisable to seek legal advice before signing the contract. Pro Forma Invoice An invoice provided by a supplier prior to the shipment Exporter of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and importation specifications (weight, size and similar characteristics). This is not issued for demanding payment but may be used when applying for an import license/permit or arranging foreign currency or other funding purposes. Commercial Invoice It is a formal demand note for payment issued by the Exporter exporter to the importer for goods sold under a sales contract. It should give details of the goods sold, payment terms and trade terms. It is also used for the customs clearance of goods and sometimes for foreign exchange purpose by the importer. Packing List A list with detailed packing information of the goods Exporter shipped. Inspection Certificate A report issued by an independent surveyor (inspection Inspection company) or the exporter on the specifications of the Company shipment, including quality, quantity, and/or price, etc; Exporter required by certain buyer and countries. Insurance Certificate Policy/ An insurance policy is an insurance document Insurer evidencing insurance has been taken out on the goods Insurance shipped, and it gives full details of the insurance or coverage. An insurance certificate certifies that the Broker shipment has been insured under a given open policy and is to cover loss of or damage to the cargo while in transit. or Agent or

Insurance

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Product Certificate

Testing A certificate to certify the products are conformed to a Accredited certain international/national technical standard, such Laboratories as product quality, safety and specifications, etc.

Health Certificate

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

Phytosanitary Certificate

Frequently an international requirement that any Exporter consignment of plants or planting materials importing into a country shall be accompanied by a Phytosanitary Certificate issued by the exporting country stating that the consignment is found substantially free from diseases and pests and conforms with the current phytosanitary regulations of the importing country. Application of the certificate in Hong Kong should be made to the Agriculture and Fisheries Department.

Fumigation Certificate

A pest control certificate issued to certify that the Exporter concerned products have been undergone the Inspection

or

quarantine and pre-shipment fumigation by the Company approved fumigation service providers. It is mainly required by the US, Canada, Australia, New Zealand and UK's customs on solid wood packing material from Hong Kong and the Chinese Mainland. ATA Carnet An international customs document used to obtain a Exporter duty-free temporary admission for goods such as exhibits for international trade fairs, samples and professional equipment, into the countries that are signatories to the ATA Convention.

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Consular Invoice

A document required by some foreign countries, Exporter showing shipment information such as consignor, consignee, and value description, etc. Certified by a consular official of the importing country stationed in the foreign country, it is used by the country's customs officials to verify the value, quantity and nature of the shipment.

B. Transport Documents

Document Shipping S/O

Functions

Prepared by /

Order A document to give details of the cargo and the shipper's Shipper requirements. It is the basic document for preparing other Transport transport documents such as bill of lading, air waybill, Companies etc.

Dock Receipt D/R A receipt to confirm the receipt of cargo on Shipping or Mate's Receipt quay/warehouse pending shipment. The dock receipt is Company used as documentation to prepare a bill of lading. It has no legal role regarding processing financial settlement. Bills of Lading ( An evidence of contract between the shipper of the goods Shipping B/L) and the carrier. The customer usually needs the original Company as proof of ownership to take possession of the goods. There are two types: a STRAIGHT bill of lading is nonnegotiable and a negotiable or shipper's ORDER bill of lading (also a title document) which can be bought, sold or traded while goods are in transit and is used for many types of financing transactions. House Lading (Groupage) Bill of A bill of lading issued by a forwarder and, in many Forwarder cases, not a title document. Shippers choosing to use a house bill of lading, should clarify with the bank whether

44

it is acceptable for letter of credit purpose before the credit is opened. Advantages include less packing, lower insurance premiums, quicker transit, less risk of damage and lower rates than cargo as an individual parcel / consignment. Sea Waybill A receipt for cargo which incorporates the contract of Shipping carriage between the shipper and the carrier but is non- Company negotiable and is therefore not a title document. Air (AWB) Waybill A kind of waybill used for the carriage of goods by air. Airline 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. House Air An air consignment note issued by an air freight agent to Forwarding provide the cargo description and records. Again, it is not Agent a title document. Shipping Guarantee Usually a pre-printed form provided by a shipping Importer's Bank company or the bank, given by an importer's bank to the / Shipping /

Waybill (HAWB)

shipping company to replace the original transport Company document. The consignee may then in advance take Consignee delivery of goods against a shipping guarantee without producing the original bill of lading. The consignee and the importer bank will be responsible for any loss or charges occurred to the shipping company if fault is found in the collection. It is usually used with full margin or trust receipt to protect the bank's control to the goods. Packing (sometimes packing note) List A list providing information needed for transportation Shipper as purpose, such as details of invoice, buyer, consignee, country of origin, vessel/flight date, port/airport of loading, port/airport of discharge, place of delivery, shipping marks / container number, weight / volume of

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merchandise and the fullest details of the goods, including packing information.

C. Financial Documents

Document Documentary Credit D/C

Functions

Prepared by Issuing

A bank instrument began (issuing or opening bank), at The

the request of the buyer, evidencing the bank's Bank upon an undertaking to the seller to pay a certain sum of money application provided that specific requirements set out in the D/C are made satisfied. by the

Importer /

Standby Credit

An arrangement between customer and his bank by Exporter which the customer may enjoy the convenience of Issuing Bank cashing cheques, up to a value. Or a credit set up between the exporter and the importer guaranteeing the exporter will pay the importer a certain amount of money if the contract is not fulfilled. It is also known as performance bond. This is usually found in large transactions, such as crude oil, fertilizers, fishmeal, sugar, urea, etc.

