1. Unit 8 Shipment and insurance

2. Shipping your product Transport allows good to be conveyed from one place to another. Without transport, international trade would not be possible. Carriage of goods can take place by sea, rail, air, road, inland waterway, parcel post, container and multimodal transport.

3. Ocean transport Ocean transport is the most widely used mode of transportation in international trade, with advantage of easy passage, large capacity and low cost. In international trade, it is generally accepted that the contract is broken if the consignor does not dispatch the goods in accordance with the time and mode of delivery as agreed upon between the consignee and the consignor. Therefore, in negotiating the clause dealing with the transportation of goods in a sales contract, the elements of time, types of shipping service, freight, etc, shall be under careful consideration.

4. Export transportation procedures Export transportation involves a lot of complicated procedures. Before the goods are to be dispatched, the following must be duly seen to: 1.Send the shipping instruction by the buyer; 2.Select a shipping line and a particular vessel; 3.Book shipping space or chartering and sign the contract of carriage; 4.Register the cargo on shipping note and send the shipping note to a shipping company; 5.Register details on customs, entry forms and send them to Customs; 6.Arrange adequate packing, including shipping marks; 7.Receive the bill of lading from the shipping company; 8.Pay the freight bill; 9.Arrange shipment; 10.Send the shipping documents and shipping advice.

5. Shipping instruction Seller will use commercially reasonable efforts to comply with shipping instructions provided by Buyer. In the absence of any specific shipping instruction, Seller will ship by the method it deems most advantageous.

6. Shipment instruction by buyer Dear sirs, We are in receipt of your fax of 5th June, from which we understand that you have booked our order for 2,000 sets of IBN-99 computers and respective 300 pieces of color monitors main boards and drivers. Since the purchase is made on CIF basis, you are to send the goods to Guangzhou by the end of August. As these goods are susceptible to shock, they must be packed in seaworthy cases capable of withstanding rough handling. The bright metal parts should be protected from water and dampness in transit by a coating of slushing compound that will keep out dampness, but will not liquefy and run off under changing weather conditions. We trust that the above instructions are clear to you and that the shipment will give the users entire satisfaction.

7. Freight Forwarders An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the methods of shipping, and the documents related to foreign trade. Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their services is a legitimate export cost that should be included in the price charged to the customer.

8. Shipper's Letter of Instruction The Shipper's Letter of Instruction is just that - a "letter" from the Shipper instructing the Freight Forwarder how and where to send the export shipment. 1. State your purpose at the very beginning of your letter. 2. Give all the necessary details about the goods you want to be shipped, and time and destination. 3. If you have questions to ask, make them as specific as possible. 4. If you want an early reply, make it clear at the end of your letter.

9. ask for a quotation from delivery services Dear sirs, Would you please quote for collecting and delivering the following consignments from Budapest to Berlin? We would like to send from Shanghai to Hong Kong 1000 kilos of crockery within the next fortnight. Could you quote charges for shipment and insurance? We need to ship a consignment of office furniture to New York at the beginning of April. Could you let us know your freight rates for crated consignments?

10. Dear sirs, We have recently concluded a contract for the supply of raw clothing material from Hong Kong to New York over next three months and should be glad if you would find us a suitable ship, about five thousand tons. The question of speed is more important as the ship must be able to make three return voyage, during this period in the time.

11. Reply from agent Dear Sirs, Confirming the E-mail we sent you this morning, of which we enclosed a copy, we are glad to inform you that we have found a ship which we think would serve you very well. She is the S.S. Red Sun with of twenty sea miles per hour, about six thousand tons. This ship is somewhat larger than the one you need, but the owners are prepared to consider a special rate for a time charter of three months. The ship, now lying in Singapore, has recently completed a charter and therefore be ready to load at Hong Kong within four or five days after receiving your faxed confirmation of charter. We will prepare the charter contract as soon as we receive your notice.

12. Dear _________, We intend to ship a consignment of 200 sewing machines to Hong Kong at the beginning of May. The consignment consists of 20 wooden crates. The weight of each crate is 100 kilos and measures 150 x 160 x 70 cm. Could you inform us which vessels are available to reach Hong Kong before May 10 and let us know your freight rates? Sincerely,

13. Shipping advice under FOB/FAB 10-15 days prior to the date of shipment, the Buyer shall inform the Seller by fax or email of the contract number, name of vessel, ETA of vessel, quantity to be loaded and the name of shipping agent, so as to enable the Seller to contact the shipping agent direct and arrange the shipment of the goods. The Seller shall advise by fax or email in time the Buyer of the result thereof. Should, for certain reasons, it become necessary for the Buyer to replace the named vessel with another one, or should the named vessel arrive at the port of shipment earlier or later than the date of arrival as previously notified to the Seller, the Buyer or its shipping agent shall advise the Seller to this effect in due time. The Seller shall also keep in close contact with the agent or the Buyer.

