ĐẠI HỌC FPT CẦN THƠ

Chapter 9 c

Trade Documents and

Transportation
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 Nội dung bài học
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• Documentation in Export-Import Trade

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• Transportation

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• Air Transportation

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• Ocean Freight

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• The Role of Freight Forwarders in Transportation

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Documentation in Export-Import Trade
v Air waybill v Commercial invoice
v Bill of exchange v D o ck receipt
v Bill of lading v D e s t ination
control statement
v Through bill of
lading v S hipper’s
export declaration
v Consular invoice
v Pro-forma invoice
v Certificate of origin
v E x port packing
v Inspection certificate list
v Insurance certificate v Manifest
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 Trade Documents
vAir waybill: Contract of carriage between the
shipper and air carrier
vBill of exchange: An unconditional written order by
one party (the drawer) that orders a second party
(the debtor or drawee) to pay a certain sum of
money to the drawer (creditor) or designated third
party
vBill of lading: A contract of carriage between the
shipper and the steamship company (carrier). It
certifies ownership and receipt of goods by the
carrier for shipment. It is issued by the carrier to the
shipper.
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 Trade Documents
vThrough bill of lading: Used when different
modes of transportation are used. The first carrier
will issue a through bill of lading and is generally
responsible for the delivery of the cargo to the final
destination.
vConsular invoice: Must be obtained from the
consulate of the country to which the goods are
being shipped
vCertificate of origin: A statement of the origin of
the export product that is usually obtained from local
chambers of commerce

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 Trade Documents
vInspection certificate: Some purchasers and
countries may require a certificate attesting to the
specifications of the goods shipped, usually
performed by a third party.
vInsurance certificate: The certificates are
negotiable and must be endorsed before
presentation to the bank. The certificate provides
the type, terms, and amount of insurance coverage.
vDock receipt: Used to transfer accountability
when the export item is moved by the domestic
carrier to the port of embarkation and left with the
international carrier for export
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 Trade Documents
vDestination control statement: Intended to
notify the carrier and other parties that the item
may be exported to only certain destinations
vShipper’s export declaration: Issued to control
certain exports and to compile trade data. It is
required for shipments valued at more than $2,500.
vPro-forma invoice: A provisional invoice sent to
the prospective buyer, usually in response to the
latter’s request for a price quotation
vManifest: A detailed summary of the total cargo
of a vessel (by each loading port) for customs
purposes
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 International Rules
Governing Inland Carriage

v Convention on the
Contract for the
International Carriage of
Goods by Road (CMR),
1956

v Convention Concerning
International Carriage by
Rail (COTIF), 1980

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 International Rules
Governing Inland Carriage
Both conventions generally apply to contracts for the
carriage of goods by road or rail between two
countries, of which at least one is a contracting party.
The convention also applies to carriage by states or
public institutions.
In both cases, a carrier is
required to issue a
consignment note
(nonnegotiable) as evidence
of contract of carriage and
condition of the goods.

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 G International Rules
overning Inland Carriage
Carriers are liable for loss,
damage, or delays up to a
liability limit insofar as the
contract is governed by
the CMR or COTIF (some
exceptions apply).

In the United States, the Carmack Amendment applies

to domestic transportation. Under the Carmack
Amendment, rail and motor common carriers are liable
for the full value of the goods lost, damaged, or
delayed in transit.

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 Road/Rail transportation

Road Transportation: Major means of transport

for trade between neighboring countries (US-
Canada-Mexico).

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 Road/Rail transportation
Rules affect
trucking:
domestic rules on
weight,
temperature;
state of
infrastructure,
and taxes
Rail Transportation: Accounts for 40% US
freight moves by ton-miles; mainly used for
transportation of commodities.
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 World maritime trade:
developments
Continued growth in
world seaborne trade
(growth of 4% and 8.7
billion tons in 2011)

Growth in world
shipping fleet (increase
of 37 % in four years)

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 World maritime trade:
developments
Increasing role of developing nations in the maritime sector: One third
of the world fleet is owned by ship owners from developing nations.
<Trade Documents and Transportation>< Truong Thi Huyen Trang > 14

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 World maritime trade:
developments
<Trade Documents and Transportation>< Truong Thi Huyen Trang > 15

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 World maritime trade:
developments
Decline in freight rates and transportation costs
mainly due to vessel oversupply.

