5. Enabling Learning Objectives (ELO’s)
Documentation Requirements:
▶ Identify Regulatory Requirements: Understand and identify the legal and regulatory documentation requirements for
international trade in a given country or region.
▶ Explain Documentation Timelines: Explain the importance of adhering to specific documentation timelines and deadlines
in international trade transactions.
▶ List Key Information: Compile a comprehensive list of essential information and data needed for international trade
documentation.
▶ Distinguish Between Types: Differentiate between various types of documents required for international trade, including
commercial invoices, certificates of origin, and bills of lading.
Invoices:
▶ Create Accurate Invoices: Learn how to create accurate and compliant commercial invoices for international
transactions, including details such as pricing, currency, and Incoterms.
▶ Calculate Duties and Taxes: Understand how to calculate and include relevant duties, taxes, and fees in international
invoices.
▶ Invoice Language and Formatting: Learn the importance of presenting invoices in the appropriate
language and format for the destination country.
Export Documents:
▶ Prepare Export Declarations: Understand how to prepare and submit export declarations to customs authorities, as
required by the exporting country.
▶ Master Bill of Lading: Learn how to complete a master bill of lading and understand its role in international shipping.
▶ Certificate of Origin: Describe the purpose of a certificate of origin and how to
obtain one for export documentation.
6. Enabling Learning Objectives (ELO’s)
Import Documents:
▶ Understanding Import Regulations: Gain knowledge of import regulations and documentation requirements of the destination country.
▶ Import Licensing: Explain the concept of import licenses and how to obtain them when required.
▶ Customs Documentation: Learn about customs clearance documents, such as import
declarations and customs bonds.
Transportation Documents:
▶ Bill of Lading Types: Understand the different types of bills of lading, including negotiable and non-negotiable, and when to use each.
▶ Air Waybills: Explain the role and importance of air waybills in air freight shipments.
▶ Packing List: Describe the purpose of a packing list and how to create an accurate and complete packing list for
different modes of transportation.
Electronic Data Interchange (EDI):
▶ EDI Implementation: Learn the basics of implementing Electronic Data Interchange for efficient and paperless international document
exchange.
▶ Data Security in EDI: Understand the importance of data security and confidentiality when using EDI for international trade documents.
▶ EDI Standards: Familiarize with common EDI standards and protocols used in international trade, such as
UN/EDIFACT and ANSI X12.
Document Preparation as a Marketing Tool:
▶ Branding in Documentation: Explore how the preparation and presentation of international trade documents can be used as a marketing
tool to enhance the company's brand image.
▶ Document Accuracy and Reputation: Understand how accurate and well-prepared documents can contribute to a positive business
reputation in international markets.
▶ Document Automation: Learn about the benefits of document automation and the use of technology in improving document accuracy
and efficiency.
7. The Complex Web of International Trade
Documentation
▶ International trade involves numerous documents that must adhere to specific requirements based on
goods, destination, transportation, and payment methods.
▶ Accurate documentation is crucial for smooth cross-border trade, compliance with regulations, and
proof of transaction details.
▶ Filling out these documents correctly is complex, with varying requirements between countries and
industries.
▶ Errors or missing documents can lead to delays, extra costs, and legal complications.
▶ Specialized software solutions have emerged to simplify the document generation process, reducing
the risk of mistakes and streamlining the workflow.
▶ Extensive documentation requirements often involve multiple originals and copies, posing logistical
challenges for exporters when dealing with various intermediaries and organizations.
▶ Despite digital advancements, many countries still favor paper-based documents, presenting logistical,
financial, and environmental challenges.
▶ The role of software in simplifying documentation is crucial, offering efficiency, accuracy, and
convenience. Future trends may include increased electronic submissions and international
standardization of trade documentation processes.
8. The Significance of the International
Invoice in Trade Transactions
▶ Currency and Exchange Rates: International transactions often involve multiple currencies. Exporters must specify
not only the price of goods in the currency of their own country but also the equivalent value in the currency of the
importing country. This necessitates an awareness of current exchange rates and a clear display of the chosen
currency.
▶ Incoterms: The International Commercial Terms, or Incoterms, dictate the responsibilities and risks associated with the
delivery of goods. Exporters must specify the chosen Incoterm on the international invoice, as it determines the point at
which ownership and risk are transferred from the seller to the buyer.
▶ Customs and Regulatory Compliance: International invoices must adhere to the customs and regulatory
requirements of the importing country. This includes accurately identifying the products, specifying their HS
(Harmonized System) codes, and providing any necessary certifications or documentation for compliance with trade
regulations and tariffs.
▶ Shipping and Transportation Details: In international transactions, the invoice should include comprehensive shipping
and transportation details. This encompasses the mode of transportation, the port of departure, and the destination port,
among other specifics. Accurate shipping information is crucial to prevent delays, clear customs, and facilitate the
smooth movement of goods.
▶ Language and Cultural Considerations: An international invoice should be presented in a language that the importer
understands. This could necessitate translations or the use of standardized, universally recognized terminology.
Additionally, an understanding of cultural nuances is important to ensure respectful and effective communication in an
international business context.
▶ Taxation and Duties: Taxation and duty-related information, such as VAT (Value Added Tax) or GST (Goods and
Services Tax), must be included in an international invoice. Accurate taxation information is essential for compliance
with the tax laws of the importing country and for the importer's claims for input tax credits.
9. Commercial Invoice
▶ An international shipment invoice is known as a commercial
invoice and can be sent directly to the importer or indirectly
through banking channels depending on the payment terms.
▶ The commercial invoice must provide a precise description of
the products being billed, including the Harmonized System
Number, due to customs clearance requirements.
▶ The terms of trade or Incoterms® rule used should be explicitly
stated, following the International Chamber of Commerce
guidelines to clarify responsibilities for various ancillary
services and fees.
▶ Detailed notes of prepaid items should be included, such as
international insurance payments for CIF or CIP shipments, to
ensure accurate duty calculations.
▶ The terms of payment, whether it's a letter of credit, bank draft,
cash-in-advance, purchasing card, or an open-account sale,
should be clearly indicated.
▶ The currency for payment should be specified, with strategies
for handling currency fluctuations discussed in our previous
lectures.
▶ Essential shipping information, including departure and
destination ports, shipping company details, shipment dates,
box or container quantities, weights, and sizes, must be
provided.
▶ Identifying information for involved parties, including seller-
exporter and buyer-importer names, contact persons,
addresses, and relevant details, should be included without
local telephone access codes.
10. Pro forma Invoice
▶ A pro forma invoice is a commonly used international document, serving as a quote
rather than an actual invoice.
▶ Due to the complexity of international transactions and the various cost factors
involved, importers may request a pro forma invoice to estimate their final
expenses.
When an exporter requests payment through a letter of credit, the information from
the pro forma invoice is used by the issuing bank to open the letter of credit, and it
must match the final transaction documents.
▶
▶ Careful attention is essential when creating a pro forma invoice, as any variance
between the pro forma invoice and the final commercial invoice may lead to
discrepancies, requiring costly amendments.
The pro forma invoice should mirror the final commercial invoice in terms of
information, amount, and quotes from other suppliers involved, such as shipping
and insurance.
▶
▶ Including an expiration date in the pro forma invoice is crucial, as international
transactions treat offer expiration differently from domestic ones, particularly under
the United Nations Convention on the International Sale of Goods (CISG).
