Key Regulatory Issues. International Regulations

Transcription

1 Key Regulatory Issues International Regulations

2 Topics International Organizations & Governmental Bodies. International Commercial Sales Terms (Incoterms) A discussion on Incoterm 2000 Risks & Liability An overview of Standard Trading Conditions, Marine Insurance and Claims Resolution. Trade Documentation.

3 International Organizations & Governmental Bodies

4 International Organizations With the proliferation of air transportation there was dire need for regulation and standardization. Airlines & Airport Authorities join these organizations to gain recognition. Behind all airport operations are universally accepted standards known as Standards and Recommended Practices (SARPS). SARPs cover all technical and operational aspects of international civil aviation, such as safety, personnel licensing, operation of aircraft, aerodromes, air traffic services, accident investigation and the environment.

5 ICAO International Civil Aviation Organization (ICAO) Established in 1944 as a not-for for-profit permanent body under the purview of the United Nations Organization. Develop and improve on Standards and Recommended Practices (SARPS). Ensures the safety and orderly growth of worldwide civil aviation. Enhance the arts of aircraft design and its operations. Encourage the development of airways, airport and air navigation facilities. Eliminate unfair competition and practices Promote flight safety and further development in international civil aviation.

6 IATA International Air Transport Association (IATA) IATA is a trade association representing the world s major airlines. Established in 1919, membership caters to airlines while travel agents and freight forwarders can be IATA Agents. More than 280 airlines are members of IATA. Helps formalize rules and regulations to ensure the smooth and safe operations of airlines globally. Relationship between airline and cargo agents are regulated and administered under IATA Resolutions.

7 IATA IATA interests in relation to its members Safety and security Industry viability and recognition Products & services Standards and procedures Industry support IATA publishes Dangerous Goods Regulations Live Animal Regulations Perishable Cargo Manual

8 IATA IATA organizes countries into three distinct areas Area I The Americas Area II Europe, Middle East & Africa (EMEA) Area III Asia east of Iran and Australasia

9 FIATA In French Federation Internationale des Associations de Transitaires et Assimiles Founded in 1926, it is a non-governmental organization representing freight forwarders worldwide. FIATA is recognized by governments, IATA, International Chambers of Commerce, World Customs Organization, WTO and many more international organizations.

10 FIATA FIATA s objectives To unite the freight forwarding industry worldwide. To represent, promote and protect the interests of the industry by participating as advisors or experts in meetings of international bodies dealing with transportation. To familiarize trade and industry and the public at large with thet services rendered by freight forwarders through the dissemination of information, distribution of publications, etc. To improve the quality of services rendered by freight forwarders by developing and promoting uniform forwarding documents, standard trading conditions, etc. To assist with vocational training for freight forwarders, liability lity insurance problems, tools for electronic commerce including electronic data interchange (EDI) and barcode.

11 FIATA Three institutes are responsible for the technical tasks Airfreight Institute (AFI) Customs Affairs Institutes (CAI) Multimodal Transport Institute (MTI) Members are grouped into 4 regions Africa/Middle East The Americas Asia Pacific Europe

12 International Organizations International Chamber of Commerce (ICC) International Road Transport Union (IRU) World Customs Organization (WCO) World Trade Organization (WTO) Other Regional & Local organizations

13 International Commercial Sales Terms Incoterm 2000

14 International Commercial Terms 13 internationally recognized International Commercial Terms (Incoterms( Incoterms) Internationally recognized as evidence of the buyer s s and seller s s responsibilities for delivery under a sales contract The 13 incoterms do not cover all aspects of sales contract in the real world. Need for users to modify and be as specific as possible. Include provisions in order to obtain further precision. Amended or added term should be carefully worded to avoid unintended consequences. Incoterms DO NOT determine title of ownership.

15 Incoterm 2000 Divided into Four Categories Group E EXW Under EXW, the seller minimizes his risks by only making the goods available at his own premises. Group F FCA, FAS, FOB Under F terms, and under FCA unless otherwise agreed, the seller arranges and pays for all the pre-carriage in the country of export. Group C CFR, CIF, CPT, CIP Under C terms, the seller arranges and pays for the main carriage but without assuming the risk of the main carriage. Group D DAF, DES, DEQ, DDU, DDP Under D terms, the seller s s cost/risk is maximized because he must make the goods available upon arrival at the agreed destination.

16 Incoterm 2000 Origin Handling Port-To-Port Transportation Destination Handling E Buyer F Seller Buyer C Seller Buyer D Seller

17 EXW EX WorksW Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Buyer s s Receipt

18 EXW EX WorksW Seller s s Primary Duty Place the goods at the disposal of the buyer at the named place. Buyer s s Primary Duty Take delivery of the goods when they have been placed at his disposal.

