A PROJECT REPORT ON EXPORT PROCESS AND DOCUMENTATION
1. Submitted by
Sagar Anand
PGDM –IB
Roll No-05
IN PARTIAL FULFILMENT OF PGDM IN INTERNATIONAL
BUSINESS FOR THE ACADEMIC YEAR -2008-10.
Under the guidance of
Dr. R. Chandran
PIMSR, NEW PANVEL
PILLAI’S INSTITUTE OF MANAGEMENT STUDIES & RESEARCH
NEW PANVEL, NAVI MUMBAI
(A recognized institute and given A rank by NACC and affiliated to AICTE)
2. Export Process & Documentation 2
COVER PAGE
EXPORT PROCESS
AND
DOCUMENTATION
PROJECT REPORT
This project report entitled “Export Process and
Documentation” based on my knowledge and two
month work experience with committed cargo care
Pvt. Ltd. as a summer trainee.
SAGAR ANAND
7/6/2009
PIMSR
3. Export Process & Documentation 3
ACKNOWLEDGEMENT
Life of human beings is full of interactions.
No one is self-sufficient by himself whenever anyone is doing
some serious and important work a lot of help from the people
concerned is needed & one less specially obliged towards them. I
cannot forget acknowledging them in few words as without the
guidance & co-ordination of them in my project report would not
have been possible.
A large number of individual contributed to this project.
I am thankful to all of them for their help and encouragement.
My writing in this project report has also been influenced by a
number of website and standard textbooks. As far as possible, they
have been fully acknowledged at the appropriate place .I express
my gratitude to all of them.
First of all I owe my heartfelt gratitude to my guide prof.
Mr. Guha and prof. Betty for his noble guidance throughout the
completion of the Project.
I would like to extend my heartfelt thanks to Mr. Vikram
singh rawat, Branch Manager of committed cargo pvt. Ltd. Navi
Mumbai Branch for giving me an opportunity to work on this project.
I would also like to thank Ms. Kirti, Senior Executive, of
committed cargo pvt. Ltd. for his guidance, inspiration, and
constructive suggestions, which helped me in the Project.
I must also thank the management of committed cargo
pvt. Ltd. to provide excellent opportunity and environment to be able
to pull my project through. Cooperation of the staff is also gratefully
acknowledged.
Last but not least, also give my sincere thanks to all the
people to directly indirectly have help and encourage me in finding the
way to us collecting the requisite information and completing the
project effectively and timely.
Sagar Anand
PGDM (IB)
Roll no. - 05
PIMSR
4. Export Process & Documentation 4
GUIDE CERTIFICATE
TO WHOMESOEVER IT MAY CONCERN
This is to certify that the project report titled
“Export Process and Documentation” Offered by
Committed cargo Pvt. Ltd. has been prepared by Sagar
Anand, Roll No.- 05, a student of PGDM (Post
Graduation Diploma in Management), session (2008-10)
with International Business as major area of specialization.
The study was conducted with special reference to
committed cargo care Pvt. Ltd. C.B.D. Belapur, Navi
Mumbai. I recommend this project for evaluation.
Place:
Date: (Dr. R. Chandran)
Director
PIMSR
5. Export Process & Documentation 5
INDEX
Subject Page No.
Important Abbreviations 6
Introduction of study 9
Objective of study 12
Research Methodology 13
Research Design 14
Scope of the Project 15
Limitations of the study 16
Company Profile 17
Organization Chart 25
Benefits Given by company 27
Theoretical background 27
Data Analysis and Interpretations 58
Findings 68
Bibliography 72
Glossary & International Freight Terms 73
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9. Export Process & Documentation 9
INTRODUCTION OF STUDY
This project is all about to know about export import
procedure/ documentation of shipment. This project puts
more focus on to know custom clearness, to make export -
import invoice, to get shipping bill number from custom
department etc. This project will also find out how
Committed cargo Pvt. Ltd. could sustain in the competitive
world by providing vast range of cargo handling through all
instruments which flexible prompt and innovative in
meeting the requirement of the customer. The purpose of
the study was to know about export – import documentation
of seaway in the committed cargo Pvt. Ltd.
The India International Coir Fair-2009, which is
coinciding with the golden jubilee celebrations of the Central
Coir Research Institute, is expected to give further fillip to
coir exports from the country by providing better visibility to
coir products in the global market. The celebration of the
International Year of the Natural Fibre is also expected to
draw greater attention to coir and coir products.
Exceeding target
At a meeting of representatives of the coir exporters with the
Board officials to discuss issues related to exports, Mr V.S.
Vijayaraghavan, Chairman of Coir Board, thanked exporters
for their collective efforts in surpassing the export target last
year, both in quantity and value, despite tremendous odds
and conspicuous global impediments.
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Forex Earnings
Indian coir exports during 2008-09 had touched 1,94,791
tonnes valued at Rs 634 crore, exceeding the target set for
the year.
Coir export was 1,87,566 tonnes valued at Rs 592 crore
during the previous year.
Performance hopes
With the conduct of the India International Coir Fair-2009
and the celebration of the International Year of Natural
Fibre, the Coir Board was confident of better performance
this year.
Mr Vijayaraghavan hoped that the Coir Exporters
Federation would play a leading role in enhancing the
growth of the coir industry in all its dimensions and assured
of the board's full support in taking timely action to redress
the problems of the exporters.
The need to obtain timely governmental sanction to
participate in overseas fairs to achieve greater mileage in the
export market, setting up of a container freight station at
Pollalchi, Tamil Nadu, in view of its growing contribution to
exports and increasing the frequency of the meeting of
exporters with Board officials also received attention at the
meeting held on Monday. It was decided to hold the next
executive committee meeting of the Board at Bangalore on
May 26.
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Sales turnover
The 30-odd Coir Board showrooms spread over the country
had achieved a sales turnover of Rs 11.19 crore, accounting
for 86.10 per cent of the Rs 13-crore target fixed for the year
2008-09. The meeting also considered suggestions to
revamp these showrooms and sales depots through out the
country in tune with the growing expectations of all
sections, especially the upper strata of society in order to
remain competitive in the domestic market. In this
background, Mr Vijayaraghavan was confident of achieving
the revised sales target of Rs 15 crore set for the showrooms
in the country for the current year.
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OBJECTIVE OF THE STUDY
The main objectives of the research were:
To know about export import process.
To know what are the documents required before and
after sailing the cargo.
To know different type of container used in shipment.
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13. Export Process & Documentation 13
RESEARCH METHODOLOGY
Collect data/information about cargo through:
Primary data collection:-
E-mail
Telephone
Invoice
Packing List
Secondary data collection:-
Invoice
Packaging list
Shipping bill
Internet
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RESEARCH DESIGN
Research design is the based framework, which provides
guidelines for the research process. It is a map or blue print according
to which the research is to be conducts. The research design specifies
the methods for data collection & data analysis determine the source
of data. Most specifically it was a kind of “Descriptive conclusive
research” who takes care of who, when, where, what, how and why
aspects of the investigation further the researcher used the statistical
method to serve he purpose of project, it permitted the research to
derive more accurate generalization whose reliability could be
measured.
CENTRE : ALL OVER INDIA
RESEARCH : EXPLORATORY
RESEARCH TECHNIQUE : QUALITATIVE & QUANNTATIVE
TOOL USED : TELEPHONIC & E-MAIL
DATA SOURCE : PRIMARY & SECONDARY
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SCOPE OF THE STUDY
The scope of marketing research could cover the business
problems relating to the followings.
Types of consumers that compromise present and potential markets.
Buying habits and pattern of consumption
Size and location of different markets, not only in India but also
overseas.
The prospects for growth or construction for the current markets being
served.
New mantras of emerging segments.
Marketing and manufacturing capabilities of competitors.
Most suitable entry timing.
The current and prospective competitive position.
Chances of improvement of current channels.
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LIMITATIONS OF THE STUDY
Not a panacea
Not an exact science
Limitation of time
Erroneous findings
Not exact tool for forecasting
In experience research staff
Narrow conception of marketing research
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COMPANY PROFILE
INTRODUCTION OF THE ORGANIZATION
Overview
An ISO 9001:2000 Company Incorporated head quarter in
the national capital Delhi, India and specializes in handling Import &
Export Cargo. Earning and maintaining a reputation for dependable
and complete worldwide cargo movement solutions with the motto
―Customer Pride‖ achieved this longevity in the volatile cargo industry.
