International Trade

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 CHAPTER 28

Export Documentation

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 Introduction

 The export process is made more complex by the

wide variety of documents that the exporter needs
to complete to ensure that the order reaches its
destination quickly, safely and without problems.
These documents range includes bill of entry,
foreign exchange documents, export permits and
etc. Documents required by the importer such as,
the proforma and commercial invoices, certificates
of origin, health and pre-shipment inspection
documents, documents required for payment such
as, Reserve Bank forms, the letter of credit and the
bill of lading and finally, documents required for
transportation such as, the bill of lading, the airway
bill or the freight transit order.
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 Function of export
documentation
 An attestation of facts, such as, a certificate of
origin.
 Evidence of the terms and conditions of a
contract if carriage, such as, in the case of an
airway bill.
 Evidence of ownership or title to goods, such
as, in the case of a bill of lading.
 A promissory note; that is, a promise to pay.
 A demand for payment, as with a bill of
exchange.
 A declaration of liability, such as, with a
customs bill of entry.
 A receipt for goods received.

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 Broad categories of
export documentation
1.Documents required by the importer:
• The proforma invoice
• The export contract
• The commercial invoice
• The packing list
• Letter of credit
• Certification
• Certificates of health
• Fumigation certificate
• Pre-shipment inspection certificate
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 (a) The proforma invoice

 A proforma invoice is little more than a pre-advice

of what will stand in the commercial invoice once
negotiations have been completed. Indeed, the
proforma invoice and the commercial invoice
often look exactly the same, except that it should
state clearly "proforma invoice" on this
document, whereas the commercial invoice will
state "invoice" or "commercial invoice". The
proforma invoice serves as a negotiating
instrument. The initial proforma invoice often sets
the stage for the first round of negotiations if the
exporter and importer have not yet had any real
discussions.

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 (b) The export contract

 An export contract (also referred to

as a sales contract) is essentially an
agreement between you and a
foreign importer to do business. The
export contract can take many
different forms

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 (c) The commercial invoice

 After the proforma invoice is accepted, the

exporter must prepare a commercial invoice. The
commercial invoice is required by both the
exporter (to obtain the necessary export
documents to enable the consignment to be
exported, to prove ownership and to enable
payment) and importer (who require the
commercial invoice to facilitate the import of the
goods in question). In exporting, the commercial
invoice is considered a very important document
as it serves as the starting document that
underpins an export transaction.
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 (d) Packing lists

When you prepare your goods for shipment, you will be

required to prepare a detailed export packing list. This is a
formal document that itemizes quite a number of details
about the cargo such as:
 Your name and contact details
 The importer's/consignee's/buyer's name, address and
contact details
 The gross, tare and net weights of the cargo
 The nature, quality and specifications of the product being
shipped
 The type of package (such as, pallet, box, crate, drum,
carton, etc.)
 The measurements/dimensions of each package
 The number of pallets/boxes/crates/drums, etc.

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 (e) Letter of credit (L/C)

 Sight credits
 Usance credits
 Transferable credits
 Revolving credits
 Back-to-back credits
 Standby credits

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 (f) Certification

 In exporting, it is quite common for

cargos to require a variety of
certificates, including certificates of
origin, certificates of value,
certificates of health, Consular
certificates, etc., before they are
permitted to be imported into the
country of destination.

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 (g) Certificates of Health

 Certificates of health are normally

required by the importing country to
ensure that the imported goods (plants,
plant products, animals and animal
products) are in good health and carry no
diseases, pests or any health-threatening
organisms. Such, certificates of health
confirm (a) the origin of the shipment and,
(b) that local authorities have inspected
the consignment and ensure its good
health.
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 (h) Fumigation certificate

 Some countries, such as, Australia, Canada, New

Zealand, the United States (US) and the United
Kingdom (UK) are very strict about letting in
goods that might contain bacteria or insects that
could harm their agriculture. For this reason, they
may require a fumigation certificate also referred
to as a 'pest control certificate’, as proof that the
packing materials e.g. wooden crates, wood, wool
etc., have been fumigated or sterilized.
Fumigation certificates usually contain details
such as, purpose of treatment, the articles in
question, temperature range used, chemicals and
concentration used, etc. Sometimes they may be
required for sea shipments, but not for air
shipments.
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 (i) Pre-shipment inspection
certificates

 It is not uncommon for importers to

want to confirm that the to-be-
exported goods meet their
requirements. This is particularly so
in instances where it is essential that
the goods meet certain standards.

