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GLOBAL OPERATIONS

AND
FRAMEWORK OF INTERNATIONAL
TRADE DOCUMENTATION

BY

D SINHA, PHD, IIFT, Kolkata Campus


CONTENTS
INTERNATIONAL TRADE OPERATIONS:
introduction

NEED FOR DOCUMENTATION

FOUNDATION FOR DOCUMENTATION

DOCUMENTATION FRAMEWORK

MANAGING SHIPMENTS
Introduction to
International Business Operations

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INTERNATIONAL BUSINESS OPERATIONS
CHARACTERISTICS
CROSS BORDER: leads to different
- Environment (PESTLE)
- Procedures & Documentation
- Currency
MULTI-MODAL: refers to more than one
- mode of transport
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- nodeDr. Deepankar Sinha, IIFT, Kolkata campus 4
effects
Greater Complexity & Risk
Longer distance longer lead
time
Higher Cost
More Stakeholders
Multiple handling
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Strategy Considerations
Minimize Risk
Minimize Cost
Minimize Time
Maximize Quality
Maximize Efficiency
Maximize customer
satisfaction
Optimize Global Operations
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Minimize : Risk and Cost
Choose the right terms of trade
The INCO Terms
Choose the right terms of payment
UCP 600
Choose the right insurance clause
Institute Clauses
Cover for political and economic risk
ECGC
Other strategies: avoidance,
postponement, control
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FLOW DIAGRAM OF DELIVERY PROCESS FROM EXPORTER TO IMPORTER TO
IMPORTERS PREMISES (SEA / AIR)

Custom
Packaging Port s
Exporter Customs Examin
Despatch Custodian
Formalities
s Factory Inspection MH to Carriers
s of Goods ation of
Goods

Forwarding ICD / Shipmenty


Instruction CFS into Vessel
Information Customs
Customs FF / CHA Receive Importer / FF Formalities Importers Shipmenty
Formalities documents from Importer by S/A by S/A by Sea / Air
Port

Receipt by
Importer
Port Formalities + Obtain Loading into
Gate pass Carrier ICD /
CFS
Sl. Stake holder Function
No.
1. Exporter / Supplier and receiver of goods
Importer
2. Inspection Agency Certifies of goods quality as per contract

3. Packaging Agency packaging suiting the goods, logistics requirement and


importers requirement

4. Frieght Forwarder Books space in the ship, liason with Port authority. Some provide
additional services such as warehousing, material handling and
transportation.
5. Transporter Provided transportation of goods

6. ICD / CFS Provides stuffing and de-stuffing operation, customs examination and
Operator approval and onward from ICD / CFS to port and vice-versa. Serves as a
Dry Port.
7. Customs House Does documents clearance from Customs.
Agent

8. Customs Permits import or export of goods from India. Collects import and export
duty wherever applicable.
9. Shipping Agent Liasons on behalf of ship owner/shipping co.
10. Port Providers loading, un-loading and associated facilities to the ship,
provides storage space, inspection facilities by Customs for cargo.
11. Ships Master Endorses receipt of good on board the ship.

12. Stevedores Provides cargo handling services on board the ship

13. Draught Surveyors Determines weight of goods

14. Quality Surveyors Determines quality of goods on board vessel during loading and un-
loading
15. NVOCC A shipment consolidator or freight forwarder who does not own any
Vessel, but functions as a carrier by issuing its own bills of lading or air
waybills and assuming responsibility for the shipments.
16. Banks Effects transfer of funds, provides loans packing credit, foreign
currency, stands as guarantee /negotiates documents, hedges currency rate

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INFORMATION FLOW

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SELLER BUYER

PURCHASE ORDER

PROFORMA INVOICE

LETTER of CREDIT

FORWARDING INSTRUCTION Goods movement &


BILL of LADING tracking information
INSTRUCTION
CARRIER

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DOCUMENT FLOW

WORK ORDER
SELLERS CONFIRMATION - PROFORMA INVOICE
BUYERS CONFIRMATION - LETTER OF CREDIT
ARRANGING FINANCE-PACKING CREDIT
PRODUCTION NOTICE
FORWARDING INSTRUCTION
SHIPPING ORDER
INSPECTION CERTIFICATE
PACKAGING CERFIFICATE
PACKING LIST
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COMMERCIAL INVOICE
BILL OF LADING
SHIPPING BILL
PORTS PERMISSION - CARTING ORDER
CUSTOMS PERMISSION LET EXPORT ORDER
DOCK CHALLAN
STOWAGE / BAY PLAN
LOADING INSTRUCTION
MATE RECEIPT
PAYMENT CLAIM
RECEIPT OF GOODS
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International Business Terms

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International Business Terms
INCO TERMS

There are 4 Groups: E, F, C & D

11 TERMS IN THESE 4 GROUPS

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INCOTERMS - 2010
International Buying Terms

E Group: Ex-Works - All charges from your


door.
F Group: FOB, FCA -Main carriage unpaid.
C Group: C&F (CFR), CIF - Main carriage paid.
D Group: DAT, DDP Door-to-Door.

