SHIPPING AND EXPORT DOCUMENTS. November 2002 Department of Forest Economics, University of Helsinki. Visit: for updates

Transcription

1 November 2002 Department of Forest Economics, University of Helsinki Visit: for updates

2 THIS PAGE IS MEANT TO BE EMPTY.

3 SHIPPING DOCUMENTS Very often an exporter wants to use a forwarding agent in the export process. In such a case the forwarding agent receives shipping orders from the seller, according to which he books a space for the cargo or makes a charterparty. The forwarding agent also arranges a vehicle from a carrier to fetch the goods from the seller on the agreed day. (In some cases the forwarding agent and the carrier may be belong to the same transport business.) If the cargo is booked on a tramp ship, the forwarding agent makes a charterparty (C/P) with the shipping company. The one who delivers the cargo is called charterer. Carrier is the owner of the ship, i.e. shipping company. Shipper and receiver are also named in the charterparty. The shipper is the one who actually delivers the goods for the ship (seller or forwarding agent). Big import and export companies usually have their own forwarding departments. After the transport the goods are received either by the buyer himself or by a forwarding agency authorized by the buyer. Notice: Charterparties are not used in regular liner shipping. Along with the shipping orders the forwarding agent should also receive a copy of the sales invoice. Thereupon he is able to fill the loading report or the so-called mate s receipt and the bill of lading. The terminal gives notice to the stevedoring firm once the goods destined for export have arrived at the port of loading. The ship s forwarding agent has to supply the filled loading report to the shipping company at least 24 hours prior to loading. Here the loading report is manifested, meaning that the reports receive the manifested stamp. The shipping company or their representative, the broker, sends the stamped loading reports to the ship s mate and the stevedoring firm so that a cargo plan can be designed. The forwarding agent and customs receive a copy of the manifested loading report and loading permission so that they can conduct possible inspections of the exported goods. After the cargo has been loaded onto the ship, the ship s mate sends a confirmation of the loading report to the port director of the forwarding agent. Any additional remarks can be mentioned in the loading report. The goods are often counted and confirmed by an outside tally. The signed loading report and the originals and copies of the bill of lading, which are made by the forwarding agent, are sent together to the shipping company, their representative, or then to the captain. He certifies the number of goods or number of parcels and possibly gives some remarks before signing the original bill of lading. Henceforth, the original bill of lading acts as a document giving the holder of the B/L (bill of lading) the right to the goods. The forwarding agent, which is in hold of the original bill of lading, sends it on to whomever the exporter has mentioned in his orders

4 Figure 1. Charterparty

5 BILL OF LADING The bill of lading is a document given out by the receiver of the cargo (the ship s captain, the shipping company or their representative). The B/L acts as: A receipt of the received goods An obligation to deliver the goods to named place and to then give them to the person who is in possession of the bill of lading A certificate of the contract and its contents In other words, the B/L is a receipt for the goods received for carriage. Once a shipped on board endorsement has been added (where necessary) it becomes a receipt for goods shipped on the nominated vessel. In a documentary credit (payment against deliverer of specified documents), the B/L document meets the requirements for both a combined transport document and a marine bill of lading. In addition, the B/L is evidence of the contract of carriage and confirms the agreement and provides the evidence for the contract s existence. Further, the bill of lading is a transferable document of title to goods. This means that goods can be bought and sold merely by the passing of the bill of lading provided that all the endorsements are in order. A good comparison to bear in mind is that the B/L is to goods what a check is to money, and all the criteria which apply to a check are equally applicable to the B/L. Alternatively think of it as a cloakroom ticket: no ticket = no coat / no bill of lading = no goods! In liner transport the liner bill of lading contains additional information about the goods and the delivery terms which the shipper has posed. In liner transport, the bill of lading could be considered as the most important document. It nevertheless does not represent a liner waybill, as it entitles the person to the goods and it is interchangeable. The bill of lading entitles to hand over the goods to the named receiver the named receiver or to the receiver of his choice to the receiver named by the seller The following restrictive clauses are commonly found in conventional bills of lading, but are considered inappropriate in a combined transport service: - 3 -

