EXPORT DOCUMENTATION

Documentation

Documentation requirements vary considerably by country,

commodity, and situations.

Documents outline the sale, shipment, and responsibilities

of each party so that the full transaction is understood and
complete without delay or additional costs.

Factors to consider

Country of origin and destination

Mode of transportation - truck, rail, ocean, air, pipeline

Commodity - agriculture, livestock, safety/security

Size-value, volume, weight, dimensions

Parties to the transaction-shipper,agents, brokers, banks

Export documentation
Export Documents
Commercial Documents
Principal

Auxiliary

Regulatory Documents

Export documentation
Principal documents are
1. The Commercial Invoice,
2. Packing List
3. Bill of Lading/Air Waybill
4. Certificate of Inspection/Quality control
5. Certificate of origin
6. Bill of Exchange and
7. Shipment Advice
8. Insurance Certificate

EXPORT DOCUMENTATION

The auxiliary documents are

1. Proforma Invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance Declaration
5. Application for certificate of origin.
6. Letter to bank of collection/negotiation of
documents

These documents are prepared by the exporter

Invoices - Commercial, Pro -forma

Packing Lists - Dock, or Warehouse, Receipt

Certificates of Origin (C/O

Declaration of Dangerous Goods (DGD)

Certificates - Insurance, Inspection

Miscellaneous: Letters of Credit

Pro-forma invoice

It is an invoice sent to
the

buyer before the shipment, giving the buyer a chance to

review the sale terms (quantity of goods, value, specifications)
It

also allows the buyer to work with their bank to arrange

any financial process for payment. For example, to open a
Documentary Credit (Letter of Credit), the buyers bank will
use the pro-forma invoice as a source of information.

Commercial Invoice
It

is prepared by the exporter and addressed to the importer, and is

one of the first documents prepared when a transaction has been agreed
upon.
The

invoice identifies the buyer and seller, describes the goods sold
and all terms of sale, including IncoTerms, payment terms, relevant
bank information, shipping details, etc.
An

invoice may be itemized to show cost of goods, freight, and

insurance, or other special handling.

Commercial Documents
Document
Quotation

Sales
Contract

Functions

Prepared by

An offer to sell goods and should state Exporter

clearly the price, details of quality,
quantity, trade terms, delivery terms,
and payment terms.
An agreement between the buyer and
the seller stipulating every details of
the transaction. It is a legally binding
document.

Exporter and
Importer

Commercial Documents

Document
Packing List

Inspection
Certificate

Functions

A list with detailed packing

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

Prepared by

Exporter

Inspection
Company or
Exporter

Commercial Documents

Document

Functions

Prepared by

Insurance
Policy/
Certificate

An insurance document that has been taken

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

Insurance
Agent or
Insurance
Broker

Commercial Documents

Document

Functions

Health
Certificate

Document issued by the competent country when

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

Prepared by
Exporter /
Inspection
Authority

Transport Documents
Document

Functions

Air
Waybill
(AWB)

A kind of waybill used for the carriage of goods by

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

Packing
List

A list providing information needed for

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

Prepared by

Airline

Shipper

Financial Documents
Document

Functions

Prepared by

Documentary A bank instrument began at the request of the Issuing Bank

buyer, evidencing the bank's undertaking to the upon an
Credit

Bill of
Exchange
(B/E) or
Draft

seller to pay a certain sum of money provided

that specific requirements set out in the D/C
are satisfied.

application
made by the
Importer

An unconditional written order, in which the

importer addressed to the exporter to pay on
demand or at a future date a certain amount of
money to the order of a person or bearer.

Exporter

Incoterms

The terms of shipment and delivery, as well as the transfer

of risk, between the buyer and seller.

Incoterms were created by the International Chamber of

Commerce (ICC) and are a registered trademark of the ICC.

Incoterms are reviewed every 10 years to keep pace with the

ever-changing world of international trade.