Committed Group has established its hub at Los Angeles, Toronto,
Shanghai, Mumbai, Jaipur, Ludhiana and a reliable network of
associate offices in India and world over and is specialized in
forwarding of cargos choosing the most convenient and cost effective
transportation method by air, courier, sea and truck any time &
anywhere around the globe.
Committed Group management has the right mix of experience and
commitment and is fast to adapt to new emerging technology. Its well-
established network and tracking software enables to provide fast and
reliable information to its client. Thus capable of handling –
Packaging
Warehousing
Freight forwarding
Clearance of Export and Import Cargo
Commercial, Diplomatic and Non-Diplomatic Consignment.
Projects
Mission Statement
―To be focused as a pro-active cargo gateway by anticipating and
reacting to each stage of a shipment's transit with commitment and to
experience strategic growth of a highly respected and recognized cargo
company in the Industry‖.
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Team
The Committed Group management team brings together leaders with
a wealth of expertise from various industries, including
transportation, logistics, cargo management, professional services and
customer service.
These individuals form a strong foundation that provides
vision and support to a growing team of talented, dedicated
professionals working to adopt and deliver professional freight
forwarding solutions and custom clearance.
The Operational team at Committed Group comprising of more than
50 in-house trained energetic and aggressive group of employees with
several years of experience in the international freight forwarding plus
an protracted experience in the reputable shipping lines and airlines.
Thus, with strong gamut of professional from cargo industry under
one roof help Committed Group to adopt the "Total Freight
Management" approach, a feature of which is the handling of client
cargo on a door-to-door basis.
This approach ensures the correct management of cargo in
a cost-efficient and professional way at competitive price and feels
Committed Group is the RIGHT PARTNER FOR YOU.
Services
Air Freight
Custom Clearance
Document Processing
Multi Modal Facility
3 PL & Supply Chain Management
Packaging & Warehousing
Tracking & Tracing
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Multi Modal Facility
At Committed Group it is a single window contract for the carriage of
goods by at least two or more different modes of transport. Thus,
providing a permutation-combination between air- ocean-surface
modes to reduce the cost of transportation. This includes Door pick to
Door delivery and a complete logistics support constituting of:
» Origin Pickup/Trucking.
» Warehousing if required.
» Customs Clearance & Documentation at origin.
» Origin charges payable like THC, B/L Fee etc.
» Carriage by Sea or Air by payment of Freight.
» Inland Trucking if required.
» Customs Clearing of goods at destination and Warehousing if need be.
» Door Delivery of the cargo.
Committed Group operates as Multimodal Transport Operator (MTO)
providing the end 2 end services like:
DDP: Delivered Duty Paid Shipments.
DDU: Delivered Duty Unpaid Shipments.
CI Shipments: Cargo picked up on cost and insurances terms
CF Shipments: Cargo picked up on cost and freight paid terms
CIF Shipments: Cargo picked up on cost Insurance and freight paid
terms.
FOB: Free on Board Shipment. Only Port to port or Apt to Apt service
by Carrier.
Ex Works: Pick up if cargo from shipper’s warehouse/factory.
Multimodal Transport (MT) Document
Services along with logistic documentation evidencing a multimodal
transport contract which can be replaced by electronic data
interchange messages insofar as permitted by applicable law and be
(a)Issued in a negotiable form or,
(b) Issued in a non-negotiable form indicating a named consignee.
Taken in charge means that the goods have been handed over to and
accepted for carriage by the MTO for delivery.
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20. Export Process & Documentation 20
Delivery of the Cargo through Multimodal facility
This is done after completion of various documentation and
formalities after the arrival of the shipment at destination.
The Cargo delivery is subject to various terms and conditions to be
fulfilled by the consignee as listed below:
1. Payment of all applicable charges to the delivery agent of the
carrier.
2. On presentation of Duly Endorsed Original Bill of Lading (for Sea /
Ocean Shipments).
3. For Air shipments, an Authority Letter is required.
4. Original DIC.
5. In case of shipments under L/C, the designated Bank need to
endorse the Bill of Lading or issue
A Bank Release Order in favour of the carrier.
Committed Group as an MTO undertakes to perform or to procure the
performance of all acts necessary to ensure delivery of the goods /
cargo with responsibility:
(a) When the MT document has been issued in a negotiable form
"to bearer", to the person surrendering one original of the
document, or
(b) When the MT document has been issued in a negotiable form
"to order", to the person surrendering one original of the document
duly endorsed, or
(c) When the MT document has been issued in a negotiable form to a
named person, to that person upon
Proof of his identity and surrender of one original document; if
such document has been transferred "to Order" or in blank the
provisions of (b) above apply, or
(d) When the MT document has been issued in a non-negotiable form,
to the person named as consignee in the document upon proof of his
identity, or
(e) When no document has been issued, to a person as instructed by
the consignor or by a person who has acquired the consignor's or the
consignee's rights under the multimodal transport contract to give
such instructions.
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Period of responsibility
The responsibility of Committed Cargo Care Pvt. Ltd. as a
Multimodal Transport Operator (MTO) for the goods under these Rules
covers the period from the time the MTO has taken the goods in his
charge to the time of their delivery.
The multimodal transport operator shall be responsible for
the acts and omissions of its employee or agents, when any such
employee or agent is acting within the scope of his employment, or of
any other person of whose services he makes use for the performance
of the contract, as if such acts and omissions were his own.
Packaging & Warehousing
Packaging at Committed Group
Committed Group employs professional packers and experienced
supervisors who are trained packing and packaging. We specialize in
handling fragile / heavy / oversized cargo. For packaging, we use
material like craft paper / soft papers, corrugated rolls & boxes, air
bubble pack rolls, polythene & polypropylene, and masking tape, etc.
depending upon the requirement.
We design fabrication and assembly of crating material for
packaging machinery and equipment for storage or shipment and
usage of correct primary protective packing materials to insulate
machinery and equipment from moisture, corrosion and excessive
shock. Crating and the use of machines to execute packing and
moving operations has resulted in accolades and sustained patronage
by clients in India and abroad.
Warehousing at Committed Group
Committed Group offer warehousing facilities to support export -
import activities. The warehousing facilities are very helpful to
accelerate the transportation of goods, especially for cargos with LCL
Status. We use authorised warehouses located worldwide.
Further to our covered warehousing facilities are provided for
storing of FMCG, industrial and high-end sophisticated products on
transit. The warehouses are equipped with dedicated loading and
unloading bays.
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At Committed Group storage areas of warehouses are demarcated to
identify each location. Our distribution centres offer ample space for
palletizing, crating and packing services according to customers’
specifications.
3 PL & Supply Chain Management
At Committed Group, we define functional experience, expertise,
speed, flexibility, and ingenuity to manage your freight efficiently
everytime.
As an experienced provider of 3PL (Third Party Logistics) 24 x 7,
we provide a total supply chain solution for your logistics and freight
management needs. Our ongoing goal is to simplify the shipping
process for our clients by finding the best rates and then smoothly
coordinating all aspects of the shipment from pick-up to ship to
delivery for our E2E, B2E, B2B, B2C and C2C clientele base.
At Committed Group, we practice logistics. We can develop a
comprehensive project plan for your organization, deploy a project
team, and remain with your team through the implementation and
start-up. We analyze existing processes, from initiation of an order
through fulfillment, and evaluate modal selection, carrier utilization,
and existing cost structures. We formulate a customized solution for
your unique needs.
Committed group is a hub-based third party fulfilment and logistics
company servicing both domestic and international needs.
Services include: Complete Supply Chain Operations: End-to-
End
Full Case Pick Modules
Split Case Pick Modules
Tilt Tray Sorter
Sliding Shoe Sorter
CAPS Line
Pick-to-Light
Kitting
Product/Process QA Management
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Performance-driven Controls
Standard and Customized Reporting
Inventory control
Private and Public Delivery Network
Invoicing
Call Centre Support
Diverse Product Categories Returns processing
Assembly and inbound / outbound freight management.
Accounts Management, and advanced in-house Systems
Support.
A-frame and Real-Time RF-Controlled Inventory System
Along with state-of-the-art distribution, our 3PL and SCM
services offers clients around the clock full service fulfilment support.