▶ In international transactions under the CISG, the offer in a pro forma invoice cannot
be revoked by the seller (or buyer) before the expiration date, making it an
irrevocable offer, with different rules than in many domestic transactions.
11. Consular Invoice
▶ A consular invoice is needed for exports to specific Latin American
countries.
▶ It is a regular commercial invoice printed on consulate-provided
stationery and made official by the consulate through stamping,
embossing, or other procedures.
▶ Obtaining a consular invoice can be time-consuming, involving
exchanges with the consulate.
▶ Countries that require consular invoices use them to forecast foreign
currency needs and generate revenue through stationery and
officialization fees.
▶ The requirement for consular invoices is diminishing and is often seen
as a non-tariff trade barrier by exporters.
▶ As of June 2017, consular invoices were still required in about six
countries, primarily in Latin America.
12. Specialized Commercial Invoices
▶ Commercial invoices are vital in international trade,
recording transaction details for goods or services.
▶ Some countries, such as Canada, Mexico, New
Zealand, Brazil, and Israel, mandate specialized
commercial invoices printed on standardized forms.
▶ These forms meet specific criteria and are compliant
with the country's customs regulations and legal
requirements.
▶ The requirement is intended to facilitate customs
procedures and expedite clearance, not seen as a
trade barrier.
▶ Specialized international stationery printers provide
these standardized forms.
▶ The use of such invoices simplifies the work of
customs employees and enhances trade efficiency.
13. Specialized Commercial
Invoices
The utilization of specialized commercial invoices offers several notable advantages:
▶ Simplification of Customs Procedures: Standardized commercial invoices streamline the customs
clearance process by presenting information in a structured and consistent format. This simplifies the work
of customs officials, who can quickly locate and verify essential data, such as the product description,
value, and origin. As a result, goods can move through the customs process more efficiently, reducing
delays and enhancing trade facilitation.
▶ Enhanced Accuracy and Compliance: The use of specialized invoices helps ensure that exporters provide
accurate and complete information. These forms often include fields for specific details required by
customs, such as the HS (Harmonized System) codes for products. This not only aids in maintaining legal
compliance but also reduces the potential for errors or discrepancies.
Greater Transparency and Accountability: Standardized forms foster transparency and accountability
throughout the supply chain. The structured layout of these invoices makes it easier for customs officials,
as well as other parties involved, to understand the transaction and confirm that it aligns with international
trade regulations. This transparency builds trust and promotes efficient trade relations.
Consistency and Predictability: Specialized invoices provide a consistent and predictable framework for
conducting international trade. Exporters can readily access and complete these forms, knowing that they
meet the legal requirements of the importing country. This consistency aids both small and large
businesses, as they do not need to tailor their invoices for different markets.
▶
▶
▶ Compliance with Legal Regulations: Using standardized commercial invoices helps exporters meet the
specific legal requirements of the destination country. Some countries have unique regulations regarding
invoices, and specialized forms ensure that exporters adhere to these rules. Compliance is essential for
avoiding legal disputes and potential penalties.
14. Export
Documents
▶ Governments may impose document
requirements for exports to gather
accurate data on outgoing products.
▶ Specific documents like Electronic Export
Information (EEI) in the United States and
the Single Administrative Document in the
European Union serve this purpose.
▶ Export licenses may also be necessary
when governments seek to control the
export of certain goods or limit trade with
specific countries for political reasons.
▶ These licenses are required in cases of
controlled merchandise or embargoes.
15. Electronic Export
Information
▶ The Electronic Export Information (EEI) is
required by the U.S. government for exports
over $2,500 per item category, except for
exports to Canada.
▶ EEI is collected electronically by U.S.
Customs and Border Protection or the
Census Bureau.
▶ EEI replaced the paper Shipper's Export
Declaration (SED) and helps tabulate
exported products and their destinations.
▶ The EEI's definition of "exporter" designates
the U.S. principal party in interest (USPPI) as
the manufacturer, improving the accuracy of
export statistics.
▶ The data collected is available through the
National Trade Data Bank on the
International Trade Commission's website
with a subscription.
16. Single Administrative
Document
▶ The Single Administrative Document (SAD) is required by
the European Union for all exports.
▶ It can be submitted in paper or electronic form and must
be filed where the goods are packed and shipped.
▶ The "owner of the goods" or their representative is
responsible for filing the SAD.
17. Export
Licenses
▶ Export licenses are government authorizations for specific product
exports.
▶ Export licenses are usually required for national treasures, antiques,
raw materials, or for political and military control.
▶ Several countries like India, Britain, France, Russia, and Turkey use
export licenses to control the export of antiques and cultural artifacts.
▶ Some governments, like China, use export licenses to manage the
export of raw materials like rare earths and phosphates.
▶ Export controls can be implemented for political reasons, such as
the Ivory Coast banning cocoa exports in 2011.
▶ Export licenses are also employed for political or military objectives,
notably by the United States.
▶ Various countries have export restrictions or controls, with over 50
countries identified by the OECD.
▶ The European Union, for instance, prohibits the export of personal
data gathered on customers or consumers.
19. U.S. Export
Controls
▶ U.S. export control policy has been shaped by
historical milestones such as the CoCom
agreement, the Export Administration Act, and
the Comprehensive Anti-Apartheid Act.
▶ These milestones led to the creation of the
Commerce Control List, which specifies which
commodities and products can be shipped to
certain countries.
▶ The list is published in the U.S. Export
Administration Regulations (EAR) and was
revised in 1996 to shift from a policy of
"everything not explicitly authorized needs an
export license" to "everything is authorized
unless specifically prohibited."
▶ In 2002, the Bureau of Export Administration
was renamed the Bureau of Industry and
Security.
▶ U.S. export control policies focus on three
elements: the product being exported, the
entity purchasing it, and the ultimate
destination of the product.
▶ Dual-use products, which can have both
commercial and military applications, are
subject to close scrutiny to ensure they are not
diverted for military use.
20. Internet
Encryption
▶ Businesses are increasingly interested in conducting
international transactions over the internet, requiring data
security for confidential information like credit card details.
▶ Encryption software is a means to secure data by scrambling it,
making it readable only to those with the corresponding
software.
▶ The United States government has historically classified
encryption technology as sensitive due to potential military
applications, placing it on the Commerce Control List.
Initially, the U.S. government restricted the use of encryption
software on the internet as it was considered an export, but
certain entities like banks, health facilities, and online
merchants were granted access.
▶
▶ The Bureau of Industry and Security (BIS) now permits low-
level "mass-market encryption" for export, but software with
such encryption is still subject to BIS review.
Software products containing low-level encryption remain listed
in the Commerce Control List.
▶
21. The Product
Exported
The Bureau of Industry and Security (BIS) publishes the Commerce
Control List (CCL), which lists products that concern the United States
and may require export licenses.
Each product on the CCL is assigned an Export Control Classification
Number (ECCN), different from the Harmonized System Number, to
determine the need for an export license.
Products not on the CCL are classified as "EAR99" by the BIS,
although some may still require licenses if under the jurisdiction of
another government entity.
The BIS provides the reason for each product's inclusion on the CCL,
such as national security, anti-terrorism, or encryption.
