Procedure for the Export of Goods

Export means selling or sending goods abroad. Procedure for the Export of goods consists on the following steps:

1. Receipt of Production order.2. Confirmation of order.3. Production4. Export Documents.

a. Export Formb. Certificate of Export (TDAP)c. Commercial Invoice d. Packing List

5. Payment conformation.6. Shipments of goods.

Now we explain each requirement for the export in detail.

1. Receipt of Production order:

The first step in the process of Export is the receipt of order for the Export of goods from the foreigners or importers .The foreign customer’s order is called Production order which usually given by Performa invoice (Quotation). When an order is received at the same time Exporter starts preparation for the Export of goods. There are two ways to obtain the order from the importers.

Firms own Marketing Department Personals search the importers and find out the needs of the importers and then according to the requirement of the people exports the goods. This is expensive way for the firm to export the goods the reason for this is that here company has to staff many personals for the search of the importer in foreign Country.

The other way of the receipt of Production order is the direct order from the importer, who searches for our firm. This is the cheapest way for the receipt of order. Because here is less requirements of

the staff for checking mails.

Export-Import Quotations:

In exporting, the terms quote, offer sheet and price sheet may be used instead of quotation. The basic information that an export quotation should have includes a description of goods, trade terms (e.g. FOB, CFR or CIF), unit price, packing, means of delivery (e.g. ocean or air), delivery time, and payment terms. No strict form is used in the quotation. Using the company letterhead for a general quotation is quite common.

Units of Measurement

Most countries have officially adopted the metric units (e.g. kilogram, meter, liter, and cubic meter) of measurement. The Imperial units (e.g. pound, foot, gallon, and cubic foot) and some local units are still in use in some countries, besides the metric system.

The preferred terms of import quotation, in the ocean freight, of some of the selected importing countries (areas) of the world are as follows:

COUNTRY TERMS  

Argentina CIF, FOB, CFR 

Australia FOB

Austria CIF, CFR

Belgium CIF

Brazil CFR, CIF

Canada FOB

Chile FOB, CFR

China FOB, FAS

Hong Kong CIF

Czech Republic FOB

Denmark CIF

Egypt CFR

Finland CIF

France CIF

Germany CIF

Greece CIF

Hungary FOB

India CIF, FOB

Indonesia CIF

Ireland CIF

Israel CIF, FOB, CFR

Italy CIF

Japan CIF, FOB, CFR

Korea, South CIF

Malaysia CIF

Mexico FOB

Netherlands CIF

New Zealand FOB

Norway CIF

Pakistan CFR

Peru CIF, FOB, CFR

Philippines CFR

Poland FOB

Portugal CIF

Russian Federation FOB

Saudi Arabia CIF, CFR

Singapore CIF

South Africa CIF, FOB

Spain CIF

Sweden CIF

Switzerland CIF

Taiwan CFR

Thailand CIF, CFR

Turkey CIF

United Arab Emirates CIF, CFR

United Kingdom CIF

USA FOB

Venezuela CIF, FOB, CFR

Importers may request for trade terms not listed above. In practice, importers usually specify the terms of import quotation.

The import duty is often based on FOB or CIF value. Some countries may require itemized charges on the CIF term, that is, showing on the invoice the FOB value, insurance and freight, and may further require the cost of packing material and labor.

Some countries may require that the import and/or export shipments be insured with their national insurance companies.

Commission Included in the Quotation:

When selling through an agent, the commission may be included in the quoted price. The commission may be reflected using '&C' {+ the percentage rate of commission} or 'C' {+ the percentage rate of commission} after the trade term. For example, CIF&C5 Bangkok (or CIFC5 Bangkok) means that the quoted price includes a 5% commission.

2.Confirmation of order:

In this step the importer sends the performa invoice or invoice showing the specification of the goods for export.

Pro Forma Invoice or Sales Confirmation

A pro forma invoice is basically an advance copy of the final invoice. It is different from a quotation. The pro forma invoice is often used by the importer to apply for a letter of credit (L/C) and foreign exchange (import) allocation. Performa Invoice consists on the following

Product Specification i.e.