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2.Documents required for
transportation:

• Mate’s Receipt
• Bill of lading
• Airway Bill
• Freight transit order
• Road Consignment Note
• Export cargo shipping instruction

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 (a) Mate’s Receipt

 Mate’s Receipt is a receipt issued by the

Commanding Officer of the ship when the cargo is
loaded on the ship. The mate’s receipt is a prima
facie evidence that goods are loaded in the
vessel. The mate’s receipt is first handed over to
the Port Trust Authorities. After making payment
of all port dues, the exporter or his agent collects
the mate’s receipt from the Port Trust Authorities.
The mate’s receipt is freely transferable. It must
be handed over to the shipping company in order
to get the bill of lading. Bill of lading is prepared
on the basis of the mate’s receipt.

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 (b) Bill of lading (BOL (or) B/L)

 A BOL is one of the oldest and most

common forms of transportation
documents in use today. It is a document
that establishes the terms of a contract
between a shipping company (or its agent)
and the exporter/shipper (or agent, such
as, a freight forwarder). Within this
contract, it is agreed that freight is to be
moved between specified points for a
specified charge.
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 (c) Air waybill

 Air waybills (AWB) are a form of BOL and are used

for both domestic and international flights. An
AWB (also referred to as air consignment note or
airway bill of lading) refers to a documentary
receipt issued by a carrier (i.e. airline) in favour of
a shipper for goods received and is evidence of
the contract of carriage to carry the goods to a
specified airport under specified conditions, but it
is not a document of title to the goods. Hence,
the AWB is non-negotiable. It is usually the
shipper - the exporter (or their agent) that
completes the AWB.
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 (d) Freight Transit Order

 A Freight Transit Order (FTO) is a

form of inland BOL used in many
countries for rail transportation.

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 (e) Road consignment note

 A road consignment note (also referred to as a

road transport document, a road waybill or a road
manifest) is a form of inland BOL used in many
countries, although, as road consignment notes
can cover cargo moving across borders, it is also
a form of through BOL. As road haulage is drive
by a large number of private road haulers, you
may come across many different types of road
consignment notes, although there is a tendency
to follow the typical BOL used in the case of
ocean shipping (i.e. there is still a consignee, a
shipper, a description of the goods, etc.).

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 (f) Export Cargo Shipping
Instruction (ECSI)
 The Export Cargo Shipping Instruction (ECSI) is the written
instruction from the exporter to the freight forwarder or
carrier (shipping line, airline, road hauler, etc.) for them to
facilitate the movement goods to the desired destination. It
contains information on the goods and the route to their
destination, any transport requirements, customs
information, which is to receive what documents and how
costs are to be allocated. It is extremely important that the
information provided in the ECSI is accurate. Most freight
forwarders and transportation companies have standard
documents that exporters can complete. The document
provided will capture all of the necessary information to
enable the freight forwarder or transport company to
execute their obligations.

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3.Documents required for
payment:

• Commercial invoice
• Letter of credit
• Bill of Exchange.

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 (a) The commercial invoice

 The commercial invoice is required by

both the exporter (to obtain the necessary
export documents to enable the
consignment to be exported, to prove
ownership and to enable payment) and
importer (who require the commercial
invoice to facilitate the import of the
goods in question). In exporting, the
commercial invoice is considered a very
important document as it serves as the
starting document that underpins an
export transaction.

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 (b) Letter of credit (L/C)

 Sight credits
 Usance credits
 Transferable credits
 Revolving credits
 Back-to-back credits
 Standby credits

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 (c) Bill of Exchange

 A negotiable instrument, similar to a post-

dated cheque, which is usually sold at a
discount. The person holding it has proof
of debt. A bill is an unconditional order in
writing, addressed by the drawer to the
drawee, requiring the drawee to pay a
sum of money on demand or at a specified
future time to the payee (who might be
the drawer or another party) or to the
bearer.
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 4. Insurance documents:

 Marine insurance

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 (a) Marine insurance

 Because of the enormous risks involved in

international trade, it has become a core part of
the international trading process for the parties
involved to insure their respective risks. One of the
major risks that international traders (exporters
and importers) face is the risk of damage or loss
during the transportation process. This is where
marine insurance comes into play. 'Marine
insurance' is thus the term used to described the
insurance taken out to cover the risks involved in
all forms of transportation, for example, sea, road,
rail and air, from the point where the goods are
loaded onto their first form of transport until they
arrive at their final destination.

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THE END

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