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Commercial Invoice

By
Ozgur Eker (CDCS)
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0

Commercial invoice is a document which is used mostly in international trade transactions.

It is a commercial document required by customs to determine true value of the imported goods, for assessment of duties and taxes.

The commercial invoice is necessary for both the seller and the buyer.

With the commercial invoice, the seller confirms that goods have been delivered as contracted and therefore has the right to claim payment, provided that all information, payment terms, and commodity descriptions correspond exactly with the letter of credit instructions.

On the other hand, the importer needs the commercial invoice for customs clearance since customs authorities often use it to assess duties. (1)

Contents of the Commercial Invoice

There is no internationally accepted standard format in use that explains how to prepare a commercial invoice.

But a commercial invoice, which is going to be used in an international trade transaction, should cover following points.

  • Name of the Exporter, address, and contact details: “consignor”
  • Name of the Importer, address, and contact details: “consignee”
  • Title of the document, commercial invoice number, commercial invoice date:
  • “Commercial Invoice Date: 26.June.2012”, “Commercial Invoice No: CI26062012”
  • Definition of goods: “Crushing and Screening Machine” etc…
  • Delivery term: “FAS ANTWERP PORT, Incoterms 2010”, “FOB PORT OF SINGAPORE, Incoterms 2000” etc…
  • Quantity, Unit Price, Currency Code, Total Price: “10 Mtons of “Titanium Dioxide Rutile” from 3.000 USD per Mton, Total Amount is 30.000,00 USD CIF HAMBURG PORT, Incoterms 2010.”
  • Payment Terms: “Irrevocable Letter of Credit payable at 30 Days from Bill of Lading Date”, “Cash Against Documents at Sight” etc…
  • Bank account details of the exporter and all other additional conditions regarding the sales.
  • Insurance coverage and cost (if applicable)
  • Shipping charges (if applicable)
  • Signature and stamp (not required under letter of credit rules but it is asked by most of the custom authorities and government institutions.)

How to Use Commercial Invoice in Letters of Credit Transactions:

  • A letter of credit requiring an “invoice” without further definition will be satisfied by any type of invoice presented such as commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc. But invoices identified as “provisional”, “pro-forma” or the like are not acceptable under letters of credit rules and standard banking practices.
  • When a credit requires presentation of a commercial invoice, a document titled “invoice” will be acceptable.
  • The description of the goods, services or performance in the invoice must correspond with the description in the letter of credit text.
  • The description of goods, services or performance in an invoice must reflect what has actually been shipped or provided.
  • An invoice must evidence the value of the goods shipped or services or performance provided.
  • Unit price(s), if any, and currency shown in the invoice must agree with that shown in the credit.
  • The invoice must show any discounts or deductions required in the credit.
  • The invoice may also show a deduction covering advance payment, discount, etc., not stated in the credit. (with this article letters of credit rules allow mixed payments under letter of credit payments. For example %25 advance payments outside letter of credit and %75 payable by at sight letter of credit is possible)
  • If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g., a credit term “CIF Hamburg Port Incoterms 2000” would not be satisfied by “CIF CIF Hamburg Port Incoterms”). Charges and costs must be included within the value shown against the stated trade term in the credit and invoice. Any charges and costs shown beyond this value are not allowed.
  • The quantity of merchandise, weights and measurements shown on the invoice must not conflict with the same quantities appearing on other documents.

Special Hints Regarding the Commercial Invoice From ISBP (International Standard Banking Practice):

  • Although it is not required by letter of credit rules, please do not forget to sign and stamp the commercial invoice that you need to present under the letter of credit. Signature and stamp on the commercial invoices are asked by most of the custom authorities and government institutions.
  • Please make sure that your company name indicated in the letter of credit is correct. If your company name is not correct, get in touch with your customer and have the letter of credit amended.
  • Please make sure that the description on the commercial invoice is matching with the description stated in the letter of credit.
  • Do not write additional product names to the invoice which are not mentioned in the letter of credit, even if you give them free of charge.

Sample Commercial Invoice:

commercial invoice sampleReferences:

  1. Documentary Risk In Commodity Trade, UNCTAD/ITCD/COM/Misc. 31, Page: 31

Certificate of Origin

By
Ozgur Eker (CDCS)
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0

A Certificate of Origin (often abbreviated to CO, C/O, COO) is a trade document, which identifies the origin of goods that is being exported and required by almost all of the export and import shipments in international trade.