Quantity ,Quality Unit price (from export point of view) etc. Terms and Conditions relating to the Payments Mode of the Shipment

The term sales confirmation is used in lieu of the term pro forma invoice in some exporting countries. For purposes of explanation, the term sales confirmation is used here to refer to the pro forma invoice

Some buyers, particularly from less developed countries, may not issue a formal purchase order (P.O.). They may simply give the item number, quantity and delivery time required in the order, without giving the order

number and price. The exporter should prepare a sales confirmation complete with the price, based on the earlier negotiated or purchased price.

Following situations may occur in relation to the issuance of a sales confirmation:

Buyers may change the order more than once within a few days or weeks.

The delivery time required by some buyers can be relatively short---within one month.

The amount of export orders can be large or small.

" L/C Advising Bank preferred "

If a letter of credit (L/C) is advised through the exporter's bank, the exporter may avail a lower bank fee, plus the convenience that comes with it, over a bank that the exporter never dealt with.

The issuing bank normally uses its own correspondent bank as the advising bank, which may not be the bank preferred by the exporter.

" L/C negotiable in (name of exporter's city and/or country) "

This requirement on the sales confirmation insures that the exporter will have the convenience of presenting the documents for negotiation in the exporter's own city and country, instead of in another city and worse in another country. There were such cases where documents were sent by courier to a third country to meet the L/C negotiation.

" Confirmed by Buyer "

The purpose of letting the buyer confirm the sales confirmation (S/C) so issued is to ensure that the buyer's P.O. is correct and that the details of the order are what the buyer wants in the case of no formal P.O.. The buyer will sign and return the S/C sent to show acceptance

Production:

When a exporter satisfy with the intention of the buyer or importer that he really want to import goods after receiving pro forma invoice then he starts production of goods according to the specification of pro forma invoice.

Export DocumentsGenerally following are the Exports Documents which are required for

the Export of the goods from Pakistan.

1. Export Form2. Certificate of Export (TDAP)3. Commercial Invoice 4. Packing List

E. Form:

E. Form stands for Export form. It is issued by the central Bank of the Country. In Pakistan it is issued by the State Bank of Pakistan. It include the things:

Name and Addresses of the Exporter Quantity of commodity, per Unit price and total amount of exported goods

Certificate of Export (TDAP):

Document that confirms the noted items are being legally exported from their country of origin. Certificate of Export is issued by the “Trade Development Authority of Pakistan” the purpose of this requirement is to give information to the country government about the exported goods. This document is issued against a specified fee that is calculated on the basis of exported goods amount.

Commercial Invoice:

The commercial invoice is a record or evidence of transaction between the exporter and the importer. It is similar to an ordinary sales invoice, except some entries specific to the export-import trade are added.

Specific Language Requirements in the Commercial Invoice

Certain importing countries may require that the commercial invoice and the packing list be made out in, or translated to, the language of the importing country, for example, in French for shipment to France, in Italian to Italy, and in Spanish to Mexico and Venezuela.

Declaration on Commercial Invoice

The declaration on the commercial invoice for some countries must be in a specified wording. The exporter may check the wording with the customs broker, the government external trade department, or the foreign government trade office concerned in the exporting country.

The content of a typical declaration includes a sworn statement from the exporter indicating that the goods in question are manufactured in the exporting country, and that the amount shown in the invoice is the true and correct value.

Certification and/or Legalization of Commercial Invoice

The letter of credit (L/C) from certain importing countries, in particular from the Middle East, requires the certification and/or legalization of the commercial invoice.

The certification, which usually is performed by the local Chamber of Commerce of the exporting country, is to confirm that the invoice and declaration (in the invoice) are correct.

The legalization, which is done by The Consulate or The Commercial Section of the Embassy of the importing country, is to verify that the invoice is correct.

The certification and legalization are most often satisfied with a stamp or a seal on the invoice and payment of a fee. The processing time may take one week.

Corrections or Changes in the Commercial Invoice

Any visible corrections or changes made in the commercial invoice must be initialled. In practice, the initial usually is done using a rubber stamp bearing the word "CORRECTION".

" signature and/or stamp "

The commercial invoice and packing list need not be signed, unless otherwise stipulated in the letter of credit (L/C). In practice, the original and the copy of the commercial invoice and packing list are often signed.

" Description of Goods "

The description of the goods in the commercial invoice must correspond with the description in the letter of credit (L/C). In all other documents, the description can be in general terms provided it is not inconsistent with the description in the L/C.