Collection Instruction

An instruction given by an exporter to its banker, which Exporter empowers the bank to collect the payment subject to the contract terms on behalf of the exporter.

Bill of Exchange An unconditional written order, in which the importer Exporter (B/E) or Draft addressed to and required by the exporter to pay on demand or at a future date a certain amount of money to the order of a person or bearer. Trust (T/R) Receipt A document to release a merchandise by a bank to a Importer buyer (the bank still retains title to the merchandise), the buyer, who obtains the goods for processing is obligated

46

to maintain the goods distinct from the remainder of his/her assets and to hold them ready for repossession by the bank. Promissory Note A financial instrument that is negotiable evidencing the Importer obligations of the foreign buyer to pay to the bearer.

D. Government Documents

Document Certificate Origin (CO)

Functions

Prepared by and

of A certificate to certify the place of manufacture, the Trade nature/quantity/value of the goods. Industry

Department and five Chambers of Commerce 1 Certificate Origin Generalized Systems Preferences (GSP) Form A (or as Form A) of A C.O. to support the claim for preferential tariff entry (a See Above reduced or zero rate) of the exporting country's products into the GSP donors under the GSP they operate. In of general, a Form A is issued only when the goods concerned have met both the origin rules of the preference receiving country as well as the origin criteria of the respective donor country's GSP. Hong Kong is now a beneficiary under the GSP schemes operated by Canada and Norway, while China is beneficiary to countries like Australia, Canada, Czech Republic, European Union, Japan, Poland, Russia, Slovakia. Import / Export A statement made to the Director of Customs at port of Exporter/ Declaration entry/exit, declaring full particulars of the shipment, eg. Importer the nature and the destination/exporting country of the ship's cargo. Its primary use is for compiling trade statistics.

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Import / Export A document issued by a relevant government department Trade Licence authorising the imports and exports of certain controlled Industry goods. Department, Customs Excise

and

&

Department, etc International Import Certificate (IIC) A statement issued by the government of country of Trade destination, certifying the imported strategic goods will Industry be disposed of in the designated country. In Hong Kong, Department it is issued only to meet an exporting country's requirement. Delivery Verification Certificate (DVC) A statement issued by the government of country of Trade destination, certifying a specific strategic commodity has Industry been arrived in the designated country. In Hong Kong, it Department is issued only to meet an exporting country's and and

requirement. Landing Certificate A document issued by the government of country of Census destination, certifying a specific commodity has been Statistics arrived in the designated country. In Hong Kong, it is Department issued by the Census and Statistics Department. Application requirements include letter stating the reason for the application, import declaration & receipt; bill of lading, sea waybill & land manifest; supplier's invoice; and packing list (if any). A document specified by the customs authorities of the Exporter Customs Invoice importing countries stating the selling price, costs for freight, insurance, packing and payment terms, etc, for the purpose of determining the customs value. and

48

Types of invoice

The most important form which the exporter has to prepare is the invoice; an invoice must accompany every shipment even if the goods are being supplied free of charge. The invoice is the basic document used in export, and every other document draws upon the information that appears on the invoice. The purpose is to confirm to the purchaser the terms of the transaction. There are several different types of invoice: (a) Commercial invoice (b) proforma invoice (c) Commercial invoice with declaration (d) Certified invoice (e) Legalized invoice (f)Consular invoice.

It is advisable to print out invoices rather than completing them by hand. This is not a legal requirement, but customs delays are less likely if the invoices are easily read. There are several software packages available to produce invoices and other export documentation. Many countries insist on invoices being submitted in the language of the country of destination. Even when this is not a stipulation, it is good practice, and will help the goods through customs overseas morequickly.

a) Commercial invoice

The most critical document in the export process, the commercial invoice links the contract of sale between the buyer and seller and gives details of the goods being purchased. It is issued by the exporter. An example of a commercial invoice is shown in Figure 1.
49

The information which should appear on an invoice is listed below; .(a) Full name and address of the consignor and consignee. If available, include the telephone number of the consignee. (b) A full description of the goods. This should include: (i) the number of pieces; (ii) the dimensions of each parcel; (iii) the total weight of all items; (iv) a full and accurate description of the goods. This is essential for both customs and security procedures. Many companies tend to describe their goods vaguely (for example machinery parts) and these shipments are more likely to be delayed than those accurately described. Hence, it is recommended to give as much information as possible of the goods being shipped, for example; (c) The total number of items in each of the packages being dispatched. (d) The tariff number of the item if this is available. (e) The total value of the goods. Even for samples and free of charge goods. (f) The reason for export: there should be a statement explaining whether the goods are being sold, are samples or are being sent for repair or processing. (g) The country of origin: this is important to ensure rates of duty are calculated correctly or imported duty free as the case may be.

B) Proforma invoice Proforma invoices are prepared by the exporter and may be needed by the importer for quotation purposes, to draw up a letter of credit or to apply for the foreign exchange to pay for the goods. This applies to markets with exchange controls, particularly in Africa and South America. The invoice is sent in advance of the goods, but does not differ from a standard commercial invoice.