6 SHIPPING AND EXPORT DOCUMENTS Figure 2. Example of Bill of Lading. -4

7 The demise clause: The transshipment clause: The lighterage clause: The means by which a carrier, who is not the owner of the vessel on which the goods are shipped but who has issued bills of lading to merchants, withdraws from the contract once the goods are loaded onto the vessel, leaving the contract of carriage as between the merchant and the owner of the vessel direct. Demise clauses are valid in UK courts but not in most continental or US courts. The means by which a carrier provides himself with the liberty to tranship, and stipulates that, if he does so, the goods lie in the transhipment port at the merchant s risk and are on-carried upon the terms and conditions of the carrying vessel, with the carrier acting as agent only i.e. the carrier contracts to carry goods on the basis that he is a principal whilst the goods are in his personal care and an agent only whilst they are not. Which provides that, where the goods are loaded from or discharged into barge, lighterage is at the merchant s risk. (lighter = a large barge used to load or unload ships anchored in a harbor) The order bill of lading, on the other hand, is perhaps the most frequently used bill of lading. It is used in the following cases: Transit Bill of Lading A has sold goods to B, but wants to nevertheless retain his power to dominate over the goods as long as possible. If A, during shipment, has not yet decided to whom the goods are to be sold. The transit bill of lading, in which the cargo is transported by a second person, i.e. not only by the original carrier. In liner transport, usually the first carrier gives the bill of lading to the consignor and simultaneously takes the main responsibility over the goods until their arrival in the port of destination. Usually a local bill of lading is given to the second carrier. The purpose of this local B/L is to protect the first carrier during his part of the transport chain. In practice, instead of using a local B/L, a liner waybill is more commonly used within Europe. In tramp traffic, the B/L is usually much more condensed and contains a note about the freight contract, in which the delivery terms are mentioned more specifically. Clean Bill of Lading A clean B/L is a clean transport document, which bears no superimposed clauses, or notations that expressly would declare a defective condition of the goods and/or the packaging. The opposite would be an unclean B/L. Carriers attempt to receive clean B/L s, as otherwise the buyer might refuse to claim the damaged goods unless considerable discounts are given. Also in contracts involving a letter of credit, unclean - 5 -

8 B/L s might cause difficulties. The banks will refuse transport documents bearing such clauses or notations unless the credit expressly stipulates the clauses or notations, which may be accepted. What are the reasons why the carrier is so accurate about the details contained in the bill of lading? For one, the B/L is a document of title to the goods and goods can be bought and sold merely by passing of the B/L. It is the transferability and negotiability that makes the document so necessary to international trade. In other words, the shipping company only donates the goods in the named port to the person in hold of the original B/L. This means that the goods may be sold during the transport and the B/L is passed on to the new buyer. The transfer of the B/L is carried out by having the person or company in hold of the goods sign his name on the back page of the B/L. A named transfer is if the person s name, to whom the B/L is transferred, is mentioned. However, as usually only the name of the transferor is mentioned in the back of the B/L, one refers to an open transfer. If an open transfer is undertaken, the B/L can change ownership without any additional transfers. Also, to enable payment against the document rather than the goods, the buyer has to be able to rely implicitly upon certain details shown on the B/L. The carrier is legally prevented from denying any details in the B/L. Any carrier, who shows incorrect details on the B/L to comply with the letter of credit requirements, joins the shipper as a party to fraud on the consignee. Therefore, the carrier has to be very careful about what he acknowledges in the B/L. The basic rule that the carrier will apply at all times when producing the B/L is that he can show anything so long as it is true and not unduly restrictive. The following example illustrates this: If a carrier clauses a B/L To be carried at minus 20 degrees centigrade and the temperature deviates from 19.9 to 20.1 degrees Centigrade, he is liable for any loss arising therefrom. Showing lengthy details in a B/L wastes time and money, and is unnecessary and discouraged where possible. Lengthy detail should be restricted to the letter of credit and commercial invoice. The shipping company usually writes, on request of the seller, a couple of original bills of lading with Original stamped on them. In addition, 5-8 copies of the B/L are transmitted to the customs and for other office work. These copies hold the stamp Copy not negotiable and remain unsigned. These latter documents do not entitle the person to the goods. In the Finnish forest industry the use of B/L is still very common in exports destined to East Asia, Far East, Africa and South America. In European and North American transports, in which the customer relationships are usually old and established and the delivery clause is often DDP, other types of documents are used (e.g. liner waybill). As far as the large forest industry is concerned the receiver of the goods is usually not the customer, but a company owned foreign terminal. In such a case all transport documents may have been electronically transmitted between the parties in question. The most common use of bills of lading is in connection with the letters of credit, the purpose of which is to secure a safe payment for the delivered goods