ECCN commodities may or may not require licenses based on the
reason for listing and the destination country, with the BIS offering a
Product/Country License Determination Matrix to assist exporters.
22. The Purchaser
of the Product
▶ The Entity List. This list identifies people, companies, and organizations
engaged in weapon proliferation, drug smuggling, or terrorism, and to which
the U.S. government wants to control exports. Sales to persons or
organizations on the Entity List require an export license. The Entity List is
maintained by the BIS.
▶ The Unverified List. This list identifies individuals, companies, and
organizations that are suspected of engaging in activities that. the BIS
considers illegal. Before making a sale to a person on the Unverified List, the
exporter must check with the BIS about possible issues. The Unverified List is
also maintained by the BIS. In addition, the exporter must report a suspect
transaction when. the transaction has elements that the BIS considers “red
flags,”such as when a cash sale is made for a product that is generally.
Purchased on credit, or when a product is sold to a company that. does not
appear to be in the exporter’s main line of business.
▶ The Specially Designated Nationals List. The Specially Designated
Nationals List contains the names of persons located. abroad with whom
exporters are expressly warned not to do. business. These persons have been
deemed to represent countries. to which the United States does not want to
export, or they? represent companies or organizations engaged in terrorism or
trafficking. Some of these companies are located in the United. States. The
Specially Designated Nationals List also identifies. U.S. persons, companies,
or organizations “whose export privileges have been revoked.” The list is
maintained by the Department of the Treasury.
▶ The Debarred List. An exporter is expressly prohibited to sell to a person on
the Debarred List, and a company that is contacted. (even for a domestic sale)
by one of these companies must notify. the BIS. The Debarred List is
maintained by the United States Department of State.
23. The Country of
Import
▶ The Commerce Control List (CCL) determines
whether a product with an Export Control
Classification Number (ECCN) can be exported
to a specific country.
▶ The U.S. has different export regulations for
friendly and unfriendly countries, with
embargoes imposed on certain products for
select countries.
▶ Total embargoes prohibit any product exports to
Cuba, Iran, North Korea, and Syria.
▶ Limited embargoes apply to other countries,
including Belarus, Iraq, Libya, and Venezuela.
▶ When an export license is required, exporters
need an Individual Validated Export License
with specific terms and conditions, including a
Destination Control Statement on related
documents.
24. Deemed Export
▶ The U.S. Bureau of Industry and Security
(BIS) regulates exports of products with
potential risks to national security.
▶ BIS also includes "deemed exports,"
covering products sold to foreign
nationals within the United States.
▶ Companies should monitor and control
access to sensitive technology by foreign
employees.
▶ Export licenses may be required to grant
foreign employees access to controlled
technology.
▶ Permanent U.S. residents are exempt
from these regulations.
25. Fines
▶ Schlumberger Oilfield Holdings, a wholly-owned
subsidiary of Schlumberger, a Curaçao-based
company with headquarters in Sugarland, Texas,
agreed to pay over $232 million for trading with Iran
and Sudan.
▶ Hetran, located in Pennsylvania, manufactured a
large horizontal lathe, which it sold for $800,000 to a
company in the United Arab Emirates. Since
Hetran’s president knew that the shipment was
ultimately being sent to an Iranian company named
Falcon Instrumentation and Machinery, he pleaded
guilty and was sentenced to a fine of $837,500.
▶ Gary Tsai pleaded guilty to illegally export high-
precision milling machines to his father, Alex Tsai, in
Taiwan. These milling machines needed a Validated
Export License that was not obtained. Alex Tsai was
sentenced to two years in prison.
▶ Weatherford International conducted business in
Cuba, Iran, Sudan and Syria through Weatherford’s
subsidiary in the United Kingdom. Combined,
Weatherford generated approximately $110 million
in revenue from sales to these countries. The
company was fined $100 million.
▶ EgyptAir Airlines Company, the flag carrier airline of
Egypt, leased two Boeing 737 aircraft to Sudan.
EgyptAir agreed to pay a fine of $140,000 for having
re-exported the aircraft without a Validated Export
License.
26. The
Significance of
End-Use
Certificates in
International
Trade
▶ Legitimacy and Accountability: EUCs serve as a legal
commitment by the importing entity, typically a government
or authorized agency, to use the goods for the intended,
legitimate purpose. This commitment holds the importer
accountable and legally responsible for any deviations from
the stated purpose.
▶ Preventing Diversion: The primary purpose of End-Use
Certificates is to prevent the diversion of controlled goods for
unauthorized or unacceptable uses. These certificates act as
a safeguard, providing a formal mechanism for exporters to
confirm the intended end use of their products.
▶ Government Oversight: In most cases, End-Use Certificates
are issued by the importing country's government or relevant
authorities. This adds an additional layer of oversight, as
government officials evaluate and approve the intended use
of sensitive items, thereby reducing the risk of misuse.
▶ International Agreements and Treaties: End-Use Certificates
often align with international agreements and treaties that
regulate the export and use of certain goods. Compliance
with these agreements is vital for maintaining diplomatic
relations and international trust.
▶ Security and Transparency: EUCs contribute to security and
transparency in international trade. By ensuring the intended
use of controlled items, they bolster the integrity of export
controls and promote international peace and security.
▶ Preventing Human Rights Abuses: In the case of military
equipment, End-Use Certificates are instrumental in
preventing potential human rights abuses or misuse of such
equipment, such as the use of weapons against civilian
populations.
27. Enabling Learning Objectives (ELO’s)
The Impact of a Significant Disruption in International Logistics:
▶ Assess the consequences of a major disruption in international logistics on global trade and supply chains.
▶ Analyze the vulnerabilities and risks associated with disruptions in international logistics.
International Organizations:
▶ Identify the key international organizations that play a role in regulating and facilitating international logistics and trade.
Understand the functions and objectives of these international organizations in the context of logistics.
The United States’ Approach:
▶ Examine the strategies and policies employed by the United States in managing and responding to disruptions in
international logistics.
▶ Evaluate the effectiveness of the U.S. approach in mitigating logistical disruptions.
The European Union’s Programs:
▶ Explore the programs and initiatives implemented by the European Union to address disruptions in international logistics.
▶ Compare and contrast the European Union’s approach with that of the United States.
Other Countries’ Approach:
▶ Investigate how various countries around the world approach the management of significant disruptions in international
logistics.
▶ Analyze the similarities and differences in the approaches of different countries.
Corporate Efforts:
▶ Examine the role of private corporations and businesses in managing and adapting to disruptions in international logistics.
▶ Evaluate the best practices and strategies that corporations employ to safeguard their supply chains during disruptions.
28. Introduction
▶ The 9/11 attacks highlighted the vulnerability of
open economies to terrorism and marked a
turning point in addressing terrorist threats
▶ The response shifted from reactive to preventive
and systematic approaches, leading to
unprecedented security measures.
▶ In the years following the attacks, the U.S., its
trading partners, and international organizations
introduced measures to prevent international
terrorism.
▶ These measures have significantly affected the
way international business operates.
▶ The need for enhanced security has given rise to
corporate security management functions to
protect international supply chains from criminal
activities.
▶ Security measures imposed by governments and
international organizations can be integrated with
a firm's security activities in international trade.
▶ Although individual security measures may not
be highly effective, their collective
implementation has improved security in
international logistics and increased focus on
these efforts.