Certificate of origin is a document used in international trade transactions, certifies that goods in a particular export shipment are originated in a particular country either by wholly obtained principle or substantial transformation principle.

What are the Functions of a Certificate of Origin in Export / Import Transactions?

Certificates of origins are requested by the importing country administrations for the following reasons:

  1. Determining whether or not the goods being imported are eligible for any preferential custom tariffs,
  2. Determining the exact import customs duties to the goods,
  3. Determining whether or not the goods come from a country against which the importing country has trade restrictions.

What are the Types of Certificates of Origin?

Certificates of origin can be classified under two main groups:

types of certificates of origin

Ordinary Certificates of Origin: An Ordinary certificate of origin is a document that can be used to satisfy importing country’s custom authorities that the products exported are originated in a specific country.

Ordinary certificates of origin do not grant any preferential tariff treatment during the importation of goods.

Issuing Bodies of Ordinary Certificates of Origin: Ordinary certificates of origin can be issued and certified by chambers of commerce, chambers of industry and chambers of commerce and industry.

In some occasions exporting companies can also prepare ordinary certificates of origin by themselves in a separate document form or adding a statement on this effect on to the commercial invoices.

Ordinary certificates of origin do not need any endorsement or legalization from the custom authorities.

Preferential Certificates of Origin: Preferential Certificates of Origin likely to grant reduced or zero rates of custom duty when export goods are entering into importer’s country as a Preferential Certificate of Origin (PCO) proves that the product originates from a Free Trade Agreement Partner Country under stipulated Rules of Origin (ROO) and hence, qualifies the product for tariff concessions provided under the specific FTA.

Issuing Bodies of Preferential Certificates of Origin: Preferential certificates of origin must be issued and authorized by the customs or any other organization that is entrusted by the government in the exporting country.

Some Examples of Preferential Certificates of Origin:

  • Certificate of Origin GSP Form A
  • North American Free Trade Agreement (NAFTA) Certificate of Origin
  • EUR1 Form Movement Certificate
  • ATR Movement Certificate

How to Use Certificates of Origin in Letters of Credit Transactions:

Letter of credit rules do not cover certificates of origin under specific articles, unlike transport and insurance documents; as a result certificates of origin will be treated like any other ordinary document under the letter of credit rules.

This having been said, we need to emphasize that the specific requirements regarding the certificates of origin must be indicated in the letters of credit by the issuing banks.

  1. If no specific requirement exists in the letter of credit for the certificates of origin, then the presentation of a certificate of origin will be satisfied by the presentation of a signed document that appears to relate to the invoiced goods and certifies their origin.
  2. When a credit requires the presentation of a preferential certificates of origin such as a Certificate of Origin GSP Form A or EUR1 Form Movement Certificate, only a document in that specific form should be presented by the beneficiary.
  3. A certificate of origin should be issued by the entity stated in the credit such as Chamber of Commerce, Chamber of Industry, Customs Authorities etc.

Certificates of Origin Samples:

Ordinary Certificate of Origin:

certificate of origin

EUR1 Certificate of Origin:

eur1 certificate of originNafta Certificate of Origin:

nafta certificate of origin

Fiata FWB (Non-Negotiable Fiata Multimodal Transport Waybill)

By
Ozgur Eker (CDCS)
-
0

On this post, I will explain Non-Negotiable Fiata Multimodal Transport Waybill, a transport document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FWB is an acronym which stands for “Forwarder’s Waybill”, “Fiata Waybill” or “Non-Negotiable FIATA Multimodal Transport Waybill”.

FWB is a standard format transport document, which is created by FIATA (International Federation of Freight Forwarders Associations) for general use of the freight forwarders in international freight transportation.

FWB has been restricted to use only by FIATA members.

Structure of a Fiata Waybill

FWB is printed on a white color paper with light blue borders. Fiata logo is positioned in the middle of the FWB transport document. The ICC logo, which signifies the ICC approval, can be seen on the right up side of the document.

FWB is a non-negotiable transport document which was created by Fiata and acknowledged by ICC. This acknowledgement has been secured by the attachment of ICC logo on the right-up side of the document.