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THE Eleven INCOTERMS
EXW- EX WORKS DAT- DELIVERY AT
TERMINAL
FCA- FREE CARRIER
FAS- FREE ALONGSIDE DAP- DELIVERED AT PLACE
SHIP
FOB- FREE ON BOARD DDP- DELIVERED DUTY
PAID
CFR- COST AND FREIGHT
CIF- COST, INSURANCE,
FREIGHT
CPT- CARRIAGE PAID TO
CIP - CARRIAGE &
INSURANCE PAID TO
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2010

NAMED PLACE

DAP

DAP
DAT

DAP

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RESPONSIBILITY
EXW- EX WORKS
EXPORTER: NO RESPONSIBILITY EXCEPT SELLING THE RIGHT
MATERIAL
IMPORTER: EXPORT / IMPORT DOCUMENTS, INSPECTION, INLAND
TRANSPORTATION, CUSTOMS CLEARANCE, LOADING, CARRAIGE,
INSURANCE
FCA- FREE CARRIER (NAMED PLACE)
EXPORTER: EXPORT / IMPORT DOCUMENTS, INSPECTION, INLAND
TRANSPORTATION UP TO A NAMED PLACE & CUSTOMS CLEARANCE
IMPORTER: EXPORT / IMPORT DOCUMENTS, INSPECTION, INLAND
TRANSPORTATION, CUSTOMS CLEARANCE, LOADING, CARRAIGE,
INSURANCE
FAS- FREE ALONGSIDE SHIP
EXPORTER: EXP / IMP DOCUMENTS, INSPECTION, CUSTOMS
CLEARANCE
IMPORTER: LOADING, CARRAIGE, INSURANCE

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FOB- FREE ON BOARD
EXPORTER: FAS + LOADING
CFR- COST AND FREIGHT
EXPORTER: FOB + CARRAIGE/ FREIGHT
CIF- COST, INSURANCE, FREIGHT
EXPORTER: CFR + INSURANCE
CPT- CARRIAGE PAID TO
EXPORTER: CIF + NAMED PLACE AT DESTINATION
CIP CARRAIGE & INSURANCE PAID TO NAMED PLACE
OF DESTINATION
EXPORTER: CPT + INSURANCE : NAMED PLACE AT
DESTINATION

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ARRIVAL
DAP- DELIVERED EX SHIP / OR ANY MODE OF
TRANSPORT
EXPORTER: SIMILAR TO CFR + RESPONSIBILITY
UP TO IMPORTERS NAMED PLACE
(DUTY NOT PAID & NOT
UNLOADING)
DAT- DELIVERED EX TERMINAL
EXPORTER: CIF+UNLOADING AT IMPORTERS
PORT
DDP- DELIVERED DUTY PAID
EXPORTER: ALL COST UP + RESPONSIBILITY UP
TO DESTINATION (NOT
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UNLOADING)
INCO TERMS: RISK DISTRIBUTION

EXPORTER

MIN
MIN
MAX MAX
EXW FCA FAS FOB CFR CIF CPT CIP DAT DAP DDP

IMPORTER

MAX
MAX
MIN MIN
EXW FCA FAS FOB CFR CIF CPT CIP DAT DAP DDP

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TERMS A I R R O A D R A I L SEA

E X W Y Y Y Y

F C A Y Y Y Y

F A S Y

F O B Y

C F R Y

C I F Y

C P T Y Y Y Y

C I P Y Y Y Y

D A T Y Y Y Y

D A P Y Y Y Y

D D P Y Y Y Y

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SL. GROUP DESCRIPTION w.r.t Exporter TERMS of
NO. shipment
COST RESPONSIBILTY