Additional services available: extensive print support, product
packaging and ware housing.
Our 3PL solution and Supply Chain Management enables cost savings
and better route planning
Ability to connect customers and their supply chain partners
through a real-time information hub
10-15% reduction in transportation costs
Real-time monitoring of inventory, orders and events
Intelligent order sourcing across multiple stocking locations
10-15% cost improvement for fleets
Tracking & Tracing
Committed Group big advantages offer to our customers is the
one stop online track and trace facility. Through this site you now
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24. Export Process & Documentation 24
have the ability to monitor your consignments online or web access at
any time, day or night, without the need to constantly refer back to
your forwarder. Our system offers access on a 24/7 basis for all
consignments shipped by road, sea and air.
Updated daily, the moment you entrust your consignment
given a reference number and subsequently logged on our system the
same day. All customers are assigned unique login details to allow
immediate tracking of their consignments. The unique login codes
ensure total security by baring others from viewing the same
information. The accessible information is kept on a secure location
and is accessed through a strict password system. The information
available from our track and trace facility is flexible and can be
tailored to your individual needs. Thus, a global network of contacts
and our combined wealth of experience ensure that your shipments
are transported effectively and efficiently. Committed Group Track and
Trace facility is available for obtaining your freight consignment status
with most major Airlines.
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BENEFITS GIVEN BY COMPANY
Origin Pickup/Trucking.
Warehousing if required.
Customs Clearance & Documentation at origin.
Origin charges payable like THC, B/L Fee etc.
Carriage by Sea or Air by payment of Freight.
Inland Trucking if required.
Customs Clearing of goods at destination and
Warehousing if need be.
Door Delivery of the cargo.
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27. Export Process & Documentation 27
THEORETICAL BACKGROUND
LOGISTICS SYSTEM
Logistics is defined by the council of Logistics, Ohio USA as the
Process of planning, implementing and controlling the efficient, co-
effective flow and storage flow and storage of raw materials, in process
inventory finished goods and related information from point of origin
to point consumption. More simply, the objective of Logistics System
is that the right products reach the right place in the right quantity at
the right time to satisfy customer demand.
ELEMENTS OF LOGISTICS SYSTEM
Nature of Product
Location of Manufacturing Plant
Availability of infrastructure such as Road
Availability of different modes of transportation
Dealer/Distributor Network
Government Policy
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ELEMENTS OF LOGISTICS SYSTEM
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MODE OF TRANSPORTATION
AIR TRANSPORT
OCEAN TRANSPORT
RAIL TRANSPORT
ROAD TRANSPORT
OCEAN TRANSPORT
More than 95 per cent of international trade is conduced by sea
routes since ancient times, sea routes are being used for
transportation of cargo from one continent or country to Coastal
shipping is also used for transporting the cargo from one port
within the country to another.
For example in India the cargo can be transported from Chennai
port to Visakhapatnam port using the costal shipping route.
Sea routes are used for carrying bulj
commodities like such as coaling and thermal coal mires, fertilizers
rock phosphate etc, and liquid go like crude oil ammonium acids
etc Ideally the goods with high volume and kiw vakye are suited
die ocean transport in the era of containerisation even the high
value cargo can be safely enabled the cargo carrying capacities of
the ship to increase many fold.
In 1956, the first containerised ship belonging
to sea land corp. carried 58 twenty feet containers. The modern
ships have the capacity to carry 7000 containers.
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30. Export Process & Documentation 30
One of the biggest ships owned by Maersk-sea
land is 1,138 feet long from end to end and 140 feet wide at mid
ship. Such ships are called Post-Panamax ship.
Cargo ship categorised into followings:-
Liners ships : Liners ship represent the organized sector of the
shipping industries due to their fixed schedules of arrival and
departure, Pre-determined voyages and trade routes and published
ocean freight rates. Liner shipping is governed by shipping conference
and offers the following advantage to shippers:-
Regular sailings to scheduled ports of call.
Stable freight rates for a long period of time which helps the
shipper to quote C & F prices with confidence.
Uniform rates for all shippers.
Coverage of wide range of ports.
Rebates of freight rates based on loyalty agreements.
Tramp ships:- Tramp ships on the other hand have the
following characteristics –
They are free to move anywhere on the high seas at their
will.
Their voyage routes and schedules are flexible.
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31. Export Process & Documentation 31
They travel from the port to another port o various trade
routes looking for the cargo and carrying the same to various
routes looking for the cargo and carrying the same to various
destinations around the world.
They arrive or depart without a fixed route or schedule.
They fix their voyages according to availability of cargo
and as per the requirement of the shippers of these
cargoes.
The freight rates of tram ships depend upon the
demand and supply conditions in the shipping
industry. If there is a glut of shipping space the tramp
freight rates plummet. Whereas in case of shortage of
shipping space, the tramp freight rates shoot up.
The cargo space on the tramps is booked by the
brokers located in major port cities like New York,
London, Rotterdam Hamburg, and Hong- Kong etc.
They work as a link between tramp operators and
shippers.
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32. Export Process & Documentation 32
TYPE OF CONTAINER USED IN
SHIPMENT
HIGHCUBE REEFERS
BULKERS
FLAT RACKS DRY CONTAINER
TANKS ROOLTRALERS OPEN TOPS
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EXPORT PROCEDURE AND DOCUMENTATION
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40. Export Process & Documentation 40
In India, ships transport more than 90 per cent of the cargo. It
therefore interesting to study the export processed by ship
documentation related to it.
Processing of an export order-----
i. Exporter operation starts with the receipt of enquiry by the
exporter from importer. Bar on the enquiry exporter submits his
offer giving complete details of products technical specific price
delivery payment terms etc.
ii. After the process negotiations importer sends a purchase order
follow by letter of credit (if applicable).
iii. The exporter manufactures the goods according to the
specification given in purchase order.
iv. As soon as the goods are ready the exporters invites the
representative of Export inspections agency (EIA) for pre
shipment inspection and obtain the certificate of inspection.
v. After that, the exporter prepared following documents:----
INVOICE
PACKING LIST
ARE1 FROM EXSICE DEPARTMENT
MARINE INSURANCE POLICY
COPY OF PURCHASE ORDER / L/C
vi. Above those documentation sends to CHA by exporter.
vii. Based on these documents CHA agent completes the octroi
formalities, obtain port permit and prepare shipping bill which
is a customs documents.
viii. Custom department check the export cargo on the basis of
information provided on the shipping bill. If satisfy then cargo
allow to loaded on the board of ship.
ix. The shipping line gives mate receipts to CHA agents after the
payment of ocean freights and port due obtains the bill of lading
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41. Export Process & Documentation 41
(B/L) from shipping line .B/L is a proof of dispatch of cargo and
also a negotiable document.
x. After that, CHA agent send various documents back to exporter
which is—
Customs attested invoice
Copy of shipping bill
Full set of non board bill of lading.
Copy of purchase order or L/C
Copies of ARE1 Form
SDF form
xi. After that the exporter submitted above these documents for
negotiation to the bank which include :----
Commercial invoice
Packing list
SDF form
Original copy of purchases order
Certificate of origin
Bill of exchange
Shipment advice
After that, bank scrutinizes these documents and if found correct
make payment to exporter against documentations.
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42. Export Process & Documentation 42
INVOICE
CERTIFICATE
CUSTOMS DOCUMENT
EXPORT
TRANSPORT DOCUMENT
DOCUMENTATION
EXCHANGE CONTROL
DOCUMENT.
PAYMENT
DOCUMENT.
MISCELLANEOUS DOCUMENT
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EXPORT INVOICE
ELEMENT OF EXPORT INVOICE:-
Exporter
Consignee
Invoice No. and Date
Exporter Ref.
Buyer order no and date
Other reference
Buyer (other than consignee)
Country of origin of goods
Country of final destination
Terms of delivery and Payment
Pre-carriage by
Place of receipt by pre-carrier
Vessel/ Flight no.
Port of loading
Port of discharge
Final Destination
Marks and Nos. / No & Kind of pkgs.
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Item code
Description of goods
Net weight
Gross weight
Quantity
Rate CIF EURO
Amount CIF EURO
Amount in words
Declaration:
Authorised signature
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DATA ANALYSIS
How Big is a Cubic Meter?
Calculation: Length x Width x Height divided by 1728 = cubic feet
divided by 35 = cubic meters.