29. The Fallacy of One-
Hundred-Percent
Inspections
▶ Advocates of one-hundred-percent
inspection propose inspecting all imported
cargo to ensure safety and deter criminals.
▶ They argue that it is the safest method as
nothing dangerous can enter the country.
▶ While it may act as a deterrent, this
approach is largely ineffective for enhancing
border security due to several reasons.
▶ One reason is that it is impractical and
logistically challenging to inspect all
incoming cargo.
▶ Additionally, it can create bottlenecks and
disrupt trade flows, affecting the efficiency of
the supply chain.
30. The Fallacy of One-
Hundred-Percent
Inspections
▶ Physical inspection of each container is time-
consuming, taking about three hours per
container.
▶ Assuming inspectors work efficiently and can
handle three containers per day, one
inspector can manage 750 containers
annually.
▶ For the vast number of containers crossing
borders in regions like the United States and
the European Union (over 25 million ocean
containers), employing enough inspectors to
cover all cargo would be a monumental and
costly task.
▶ The cost of hiring and maintaining an
adequate number of inspectors for global
cargo inspection would amount to many
billions of dollars.
31. The Fallacy of One-
Hundred-Percent
Inspections
▶ Inspecting all cargo would lead to
significant delays in ports.
▶ Ports need substantial storage
space to accommodate and inspect
newly unloaded containers,
approximately 120 per hour.
▶ The need for storage affects the
movement of containers within the
port, leading to bottlenecks and
delays.
▶ Shifting the inspection process to
the port of departure would not
eliminate the problem but only
relocate it.
32. The Fallacy of One-
Hundred-Percent
Inspections
▶ Inadequate resources: The large
number of containers and high
inspection time per container would
require a vast number of inspectors, far
beyond practicality.
▶ Inefficiency: Rushed inspections would
be superficial and fail to uncover well-
hidden dangerous goods, leading to a
false sense of security.
▶ High costs: Even with a cursory
inspection approach, the program
would necessitate a substantial
number of inspectors and result in
significant expenses, offering only a
minor reduction in risk.
33. The Fallacy of One-
Hundred-Percent
Inspections
One-hundred-percent inspection, as
demonstrated by the TSA in the United
States:
▶ Shows empirical evidence of inefficiency:
The TSA, operating on a one-hundred-
percent inspection system, has failed to
detect 95% of mock explosives and
banned weapons during testing.
▶ Reflects inadequacy in performing its
mission: The TSA lacks the ability to
perform its mission effectively.
▶ Demonstrates the ability of testers to
bring unauthorized items onto aircraft
undetected, highlighting significant
security shortcomings.
34. The Impact of a
Significant Disruption in
International Logistics
▶ Natural disasters and catastrophes can disrupt
international trade. For instance, Hurricane Katrina
closed U.S. Gulf ports, leading to months of delays
in grain and commodity shipments.
▶ Terrorist acts pose a grave threat to international
trade. After the 9/11 attacks, all North American
airline traffic was halted for three days, causing
delays in air cargo and operations that took weeks
to resolve.
▶ The potential consequences of a terrorist act are
significant. A simulation involving a dirty bomb
scare in U.S. ports indicated that shutting down
ports for 12 days would create a backlog of
containers lasting three months, with an estimated
cost of $58 billion in 2002.
▶ Costs have likely increased over time, making the
potential economic impact of similar events in 2017
much higher, possibly around $75-80 billion.
▶ Such disruptions are not limited to the United
States and can occur worldwide due to various
events, whether natural or man-made.
▶ To mitigate these risks, governments and
international agencies have collaborated to
establish security measures addressing
vulnerabilities in the global supply chain.
35. International Maritime Organization
▶ International organizations like the International Maritime Organization
(IMO) and the Customs Cooperation Council monitor international
agreements and treaties.
The IMO was among the first to implement enhanced security measures,
introducing the International Ship and Port Facility Security (ISPS) Code in
December 2002.
The ISPS Code was incorporated into the International Convention for the
Safety of Life at Sea (SOLAS), which had already been signed by 148
countries, ensuring rapid implementation.
The ISPS Code enhances port security with Part A specifying required
measures for ports, and Part B offering recommendations for their
implementation.
Due to varying port characteristics, locations, and cargo types, ISPS Code
implementation and costs differ widely.
Implementation of the ISPS Code has generally improved security and led
to benefits like reduced theft, fewer stowaways, and smoother port
operations at a relatively low cost per container handled.
Port security is achieved through tight access control, video recording, and
secure communication systems. Port security officers oversee these
activities.
The United States Coast Guard collaborates with 47 other countries
through International Port Security Liaison Officers, sharing best practices
to enhance port security globally.
The ISPS Code for ships involves the appointment of company security
officers and ship security officers who develop security assessments and
plans based on ship and cargo type.
Additional ship security measures include background checks for crew
members, document security, employee training, and adherence to specific
standards, with many ships having obtained International Ship Security
Certificates to indicate compliance.
▶
▶
▶
▶
▶
▶
▶
▶
▶
36. World Customs
Organization
▶ WCO's traditional role: The WCO traditionally focused
on simplifying and harmonizing customs procedures.
▶ Security enhancement initiatives: The WCO has
undertaken initiatives to enhance security,
complementing efforts by organizations like the IMO.
▶ Pre-screening high-risk shipments: The WCO
encourages standardization of documents, identifies
high-risk shipment data characteristics, and establishes
guidelines for customs authorities to access shipment
documents before loading.
▶ Advanced Cargo Information: This focus on advanced
cargo information is akin to initiatives by the U.S.
Customs and Border Protection agency.
▶ Collaborative approach: The WCO aims to facilitate the
identification of high-risk shipments and improve
security measures in international trade.
37. The World Customs Organization (WCO) plays a
significant role in enhancing international shipping
security
▶ All customs authorities must adhere to a
set of advance electronic information
standards for all international shipments.
What is required of shippers should be
identical, regardless of country of export
and country of import.
Each country must have consistent risk
management approaches to address
security threats.
▶
▶ Exporting countries’ customs authorities
must comply with a reasonable request
from the importing country’s customs
authorities to inspect outgoing cargo,
preferably using nonintrusive technology
(x-rays) if possible (see Figure 16.3).
All customs authorities must provide
benefits to companies that demonstrate
that they meet minimum standards of
security. Such companies are called
Authorized Economic Operators, and
benefit from faster processing of customs
clearance and lower inspection rates.16
▶
38. The Role of the International
Chamber of Commerce in
International Logistics Security
The International Chamber of
Commerce (ICC) is a prominent global
organization that plays a vital role in
shaping international trade practices
and policies. In the context of
international logistics security, the ICC
has been a strong advocate for
collaboration and the development of
international agreements to ensure the
safe and efficient movement of goods
across borders. This essay discusses
the ICC's stance on security initiatives,
emphasizing the importance of
international cooperation and the
protection of sensitive business
information.
39. ICC's Policy Statement on International
Logistics Security
▶ International Agreements Over Unilateral Actions: The ICC stressed the importance of security
initiatives being rooted in international agreements between countries. Rather than unilateral actions
taken by individual governments, the ICC advocated for collaborative efforts that involve multiple
nations. This approach promotes consistency and harmonization in security measures, reducing
potential trade barriers.