1. E Ex Works Up to exporters premises ExW

2. F Cost up to a named Up to a named place (ICD, Port) in FCA, FAS,


place (ICD, Port) in exporting country FOB
exporting country paid
by exporter

3. C Cost of Carriage Up to a named place (ICD, Port) in CPT, CIP,


(Freight) paid by exporting country and not up to CFR, CIF
exporter up to any any place at importers country
place in the importers even if the cost has been paid. For
country and in example., exporter may pay all cost
addition may also pay up to importers port but his or her
for marine insurance responsibility ends at the port of
depending on the his or her own country
terms of shipment;

4. D Cost of Carriage Responsibility up to named place at DAP, DAT,


(Freight) paid by importers country depending on DDU, DDP
exporter and in the terms of shipment
addition may also pay
for marine insurance
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NEED FOR
DOCUMENTATION
Why is documentation necessary?

Documentation is used to keep shipment and


delivery on schedule,
to describe cargo,
for customs clearance,
to indicate the ownership of goods for
collection purposes or
in the event of dispute, and
to obtain payment
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 the terms and conditions of a
contract if carriage, such as in the case of an
airway bill
Evidence of ownership or title to goods, such as
in the case of a bill of lading
Function of export documentation
CONTD

A promissory note; that is, a promise to pay


A demand for payment, as with a bill of
exchange
A declaration of liability, such as with a
customs bill of entry
A receipt for goods received.

Source: JCCI Exporter's Manual


FOUNDATION
FOR
DOCUMENTATION
-THE INCO-TERMS
EXPORT DOCUMENTATION FRAMEWORK

STARTING EXPORT

PROCESSING ORDERS
FOR EXPORT

SHIPMENT OF EXPORT

POST-SHIPMENT
STARTING EXPORT
documentation
STARTING EXPORT - related documents
REGISTERING PROFILE WITH DGFT -
RA

OBTAINING IEC RE: EXPORT LICENSE


NOTE SCHEDULE 2
OF EXPORT POLICY
OBTAINING ECC EXPORT LICENCE
RE: HANDBOOK OF
EXPORT LICENCE FOR RESTRICTED PROCEDURES VOL-I
ITEMS DGFT WEB SITE

AUTHORISATION FOR AUTHORISATION FOR AUTHORISATION FOR AUTHORISATION


DFIA EPCG DEEC FOR CCP

REGISTRATION WITH EXPORT


OBTAINING ID CARD FROM DGFT
COUNCILS
INTERVIEW SETTING UP OF
WITH DGFT EXECUTING BG / LUT : RA / CUSTOMS
CUSTOMS BONDED
FOR DFIA / EPCG / DEPB WAREHOUSE
ABBREVIATIONS
RA REGIONAL AUTHORITY
IEC IMPORT EXPORT CODE
ECC- EXCISE CONTROL CODE
DFIA- DUTY FREE IMPORT AUTHORISATION
DGFT-DIRECTOR GENERAL OF FOREIGN TRADE
EPCG-EXPORT PROMOTION CAPITAL GOODS
DEEC-DUTY EXEMPTION ENTILEMENT
CERTIFICATE
CCP- CUSTOMS CLEARANCE PERMIT
PROCESSING ORDERS
FOR EXPORT
EXPORT PROCESS
Offers / requests / pro-
RECEIVE EXPORT ORDER
forma orders /
negotiations / formal
order
CONFIRMATION OF EXPORT ORDER

ISSUE PROFORMA INVOICE


ECGC AUTHORISATION

FINALIZE THE CONTRACT FOR SALE

RECEIVE BUYERS LC
CERTIFICATE OF
QUALITY
SHIPMENT PREPARATION
SHIPMENT OF EXPORT
documentation
SHIPMENT PREPARATION
CERTIFICATE OF
ORIGIN
FORWARDING INSTRUCTION

PACKING CERTIFICATE
PACKING LIST

COMMERCIAL INVOICE
MARINE CARGO
INSURANCE
BILL OF LADING - SEA
FREIGHT

AIR WAY BILL - AIR


FREIGHT PORT PROCESS &
DOCUMENTATION
SHIPPING BILL
EXPORT PERMIT
LET EXPORT ORDER

SHIPMENT ADVICE
POST-SHIPMENT
documentation
POST-SHIPMENT
documentation
ADVANCE PAYMENT IRREVOCABLE LC NON-REALIZED EXPORTS

deemed to be export certified by foreign


CERTIFIED BY mission
EXPORTERS BANK
REALIZATION OF RBI WRITES - OFF
INCENTIVES deemed to be realized
THANK YOU