C) Commercial invoice with declaration Certain countries may require a specific declaration to be included on the invoice in order to comply with certain import regulations in the country of destination.

D) Certified invoice Some countries require certified invoices, particularly when goods are being shipped against letter of credit (see , Methods of export payment). These are invoices which are certified by a Chamber of
50

Commerce before goods are despatched. Exporters present the invoice to the IEA or a Chamber of Commerce, and they then stamp the document. The exporter lodges authorised signatures with the IEA or the local chambers who verify the signature before stamping the document.

E) Legalised invoice Occasionally, customs in the Middle East, require invoices to be both certified and legalised. After certification, invoices have to be presented to the embassy of the destination country for legalisation. This involves presentation of the certified invoices to the embassy who then attach their stamp to the documents. Points to remember when presenting legalised invoices are: (a) Allow sufficient time for presentation as goods should not be despatched before the invoices are legalised. Legalisation can take between five and seven working days depending on the embassy concerned, and whether or not there is an embassy in Dublin.

F) Consular invoice These are particularly common in South America. The details of the invoice are transferred onto a standard form prepared by the country of destination. The precise format of a consular invoice depends on the country of destination. All details and supporting paperwork should be submitted to the countrys commercial section prior to the despatch of the goods. (In some cases, the exporters invoice is stamped and signed by the Consul of the importing county.) It is particularly important to: (a) allow sufficient time for the procedure to be completed usually several days; (b) make an allowance in the quotation for consular fees which are often based on the value of the consignment. A consular invoice is usually needed in addition to a normal commercial invoice.

G) Signed original invoices Signed original invoices are occasionally sought by foreign countries. This means that each individual invoice has to be signed; even if the invoice is a photocopy, it must still have an individual original signature. As most printed invoices are in black ink, it is advisable to use blue ink for signing when an original signature is required.

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ORIGIN CERTIFICATES

Purpose and types In many cases, exporters have to obtain an origin certificate to accompany the invoice. The purpose of these certificates is:(a) to confirm the origin of the goods (also known as non-preferential origin). The certificates used are called a Certificate of Origin or an Arab-Irish Certificate of Origin; (b) to allow the consignment to benefit from a reduced or zero rate of duty in the country of import (also known as preferential origin). Here, EUR1, EUR2, and ATR certificates are used. An origin certificate can either be: a prepared and signed statement which appears on an invoice; or a separate form which has to be authorised by Customs & Excise or a Chamber of Commerce and/or the embassy of the country of destination.

European

Community

Certificate

of

Origin

It may be a requirement of the export contract that the goods have to be manufactured in a particular country. In order to prove the country of manufacture, a certificate or origin must accompany the goods. The certificate is issued by the Chambers of Commerce and can either be certified by the chamber or self-certified.

Only when sufficient, economically justified processing has been carried out in Ireland, can the origin of the goods be declared as Irish on the Certificate of Origin.

The main boxes requiring completion are:(a) Box 1 - consignor(b) Box 2 - consignee(c) Box 3 country of origin(d) Box 6 - item number, marks, numbers and kind of packages, description of goods

EUR1 and ATR movement certificates EUR1 movement certificate

The purpose of the EUR form is to allow goods to enter the country of destination at a reduced or zero
52

rate of duty. The introduction of the EUR form took place with the creation of the European Free Trade Association (EFTA) over 30 years ago. It is now used for the remaining few members of EFTA and those countries with whom the EU has a trade agreement. EUR forms are also frequently referred to as movement certificates.

Exporters can only use EUR certificates in the following circumstances: (a) When a preferential rate of duty is given by the importing country on products exported; (b) When the rules of origin are complied with. This means that very strict rules governing movement

certificates must be satisfied.The preferential origin rules are complex and vary according to the product and the country where it is being exported to. For example, the manufacturer of a mobile phone who is exporting to Poland can only issue an EUR1 Certificate if all the non-EU material (excluding labour, heat, profit etc.) used to make the product, does not exceed the value of the EU material used AND the value of the non-EU material used does not exceed 40 per cent of the ex-works price. Types of EUR form

There are two types of EUR form EUR1 (form C1299) and EUR2 (C1297) with some common characteristics:(a) The EUR1 form is a four-part document and the EUR2 a one-part document.(b) Each has a unique number.(c) Chambers of Commerce provide a service of checking the completed EUR1 before it is presented to

Customs at the point of export. Once checked, and, if satisfied, the Chamber representative signs the EUR form.

(d) Customs stamp EUR1 forms at the point of export. Usually the completed form is presented at the port or airport of departure of the goods, but if it is more practical to have the EUR 1 form stamped at another office of departure, this is quite acceptable. Completed forms can also be sent in advance to the port of departure for stamping, and then returned to the shipper. This last course can save time upon departure, but also requires pre-planning.

(e) EUR1 forms are valid for four months to all countries except Ceuta, Croatia, Cyprus, Macedonia, Melilla and Malta where they are valid for five months.
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Figure Figure 5

Eur1 Application Form

and for

Application Movement

Form Certificate

ATR1

declaration

Exporters with customers in Turkey require on ATR1 declaration instead of an EUR declaration. An ATR1form is almost identical to an EUR1 form, and works in much the same way.