For example, referring to the sample L/C, the description of goods in the commercial invoice should be "'ABC' Brand Pneumatic Tools, 1/2" drive, complete with hose and quick couplings", the description in all other documents can be in general terms like "'ABC' Brand Pneumatic Tools". However, if any other documents indicate "'ABC' Brand Air Tools", it is inconsistent with the description in the L/C for using the word "air", which should be "pneumatic", despite both terms being technically the same. Consequently, there is a discrepancy and the bank will reject the documents.

Marks & Numbers

Please see Shipping Marks and Numbers for detail information.

Quantity

If the letter of credit (L/C) does not stipulate the quantity in a stated number of units (i.e., it does not state in units such as piece, set, box, dozen, or gross), or unless the L/C stipulates that the quantity of the goods specified must not be exceeded or reduced, a tolerance of 5% more or 5% less quantity is permitted, provided the total amount does not exceed the amount of the L/C.

In the sample L/C the stated quantity is 100 Sets, thus the quantity in the invoice must be 100 Sets. If such sample L/C does not state the

quantity, the UVW Exports can ship between 95 sets and 100 sets of pneumatic tools, but not over 100 sets as the total amount will exceed the L/C amount of US$25,000. If such L/C does not state the quantity and the L/C amount is US$26,250 or more, the exporter may ship between 95 and 105 sets.

If the L/C quantity is indicated using the words "about", "approximately", "circa" or similar expressions, the quantity in the invoice cannot exceed 10% more or 10% less than the quantity indicated in the L/C. For example, if the L/C quantity is "about 100 sets", the quantity in the invoice can be any quantity between 90 sets and 110 sets, provided the total amount does not exceed the amount of the L/C.

Unit Price

If the letter of credit (L/C) unit price is indicated using the words "about", "approximately", "circa" or similar expressions, the unit price in the invoice cannot exceed 10% more or 10% less than the unit price indicated in the L/C. For example, if the L/C unit price is "about US$250", the unit price in the invoice can be any unit price between US$225 and US$275, provided the total amount does not exceed the amount of the L/C.

Amount

Unless otherwise stipulated in the letter of credit (L/C), the amount must not exceed the amount permitted by the L/C. If the L/C amount is indicated using the words "about", "approximately", "circa" or similar expressions, the amount of the invoice cannot exceed 10% more or 10% less than the amount indicated in the L/C. For example, if the L/C amount is "approximately US$10,000", the amount of invoice can be any amount between US$9,000 and US$11,000.

Packing List:

The packing list is an extension of the commercial invoice, as such it looks like a commercial invoice. The exporter or his/her agent---the customs broker or the freight forwarder---reserves the shipping space based on the gross weight or the measurement shown in the packing list.

Customs uses the packing list as a check-list to verify the outgoing cargo (in exporting) and the incoming cargo (in importing). The importer uses the packing list to inventory the incoming consignment..

For the purpose of explaining other fields in the packing list, it is assumed that the pneumatic tools in the sample L/C contain the following data:

 The catalogue or item number of the pneumatic tools is A380

Each set is in an inner box and there are two boxes in an export master carton, or a total of 50 cartons for the 100 sets

Each master carton:

  Net Weight (N.W.) .....   20 kgs.  (44.1 lbs.)

  Gross Weight (G.W.) ..... 23 kgs.  (50.7 lbs.)

  Measurement (Meas.) ..... 0.113 CBM  (4 cft.)

     61 cms. x 61 cms. x 30.5 cms.(2' x 2' x 1')

" Package No. " 

The entries preferably arranged in sequence from the lowest number to the highest, that is, from package No. 1 and up

" Item No. " and " Description of Goods " 

The description of the goods in the packing list can be in general terms, provided it is not inconsistent with the description in the L/C

" Quantity " 

It shows the total quantity within a stated range of the package number and the breakdown in each package. 

" Weight " 

It shows the total weight within a stated range of the package number and the weight of each package 

As far as the carrier is concerned, the gross weight or measurement of a consignment is needed to calculate the freight. In case the goods are assessed in the importing country or exported on the net weight basis, it is necessary to show the net weight and gross weight in the packing list. The entry may appear as:

N.W. 1,000 Kgs.G.W. 1,150 Kgs.