23 BOOK BOXES 11 MEDIUM BOXES 8 LARGE BOXES
= one cubic meter
13x13x17 inches 18x18x17 inches 18x18x24 inches
1.5 cubic feet 3.1 Cubic Feet 4.5 Cubic Feet
0.043 Cubic Meters 0.091 Cubic Meters 0.125 Cubic Meters
(approx) (approx) (approx)
Or mix and match:
=
one
cubi
c
met
er
=
one
cubi
c
met
er
=
one
cubi
c
met
er
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59. Export Process & Documentation 59
Air freight calculation
Introduction
Airlines that are members of the International Air Transport
Association (IATA) are bound by their membership to
comply with tariffs issued by IATA. However since 11th
September 2002, airfreight rates are now extremely
negotiable. Airfreight rates cover transportation from the
airport of loading to the airport of discharge.
These rates do not include the following:
Collection of air cargo from the consignor's/exporters
premises
Delivery of cargo from the airport of destination to the
consignee's premises
Storage of cargo before or after loading
Customs clearance in the country of destination
Any duties and taxes that may have to be paid
Insurance
Chargeable/volumetric weight
Airline freight rates are based on a "chargeable weight",
because the volume or weight that can be loaded into an
aircraft is limited. The chargeable weight of a shipment will
be either the "actual gross mass" or the "volumetric weight",
whichever is the highest. The chargeable weight is
calculated as follows: 1 metric ton = 6 cubic metres. In
order to establish if the cargo will be a weight or volumetric
based shipment.
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Step 1
Measure the parcel/cargo along the greatest length, width
and height of that parcel. For example; 100 cm (L) X 100 cm
(W) X 100 cm (H) = 1 000 000 cm3. Next, weigh the parcel;
assume it weighs 150kg.
Step 2
Now divide the 1 000 000 cm3 by 6 000 = 166,66 kg. You
have now converted the centimeters (cm) into kilograms (kg)
Step 3
Now compare the weight to the volume. If the weight is 150
kg then the airline would base the freight on the higher
amount being: 166,66 kg
Air freight calculations
The airline calculates freight based on weight or volume,
which ever yields the greatest amount. Airlines quote freight
rates based on the following rate structures:
A basic minimum charge per shipment.
General cargo rates quoted for per kilogram. This rate
applies without reference to the nature or description
of the parcel, which is to be freighted.
Specific commodity rates apply to certain goods of
specific descriptions, such as fresh produce. These
rates are lower than the general cargo rate, and they
provide breakpoints at which the level of the rate
reduces further.
Example:
0 - 50 Kg @ R22.00/per kg
50 - 100 Kg @ R19.00 per kg
100 - 150 Kg @ R17.00 per kg
Unit Load Device charges
These rates are charged per container/ULD without
reference to the commodity loaded therein. Calculation of
freight rates:
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Let us assume the following figures:
The freight rate is R18.00 per kg
The weight of the parcel is 300 kg
The dimensions are: 114,6 cm X 120,4cm X 132,5 cm
(round the cm's up or down)
Therefore: 115 cm X 120 X 133 cm = 1 835 400 divide by 6
000 = 305.9 kg (having converted cm's to kg's now round up
the kg's to the next half a kilogram = 306 kg.
As the freight rate quoted by the airline is R18.00 per kg, we
calculate the price as follows:
306 kg X R18/kg = R5 508.00
The freight rate will not be calculated on the actual mass
300 kg X R18.00 = R5 400.00 as the airline will always use
the greater amount either the kg, or volumetric weight.
Consolidation
Consolidation is an economical method of moving cargo by
employing a consolidator. The consolidator receives cargo
from a number of suppliers/shippers and then combines
these cargoes into one consignment by packing the goods
into a Unit Load Device. The consolidator then books the
Unit Load Device with an airline. The supplier/shipper
would have a contract of carriage with the consolidator of
the cargo and in turn the airline would have a contract of
carriage with the consolidator. The airline would issue an
air waybill to the consolidator when accepting the Unit Load
Device and in turn the consolidator would issue the
supplier/shipper with a house air waybill.
The air waybill
The air waybill, unlike the ocean bill of lading is not a
document of title to the goods described therein, however it
does perform several similar functions these are:
It is a receipt for the goods
It is evidence of the contract of carriage between the
exporter and the carrier
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It incorporates full details of the consignor/shipper,
the consignee/receiver and the consignment/goods
It is an invoice showing the full freight amount
It must be produced, be it in an electronic format, at
the airport of discharge for clearing purposes
All copies of the air waybill, together with the commercial
invoice, packing list, certificate of origin and any other
document which may be necessary for clearing the goods
through customs, these documents are carried in the flight
captain's bag.
Sea freight calculations
Introduction
Seafreight calculations can broadly be divided into two main
components; breakbulk and containerised. In this section
we deal with how you should calculate the freight costs of
both of these two types of seafreight.
Break bulk cargo calculations
Break bulk cargo, is cargo that is unitised, palletised or
strapped. This cargo is measured along the greatest length,
width and height of the entire shipment. The cargo is also
weighed. Shipping lines quote break bulk cargo per "freight
ton", which is either 1 metric ton or 1 cubic metre, which
ever yields the greatest revenue.
Example:
A case has a gross mass of 2 Mt.
The dimensions of the cargo are:
2.5 X 1 X 2 metres
The tariff rate quoted by the shipping line is: USD 110.00
weight or measure (freight ton)
Step 1
Multiply the metres 2.5 X 1 X 2 = 5 metres Compare to the
mass = 2 Mt.
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Step 2
Calculate the freight with the greater amount either the
mass or the dimension. 5 X USD 110.00 = USD 550.00
Freight would be paid on the measurement and not the
weight. All shipping lines carrying cargo in a break-bulk
form insist on payment based on a minimum freight charge
which is equivalent to one freight ton, one cubic metre or
one metric ton.
Full Container load calculations and surcharges
Freight rates for containers are based on the container as a
unit of freight irrespective of the commodity or commodities
loaded therein, (FAK) Freight All Kinds. The shipping lines
quote per box (container) either a six or twelve metre
container. From time to time, abnormal or exceptional costs
arise in respect of which no provision has been made in the
tariffs. For example a shipping line cannot predict the
movement of the US Dollar or the sudden increase of the
international oil price. These increases have to be taken into
account by the shipping line in order to ensure that the
shipping line continues to operate at a profit. These
increases are called surcharges. All shipping lines
accordingly retain the right to impose an adjustment factor
upon their rates taking into account these fluctuations. All
surcharges are expressed as a percentage of the basic
freight rate. Surcharges are regularly reviewed in the light of
unforeseen circumstances, which may arise and bring cause
for a surcharge increase.
Bunker Adjustment Factor (BAF)
"Bunkers" is the generic name given to fuels and lubricants
that provide energy to power ships. The cost of bunker oil
fluctuates continually and with comparatively little warning.
Example:
Freight rate: Port Elizabeth to Singapore
Freight rate: US Dollar: 1 250.00 per 6-M container
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+ BAF 5.2%
US Dollar 1 250.00 X 5.2% = US Dollar 65.00
Add the two amounts together
Freight rate: U S Dollar 1 315.00
Currency Adjustment Factor (CAF)
The currency adjustment factor is a mechanism for taking
into account fluctuations in exchange rates, these
fluctuations occur when expenses are paid in one currency
and monies earned in another by a shipping company. The
currency adjustment factor is a mechanism for taking into
account these exchange rate fluctuations. It is always
expressed as a percentage of the basic freight and is subject
to regular review.
Example:
Freight rate: Port Elizabeth to Singapore
Freight rate: US Dollar: 1 250.00 per 6-M container
+ CAF 6.3%
US Dollar 1 250.00 X 6.3% = US Dollar 78.75
Add the two amounts together
Freight rate: U S Dollar 1 328.75
War Surcharge
The outbreak of hostilities between nations can have a
serious effect upon carriers servicing international trade
even though they may sail under a neutral flag. Carriers
sailing within the vicinity of a war zone may impose a war
surcharge on freight to compensate for the higher risks
involved and the higher levels of insurance premium, which
they may be obliged to pay.
