Export & Import Documentation

                  
1. Introduction

The acquisition of overseas customers, while in itself an achievement, is only the first step in selling goods overseas: the job is not complete until your customer has physically received the consignment. As much attention must be paid to the final part of the order cycle which involves completing the documentation requirements, arranging the transport and ensuring payment, as to securing the business.
Every exporter can recall some horror story which relates to problems with documentation. Sometimes the problems are unavoidable, but in too many cases it is the exporter who has not been careful enough in producing the required documents.

Errors in documentation are very expensive. The first result of a mistake is delay to the consignment which might be held up in a warehouse under customs control in Ireland or overseas. Wherever the delay, storage charges will become payable almost immediately, and these have a habit of rising disproportionately as the delay extends from days to weeks and perhaps even months. Most customs authorities have the reserve power to seize goods which have not been cleared of customs within a certain period. The other danger of delay is the loss of confidence by the customer. In addition, any delay in delivery may lead to a deferment in settlement of the order, so cash flow is then affected.

Although such events occur every day, there is no need for exporters to expose themselves to these additional costs. Documentation for exports is not that complicated, and the number of documents which have to be prepared by exporters is very few. They must, however, all be completed carefully, and checked before they are despatched.

Many of the other forms are completed by freight forwarders, hauliers, airlines and shipping lines, as well as banks and other financial intermediaries. This chapter looks at both the documents which exporters complete and those normally completed by the suppliers of transport.

2 .The Invoice

2.1 Types of invoice
The most important form which the exporter has to prepare is the invoice; an invoice must accompany every shipment even if the goods are being supplied free of charge. The invoice is the basic document used in export, and every other document draws upon the information that appears on the invoice. The purpose is to confirm to the purchaser the terms of the transaction. There are several different types of invoice:(a) commercial invoice;(b) proforma invoice;(c) commercial invoice with declaration;(d) certified invoice;(e) legalised invoice;(f) consular invoice.

It is advisable to print out invoices rather than completing them by hand. This is not a legal requirement, but customs delays are less likely if the invoices are easily read. There are several software packages available to produce invoices and other export documentation.
Many countries insist on invoices being submitted in the language of the country of destination. Even when this is not a stipulation, it is good practice, and will help the goods through customs overseas more quickly.

2.2 Commercial invoice
The most critical document in the export process, the commercial invoice links the contract of sale between the buyer and seller and gives details of the goods being purchased. It is issued by the exporter. An example of a commercial invoice is shown in Figure 1.
The information which should appear on an invoice is listed below;
.(a) Full name and address of the consignor and consignee. If available, include the telephone number of the consignee.

(b) A full description of the goods. This should include:

(i) the number of pieces; (ii) the dimensions of each parcel; (iii) the total weight of all items; (iv) a full and accurate description of the goods. This is essential for both customs and security procedures. Many companies tend to describe their goods vaguely (for example machinery parts) and these shipments are more likely to be delayed than those accurately described.

Hence , it is recommended to give as much information as possible of the goods being shipped, for example;
(c) The total number of items in each of the packages being despatched.
(d) The tariff number of the item if this is available.
(e) The total value of the goods. Even for samples and free of charge goods.
(f) The reason for export: there should be a statement explaining whether the goods are being sold, are samples or are being sent for repair or processing.

(g) The country of origin: this is important to ensure rates of duty are calculated correctly or imported duty free as the case may be.

(h) Signature of exporter (this is the person responsible for sending the shipment).

There are other items which have to be included on some commercial invoices:

•VAT registration number of the buyer this applies to transactions with other EU Member States

•details of the letter of credit if the goods are being shipped against a letter of credit (see Methods of export payment).

•When sending fabrics, all countries require details of fibre content. Samples should be markedsample or cut off 1½ inches and the invoice must state that the garment is mutilated.
When samples are being sent free of charge, customs authorities require an invoice for customs purposes only. In this case the invoice is claused No commercial value. Value for customs purposes only.

2.3 Proforma invoice
Proforma invoices are prepared by the exporter and may be needed by the importer for quotation purposes, to draw up a letter of credit or to apply for the foreign exchange to pay for the goods. This applies to markets with exchange controls, particularly in Africa and South America. The invoice is sent in advance of the goods, but does not differ from a standard commercial invoice.

2.4 Commercial invoice with declaration
Certain countries may require a specific declaration to be included on the invoice in order to comply with certain import regulations in the country of destination.

2.5 Certified invoice
Some countries require certified invoices, particularly when goods are being shipped against letter of credit (see , Methods of export payment). These are invoices which are certified by a Chamber of Commerce before goods are despatched. Exporters present the invoice to the IEA or a Chamber of Commerce, and they then stamp the document. The exporter lodges authorised signatures with the IEA or the local chambers who verify the signature before stamping the document.

2.6 Legalised invoice
Occasionally, customs in the Middle East, require invoices to be both certified and legalised. After certification, invoices have to be presented to the embassy of the destination country for legalisation. This involves presentation of the certified invoices to the embassy who then attach their stamp to the documents. Points to remember when presenting legalised invoices are: (a) Allow sufficient time for presentation as goods should not be despatched before the invoices are
legalised. Legalisation can take between five and seven working days depending on the embassy concerned, and whether or not there is an embassy in Dublin.