" Measurement " 

Ocean shipments are most often charged by the cubic meter (CBM or cbm). Enter: 

" signature and/or stamp " 

The packing list and commercial invoice need not be signed, unless otherwise stipulated in the letter of credit (L/C). In practice, the original and the copy of the packing list and commercial invoice are often signed. 

Corrections or Changes in the Packing List 

Any visible corrections or changes made in the packing list must be initialled, as in the commercial invoice and all other export documents, by their respective issuers. In practice, the initial usually is done using a rubber stamp bearing the word "CORRECTION". 

Summary of Totals in a Consignment 

Total Number of Packages 

For example a consignment where the range of the carton number is as follows:

C/No. 1-8C/No. 9-17C/No. 18-23C/No. 24-30C/No. 31-42C/No. 43-50   

- Product A- Product B- Product C- Product D- Product E- Product F

put a summary "Total 50 Cartons" in a succeeding row after the "C/No. 43-50". 

Total Quantity 

If a consignment consists of different units, preferably show all the units used in the summary of totals. For example, a shipment includes:

100 dozen200 dozen300 boxes400 boxes  

- Product A- Product B- Product C- Product D

as such the total shows "300 Dozen and 700 Boxes". 

Total Weight and Total Measurement 

If the net weight and gross weight are used in the breakdown, the summary must show the total net weight and the total gross weight. If kgs., lbs., CBM and cft. are used in the breakdown, the summary must show the total of kgs., lbs., CBM and cft.. 

Under certain circumtances, such as in a consignment consisting of a few master cartons where each carton contains several small items of different sizes, it is necessary to show the breakdown of the quantity of each item. There is no need to show the breakdown of the weight and measurement of each carton. Simply entering the total weight and the total measurement of the consignment in the summary row would satisfy the export requirements.

Payment conformation

Bills of Exchange (Drafts) 

The bill of exchange, commonly referred to as the draft or the bill, is an unconditional order in writing, signed and addressed by the drawer (the exporter usually) to the drawee (the confirming bank or the issuing bank usually), requiring the drawee to pay the drawer a certain sum of money at sight or at a fixed or determinable future time.

The draft is widely used in international trade, most frequently in the payment against a letter of credit (L/C). It is also used in the open account without any L/C involved.

The Letters of Undertaking Instead of the Drafts 

In certain exporting countries, the government levy a heavy tax on drafts. In such a circumstance, the exporter may request the importer to specify in his/her letter of credit (L/C) application that "No drafts be issued". When the documents are presented to the negotiating bank, the bank issues a letter of undertaking indicating when and where the money will be paid, instead of accepting a draft drawn by the exporter. 

'Avalised' Term Drafts 

The word "aval" in French means endorsement. A term draft accepted by the importer does not guarantee payment on maturity, hence it is not readily accepted for discounting or as collateral in a loan. The exporter may arrange to have the accepted draft to be 'avalised' by the importer's bank---the bank adds its endorsement as guarantee of payment. The 'avalised' term draft can be readily discounted, thus providing the exporter with immediate funds. 

Sight Drafts versus Term Drafts 

The usual way the drawee accepts a draft is by writing or stamping the word "ACCEPTED" on the face of the draft, plus the drawee's authorized signature and the date accepted.

Unless the importer's integrity is irrefutable, using a term draft is risky, especially when the draft is drawn on the importer where the remitting bank and the collecting bank are merely acting as agents without guarantee of payment.

In certain countries, the importer may have access to the customs warehouse or docks and examine the goods before accepting them. The risk is that the importer may intentionally reject the goods even when they are in good order and condition, without paying or accepting the draft. The importer may reject the goods, for example, if the local market prices of the goods have dropped. Unless the goods are shipped back or rerouted to other buyers, the goods may incur warehousing charges and be subject to foreclosure after a period of time and auctioned off by the customs. The importer, not surprisingly, could be one of the bidders at the auction and obtain the abandoned goods at a fraction of the import cost. A remedy to counter such rejection is to send the draft and documents immediately to the remitting bank, so that the remitting bank may relay them to the collecting bank and the collecting bank presents them to the importer for payment or acceptance before the goods arrive at the destination.

The importer, however, has the right to reject goods that deviate from the contracted specifications and quality. The importer can instruct the collecting bank not to pay the draft.