The latest edition is the Incoterms 2010 which are effective

January 1, 2011

New changes

The number of categories reduced from four to two in new

Incoterms 2011

These two categories are :

Terms for any mode or modes of transport

Term for sea and domestic waterway transport

These Consists of following terms

CIP - CARRIAGE AND INSURANCE PAID TO

CPT - CARRIAGE PAID TO

DAT - DELIVERED AT TERMINAL

FCA - FREE CARRIER

EXW - EX WORKS

All of these terms need to specify the port or destination

CIP - CARRIAGE AND INSURANCE PAID TO

The Seller pays for moving the goods to destination. From the time
the goods are despatched.

Seller, however, purchases the goods insurance.

CPT - CARRIAGE PAID TO

The Seller pays for moving the goods to destination. From the time
the goods are transferred to the first transporter, the Buyer bears the
risks of loss or damage.

DAT - DELIVERED AT TERMINAL

The Seller delivers when the goods, once unloaded from the arriving means
of transport, are placed at the Buyer's terminal.

The Seller bears all risks involved in bringing the goods to and unloading
them at the terminal at the named port or place of destination.

DAP - DELIVERED AT PLACE

The Seller delivers when the goods are placed at the Buyer's clearance The
Seller bears all risks involved in bringing the goods to the named place.

FCA - FREE CARRIER

The

Seller delivers the goods, cleared for export, to the transporter

selected by the Buyer. The Seller loads the goods if the carrier pickup is
at the Seller's premises. From that point, the Buyer bears the costs and
risks of moving the goods to destination.
EXW The

EX WORKS

Seller's only responsibility is to make the goods available at the

Seller's premises. The Buyer bears full costs and risks of moving the
goods from there to destination.

CFR

- COST AND FREIGHT

The

Seller clears the goods for export and pays the costs of moving the
goods to destination. The Buyer bears all risks of loss or damage
CIF
The

- COST INSURANCE AND FREIGHT

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

METHODS OF PAYMENT IN INTERNATIONALTRADE:

For exporters, any sale is a gift until payment is received.

Exporters want to receive payment as soon as possible, preferably as

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

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

received.

Importers want to receive the goods as soon as possible but to delay

payment as long as possible, preferably until after the goods are
resold to generate enough income to pay the exporter.

CASH IN ADVANCE / PREPAYMENTS:

With cash-in-advance payment terms, the exporter can avoid

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

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

LETTERS OF CREDIT: Letters of credit (LCs) are one of the most

secure instruments available to international traders.

An LC is a commitment by a bank on behalf of the buyer that

payment will be made to the exporter, provided that the terms and
conditions stated in the LC have been met, as verified through the
presentation of all required documents.

The buyer pays his or her bank to render this service.

An LC also protects the buyer because no payment obligation arises

until the goods have been shipped or delivered as promised.

OPEN ACCOUNT:

An open account transaction is a sale where the goods are

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

This option is the most advantageous option to the importer

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

TYPES OF LETTER OF CREDIT

Irrevocable and revocable letters of credit

Revocable can be changed or cancelled by the bank that

issued it at any time and for any reason.

An irrevocable letter of credit cannot be changed or

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

Transferable letters of credit :

A transferable letter of credit can be passed from one

beneficiary (person receiving payment) to others.

They are commonly used when intermediaries are involved

in a transaction.

Revolving LC

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

same importer. It can revolve in relation to time or value.

If the credit is time revolving once utilized it is re-instated for

further regular shipments until the credit is fully drawn.

They are useful to avoid the need for repetitious arrangements

for opening or amending letters of credit.

Transport Documents used in

International Trade

In international trade, the goods move from the warehouse

of the exporter to the warehouse of the importer.

The goods may move by land water or air or a combination

of one or more of these modes.

In international trade, such transport documents are more in

number and it is very important to know the significance of
each type of document.

Bill of Lading

This is a transport document, which represents the movement

of goods by water.

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

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

Air Waybills (AWBs) are consignment notes for air-freight.

They act as a receipt for the goods in apparent good order

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

Unlike Bills of Lading, AWBs are not documents of title,

so that the holder does not necessarily have ownership of
the goods. The consignee can claim the goods on arrival
merely by quoting the AWB number.