(b) Embassies charge for legalisation either a flat fee or a percentage of the value of the transaction.

Exporters should make allowance for what are often unexpected additional costs.

The Irish Exporters Association offers a comprehensive one-stop-shop service for all invoice legalisation and visas. The close relationship between the Irish Exporters Association and the Department of Foreign Affairs and the various embassies can often speed up the legalisation process and minimise costs.
The IEA Offer a legalization service for all exporters , and in a one stop shop cover all the Legalisation requirements .
For further information contact: VISA/Legalisation, Irish Exporters Association,28, Merrion Square, Dublin 2, Tel. +353 1 661 2182
Tel. +353 1 661 2182
e-mail: iea@irishexporters.ie

2.7 Consular invoice
These are particularly common in South America. The details of the invoice are transferred onto a standard form prepared by the country of destination. The precise format of a consular invoice depends on the country of destination. All details and supporting paperwork should be submitted to the countrys commercial section prior to the despatch of the goods. (In some cases, the exporters invoice is stamped and signed by the Consul of the importing county.) It is particularly important to: (a) allow sufficient time for the procedure to be completed usually several days; (b) make an allowance in the quotation for consular fees which are often based on the value of the consignment.
A consular invoice is usually needed in addition to a normal commercial invoice.

2.8 Signed original invoices
Signed original invoices are occasionally sought by foreign countries. This means that each individual invoice has to be signed; even if the invoice is a photocopy, it must still have an individual original signature. As most printed invoices are in black ink, it is advisable to use blue ink for signing when an original signature is required.

2.9 Conclusion

• Regulations regarding invoices vary from one country to another, and change frequently. For up to date information, shippers should consult the Irish Exporters Handbook , available from the Irish Exporters Association and Enterprise Ireland which lists the documentation requirements for every country. Amendments are published periodically.
• Exporters should only despatch goods together with accompanying invoices. The exception to this rule is for sales to other member states of the EU.
• The use of the fax can reduce customs delays. However, many customs authorities in other parts of the world do not accept a fax as a substitute for an original invoice.
• If you are unsure which invoice to send with the shipment you should ask your customer.

3. Language

Irish companies usually prepare their invoices in English. It is good commercial practice to also prepare invoices in the language of the country of destination; this can help avoid delays with customs.

Some customs authorities abroad request that the contents of an invoice be expressed in the local language. This condition is sometimes part of complying with a letter of credit.

The Irish Exporters Association offers an online transaction service. http://www.irishexporters.ie/

4. Origin Certificates

4.1 Purpose and types

In many cases, exporters have to obtain an origin certificate to accompany the invoice. The purpose of these certificates is:(a) to confirm the origin of the goods (also known as non-preferential origin). The certificates used are called a Certificate of Origin or an Arab-Irish Certificate of Origin;
(b) to allow the consignment to benefit from a reduced or zero rate of duty in the country of import (also known as preferential origin). Here, EUR1, EUR2, and ATR certificates are used.
An origin certificate can either be:
• a prepared and signed statement which appears on an invoice; or
• a separate form which has to be authorised by Customs & Excise or a Chamber of Commerce and/or the embassy of the country of destination.

4.2 European Community Certificate of Origin
It may be a requirement of the export contract that the goods have to be manufactured in a particular country. In order to prove the country of manufacture, a certificate or origin must accompany the goods. The certificate is issued by the Chambers of Commerce and can either be certified by the chamber or self-certified.

Only when sufficient, economically justified processing has been carried out in Ireland, can the origin of the goods be declared as Irish on the Certificate of Origin.

The main boxes requiring completion are:(a) Box 1 - consignor(b) Box 2 - consignee(c) Box 3 - country of origin(d) Box 6 - item number, marks, numbers and kind of packages, description of goods

4.3 EUR1 and ATR movement certificates

4.3.1 EUR1 movement certificate
The purpose of the EUR form is to allow goods to enter the country of destination at a reduced or zero rate of duty. The introduction of the EUR form took place with the creation of the European Free Trade Association (EFTA) over 30 years ago. It is now used for the remaining few members of EFTA and those countries with whom the EU has a trade agreement. EUR forms are also frequently referred to as movement certificates.

Exporters can only use EUR certificates in the following circumstances: (a) When a preferential rate of duty is given by the importing country on products exported; (b) When the rules of origin are complied with. This means that very strict rules governing movement
certificates must be satisfied.The preferential origin rules are complex and vary according to the product and the country where it is being exported to. For example, the manufacturer of a mobile phone who is exporting to Poland can only issue an EUR1 Certificate if all the non-EU material (excluding labour, heat, profit etc.) used to make the product, does not exceed the value of the EU material used AND the value of the non-EU material used does not exceed 40 per cent of the ex-works price.