Clean Drafts versus Documentary Draftsin the Documentary Collections 

Clean Draft 

In a clean draft, no shipping documents are attached to the draft sent to the remitting bank. The documents are sent together with the goods, directly to the buyer. Therefore, unless the credibility of the buyer is unquestionable, using a clean draft in the shipment of goods is risky. The clean draft is more often drawn for the collection of payment for the services, not goods. 

Documentary Draft 

In a documentary draft, the shipping documents are attached to the draft sent to the remitting bank. The buyer will be able to receive the shipping documents from the collecting bank only after he/she has accepted the draft for payment later or after he/she has paid the draft. 

Shipments of goods

Export-Import Cargo (Marine) Insurance 

The term cargo insurance, popularly known as marine insurance, applies to all modes of transportation. The need for export (or import) cargo insurance often differs from exporter to exporter (or importer to importer) and from consignment to consignment. Unless the insurance is mandatory in a trade term, the exporter or the importer may opt not to insure the goods at his/her own risks.

Depending on the international commercial terms, either the seller (the exporter) or the buyer (the importer) is responsible for insuring the cargo. The seller is obligated to insure the cargo in the CIF and CIP terms. The seller may opt not to insure the cargo at his/her own risks in the DDU and DDP terms.

The trade terms DDU and DDP are often used in the turnkey projects where the amount at stake is large. In practice, the seller usually insures the cargo in the DDU and DDP terms.

Insurance Policy and Cover Note 

Proof of insurance coverage is contained in a document known as policy or insurance policy. The format of insurance policy forms varies from insurer to insurer, but all essentially have the Institute Clauses and the same information as contained in the Insurance Application-Instructions (IAI).

The policy must be issued and signed by an insurance company or its agent. If more than one original is issued and is so indicated in the policy, all the originals must be presented to the bank, unless otherwise authorized in the letter of credit (L/C).

The sample letter of credit requires "insurance policy in duplicate ...", as such the presentation of one original and one copy (both signed) will satisfy the requirement.

Unless authorized in the letter of credit (L/C), the cover note issued by broker, which is a temporary insurance coverage pending the later issuance of an insurance policy, is not acceptable.

Insurance Policy versus Insurance Certificate

In the sample letter of credit the insurance policy is required, hence the bank will not accept the insurance certificate.

Open Policy versus Specific Policy 

Advantages of an Open PolicyOver a Specific Policy 

Time Saving and Convenience 

In certain countries the insurance agent (broker) may hand-deliver the insurance policy to the exporter within 4-5 hours after the receipt of the Insurance Application-Instructions (IAI) or similar form. However, in some countries it is not uncommon that the policy is mailed to the exporter 2-3 days after the receipt of the Insurance Application-Instructions (IAI) or similar form. Considering that the national mail in some countries may take four (4) or more days to reach the addressee, the deadline to meet the L/C latest negotiation date may not be met. 

In an open policy the exporter may have the documentary proof of insurance coverage in a matter of minutes by simply completing and signing the blank insurance certificates supplied by the insurer.

Shipments Insured Automatically 

Under the open policy the insurer most often does not know the shipments made by the exporter before the receipt of the insurance declaration form and/or copy of the insurance certificates, but such shipments are insured (please refer to the Utmost Good Faith for related information).

Packing of Containers:Corrugated Cartons, Wooden Cases/Boxes, and Bales 

The basic information on how to efficiently pack (load) the containers is being discussed here. There are several container-loading software in the market in which the exporters and shippers may use to generate the efficient way of packing (loading) the containers.

The cube relation, that is, the dimension of export pack in relation to the internal dimension of container, is used to efficiently pack (load) a container.

Referring to the Diagram: Package Orientation below, a regular-shaped export pack (e.g. carton) has six different possible orientations as follows:

Export Pack Orientation

(1)     A || D       B || W       C || H

(2) A || D B || H C || W

(3) A || H B || W C || D

(4) A || W B || D C || H

(5) A || H B || D C || W

(6) A || W B || H C || D

LEGEND: 

"||"  means parallel to  "A" represents the external length of carton  "B" represents the external width of carton  "C" represents the external height of carton  "D" represents the internal length (deep) of container  "W" represents the internal width (wide) of container  "H" represents the internal height of container 

The orientation or a combination of orientations that allows the greatest number of packs or the highest multiple of packs is the most efficient method of packing.

