1. North Carolina A&T State University International Trade Center
DOCUMENTATION & SHIPPING TERMS
North Carolina A&T State University
International Trade Center

2. WHAT IS EXPORT DOCUMENTATION?
The paperwork that is required for an export sales transaction
The means by which the shipping process is facilitated and recorded.
Documentation is essential for moving goods through the channels of distribution, transferring responsibility or possession, clearing goods through customs, and facilitating payment according to the agreed upon terms.

3. WHAT IS THE PURPOSE OF EXPORT DOCUMENTATION?
Export documentation provides evidence that the negotiated terms between the buyer and the seller have been complied with.
This is essential if the seller wishes to get paid
Export documentation provides important information that is used by the seller, the freight companies, governments, and the buyer.

4. THE KEY INFORMATION CONTAINED IN EXPORT DOCUMENTS
Description of the goods
Mode of transportation
rail, air, ocean
Terms of sale
Who pays for what?
Origin of the goods
Identity of the seller/shipper
Identity of the buyer
Terms of payment
Shipping instructions
Evidence of shipment
Foley, James, F. “The Global Entrepreneur: Taking Your Business International.” Dearborn Financial Publishing P. 210.

5. COMMON EXPORT DOCUMENTS
Pro forma invoice
Bill of Lading
Certificate of Origin
Packing List
Commercial Invoice
Shipper’s Export Declaration (SED)
Consular Invoice
Inspection Certificate
Insurance Certificate
Dock/Warehouse receipt
Letter of Credit
Draft

6. DEFINITIONS
Pro forma invoice - basically a price quote. Describes the type and quantity of the goods to be shipped, value of the goods, total cost of the transaction based on the terms of sale, and other specifications.
Bill of lading - a contract between the seller and the carrier. The BOL is usually prepared by the carrier of forwarder. It documents the condition of the goods upon the carrier’s acceptance. It is negotiable when it is consigned “to order of” meaning the buyer is allowed to take possession of the goods.
Certificate of Origin - a statement required by some countries that certifies the origin of the exported goods (eg. The NAFTA certificate of origin)

7. DEFINITIONS
Packing List - An itemized list describing the contents of each package in a shipment. Used in determining the total weight and volume of a shipment and for verifying the cargo.
Commercial Invoice - Basically a bill for the goods from the buyer to the seller
SED - a document required to be filed for every shipment exceeding $2500 in value. It is used by the Department of Commerce to gather statistical information on the types, volume, value, and destination(s) of products exported from the U.S.

8. DEFINITIONS...
Consular Invoice - A document required by some foreign governments for identifying and controlling imported goods
Inspection Certificate - a document required by some foreign governments that certifies that the goods imported conform to the order
Insurance Certificate - the document providing proof that the cargo (goods shipped) have been properly insured. (amount and type of insurance)

9. DEFINITIONS...
Dock/warehouse receipt - this document transfers accountability from the seller to the carrier.
Letter of Credit - a letter from your customer’s bank to you, in which the importer’s bank guarantees payment, provided that all the terms stated in the letter are met.
Draft - An unconditional order in writing from the drawer to the drawee that directs the drawee to pay a specified amount to a named drawer at a fixed or determinable future date.

10. A GUIDE FOR DOCUMENT PREPARATION
To ensure accurate document preparation, the services of a freight forwarder should be sought.
However, the exporter should understand the essentials of document preparation and at least review the prepared documents.
Seek explanation and instruction from the freight forwarder.

11. A GUIDE FOR DOCUMENT PREPARATION...
To determine the required documents for a given country and transaction, an exporter can:
solicit the services of a freight forwarder
consult the “Exporter’s Encyclopedia” or the National Trade Data Bank (both available at the “Center”.)
contact commercial attaches in the target markets
Foreign Agricultural Service’s Overseas Offices
The U.S. Department of Commerce’s Overseas Contact List

12. WHAT IS A FREIGHT FORWARDER?
The freight forwarding professional advises clients of the best rates, routings and modes of transporting goods to or from any area in the world. The forwarder is the exporter’s agent and provides the traffic and documentation services consistent with the exporter’s needs, arranging for carriage with vessel operators, trucking companies and airlines specializing in the consolidation of container-load shipments.
Using the many resources at their disposal, forwarders find the “right match” of services available so that products are moved by the most timely and cost-effective means.
“”Customized” services to fit the clients’ operational needs are forwarder’s specialty. Forwarders coordinate arrangements for storage, pick-and-pack operations, consolidations or full container movements as well as inland transportation to provide clients with true door-to-door service.
From assisting with initial quotations or preparation of proforma invoices, to banking clients’ documents for collection, the professional ocean and or air freight forwarder is and essential component in the facilitation of international trade.
The Exporter’s Encyclopedia. P 3 * 104

13. STEPS IN THE DOCUMENTATION PROCESS
Receive the order under accepted terms & consult with a banker or a freight forwarder.
Begin organizing information for required export documents and export license applications.
Evaluate modes of transportation, requirements for perishable products, and cost of various alternative modes.
Prepare goods for shipping (marking/labeling, packing, consolidating/containerizing, insuring)
Complete and forward required export documents.