Cumulation is a concept used to widen the definition of originating products. There are three types of cumulation:
• bi-lateral e.g. EU / Israel
• diagonal or pan-European EU with a number of countries
• full cumulation EU with former EFTA countries - Iceland, Norway and Liechtenstein.
Bi-lateral cumulation allows materials imported from Israel (for example) to be regarded as originating in the EU when incorporated into a finished product in the EU. Diagonal cumulation allows exporters toincorporate goods in the pan-European cumulation zone to be considered as originating in the EU when incorporated into a finished product in the EU. In the case of full cumulation, non-originating materials processed in Norway (for example), without obtaining Norwegian origin, can be further processed in the EU and obtain community origin there.
The Preferential Trade Agreements (PTAs) have documentary requirements so that importers in the relevant countries may claim preferential rates of duty. These can be summarised as the EUR1 form, the ATR form (for Turkey) and invoice declarations.
Countries with which the EU has signed EUR agreements are as follows:

Simplified Procedures. Exporters claiming preference can avoid the use of the EUR 1 form by including a declaration on the invoice to the effect that their goods qualify for EU origin status. Exporters must apply to customs for approval to use simplified procedures. Application should be made to:
Customs Economic Procedures Unit Government Buildings NenaghCo. Tipperary Tel: 067 44213Fax: 067 44388Email:

Once approved, the exporter receives an authorisation number which is quoted on further shipments. Simplified procedures may be used without seeking formal approval if the value of the consignment does not exceed 6,000 euros, except in the case of Bosnia-Herzegovina, Croatia, Federal Republic of Yugoslavia and the Territories of the West Bank and Gaza strip, where the limit is 3,000 euros.


Format of an Invoice Declaration.

The exporter of the products covered by this document *(customs authorisation No........) declares that, except where otherwise clearly indicated, these products are of EU preferential origin.

Signature______________________________
Place and Date__________________________

Not necessary for low value consignments

The above should be used for all countries except Mexico (see above) and Israel, which should read as follows

I the undersigned, exporter of the goods covered by this document *(customs authorisation No......)
declare that except where otherwise indicated, the goods meet the conditions to obtain originating status in preferential trade with Israel, and that the country of origin of the goods is the European Community.

Signature______________________________
Place and Date__________________________

Not necessary for low value consignments (d) Preference documentation is valid for four months from the date of issue with some exceptional . Exporters have to keep all supporting documentation for at least three years.

The purpose of the EUR form is to allow goods to enter the country of destination free from duty or at a reduced rate. The absence of an EUR form does not prevent the movement or import of the goods. If an EUR form is missing, these are the alternatives available:

Ask the importer to present the consignment to customs in the country of destination, pay the full rate of duty and then reclaim the duty when the EUR form is presented at a later stage. This might be cheaper than subjecting the goods to unnecessary storage charges.

Fax the missing EUR form to the customer for presentation to customs. If a fax is not acceptable, send the original EUR form by courier to the consignee.
Figure 3 Exporters Application for Approval to Use
Simplified Procedure When Issuing Origin Documentation

4.3.2 Types of EUR form
There are two types of EUR form EUR1 (form C1299) and EUR2 (C1297) with some common characteristics:(a) The EUR1 form is a four-part document and the EUR2 a one-part document.(b) Each has a unique number.(c) Chambers of Commerce provide a service of checking the completed EUR1 before it is presented to
Customs at the point of export. Once checked, and, if satisfied, the Chamber representative signs the EUR form.

(d) Customs stamp EUR1 forms at the point of export. Usually the completed form is presented at the port or airport of departure of the goods, but if it is more practical to have the EUR 1 form stamped at another office of departure, this is quite acceptable. Completed forms can also be sent in advance to the port of departure for stamping, and then returned to the shipper. This last course can save time upon departure, but also requires pre-planning.

(e) EUR1 forms are valid for four months to all countries except Ceuta, Croatia, Cyprus, Macedonia, Melilla and Malta where they are valid for five months.
Figure 4 Eur1 and Application Form
Figure 5 Application Form for Movement Certificate

4.3.3 ATR1 declaration
Exporters with customers in Turkey require on ATR1 declaration instead of an EUR declaration. An ATR1form is almost identical to an EUR1 form, and works in much the same way.

4.4 Joint Arab-Irish certificate of origin
These certificates (see Figure 6) are often required for goods that are shipped to the Middle East. The document is completed by the exporter and certified by the Joint Arab-Irish Chamber of Commerce, who will also undertake legalisation with the relevant embassy, if required. Exporters who are members of the Joint Arab-Irish Chamber of Commerce can go direct to the Chamber for certification and legalisation. If not, they request their local Chamber of Commerce to attend to the formalities.
For further information, contact:
Joint Arab-Irish Chamber of Commerce63 Lower mount StreetDublin 2Tel: 01-662 4451Fax: 01-662 4729E-mail: jaicc@indigo.ie

4.5 Certificate of conformity
Some countries demand that all goods require a certificate of conformity. The certificate of conformity confirms that the goods comply with standards issued by the importing country.

Features of a certificate of conformity are:(a) The certificate has to be obtained prior to shipment.(b) Many countries appoint an exclusive organisation worldwide to issue certificates of conformity.

These organisations frequently verify consignments before issuing a certificate of conformity.
(c) Goods arriving at a frontier without a certificate of conformity are likely to be impounded or confiscated.

Russia, Belarus, Kazakhstan, Moldova and Romania all require certificates of conformity. For these countries the scheme is run by:
SGS(GOST) Department SGS (UK) Ltd217/221 London Road Camberley Surrey GU15 3EYTel: 00441276 691133Fax: 00441276 697888.

Exporters should remember that the certification companies charge for this service, and should allow for these costs when preparing quotations.