Example:
Freight rate: Port Elizabeth to Singapore
Freight rate: US Dollar: 1 250.00 per 6-M container
+ WAR 5%
US Dollar 1 250.00 X 5% = US Dollar 62.50
Add the two amounts together
Freight rate: U S Dollar 1 35.50
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65. Export Process & Documentation 65
All of the above surcharges may be applied to a single
freight rate.
Example:
Freight rate: Port Elizabeth to Singapore
Freight rate: US Dollar: 1 250.00 per 6-M container
+ BAF 5.2%
+ CAF 6.3%
+ WAR 5%
Total amount of surcharge 16.5%
US Dollar 1 250.00 X 16.5% = US Dollar 206.25
(add to freight rate)
US Dollar 1 456.25
Port Congestion Surcharge
Congestion in a port for a period of time can involve
considerable idle time for vessels serving that port. When a
ship lies idle, this creates a huge amount of loss for the
ship's owner. Shipping lines therefore have the right to
impose a surcharge on the freight to recover revenue lost.
Another factor which influences port congestion surcharge
would be labour disputes. Port congestion surcharges are
calculated as a percentage of the freight rate as expressed in
the previous examples.
Consolidation services
The consolidator or groupage operator hires a container
from a shipping line and then sells that space to his
clients/exporters. The benefit for the exporter is that small
quantities which, would not fill a full container load, can be
shipped by sea freight in a shipping container as an
alternative to air freighting the goods. The consolidator
would charge per metric ton or cubic metre, which ever
yields the greatest. Example: US Dollar 89.00 Weight or
Measure. The shipping line would have a contract of
carriage with the consolidator and in turn the consolidator
would have a contract of carriage with the exporter. The
consolidator would be issued with an combined through bill
of lading from the shipping line and then present the
exporter with a house bill of lading (See bill of lading below)
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The bill of lading
The bill of lading performs the following functions:
A contract of carriage between the shipper of the cargo
and the carrying shipping company.
The name of the shipper and the receiver of the goods
the consignee.
The contents of the packages as declared by the
shipper.
Shipping details such as: port of loading and the port
of discharge.
The bill of lading is a freight invoice and indicates if
the freight costs have been prepaid by the exporter or
will be paid by the importer, "freight collect".
The bill of lading states the number of packages,
weight and dimension of the shipment.
It is a document of title to the goods stated thereon.
Every original bill of lading signed by or on behalf of the
shipping company is a document of title to the underlying
goods. This special function of a bill of lading is achieved by
a form of words which state: "In witness whereof the
undersigned on behalf of the shipping company has signed
three bills of lading all of this tenor and date, one of which
being accomplished the others to stand void".
"Accomplishing" the bill of lading requires the surrender to
the shipping line or its agents in the port or place of
destination one of the signed original bills of lading duly
endorsed by the consignee/importer. Unless and until one
of the original bills of lading as described above is
surrendered, the shipping line will not release the cargo to
the consignee/importer. Upon surrender of any one of the
originals the other originals bills of lading become void.
Endorsed Bills of Lading
Bills of lading can only be issued with the words "shipped
on board", if the cargo has actually been loaded onto the
named vessel at the port of loading. By insisting that the
exporter supplies the importer with a "shipped on board" bill
of lading, the importer obtains conclusive evidence that the
goods have been loaded on board the intended vessel.
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Some importers insist that the exporter presents "shipped
on board" bills as a condition for payment. "Received for
shipment", bills of lading can be issued as soon as the goods
have been delivered into the custody of the carrying
shipping company or its agent either at the point of receipt
or at the port of loading. Thus, a 'received for shipment", bill
of lading will only indicate the ship in which the cargo is
intended to be loaded on. The risk remains that the loading
may, for many reasons delayed or the cargo may not be
loaded at all.
Banks responsible for the payment of funds in payment for
goods under letters of credit will not release the funds if the
bill of lading has been endorsed "received for shipment".
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IMPORTER
PURCHASES ORDER / L/C
EXPORTER
CERTIFICATE INVOICE PACKING GR ARE1 MARINE
OF LIST FORM FORM INSURANCE
INSPECTION POLICY
C & F AGENT
CUSTOMS SHIPPING FULL COPY DUPLICATE DUPLICATE
ATTESTED BILLS SET OF OF L/C COPY ARE COPY GR
INVOICE ON FORM FORM
BOARD
BILL OF
LADING
EXPORTER
COMMERCI PACKIN DUPLICA NEGOTIAB ORIGI CERTIFICATE BILL OF
AL INVOICE G LIST TE COPY LE COPIES NAL OF ORIGIN EXCHANG
GR FORM OF B/L L/C E
NEGOTIATING BANK
L/C AMOUNT SHIPPING DOCUMENT
EXPORTER IMPORTER
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72. Export Process & Documentation 72
BIBLIOGRAPHY
Export Import Documentation - Prof. D.C. pai
Logistics in International Business - Prof. Rajeev Aserkar
REFERENCES – INTERNET
www.committedgroup.com
www.google.co.in
www.ask.com
www.exit.net
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73. Export Process & Documentation 73
GLOSSARY INTERNATIONAL FREIGHT
TERMS
ABI - Automated Brokerage Interface: Is a system available to U.S.
Customs Brokers with the computer capabilities and customs certification
to transmit and exchange customs entries and other information, facilitating
prompt release of imported cargo.
Acceptance: A time draft (or bill of exchange) which the drawee has
accepted and is unconditionally obligated to pay at maturity. Drawee's act
in receiving a draft and thus entering into the obligation to pay its value at
maturity. An agreement to purchase goods under specified terms.
Add Hoc Charter: A one-off charter operated at the necessity of an airline
or charterer.
Ad Valorem ("according to the value"): A fixed percentage of the value of
goods that is used to calculate customs duties and taxes.
Admiralty Court: Is a court having jurisdiction over maritime questions
pertaining to ocean transport, including contracts, charters, collisions, and
cargo damages.
Advance Against Documents: Load made on the security of the documents
covering the shipment.
Advising Bank: A bank that receives a letter of credit from an issuing bank,
verifies its authenticity, and forwards the original letter of credit to the
exporter without obligation to pay.
Advisory Capacity: A term indicating that a shipper's agent or
representative is not empowered to make definite decisions or adjustment
without the approval of the group or individual represented.
Affiliate: Is a company that controls, or is controlled by another company,
or is one of two or more commonly controlled companies.
Airfreightment: An agreement by a steamship line to provide cargo space
on a vessel at a specified time and for a specified price to accommodate an
exporter or importer, who then becomes liable for payment even though
he is later unable to make the shipment.
Agency Agreement: The steamship line appoints the steamship agent and
defines the specific duties and areas of responsibility of that agent.
Air Cargo Agent: Is a type of freight forwarder who specializes in air cargo
and acts for airlines that pay him a fee (usually 5%). He is registered with
theInternational Air Transport Association, IATA (See also Air Freight
Forwarder; Forwarder, Freight Forwarder, Foreign Freight Forwarder).
Air Freight Forwarder: Is a type of freight forwarder who specializes in air
cargo. He usually consolidates the air shipments of various exporters,
charging them for actual weight and deriving his profit by paying the airline
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the lower consolidated rate. He issues his own air waybills to the exporters,
is licensed by the CAB (Civil Aeronautics Board) and has the status of an
indirect air carrier (See also Air Cargo Agent, Forwarder, Freight
Forwarder, Foreign Freight Forwarder.)
Air Waybill: A bill of landing that covers both international and domestic
flights transporting goods to a specified destination. This is a non-
negotiable documents of air transport that serves as a receipt for the
shipper, indicating that the carrier has accepted the goods listed and
obligates itself to carry the consignment to the airport of destination
according to specified conditions.
AITA: International Air Transport Association, IATA, (French, German).
All-Risk Clause: Is an insurance provision that all loss or damage to goods
is insured except that of inherent vice (self caused). (See All Risk
Insurance).
All Risk Insurance: Is a clause included in marine insurance policies to
cover loss and damage from external causes, such as fire, collision,
pilferage, etc. but not against innate flaws in the goods, such as decay,
germination, nor against faulty packaging, improper packing/ loading or
loss of market, nor against war, strikes, riots and civil commotions (See
Marine Insurance)
Alongside: A phrase referring to the side of a ship. Goods to be delivered
"alongside" are to be placed on the dock or barge within reach of the
transport ship's tackle so that they can be loaded abroad the ship.