9 LINER WAYBILL (LWB) The waybill could be described as a B/L that is not a document of title and can thus be defined as follows: A receipt for the goods An obligation to deliver the goods to the named place and to hand them over to the named receiver without him having to first present any documents Transporting contract which points out the terms on which the goods have been taken for transport The line waybill has to always be set to a named receiver and it cannot be negotiated. This document can be used in all the transports, which do not involve payment by the cash against documents (CAD) terms, or by letter of credit. Only if the bank is named as the receiver of the goods, can the waybill also be used in the latter cases. In this way, a certain reassurance similar to the one involved in the bill of lading can be obtained. The liner waybill or recommendable in liner transport. The following list gives a comparison of the characteristics of a waybill and a bill of lading: Liner waybill Delivery to a nominated consignee upon proof of identity Bill of lading Delivery to a holder, in case the provided endorsements are in order Title is a transferable contract to which each holder in turn becomes a party International truck transport The development of ferry traffic has substantially increased the importance of truck transports in exports. The vehicle stock has improved technically and its carrying capacity has increased. Regular liner traffic is pursued to the whole of Western Europe, but also in some extent to East Europe. Chartered transport may extend even further. Since the Baltic Sea surrounds Finland, two main routes have evolved for the traffic to Western Europe. These are the routes through Sweden and ferry connections to Central Europe. The so called Via Baltica through the Baltic States may also evolve to an important route in the near future. International truck transports are regulated by the international cargo agreement CMR, which was signed in Geneva in The agreement regulates the responsibilities and risks of the consignor, carrier and receiver. Almost all the European countries have ratified the agreement. In Finland the Law on Road Transport applies to both domestic and international road transport. It is based on the CMR-agreement

10 Figure 3. Example of Liner Waybill

11 An international transport agreement is confirmed by consignment note (waybill, bill of freight). The consignment note has to be prepared in three copies. The parties have to mark all the compulsory information listed in the Law on Road Transport on the consignment note. The consignor and the carrier have to sign all three copies. There is a standardized CMR-consignment note in use, which has to be filled out carefully. The consignor is responsible for the information he marks on the consignment note. He may be liable to compensate any damage that is caused to the carrier by incorrect information. The CMR-consignment note is a receiver document implying that the goods are handed out to the receiver who is named in the consignment note. This must be taken into consideration when choosing the method of payment. (The source of the chapter: Mikkola, Myrttinen) TRADE WITHIN THE EUROPEAN UNION Since Finland has joined the European Union, our foreign trade is divided into internal and external trade with respect to the single European market. Internal trade is trade between the EU member countries, and trade with third party countries is called external trade. In internal trade exports are called as community sales and imports as community procurement. External trade regulations have not changed much after the EU membership. All goods move mostly freely from one member country to another. It is not necessary to clear the goods for export any more. It is enough to prove that the merchandise has the so-called status of a community good. Community goods are all goods, which have been fully produced within the EU, as well as all goods that have been imported from outside the EU and which have been properly cleared for import. Following the clearance the goods are set free on the single market. The main principle is that goods circulating on the single market are community goods, and their legal status must not be proved at the customs when moving them on the market. As an exception the legal status of the goods may have to be indicated to the customs, if the goods are transported through third party countries or international waterways. In regular liner traffic (air, sea) the goods are usually considered equal with goods transported directly from one member country to another. (The source of the chapter: Pehkonen) EXPORT DOCUMENTS Internal trade on the European single market When making deliveries within the European single market, only a commercial invoice and a bill of lading (sea traffic) or consignment note (road traffic) is needed. Customs clearance documents are no longer required. Commercial Invoice The commercial invoice contains the main points of the sales contract, supplements actual information, and lists the goods delivered to the buyer. The seller cannot set any obligations, which deviate from the sales contract, to the buyer. Every exception has to be made up separately. In addition to the main points of the sales contract, the commercial invoice contains information e.g. to customs and currency authorities, forwarding agents and the carriers, banks and other intermediaries of for