Terms and conditions of the carriage have been printed on the reverse side of the FWB transport document under the title of “Standard Conditions (1997) governing the FIATA Multimodal Transport Waybill”.

As a result FWB is not a short form or blank back non-negotiable sea waybill.

FWB is a valid transport document when it is issued as a non-negotiable sea waybill according to letter of credit rules.

This view supported by the Fiata with the following declaration: “The non-negotiable FIATA Multimodal Transport Waybill (FWB) conforms to the requirements of the “Guide for the Uniform Customs and Practice for Documentary Credits (UCP 600)” of ICC (ICC publication No. 600) in line with article 21 when issued as a sea waybill, as an acceptable transport document.”

Why Exporters and Importers Use a FWB transport document?

The main reason to use a FWB would be working with a freight forwarder instead of a carrier.

FBL issued by the freight forwarders in the capacity of contractual carriers. They usually sign FBL transport document “as carrier”.

Additionally, importers could clear the consignment at the port of discharge without surrendering an original bill of lading, as carriers could deliver the cargo to the importers with a proof of identity.

What are the Main Characteristics of a Fiata Waybill?

  1. FWB includes a contract of carriage and it is a valid sea waybill according to current letter of credit rules.
  2. FWB is a non-negotiable transport document. If a FWB is issued, carriers could deliver the cargo to the importers by the proof of identity only without requiring the original copy of the FWB.
  3. FWB transport documents can be used not only in multimodal transportation, but also single mode port-to-port sea shipments.
  4. The copyrights of FBL documents are owned by FIATA. Only Fiata member freight forwarders could use FWB standard format multimodal non-negotiable waybill.
  5. FWB is in conformity with the UNCTAD/ICC Rules for Multimodal Transport Documents only when it is used as non-negotiable sea waybill in port-to-port sea shipments.

What are the Differences Between a FWB (Non-Negotiable FIATA Multimodal Transport Waybill) and a Shipping Line Sea Waybill (SLSWB)?

  1. A Shipping Line Sea Waybill (SLSWB) or carrier’s sea waybill is issued by the carrier or its agent on behalf of the carrier. SLSWB generally printed on the letterhead of the shipping line. On the reverse side of the SLSWB the terms and conditions of carriage of the shipping line are incorporated.
  2. A Non-Negotiable FIATA Multimodal Transport Waybill (FWB) is issued by a freight forwarder. FWB should be printed on the standard form Fiata FWB format incorporating Fiata and ICC logos. “Standard Conditions (1997) governing the FIATA Multimodal Transport Waybill” has been printed on the reverse side of the FWB. FWB signed by the freight forwarder, as carrier.

Sample Form of a Non-Negotiable FIATA Multimodal Transport Waybill

fiata waybill fwb

FIATA FBL (Negotiable FIATA Multimodal Transport Bill of Lading)

By
Ozgur Eker (CDCS)
-
0

On this post, I will explain Negotiable FIATA Multimodal Transport Bill of Lading, a transport document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FBL is an acronym which stands for “Forwarder’s Bill of Lading”, “Fiata Bill of Lading” or “Negotiable FIATA Multimodal Transport Bill of Lading”.

FBL is a one of the oldest and well-known standard transport documents created by FIATA (International Federation of Freight Forwarders Associations) for general use of the freight forwarders in international transportation.

FBL has been restricted to use only by FIATA members.

FBL is printed on a blue color paper.

Fiata logo is positioned in the middle of the FBL transport document. ICC logo, which signifies the ICC approval, can be seen on the right up side of the document.

History of FBL:

First FBL was created in year 1975.

Fiata FBL was acknowledged by ICC in 1993, which means that the Negotiable FIATA Multimodal Transport Bill of Lading is entirely in conformity with the UNCTAD/ICC Rules for Multimodal Transport. Since then FBL carries ICC logo.

Terms and conditions of the carriage have been printed on the reverse side of the FBL document under the title of “Standard Trading Conditions Governing FIATA Combined Transport Bills of Lading”. As a result FBL is not a short form or blank back bill of lading.

FBL is a valid transport document according to letter of credit rules, and has been accepted by banks without any problem, as long as it is issued not in conflict with the conditions stated in respective articles of UCP 600 such as article 19, 20 or 21.

Why Exporters and Importers Use a FBL?