19 FCA Free CArrier Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Document evidencing delivery of the goods to the carrier Export License, if necessary

20 FCA Free CArrier Seller s s Primary Duty Deliver the goods at the named point. Provide evidence of delivery of the goods to the carrier. Arrange Export Clearance. Buyer s s Primary Duty Nominate Carrier. Contract for carriage (origin to destination)

21 FAS Free Alongside Ship Mode Sea Required Documentation Commercial Invoice Customary Clean Receipt Export License, if necessary

22 FAS Free Alongside Ship Seller s s Primary Duty Deliver the goods alongside the ship. Provide an alongside receipt. Provide Export Clearance. Buyer s s Primary Duty Nominate Carrier. Contract for carriage (origin to destination)

23 FOB Free On Board Mode Sea Required Documentation Commercial Invoice Customary Clean Receipt Export License, if necessary

24 FOB Free On Board Seller s s Primary Duty Deliver the goods on board. Provide a clean on board receipt. Pay loading cost not included in the freight. Arrange Export Clearance. Buyer s s Primary Duty Nominate Carrier. Contract for carriage (origin to destination). Pay unloading cost.

25 CFR Cost and FReight Mode Sea Required Documentation Commercial Invoice Transport Document Export License, if necessary

26 CFR Cost and FReight Seller s s Primary Duty Contract for carriage. Deliver the goods on board. Provide a clean transport document (bill of lading or sea waybill). Arrange Export Clearance. Pay unloading costs if for his account under the contract of carriage. Buyer s s Primary Duty Nominate Carrier. Contract for carriage (origin to destination). Pay unloading cost.

27 CIF Cost, Insurance and Freight Mode Sea Required Documentation Commercial Invoice Transport Document Export License, if necessary Insurance policy (certificate)

28 CIF Cost, Insurance and Freight Seller s s Primary Duty Contract for carriage and insurance. Deliver the goods on board. Provide a clean transport document (bill of lading or sea waybill) and a cargo insurance policy or certificate Arrange Export Clearance. Pay unloading costs if for his account under the contract of carriage. Buyer s s Primary Duty Accept delivery of the goods upon shipment. Receive the goods from the carrier. Pay such costs as are not for the seller's account under the contract of carriage.

29 CPT Carriage Paid To Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Transport Document Export License, if necessary

30 CPT Carriage Paid To Seller s s Primary Duty Contract for carriage. Deliver the goods to the (first) carrier. Provide a usual and clean transport document. Arrange Export Clearance. Pay loading costs. Pay unloading costs if for his account under the contract of carriage. Buyer s s Primary Duty Accept delivery of the goods when they have been delivered to the carrier. Receive the goods from the carrier. Pay such costs as are not for the seller's account under the contract of carriage.

31 CIP Carriage and Insurance Paid To Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Transport Document Export License, if necessary Insurance policy (certificate)

32 CIP Carriage and Insurance Paid To Seller s s Primary Duty Contract for carriage and insurance. Deliver the goods to the (first) carrier. Provide a usual and clean transport document and a cargo insurance policy or certificate. Arrange Export Clearance. Pay loading costs. Pay unloading costs if for his account under the contract of carriage. Buyer s s Primary Duty Accept delivery of the goods when they have been delivered to the carrier. Receive the goods from the carrier. Pay such costs as are not for the seller's account under the contract of carriage.

33 DAF Delivered At Frontier Mode Road and Rail Required Documentation Commercial Invoice Transport Document or Warehouse Warrant

34 DAF Delivered At Frontier Seller s s Primary Duty Deliver the goods at the named frontier. Provide a document to enable the buyer to take delivery at the frontier or assist him to obtain a through transport document. Arrange Export Clearance. Arrange carriage. Buyer s s Primary Duty Take delivery of the goods at the named frontier or assume responsibility for on-carriage. Arrange Import Clearance.

35 DES Delivered Ex Ship Mode Sea Required Documentation Commercial Invoice Bill of Lading or Delivery Order

36 DES Delivered Ex Ship Seller s s Primary Duty Deliver the goods on board the ship at the port of destination. Provide a document to enable the buyer to take delivery from the ship (bill of lading or delivery order). Arrange Export Clearance. Arrange carriage. Buyer s s Primary Duty Take delivery of the goods from the ship at the port of destination. Arrange Import Clearance.

37 DEQ Delivery Ex Quay Mode Sea Required Documentation Commercial Invoice Bill of Lading or Delivery Order

38 DEQ Delivery Ex Quay Seller s s Primary Duty Deliver the goods on the quay at the port of destination. Provide a document to enable the buyer to take delivery from the quay (bill of lading or delivery order). Arrange Export Clearance. Arrange carriage. Buyer s s Primary Duty Take delivery of the goods from the quay at the port of destination. Arrange Import Clearance.