Joint

Arab-Irish

Certificate

Of

Origin

These certificates (see Figure 6) are often required for goods that are shipped to the Middle East. The document is completed by the exporter and certified by the Joint Arab-Irish Chamber of Commerce, who will also undertake legalisation with the relevant embassy, if required. Exporters who are members of the Joint Arab-Irish Chamber of Commerce can go direct to the Chamber for certification and legalisation. If not, they request their local Chamber of Commerce to attend to the formalities. 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 country.

Features of a certificate of conformity are :(a) The certificate has to be obtained prior to shipment.(b) Many countries appoint an exclusive organization worldwide to issue certificates of conformity.

These organizations 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.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
54

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.

Other points

With the creation of the Single Export Market (SEM) and the abolition of much paperwork, many shippers have dispensed with the SSN this creates problems for everyone else involved with the shipment as there is still a requirement for the transmission of fundamental information about .

A SSN which is endorsed with a valid Export Consignment Identifier can be used as a declaration for Simplified Clearance Procedure an export declaration for goods destined for non-EU markets .

The CMR form

The full English translation of CMR is Convention on the Contract for the International Carriage of Goodsby Road. The CMR is widely used for road freight for traffic within Europe.

Most countries within Europe have accepted the CMR Convention which regulates the responsibilities and potential liabilities of the carrier when engaged in international transport for hire and reward. Although not a signatory, Ireland has acceded to the CMR Convention, which is incorporated into Irish law by the International Carriage of Goods by Road Act 1990. Traffic between Ireland and the UK,
55

however, has not been included, although hauliers can agree to incorporate the CMR terms voluntarily into their conditions of carriage. Many hauliers rely on RHA (Road Hauliers Association) terms for this traffic. The main difference revolves around the limits of the carriers liability for loss or damage to goods.

Completion of the CMR

The haulier completes the CMR and has it available for signature by the sender when the goods are collected. There are four copies of the CMR each identified by a different colour: first copy for sender red; second copy for consignee blue; third copy for carrier green; fourth copy for administration black. In most cases, the carrier completes the CMR note (see Figure 10), but most of the information relates to the consignor, so there is a good case to be made for the consignor to fill out the CMR. The consignor is responsible for the accuracy of the CMR. Upon unloading of the goods, the consignee is asked to sign the CMR. There is room on the CMR for the consignor or consignee to add any information which might assist the haulier.

TYPES OF BILLS
SEA WAYBILL Functions The sea waybill is becoming more widely used as an alternative to the bill of lading. The functions of a sea waybill are:(a) receipt for the goods;(b) contract of carriage.

Advantages A sea waybill is not a document of title, unlike a bill of lading. The advantages of a sea waybill are: (a) It is non-negotiable, and the consignee does not need a copy to obtain delivery of the goods. This is an advantage for short sea journeys when there might not be enough time to process a bill of lading, and when dealing with credit-worthy and long-standing customers. (b) It is a contract between shipper and shipping line without the involvement of the consignee. (c) It is
56

ideal for through movement of cargo from door-to-door.(d) It can be easily used by shippers and freight forwarders alike.

AIR WAYBILL

Types The air waybill is used for all air freight. There are two main types of air waybill: (a) Air waybill often abbreviated to MAWB. These are produced by airlines, and each waybill has 11 digits in three parts: (i) The first three digits are the airline prefix. (ii) The next seven digits are the serial number of the air waybill. (iii) The last digit is the check digit. The purpose of the check digit is to minimise computer error. The last figure of every air waybill is between 1 and 6 - never7, 8 or 9. (b) House air waybill often abbreviated to HAWB. These are produced by freight forwarders; they are used in much the same way as a house bill of lading .The airline produces a master air waybill which has freight forwarders as consignor and consignee. The freight forwarder then issues individual house air waybills for every shipment.

Functions of an Air Waybill The air waybill has several functions:(a) a legally binding contract of carriage between the shipper and the airline;(b) a guide to airline staff informing them about the shipment and including special handling instructions;(c) a certificate of insurance;(d) a method of invoicing for freight and other charges. The air waybill must consist of three original copies with a minimum of six copies and a maximum of 11additional copies. The distribution of the three original air waybills is as follows:(a) Green copy marked for the issuing carrier and retained by the airline. It serves as an accounting document for the issuing carrier and being signed by the shipper is proof of the contract of carriage.

(b) Pink or red copy marked for consignee. This accompanies the goods, and is signed by the consignee upon delivery. (c) Blue - marked for shipper. Given to the shipper it serves as a proof of receipt of the goods for shipment and documentary evidence of the contract of carriage. At the top of the air waybill are the words non-negotiable (or not negotiable). The air waybill is nonnegotiable, and cannot be endorsed over to another party. This is a major difference between an
57

airwaybill and a bill of lading.

How to use an air waybill The main pieces of information required for an air waybill are: (a) shippers and consignees name and address; (b) issuing carriers agent and agents IATA code; (c) airport of departure and airport of destination; (d) Handling of information box. In this box, details of special instructions are provided on dangerous goods information, live animals information and special handling instructions on the temperature requirements of the cargo.

