Seminar by Ravindran Raghavan on freight documentation and Incoterms 2010. Note that Incoterms may be revised and updated by ICC, hence read with caution as these contents could have become outdated when you download them. 1. Airway Bill 2. Bill of Lading 3. Other documentation for cargo shipment 4. Incoterms 2010 -EXW, FOB, CIF, DAP, DDP

2. Transportation
• Sea
• Air
• Rail – Road
• Pipeline
Storage
• Warehousing
• Distribution
Documentation
• Incoterms
• Shipping
docs
Insurance
• Cargo
insurance
• Marine
insurance

3. PART C – DOCUMENTATION
Documents of carriage
 9.2 Seaway Bill
 9.3 Bill of Lading
 9.4 Multi modal Bill of Lading
 9.5 Airway Bill
 9.6 Master / House BL or Airway Bill
Group
work?

4. Antiquity Measurement
Black List Certificate
Cart/Lorry Ticket
Certificate of Chemical
Analysis
Certificate of Inspection
Certificate of Shipment
Certified Invoice
Commercial Invoice
Consular Invoice
Customs Declaration Form
Customs Invoice
Despatch Note
Health/Veterinary/Sanitary
Certification
Legalised/Visaed Invoice
Manufacturer's Certificate
Packing List
Shipping Bill
Shipping Order
Short Shipment Form
Shut Out Advice
PART C – DOCUMENTATION
Other documents

5. Antiquity Measurement – It is issued by
Archaeological Survey of India in case of antiques.
Black List Certificate - It is required for countries
which have strained political relation. It certifies
that the ship or the aircraft carrying the goods has
not touched those country(s).
Cart/ Lorry Ticket - It is prepared for admittance of
the cargo through the port gate and includes the
shipper's name, cart/ lorry No., marks on
packages, quantity, etc.
PART C – DOCUMENTATION
Other documents

6. Certificate of Chemical Analysis - It is required to
ensure the quality and grade of certain items such
as metallic ores, pigments, etc.
Certificate of Conditioning - It is issued by the
competent office to certify compliance of humidity
factor, dry weight, etc.
Certificate of Inspection – It is a type of document
describing the condition of goods and confirming
that they have been inspected.
Certificate of Shipment - It signifies that a certain
lot of goods have been shipped.
PART C – DOCUMENTATION
Other documents

7. Certified Invoice - It is required when the exporter
needs to certify on the invoice that the goods are of a
particular origin or manufactured/ packed at a
particular place and in accordance with specific
contract. Sight Draft and Usance Draft are available for
this. Sight Draft is required when the exporter expects
immediate payment and Usance Draft is required for
credit delivery.
Commercial Invoice - Issued by the exporter for the
full realisable amount of goods as per trade term.
PART C – DOCUMENTATION
Other documents

8. Consular Invoice - Mainly needed for the countries like
Kenya, Uganda, Tanzania, Mauritius, New Zealand,
Burma, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana,
Zanzibar etc. It is prepared in the prescribed format
and is signed/ certified by the counsel of the importing
country located in the country of export.
Customs Declaration Form - It is prescribed by the
Universal Postal Union (UPU) and international apex
body coordinating activities of national postal
administration. It is known by the code number CP2/
CP3 and to be prepared in quadruplicate, signed by
the sender.
PART C – DOCUMENTATION
Other documents

9. Customs Invoice - Mainly needed for the countries like
USA, Canada, etc. It is prepared on a special form being
presented by the Customs authorities of the importing
country. It facilitates entry of goods in the importing
country at preferential tariff rate.
Despatch Note- It is filled by the exporter to specify the
action to be taken by the postal department at the
destination in case the address is non-traceable or the
parcel is refused to be accepted.
PART C – DOCUMENTATION
Other documents

