Facilitating International Freight Flows PDF

CHAPTER 9 Facilitating International Freight Flows Bill of Lading · International freight flows along global supply chains are not possible without the flow of information. · One of the most important documents in an international transaction. · Bill of lading: a document containing all the key...

CHAPTER 9 Facilitating International Freight Flows Bill of Lading · International freight flows along global supply chains are not possible without the flow of information. · One of the most important documents in an international transaction. · Bill of lading: a document containing all the key information concerning a consignment being transported (referred to as an air waybill in air transport). – In the case of consolidated shipments, the entire shipment will be covered by a ‘master waybill,’ with the individual shipments covered by documents known as ‘house waybills. · It provides evidence of a contract between the carrier and the exporter to deliver the goods. – BOL acknowledges that the carrier has received the goods to be delivered to the importer. – BOL details the goods transported, the port's name where they will be loaded, and the destination port. – BOL gives title to the goods to the importer, who can take possession of them once they reach their destination. Incoterms · Abbreviation for international commercial terms that are now commonly accepted standards in global trade. · When freight moves from consignor to consignee, it is important to understand who has responsibility for it at the various stages of its journey. · Ex: If the freight is damaged, who will be held responsible? · Incoterms were first published in 1936 by the International Chamber of Commerce (ICC) and are now commonly accepted standards in global trade. · Incoterms are also periodically updated. (The latest version was in 2020) · There are, in fact, 11 incoterms, divided into four groups. · Some incoterms can be applied to any transport mode, these are: FCA, CPT, CIP, and Groups E and D. · In contrast, FAS, FOB, CFR, and CIF are used in inland and waterway transport only. Incoterms Parties’ responsibilities according to Incoterms Trade Documents Trade Documents (Example) Ex: An interested buyer wants to buy 500 brown men’s shoes to be delivered to Spain in 120 days. 1. The buyer will need to send a letter of inquiry to request a quote (the price) 2. If the seller decides to reply to the inquiry, you will send a proforma invoice, which is a quote that looks like a commercial invoice. 3. If the buyer agrees with the offer, the next step is a sales contract. This includes the incoterms. 4. You will then receive the purchase order. Trade Documents (Example cont.) 5. Next you will need to prepare the goods and documents for export. This will include (1) the commercial invoice which replicates the terms agreed in the contract and purchase order; (2) the packing list which provides the freight forwarder, carrier, and customs with information about your shipment; (3) a shippers letter of instruction to have a written record of, for example, who received the shipping documents and whom to contact if needed; (4) bills of lading for inland and maritime transport and (5) the required sanitary and phytosanitary certificates, control and inspection certificates. These certificates verify that agricultural products have been inspected and are pest and disease free. Finally in some cases, you will also need to include a certificate of origin of the goods for customs duties purposes. Trade Facilitation · Given the importance of trade to economic development, there is increasing emphasis on trade facilitation. · Each year, the World Bank publishes its Doing Business report, which includes an analysis of the ability to trade across borders. · The aim of trade facilitation is (1) the elimination of time as a trade barrier such as poor transport links and timings and (2) reducing bureaucracy caused by procedural, administrative, and legal requirements. · It is estimated that around 49 documents are involved in the average customs transaction, with 70% of data needing to be retyped/reuploaded at least once. · Trade facilitation refers to the simplification, harmonization, and automation of international trade procedures, providing trade transactions with more transparency, predictability, and efficiency. The Goal of Trade Facilitation Trade Facilitation · Trade facilitation has a direct impact on two critical variables for the performance of global supply chains: time and cost. · Because production processes in global supply chains are fragmented across borders, the delay of materials at any border can create significant risks for production (and even JIT activities). · When reliability is low due to uncertainties related to cross- border procedures, producers opt for increasing their inventories, which in turn raises their financial costs. · Additional costs may arise with delays in border clearance, for example requiring the importers to pay for extra storage and security. Trading across borders – best performers 2020 Source: Derived from https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf. Licensed Under CC BY 3.0 IGO. Trade Facilitation What do the top countries have in common? · Electronic exchange of information between traders, customs, and other agencies. · This saves time and money as everything is done electronically and can be paid and processed electronically. · Limiting direct interactions also reduced bribery. · Other critical benefits of the electronic exchange of information include generating statistical data and improving the monitoring system which can combat fraud. · Reduced number of physical inspections of shipments meaning that cargo can go through without any inspection (if labeled green), limited inspection (labeled yellow), and full inspection (labeled red). · International cooperation and agreements with other countries and regions to reduce documents and processes needed.  Port Community Systems · The PCS is an electronic platform that connects multiple systems operated by a variety of organizations that make up a seaport community. · The PCS is aimed at eliminating unnecessary paperwork and streamlining processes to improve efficiency at all the stages of cargo handling at port terminals (e.g., vessel discharge and loading, customs clearance, port health formalities, etc.). · The PCS offers the following: – Information exchange among ports, such as shipping companies, trucking operators, shippers, terminal operators, customs, port and other authorities. – Electronic exchange of customs declarations customs responses and cargo releases between private parties and customs. – Electronic handling of all information regarding the import and export of containerized, general, and bulk cargo for the port community. – Processing of dangerous goods. – Processing of maritime and other statistics. – Status information and control, tracking and tracing goods through the whole logistics chain.