▶ Leveraging Business Investments: The ICC acknowledged that businesses involved in international
trade had already invested substantial resources in security initiatives. Therefore, the organization
advocated for international rules and regulations that build upon and capitalize on these existing
investments. This not only minimizes duplication of efforts but also ensures that security standards are
cost-effective and practical for the private sector.
▶ Preventing Undue Burdens: The ICC expressed concerns that country-specific security requirements
could place undue burdens on businesses engaged in international trade. Such requirements could
lead to administrative complexities, compliance challenges, and increased costs. The ICC emphasized
the need for harmonized, globally accepted security standards to prevent hindrances to trade.
▶ Protection of Business Information: A critical aspect of the ICC's policy statement was the
protection of sensitive and confidential company information. The organization cautioned that as
security initiatives collect and share data with various law enforcement authorities, great care should
be exercised to ensure that no sensitive business information is inadvertently disclosed.
40. Importance
of
International
Cooperation
Consistency and Harmonization: By advocating for international agreements,
the ICC promotes consistency and harmonization in security measures. This
ensures that businesses do not face a patchwork of different requirements in
each country, making it easier to conduct cross-border trade.
Economic Efficiency: Collaborative security initiatives are more economically
efficient. They reduce duplication of efforts, administrative burdens, and
compliance costs, which ultimately benefits businesses and consumers.
Protection of Business Interests: Protecting sensitive and confidential business
information is paramount. International cooperation and agreement on data
handling and sharing protocols help safeguard business interests while meeting
security objectives.
Facilitation of Global Trade: The ICC's approach aligns with its core mission of
facilitating international trade. International agreements on security initiatives
support the free flow of goods across borders, contributing to economic growth
and prosperity.
41. National
Governments’
Involvement
▶ Unilateral security measures: Many governments
independently enforced various security measures in
response to terrorist attacks over the past two decades.
▶ Diverse range of attacks: Terrorism has affected numerous
countries with a growing frequency and an increasing
diversity of groups targeting democratic societies, leading to
the implementation of these measures.
▶ Wide-ranging impact on international trade: The security
measures imposed by governments have had a significant
impact on international trade operations and logistics.
▶ Indiscriminate terrorism: Terrorist activities are
indiscriminate, targeting multiple countries and various types
of targets, often involving both foreign and domestic
terrorists.
▶ A global concern: Terrorism has become a worldwide issue,
with few countries remaining untouched by its impacts.
43. The United
States’ Approach
The United States government
implemented several security
measures to limit the country’s
vulnerability to terrorist attacks,
focusing initially on interdiction, a
strategy that the country had already
been pursuing in its war against
contraband street drugs and illegal
immigration, and eventually moving to
a system of partnership with
importers.
44. Interdiction ▶ Interdiction rationale: The interdiction approach
seeks to prevent the entry of specific individuals
and goods into a country, making it impossible
for terrorists to operate.
▶ Immediate post-9/11 measures: After the 9/11
attacks, the United States implemented strict
monitoring of air travelers and their luggage,
followed by extending these efforts to certain
groups of foreigners denied visas.
▶ Creation of the TSA: The Transportation
Security Administration (TSA) was established
in 2001 by consolidating private security firms,
with a focus on systematically inspecting
passengers and checked luggage. However,
this approach has faced criticism for its
shortcomings.
▶ Interdiction as "theater": The TSA's policies
have been criticized for their limited
effectiveness, often viewed as security theater,
offering reassurance but not necessarily
achieving their stated goals.
▶ Formation of the Department of Homeland
Security (DHS): The U.S. formalized its
interdiction strategy in 2002 by establishing the
Department of Homeland Security, which
consolidated various agencies to enhance
cooperation in counterterrorism efforts. DHS
plays a substantial role in maintaining security
within the United States.
45. Understanding Type I and Type II Errors
▶ Bomb detection machine operation: Bomb
detection machines at airports aim to
identify explosives by analyzing the air
around luggage. They must operate
quickly and less invasively due to the high
volume of luggage.
Type I error: The machine may incorrectly
detect a bomb when there is none. This
sensitivity is necessary, but it can lead to
false alarms. This error is referred to as a
Type I error or a "false positive."
▶
▶ Type II error: Conversely, the machine
may fail to detect a bomb when one is
present, due to factors like good bomb
packaging or insufficient trace chemicals in
the sample. This error is known as a Type
II error or a "false negative."
▶ Calibrating the machine: The machine is
designed with an error rate of 5% for both
Type I and Type II errors.
Most worrisome error rate: In this context,
both error rates are of concern, but the
consequences of a Type II error (false
negative) can be more severe as it means
potentially failing to detect a dangerous
item, like a bomb, which poses a greater
risk to security.
▶
46. Understanding
Type I and
Type II Errors
▶ The paradox of Type I and Type II errors: People often mistakenly believe that the Type II
error rate is more concerning than the Type I error rate, but this is incorrect.
▶ Incidence of one bomb per one million pieces of luggage: In this example, there is one bomb
for every one million pieces of luggage, making the "bomb rate" 0.0001 percent.
▶ Analysis of one million pieces of luggage: Assuming one million pieces of luggage are
inspected annually at a rate of about 2,750 pieces per day.
▶ Type II error rate (5%): With a Type II error rate of 5%, there is a 95% chance the machine will
correctly detect a bomb when present.
▶ Type I error implications: The paradox arises from Type I errors, where the machine
erroneously alarms on luggage without bombs. Over the year, this results in around 50,000
false alarms.
▶ Operator's challenge: The operator must manually inspect the 50,000 falsely alarmed pieces
of luggage within a short time frame, but none contain a bomb.
▶ Handling of dangerous luggage: When the machine correctly identifies a piece with a
concealed bomb, human nature makes operators assume it's another false alarm, potentially
leading to the dangerous luggage being cleared.
▶ Extremely low probability of bomb: Only 0.002 percent of inspected luggage (1 out of 50,000)
actually contains a bomb, making it challenging for operators to identify the rare occurrence
among many false alarms.
47. Customs-Trade
Partnership Against
Terrorism
▶ Creation of C-TPAT: The Customs-Trade Partnership Against
Terrorism (C-TPAT) was established by the United States in 2001
as part of its security measures.
▶ Program growth: The program initially had few participants, but
by 2003, it had 137 companies involved. In 2016, over 11,500
importers and logistics service providers were enrolled in C-
TPAT.
▶ High compliance: C-TPAT participants accounted for about 55%
of the total value of shipments entering the United States, and all
their shipments met U.S. Customs and Border Protection security
guidelines.
▶ Focus on security: C-TPAT shifted away from interdiction and
100% inspection approaches, acknowledging that most
international shipments are not threats. Instead, the program
focuses on preventing tampering with shipments in the supply
chain.
▶ Corporate responsibility: Corporations involved in international
trade are encouraged to assess their supply chain security,
identify vulnerabilities, and take measures to prevent tampering
or substitution of goods.
▶ Supply chain security: C-TPAT's goal is to enhance supply chain
security and minimize the risk of tampering or criminal
interception of shipments.
48. Customs-Trade
Partnership Against
Terrorism
▶ A lower inspection probability. At the port of entry, U.S.
Customs and Border Protection assigns a security score
to a shipment. If a shipment’s score falls below a
specified threshold, an inspection is deemed necessary.