(e) Declared value of the goods. This is divided into three:

(i) Value for carriage this can be any amount specified by the shipper or no value might be declared. The amount in this box affects the airlines responsibility in case of loss or damage to the consignment it can also affect the freight rate.

(ii) Value for Customs this is the value declared by the exporter for customs. (iii) Value for insurance this is the amount of insurance the shipper might insure the cargo for through the airline. Most exporters prefer to take out insurance through their own nominated broker (see Transit insurance). (f) Description of the goods this includes the gross weight (in kilos or lbs), the number of pieces, the nature of the goods, the dimensions and the chargeable weight. The chargeable weight is the number of kilos on which the freight is being levied. For volumetric shipments, the chargeable weight is always larger than the actual weight of the shipment . (g) Details of charges. These appear in the lower left side of the air waybill, and charges are either prepaid or collect. Prepaid means the exporter pays, and charges collect means the consignee pays. (h) The shipper and the issuing carrier sign separate boxes of the air waybill which establishes a contract of carriage between the two parties.

The importance of the air waybill

Points to be noted:(a) The air waybill is used throughout the air journey, and even if the consignment is passed from one airline to another, the same waybill continues to be
58

used.

(b) The language of the air waybill is the language of the country of origin.(c) Erasures are not allowed, but alterations can be made as long as they are authenticated by the consignors signature or initials. (d) The number of the air waybill is used to trace consignments throughout their journey; without the number of the air waybill, no information on a consignment is available.

COURIER WAYBILL

Function The couriers and integrated operators are an important part of international transport, and carry freightas well as their traditional market of documents. This group relies on a different and shorter form of airwaybill which exporters complete prior to shipment.

The

importance

of

the

courier

waybill

Points to be noted:(a) The waybill covers all methods of transport and worldwide destinations.(b) The shipper has a number of options which cover service requirements. In Figure 16, the shipper can choose between express documents, express parcels or express freight. There are also questions about insurance. (c) Many of these companies do not recognise Incoterms , but rather just ask the shipper to choose between sender pays or receiver pays. No interim transfer of responsibility is available. (d) The waybill is used as the basis for customs clearance procedures both in Ireland and in the country of destination.

(e) The conditions of carriage are printed on the back of the waybill. Neither the conditions nor the limitation of liability are standardised, and each integrated operator will establish its own conditions. Shippers should satisfy themselves that the conditions of carriage are acceptable before handing a shipment to a courier or an integrated operator.

Main features of a courier waybill

59

The

main

information

required

to

complete

courier

waybill

is:

From and to - shippers and consignees full name and address including a telephone number. Many couriers refuse goods consigned to PO box numbers. Single Administrative Document

Use

of

the

SAD

The single administrative document (SAD) is used for exports to countries outside the European Union. It is used to complete the export, transit and import requirements of customs. By virtue of the number of copies and the different functions of each, the SAD is a versatile document. A major use of the SAD by many Irish exporters is for proof of export from the EU of goods eligible forexport refunds under the Common Agricultural Policy (CAP). The SAD is recognised by Irelands trading partners outside the EU, particularly those with Features of the SAD whom a preferential trade agreement exists.

Points to note:(a) The SAD is a standard document throughout the EU; each member state produces its own version in its own language.

(b) The SAD can be completed by the exporter, freight forwarder, carrier, clearing agent and importer. In many cases, different parts of the document are completed by different organizations as the shipment moves from one country to another.

(c) The exporter has to complete part of the SAD when the goods are subject to an export license , and hand the partially completed form on to the forwarder who will complete the other parts in the normal way. After checking, Customs will send the first stamped sheet of the SAD back to the consignor. (d) Although many Customs systems are now electronic, export Customs forms are based on the SAD, so understanding of the SAD is essential in order to use computer-based systems. (e) There are 54 boxes on the front page of the SAD; for exports, it is unlikely that more than about 10 or 12 boxes have to be completed.

(f) The SAD is required as proof of export to support claims under the Common Agricultural Policy.

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ROLE OF EXPORT DOCUMENTATION

Export documentation plays a vital role in international marketing as it facilitates the smooth flow of goods and payments thereof across national frontiers. A number of documents accompany every shipment. These documents must be properly and correctly filled. Export documentation is, however, complex as the number of documents to be filled in is large, so also is the number of concerned authorities to whom the relevant documents are to be submitted. Moreover documents required differ from country to country. Incorrect documents may lead to non delivery of goods to the importer. You may get the correct documents after some time but in the meantime storage charges may have to be paid. More important, the importer will think twice before importing from the same exporter. It is therefore, advisable to take the help of shipping and forwarding agents who will obtain fill out the documents correctly as well as arrange for transportation. But every exporter should have an adequate knowledge about export documents and procedures. On the basis of the functions to be performed, export documents can be classified under four categories: 1. Commercial Documents: These include commercial invoices, bills of exchange bills of lading, letters of credit, marine insurance policy and certificates etc.

2. Regulatory Documents: These are the documents which are required for complying with the rules and regulations governing export trade transactions such as foreign exchange regulations, customs formalities export inspection etc.

