Transport Incoterms

1. Transport & Incoterms Reading: INCOTERMS 1990 Hill pp 520/525 Elements of import/export - Alan Branch

2. Trade agreements: EU and: EFTA (European Free Trade Area) Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, Syria, Tunisia, most of former Yugoslavia The Faroe Islands Some African, Caribbean & Pacific states (ACP) Certain Overseas Countries & Territories (OCT)s and 150 developing countries Capital cities please: Algeria - Algiers- Algerian Dinar Cyprus - Nicosia - Cyprus pound Egypt - Cairo- Egyptian pound Israel - Jerusalem/Tel Aviv - New Shekel Jordan - Amman - Jordanian Dinar Lebanon - Beirut - Lebenese pound Malta - Valetta - Maltese Lira Morocco - Rabat - Moroccan Dirham Spain - Madrid - Peseta Syria - Damascus - Syrain pound Tunisia - Tunis - Tunisian DinarCapital cities please: Algeria - Algiers- Algerian Dinar Cyprus - Nicosia - Cyprus pound Egypt - Cairo- Egyptian pound Israel - Jerusalem/Tel Aviv - New Shekel Jordan - Amman - Jordanian Dinar Lebanon - Beirut - Lebenese pound Malta - Valetta - Maltese Lira Morocco - Rabat - Moroccan Dirham Spain - Madrid - Peseta Syria - Damascus - Syrain pound Tunisia - Tunis - Tunisian Dinar

3. Selection of Transport Mode Road Rail Sea Air Pipeline

4. How to select transport distribution analysis speed frequency reliability quality cost

5. Selection of Mode nature of commodity degree of packing & cost ease of handling in a transport mode statutory obligations transport in country image distribution factors dangerous cargo suitability transit time quantity insurance terms of export sale documentation

6. strengths & weaknesses strengths of air: speed of travel, good safety record, highly trained staff, good public image strengths of sea: capability of moving large loads, cheapest option. Shipowners can trade anywhere, subject to water depth Limits of road: load size restricted by legislation, distance regulated by drivers hours, congestion, road shared with other users Limits of rail: inflexibility of operation, need for transhipment, political interference

7. The unknown revolution: Containers: revolutionised shipping itineraries constraints on ship size all but vanished regular & frequent service required by shippers service patterns changed to selective port calls, amalgamation of services, mergers between lines & consortium

8. Comparison: 10,000dwt takes up to 14 days to unload Traditional shipment - spends 2/3 time in port Break bulk can cause damage Easy for theft & pilferage Containers vessel of 40,000 dwt takes 24 hours to unload Containers - reduce number of ports of call - ideal is 4 Rapid turnaround & intensive use reduces numbers of vessels needed on a route reduction of sea haul - eg trunk across USA by rail

9. “Reefers”= “refrigerated goods” 50% trade is fruit and vegetables - very seasonal mainly about long term contracts trade depends on demand - (chinese gooseberry) other products: frozen fruit juice, flowers & bulbs, diary products, meat, X-Ray film, confectionary

10. Commercial imports Goods may be imported legally only through places approved by customs Ships & aircraft must lodge a report, including cargo list with customs on arrival, usually before unloading All goods must be properly “entered” and duties/levies/charges paid before released from customs control Customs officers have the right to examine all goods to confirm they correspond with the “entry”

11. The trade transaction Three key documents: 1) The letter of credit issued by a bank at the request of an importer, it states the bank will pay a specified amount of money to the beneficiary (exporter) on production of specified documents 2) Draft or Bill of Exchange used to settle trade transactions “sight” or “time” 3) The Bill of Lading Firms engaging I international trade have to trust someone they have never met, from a different culture, lives in a different country, abides by a different legal system, and could be very difficult to track down if there are problems! UK shipment to Indonesia. If UK ships before payment, concern. Importer - if pays prior to shipment - take delivery & not pay. Or defective goods shipped? Each party has different set of preferences re payment! ie one before & one after. Problem solved by using third party they can both trust - usually bank. 1/ Importer obtains banks promise to pay on importers behalf. (letter of credit) 2/ Bank promises exporter to pay on behalf of importer (exporter, sees L/C & ships) 3/ Exporter ships “to the bank” trusting banks promise to pay (Title given to bank in form of Bill of Lading) 4/ Bank pays exporter (L/C presented) 5/ Bank gives merchandise to importer (B/Lading signed to importer) 6/ Importer pays bank (reinburses bank) Firms engaging I international trade have to trust someone they have never met, from a different culture, lives in a different country, abides by a different legal system, and could be very difficult to track down if there are problems! UK shipment to Indonesia. If UK ships before payment, concern. Importer - if pays prior to shipment - take delivery & not pay. Or defective goods shipped? Each party has different set of preferences re payment! ie one before & one after. Problem solved by using third party they can both trust - usually bank. 1/ Importer obtains banks promise to pay on importers behalf. (letter of credit) 2/ Bank promises exporter to pay on behalf of importer (exporter, sees L/C & ships) 3/ Exporter ships “to the bank” trusting banks promise to pay (Title given to bank in form of Bill of Lading) 4/ Bank pays exporter (L/C presented) 5/ Bank gives merchandise to importer (B/Lading signed to importer) 6/ Importer pays bank (reinburses bank)