Figure 6 Joint Arab-Irish Certificate of Origin

4.6 Certificate of value
The exporter confirms that the certificate containing the true and full statement of the price for the goods and that there is no other understanding between the exporter and the importer about the purchase price. (Many countries depend on import duties for a large part of their national revenue and may insist on a certificate of value.)

4.7 Certificate of health
Some countries require a health or sanitary certificate when animals, animal products, fish, plants and food products are skilled. These certificates confirm that the goods are free from disease or pests (insects), and that products have been prepared in such a way that they reach prescribed standards. Normally, these certificates are issued by the Department of Agriculture.

5. Other points

With the creation of the Single Export Market (SEM) and the abolition of much paperwork, many shippers have dispensed with the SSN this creates problems for everyone else involved with the shipment as there is still a requirement for the transmission of fundamental information about .

A SSN which is endorsed with a valid Export Consignment Identifier can be used as a declaration for Simplified Clearance Procedure an export declaration for goods destined for non-EU markets .

6.3 The CMR form

6.3.1 Use

The full English translation of CMR is Convention on the Contract for the International Carriage of Goodsby Road. The CMR is widely used for road freight for traffic within Europe.

Most countries within Europe have accepted the CMR Convention which regulates the responsibilities and potential liabilities of the carrier when engaged in international transport for hire and reward.
Although not a signatory, Ireland has acceded to the CMR Convention, which is incorporated into Irish law by the International Carriage of Goods by Road Act 1990. Traffic between Ireland and the UK, however, has not been included, although hauliers can agree to incorporate the CMR terms voluntarily into their conditions of carriage. Many hauliers rely on RHA (Road Hauliers Association) terms for this traffic. The main difference revolves around the limits of the carriers liability for loss or damage to goods.

Signatories to the Cmr Convention

The signatories are: (a) all members of the EU with the exception of Ireland; (b) Bulgaria; (c) the CIS; (d) Czech Republic; (e) Gibraltar; (f) Hungary; (g) Norway; (h) Poland; (i) Romania; (j) Slovakia; (k) Switzerland.

6.3.2 Completion of the CMR

The haulier completes the CMR and has it available for signature by the sender when the goods are collected. There are four copies of the CMR each identified by a different colour:
• first copy for sender red;
• second copy for consignee blue;
• third copy for carrier green;
• fourth copy for administration black.
In most cases, the carrier completes the CMR note (see Figure 10), but most of the information relates to the consignor, so there is a good case to be made for the consignor to fill out the CMR. The consignor is responsible for the accuracy of the CMR. Upon unloading of the goods, the consignee is asked to sign the CMR. There is room on the CMR for the consignor or consignee to add any information which might assist the haulier.

6.3.3 Responsibility under CMR
Under the CMR convention, the carrier is responsible for loss and damage from taking over the goods until their delivery. Hauliers will frequently assure their customers that all goods are carried under CMR conditions which apply automatically to every contract for the international carriage of goods.

The convention is equally valid when the vehicle is on:(a) a Ro-Ro ferry;(b) carried by rail;(c) carried on inland waterway.
Even when a haulier is not aware that the goods are being moved as part of an international journey, the CMR conditions apply.

6.3.4 Limitation of liability
The limitation of liability of the carrier under CMR conditions is 8.33 Special Drawing Rights (SDR) perkilo. The conversion rate for SDR appears each day on the foreign exchange page of the Financial Times.

The example in Figure 8 shows the limitations of the cover under the CMR Convention, and the need therefore for additional transit insurance (see Chapter 11, Transit insurance). Cover under CMR liability does not guarantee swift settlement of any claim; CMR liability is not in any way linked with the financial standing of the carrier.


7 Bill of Lading

7.1 Function

One of the oldest documents used in international trade is the bill of lading. Today, the bill of lading is still an important document which is used in virtually all circumstances when goods are being shipped overseas by container or conventional vessel. The functions of a bill of lading are the following:

(a) A document of title this distinguishes a bill of lading from all other transport documents. Transfer of an original bill of lading also means that ownership of the goods passes to another party. This is why a bill of lading is an extremely valuable document, and must be kept securely at all times. The negotiability of a bill of lading depends on how it is completed .

(b) A contract of carriage the bill of lading is evidence of a contract of carriage between the consignor and the shipping line. One of the main conditions of the contract of carriage allows the shipping line to raise charges for the freight.

(c) A receipt for the goods the shipping line checks the goods as they are loaded and then issues the
bill of lading, which is therefore a receipt for the goods. If there are no clauses on the bill of lading, it is known as a clean bill of lading. In many cases, cargo might be damaged or packing inadequate, and the bill of lading is then claused accordingly e.g. leaking drum, inadequate packing. This then means the bill of lading is a claused bill of lading and this causes a lot of problems to the shipper.
Unlike any other transport document, the bill of lading allows the exporter to have almost total control of the shipment even when it is thousands of miles away. The consignee cannot obtain the goods without an original bill of lading; the consignor can retain the original bill until, for example, full payment has been made.

There are many types of bill of lading as follows;

(a) shipped bill of lading;(b) received bill of lading;(c) through bill of lading;(d) house or groupage bill of lading;(e) clean bill of lading;(f) combined transport bill of lading;(g) negotiable bill of lading;(h) FIATA multimodal transport bill of lading.