The main reason to use a FBL would be working with a freight forwarder instead of a carrier.

FBL issued by the freight forwarders in the capacity of contractual carriers. They usually sign FBL transport document “as carrier”.

What are the Main Characteristics of a FBL Transport Document?

  1. FBL includes a contract of carriage and it is a valid transport document according to the letter of credit rules.
  2. FBL will be issued in a negotiable form as the consignee part of the Fiata multimodal transport bill of lading includes pre-printed “consigned to order of” phrase. Exporters must be very careful with last leg of the transportation in regards to negotiability of the FBL. If the last leg of the transportation is not ended at sea, the FBL document may not be considered as a negotiable instrument.
  3. FBL transport document can be used not only in multimodal transportation, but also single mode port-to-port sea or land shipments.
  4. The copyrights of FBL document is owned by FIATA. Only Fiata member freight forwarders could use FBL standard format multimodal bill of lading.
  5. FBL is entirely in conformity with the UNCTAD/ICC Rules for Multimodal Transport Documents and is approved by ICC.

What are the differences between a FBL (Negotiable FIATA Multimodal Transport Bill of Lading) and a Shipping Line Bill of Lading (SLBL)?

  1. A Shipping Line Bill of Lading (SLBL) or carrier’s bill of lading is issued by the carrier or its agent on behalf of the carrier. SLBL generally printed on the letterhead of the shipping line. On the reverse side of the SLBL the terms and conditions of carriage of the shipping line are incorporated. This is the best bill of lading option for the beneficiary, the applicant and the banks that enter letter of credit transaction.
  2. A Negotiable FIATA Multimodal Transport Bill of Lading (FBL) which is also known as Fiata Bill of Lading or Forwarder’s Bill of Lading, is “issued” by a freight forwarder. FBL should be printed on the standard form Fiata FBL format incorporating Fiata and ICC logos. “Standard Trading Conditions Governing FIATA Combined Transport Bills of Lading” has been printed on the reverse side of the FBL. FBL signed by the freight forwarder, as carrier.

Sample Form of a Negotiable Fiata Multimodal Transport Bill of Lading

Negotiable FIATA Multimodal Transport Bill of Lading

Fiata FWR (Warehouse Receipt)

By
Ozgur Eker (CDCS)
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0

On this post, I will explain Fiata Warehouse Receipt, an international trade document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FWR is an acronym which stands for “Fiata Warehouse Receipt”.

FWR is a standardized document format created by FIATA (International Federation of Freight Forwarders Associations) for general use in international and domestic trade.

FWR has restricted to be used only by FIATA members.

History and Usage of Fiata Warehouse Receipt

Just until a couple decades ago, freight forwarders had been providing very limited services to their clients; such as negotiating freight charges, booking cargo space and making freight consolidations.

After the globalization era, freight forwarders had been expanding their services to new areas such as providing warehousing, tracking and on time delivery services with the help of modern information and communication technology.

Freight forwarders have to issue a receipt for the merchandise they take possession when they provide warehousing services.

The FWR is a Warehouse Receipt which is a standard document for use in freight forwarders’ warehousing operations in both national and international scale.

FWR is not a contract of carriage as a result it is not a transport document unlike bill of lading, multimodal bill of lading, air waybill, road transport document or rail transport document.

Differences Between a Warrant and a Fiata Warehouse Receipt:

Warrant is a formal document that certifies or guarantees a receipt for goods that are being stored in a warehouse.

The FWR is not a “warrant” in legal means. When a warehouse keeper is requested to issue a “warrant”, the FWR cannot be utilized.

Why Exporters and Importers Use a FWR Certificate?

FWR is expected to be used in international transactions where Free Carrier (FCA) or Delivered at Terminal (DAT) trade term is chosen by exporters and importers.

According to Incoterms 2010 Rules:

  • “Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
  • “Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.

Seller can prove to the buyer that he has already delivered goods to the buyer’s forwarder at the pre-determined warehouse by presentation of a Fiata Warehouse Receipt.

Also if the payment will be made via documentary collection or letter of credit, banks would request presentation of a FWR document.

What are the Main Characteristics of a FWR Certificate?