For C-TPAT participating companies, the threshold is
lowered. Tier I companies have an inspection rate that is
15 to 20 percent of the inspection rate of non-C-TPAT
companies. The threshold is lowered further for Tier II
companies, and Tier III companies’ shipments are not
subjected to security inspections, only random
compliance inspections.29
▶ Priority inspections. For Tier II companies, if an
inspection is deemed necessary, the shipment receives
priority, and is moved to the front of the line.
▶ Priority processing. Both Tier I and Tier II companies
have access to the FAST lane at the land borders of the
United States, allowing them to process shipments
faster. Tier III companies have access to a true “green
lane,” which speeds up the processing on an import
considerably.30 That “green lane” was what had been
promised in the beginning of the implementation of the
C-TPAT program, and what Tier II companies had hoped
to obtain. As of 2013, it is not anticipated that this benefit
will be extended to companies that have not achieved
Tier III.
▶ Customs assistance. All C-TPAT participating companies
can obtain assistance from Customs’ supply-chain
security specialists to resolve security challenges.
49. Customs-Trade
Partnership Against
Terrorism
▶ C-TPAT evolution: C-TPAT has shifted from a voluntary to
a mandatory program, involving importers, carriers, and
third-party logistics providers.
▶ Compliance with international guidelines: C-TPAT operates
within the framework established by the WCO's SAFE
initiative. It focuses on shipments with presumed risk
characteristics to minimize disruptions to international
commerce, in line with ICC requirements.
▶ Mutual recognition agreements: The U.S. has signed
agreements with various countries, including the European
Union, for mutual recognition of security compliance
programs, benefiting companies with U.S.-validated C-
TPAT status.
▶ Importer Self-Assessment (ISA): Companies with C-TPAT
Tier II certification for over two years can apply for the ISA
program, involving self-assessment of supply-chain
security and compliance monitoring.
▶ Trusted Trader Program (TTP): Under development by
U.S. Customs and Border Protection, TTP will be for
companies with regulatory requirements beyond CBP,
simplifying the compliance process.
Transition from ISA to TTP: TTP is expected to replace the
ISA program, and it will involve self-assessment of trade
compliance.
▶
52. Maritime
Transportation
Security Act
▶ Maritime Transportation Security Act (MTSA): Enacted in 2002
as part of the Code of Federal Regulations (33-CFR-101
through 107), implementing the IMO's International Ship and
Port Facility Security Code (ISPS) with minor differences.
Broad coverage: The MTSA applies to cargo vessels over 100
dwt and any structures related to U.S. waters, while the ISPS
only covers vessels over 500 dwt and port facilities. It also
covers passenger vessels with over 150 passengers compared
to ISPS, which applies to all passenger ships.
▶
▶ Port security requirements: Ports must have approved security
plans monitored by a Port Security Officer, ensuring
compliance with the U.S. Coast Guard Captain of the Port.
▶ Vessel security plans: All vessels calling on U.S. ports,
regardless of flag, must have approved security plans
overseen by a Vessel Security Officer, with approval from the
U.S. Coast Guard Marine Safety Center.
Security plan components: Both port and vessel security plans
encompass aspects like port access, training programs, drills,
record keeping, and the maintenance of emergency
communication equipment.
Emphasis on security: These initiatives aim to enhance
security and compliance within U.S. maritime operations,
aligning with international guidelines.
▶
▶
53. Security and
Accountability for
Every Port
▶ Enacted in 2006: The U.S. Congress passed the Security and
Accountability For Every Port (SAFE Port) Act, which made
modifications to the Container Security Initiative (CSI),
Customs-Trade Partnership Against Terrorism (C-TPAT), and
introduced the Transportation Workers’ Identification Credential
(TWIC) program.
▶ U.S. Coast Guard empowerment: The primary effect of the
SAFE Port Act was to grant the U.S. Coast Guard authority to
enforce the implementation of the Maritime Transportation
Security Act (MTSA).
Response to Dubai Ports World: The Act's creation was
triggered by the controversy surrounding the Dubai Ports
World's acquisition of the P&O company, which managed
terminals in U.S. ports. Political objections led to the passing of
the SAFE Port Act, ultimately causing Dubai Ports World to
relinquish management of U.S. terminals.
Unrelated to WCO's initiative: Despite sharing the same
acronym, the SAFE Port Act is unrelated to the World Customs
Organization's (WCO) initiative.
Scanning mandate: The Act mandated that, by 2012, all cargo
entering the U.S., not just containers, had to be checked for
weapons of mass destruction using non-invasive methods like
x-rays. The mandate saw extensions to 2014, 2016, and
eventually May 2018.
▶
▶
▶
▶ Compliance challenges: The U.S. Department of Homeland
Security (DHS) expressed doubts about the feasibility and cost-
effectiveness of achieving 100 percent cargo scanning
compliance.
54. The Transportation
Workers’
Identification
Credential
▶ Identification Requirement: The Transportation Workers'
Identification Credential (TWIC) program mandates that all
individuals with access to U.S. ports must possess a biometric-
based identification card, obtained after a background check.
Approximately 3 million transportation workers hold TWIC
credentials.
▶ Criticisms and Effectiveness: The TWIC program has faced
criticism regarding card reliability, counterfeiting risks, and its
ability to prevent terrorist acts. It has been labeled as essentially
ineffective, with a critical Government Accountability Office
report supporting this view. No significant changes or analyses
have occurred as of March 2017.
▶ Expansion Plans on Hold: Initially, the TWIC program was
intended for broader transportation modes, including airports
and public transportation. However, as of July 2013, these
expansion plans were on hold, and no progress had been made
by March 2017.
55. Container
Security Initiative
▶ Counterterrorism Measure: CSI addresses the threat
of terrorists using containers to deliver weapons. It
focuses on identifying containers before they are
loaded onto vessels bound for the United States.
▶ International Cooperation: CSI involves U.S. Customs
and Border Protection (CBP) and Immigration and
Customs Enforcement (ICE) officers stationed in
foreign ports to target, screen, and inspect
containers. It relies on cooperation from foreign
officials, as U.S. authorities cannot conduct searches
in non-U.S. territories.
▶ SAFE Initiative and Global Coverage: CSI aligns with
the World Customs Organization's SAFE initiative
and screens containers using non-invasive methods
like x-rays. It operates in 58 ports worldwide and
screens over 80% of maritime containerized cargo
imported into the United States as of 2014.
56. Free and Secure Trade
▶ Joint Initiative: FAST is a collaborative
program between the Canada Border
Services Agency (CBSA), U.S. Customs and
Border Protection (CBP), and Mexican
Customs to expedite the movement of cargo
and carriers across borders.
▶ Three Clearance Entities: FAST clearance
involves the exporter/importer, carrier, and
driver. Each entity undergoes background
checks, and security measures at importer's
facilities and by the carrier are reviewed.
▶ Dedicated Lanes: When all three entities are
FAST members, they gain access to
dedicated lanes at border crossings for
quicker and more efficient border clearance.
▶ Bar-Coded Documents: Drivers present three
bar-coded documents to border officers, one
for each participating party. Bar codes are
scanned at the crossing, while data
declarations and verifications occur later.
▶ Voluntary Program: FAST is a voluntary
program promoted by customs officials in all
three countries, with approximately 78,000
drivers enrolled in the program as of 2016.
57. Importer Security
Filing
▶ Supersession: The program supersedes a previous
initiative and aligns with the World Customs
Organization's SAFE guidelines for uniform information
from shippers.