7.2 Legal framework Bills of Lading

7.2.1 Relevant legislation

The law which governs the use of bills of lading is the Shipping (Liability of Shipowners and Others) Act1996.
Goods at sea are usually subject to the Hague-Visby Rules or the Hamburg Rules. The Hague-VisbyRules were introduced in Ireland through the Shipping (Liability of Shipowners and Others) Act 1996.

7.2.2 Limitation of liability

Under the Hague-Visby rules for maritime transport, the limitation of liability is the greater of 666.67special drawing rights (SDR) per package or 2 SDRs per kilo.

7.3 Procedures for a bill of lading

7.3.1 Information required

There are many types of bill of lading. The main pieces of information required are:(a) the parties involved (consignor, consignee and notify party);(b) ports of loading and discharge and place of delivery;(c) name of vessel and voyage reference number;(d) description of the goods this is often just the number of a container and some brief information;

e.g. Container XXLU 4908761 said to contain 180 cartons footwear;

(e) volumetric measurement (m3) and gross weight in kilos;

(f) number of original bills of lading;(g) details of freight payment prepaid or forward;(h) marks.

7.3.2 Number of bills of lading

Most shipping lines issue two or three original bills of lading and several copies. The originals and copies are all stamped accordingly. In Figure 10 the bill of lading has copy non-negotiable printed across the middle. The number of originals which exist is inserted in a box on the bill of lading.

The original bill of lading is a valuable document; the copies are used for various administrative tasks such as invoicing and customs formalities.

7.4 What to do with a bill of lading

7.4.1 Open account

The shipping line issues and signs the original bills of lading when the goods are on board the vessel. When consignor and consignee are trading on open account (see , Methods of export payment), there are the following stages: (a) The original bill is sent to the exporter. Depending on the relationship with the shipping company and the terms of sale, payment of the freight and FOB charges might be demanded before the bill is released.
(b) The exporter sends the original bills of lading to the consignee. Without the original bill of lading the consignee cannot receive the consignment.
(c) The consignee presents the original bill of lading to the shipping company or their agent in the port of destination, and accepts delivery of the goods. If the freight is payable at destination, the consignee has to pay the freight before the goods are released.
The consignee has the option of endorsing the bill of lading which means the title to the goods passes to another party.

7.4.2 Letter of credit transactions

Bills of lading are an integral part of letter of credit transactions (see Finance for export), and the sequence of events is somewhat different: (a) The original bills are sent to the exporter. Depending on the relationship with the shipping company and the terms of sale, payment of the freight and FOB charges might be demanded before the bill is released. For letter of credit transactions, the box consignee often has the words to order. The box notify party can either be the importer, the freight forwarder or a bank. The exporter endorses the bill of lading.

(b) The shipping line advises the notify party of the impending arrival of the goods. (c) The exporter sends the original bills of lading to the nominated bank together with all the other documents required by the letter of credit.

(d) The opening bank transfers the bills of lading to the party nominated in the notify party box. This party endorses the bills of lading and hands it on to the importer.

(e) The importer then takes delivery of the goods upon arrival. Banks normally insist on having the full set of original bills in their possession.

7.5 Types of bills of lading

7.5.1 Shipped bill of lading

This is one of the most common forms of bill of lading . The bill, when signed, confirms that the goods are on the vessel and have been shipped on board.

7.5.2 Received bill of lading
The received bill of lading confirms that the goods have been received for shipment. Frequently received bills of lading are issued by the shipping lines agents; the goods have not necessarily been shipped, but are required by the exporter for finance.
Problems can sometimes arise with the received bill of lading in that the shipping line might become embroiled in disputes about loss or damage to the cargo before the goods are on the vessel. Equally, the shipper can become confused by the division of responsibilities between the shipping lines agent and the shipping line.

7.5.3 Through bill of lading/combined transport bill of lading
The through bill of lading is growing in popularity, and is widely used when containers are transferred from one shipping line to another or moved from the port inland. The Ocean carrier takes responsibility for the transhipment and selection of the on carrying vessel. The through bill of lading covers the complete journey, and means the shipping line can quote one freight rate to cover the whole journey. The combined transport bill of lading, similar to the through bill of lading, is widely used when more than one mode of transport is used, e.g. road and sea or rail and sea.

7.5.4 House bill of lading

Freight forwarders frequently group several consignments for the same destination together in one container referred to as groupage or consolidation (see ,Transport and International distribution).T he shipping line issues one shipped bill of lading to the forwarder who then issues separate house bills of lading to each consignor. These bills of lading (unless a FIATA multimodal transport bill of lading) do not have the same legal force as a shipping line bill, and might be unacceptable to the bank for a letter of credit transaction.

7.5.5 Clean bill of lading
A bill of lading which remains unclaused is a clean bill of lading. This means the shipping line accepts their full liability under the Hague-Visby Rules .

7.5.6 Negotiable bill of lading

Most bills of lading are negotiable which means they can be endorsed and ownership of the goods then passes to another party. Bills of lading which are non-negotiable usually have the words non-negotiable prominently displayed.

7.5.7 FIATA multimodal transport bill of lading

The FIATA bill of lading has been created to solve the problems encountered with house bills of lading. Freight forwarders who meet certain criteria belong to FIATA (International Federation of Freight Forwarders Associations) and can issue FIATA bills of lading.