12. These are the main documents required: Commercial invoice Import licence Certificate of origin Community Transit Document Single Administration Document Evidence of freight charges Out of Charge note (form C130) Commercial invoice:Original invoice & copy for retention by customs must be submitted. If in a foreign language, a translation may be required. If invoice does not give details, a separate packing list will be required Import licence: required for goods not covered by an open general licence Certificate of Origin: if required Community Transport Document: For goods imported from another part of the EU Single Administration Document: Customs Entry Evidence of freight charges - for goods bought on FOB terms Out of charge: details of goods imported, shipping marks etc.when entry has been processed and examination of goods completed, it will be returned to the importer as an authority that goods may be released from customs. Commercial invoice:Original invoice & copy for retention by customs must be submitted. If in a foreign language, a translation may be required. If invoice does not give details, a separate packing list will be required Import licence: required for goods not covered by an open general licence Certificate of Origin: if required Community Transport Document: For goods imported from another part of the EU Single Administration Document: Customs Entry Evidence of freight charges - for goods bought on FOB terms Out of charge: details of goods imported, shipping marks etc.when entry has been processed and examination of goods completed, it will be returned to the importer as an authority that goods may be released from customs.

13. Import licences E.U. Textiles & clothing (negotiated bi-lateral agreement, being phased out, WTO takes over) Iron & Steel (monitors volume & price for outside EU) Other Products(eg toys, footwear from China) UK Firearms & ammunition Nuclear weapons Sanctions (eg Iraq prohibits any imports without a DTI licence)

14. Single Administration Document Introduced in 1988 to replace over 100 different forms used before within the EU! Developed as a 8 copy set: 1/3 for export 4/5 for community transit 6/8 for import 90% of imports now use direct trader input (dti) where importer sends info to HM customs computer

15. Checklist: Plan as much as possible for each import Use correct INCOTERM for maximum profit & minimum risk Select forwarding agents carefully Know about commercial credits Regularly review your transport arrangements Research - to keep up to date!

16. You will need to write notes on: Bill of Lading it is a receipt it is a contract it is a document of title What are details contained in a B/L? Air way bills receipt not document of title - no legal application non-negotiable evidence of a contract of carriage original not needed for collection: fax Bill of lading:Issued to the exporter by the common carrier transporting the merchandise,states the conditions in which the goods were delivered to (and received by) the ship. Forms evidence for the actual contract, document of title it can be used to obtain payment, or written promise of payment before the merchandise is released to the importer. Can also function as collateral against funds which may be advanced by the exporter by its local bank during shipment and before final payment. 1. name of shipper 2. name of carrying vessel 3. full description of cargo: shipping marks, individual package numbers, contents, cubic capacity, gross weight 4. Marks & Numbers identifying the goods 5. Port of Shipment 6. Port of discharge 7. Full details of freight, inc when & where it is to be paid 8 name of consignee/shippers order 9 terms of contract of carriage 10 Date goods rec. for shipment/loaded onto vessel 11. name & address of notified party 12 Number of B/lading 13 Signature of ships master/agent, dateBill of lading:Issued to the exporter by the common carrier transporting the merchandise,states the conditions in which the goods were delivered to (and received by) the ship. Forms evidence for the actual contract, document of title it can be used to obtain payment, or written promise of payment before the merchandise is released to the importer. Can also function as collateral against funds which may be advanced by the exporter by its local bank during shipment and before final payment. 1. name of shipper 2. name of carrying vessel 3. full description of cargo: shipping marks, individual package numbers, contents, cubic capacity, gross weight 4. Marks & Numbers identifying the goods 5. Port of Shipment 6. Port of discharge 7. Full details of freight, inc when & where it is to be paid 8 name of consignee/shippers order 9 terms of contract of carriage 10 Date goods rec. for shipment/loaded onto vessel 11. name & address of notified party 12 Number of B/lading 13 Signature of ships master/agent, date