Arbitration Clause: Is a standard clause to be included in the contracts of
exporters and importers, as suggested by the American Arbitration
Association. It states that any controversy or claim will be settled by
arbitration in accordance with the rules of the American Arbitration
Association.
Assignment: The transfer of the rights, duties, responsibilities and/or
benefits of an agreement, contract, or financial instrument to third party.
Assignment of Proceeds: A stipulation within a letter of credit in which
some or all of the proceeds are assigned from the original beneficiary to
one or more additional beneficiaries.
A.T.: American Terms (Marine Insurance) A term used to differentiate
between the conditions of American Policies from those of other nations,
principally England.
Automated Brokerage Interface (ABI): An electronic system allowing
customhouse brokers and importers to interface via computer with the US
Customs Service for transmitting entry and entry summary data on
imported merchandise.
Automated Commercial System (ACS): The electronic system of the US
Customs Service, encompassing a variety of industry sectors, that permits
online access to information in selected areas.
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Automated Manifest System (AMS): The electronic system allowing a
manifest inventory to be transmitted to the US Customs Service data center
by carrier, port authority or service center computers.
BAA: British Airports Authority
BACA: Baltic Air Charter Association
Balance of Trade: The difference between a country's total imports and
exports; if exports exceed imports, favorable balance of trade exists, if not,
a trade deficit is said to exist.
Barter: Trade in which merchandise is exchanged directly for other
merchandise without use of money. Barter is an important means of trade
with countries using currency that is not readily convertible.
B/B: (See Break-Bulk Cargo)
Belly Cargo: Freight accommodation below the main deck.
Beneficiary: A firm or person on whom a letter of credit has been drawn.
The beneficiary is usually the seller or exporter.
Bermuda Agreement: An agreement concluded in 1946 between the U.K.
and the U.S., designed to regulate future international air traffic. Most
governments accept its principles and follow it inter alia by limiting traffic
rights on international routes to one or two carriers.
Berth: Is the place beside a pier, quay or wharf where a vessel can be
loaded or discharged.
Berth Liner Service: Is a regular scheduled steamship line with regular
published schedules (port of call ) from and to defined trade areas.
Berth or Liner Terms: Is an expression covering assessment of ocean
freight rates generally implying that loading and discharging expenses will
be for ship owner's account, and usually apply from the end of ship's tackle
in port of loading to the end of ship's tackle in port of discharge.
Bill of Lading: A document that establishes the terms of a contract between
a shipper and a transportation company under which freight is to be
moved between specified points for a specified charge. Usually prepared
by the shipper on forms issued by the carrier, it serves as a document of
title, contract of carriage, and a receipt for goods. Also see Air Waybill and
Ocean Bill of Lading.
Bonded Warehouse: A warehouse storage area or manufacturing facility in
which imported goods may be stored or processed without payment of
customs duties.
Brussels Tariff Nomenclature Number (BTN): The customs tariff number
used by most European nations. The United States does not use the BTN,
but a similar system known as the Harmonize Tariff Schedule.
CAA: Is the Civil Aviation Authority. Government body responsible for
regulating
U.K. airlines.
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Cabotage: Is where cargo is carried on what is essentially a domestic flight
and therefore not subject to international agreements that fix set rates.
Cabotage rates are negotiable between shipper and airline and apply on
flights within a country and to its overseas territories.
CAD Can have two meanings in the industry
CAD: The acronym meaning "cash against documents," a method of
payment for goods in which documents transferring title are given to the
buyer upon payment of cash to an intermediary acting for the seller.
CAD/CAM: Computer Aided Design/Computer Aided Manufacturing.
Cage: The transporting of goods by truck to or from a vessel, aircraft, or
bonded warehouse, all under customs custody.
Cargo: Is merchandise/commodities/freight carried by means of
transportation.
Cargo Receipt: Is a receipt of cargo for shipment by a consolidator (used in
ocean freight).
Carnet: A customs document permitting the holder to carry or send
merchandise temporarily into certain foreign countries (for display,
demonstration, or similar purpose) without paying duties or posting bonds.
Carriers(s) Containers or Shipper(s) Containers: The term Carrier(s)
Container(s) or Shipper(s) Container(s) means containers over which the
carrier or the shipper has control either by ownership or by the acquisition
thereof under lease or rental from container companies or container
suppliers or from similar sources. Carriers are prohibited from purchasing,
leasing or renting shipper owned containers.
Carrier, Common: A public or privately owned firm or corporation that
transports the goods of others over land, sea, or through the air, for a stated
freight rate. By government regulation, a common carrier is required to
carry all goods offered if accommodations are available and the established
rate is paid.
Cartel: Is an association of several independent national or international
business organizations that regulates competition by controlling the prices,
the production, or the marketing of a product or an industry.
Cash in Advance (C.I.A.): Payment for goods in which the price is paid in
full before shipment is made. This method is usually used only for small
purchases or when the goods are built to order.
Cash Against Documents (CAD): Payment for goods in which a
commission house, or other intermediary, transfers title documents to the
buyer upon payment in cash.
C.C.E.F.: Is a Customs Centralized Examination Facility.
Certificate of Analysis: Is a certificate required by some countries as proof
of the quality and composition of food products or pharmaceuticals. The
required analysis may be made by a private or government health agency.
The certificate must be legalized by a foreign consul of the country
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concerned, as is the case with such similar certificates as the phytosanitary
certificate.
Certificate of Inspection: A document certifying that the goods were in
apparent good condition immediately prior to shipment.
Certificate of Manufacture: A statement in which a producer specifies
where his goods were manufactured, certifies that manufacturing has been
completed, and confirms that the goods are at the buyer's disposal.
Certificate of Origin: A statement signed by the exporter, or his agent, and
attested to by a local Chamber of Commerce, indicating that the goods
being shipped, or a major percentage of them, originated and were
produced in the exporter's country.
CES: Is a Customs Examination Station
C&F: Is a quoted price includes cost of goods and freight.
C & I: Is a quoted price includes cost of goods and insurance.
CFS (Container Freight Station): The term CFS at loading port means the
location designated by carriers for the receiving of cargo to be packed into
containers by the carrier. At discharge ports, the term CFS means the
bonded location designated by carriers in the port area for unpacking and
delivery of cargo.
CFS/CFS (Pier to Pier): The term CFS/CFS means cargo delivered by
break bulk to Carrier's CFS to be packed by Carrier into containers and to
be unpacked by Carrier from the container at Carrier's destination port
CFS.
CFS/CY (Pier to House): The term CFS/CY means cargo delivered break-
bulk to Carrier's CFS to be packed by Carrier into containers and accepted
by consignee at Carrier's CY and unpacked by the consignee off Carrier's
premises, all at consignee's risk and expense.
CFS CHARGE (Container Freight Charge): The term CFS Charge means
the charge assessed for services performed at the loading or discharging
port in packing or unpacking of cargo into/from containers at CFS.
CFS Receiving Service: The term "CFS Receiving Services" means the
service performed at loading port in receiving and packing cargo into
containers from CFS to CY or shipside. "CFS Receiving Services" referred
herein are restricted to the following
1. Moving empty containers from CY to CFS
2. Drayage of loaded containers from CFS to CY and/or ship's tackle
3. Tallying
4. Issuing dock receipt/shipping order
5. Physical movement of cargo into, out of and within CFS
6. Stuffing, sealing and marking containers
7. Storage
8. Ordinary sorting and stacking
9. Preparing carrier's internal container load plan
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CIF (cost, insurance and freight): Seller is responsible for inland freight,
ocean/air freight, and marine/air insurance to the port of final entry in the
buyer's country. The buyer is responsible for inland transportation to his or
her location.
Chargeable Kilo: Rate for goods where volume exceeds six cubic metres to
the tonne.
Charter: Originally meant a flight where a shipper contracted hire of an
aircraft from an airline. Has usually come to mean any non-scheduled
commercial service.
Charter Party: The contract between the owner of a ship and the individual
or company chartering it. Among other specifications, the contract usually
stipulates the exact obligations of the ship-owner (loading the goods,
carrying the goods to a certain point, returning to the charterer with other
goods, etc.); or it provides for an outright leasing of the vessel to the
charterer, who then is responsible for his own loading and delivery. In
either case, the charter party sets forth the exact conditions and
requirements agreed upon by both sides.
