Thursday, February 22, 2024
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HomeProcurement/Supply Chain ManagementGoing for International Trade! Here are some Important Documents used in International...

Going for International Trade! Here are some Important Documents used in International Trade

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Establishing a business usually require export and import of goods & services through international borders. The import and export of goods require various documents, permits and other formalities. These documents are related to various aspects such as quality, quantity, specifications, transportation medium, inspection, insurance, etc. Before embarking into international trade journey, supplier and buyer both should possess various important documents required for expert and import of goods to avoid complications in the transaction.

The following is the list of important documents which are required for international trade which are described in detail below.

  • Airway Bill
  • Certificate of Origin
  • Bill of Lading (B/L)
  • Combined Transportation Document
  • Bill of Exchange or Draft
  • Insurance Policy
  • Packing List
  • Inspection Certificate

Airway bill

Airway bill is the receipt issued by the international airlines for carriage of goods and it is an evidence that there is a contract between the shipper and carrier for carriage of goods. The airway bill is non-negotiable. It is the most important document issued by either carrier or by its agent. Airway bills have eleven digit numbers and which can be used to make bookings or to check the current position of the shipment.

The airway bills are issued in eight copies of different colors. The first three copies are originals. The first original which is green is the issuing carrier’s copy. The second copy is consignee’s copy which is pink colored. Third copy is of blue color which is shipper’s copy. A forth brown copy is delivery receipt. The other four copies are white.

Airway bill serves the following purposes:

  • Contract of carriage
  • Evidence of receipt of goods
  • Freight Bill
  • Certificate of Insurance
  • A guide for airline staff for handling, dispatch and delivery of the goods.

Certificate of Origin

A certificate of origin is a proof certifying the origin of the product and it forms the basis for customs authorities to determine the tariffs and other trade measures that will be applied. It is prepared by the exporter or manufacturer and may be required to be certified by an authorized third party. It is submitted to the customs authorities of the importing country to justify the product’s eligibility for entry and/or its entitlement to preferential treatment. International Chamber of Commerce issues guidelines for issuance of the certificate of origin.

The certificate of origin generally consists the following:

  • The name and address of the company exporting the goods.
  • The name of the importer.
  • Package numbers, shipping marks and description of goods.
  • Any weight or measurement of goods.
  • It should be signed and stamped by the Chamber of Commerce.

The details mentioned in the certificate of origin should match with the other documents.

Bill of Lading (B/L)

The bill of lading also denoted as (B/L) is a legal document issued by the carrier (or authorized agent) to acknowledge receipt of goods for shipment. It details the type, quantity and destination of goods being carried. The bill of lading must accompany the shipped product, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver. If the bill of lading is managed and reviewed properly then it prevents potential theft of goods.

The bill of lading has following functions:

  • It is a document of title to the goods described in the bill of lading.
  • It is an acknowledge of receipt of goods for shipment.
  • It represents agreed terms and conditions for the carriage of goods.

Combined Transportation Document

Combined transportation document is also called Multimodal Transportation Document because it is used when the goods are to be carried by more than one mode of transport. In this case, a contract is signed between the shipper and the carrier for carriage of goods from place of shipping to the place of delivery using a combined transport system. The combined transport career is responsible for safety of goods from the point of origin until they arrived at point of destination.

Combined transport document normally includes the following:

  • The place where goods are received and the final destination where goods are to be delivered.
  • Whether freight is prepaid or to be collected.
  • The date of dispatch.
  • Total number of originals.
  • Signature of the carrier, multimodal transport operator or their agents.

Bill of Exchange or Draft

Bill of exchange also called as draft is a short term negotiable instrument consists of a written order addressed by the seller of goods to the buyer requiring the buyer to pay a certain sum of money to a specified person or to the bearer of the bill in future. This document is important in wholescale trade where large amount of money is involved. The term Draft often used for the Bill of Exchange usually applies to the domestic transaction only.

There are two types of bill of exchange according to due date:

  • Bill of Exchange after Date: In this case the due date is counted from the date of drawing.
  • Bill of Exchange after Sight: In this case the due date is counted from the date of acceptance of the bill.

Insurance Policy

It is also called as insurance certificate and it certifies that the goods transported are properly insured. Details about the risks covered are mentioned in the insurance certificate. It is important to note that the date of effectiveness of the insurance policy should be same as the date of issuance to transport certificates.

The insurance certificate generally contains the following:

  • The name of the party in the favor of which the policy is issued
  • The name of vessel of details of flight
  • The place where insurance is commenced and the place where it ends
  • Insurance value
  • The description of the goods insured
  • The name and address of claim settling agent and the place where the claims will be settled

Packing List

The packing list provides the exporter, international freight forwarder, and consignee the information of goods, how they are packed, the weight and dimensions of each package, and the marks and numbers that are written on the outside of the boxes. The packing list is not legally required by the customs department but it is good to include this document in the shipment as it helps the make the import/ export process easier for both shippers and customs.

Some important details to be mentioned in the packing list are as follows:

  • Date
  • Contact details of shipper and exporter
  • Contact information of consignee
  • The origin and destination address of shipment
  • The total number of packages within the shipment
  • The detailed description of each package
  • The volume, weight and dimensions of each package
  • The volume and weight of entire package
  • Commercial invoice number of the shipment

Inspection Certificate

An inspection certificate indicates that the goods in the shipment have been inspected by a competent authority and certified that the goods conform to the terms indicated in the sales contract. It verifies, whether the goods conform to the agreed specifications related to quality, quantity, import eligibility, tariff classification and the price.

The inspection certificate is issued by a qualified inspector who is working for an independent inspection company and is always issued in the official letterhead of the inspection company.

The details carried by the inspection certificate are as follows:

  • Date of issue
  • Date and place of inspection
  • Contact details of the applicant
  • The country of origin
  • The description of goods
  • The weight of shipment
  • Port of discharge
  • Contact details of the supplier
  • Number of packages
  • The insurance policy number
  • The number and date of bill of lading
  • The code number of the custom tariff
  • The number and date of pro forma invoice
  • Type of packing
  • Place of issue
  • The name and signature of the authorized person
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Rajesh Pant
Rajesh Panthttps://managemententhusiast.com
My name is Rajesh Pant. I am M. Tech. (Civil Engineering) and M. B. A. (Infrastructure Management). I have gained knowledge of contract management, procurement & project management while I handled various infrastructure projects as Executive Engineer/ Procurement & Contract Management Expert in Govt. Sector. I also have exposure of handling projects financed by multi-lateral organizations like the World Bank Projects. During my MBA studies I developed interest in management concepts.
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