▶ 10 + 2 Rule: Commonly known as the "10 + 2 rule," it
expands data requirements for importers and carriers.
▶ Importer Data (10 Items): Importers must provide ten
pieces of data, including identification numbers,
manufacturer and seller information, buyer details,
shipping destination, stuffer's information, container
stuffing location, country of origin, and Harmonized
System number for the goods.
▶ Carrier Data (2 Items): Carriers are required to submit
the vessel stow plan and container status message,
including container number, location, condition, and
event details.
▶ Timely Submission: Importers must provide this data to
U.S. Customs and Border Protection at least 24 hours
before the goods arrive in a U.S. port.
58. Importer
Security Filing
1. The identification number of the importer of
record (Employer
2. Identification Number [EIN] or Social Security
Number [SSN])
3. The identification number of the consignee (EIN
or SSN)
4. The manufacturer (name and address)
5. The seller of the goods (name and address)
6. The buyer of the goods (name and address)
7. The name and address of the business to which
the shipment is going
8. The stuffer’s name and address (the party that
filled the container)
9. The location where the container was stuffed
10. The country of origin of the goods
11. The six-digit Harmonized System number for the
goods
59. Importer Security
Filing
▶ 1. The vessel stow plan (the way
the containers are organized
onboard the vessel)
▶ 2. The container status message
(container number, location,
condition—full or empty—,
events—loading or unloading—,
and event times)
60. The European
Union’s Programs
▶ Prevention Focus: The European Union's primary
security focus is on prevention, addressing issues
related to terrorism and weapons of mass destruction
through proactive measures.
▶ Strategies Emphasized: The EU aims to reduce
poverty, enforce international agreements against arms
proliferation, restore democratic governments in
conflict areas, and enhance international cooperation
in criminal investigations to address security threats
effectively.
▶ Compliance with International Guidelines: The EU has
implemented security programs in line with
international organization guidelines, including the
International Ship and Port Facilities Security Code
(IMO) and the SAFE framework (WCO).
▶ Uniform Response: The EU has largely adopted a
uniform approach to security threats, aligning with
international guidelines while addressing regional
security concerns.
▶ Multifaceted Approach: The EU combines preventive
measures, international cooperation, and adherence to
security guidelines to enhance overall security.
61. Authorized
Economic Operator
▶ WCO Mandate: The AEO program responds to the World
Customs Organization's (WCO) mandate for customs
organizations to provide benefits to businesses that meet
minimum supply chain security standards and best practices.
Eligible Entities: Companies involved in international trade,
including importers, exporters, carriers, ports, airports, and
other trade intermediaries, can become AEOs by
demonstrating security measures approved by a national
customs administration.
▶
▶ Similar to C-TPAT: AEO is akin to Tier II of the United States'
C-TPAT program but includes financial viability requirements
not found in C-TPAT.
▶ Country-Specific Benefits: The benefits of AEO status, such as
simplified customs procedures and reduced controls, are
specific to individual European countries rather than applying
uniformly across the EU.
EU Authority and Mutual Recognition: AEO status is granted by
one EU customs authority, and other customs authorities in the
EU are expected to provide similar streamlined processes to
their own AEOs. Additionally, AEO status can be granted to
companies validated under the Customs-Trade Partnership
Against Terrorism (C-TPAT).
▶
62. Customs Security
Programme
The European Union’s Customs Security
Programme (CSP) was designed to develop
and implement measures that enhance border
security. CSP achieves this through improved
customs controls. Importers are required to
provide customs authorities with information
on goods prior to their arrival in the European
Union (pre-arrival declaration), and customs
use this advance electronic information to
perform a risk analysis of every shipment,
which enables customs to identify high risk
cargo bound for Europe. In a way that is
encouraged by the WCO, European customs
cooperate with other customs authorities
worldwide to identify cargo that may present a
threat and inspect cargo prior to shipment
when requested.
63. Other Countries’
Approach
▶ European Union Model: Countries outside Europe and
North America have implemented security policies
resembling the EU's ISPS Code and SAFE framework,
focusing on international cooperation rather than
responding to a terrorism threat.
Perceived U.S. Focus: Many believed that terrorists
primarily targeted the United States and, to some extent,
the European Union. Consequently, some considered
terrorism primarily a U.S. issue from which other nations
could distance themselves.
U.S. Influence: The United States imposed additional
security measures on trade partners, requiring them to
implement these measures under the oversight of U.S.
enforcement agencies, such as Customs and Border
Protection, Immigration and Customs Enforcement, or the
Coast Guard.
Reluctant Adoption: Some countries initially embraced
these changes reluctantly, as they had more pressing
domestic issues and were hesitant to allocate resources to
a "foreign" problem.
Changing Perspective: Events such as bombings in Bali,
Istanbul, Moscow, and Mumbai rapidly shifted the
perspective, making many countries acknowledge terrorism
as a global issue. However, they often perceived it as a
lower risk compared to widespread poverty, substantial
criminal activity, and potential social unrest.
▶
▶
▶
▶
64. Corporate Efforts
Supply Chain Security Perspective:
▶ Companies primarily view security in terms of theft, criminal activities
(e.g., tampering, vandalism, counterfeit products), and cargo losses.
▶ They participate in security-related programs to prevent customs
clearance delays.
Total Security Management (TSM):
▶ 3Government programs focused on eliminating terrorism spurred the
adoption of Total Security Management (TSM).
▶ TSM is inspired by Total Quality Management concepts and
encourages employees at all levels to recognize the importance of
security and suggest process improvements.
▶ TSM aims to integrate security into the corporate culture, with the belief
that security costs are offset by reductions in theft, damaged goods,
and productivity losses.
Four Key Supply Chain Security Areas:
▶ 6.Companies must secure four key areas in their supply chains: fixed
assets, inbound and outbound shipments, information, and workforce.
To protect fixed assets, they install physical barriers, lock doors,
increase outdoor lighting, and employ security guards and cameras.
Emergency security procedures are established, and employees
receive training on security breach response.
To protect shipments, companies seal cargo containers, restrict the
release of cargo information, instruct drivers to monitor their
surroundings, and employ geo-fencing systems.
Corporate information security is crucial, with procedures ensuring
information reaches only authorized personnel.
▶
▶
▶
▶
Human Resources Practices:
▶ 11. Good security practices rely on effective human resources
practices, including background checks, activity monitoring, employee
training to recognize security violations, and anonymous reporting
systems.
68. Open top
containers
• Open top containers are those whose cargo is
out of the garage, with the height of the cargo.
• Example: Animals, Machinery.
69.
70.
71.
72.
73.
74.
75.
76.
77. VESS
EL
• A craft for traveling
on water, now
usually one larger
than an ordinary
rowboat, a ship or
boat.
78.
79. Every Stop a Shipping Container Makes from China to
Chicago
80. Difference between RO-
RO and Breakbulk
Cargo
• RO-RO: Roll-on roll-off vessel is
designed to carry wheeled cargo such
as cars, trucks, semi-trucks off the ship
with their heels such as self-propelled
modular transporter.
81.
82. BREAKBULK • Breakbulk: Break bulk cargo are goods that
must be loaded individually are not in an
intermodal container this sort of cargo is called
general cargo ships.
83.