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 Ocean Freight
Types of ocean carriers:

Private fleets: Large fleets of specialized ships owned

and managed by merchants and manufacturers to carry
their own goods
Tramps: Vessels leased to transport, usually, large
quantities of bulk cargo (oil, coal, grain, sugar, etc.) that
fill the entire ship
Conference lines: Voluntary association of ocean
carriers operating on a particular trade route between
two or more countries

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 Ocean Freight (Cont.)
Types of ocean cargo:

Containerized
Bulk
Break-bulk

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 Ocean Freight (Cont.)
Types of ocean cargo:
Containerized
DC Dry Cont hàng khô
Container
GP General Hàng bách hóa
Purpose (khô)
ST Standard Cont tiêu chuẩn
(khô)
HC High cube Cont cao
RE Reefer Cont lạnh
HR Hi-cube Cont lạnh cao
Reefer
OT Open Top Cont cửa trên
FR Flat Rack Cont mở nắp

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 Ocean Freight (Cont.)
Types of ocean cargo:
Containerized

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 Ocean Freight (Cont.)
Types of ocean cargo:
Bulk: Cargo that is loaded and carried in bulk, without mark or count, in
a loose, unpackaged form, having homogenous characteristics
Break-bulk: Packaged cargo that is loaded and unloaded on a piece-by-
piece basis, that is, by number or count
<Trade Documents and Transportation>< Truong Thi Huyen Trang >

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 Ocean Freight (Cont.)
Types of ocean vessels:

Tankers: Vessels designed to carry liquid cargo such

as oil in large tanks. They can be modified to carry
other types of cargo such as grain or coffee
Bulk carriers: Vessels that carry a variety of bulk
cargo
General cargo vessels: Include containerships,
Ro/Ro vessels, and LASH vessels
Barges: Unmanned vessels
Combination carriers: Carry passengers and cargo
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 Carriage of Goods by Sea
Major international rules:
The Hague Rules (1924): Scope of application,
carrier’s duty, liability and exemptions, limitation
of action, limits of liability

The Hague-Visby
Rules (1968)

The Hamburg Rules

(1978)

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 The Hague Rules, 1924
Scope of application: The rules apply to all
bills of lading issued in any of the contracting
states.

Carrier’s duty: (1) Making the ship seaworthy;

(2) properly manning, equipping, and supplying
the ship; (3) making the ship (holds, refrigerating
chambers, etc.) fit and safe for reception, carriage,
and preservation of the goods; and (4) properly
and carefully loading, handling, stowing, carrying,
and discharging the goods.
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 The Hague Rules, 1924
Carrier’s liability and exemptions: The
carrier’s liability applies to loss of or damage to
the goods. It does not extend to delays in the
delivery of the merchandise.

Limitation of action: All claims against the

carrier must be brought within one year after the
actual or supposed date of delivery of the goods.

Limits of liability: The maximum limitation of

liability is $500 per package.
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The Hague-Visby Rules (1968)

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 Proposed Rules and
Container Security
Proposed Rotterdam Rules: A new
treaty (Rotterdam Rules) that
replaces the Hague Rules was
adopted in 2008 and awaiting
ratification. Establishes a modern,
uniform legal regime.
Container Security: CBP’s 24-hour
rule, Automated targeting system,
the 10+ rule, Cargo-security
initiative, Customs-Trade
Partnership against terrorism.
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 Carriage of Goods by Air
Factors contributing to the growth in
airfreight:

v Global economic growth, infrastructure

investments in many developing countries,
faster delivery, technological changes

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 Carriage of Goods by Air
Major international rules:
v The Warsaw Convention (1929): Scope of
application, air waybill, liability of carrier,
limitation of liability, limitation of action

v The Warsaw
Convention (amended)
(1955); Montreal
Convention (1999)

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 Air Transportation:Advantages

Faster delivery of perishable commodities, production

parts, etc. Well suited for commodities that have a high
value-to-weight ratio, required on short notice or can be
quickly obsolete.
Ideal for products when demand is unpredictable,
infrequent or seasonal.
Shipments do not require heavy packing (standard
domestic packing is sufficient).
Reduces inventory and storage costs.
Reduces insurance cost and documentation.
Achieves savings in total transportation cost and
provides reliability of service.
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 Air Transportation:
Disadvantages
Generally expensive for high–bulk freight. Value
must be high enough to justify higher freight cost.
Inefficient for shorter distances, which are handled
faster by trucks. Only the express air services, such
as UPS or DHL, have equally competitive services.
Shipping containers must be small enough to fit
into an air carrier.
Not suitable for products that are sensitive to low
pressures and variations in temperature.