14. Shipping advice C&F Terms: The Seller shall, at least 10 days prior to the date of shipment, inform the Buyer of the following information: the contract number, the name of commodity, quantity, the name of the carrying vessel, the age, nationality, and particulars of the carrying vessel, the expected date of loading, the expected time of arrival at the port of destination, the name, Email or fax of the carrier.

15. Shipping advice CIF Terms: Within 48 hours immediately after completion of loading of goods on board the vessel the Seller shall advise the Buyer by fax or email of the contract number, the name of goods, weight (net/gross) or quantity loaded, invoice value, name of vessel, port of loading, sailing date and expected time of arrival (ETA) at the port of destination. Should the Buyer be unable to arrange insurance in time owing to the Seller’ s failure to give the above mentioned advice of shipment by fax or email, the Seller shall be held responsible for any and all damages and/or losses attributable to such failure.

16. The Seller shall maintain close contact with the carrying vessel and shall notify the Buyer by fastest means of communication about any and all accidents that may occur while the carrying vessel is on route. The Seller shall assume full responsibility and shall compensate the Buyer for all losses incurred for its failure to give timely advice or notification to the Buyer.

17. Shipping advice Dear sirs, We are pleased to have receive your L/C No. 9891, covering 1,000 dozen “Tiger Head” brand flashlights under our Sales Confirmation No. FC 9898 and inform you that shipment was made on S/S Dongfeng on August 3 for transshipments at Hong Kong. Enclosed is a set of the duplicate shipping documents consisting of: 1.A Non-negotiable copy of Bill of lading. 2.A signed Invoice No. 889. 3.Packing list. 4.Certificate of Origin No. 10001. 5.Insurance Policy. availing ourselves of this opportunity, we wish to assure you of our close cooperation.

18. Dear sirs, We are pleased to advise that the whisky you ordered was dispatched via the M/S Evergreen, this date. Despite all precautions in packing, periodically a barrel may be broken in transit. Should this occur, or if you are not fully satisfied in any regard, please don't hesitate to contact us. The goods are being consigned by the above ship, arriving in Sydney on September 25. Further details, including packing and shipping marks, are contained in our invoice number 218, enclosed in triplicate. In order to cover this shipment, we have drawn you a draft under L/C, and negotiated through the Bank of Taiwan, Taipei, with the corresponding shipping documents.

19. Dear sirs, Regarding your order number 2231/C, we are pleased to inform you that the bicycles have been dispatched. The shipment consists of three packing cases bearing Marking "K", Numbering FA, in triangle over New York, with case number(s) 1-3. Particulars of weight and measurement are given on the enclosed sheet. Shipment is via M/S Pacific, which sailed from Keelung on April 10, scheduled for arrival in New York on June 3. Clean, shipped on board, B/L's in complete set, together with commercial invoice and insurance policy, which have been negotiated through the Bank of Taiwan, Taipei, with the sight draft under your L/C No. 2811. We shall be pleased to hear that the goods have arrived safely, and in good order.

20. Sample sentence How to request forwarding agents to handle the shipment? Could you pick up a consignment of 50 Decol television sets and make the necessary arrangements to ship them to... [name and address]? Could you handle all the shipping formalities and insurance? We would appreciate it if you could treat the shipment as urgent.

21. Explain a delay in shipment Dear Sirs, Thank you for your letter of 20 May enquiring about the shipment of your order under contract 4632. Please accept our apology for the delay which has been caused by the unavailability of shipping space from Bombay to London. The matter was, however, in hand and your consignment was shipped yesterday on board SS Pandit which is sailing directly to London. I enclose one set of shipping documents comprising: 1.One non-negotiable copy of the bill of lading 2.Commercial invoice in duplicate. 3.One copy of the certificate of guarantee. 4.One copy of the certificate of quantity. 5.One copy of the insurance policy. I am glad that we have been able to execute your order as contracted. I trust the goods will reach you in time for the winter selling season and prove to be entirely satisfactory. I will personally ensure that you receive our prompt and careful attention at all times.

