Logistics & Documentation

8/14/2019 Logistics & Documentation

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Logistics &

Documentation



Main Clauses-International Commercial

contract

Product Specifications, Quality and Quantity Description

Specifications

Quantity Quantity Tolerances

Test Certification

Size-wise Breakup of Quantity

Chargeable Weight (i.e. Net Weight) Penalty and Bonus

Packing

Marking



Price – Currency – Unit Price – Basis of Quotation (FOB, CIF etc.) – Cost Distribution and Delivery

Terms of Payment – Letter of credit

Right of Transfer – Buyer/Seller Right to Assign/Transfer Contract (Generally not

agreed upon, except to the successors)

Modification of the Contract – Cancellation of Previous negotiation/agreements – Modification only after agreement in writing by all parties to

the contract.


contract



Delivery and Shipment• Period of Delivery (e.g. from the date of

receipt of L.C)

• Validity of L.C for shipment Destination• Terms and Condition of Delivery

• INCO Terms

• Passing of Risk and Title


contract



INCOTERMSIncoterms are worldwide accepted commercial terms that defines therespective roles of the buyer as well as of the seller in arrangement of thetransportation and other responsibilities and it also clarifies when the

ownership of the merchandise takes place.

Origin TermsEXW (Ex-Works)

International Carriage Not Paid by Seller

FCA (Free Carrier)FAS (Free Alongside Ship)FOB (Free On Board)

International Carriage Paid by the Seller CFR (Cost and Freight)

CIF (Cost, Insurance and FreightCPT (Carriage Paid To)

CIP (Carriage and Insurance Paid To Arrival At Stated Destination

DAF (Delivered at Frontier)DES (Delivered Ex Ship)DEQ (Delivered Ex Quay - Duty Paid)

DDU (Delivered Duty Unpaid)DDP (Delivered Duty Paid)



FREE ON BOARD(FOB)

“Free on Board” means that the seller

delivers when the goods pass the ship’s rail atthe named port of shipment. This means that

the buyer has to bear all costs and risks of loss

or damage to the goods from that point.

The FOB term requires the seller to clear

the goods for export. This term can be used

only for sea or inland water way transport.

INCOTERMS



Cost, Insurance and Freight (CIF)

The title and risk passes on to the buyer if

delivered on board the ship by the seller whopaid the transportation and insurance cost to

the destination port. It is used for sea or inland

waterway transportation.

INCOTERMS



• A letter of credit is a document issued mostlyby a financial institution which provides anirrevocable payment undertaking to a

beneficiary against complying documents asstated in the credit.

• The LC is a source of payment for atransaction, meaning that an exporter will getpaid by redeeming the letter of credit.

• It is the safest mode of payment through bank.

Letter of Credit (LC)

http://en.wikipedia.org/wiki/Financial_institution

http://en.wikipedia.org/wiki/Beneficiary

http://en.wikipedia.org/wiki/Beneficiary

http://en.wikipedia.org/wiki/Financial_institution



LC- Process Flow Chart

Buyer Seller

Buyer’s bank

Carrier

Seller’s bank

1. Mutual agreement on LC terms & conditions

2. LC Info

3. Opening of LC

4. Copy of LC

5. Goods

handed

over to

carrier &

Bill of

Lading to

Seller

6. BL and other docs

7.BL and other docs for payment

8.BL and other docs

for getting of goods

9.BL and other docs for receiving of goods

10. Payment



Types of LC

• Revocable LC- Terms and conditions are

changeable. Changes are made by the

buyer in consent with the seller.

• Irrevocable LC- No changes can be made

Payment modes on basis of LC

• LC at sight• LC at 30 days

• LC at 60 days

• LC at 90 days



• FROM :( NAME & ADDRESS OF OPENINGBANK )

• TO :( NAME & ADDRESS OF ADVISINGBANK )

• TYPE OF L/C

• L/C Number

• DATE OF ISSUE

• DT. & PLACE OF EXPIRY

• NAME & ADDRESS OF THE APPLICANT

•NAME & ADDRESS OF THE BENEFICIARY

Main Information on LC



• PARTIAL SHIPMENT

• TRANSHIPMENT

• SHIPMENT FROM

• SHIPMENT TO

• LATEST SHIPMENT DATE

• DESCRIPTION OF GOODS – Description of Materials

– Size

– Specification

– Tolerance – Quantity

– Quantity Tolerance

– Price

• DOCUMENTS REQUIRED

• Additional Conditions

Main Information on LC



Purchase Order (PO)

A Purchase Order is a commercial document issuedby a buyer to a seller , indicating the type, quantities

and agreed prices for products or services that the

seller will provide to the buyer.

Main Informations on PO-

Buyer Information

Vendor Information

Ship To Information FOB related Information

Labeling Instruction

Packing Instruction

http://en.wikipedia.org/wiki/Trade

http://en.wikipedia.org/wiki/Buyer

http://en.wikipedia.org/wiki/Seller

http://en.wikipedia.org/wiki/Seller

http://en.wikipedia.org/wiki/Buyer

http://en.wikipedia.org/wiki/Trade



Types of Commercial Documents

The set of commercial documents, knownvariously as Shipping Documents or Principal

Export Documents, is essential for smooth flow

of international trade. The main types are asfollows-

– Commercial Invoice

– Bill of Lading – Cargo Insurance Policy/ certificate

– Bill of Exchange.



Commercial Invoice

First basic and the only complete document for a

shipment from among the set of commercial

documents.

Document is needed at pre-shipment and post-

shipment stages for various purposes like, Export Inspection Certificate

Clearance from excise and customs authorities

Commercial invoice performs three main functions.

Document of ContentBill by exporter

packing list.

It also sets forth the terms of shipment and payment

and can operate as Certificate of Origin.



Bill of Lading

• Bill of Lading is an evidence shipment of goods.

• This document evidences the mode, manner

and date of shipment.

• Bill of Lading, issued by the shipping company

• Bill of Lading enables the lawful holders to

claim goods at the destination.• Bill of Lading performs three functions-It is an

evidence of the contract of transport, receipt

of goods and document of title.



Insurance Policy /Certificate

• For providing protection to cargo owners, cargo

insurance is provided by the insurance

companies.

• Cargo insurance covers risk to the cargo while

in transit from consignor to consignee.

• The export contract/LC will specify the nature of

the risk coverage as well as the insurable value



Bill of Exchange

• Performs the role of bridging the huge gap betweenshipment of goods and receipt of sale amount.

• Prepared by the exporter and given to the bank along

with other commercial documents.

• Bill of Exchange is defined as “an unconditional order

in writing addressed by one person (exporter) toanother (importer), signed by the person giving it,

requiring the person to whom it is addressed to pay.