12 eign trade. The information on a commercial invoice is usually used as the basis for other necessary documents. Therefore the information must be correct and precise. In community trade, the exporter has to mark his own and his customer s VAT (Value Added Tax) code on the invoice. It is the responsibility of the seller that the buyer actually has a valid VAT code. What other types of information should a valid commercial invoice contain? Please study the following example. If there is not enough room for a proper specification of the consignment on the invoice, a packing list is annexed to the invoice. It contains a detailed specification of the gross and net weights of the packaging units, their volumes, labels and contents. Since most of the parties involved in an export transaction need the invoice, it has to be copied several times. Proforma Invoice Proforma invoice is a formal invoice, the contents of which are almost identical with the original invoice, but which does not imply a payment obligation for the buyer. The buyer may need a proforma invoice when he is applying for an import license when he is, for example, opening a letter of credit. In community trade, there is no obligation to submit a declaration of origin. The authorities of the buyer s country are entitled, however, to demand information about the origin of the merchandise. The information is supplied by means of the so-called supplier s declaration, which the exporter has to affirm with his signature. The use of supplier s declaration is based on the free trade agreement, which the EU has signed with third party countries. When a supplier s declaration exist, the goods can be exported further to third party countries. Consignment notes and bills of lading have already been discussed in the previous chapters in connection with shipment and truck transport. Owing to the nature and quality of the product or requirements set by the sales contract, the seller may be obliged to provide also some other documents than the ones named before. These may include documents that certify e.g. the quality and the technical properties of the product, or that the product has been tested by its safety in service. (The source of the chapter: Pehkonen)

13 Figure 4. Example of Invoice

14 External trade with third party countries In addition to the export documents dealt with in the previous chapter, a clearance declaration is required when exporting to countries outside the European Union. The clearance declaration is made on a unitary document called SAD. Detailed information concerning the clearance procedure is available from the Finnish National Board of Customs. The procedures are rather complicated indeed and fall out of the scope of this book. Other documents, which may be required when exporting to different third party countries, are: Consular invoice: Customs invoice: Exports license: ATA-carnet (Admission temporaire): Declaration of origin: A kind of commercial invoice, which is required by the local authorities when exporting to Central and South America. A kind of commercial invoice, which is required by the local authorities to some countries of the British Commonwealth. This document is required for some special goods, such as some food supplies, antique, arms etc. This document is required when goods are temporarily brought into a country. This document is needed when goods are exported to a third party country, with which the EU has made a free trade agreement, i.e. duties have been reduced or totally abolished on certain goods. The declaration of origin has to be presented for the authorities in the buyer s country. The forms EUR.1 and EUR.2 are currently in use. (The source of the chapter: Pehkonen) References: Mikkola, M. & Myrttinen, S The Forest Industry s Transportation Systems in Export. University of Helsinki. Department of Forest Economics. Pehkonen, E EU-Suomen vienti- ja tuontitoiminta. WSOY. P ISBN