39 DDU Delivered Duty Unpaid Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Document needed for taking delivery

40 DDU Delivered Duty Unpaid Seller s s Primary Duty Deliver the goods at the named place of destination. Provide a document to enable the buyer to take delivery. Arrange Export Clearance. Arrange carriage. Buyer s s Primary Duty Take delivery of the goods from the named place of destination. Arrange Import Clearance.

41 DDP Delivered Duty Paid Mode Road, Rail, Sea and Air Required Documentation Commercial Invoice Document needed for taking delivery Import license, if necessary

42 DDP Delivered Duty Paid Seller s s Primary Duty Deliver the goods at the named place of destination. Provide a document to enable the buyer to take delivery. Arrange Export and Import Clearance. Arrange carriage. Buyer s s Primary Duty Take delivery of the goods from the named place of destination.

43 Risks & Liability

44 Risks & Liability Standard Trading Conditions Marine Insurance Claims & Resolution

45 Standard Trading Conditions All organizations involved in the freight trade have some form of STC. Parties involved Carriers (airlines, vessel operators, etc.) Freight forwarders Shipper & Consignee Clearly states the terms and condition as laid down by the provider of the transportation services.

46 Standard Trading Conditions Clearly defines Customers warranty on ownership of goods. Performance by freight forwarder. Freight forwarder s s authority. Discretion of freight forwarder in discharge of duties. Warehousing activities. Packaging and warranty. Loading warranty. Payment of billing invoices & interest on overdue payments. Payment of brokerage & commission in the course of duty.

47 Standard Trading Conditions Clearly defines Acceptance of quotation by customers. Provision of detailed information of goods by customers. Payment of customs duties, taxes and levies imposed by local authorities. Customers payment of freight charges, duties and miscellaneous charges should consignee default. Customers insurance coverage on goods, or advice to freight forwarders to act on their behalf. Freight forwarders liability for any loss, damage or theft to goods in their possession and attributed to its negligence.

48 General Insurance Market Re-Insurer Pre-Risk/Risk Improvement Insurer Claims Surveyors / Adjustors Brokers / Agents Surveyors / Adjustors Insured

49 Marine Insurance Marine Insurance Act established in Five fundamental principles of insurance Insurable Interests Utmost Good Faith Proximate Cause Indemnity Subrogation

50 Insurable Interest Relates to the type of goods that can be insured and what constitutes an insurable interest. Refers to a legally recognized relationship between insured and insurer that concerns an insurable property at risk on a maritime adventure, the loss or damage of which would result in financial loss.

51 Insurable Interest Takes into consideration Value of goods Packaging Transportation costs Insurance costs Customs duties & tariffs. All Risks Insurance covers goods from all causes of loss that are not specifically excluded.

52 Utmost Good Faith The Marine Insurance Act places a duty on both insurer and proposer to the insurance contract to perform their obligations under the contract in utmost good faith. Feature of this duty if full and frank disclosure. If duty is breached, the party affected by the breach may exercise his rights to void or nullify the contract.

53 Utmost Good Faith So what needs to be disclosed? Claims or loss history. Value of cargo and a statement of over- or undervaluation, if any. Cancellations of any previous policies and reasons for such cancellations. Any special terms and conditions as imposed by previous insurers. The existence of any other insurance policies covering the same risks. Any inherent factors that make the risks more hazardous than they may be at face value e.g. oversized cargo requiring crane lift.

54 Proximate Cause The purposed of insurance is to protect against loss in the event of unforeseen circumstances. Not all risks or perils can or will be insured. Proximate cause is defined as the most dominant or effective cause that sets in motion a chain of events that brought about a certain result. Example if rain water seeps into a truck through a hole in the truck, thereby damaging the cargo, proximate cause is not the rain water but the defect in the truck.

55 Indemnity A contract of marine insurance is a contract of indemnity. The principle of indemnity is intended to place the insured in the same financial position as he would have been but for the loss. Cargo insurance, a specific type of marine insurance, is meant to shift the financial risk involved with the voyage from the trader (the insured), to the insurance company, thereby compensating the insured in the event of a loss.

56 Subrogation Because a contract of marine insurance is a contract of indemnity, subrogation rights are a feature of the contract in the event of a loss. Insurer is entitled, by law, to step into the shoes of the insured after having paid for the loss, taking over any rights that the insured may have had against any third party/parties.

57 Claims & Resolution Strict rules and regulations govern claims and their resolution. Claims for damages must be filed within 14 days from the date of receipt of goods. In the event of delays or loss, claims must be made within 21 days from date that cargo was to be delivered. To make a successful claim, shipper must show evidence of loss or damage incurred.