  1. FWR does not include a contract of carriage. For this reason it is not as a transport document in conventional means.
  2. FWR certificate is not negotiable unless otherwise indicated on the document.
  3. Stored goods can be delivered to the holder of the documents only against presentation of the original copy of the FWR certificate.
  4. Depositor should endorse the FWR document in accordance with the conditions stated under “transfer of property” heading on the back side of the certificate.
  5. If new owner of the goods would like to assign their delivery claim to another entity, then they should use the area titled with “cession of the delivery claim” which is placed on the back side of the certificate.
  6. In case of partial shipments would like to be effected, original Fiata Warehouse Receipt must be submitted to warehouse keepers in every time.

What are the Differences Between a FWR (Fiata Warehouse Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Fiata Warehouse Receipt

  1. Fiata Warehouse Receipt does not include a contract of carriage.
  2. Fiata Warehouse Receipt can also be issued in negotiable form but this must be identified on the face of the document.
  3. Fiata Warehouse Receipt is not a transport document in regards to letter of credit rules.
  4. Fiata Warehouse Receipt need not to state port of loading, port of discharge and shipped on board date on its face.
  5. Original FWR certificate copy must be surrendered to the warehouse keeper during the claim for the delivery of the goods.
  6. Endorsement must be made in accordance with the terms and conditions stated on the back side of the document.

Sample Form of a Fiata Warehouse Receipt:

Fiata Warehouse Receipt

FIATA FCT (Forwarders Certificate of Transport)

By
Ozgur Eker (CDCS)
-
0

On this post, I will explain Forwarder’s Certificate of Transport, an international trade document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FCT is an acronym which stands for “Forwarder’s Certificate of Transport”.

FCT is another standard document template created by FIATA (International Federation of Freight Forwarders Associations) for general use in international shipments.

FCT is only available to FIATA member freight forwarders.

FCT certificate is a signed declaration of the freight forwarder, in which he confirms to the consignor that he has taken over the goods and has assumed responsibility for delivery of the consignment as per instructions, that he has received from the consignor as indicated on the FCT document.

It must be noted that according to the FCT certificate a freight forwarder acts as a freight forwarder and not as a carrier.

A freight forwarder is responsible for the signature of the contract of carriage or carriages with the carrier or carriers. The freight forwarder is not responsible for the acts of the carriers.

Important Note: FCT is not a contract of carriage as a result it is not a transport document unlike bill of lading, multimodal bill of lading, air waybill, road transport document or rail transport document.

Why Exporters and Importers are Using a FCT Certificate?

FCT document mostly used in international transactions where Ex Works (EXW) or Free Carrier (FCA) trade terms is chosen by the exporters.

According to ICC’s Incoterms 2010 rules, “Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).

The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

As per Incoterms 2010 “Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.

Seller can prove to the buyer that he has already places the goods at the disposal of the buyer’s forwarder with the presentation of Forwarder’s Certificate of Transport.

Also if the payment will be made via documentary collection or letter of credit, banks or buyers would request presentation of a FCT document.

What are the Main Characteristics of a FCT Certificate?

By issuing a FCT certificate, the freight forwarder certifies to the consignor that,

  1. the freight forwarder has been authorized to enter into contracts with the carriers and
  2. the freight forwarder has taken charge of the goods as indicated on the forwarder’s certificate of transport in apparent good order and condition and
  3. the freight forwarder is responsible for delivery of the goods to the holder of the certificate through the services of the carriers of their choice and
  4. the freight forwarder will be acting as a freight forwarder not as a carrier and
  5. the freight forwarder will not be held liable for the acts of the carriers.

FCT certificate does not contain a contract of carriage. As a result it is not considered as a transport document.

FCT certificate can be issued in a negotiable form. If a FCT certificate issued in a negotiable form, it is very important to state whether it is issued in one original or else how many original copies have been issued on the face of the document.

What are the Differences Between a FCR (Forwarder’s Certificate of Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Forwarder’s Certificate of Transport

  1. Forwarder’s Certificate of Transport does not contain a contract of carriage as a result it is not a transport document in regards to letter of credit rules.
  2. Forwarder’s Certificate of Transport can also be issued in negotiable form as shown on the below examples:
    *made out to the order of the issuing bank.
    *made out to order and blank endorsed.
  3. At least one original Forwarder’s Certificate of Transport must be surrendered to the carrier for delivery of the goods in case Forwarder’s Certificate of Transport was issued in negotiable form
  4. Forwarder’s Certificate of Transport need not to state port of loading, port of discharge and shipped on board date on its face.