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 The Montreal Convention, 1999
Scope of application: Convention governs
liability of carrier while goods are in its charge,
whether at or outside the airport. Departure and
destination countries to subscribe to the
convention. Also applies to passengers ticketed
for international travel.
Air waybill: The carrier
requires the consignor to
make out and hand over
the air waybill with the
goods.
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 The Montreal Convention, 1999
Liability of carrier: The carrier is liable for loss
or damage to cargo and for damage arising from
delay.
Limitation of action:
The right to damages
will be extinguished if
an action is not
brought within two
years after the actual
or supposed delivery of
cargo.
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 The Montreal Convention, 1999
Limitation of liability: The liability of the
carrier with respect to loss or damage to the
goods or delay in delivery is limited to a sum
specified under the convention unless the
consignor has declared a higher value and paid
a supplementary charge.

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 Air cargo security
Customs-Trade Partnership Against
terrorism (C-TPAT)
➢Air cargo advance screening (ACAS)
➢Certified cargo screening program (CCSP)
➢Indirect air carrier program

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 Multimodal Transportation (MMT)
What is MMT? Carriage by 2 or more modes of
transport, under one contract/one document
and one responsible party

The Multimodal
transportation
convention (1980)
failed to attract the
necessary
ratifications

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 Freight Forwarders (FF)
What is the role of FF in transportation? To
facilitate the movement of cargo to the overseas
destination on behalf of shippers and process
the documentation or perform activities related
to those shipments.
They advise shippers on
the most economical
choice of transportation,
book space, and arrange
for pickup, transportation,
and delivery of goods.
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 Freight Forwarders (FF)
Licensing requirements: To be eligible for a
license as a freight forwarder, the applicant must
demonstrate to the FMC that he or she has a
minimum of three years’ experience in ocean freight
forwarding duties in the United States, has the
necessary character to render such services, and
has a valid surety bond filed with the FMC.

<Trade Documents and Transportation><> 39

 FF vs. NVOCC
(Freight Forwarders) vs. (Non-Vessel Operating Common Carrier)

} NVOCCs fulfill the role of the shipper with

respect to carriers and that of a carrier with
respect to shippers.
} Unlike freight forwarders, NVOCCs publish their
own tariffs and receive and consolidate cargo of
different shippers for transportation to the same
port.

<Trade Documents and Transportation><Nguyen Thang Loi> 40

 FF vs. NVOCC
(Freight Forwarders) vs. (Non-Vessel Operating Common Carrier)

} NVOCCs issue bills of lading to acknowledge

receipt of cargoes for shipment.
} Forwarders use the services of NVOCCs and
facilitate the movement of cargo without
operating as carriers.
} NVOCCs are often
owned by freight
forwarders or large
transportation
companies.
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 REVIEW QUESTIONS
1.What is the difference between a bill of exchange and a bill of
lading? Are straight bills of lading negotiable?
2.What is the significance of these documents for importers:
certificate of origin, destination control statement, pro forma
invoice?
3.What factors are likely to contribute to the growth in air freight
in future? Is it a major mode of transportation for cargo?
4. What are the three major types of ocean carriers?
5.What is the carrier’s duty under a bill of lading? Discuss the
“Himalaya clause.”
6.State the major differences between the Hamburg rules and
the Hague/Hague-Visby rules on carriage of goods by sea.
7.Discuss the difference between a freight forwarder and
NVOCC.
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SAMPLES

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BILL OF LADING
 PACKING LIST

§ Packing list is a part of import and

export documents, describing in detail
the contents of the shipment and usually
d o e s n o t i n c l u d e t h e va l u e o f t h e
shipment.

§ Provide the name of the goods, net

weight, gross weight, packaging method
of the goods, type of goods, quantity,
packaging specifications.

§ Immediately after packing the goods,

the seller will send the packing list to
the buyer so that the buyer can check
the goods before receiving the goods.

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 COMMERCIAL INVOICE
§ Commercial Invoice is an important
document in the purchase of import and export
goods.

§ After cargo stuffed into containers and

loading on the ship, the seller will send a
commercial invoice to the buyer so that the
buyer can make payment.

§ The invoice must clearly show the invoice

number, invoice date, seller, buyer, goods
description, quantity, unit price and total amount.

§ Commercial Invoice is dispatched along with

Bill of Lading, Packing list, certificate of origin...

§ Used for tax payment and customs

declaration
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 CARGO MANIFEST

§ A summary list of goods loaded onto the ship for transport to different ports, prepared by the shipping
agent at the loading port, based on the loaded bill of lading.

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 ARRIVAL NOTICE

§ A detailed notice from the Shipping

Lines, Shipping agent / Logistics
company inform about the arrival
schedule of the imported shipment.

§ Arrival Notice is also considered as a

receipt of goods.

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 DELIVERY ORDER

§ Delivery Order (D/O): issued by the carrier / their agent

for the purpose of requesting the port to transfer the right
of the goods to the importer.
§ Issued after the consignee presents a valid bill of lading
and pays freight and fees related to the shipment.

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