These bills of lading are acceptable under the ICC Rules Uniform Customs and Practice for Documentary Credits (ICC 500and have the ICC logo in the right-hand corner, see Chapter 5, Methods of export payment). The main advantage of the FIATA bill of lading is that it can be used for various combinations of transport, including road. It also allows shippers to use freight forwarders door-to-door groupage services even if the shipment is against a letter of credit.

7.6 Problems with bills of lading

7.6.1 Examples

There are hundreds of legal precedents which have framed custom and practice regarding bills of lading. All these cases have arisen when something went wrong, and the dispute ended up in the courts. The delivery of cargo without bills of lading remains the largest single cause of claims against both liner andport agents. Shippers should always ensure their customer overseas has: (a) the original bill of lading; (b) the correct bill of lading.

The alternative when a bill of lading is lost is to obtain a letter of indemnity, to which special rules attach (see(c) below). Further details of the legal minefield surrounding bills of lading are in Schmitthoff sExport Trade: The Law and Practice of International Trade Clive M Schmitthoff (Publisher: Stevens).Common problems arising with bills of lading are: (a) Stale bill of lading a stale bill of lading is a bill which arrives at the port after the goods have arrived. The delay inevitably means the cargo cannot be released, and there are demurrage charges to be paid before the goods are released. If a bill of lading is not presented within the time limit stipulated (normally 21 days after shipment), banks also regard the bill of lading as stale.

(b) Claused bill of lading when the shipping line wants to amend any of the clauses in the bill of lading, some comments are added to the document. This can occur when the goods are damaged, wet, or when the number of items does not tally with the number stated on the bill of lading. The bill of lading then becomes a claused bill of lading. A claused bill might be rejected by a bank.

(c) Loss of bills of lading one of the commonest problems with bills of lading is their loss, often in the postal system. This can be avoided if the shipping line issues two or three originals, and one original bill is held by the shipper as an insurance policy in the event of loss. It is usual practice to send the original bills of lading under separate cover on successive days to minimise the danger of loss of these important documents in the post. Courier companies are an alternative. If an original bill of lading is irretrievably lost, the shipping line will only issue a duplicate if it is given a letter of indemnity by the consignee (or shipper) which will cover its potential liability in case anyone ever presents the original bill in the future. Most shipping lines have strict rules about releasing goods without a bill of lading. The usual option is to deliver cargo against a letter of indemnity. The indemnity means that the carrier can obtain compensation for any amounts of money which it might have to pay to the holder of the original bill of lading. Because of the potential liabilities which can arise with an indemnity there are several rules to follow;

(i) The exporter must provide written authority for the issue of a letter of indemnity. The wording of the letter and the security should also be formally agreed.

(ii) The owner of the cargo (often the exporter) must authorise the release of the cargo in writing. Unscrupulous people have obtained valuable cargoes by sending forged faxes which have led to the release of goods.

(iii) Ensure that the letter of indemnity is countersigned by a first class bank. Some people have issued forged bank indemnities - delivering valuable cargo against a rubber stamp is not advisable.

(iv) Ensure that the indemnity has an adequate time limit. The usual statutory period is six years plus one additional year as a precaution making a total of seven years.

(v) Ensure that the indemnity matches the quantity and value of the cargo. Indemnities issued might be unlimited (because the shipping line is wary of consequential loss) or for a specified amount usually a multiple of the CIF value of the goods (see Chapter 2, How to price for export). When all the original bills of lading are lost, and the shipment is subject to a letter of credit, the shipping line will usually agree to the issue of another bill of lading against a bank endorsed indemnity. Most carriers insist on keeping the bank indemnity valid for ten years.

(d) Discrepancies there are errors with bills of lading which mean they do not reflect the terms of the letter of credit and so are rejected by the bank. For example: the goods might be shipped after the expiry date of the letter of credit; or (i) the wrong type of bill of lading might be used; or (ii) presentation of the bill might be late; or (iii) the bill might not give a consistent description of the goods.

7.6.2 Action to take in the event of a mistake
The bill of lading is a valuable and important document, and must be completed correctly. If the shipping line makes any type of mistake, exporters should point this out, and ask for an amended set or a new set. However, all the originals should be returned to the shipping line.

Shipping lines also have a duty of accuracy, and can be expected to put correct shipping dates on a bill of lading, so that the document complies with a letter of credit.

7.6.3 Bill of lading fraud

Fraudulent bills of lading have been a major problem for many years, and all shippers should be aware of some of the most common methods used;
(a) Mis-dating the bill of lading. Shippers might ask the shipping line to confirm loading of goods prior to or after the actual date of loading.

(b) Incorrect description. Shippers want their cargo to be accepted clean on board. However, if cargo
does appear damaged, clausing the bill of lading as clean on board is fraudulent.

(c) Shipped on board. Bills of lading might be claused shipped on board even before the cargo has been loaded or even
before the ship arrives in the port.

(d) Conventional cargo . A particular problem occurs with conventional cargo which has been shipped on deck, but the bill of lading is claused as shipped under deck.

(e) Incorrect port of shipment. An incorrect port of shipment is inserted to conceal the origin of the goods, perhaps for sanction busting
or quota reasons.

8 .Sea Waybill

8.1 Functions

The sea waybill is becoming more widely used as an alternative to the bill of lading. The functions of a sea waybill are:(a) receipt for the goods;(b) contract of carriage.