10. Health/ Veterinary/ Sanitary Certification - Required for
export of foodstuffs, marine products, hides, livestock
etc.
Legalised / Visaed Invoice - This shows the seller's
genuineness before the appropriate consulate or
chamber or commerce/ embassy.
Manufacturer's Certificate - It is required in addition to
the Certificate of Origin for few countries to show that
the goods shipped have actually been manufactured
and is available.
Packing List - It shows the details of goods contained
in each parcel / shipment.
PART C – DOCUMENTATION
Other documents

11. Shipping Order - Issued by the Shipping (Conference)
Line which intimates the exporter about the
reservation of space of shipment of cargo through the
specific vessel from a specified port and on a
specified date.
Short Shipment Form - It is an application to the
customs authorities at port which advises short
shipment of goods and required for claiming the
return.
Shut Out Advice - It is a statement of packages which
are shut out by a ship and is prepared by the
concerned shed and is sent to the exporter.
PART C – DOCUMENTATION
Other documents

12. Transportation
• Sea
• Air
• Rail – Road
• Pipeline
Storage
• Warehousing
• Distribution
Documentation
• Incoterms
• Shipping docs
Insurance
• Cargo
insurance
• Marine
insurance

13. 9.1 INCOTERMS 2010
International Commercial
Terms
 First published in 1936 by
International Chamber of Commerce
 Revised 6 times before 2010
 Current revision (“Incoterms 2010”)
became effective January 2011

15. 9.1 INCOTERMS 2010
Electronic Communication
 Electronic means of communication
now given same effect as paper as long
as parties agree or where customary
String Sales
 Rules now recognize that seller may
fulfill its obligations by procuring goods
that have been shipped

16. 9.1 INCOTERMS 2010

17. 9.1 INCOTERMS 2010

18. 9.1 INCOTERMS 2010
Rules applicable to any modes of transport
EXW Ex Works
FCA Free Carrier
CPT Carriage Paid To
CIP Carriage & Insurance Paid To
DAT Delivered at Terminal
DAP Delivered at Place
DDP Delivered Duty Paid

19. 9.1 INCOTERMS 2010
Rules for Sea and Inland Waterway
FAS Free Alongside Ship
FOB Free On Board
CFR Cost and Freight
CIF Cost, Insurance and Freight

20. 9.1 INCOTERMS 2010
Specifying “location”
EXW, FCA, FAS,
FOB, DAT, DAP,
DDU
place of
delivery
CPT, CIP, CFR, CIF
place of
destination

21. 9.1 INCOTERMS 2010
Most common rules
EXW Ex Works
FOB Free On Board
CFR Cost and Freight
CIF Cost, Insurance and Freight
DDP Delivered Duty Paid

23. EXW = Ex Works
 Seller places the goods at his premises or
another named place (i.e. works, factory,
warehouse, etc.).
 Seller does not need to load the goods or
clear for export

24.  Fewest up front requirements for seller
 Example: “Ex works [factory]Wheeling,WV,
U.S.A. (Incoterms 2010)”

25.  Notes
 Seller has no obligation to load goods, even if better-
suited to do so
 If seller does load goods, it does so at buyer’s expense
and risk
 Better-suited to domestic transport (no obligation
that seller clear goods for export—only provide
assistance if necessary at buyer’s expense and risk)
 Buyer bears all risk of loss from time seller places
goods at buyer’s disposal

26.  FOB = Free on Board
 Seller delivers the goods on board the vessel
nominated by the buyer at the named port of
shipment or procures the goods already so delivered.
 The risk of loss of or damage to the goods passes
when the goods are on board the vessel, and the
buyer bears all costs from that moment onwards.

27.  Notes
 Notice change in 2010: “free on board” no longer
means across the ship’s rail; now means on board the
vessel
 Another change in 2010: if requested by buyer or if it
is commercial practice and buyer does not instruct
otherwise, seller may contract for carriage at buyer’s
risk and expense; seller may decline but must notify
buyer promptly
▪ Therefore, may want to exclude if that is the intent
 Like FAS but goods must be placed on board
 Usage: “FOB Charleston, SC, USA (Incoterms 2010)”

28.  CFR = Cost and Freight
 Seller delivers the goods on board the vessel or procures
the goods already so delivered.
 The risk of loss of or damage to the goods passes when
the goods are on board the vessel.
 The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of
destination.