Sample Form of Forwarder’s Certificate of Transport

Sample FCT (Forwarder’s Certificate of Transport)

Fiata FCR (Forwarder’s Certificate of Receipt)

By
Ozgur Eker (CDCS)
-
0

On this post, I will explain Forwarder’s Certificate of Receipt, an international trade document, only issued by freight forwarders, whom are the members of FIATA (International Federation of Freight Forwarders Associations).

Freight forwarder is a person, who is expediting goods to the consignee on behalf of the shipper; may be an agent or company who performs services (such as receiving, trans-shipping or delivering) designed to assure and facilitate the passage of goods. (1)

FCR is an acronym, which stands for “Forwarder’s Certificate of Receipt”.

FCR is a standard form of a trade document, which was prepared by FIATA (International Federation of Freight Forwarders Associations) for general use in international shipments.

FCR is available to FIATA members only.

Why Exporters and Importers are Using a FCR Certificate?

FCR certificate mainly used in international transactions where Ex Works (EXW) trade term is selected by the parties.

According to ICC’s Incoterms 2010 rules “Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).

The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

Under Ex Works trade term, the Seller can prove to the Buyer that he has already places the goods at the disposal of the buyer’s forwarder with the presentation of a Forwarder’s Certificate of Receipt.

Also, if the payment will be made via a letter of credit, banks would like to see the FCR document.

What are the Main Characteristics of a FCR Certificate?

FCR document does not contain a contract of carriage. For this reason it is not accepted as a transport document under letter of credit rules.

  1. By issuing a FCR document a freight forwarder certifies to the consignor that,
    1. the freight forwarder has assumed control of the goods as indicated on the forwarder’s certificate of receipt in apparent good order and condition at the disposal of the consignee or
    2. the freight forwarder has assumed control of the goods as indicated on the forwarder’s certificate of receipt in apparent good order and condition with irrevocable instructions to be forwarded to the consignee.
  2. FCR document is not negotiable. It is non-negotiable so that consignee need not to present an original copy to collect the goods from the transport company.

What are the Differences Between a FCR (Forwarder’s Certificate of Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Forwarder’s Certificate of Receipt

  1. Forwarder’s Certificate of Receipt does not contain a contract of carriage.
  2. Forwarder’s Certificate of Receipt can’t be issued in negotiable form.
    Consignee can clear the goods from the carrier without surrendering the original copy of
  3. Forwarder’s Certificate of Receipt.
  4. Forwarder’s Certificate of Receipt is not a transport document in regards to letter of credit rules.
  5. Forwarder’s Certificate of Receipt need not to state port of loading, port of discharge and shipped on board date on its face.
  6. Forwarder’s Certificate of Receipt is not a transport document as defined in UCP 600 articles 19‐25. This document is to be examined only to the extent expressly stated in the credit, otherwise according to UCP 600 sub‐article 14 (f).

Sample Form of FCR (Forwarder’s Certificate of Receipt)

Sample FCR (Forwarder’s Certificate of Receipt)

References:

  1. Transportation Best Practices Manual, PF Collins International Trade Services, 2003, Page:44

Fiata Documents

By
Ozgur Eker (CDCS)
-
0

On this post, I will explain freight forwarders, freight forwarders association and the documents published by the freight forwarders association in a global scale.

Forwarding agents are also known as freight forwarders, freight brokers, transit agents, and they may also act as clearing agents or customs brokers.

In most instances buyers and sellers are not themselves in a position to carry out the necessary arrangements for the shipment of their cargo.

They rely on the services of specialized firms for this work and for processing customs formalities. (1)

Freight forwarders can arrange door-to-door shipments, decrease transportation costs by offering more competitive freight quotes, increase the efficiency of carriers, exporters and importers by giving professional logistics services, consolidate small orders, offer storage, handling, packing, distribution and customs breakage services to their clients. (2)

Freight forwarders around to world are gathered together and formed an association that shapes the international transportation.

FIATA stands for International Federation of Freight Forwarders Associations. FIATA was founded in Vienna/Austria on May 31, 1926.