Charter party Bill of Lading: A bill of lading issued under a charter party. It
is not acceptable by banks under letters of credit unless so authorized in
the credit.
Chassis: A wheel assemble including bogies constructed to accept
mounting of containers.
CIA: The acronym meaning "cash in advance," a method of payment for
goods whereby buyer pays seller in advance of shipment of goods.
C.I.F.: Is a quoted price includes cost of goods, insurance and freight.
C.I.T.E.S.: Committee on International Trade of Endangered Species.
Class Rates: A class of goods or commodities is a large grouping of various
items under one general heading. All items in the group make up a class.
The freight rates that apply to all items in the class are called class rates.
Classification: Is a customs term. The placement of an item under the
correct number in the customs tariff for duty purposes. At times this
procedure becomes highly complicated; it is not uncommon for importers
to resort to litigation over the correct duty to be assessed by the customs on
a given item.
Claused Bill of Lading: Is a bill of lading which has exemptions to the
receipt of merchandise in "apparent good order" noted.
Clean Bill of Lading: Is a bill of lading which covers goods received in
"apparent good order and condition" and without qualification.
Clean Draft: Is a draft to which no documents have been attached.
cm: Centimeters
CNS: Cargo Network Services, an IATA company. See IATA.
Collective Paper: All documents (commercial invoices, bills of lading, etc.)
submitted to a buyer for the purpose of receiving payment for a shipment.
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Commercial Risk: Risk carried by the exporter (unless insurance is
secured) that the foreign buyer may not be able to pay for goods delivered
on an open account basis.
Confirmed Letter of Credit: A letter of credit, issued by a foreign bank,
with validity confirmed by a U.S. bank. An exporter who requires a
confirmed letter of credit from the buyer is assured of payment by the U.S.
bank even if the foreign buyer or the foreign bank defaults.
Conference: A group of vessel operators joined together for the purpose of
establishing freight rates.
• RoRo/Container Vessel - Ship designed to accommodate containers and
roll-on roll-off cargo. It can be self sustaining.
• RoRo/Container/Break-bulk Vessel - Designated to accommodate three
types of cargo, usually self sustaining.
Commercial Code: A published code designed to reduce the total number
of words required in a cablegram.
Commodity Specialist: An official authorized by the U.S. Treasury to
determine proper tariff and value of imported goods.
Consignee: Person or firm to whom goods are shipped under a bill of
landing.
Consular Declaration: A formal statement, made to the consul of a foreign
country, describing goods to be shipped.
Consular Invoice: A document, required by some foreign countries,
describing a shipment of goods and showing information such as the
consignor, consignee, and value of the shipment. Certified by consular
official of the foreign, it is used by the country's customs official to verify
the value, quantity, and nature of the shipment.
Combi: Is an aircraft with pallet or container capacity on its main deck as
well as in its belly holds.
Combination Vessels: Container/Break-bulk vessel - this type of ship
accommodates both container and break-bulk cargo. It can be either self
sustaining or non-self sustaining.
Commercial Invoice: An itemized list of goods shipped, usually included
among an exporter's collection papers.
Common Carrier: A firm or individual that transports persons or goods for
compensation.
Confirmed Letter of Credit: A letter of credit, issued by a foreign bank
with validity confirmed by a U.S. bank.
Confiscation: The taking and holding of private property by a government
or an agency acting for a government. Compensation may or may not be
given to the owner of the property.
Consignee: The individual or company to whom a seller or sipper sends
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merchandise and who, upon presentation of necessary documents, is
recognized as merchandise owner for the purpose of declaring and paying
customs duties.
Consignee Marks: A symbol laced on packages for identification purposes;
generally consisting of a triangle, square, circle, diamond, cross, with letters
and/or numbers as well as port of discharge.
Consignment: Is the physical transfer of goods from a seller (consignor)
with whom the title remains, to another legal entity (consignee) who acts as
a selling agent, selling the goods and remitting the new proceeds to the
consignor.
Consignor: A term used to describe any person who consigns goods to
himself or to another party in a bill of lading or equivalent document. A
consignor might be the owner of the goods, or a freight forwarder who
consigns goods on behalf of his principal.
Consolidated Shipment: An arrangement whereby various shippers pool
their boxed goods on the same shipment, sharing the total weight charge
for the shipment.
Consolidator: An agent which brings together a number of shipments for
one destination to qualify for preferential airline rates.
Consortium: The name for an agreement under which several nations or
nationals (usually corporations) of more than one nation, join together for
a common purpose. It could be for management or exploitation of a
natural resource, as in the case of some international petroleum
consortiums.
Consul: A government official residing in a foreign country, charged with
representing the interests of his or her country and its nationals.
Consular Documents: Special forms signed by the consul of a country to
which cargo is destined.
Consular Invoice: A document, required by some foreign countries,
describing a shipment of goods and showing information such as the
consignor, consignee, and value of the shipment. Certified by a consular
official of the foreign country, it is used by the country's customs officials to
verify the value, quantity and nature of the shipment.
Container: The term container means a single rigid, non-disposable dry
cargo, insulated, temperature controlled flatrack, vehicle rack portable
liquid tank, or open top container without wheels or bogies attached,
having not less than 350 cubic feet capacity, having a closure or
permanently hinged door that allows ready access to the cargo (closure or
permanently hinged door not applicable to flatrack vehicle rack or portable
liquid tank). All types of containers will have constructions, fittings and
fastenings able to withstand without permanent distortion, all the stresses
that may be applied in normal service use of continuous transportation. All
containers must bear manufacturer's specifications.
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Container Ship: Ocean going ship designed to carry containers both
internally and on deck. Some are self sustaining.
Containerization: Is a concept for the ultimate unitizing of cargo used by
both steamship lines and air cargo lines. Containers allow a greater amount
of cargo protection from weather, damage, and theft.
Containers (Air Cargo): Many types of air cargo containers are offered:
The containers are designed in various sizes and irregular shapes to
conform to the inside dimensions of a specific aircraft.
Containers (Ocean): Are designed to be moved inland on its own chassis
and can be loaded at the shippers plant for shipment overseas. Basic types
of containers are; dry van, open top, half high, hi cube, flat rock, tank
container, refrigerated container, insulated container, tilting container.
Average outside dimensions are generally 20, 35, and 40 feet in length, 8
feet wide and 8 feet high standard.
Continuous Bond: Is an annual customs bond insuring compliance with all
regulations and requirements.
Contract Rate: Is a charge levied by carriers selling capacity forward over a
given route to a shipper of forwarder; the client is therefore assured of
capacity, which must be paid for regardless of load carried.
Coordinating Committee for Export Controls (COCOM): An informal
group of 15 western countries established to prevent the export of certain
strategic products to potentially hostile nations.
Correspondent Bank: A bank that, in its own country, handles the business
of a foreign bank.
Countertrade: Is a reciprocal trading arrangement, which includes a variety
of transactions involving two or more parties.
Countervailing Duties: Is a special duties imposed on imports to offset the
benefits of subsidies to producers or exporters of the exporting country.
Credit Risk Insurance: Insurance designed to cover risks of nonpayment
for delivered goods.
Customs Bonded Warehouse: Is a warehouse where imported goods may
be stored for a total of three years without the payment of duty or taxes.
Customhouse Broker: An individual or firm licensed to enter and clear
goods through Customs.
Customs Court: Is the court to which importers might appeal or protest
decisions made by Customs officers.
Customs Tariff: Is a schedule of charges assessed by the federal
government on imported goods.
Customs Union: Is an agreement between two or more countries in which
they arrange to abolish tariffs and other import restrictions on each other's
goods and establish a common tariff for the imports of all other countries.
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CWO: The acronym meaning "cash with order," a method of payment for
goods where cash is paid at the time of order and the transaction becomes
binding on both buyer and seller.
CY (Container Yard): The term CY means the location designated by
Carrier in the port terminal area for receiving, assembling, holding, storing
and delivering containers, and where containers may be picked up by
shippers or re-delivered by consignees. No container yard (CY) shall be a
shipper's, consignee's,
NVOCC's, or a forwarder's place of business, unless otherwise provided.
CY/CFS (House to Pier): The term CY/CFS means containers packed by
shipper of carrier's premises and delivered by shipper to Carrier's CY, all at
shipper's risk and expense and unpacked by Carrier at the destination port
CFS.