58 Claims & Resolution Depending on severity of damages, shipper or consignee may want to appoint a Surveyor to survey the shipment. If damages are discovered at the end of a transportation leg, it is best to clearly indicate discrepancy in hand over document. Typical claims payout by airlines is US$20/kg, based on Warsaw Convention unless otherwise insured.

59 Trade Documentation

60 Trade Documentation Consignment Note Air Waybill, Bill of Lading Types of CN Master Air Waybill (MAWB) and House Air Waybill (HAWB) Commercial Invoices Packing List Shipper Letter of Instruction Letters of Credit Other Important Documentation

61 Consignment Note Air waybill (AWB) A bill of lading for air transport. It serves as a receipt for the shipper. Indicates that the carrier has accepted the cargo listed and obligates the carrier to carry the consignment to the airport of destination according to specified conditions. Typically, the reverse side of the AWB spells out clearly the carrier s s limitations of liability.

62 Consignment Note Bill of Lading (B/L) A document issued by an entity providing transportation services that Serves as receipt for the goods delivered to the carrier of the shipment. Defines the contract of carriage of goods from the point of origin to point of destination according to the responsibilities of the service provider listed on the B/L Under certain conditions, provides evidence of title for the goods.

63 Significance of AWB A contract of carriage between the airlines and the shipper. A proof of receipt of cargo for carriage. A freight bill. A certificate of insurance if the shipper requests for insurance coverage offered by the airline Customs declaration and clearance. Documentary evidence of all shipment details. Documentary proof of the higher value for carriage as declared by shipper.

64 Types of AWB Master Air Waybill (MAWB) Also referred to as an Airline Air Waybill. Issued by an Airline. Typical relationship is between Airline and Freight Forwarder. House Air Waybill (HAWB) Issued by a freight forwarder. Typical relationship is between Freight Forwarder and a shipper (owner of goods).

65 Air Waybill An AWB is a legal document. In the case of MAWB, has specific conventions to identify Airline, Shipper, Consignee, Port of Departure, Port of Destination etc. All IATA agents are issued with IATA Agency codes and has to be completed in the MAWB. Globally accepted three letter City/Airport Codes are used.

66 Commercial Invoice In almost all shipments, a Commercial invoice is necessary as a trade document. Commercial Invoice should clearly state Parties Seller, Buyer, Exporter & Importer. Item Description and HTS Code. Unit Cost per item, Quantity & Total Cost per item. Country of Origin. Number of packages. Flight details, AWB Number, Carrier & Shipment Date. An authorized signature & company stamp.

67 Commercial Invoice Common name description no longer acceptable. Example Scotch tape should be described in invoice as Self-adhesive paper, in strips or rolls Harmonized Tariff System Code should be indicated e.g

68 Packing List Details the shipping information on top of the Commercial Invoice Marks, numbers and kind of packages. Quantity of packages/pallets Gross and net weight (shipping weight) Size and dimension of packages/pallets. Usually does not indicate value of goods.

69 Shipper Letter of Instruction Commonly known as the SLI. Gives clear instruction to the carrier as to the export instructions. Informs the freight forwarder Details of the shipment e.g. description, no. of pieces, weight etc. Location and date where shipment will be ready Location where shipment is to be delivered. Consignee details Incoterms

70 Letter of Credit An international document issued by a bank that guarantees payment to the seller. Elements of an L/C A payment undertaking given by a bank (issuing bank). On behalf of a buyer (applicant). To pay a seller (beneficiary) for a given amount of money. On presentation of specified documents representing the supply of goods. Within specified time limits. Documents must conform to terms and conditions set out in the letter of credit. Documents to be presented at a specified place.

71 Letter of Credit Consignor/Seller/Exporter Contract fulfillment of sales assurance that the seller will be paid in full for supplying the goods to the buyer. Convenience payment from the buyer is issued directly to the seller s s bank. Prompt payment on-time payment for the goods improves the seller s business liquidity. Consignee/Buyer/Importer Contract fulfillment of sales assurance that the buyer does not have to pay the seller until the seller has fulfilled its obligation without default. Convenience a 3 rd party (the bank) that has documentary expertise in handling Letters of Credit. Form of credit a good form of cash-flow management through bank financing.

72 Other Documentation Dangerous Goods Certificate. For shipment of Hazardous Goods Chemicals, pharmaceuticals, magnetic products etc. IATA airlines and agents need to be trained to handle DG. There exists specialists 3 rd party providers of such services e.g. DGM Support group. Country of Origin Certificate. Issued by most Chambers of Commerce. Required by some countries to show origin of product.