FIATA, a non-governmental organisation, represents today an industry covering approximately 40,000 forwarding and logistics firms, also known as the “Architects of Transport”, employing around 8 – 10 million people in 150 countries. (3)

Fiata has created several documents and templates in order to reach a uniform standard for use by freight forwarders in a global scale.

Fiata documents are known as FCR, FCT, FWR, FBL, FWB, SDT, SIC and FFI. These documents have been printed in different colors so that they can be distinguished from each other.

Fiata Documents

fiata documents

Main Features of Fiata Documents

Here are some important features of Fiata documents:

  • Fiata documents are highly standardized.
  • Only national freight forwarders associations (general members of FIATA) can issue FIATA documents.
  • Fiata documents can only be used by Fiata members.
  • Every Fiata document must bear the Fiata logo at the right head section of the documents.
  • Only negotiable FIATA Multimodal Transport Bill of Lading and non-negotiable FIATA Multimodal Transport Waybill are accepted as a transport document in terms of letter of credit rules. Other Fiata documents are not considered as a transport document in UCP 600 latest L/C rules.
  • Some major countries that are using Fiata documents are: Australia, Austria, Belgium, Canada, Colombia, Croatia, Cyprus, the Czech republic, Estonia, Finland, France, Germany, Hong Kong, Hungary, Indonesia, Iran, Ireland, Israel, South Korea, Italy, Japan, Kenya, Latvia, Lithuania, Malaysia, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Singapore, Slovenia, Sweden, Switzerland, Spain, Sri Lanka, China, Taiwan, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, the United States, Vietnam.

References:

  1. Shipping and Incoterms, Practice Guide, UNDP Practice Series, Page.10
  2. What are the functions of freight forwarders in international transportation?
  3. Who is FIATA

Rail Transport Document (CIM)

By
Ozgur Eker (CDCS)
-
0

On this page, I will try to explain you “Rail Transport Document” and its applications in letters of credit transactions.

Banks mention “Rail Transport Document” as “Rail Transport Document “, “Rail Consignment Note”, or “CIM Consignment Note” in letters of credit.

Rail transport document or rail consignment note is a transport document used in rail shipments.

Rail consignment note confirms that the rail carrier has received the goods and that a contract of carriage exists between trader and carrier.

Key details to be provided in the note include: a description of the goods; the number of packages and their weight; the names and addresses of the sender and recipient. (1)

Important Note 1 : Rail transport document is not a document title of goods, which means that rail transport document is a non-negotiable transport document.

As a result, rail carriers will be able to deliver goods to the consignee without obtaining one original copy of rail transport document.

For this reason, exporters and banks (issuing bank and confirming bank) have to be very careful when working with a letter of credit demanding a rail transport document as a transport document, because neither exporters nor banks could secure goods as a collateral.

Important Note 2 : The Intergovernmental Organisation for International Carriage by Rail (OTIF) was set up on 1 May 1985. 48 States are Members of OTIF at the present time (Europe, Asia and North Africa) and one State is an Associate Member (Jordan).

The Intergovernmental Organisation for International Carriage by Rail (OTIF) has developed the uniform systems of law which apply to freight in international through traffic by rail.

These systems of law are known as the Convention concerning International Carriage by Rail (COTIF) of 9 May 1980 (1999 Protocol) .

Appendix B to the Convention concerning International Carriage by Rail (COTIF) of 9 June 1999 is Uniform Rules Concerning the Contract of International Carriage of Goods by Rail (CIM).

Transport document prepared according to the CIM Convention is called CIM Rail Consignment Note.

Uniform Rules Concerning the Contract of International Carriage of Goods by Rail (CIM)

rail transport document sample
Sample CIM Consignment Note

How to Use Rail Transport Document in Letters of Credit Transactions:

Rail Transport Document / Rail Consignment Note is covered under article 24 of UCP 600.

A rail transport document, however named, must appear to:

  1. indicate the name of the carrier and:
    – be signed by the carrier or a named agent for or on behalf of the carrier, or
    – indicate receipt of the goods by signature, stamp or notation by the carrier or a named agent for or on behalf of the carrier.
  2. indicate the date of shipment or the date the goods have been received for shipment, dispatch or carriage at the place stated in the credit. Unless the transport document contains a dated reception stamp, an indication of the date of receipt or a date of shipment, the date of issuance of the transport document will be deemed to be the date of shipment.
  3. indicate the place of shipment and the place of destination stated in the credit.