29.  2 places of importance
 Place of delivery of goods
▪ Seller’s delivery obligation is fulfilled when goods are on
board the vessel
▪ Risk of loss passes when the goods are on board the
vessel
 Port of destination
▪ Seller pays for carriage to port of destination

30.  Examples:
 Contract says: Seller is to deliver goods on board
vessel at Port of Charleston, SC, USA. Terms of
sale are: “CFR, Shanghai (Incoterms 2010).”
▪ Seller’s delivery obligation is fulfilled when the goods are on board
the vessel in South Carolina; risk of loss passes then also
▪ Seller must pay for shipment to Shanghai
 Contract says terms of sale are: “CFR, Shanghai
(Incoterms 2010).” Silent as to port of shipment
▪ Seller’s delivery obligation is fulfilled when the goods are on board
the vessel in the port selected by seller; risk of loss passes then also
▪ Seller must pay for shipment to Shanghai

31.  Notes
 Seller pays for unloading if the contract of
carriage covers unloading
 Seller clears goods for export but not import
 Seller has no obligation to obtain insurance
 If intent to ship in containers and delivery is to
carrier other than vessel, use CPT

32.  CIF = Cost Insurance and Freight
 Seller delivers the goods on board the vessel or procures
the goods already so delivered.
 The risk of loss of damage to the goods passes when the
goods are on board the vessel.
 The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of
destination.

33.  Notes
 Like CFR but with additional obligation to procure
insurance to port of destination
 Insurance requirement is minimum cover
(institute cargo clause c) in the amount of
contract price plus 10% from point of delivery to
point of destination
 Seller clears goods for export but not import

34.  DDP = Delivered Duty Paid
 Seller delivers the goods when the goods are placed at the disposal of
the buyer, cleared for import on the arriving means of transport ready
for unloading at the named place of destination.
 The seller bears all the costs and risks involved in bringing the goods
to the place of destination and has an obligation to clear the goods
not only for export but also for import, to pay any duty for both export
and import and to carry out all customs formalities.

35.  Notes
 Like DAP, but including seller’s obligation to clear
goods for import—pay for any necessary licenses
 Maximum obligation for seller
 If seller is not well-suited to clear goods for
import, DAP should be used
 No obligation to pay for insurance

36. Other rules

37.  FAC = Free Carrier
 Seller delivers the goods to the carrier or another
person nominated by the buyer at the seller’s
premises or another named place.
 The parties are well advised to specify as clearly as
possible the point within the named place of delivery,
as the risk passes to the buyer at that point.

38.  Notes
 Seller does clear goods for export; import
formalities are buyer’s responsibility
 Seller may contract for carriage at buyer’s
expense and risk

39.  Seller’s delivery options
 If the named place is seller’s premises: seller must
load goods onto buyer’s means of transport
 If the named place is any other place: seller must
place the goods at buyer’s (or his carrier’s
disposal) on seller’s mode of transport (ready for
unloading)

40.  Improvements over ExWorks
 Seller clears goods for export
 Can be used to require seller to load goods, when
seller is in a better position to do so
 But…
 Buyer may have little idea what delivery at seller’s
factory means
 Buyer has costs in addition to sales price that
must calculated
 Seller has no control over carrier, insurance, etc.

41.  CPT = Carriage PaidTo
 Seller delivers the goods to the carrier or another
person nominated by the seller at an agreed place (if
any place is agreed between the parties) and the seller
must contract for and pay the costs of carriage
necessary to bring the goods to the named place of
destination.