14. STEPS IN THE DOCUMENTATION PROCESS...
Transport goods to U.S. port of export.
Transfer goods to carrier.
Ship goods and forward appropriate export documents .
Unload goods at foreign port.
Clear customs.
Transport goods from foreign port to intermediate and/or ultimate consignee.
Note: Responsibility for different steps in the documentation and shipping process depends on the terms of sale and the method of payment and collection.
International Marketing for Agribusiness - Concepts and Applications, 12/2000

15. THE TERMS OF SALE…… INCOTERMS
Understanding the Incoterms, also called the terms of sale, is the first step in responding to a trade lead or starting to prepare a quote.
Definition: An international rule for pricing terms which represent different levels of financial responsibility for the buyer and seller in an export transaction.

16. INCOTERMS... The INCOTERMS establish :
the geographical location where the buyer becomes responsible for the goods
payment of shipping, handling, insurance, inland freight, etc.
the point where ownership of the goods or the title for the goods changes ownership
Note: The terms of sale should always be followed by a physical location so that the buyer cannot surprise the seller and select a costly or infeasible location

17. THE THIRTEEN INCOTERMS
EXW - EX WORKS
FCA - FREE CARRIER
FAS - FREE ALONGSIDE SHIP
FOB - FREE ON BOARD
CFR - COST AND FREIGHT
CIF - COST, INSURANCE, FREIGHT
CPT - CARRIAGE PAID TO

18. THE THIRTEEN INCOTERMS….
CPT - CARRIAGE PAID TO
DAF - DELIVERY AT FRONTIER
DES - DELIVERED EX SHIP
DEQ - DELIVERED EX QUAY
DDU - DELIVERED DUTY UNPAID
DDP - DELIVERED DUTY PAID

19. DEFINITIONS OF THE MOST COMMONLY USED INCOTERMS

20. EXW: EX-WORKS EXW (geographical location)
EXW signifies a precise location where the product is made ready to the buyer.
When offering a “EXW” quotation: the price includes only those costs involved up to an agreed point of origin, usually the shipper’s factory. The shipper/seller places the product at the control of the buyer at a concurred place, date, time, etc.

21. EXW: EX-WORKS... EXW COSTS CAN INCLUDE: Raw or processed product
Standard packaging
Pallets, banding, shrink-wrap, slip sheets, slings, one-ton-big-bags
Special labeling
Translation and printing
Inspection certificates (Phytosanitary, Health, Quality, or Export License)
Bracing or inspecting a container
Export packaging

22. FCA: FREE CARRIER
FCA (geographical location) (FCA Acme Trucking Company, Your Factory, Anytown, Anystate)
FCA signifies a precise location where the product is turned over to a carrier or person who will ensure carriage, and the goods are cleared for export.
When offering a “FCA” quotation: the price includes those costs involved up to that agreed point, including transportation and loading if required.

23. FCA: FREE CARRIER...
FCA COSTS CAN INCLUDE ( IN ADDITION TO THE EXW COSTS):
Loading on board carrier
Transportation to the carrier
Insurance coverage to carrier (optional)

24. FAS: FREE ALONGSIDE SHIP
FAS (port of exit) (FAS Ocean Port of Exit, State)
FAS signifies a precise ocean port location where the product is turned over to a carrier, and the goods are cleared for export
When offering an “FAS” quotation: the shipper/seller places the product alongside the vessel

25. FAS: FREE ALONGSIDE SHIP...
FAS COSTS CAN INCLUDE (IN ADDITION TO FCA COSTS):
inland transportation (from your plant to the port)
port charges (including Terminal Handling or Receiving Charges, or stevedore, wharfage, forklift, off-load, etc.)

26. FOB: FREE ON BOARD
FOB (Ocean Ship at Port of Exit) (FOB Ship’s Rail Ocean Port of Exit, State)
When offering an “FOB” quotation: the shipper/seller places the product over the ship’s rail. FOB only applies to sea or water transportation

27. FOB: FREE ON BOARD... The costs associated with FOB include:
loading on board ship
heavy lift charges
These costs are correct in theory, but actually the loading and heavy lift charges will be included in the shipping cost from the port to the final destination which the buyer will pay.

28. CFR: COST AND FREIGHT
CFR (FOREIGN PORT OF ENTRY) (CFR PORT OF ENTRY, COUNTRY)
CFR signifies that the seller loads the product on board a carrier, clears the goods for export, arranges and pays the ocean freight and other charges.
The risk during carriage is transferred to the buyer, and the goods change hands when they pass the ship’s rail at the port of shipment. (the final destination)

29. CFR: COST AND FREIGHT...
The charges associated with CFR include (in addition to the FOB costs):
Ocean Freight
Fuel Adjustment Factor
Currency Adjustment Factor
Destination Delivery Charges or Container Service Charges

30. CIF: COST, INSURANCE, AND FRIEGHT
CIF (FOREIGN PORT OF ENTRY) (CIF PORT OF ENTRY, COUNTRY)
CIF signifies that the seller loads the product on board a carrier, clears the goods for export, arranges and pays the ocean freight and other charges.
The seller insures the shipment, and the goods change hands when they pass the ship’s rail at the port of shipment.

31. CIF: COST, INSURANCE, AND FRIEGHT...
COSTS ASSOCIATED WITH CIF INCLUDE (IN ADDITION TO CFR);
marine cargo insurance

32. NOTE
The previous definitions and list of costs are general. These definitions, terms, shipping regulations, etc. often change.
For these reasons, it is highly recommended that the services of a freight forwarder are enlisted as freight forwarders are aware of any changes.