22. Insurance of Marine Transportation In international trade, goods traveling along distances to another country, out of the direct physical control of both the buyer and the seller, may face all kinds of risks or losses. Therefore, to protect the goods against possible loss in case of such perils, the buyer or seller before the transportation of the goods usually applied to an insurance company for insurance covering the goods in transit. Export shipments are usually insured against loss, damage, and delay in transit by cargo insurance. Carrier liability is frequently limited by international agreements. Additionally, the coverage is substantially different from domestic coverage. Arrangements for insurance may be made by either the buyer or the seller, in accordance with the terms of sale. Exporters are advised to consult with international insurance carriers or freight forwarders for more information.

23. The insurance insured Usually insurance is arranged by the exporter or the importer approaching an insurance company specializing in cargo insurance. They may start by inquiring and choosing the right coverage and then negotiate insurance premium rates. In international trade, who will effect insurance depends on the particular trade term adopted. Under CIF terms, it is the seller who arranged insurance with insurance company. Under FOB, CFR terms, the buyer effects insurance, but he may ask the seller to arrange insurance on behalf of the buyer. Although sellers and buyers can agree to different components, coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.

24. asking the seller to arrange shipment and insurance Dear sirs, Referring to the 3,000 cases of Iron Nails under Sales Contract No…, we are pleased to inform you that we have established with the Bank of China, London, the confirmed, irrevocable L/C No…, in the amount of US$..., valid up to May 15th. Please see to it that the above mentioned goods are shipped before May 15th and the insurance is covered for 150% of the invoice value against all risk. As we understand that as per your customary practice you only (provide insurance) insure the shipments for 10% above the invoice value, the extra premium for additional coverage shall be borne by us. Please arrange insurance according to our request and meanwhile, we are expecting your shipping advice.

25. Asking the buyer to cover insurance Dear sirs, We are pleased to inform you that we have booked shipping space for your Order No. 2345 of 30 casks Salted Hog Castings on S/S YUNNAN which sails for your port on or about June 25. We trust you will duly insure the goods at your end.

26. Ask seller to buy insurance Dear Mr. Johnson, We wish to refer you to our order No. 0031 for 600 photocopiers, from which you will see that this order is placed on a CFR basis. As we now desire to have the shipment insured at your end, we shall be pleased if you will arrange to insure the goods on our behalf against All Risks invoice value plus 10%,i.e.USD10,000. We shall of course refund to you the premium upon receipt of your debit note or, if you like, you may draw on us at sight of the amount required. We sincerely hope that our request will meet with your approval.

27. Willing to buy insurance for buyer Dear Ms. Baker, This is to acknowledge receipt of your letter dated 30th August requesting us to effect insurance on the captioned shipment for your account. We are pleased to inform you that we have covered the above shipment with the Asian insurance Company of Hong Kong against Al Risks for USD 10,000. the policy has been prepared accordingly and will be forwarded to you by the end of the week together with our debit note the premium. For your information, we are making arrangements to ship the 600 photocopiers by S.S. “Maria”, sailing on or about the 25th of September.

28. A reply to a request for excessive insurance Dear Sirs, We have received your letter of January 23, asking us to insure the captioned goods for an amount of 30% above the invoice value. Although it is our usual practice to take out insurance for the invoice value plus 10%, we are prepared to comply with your request for getting cover for 130% of the invoice value. But the extra premium will be for your account. Please take note of the above.

29. Ask for high extra premium insurance Dear Mr. Johnson, We thank you for your quotation of No.21 and are pleased to tell you we are happy with all terms except the insurance. Since we want to land this deal on CIF basis, we shall be pleased if you will arrange to insure the goods we plan to buy against All risks and War Risks at invoice value plus 50% as we usual do. Please let us know if you have any problem.

30. Reply to the request of Extra premium Dear Ms. Li, Thank you for your E-mail of 25th Nov. for goods sold on CIF basis, insurance is usually to be effected by us against All Risks and war risks based on warehouse to warehouse clause for the invoice value plus 10%. Your request for insurance to be covered for 150% of the invoice can be met but the premium for the difference between 150% and 110% should be for your account. Based on our calculation, the difference is USD 231. if you are willing to pay the difference, we will make certain arrangement soon. We are awaiting your early reply.

31. A letter to insure the goods against all risks Dear sirs, We wish to insure the following consignment against all risks for the sum of U.S.$75,000. 25,000 yard Shanghai Printed Pure Silk Fabrics. These goods are now lying at Shanghai Port waiting to be shipped by S.S. Dongfeng, due to leave for San Francisco on 5th July. We require immediate cover as far as San Francisco and shall be glad if you let us have the policy as soon as it is ready. In the meantime please confirm that you hold the consignment covered.