CY/CY (House to House): The term CY/CY means containers packed by
shipper off Carrier's premises and delivered by shipper to Carrier's CY and
accepted by consignee a t Carrier's CY and unpacked by consignee off
Carrier's premises, all at the risk and expense of cargo.
Dangerous Goods: Articles or substance capable of posing a significant risk
to health, safety or property, and that ordinarily require special attention
when being transported.
DAT: Dangerous articles tariff.
Date Draft: Draft that matures in a specified number of days after the date
it is issued, without regard to the date of Acceptance. See Draft.
DCA: Department of Civil Aviation. Commonly used term to denote the
government department of any foreign country that is responsible for
aviation regulation and granting traffic rights.
DDP: Delivered duty paid. Also known as "free domicile."
DDU: Delivered duty unpaid. Reflects the emergence of "door-to-door"
intermodal or courier contracts or carriage where only the destination
customs duty and taxes (if any) are paid by consignee.
Dead Leg: Is a sector flown without payload.
Dead Freight: Is freight charges paid by the charterer of vessel for the
contracted space, which is left partially unoccupied.
Deck Cargo: Is cargo carried on deck rather than stowed under deck. On
deck carriage is required for certain commodities, such as explosives.
Deferred Payment Credit: Type of letter of credit providing for payment
some time after presentation of shipping documents by exporter.
Deferred Rebate: The return of a portion of the freight charges by a carrier
or a conference shipper in exchange for the shipper giving all or most of
his shipments to the carrier or conference over a specified period of time
(usually 6 months). Payment of the rate is deferred for a further similar
period, during which the shipper must continue to give all or most of his
shipments to the rebating carrier or conference. The shipper thus earns a
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further rebate which will not, however, be paid without an additional
period of exclusive or almost exclusive patronage with the carrier of
conference. In this way, the shipper becomes tied to the rebating carrier or
conference. Although, the deferred rebate system is illegal in U.S. foreign
commerce, it generally is accepted in the ocean trade between foreign
countries.
Demurrage: A penalty for exceeding free time allowed for loading or
unloading at a pier or freight terminal. Also a charge for undue detention
of transportation equipment or carriers in port while loading or unloading.
Density: Density means pounds per cubic foot. The cubage of loose
articles or pieces, or packaged articles of a rectangular, elliptical or square
shape on one plane shall be determined by multiplying the greatest straight
line dimensions of length, width and depth in inches, including all
projections, and dividing the total by 1728 (to obtain cubic feet). The
density is the weight of the article divided by the cubic feet thus obtained.
DEQ: Delivered ex quay/duty paid.
Destination Control Statement: Any of various statements that the U.S.
government requires to be displayed on export shipments and that specify
the destination for which export of the shipment has been authorized.
D.F.: Dead Freight
DGR: Dangerous Goods Requirement.
Dim Weight: (Dimensionalized Weight) Determined by calculating length
x width x height and dividing by 166. Charged when actual weight is less
than the dim. weight.
Dock Receipt: When cargo is delivered to a steamship company at the
pier, the receiving clerk issues a dock receipt.
Documents Against Acceptance (D/A): Instructions given by a shipper to a
bank indicating that documents transferring title goods should be delivered
to the buyer (or drawee) only upon the buyer's acceptance of the attached
draft.
DOT: Department of Transportation
Draft (or Bill of Exchange): An unconditional order in writing from one
person (the drawer) to another (the drawee), directing the Drawee to pay a
specified amount to a named Drawer at a fixed or determinable future
date.
Drawback: A U.S. customs law that permits an American exporter to
recover duties paid on imported foreign raw materials or components
included in products that are subsequently exported out of the United
States.
Drawee: The individual or firm on whom a draft is drawn and who owes
the stated amount to the drawer.
Dry Lease: The rental of a "clean" aircraft without crew, ground staff or
supporting equipment.
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DST: The acronym meaning "double stack train" service, which is the
transport rail between two points of a trainload of containers with two
containers, one on top of the other, per chassis.
d.w.: Deadweight (tons of 2,240 lbs.)
d.w.c.: Deadweight for cargo
E.A.O.N.: Except as otherwise noted.
EDI or EDIFACT: Electronic Data Interchange for Administration,
Commerce and Transport, from the UN-backed electronic data
interchange standards body, to create electronic versions of common
business documents that will work on a global scale. One digital document
under consideration, the International Forwarding and Transport Message
will do the jobs of six different electronic messages currently in use.
Empty Leg: Results from an aircraft primarily chartered outbound having
cargo capacity inbound or vice versa. A cheap form of airfreight.
Endorsement in Blank: Commonly used on a bank check, an
endorsement in blank is an endorsement to the bearer. It contains only the
name of the endorser and specifies no particular payee. Also, a common
means of endorsing bills of lading dawn to the order of the shipper. The
bills are endorsed "For..." (see Bill of Lading, Order).
Eurodollars: U.S. dollars on deposit outside of the United States to include
dollars on deposit at foreign branches of U.S. banks, and dollars on
deposit with foreign banks.
"Ex": Signifies that the quoted price applies only at the indicated point of
origin (e.g. "price ex factory" means that the quoted price is for the goods
available at the factory gate of the seller).
Ex. B.L.: Exchange bill of lading.
Export Broker: The individual who brings together buyer and seller for a
fee, eventually withdrawing from any transaction.
Export Declaration: A form to be completed by the exporter or their
authorized agent and filed in triplicate by a carrier with the United State
Collector of customs at the point of exit. It serves a twofold purpose:
1. Primarily, it is used by the U.S. Bureau of Census for the compilation of
export statistics on United States foreign trade (for this reason an export
declaration is required for practically all shipments from the United States
to foreign countries and the United States possessions, except for mail
shipments of small value, or for those of a non commercial character);
2. The declaration also serves as an export control document because it
must be presented, together with the export license, to the United States
Customs at the port of export. If the goods may be exported under general
export license, this fact must be stated on the export declaration.
Export License: A document secured from a government, authorizing an
exporter to export a specific quantity of a particular commodity to a certain
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country. An export license is often required if a government has place
embargoes or other restrictions upon exports. See General Export License.
Export Trading Company: A corporation or other business unit organized
and operated primarily for the purpose of exporting goods and services, or
of providing export related services to other companies.
Express: Premium-rated service for urgent deliveries.
EXW: Ex works. Same as the former "Ex Works."FAK: Freight All Kinds
– uniform airline charging scale applying to a number of commodities; as
opposed to SCR (Specific Commodity Rate) applying to one commodity
only.
FAS (free alongside ship): Seller is responsible for inland freight costs until
goods are located alongside the vessel/aircraft for loading. Buyer is
responsible for loading costs, ocean /air freight and marine/air insurance.
Fathom: (Nautical) Conversion equivalents: 6 feet; 1.83 meters.
F.C.L.: Full container load, full car load.
F.c.s.: Free of capture and seizure.
f.c.s.r.c.c.: Free of capture, seizure, riots and civil commotions.
F.&.D.: Freight and demurrage.
FEU: Forty foot equivalent
FIATA: International Federation of Freight Forwarders Associations.
Fifth Freedom Flight: Where cargo is carried by an airline between two
countries in neither of which it is based.
F.i.b.: Free in bunkers; free into barge.
Flag Carrier: An airline of one national registry whose government gives it
partial or total monopoly over international routes.
FOB (free on board): Seller is responsible for inland freight and all other
costs until the cargo has been loaded on the vessel/aircraft. Buyer is
responsible for ocean/air freight and marine/air insurance.
F.o.d. : Free of damage
Folded: An article folded in such a manner as to reduce its bulk 33 1/3%
from its normal shipping cubage when not folded.
Force Majeure: The title of a standard clause found in marine contracts
exempting the parties for nonfulfillment of their obligations by reasons of
occurrences beyond their control, such as earthquakes, floods or war.
Foreign Trade Zone: A free port in the United Stated divorced from
Customs authority but under Federal control. Merchandise, except that
which is prohibited, may be stored in the zone without being subjected to
the United States tariff regulation. Also called Free Trade Zone.
Foreign Trade Zone Entry: A form declaring goods which are brought duty
free into a Foreign Trade Zone for further processing or storage and
subsequent exportation.
Forwarder, Freight Forwarder, Foreign Freight Forwarder: An independent
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