3. Export Assistance Documents: These are the documents which are required for claiming assistance under the various export assistance measures as may be in operation from time to time. Presently these refer to drawbacks of Central excise and customs duties, packing credit facilities etc,

4. Documentation required by importing Countries. These are the documents which are required

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by the importer in order to satisfy the requirements of his government. These include certificates of origin, consular invoice, quality control certificate etc. Export documents could be classified into two categories depending upon the specific requirements satisfied by them: (1) Regulatory and (2) Operational. Regulatory Requirements: An exporter has to follow strictly the regulation of both the exporting country as well as that of the importing country. For example, there is exchange control in India. Therefore when we export goods, we have to give an undertaking to the RBI that we shall realize the foreign exchange in lieu of the goods exported. We do this by submitting GR form, and it is obvious that we cannot export unless we submit this document. Then there are certain commodities which are subject to export regulation. We have to obtain a licence for exporting the controlled commodities. Thus, another document has necessarily to be used. In order to build up an image of Indian goods abroad there is a system of compulsory pre-shipment inspection and quality control of a number of export goods. The exporter has to obtain an inspection certificate. This gives rise to still another document. There are a number of importing countries which stipulate that the exporter must submit certain specified documents duly certified by their missions in the exporting country. This condition makes it essential the use of the consular invoice and in some cases the use of the legalized invoice. There are countries specially the Commonwealth countries and also those developed countries which have offered concessions to the developing countries under the Generalized System of Preferences which demand that the exporters must submit a certificate of origin. Thus, the exporter has to submit GR form, export licence inspection certificate, consular invoice, legalized invoice and certificate of origin. These are examples of regulatory documents. Operational Requirements: The customs authorities are charged with the responsibility of verifying compliance on the part of the exporters with all types of regulations in force in the country. For their own record purposes, they have devised the Shipping bill. No shipping company or airline will accept any export cargo unless the customs authorities have granted their permission on the shipping bill.
62

TOP TEN EXPORTERS OF INDIA

The rupee has depreciated steeply against the dollar in the past two months and is trading at Rs 56 per dollar. This has negatively affected the already weakened Indian economy. With India being a net importer the impact is more severe. However, there are certain companies that are major exporters and hence are benefited when the rupee depreciates. Here we are providing a list of the top ten companies that have the highest percentage of exports forming part of sales.

1. Oracle Financial Services Software

Oracle Financial Services Software Limited (OFSSL) is a world leader in providing IT solutions to the financial services industry. The company has a large exposure to foreign financial companies which contribute 96 per cent of the revenue to the company. The company addresses the entire financial services space through a comprehensive portfolio of products, IT services, consulting and knowledge process outsourcing services with an experience of delivering valuebased IT solutions to over 810 financial institutions across 130 countries. The company also has strong alliance and/or implementation relationships with industry leaders such as HewlettPackard, IBM, Sun Microsystems and Intel. 2. Opto Circuits (India)

Opto Circuits (India) is a technology-based electronics company engaged in design, development, manufacturing, marketing and distribution of medical electronic devices and medical monitoring products. Opto Circuits offers technological advanced medical devices that are proprietary in nature, improve patient safety and care and reduce healthcare costs. It offers a
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broad range of more than 100 medical devices across 17 clinical categories spread over 12 medical fields. It has sales in 56 countries and operations in India, Germany and the US. Of its total sales, around 95 per cent of the revenue comes from exports while the remaining comes from the domestic markets. 3. Infosys

Infosys, the second-largest software making company, generates 94 per cent of the revenue through exports. The major exporting countries are the US (63.9 per cent) and Europe (21.9 per cent) that together generates almost 85 per cent of the export revenues while the rest comes from India (2.2 per cent) and some other countries. The companys revenue comes from providing various IT products and services catering to sectors such as BFSI, manufacturing, retail, life science, energy and communication services. 4. TCS

Tata Consultancy Services, part of the Tata Group that is one of Indias largest industrial conglomerates and most respected brands, is an IT services, business solutions and outsourcing organisation that delivers real results to global businesses, ensuring a level of certainty that no other firm can match. TCS offers a consulting-led integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model (GNDM), recognised

64

as the benchmark of excellence in software development. Of its total sales, 91 per cent of the revenue comes from exports while the remaining is derived from the domestic markets. 5. Divis Lab

Divis Laboratories is engaged in the manufacture of generic active pharmaceutical ingredients (APIs), custom synthesis of active ingredients and other specialty chemicals such as peptides and nutraceuticals. The company has three multi-purpose manufacturing facilities with a total reactor capacity of 4,500 cubic meters and all support infrastructure such as utilities, environment management and safety systems. The company in a matter of short time has expanded its breadth of operations to provide complete turnkey solutions to the domestic Indian pharmaceutical industry. Of its total sales, more than 90 per cent of the revenue comes from exports while the remaining comes from the domestic markets. 6. Rajesh Exports

Rajesh Exports Limited (REL) is the largest gold jewellery manufacturer in the world and also the countrys largest exporter of gold jewellery with a market share of around 40 per cent. Shubh Jewellers is the retail brand of the company. Of the total sales, around 85 per cent of the revenue comes from exports while the remaining is from the domestic markets. REL exports plain gold
65

jewellery and studded gold jewellery mainly to the US, UK, Singapore and the UAE. It is also the only Indian company to be recognised by the Government of India as a Five Star Export House in the field of gold jewellery. 7. Tech Mahindra