Referring to the Case Sample: Container Selection (1), the method (A) of stowing the container is the export pack orientation (1) shown above, the method (B) is the orientation (4), and the method (C) is the combination of orientations (1) and (4). The product DX demands the stowage of cartons in an upright position. Other orientations cannot be used as the product could be damaged.

Further to the above case sample, assume that the product DX can be stowed in any orientation. The different multiples of carton (of the product DX) that can be packed into a 40' x 8.5' standard dry cargo container, based on the external dimension of carton

A = 18"B = 12"C = 12"

and the internal dimension of 40' container

D = 473"W = 92"H = 94"

are as follows:

Ocean (Marine) Bills of Lading 

The bill of lading (in ocean transport), waybill or consignment note (in air, road, rail or sea transport), and receipt (in postal or courier delivery) are collectively known as the transport documents.

Please see the sample Ocean Bill of Lading below. The bill of lading (B/L) serves as a receipt for goods, an evidence of the contract of carriage, and a document of title to the goods. The carrier issues the B/L according to the information in a dock receipt, or in some cases according to a completed working copy of the B/L supplied by the customs broker.

The B/L must indicate that the goods have been loaded on board or shipped on a named vessel, and it must be signed or authenticated by the carrier or the master, or the agent on behalf of the

carrier or the master. The signature or authentication must be identified as carrier or master, and in the case of agent signing or authenticating, the name and capacity of the carrier or the master on whose behalf such agent signs or authenticates must be indicated.

Unless otherwise stipulated in the letter of credit (L/C), a bill of lading containing an indication that it is subject to a charter party and/or that the vessel is propelled by sail only is not acceptable.

The Date of Shipment in Ocean Freight 

In cases where the bill of lading (B/L) has pre-printed wording indicating that the goods have been loaded on board or shipped on a named vessel, the issuance date of such B/L is considered to be the date of loading on board or the date of shipment. 

In cases where the B/L does not have pre-printed wording indicating that the goods have been loaded on board or shipped on a named vessel, the loading on board a named vessel is evidenced by the on board notation (e.g. "on board", "laden on board" or "shipped on board") on the B/L, which must be initialled and dated by the carrier or its agent. The date of the on board notation is considered to be the date of shipment.

Transhipment Clauses in Ocean Bills of Lading 

If the bill of lading incorporates clauses stating that the carrier reserves the right to tranship, then the transhipment is allowed even if the letter of credit (L/C) prohibits transhipment. 

Loading On Deck 

Unless otherwise stipulated in the letter of credit (L/C), the bill of lading (B/L) must not indicate that the goods are or will be loaded on deck. Modern cellular container ships carry about one-third of the containers on deck. Consequently, the B/L may contain a provision that the goods may be carried on deck. If such provision is contained on the B/L, then the loading on deck is acceptable even if the L/C stipulates otherwise, provided that the B/L does not specifically state that the goods are or will be loaded on deck. 

" Full Set ... " (as stipulated in the sample Letter of Credit) and" Number of Original B(s)/L " 

" ... two (2) non-negotiable copies "(as stipulated in the sample Letter of Credit) 

The non-negotiable copy of bill of lading (B/L) should not be confused with the non-negotiable bill of lading or straight bill of lading. The non-negotiable copy of B/L simply means the unsigned copy of the B/L, which is for information purposes. The copies are marked as "non-negotiable". 

The copies of the B/L can be of any number. The number depends on the requirements of the importer, importing country, shipper, carrier, Chamber of Commerce (if the L/C calls for certification of the B/L), and Consulate (if the L/C calls for consular legalization of the B/L).

In the sample Letter of Credit DEF Imports requires two copies of the non-negotiable copy of bill of lading.

" Place of Receipt " 

If the place of receipt (or taking in charge) is different from the port of loading, as in the case of multimodal transport, the on board notation or the pre-printed wording must include the letter of credit (L/C) stipulated port of loading and the name of vessel on which the goods have been loaded. 

" Container No(s). " and " Seal No(s). " 

Please refer to The Marking and Identification of Containers. The container number is entered on the dock receipt and the bill of lading (B/L). 

Under the shipper's load and count arrangement, the shipper or its agent must seal the container before transferring it to the carrier. The container that originates from a bonded factory outside the EPZ (export processing zone) or from a factory inside the EPZ is sealed before leaving the bonded factory or the EPZ.