42.  2 points of importance
 Place of delivery of goods to carrier
▪ Seller’s delivery obligation is complete
▪ Risk of loss passes
 Place of destination
▪ Seller contracts for and pays for carriage to the place of
destination

43.  An Example:
 Contract says seller is to deliver goods to shipping
warehouse in Charleston, WV. Terms of sale are
“CPT buyer’s facility, 24Waffle Place, #1,
Singapore 048621 (Incoterms 2010).”
 Delivery obligation is fulfilled when seller delivers
to the shipping facility in Charleston.
 Risk of loss passes at the moment the goods are
handed over to the carrier in Charleston.
 But seller pays for carriage to Singapore.

44.  Notes
 Seller clears goods for export and pays for transport
through any country necessary to delivery
 Seller has no obligation to pay for insurance but must
provide buyer information to buy insurance at buyer’s
risk and expense
 Buyer obtains import licenses and carries out customs
formalities
 Seller pays for both loading and unloading if covered
by contract of carriage

45.  CIP= Carriage and Insurance PaidTo
 Seller delivers the goods to the carrier or another
person nominated by the seller at an agreed place (if
any such place is agreed between the parties); seller
must contract for and pay the costs of carriage
necessary to bring the goods to the named place of
destination.

46.  Notes
 Like CPT but with the additional requirement that
seller pay for insurance to the named destination
 Insurance requirement is minimum cover
(institute cargo clause c) in the amount of
contract price plus 10% from point of delivery to
point of destination
 Buyer may pay for additional coverage (institute
cargo clauses a or b); seller must provide the
information necessary to allow buyer to do so

47.  DAT = Delivered atTerminal
 Seller delivers when the goods, once unloaded from the arriving means of
transport, are placed at the disposal of the buyer at a named terminal at the
named port or place of destination.
 “Terminal” includes any place, whether covered or not, such as a quay,
warehouse, container yard or road, rail or air cargo terminal.
 The seller bears all risks involved in bringing the goods to and unloading them
at the terminal at the named port or place of destination.

48.  Notes
 Seller’s obligation is fulfilled and risk of loss passes at
same time: when the goods are unloaded at the
arriving terminal and placed at buyer’s disposal
 Can specify a point within the terminal at which time
the obligation is complete
 Seller clears goods for export but not for import
 No requirement of insurance
 If the intention is to carry seller’s obligation further
into buyer’s country, use DAP or DDP

49.  DAP = Delivered at Place
 Seller delivers when the goods are placed at the disposal
of the buyer on the arriving means of transport ready for
unloading at the named place of destination.
 The seller bears all risks involved in bringing the good to
the named place.

50.  Notes
 Much like DAT, but with additional obligation by
seller into country of delivery
 Goods are placed at buyer’s disposal at named
location ready for unloading; risk passes at that
point
 Seller clears goods for export but not import (use
DDP if intent is to require seller to clear goods for
import also).
 No obligation on seller to purchase insurance

51.  FAS = FreeAlongside Ship
 Seller delivers when the goods are placed alongside
the vessel (e.g., on a quay or a barge) nominated by
the buyer at the named port of shipment.
 The risk of loss of or damage to the goods passes
when the goods are alongside the ship, the buyer
bears all costs from the moment onwards.

52.  Notes
 Usage: “FAS Charleston, SC, USA (Incoterms 2010)”
 Can be used in a string sale where seller procures
goods already delivered for shipment
 Seller is obligated to clear goods for export but not
import
 Seller has no obligation to pay for contracts of
carriage or insurance but may contract for carriage
and must assist buyer by providing necessary
information for insurance

53.  Notes
 Not appropriate when goods in container and
delivered to carrier at terminal; use FCA
 Might want to define what it means to be
“alongside” ship

54. Moving on to next segment
RAVINDRAN RAGHAVAN
Email:
ravi@straits.my
Biography:
www.ravi.com.my
Facebook:
www.facebook.com/ravi311
www.facebook.com/straits.my