A rail transport document marked “duplicate” will be accepted as an original.

  • A rail transport document will be accepted as an original whether marked as an original or not.

In the absence of an indication on the transport document as to the number of originals issued, the number presented will be deemed to constitute a full set.

For the purpose of this article, transhipment means unloading from one means of conveyance and reloading to another means of conveyance, within the same mode of transport, during the carriage from the place of shipment, dispatch or carriage to the place of destination stated in the credit. (2)

Special Hints Regarding the Rail Transport Document From ISBP (International Standard Banking Practice):

If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP 600 article 24 is applicable.

References:

  1. How to move goods by rail, Key rail transport documents by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland.
  2. UCP 600

Road Transport Document (CMR)

By
Ozgur Eker (CDCS)
-
0

On this page, I will try to explain you “Road Transport Document” and its applications in letters of credit transactions.

Banks mention Road Transport Document as “CMR Road Transport Document “, “Truck Consignment Note”, “CMR Consignment Note” in letters of credit.

A road consignment note is issued by the carrier and is used for carriage by truck. The document evidences that the carrier has received the goods for transportation. (1)

Road transport document that confirms that the carrier (ie the road haulage company) has received the goods and that a contract of carriage exists between the trader and the carrier. (2)

Important Note 1 : Road transport document is not a document title to goods, which means that road transport document is a non-negotiable transport document.

As a result road carriers will be able to deliver goods to the consignee without obtaining one original copy of road transport document.

For this reason, exporters and banks (issuing bank and confirming bank) have to be very careful when working with a letter of credit demanding a road transport document as a transport document, because neither exporters nor banks could secure goods as a collateral.

Important Note 2 : CMR Convention (full title is Convention on the Contract for the International Carriage of Goods by Road) regulates various legal issues concerning transportation of cargo by road among the member states of the convention.

CMR Convention is signed by most of the EUROPEAN countries. As of April 2018, it has been ratified by 44 states. You can reach the ratifying countries from this link.

cmr convention countries
44 Contracting Parties of CMR Convention: Albania, Armenia, Austria, Belarus, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iran (Islamic Republic of), Ireland, Italy, Jordan, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Republic of Moldova, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, the former Yugoslav Republic of Macedonia, Tunisia, Turkey, Turkmenistan, United Kingdom of Great Britain and Northern Ireland, Uzbekistan.

“CMR International Consignment Note” is the transport document created in standard forms according to CMR convention.

Logistics sector calls this document “CMR International Consignment Note”, CMR Note or simply CMR.

Generally, there will be four copies of a CMR note. One will be kept by the trader and another by the carrier, while the third will travel with the goods all the way to their final destination. The last copy is the administration copy.

How to Use Road Transport Document in Letters of Credit Transactions:

Road Transport Document / Road Consignment Note is covered under article 24 of UCP 600.

A road, rail or inland waterway transport document, however named, must appear to:

  1. indicate the name of the carrier and:
    -be signed by the carrier or a named agent for or on behalf of the carrier, or
    -indicate receipt of the goods by signature, stamp or notation by the carrier or a named agent for or on behalf of the carrier.
  2. indicate the date of shipment or the date the goods have been received for shipment, dispatch or carriage at the place stated in the credit. Unless the transport document contains a dated reception stamp, an indication of the date of receipt or a date of shipment, the date of issuance of the transport document will be deemed to be the date of shipment.
  3. indicate the place of shipment and the place of destination stated in the credit.

A road transport document must appear to be the original for consignor or shipper or bear no marking indicating for whom the document has been prepared.

In the absence of an indication on the transport document as to the number of originals issued, the number presented will be deemed to constitute a full set.

For the purpose of this article, transhipment means unloading from one means of conveyance and reloading to another means of conveyance, within the same mode of transport, during the carriage from the place of shipment, dispatch or carriage to the place of destination stated in the credit. (3)

Special Hints Regarding the Road Transport Document From ISBP (International Standard Banking Practice):

  1. If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP 600 article 24 is applicable.

References:

  1. Documentary Credits, Nordea Trade Finance, Page:27
  2. How to move goods by road, The CMR note: the key road transport document
  3. UCP 600
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