8.2 Advantages
A sea waybill is not a document of title, unlike a bill of lading. The advantages of a sea waybill are: (a) It is non-negotiable, and the consignee does not need a copy to obtain delivery of the goods. This is an advantage for short sea journeys when there might not be enough time to process a bill of lading, and when dealing with credit-worthy and long-standing customers.
(b) It is a contract between shipper and shipping line without the involvement of the consignee. (c) It is ideal for through movement of cargo from door-to-door.(d) It can be easily used by shippers and freight forwarders alike.

9. Air Waybill

9.1 Types

The air waybill is used for all air freight. There are two main types of air waybill:
(a) Air waybill often abbreviated to MAWB. These are produced by airlines, and each waybill has 11 digits in three parts: (i) The first three digits are the airline prefix. (ii) The next seven digits are the serial number of the air waybill. (iii) The last digit is the check digit. The purpose of the check digit is to minimise computer error. The last figure of every air waybill is between 1 and 6 - never7, 8 or 9.
(b) House air waybill often abbreviated to HAWB. These are produced by freight forwarders; they are used in much the same way as a house bill of lading .The airline produces a master air waybill which has freight forwarders as consignor and consignee. The freight forwarder then issues individual house air waybills for every shipment.

9.2 Functions of an Air Waybill

The air waybill has several functions:(a) a legally binding contract of carriage between the shipper and the airline;(b) a guide to airline staff informing them about the shipment and including special handling instructions;(c) a certificate of insurance;(d) a method of invoicing for freight and other charges.
The air waybill must consist of three original copies with a minimum of six copies and a maximum of 11additional copies. The distribution of the three original air waybills is as follows:(a) Green copy marked for the issuing carrier and retained by the airline. It serves as an accounting
document for the issuing carrier and being signed by the shipper is proof of the contract of carriage.

(b) Pink or red copy marked for consignee. This accompanies the goods, and is signed by the consignee upon delivery.
(c) Blue - marked for shipper. Given to the shipper it serves as a proof of receipt of the goods for shipment and documentary evidence of the contract of carriage.
At the top of the air waybill are the words non-negotiable (or not negotiable). The air waybill is non-negotiable, and cannot be endorsed over to another party. This is a major difference between an airwaybill and a bill of lading.
9.3 Legal framework
The international convention which governs the use of air waybills is the Warsaw Convention, incorporated into Irish law under the Air Navigation and Transport Act 1936. More recent protocols (The Hague and Guadalajara protocols) were included in amendments in 1954 and 1965.
The majority of airlines belong to the International Air Transport Association (IATA), and liability of IATA member airlines is restricted to 250 Gold Francs per kilo. This is approximately equivalent to US$20 perkilo although the conversion fluctuates in line with the price of gold.

9.4 How to use an air waybill

The main pieces of information required for an air waybill are: (a) shippers and consignees name and address; (b) issuing carriers agent and agents IATA code; (c) airport of departure and airport of destination; (d) Handling of information box. In this box, details of special instructions are provided on dangerous goods information, live animals information and special handling instructions on the temperature requirements of the cargo.

(e) Declared value of the goods. This is divided into three:

(i) Value for carriage this can be any amount specified by the shipper or no value might be declared. The amount in this box affects the
airlines responsibility in case of loss or damage to the consignment it can also affect the freight rate.

(ii) Value for Customs this is the value declared by the exporter for customs. (iii) Value for insurance this is the amount of insurance the shipper might insure the cargo for through the airline. Most exporters prefer to take out insurance through their own nominated broker (see Transit insurance).
(f) Description of the goods this includes the gross weight (in kilos or lbs), the number of pieces, the nature of the goods, the dimensions and the chargeable weight. The chargeable weight is the number of kilos on which the freight is being levied. For volumetric shipments, the chargeable weight is always larger than the actual weight of the shipment .
(g) Details of charges. These appear in the lower left side of the air waybill, and charges are either prepaid or collect. Prepaid means the exporter pays, and charges collect means the consignee pays.
(h) The shipper and the issuing carrier sign separate boxes of the air waybill which establishes a contract of carriage between the two parties.

9.5 The importance of the air waybill
Points to be noted:(a) The air waybill is used throughout the air journey, and even if the consignment is passed from one airline to another, the same waybill continues to be used.
(b) The language of the air waybill is the language of the country of origin.(c) Erasures are not allowed, but alterations can be made as long as they are authenticated by the consignors signature or initials.
(d) The number of the air waybill is used to trace consignments throughout their journey; without the number of the air waybill, no information on a consignment is available.

10. Courier Waybill

10.1 Function

The couriers and integrated operators are an important part of international transport, and carry freightas well as their traditional market of documents. This group relies on a different and shorter form of airwaybill which exporters complete prior to shipment.

10.2 The importance of the courier waybill
Points to be noted:(a) The waybill covers all methods of transport and worldwide destinations.(b) The shipper has a number of options which cover service requirements. In Figure 16, the shipper can choose between express documents, express parcels or express freight. There are also questions about insurance.
(c) Many of these companies do not recognise Incoterms , but rather just ask the shipper to choose between sender pays or receiver pays. No interim transfer of responsibility is available.
(d) The waybill is used as the basis for customs clearance procedures both in Ireland and in the country of destination.
(e) The conditions of carriage are printed on the back of the waybill. Neither the conditions nor the limitation of liability are standardised, and each integrated operator will establish its own conditions. Shippers should satisfy themselves that the conditions of carriage are acceptable before handing a shipment to a courier or an integrated operator.