Tech Mahindra provides information technology (IT) services to the telecommunications industry worldwide. Tech Mahindra, with 84.75 per cent exports of its sales in FY11, arrives at number seven in our list. A majority of its stake is owned by Mahindra & Mahindra Limited in partnership with British Telecommunications Plc. Tech Mahindra serves telecom service providers, equipment manufacturers, software vendors and systems integrators. The company recently completed the merger of Mahindra Satyam with itself. This merger has made Tech Mahindra the sixth-largest IT service provider with topline of Rs 5,490 crore and a workforce of 75,000. 8. Aban Offshore

Aban Offshore provides drilling and oil field services for the offshore exploration and production of hydrocarbons to the oil industry in India and internationally. The company is also involved in wind power generation activities. It owns and operates 15 jack-up offshore drilling rigs, two drill ships, one floating production platform and one jack-up rig and a drill ship on bareboat charter. It also operates 165 wind energy generators. The company earned around 84.39 per cent of its revenues from exports in FY11, making it the eighth in the list. This takes the total export sales to above Rs 1,004 crore. 9. Sesa Goa
66

Goa-based Sesa Goa is Indias largest private producer and exporter of iron ore with operations in Karnataka too. The company produces 18.8 MT of iron ore and receives 80 per cent of its revenue from exports and the rest through domestic sale. At present the company seems to be facing severe problems due to the ban on iron ore mining in Karnataka and the increase in export duty. The iron ore mining ban in Karnataka has stopped the company from producing iron ore and the concerns have now shifted to the Goa mines as an appointed commission has submitted a report with regards to illegal mining taking place in Goa. Sesa Goa has a major mining operation in Goa that almost contributed 80 per cent of the total production of the company in FY11. 10. Dr. Reddys Lab

Dr. Reddys Lab was established in 1984 and is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. It operates in three segments viz. pharmaceuticals and active ingredients (PSAI), global generics and proprietary products. Their major markets include India, USA, Russia and CIS, Germany, the UK, Venezuela, South Africa, Romania and New Zealand. Of the total sales, around 72 per cent of the revenue comes from exports while the remaining from the domestic markets.

Turbo-EMS: Export DOCUMENTATION System

Modular ERP Software Solution for Managing Operations of Small & Big Exporters

Turbo-EMS , Indias No. 1 Innovative & Most Trusted Software Package for Export Documentation & Management specially designed for the organizations engaged in Export of Handicrafts, Home Furnishing, Garments, Gems & Jewellery, Auto Parts, Engineering Items,
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Hand Tools, Stainless Steel Kitchen Items, Leather Bags / Shoes / Accessories, Sports Goods, Chemicals, Rice, Food & Agro, Publishers, etc...

Shiva Infotech is Pioneer & Trendsetter in India in developing softwares for Export Industry. Turbo-EMS is the result of in-depth study, research and a vast experience of serving export industry since 1990.

Tried, Tested & Trusted by over 700 Exporters, Importers & Buying Agents Our success can be measured with 99% upclientele Pre & Post Shipment Documents

Buyer & Vendor Purchase Order Processing Factory Order for Production department with photo Buyer Order Reports based upon Qty & Value

Sample Invoice, Proforma, Packing Slip, Packing List , Invoice Shipping Instructions, Road Challan, Master Case Labels

Certificate of Origin (GSP, DCC, PHD)

Buyer Shipment & Payment Status

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Letter of Credit Monitoring Bill of Exchange/ Sight Draft Bank Realisation Certificate Sales & Pending Shipment Reports

Material Receipt & Debit Note generation Vendor Bill Reconciliation & Payment Control

Vendor Order Control Reports

DBK & DEPB, Advance Licenses, Focus, Incentive calculation Store Inventory (Trading & Production)

Pre & Post Shipment Profitability Analysis

Material Incoming & Outgoing Registers Stock Ledger & Valuation Stock Allocation for Buyer Order & Indent Planning

Different item description in Invoice & Packing for Buyer & Custom List

Production, Planning & Control

Salient Features

Detailed Item Costing (BOM-Manufacturing / Trading)

Local Sales Invoice with VAT Register

Raw Material Requirements for Production Planning

Track Purchase & Shipment History

Head office linkage facility with multiple Factory units

Sales Analysis on Product, Buyer, Country Multi Company, Auto Conversion of

Job Work Order, Rejection, Issue & Purchase Challan

Currency & Dimensions Calculation capacity

of

CBM,

CFT,

Container

Query

Powerful Query Module for Costing, Open/ Close Orders of Buyer or Vendor, Payment Status

Saves Documents & Reports in PDF, Excel & auto Emailing

Powerful Document Designer for creating New Reports

History of Proforma Invoice, Buyer Order, Purchase Order, Invoice

Generate Documents with Signature & Company Logo

Barcode Label Printing & Scanning Fully integrated with Turbo-PMS & Tally

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Shiva Infotechs corporate philosophy is to continuously strive for improvement in the products, services and customer relationships. This is reflected in Shiva Infotechs positional statement "Always Getting Better". This Philosophy translates not only to continuous human resource improvement internally at Shiva Infotech but also to the quality of design, performance and durability of the products and services provided to the customers.

