Third Session : Presentation on (Export/Import Documentation Incoterms and procedures of Export /Import by Rajan Sharma

Objective of this Class: Acquaint the participants with the following: a. Document required for export and Import b. Import and export procedure c. Choosing the right means and mode of transportation d.International Incoterms and its implication in business contract and negotiation. e. Packing,warehousing and distribution. f. Problems in shipping out of Nepal

Raw materials supplier Final consumer Retailer Component manufacturer Assembler Logistics: transport, storage, packing and handling An example of a simple supply chain IN THE NEPALESE CONTEXT:

The right type(s) of material(s) In the right quantity(s) To the right location(s) At the right time(s), and For the right cost Increasingly, a sixth “right” must be added Delivered with the right tailored services What is Logistics? It generally involves all activities involved in securing:

What does Each Incoterm determine ? When and where the seller provides the goods to the buyer and when and where the buyer is obliged to pay the contracted price Obligations for export/import licences, duties, taxes, etc. Obligations to arrange and pay for transportation and insurance Conditions for delivery by the seller and acceptance by the buyer Allocation of responsibility for risk of loss or damage Allocation of costs associated with movement of the goods Provisions regarding notices of delivery or dispatch of the goods Proof of delivery, transport documents or electronic messages Requirements of seller to check quantity & conformance of goods with the contract and to provide suitable packaging and markings Obligations of mutual assistance, information and documentation

Incoterms are grouped into four categories: “E” Terms - Ex-works “F” Terms - Main carriage not paid by seller “C” Terms - Main carriage paid by seller “D” Terms - Delivered on arrival

Incoterms – Point of delivery of the goods and transfer of risk E EXW Ex works Upon delivery of goods at the seller’s premises (named place) FCA Free carrier Upon delivery of goods to the carrier (named place) FAS Free alongside ship Upon delivery of goods alongside ship (named port of shipment) F FOB Free on board When the goods pass the ship’s rail at the named port of shipment CFR Cost and freight When the goods pass the ship’s rail at the port of shipment CIF Cost, insurance and freight When the goods pass the ship’s rail at the port of shipment CPT Carriage paid to Upon delivery of goods to the carrier (named place) C CIP Carriage and insurance paid to Upon delivery of goods to the carrier (named place)

DAF Delivered at frontier Upon delivery of goods at frontier (named place) - not unloaded DES Delivered ex ship When goods are placed at the disposal of the buyer on board the ship (named port of destination) DEQ Delivered ex quay When goods are placed at the disposal of the buyer at the quay (named port of destination) DDU Delivered duty unpaid Upon delivery of goods (at named place of destination) not cleared for import and not unloaded D DDP Delivered duty paid Upon delivery of goods cleared for import (at named place of destination), duty paid but not unloaded Incoterms – Point of delivery of the goods and transfer of risk

DELIVERY and TRANSFER OF RISK can take place at many points between the seller’s premises and the buyer’s premises BuyerSeller EXWFCA CPT CIP FOB CFR CIF FASDESDEQ DDU DDP Waterborne transport only DAF Cus- toms Transport by land Cus- toms Cus- toms Cus- toms

TRANSFER OF COSTS takes place at points that are sometimes different BuyerSeller EXWFCA CPT CIP FOBFASDESDEQ DDU DDP Waterborne transport only DAF CFR CIF Import clearance costs on account of the buyer Export clearance costs on account of the seller Transport insurance costs on account of the seller Unloading costs on account of the seller only if in its contract of carriage Transport by land * * * Cus- toms Cus- toms Cus- toms Cus- toms

DAF terms are commonly used for land transport Customs COUNTRY OF EXPORTCOUNTRY OF IMPORT Delivered at frontier, export customs cleared DAF

INCOTERM used in the Sales Contract Contract of carriage Custom & practice of trade The role of the Incoterm used and custom & practice of the trade in establishing the contract of carriage Transport Operator(s) Buyer Seller

Freight Forwarders Responsibility and Duties: Duties and responsibilities of the freight forwarding agent when contracted by the shipper(who may be the exporter or importer depending on the Incoterm used): Advise on the most appropriate mode of transport. Arrange reservation of space on a vessel, train or aeroplane. Take delivery of the goods. Pack products into containers or onto pallets. Store goods in transit (before loading on board). Insure the cargo. Weigh and measure the goods. Prepare loading and, if necessary, transhipments. Transport the goods to a named port or airport of origin.

Freight Forwarders… cont.. Duties and responsibilities of the freight forwarding agent when contracted by the importer (whether or not the importer is the shipper): Follow-up on the movement of the goods. Receive and control documents related to the goods. Ensure customs documents are prepared in advance. Take delivery of the goods. Check on goods storage during transhipments. Assist with customs clearance. Deliver the goods to the consignee.

Export Documents: Letter of Credit/Advance payment certificate and Covering letter of bank Invoice (Description of Goods and value per unit and total. Packing list (Volume and weight break of each Pc) Certificate of origin and GSP Pan /Vat/Company registration certificate copy Authority Letter CTD ATA CARNET

Yellow paper (Custom declaration) Currency declaration Form Handicraft Certificate (for handicraft Goods) Visa in case of garments export Plant Quarantine certificate in case of Plants/Food items Permission from department of Forestry in cage of Forest product Certificate from Agriculture department in case of agro products. Sample goods and special goods permission from department of Customs ie: diplomatic /Personal effects Human remains: Fumigation certificate for Agro products or wooden goods.

Documents for Import Goods: Letter of credit with Covering letters from bank NTWCL Invoice Packing List Certificate of origin Bank forms, Custom declaration AWB/HBL or MBL ( Transport Documents) Permission Certificate from department of custom Permission Certificate from department of commerce

Authority permission by importer (consignee) Insurance covering paper Delivery Order paper from transporter CTD In case of Land Shipment: Mode and Means of Shipment and how to choose the right mode and means of transport. Air/Air Air/Sea Land/sea. Airplane, Trucking, Train, Ship :

Payment methods Letter of credit Telegraphic transfer Advance payment Cash against documents

Factors to be considered in the means and mode of transport: Time Cost Place of delivery Loading point Tran-shipment point Customs point and infrastructure and cost.

Packing /Marks and Numbers : Distribution Warehousing (storage) It protects your product your during transportation. It breaks down your product to sellable units (e.g. transforming staple goods into consumer units), or it simply makes the product accessible to consumers. It conveys a message to the buyer/consumer (e.g. advertisement or instruction for use etc.).

Traditional Distribution Systems Factory 18 routes dispatches per Import factory Port FrontierAirport Minimum of 6 Minimum of 3 deliveries per

Factory 12 routes Maximum of2 dispatches per Import Maximum of1 delivery per factory Port FrontierAirport (B) Using cross-docking centres Customs Douane Using Cross-docking Centres

Option A: Star delivery plan 100 km 160 km A B C D

Option B: Multi-point delivery plan 50 km A B C D

Document required for exporting to EU GSP (Derogation) Other necessary quality certification Health and Sanitization certificate HACCP Environment issues Child labor issues

Export procedure Preparing shipment Haulage, choosing the means and mode of transport, sending pre-alert, issuing the right transport document, negotiation with bank, Other document compliance.

Import Procedure: Product finding Price negotiation adding document cost, haulage cost, customs cost, tax in the exporting country, Arranging shipping, information flow, trans-shipment point procedure,import procedure of the country. dealing with customs etc.

Problems: L/C Compliance Transport Document Compliance Shipment date L/C expiry Delivery problem/Delivery order Discrepancy due to transportation problem Bank release.

Thank You for your Attention. Any Questions ??????