84. Differenc
e between
Bulk
and
Containerized
Vessel
• Bulk: A bulk carrier,
bulk freighter specially
designed transport
raw material
shipped in cargo
unpacked cargo.
• Containerized Vessel:
Containerized is a
system of intermodal
freight transport
containers where the
cargo is shipped in a
container.
85. Difference
between Feeder
Vessel & Mother
Vessel
• Feeder Vessel: Feeder vessel normally small in size.
Feeder vessel used to take goods from small ports to
major parts. It has a capacity to carry small container.
86. Difference between Feeder Vessel & Mother Vessel
• Mother Vessel: Mother vessel normally big in size. Mother vessel only severe
major parts. It has a capacity to carry thousand containers.
89. QUOTATION
• An offer to sell goods or services in international
trade. A request for quote (RFQ) is a process
in which a company solicits select contractors
to submit bids for the chance to fulfill certain
projects. Also called an invitation for bid (IFB),
it's especially important to companies that
need a consistent supply of standard
products.
90. Purchase
Order
• A purchase order is a commercial document and the first
official offer issued by a buyer to the seller indicating types
and providing, agreed price detail to be purchased include
quantity price and other detail.
91. Commercial Invoice
• The commercial invoice is a legal document between the supplier
and the customer that clearly describes the amount due to the
customer seller and buyer record the details which are sold out
unit price quantity the total sum of goods.
92. Packing
List
• Itemize a list of articles each shipping package given
quantity description weight of the contents. Prepared by
the shipper item number and dimension.
93. Certificate of Origin
• Certificate of origin is an important International
trade the document confirms that the goods
particular shipment the cargo and cargo
details which be reassured of destination.
94. Shipping
Instructio
n
• A shipping instruction is a
document advising detail of
cargo and exporter’s
requirements and physical
movement freight forwarder
to issue the bill of lading.
95. Shipping
Bill and
Bill of
Lading
• It is a document filed by the exporter
and value of goods qualified customs it
is examined on customs authorities
Tariff and regulations.
96.
97.
98. Pre-Alert
document
s
• When your cargo is ready
for shipping before the
departure of cargo. Free
alert aloes final checking for
all shipping documents for
the filling with the custom
at the destination.
99. Cargo
Arrival
Notice
• CAN be given by a carrier or
agent the conscience (and to the
notify party) e-income about the
arrival of shipment number
package goods and weight and
collection charges on the bill.
100.
101. SALES
INVOICE
• Sales Invoice is a written document used by a seller to inform the detail of
the transaction to their customers.
• It includes all factors about the due date, number of products, seller, buyer
and also total price.
• A receipt will be sent after the seller received payment from their customer.
• It is prepared by the shipper and provided to the consignee.
• It contains product name cargo details total number of units.
109. 3 TYPES OF DOCUMENTATION IN
INTERNATIONAL TRANSPORTATION
TRANSPORTATION COMMERCIAL FINANCIAL
110. Transportation
documents
• Transportation documents, such as the bill of lading or air waybill are
issued by carriers.
• Financial documents will be outlined in the sections on international
payments in this textbook.
111. Commercal documents
• Commercial documents are issued by exporters.
• They are, for example, the commercial invoice and the packing list.
• Regulatory documents are required when shipping goods into and out of
Canada to/from a foreign country (issued for Customs’ or other organizations’
purposes, e.g., the import permit, certificate of origin, etc.).
112. EXPORT DOCUMENTATION
Most commercial documents are prepared in the country of export.
Preparing the documentation for an export shipment is more demanding than
the mere processing of import documents.
The exporter always issues a commercial invoice; determining who is responsible
for the rest of the documentation depends on the Incoterm® governing the
transaction.
113. IMPORT DOCUMENTATION
• The challenges of import
documentation are different
from those of export
documentation, as we find
ourselves at the receiving end of
what was created at origin.
• We often have little control or
input, plus we sometimes
receive the documentation late.
This Photo by Unknown author is licensed under CC BY-SA.
114. IMPORT DOCUMENTATION
• The number of types of documents we have to handle is limited, but they come from all
over the world and can be subject to misunderstandings due to differences in culture,
language, political systems, business climate, etc.
• Our challenge, as import forwarders, is to advise the customer (importer) of the import
documentation requirements and to guide the overseas shipper (usually through our
overseas office or agent) on the required documents so that they are complete and
correct in order to meet all of the Canadian entry requirements of Canada Customs
(CBSA) and the other government departments involved (OGDs).
115. One of the importer’s challenges is to have all
required documentation available on time, and
our role as a freight forwarder is to proactively
facilitate that, thereby avoiding delays, penalties,
demurrage, storage charges and other problems.
116. COMMERCI
AL INVOICE
• The commercial invoice is
one of the most important
documents in a trade
transaction and serves the
following purposes:
This Photo by Unknown author is licensed under CC BY-SA.
119. No matter what the language or languages of
the document are, complete accuracy of the
information on the Commercial Invoice is
essential to avoid excessive duties and/or
penalties.
120. We prepare the Canadian export
declaration on behalf of a customer,
it must mirror the information
contained in the commercial
invoice.
121. This document is generally prepared
by the seller/exporter and, as freight
forwarders, we can play an essential
role in guiding customers so that the
commercial invoice is complete and
accurate and meets requirements.
122. This is an
example of the
minimum
requirements for
a commercial
invoice
123.
124.
125.
126.
127. certificate
of origin
(C.O.O.)
• The certificate of origin (C.O.O.) is an important trade document
attesting that goods in a specific export shipment are wholly
obtained, produced, manufactured or processed in a particular
country or meet the rules of origin of a preferential treatment or
a Free Trade Agreement.
• The C.O.O. constitutes a declaration by the exporter and is a
legally binding document.
131. Consular invoices
and Consular visas
are two different
things.
• Some countries used to require
Consular invoices to be purchased
from their Consulates or
Embassies in the country of
dispatch, filled out by the exporter,
stamped or consularized at origin,
then dispatched to the importer,
who then needed to present it to
local Customs
132. While the economic
benefits of free-flowing
trade are one of
Canada’s greatest
assets, controls have
been judged essential
for a variety of reasons:
146. There are two types of
permits: a general export
permit and an individual Export
Permit.
147. GENERAL EXPORT PERMITS
• General export permits (GEP) were introduced to minimize the administrative burden of
export controls on exporters and to streamline export licensing procedures.
• GEPs enable an exporter to export certain specified goods that are subject to control to eligible
destinations without the necessity of submitting an export permit application.
• These are generally applicable for less-sensitive goods, removing the need to apply for an
individual export permit.
149. A GEP is a valid export
permit that is used to
minimize the
administrative burden
for exporters and to
streamline licensing
procedures.
150.
151. INDIVIDUAL
EXPORT
PERMITS
• When an export permit is
required and a GEP cannot be
used, an individual export permit
(IEP) must be obtained; this is
done on-line via the Export
Controls On-Line (EXCOL)
process.
• EXCOL is an internet-based
system that allows applicants to
apply for export control
documents electronically.
152.
153.
154.
155.
156. An export declaration is not required
for goods with a final destination in
the U.S. for U.S consumption.
157. There are three methods of filing an
export declaration:
1. Canadian Export Reporting System (CERS):
2. G7 EDI Export Reporting:
3. Export Summary Reporting (filed through the CERS):