We Our

Focus Products

on 3Cs : Customer, symbolize 3Es : Error free,

Cost, Effective and

Convenience Efficient

We are continuously serving the Industry with readymade and customized software solutions. Shiva InfoTechs Turbo-EMS & Turbo-PMS are India's No.1 Innovative & Most Trusted Software Packages for Export Management & Photo Catalog Generation. We are serving Export Industry thru IT since 1990 & our clients are spread across the Globe.

Turbo-EMS : Export Documentation / Management System software - Modular ERP Software Solution for Managing Operation of Small & Big Exporters

Turbo-PMS : Photo Management System software easy 2 use Marketing software tool for generation of Photo Offers, Photo catalog, Quotation & Item Barcode Label. Turbo-EXIM : Export Import Management System software Specially designed for Importers & Distributors to manage their operations Turbo-ERP : Cloud based ERP for SME sector Integrated solutions for Manufacturing / Trading Exporters & importers, suitable to manage multi location activities. Turbo-BHMS : Buying House Management System software

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a web enabled solution for Buying Agents to manage their multi locations activities Web Solutions e-Commerce Application, Flash based Dynamic & Static Website, B2B/B2C Portals with Shopping Cart and Web Promotion on top Search Engines. Barcode Solutions - Printing of Barcode labels in different sizes, Barcode scanning thru Touch Screen Mobile Computers (cordless scanner) for Customer Order booking during international fairs and track movement of goods in Warehouse. Software Conversion Solutions Conversion of Visual FoxPro applications to ASP.NET

EXPORT PROCEDURES AND DOCUMENTATION FOR TEXTILES AND APPAREL PRODUCTS This covers the exportation of all textiles and their by-products. 1. Consult with a Quota Allocation Officer at the Trade Board Ltd. as to the products that have an available quota for exportation under the US/Jamaica Bilateral Textile Agreement 2. If there is an available quota for the product that you wish to export, or if you are planning to export to a non-US market, then visit www.jexporter.com or the JAMPRO offices and register to become an exporter. The registration process usually takes three to five days. 3. Consult with the Bureau of Standards for information regarding proper labelling requirements. 4. Purchase and complete Form JN2/JN3 for export to non-US and US markets respectively, as well as the Certificate of Jamaican Origin/Certificate of Exemption (where applicable), all of which are available from the Trade Board Ltd. Furthermore, for 807 products a commitment letter is required.
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5. Purchase and complete Export Entry Form C82, which is available from the Trade Board or the Jamaica Exporters Association. Complete all relevant commercial and export forms. 6. You may consult with the Trade Boards Certification Unit to determine whether the product you wish to export qualifies for preferential treatment in any overseas market. If so, purchase the relevant form and obtain the required Certificate of Origin. 7. Check shipping/air cargo rates and schedules as well as provisions for insurance coverage. Complete Tally Sheet (by air) or Wharf/Dock Receipt and Cargo Integrity Form (by sea).

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CONCLUSION
Global marketing logistics, referred to earlier in chapter four, can present to the unwary and uninitiated an enormously formidable barrier. Having the correct documentation internally and externally is vital or goods and services just simply cannot be exported. Marketers or their agents must be familiar with Terms of Access, contracts, trade terms, commercial documents including insurance and financial documents, and the consequences of breaking any of the terms and conditions. In many products, the more familiar the distribution network players are with each other and their individual systems, the easier the documentation process becomes to set up and operate. This reduction of transaction risk is a bonus and may involve the use of specialist agencies like freight forwarders and shippers.

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REFERENCES
McGuiness, N.W. and Little, B. "The Influence of Product Characteristics on the Export Performance of New Industrial Products", Journal of Marketing, Spring 1981, pp 110122. Kwelepeta, S.L, "Legal Aspects of Foreign Trade", S. Carter (ed.), "Export Procedures" Network and Centre for Agricultural Marketing Training in Eastern and Southern Africa, August 1991, pp 78 - 85. Kimweli P.K. "Exporting of Horticultural Produce in Kenya". In S Carter, ed. "Marketing Management in the Horticultural Industry". Network and Centre for Agricultural Marketing in Eastern and Southern Africa, FAO, November 1991, pp 131 -151 Keegan, W.J. 1989, "Global Marketing Management", 4th ed., Prentice Hall International Edition. Kwelepeta, S.L., "Export Documentation", op. cit. pp 89-98. http://hong-kong-economy-research.hktdc.com/business-news/article/Small-BusinessBusiness-Resources/Common-Import-Export Documents/sbr/en/1/1X000000/1X006MLL.htm#sthash.qPqOAbhy.dpuf http://www.citeman.com/4112-role-of-export-documentation.html#ixzz2vOG0Kcfv http://www.dsij.in/article-details/articleid/4476/top-ten-exporters-ofindia.aspx#sthash.wQHK8SXf.dpuf http://www.dsij.in/article-details/articleid/4476/top-ten-exporters-of-india.aspx http://www.business.vic.gov.au/operating-a-business/export/start-exporting/Plan-forMarket-Entry/export-documentation http://www.globalconferencegroup.com/06export/export.html

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