The metal seal for the container is provided by the carrier. The seal number is entered on the dock receipt and the B/L. If a seal is broken for customs purposes, a customs inspector must supervise the breaking of the seal and the resealing of the container. The new seal number replaces the previous number that was entered on the dock receipt.

" Shipper " 

Unless otherwise stipulated in the letter of credit (L/C), the bill of lading may indicate as the shipper (the consignor) of the goods a party other than the beneficiary of the L/C. 

" Notify Party " and " Also Notify " or " Additional Notify Party " 

The notify party is the party that the carrier must notify when the goods arrive at the port of destination. The carrier issues an Arrival Notice informing the notify party about the cargo discharge point, number of packages and other information. The letter of credit (L/C) may require that the carrier notifies a party in addition to the notify party, usually using the words "also notify". 

The notify party depends on the L/C requirement, it can be the importer, freight forwarder or bank. In the sample Letter of Credit the L/C stipulated "notify the above accountee", in other words the notify party is DEF Imports, 7 Sunshine Street, Sunlight City, Import-Country.

If the notify party and the consignee are the same party, then enter the word "SAME" or "CONSIGNEE" in the 'Notify Party' field in the bill of lading (B/L).

International Commercial Terms (INCOTERMS) 

The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial term like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance, and other costs and risks.

The INCOTERMS was first published in 1936--- INCOTERMS 1936---and it is revised periodically to keep up with changes in the international trade needs. The complete definition of each term is available from the current publication--- INCOTERMS 2000. The publication is

International Commercial Terms( INCOTERMS )

GROUP TERM Stands for

E EXW Ex Works

F FCA Free Carrier

FAS Free Alongside Ship

FOB Free On Board

C CFR Cost and Freight

CIF Cost, Insurance and Freight

CPT Carriage Paid To

CIP Carriage and Insurance Paid To

D DAF Delivered At Frontier

DES Delivered Ex Ship

DEQ Delivered Ex Quay

DDU Delivered Duty Unpaid

DDPDelivered Duty Paid

available at your local Chamber of Commerce affiliated with the International Chamber of Commerce (ICC).

Many importers and exporters worldwide are accustomed to and may still use the INCOTERMS 1980, the predecessor of INCOTERMS 1990 and INCOTERMS 2000.

Under the INCOTERMS 2000, the international commercial terms are grouped into E, F, C and D, designated by the first letter of the term (acronym), as follows:

In practice, trade terms are written with either all upper case letters (e.g. FOB, CFR, CIF, and FAS) or all lower case letters (e.g. fob, cfr, cif, and fas). They may be written with periods (e.g. F.O.B. and c.i.f.).

In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer's end, for example the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid) . Quite often, the charges and expenses at the buyer's end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines.

Similarly, it would be best for importers not to deal in EXW (Ex Works) , which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller's end.

EXW   {+ the named place}Ex Works 

Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks. 

In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.

In the quotation, indicate the named place (seller's premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works.

FCA   {+ the named point of departure}Free Carrier 

The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks. 

In the air shipment, technically speaking, goods placed in the custody of an air carrier is considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment.

The term FCA is also used in the RO/RO (roll on/roll off) services.

In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.

Some manufacturers may use the former terms FOT (Free On Truck) and FOR (Free On Rail) in selling to export-traders.

FAS   {+ the named port of origin}Free Alongside Ship 

Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks. 

In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen.

The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels.

FOB   {+ the named port of origin}Free On Board 

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CFR   {+ the named port of destination}Cost and Freight 

CIF   {+ the named port of destination}Cost, Insurance and Freight 

CPT   {+ the named place of destination}Carriage Paid To 

The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. 

In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP   {+ the named place of destination}Carriage and Insurance Paid To 

The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks. 

In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.

DAF   {+ the named point at frontier}Delivered At Frontier 

The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks. 

In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland.

DES   {+ the named port of destination}Delivered Ex Ship 

The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks. 

In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm.

DEQ   {+ the named port of destination}Delivered Ex Quay 

The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks. 

In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo.

DDU   {+ the named point of destination}Delivered Duty Unpaid 

The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks. 

In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.

DDP   {+ the named point of destination}Delivered Duty Paid 

The seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or buyer's premises. The seller may opt not to insure the goods at his/her own risks. 

In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.