10.3 Main features of a courier waybill
The main information required to complete a courier waybill is:
From and to - shippers and consignees full name and address including a telephone number. Many couriers refuse goods consigned to PO box numbers.

11. Cim Consignment Note

11.1 Purposes and format

The creation of the Single Market in January 1993 was used as an opportunity to introduce a new rail consignment note which in fact does not differ that much from its predecessor. The rail consignment note - usually referred to as the CIM note (Convention International des Merchandises par Chemin de Fer), is required for both intermodal and wagon freight. So, the documentation for a swap body travelling through the Channel Tunnel is a CIM note rather than a CMR note. The purposes of the CIM consignment note are:(a) to accompany the goods from consignor to consignee;(b) to calculate the charges payable.
The CIM accompanies the freight throughout its journey. The CIM is usually completed by a freight forwarder. On the Continent, the CIM is usually initiated at the station of despatch.
The CIM is a five-part document. For traffic to non-EU countries, the CIM will be used to support other documents for customs purposes.

11.2 Legal framework
Rail freight is carried under the terms and conditions of the Convention concerning the International Carriage by Rail known as the COTIF Convention. They operate in a similar manner to CMR conditions for road freight.
The limitation of the carriers liability for rail transport is almost double CMR conditions. Under the COTIF Convention, liability is limited to 17 SDRs per kilo. Conversion is calculated in the same way as for the CMR .

11.3 How to use a CIM consignment note
With over 100 boxes on both sides of the form, the CIM looks an immensely complex document. The top half of the document is for the transport information consignor, consignee, description of goods while the bottom half has space for all the railway authorities to write in the charges and exchange rates applicable.

12. Certificate of Shipment

12.1 Purpose

Exporters frequently come across a certificate of shipment (see Figure 18) which is a document issued by a freight forwarder with the following purpose:
•confirmation that the goods have been despatched overseas;
•fulfilment of proof of despatch requirements for VAT purposes (see Chapter 14, VAT).


12.2 Content and use

The certificate of shipment contains details of the consignment including:(a) name and address of shipper and consignee;(b) receiving or clearing agent at destination (in some cases);(c) routeing name of vessel, ports of loading and discharge and final destination;(d) terms of delivery (Incoterms);(e) description of the goods marks, weight and measurement;(f) exporters invoice number and date.
The certificate of shipment is used particularly for trade within Europe. It has value for the exporter, but is not a replacement for the standard transport documents such as a CMR note, bill of lading, air way bill or CIM note.

13. Single Administrative Document


13.1 Use of the SAD
The single administrative document (SAD) is used for exports to countries outside the European Union. It is used to complete the export, transit and import requirements of customs. By virtue of the number of copies and the different functions of each, the SAD is a versatile document. A major use of the SAD by many Irish exporters is for proof of export from the EU of goods eligible forexport refunds under the Common Agricultural Policy (CAP). The SAD is recognised by Irelands trading partners outside the EU, particularly those with whom a preferential trade agreement exists.

The SAD is not used for trade with other countries of the EU.


13.2 How to use a SAD
The eight copies of the SAD are used in the following way:
• •copy 1 copy for Customs in the country of despatch/export; a second copy is required for transit declarations and CAP refunds;
• •copy 2 statistical copy country of despatch/export;
• •copy 3 copy for the consignor/exporter;
• •copy 4 copy for Customs in the office of destination; evidence of goods in free circulation;
• •copy 5 copy for return community transit; evidence that goods have left the EU;
• •copy 6 copy for the country of destination; import declaration;
• •copy 7 statistical copy country of destination;
• •copy 8 copy for the consignee or importer.
One can summarise the copies as follows:(a) export copies 1, 2 and 3;(b) transit copies 1, 4, 5 and 7;(c) import copies 6 and 8.
For information about completing the SAD, see Customs and Excise Tariff of Ireland Part VI, available from
Government Publications Office, Molesworth Street, Dublin 2, Tel: 01 647 6000

Also see the Customs and Excise AEP Trader Guide published by Customs and Excise.

13.3 Features of the SAD
Points to note:(a) The SAD is a standard document throughout the EU; each member state produces its own version in its own language.

(b) The SAD can be completed by the exporter, freight forwarder, carrier, clearing agent and importer.
In many cases, different parts of the document are completed by different organisations as the shipment moves from one country to another.

(c) The exporter has to complete part of the SAD when the goods are subject to an export licence , and hand the partially completed form on to the forwarder who will complete the other parts in the normal way. After checking, Customs will send the first stamped sheet of the SAD back to the consignor.

(d) Although many Customs systems are now electronic, export Customs forms are based on the SAD, so understanding of the SAD is essential in order to use computer-based systems.

(e) There are 54 boxes on the front page of the SAD; for exports, it is unlikely that more than about 10 or 12 boxes have to be completed.

(f) The SAD is required as proof of export to support claims under the Common Agricultural Policy.
Newsletters Newsroom Suppliers and Services Directory