ACT OF GOD
An act beyond human control, such as lightning, flood or earthquake.
AIR WAYBILL (AWB)
What does an Air Waybill (AWB) consist of?
Each Air Waybill consists of a set of three originals:
Original 1 (green) - retained by the carrier (airline) - signed by the shipper
Original 2 (red) - forwarded to the consignee - signed by the shipper and the carrier
Original 3 (blue) - returned to the shipper - signed by the shipper and by the carrier on receipt of the goods for transit.
Plus at least 6 copies (unsigned) for the use of forwarders, customs agents, etc.
Who issues the Air Waybill?
Air Waybills are sets of forms, following the IATA standard form. They are issued by the airlines (or their accredited agents), and each one has on it a serial number and the name and the three-digit identification number of the issuing airline. The contracting or main airline can issue an AWB to cover the whole route, even when, as is often the case, parts of the route are flown by other airlines.
What is a "Neutral Air Waybill"?
Many airlines of their agents print their own Air Waybills electronically. They are allotted a set of AWB numbers, and print the serial numbers and identification number on the forms themselves. These "unmarked" AWBs can be called "neutral AWBs".
Who is responsible for filling in the Air Waybill?
The IATA conditions state that the Air Waybill must be filled in by the shipper, or in his name. The AWB may be filled out by the airline, or by an IATA agent, but in the name of the shipper. The shipper is responsible for the fact that the information given on the AWB is correct and complete: this means he is responsible for any damage to property or injury to persons which may be the result of giving false information.
What is the function of the Air Waybill?
An Air Waybill is a documentary proof of the contract of carriage between the shipper and the carrier.
It also serves as:
- a receipt of goods for shipment
- a dispatch note, bearing a list of all accompanying documents, and any special instructions given by the shipper
- a form of invoice for the carriage of the goods
- a document required for Customs clearance
- a delivery receipt
- an insurance certificate (if the insurance cover was arranged through the airline)
An Air Waybill is not a title document, it is not negotiable. An Air Waybill is a document which has the same importance in airfreight as a Bill of Lading has in sea freight, but, whereas a B/L is a title document, (i.e. it is a document which proves ownership of the goods mentioned in the B/L, and which can be bought and sold, entitling the buyer to ownership of the goods), an AWB cannot be used in this way.
The words non-negotiable are printed at the top of the Air Waybill, and must not be changed or removed.
Who makes the rules for international air traffic?
1. The Warsaw Convention / Warsaw Agreement
Each mode of international transport is regulated by a Convention or international agreement whichstandardizes the documentation and the contract of carriage, and rules on legal questions concerning international transport of baggage, goods or persons. The convention which applies to air transport is the Warsaw Convention (as amended at the Hague in 1955). Section 3 (Article 5-11) of this convention deals with the Air Waybill, (definition, number of originals, details which must be included, function of the AWB).
2. IATA = International Air Transport Association
IATA is a non-political international organization, with headquarters in Montreal and in Geneva. Membership is open to all scheduled airlines registered in countries eligible for membership of the ICAO (International Civil Aviation Organization: this organization is a branch of the United Nations). Charter companies are not eligible for membership.
The objects of the IATA are to promote commercial air traffic, and to increase safety, speed and efficiency.
The IATA promotes:
- cooperation between airlines, and exchange of information
- cooperation with international organizations (e.g. ICAO)
- the standardization of rates and conditions
- the reduction of the bureaucratic formalities to a minimum
Approximately 80% of all airlines are members: IATA can find solutions to international problems which no single airline could solve: it can also guarantee international standards. This is an advantage to the airlines, as forms and handling procedures are standardized; and an advantage to the user, who can count on high standards of service from the airlines and their agents and on intentionally agreed fares and cargo rates.
Accredited IATA agencies (air forwarding agencies, travel agencies) have satisfied the standards of the IATA. Any Forwarder who regularly deals with air transport must be accredited as an IATA Cargo Agent.
All in rate
Freight rate which is inclusive of all surcharges and extras.
Arbitrary charge. Charge for added expense, such as transshipment charges or ice-breaking charges.
A notification by carrier of ship's arrival to the consignee, the "Notify Party," and - when applicable - the "Also Notify Party." These parties in interest are listed in blocks 3, 4 and 10, respectively, of the Bill of Lading.
- Entity to whom money is payable.
- The entity for whom a letter of credit is issued.
- The seller and the drawer of a draft.
BILL OF LADING (B/L)
A document that establishes the terms of a contract between a shipper and a transportation company. It serves as a document of title, a contract of carriage and a receipt for goods.
A Bill of Lading serves three separate important functions:
1. A B/L is a receipt for a consignment; the shipping company or carrier certifies that it has received the goods mentioned in the B/L for transportation to the specified destination
2. A B/L is evidence of a contract between shipper and shipping company for the transportation of the goods mentioned in the B/L
3. A B/L is a title deed, i.e., it is a document which proves ownership of the goods mentioned in the B/L
Why is a Bill of Lading so important?
- a B/L is a negotiable document which can be used to transfer the ownership of the goods named on it to somebody else
- it is evidence of the goods being shipped
- it is evidence of the goods being in apparent good condition when shipped
- it is evidence of the contract of carriage, and a promise by the carrier to deliver the goods
- in international trade where payment by Letter of Credit is arranged, a clean B/L is required by the banks before any payments will be made
When is a Combined Transport Bill of Lading, e.g. FBL, needed?
When the document covers transport to and/or from the ports of departure and destination, using another mode of transport.
What alternatives are there to be a Bill of Lading?
If there are no Letter of Credit requirements, which make it necessary to use a B/L, then a non-negotiable document, such as a Sea Waybill or a Certificate of Transport can be used.
What must be stated in a Bill of Lading?
- The name and address of:
- the carrier (the shipping company responsible for transport)
- the shipper (the consignor/sender, or his agent)
- the consignee (the buyer or his agent)
- The name and nationality of the ship
- The port of departure and port of destination (through B/L / FBL: Places of departure and destination)
- Description of the goods
- Instructions for the payment of freight (collect or prepaid)
- Place and date issued
- The number of original B/Ls
How many Originals are normally issued?
2 or 3 originals which are all signed, and a number of copies (unsigned and non-negotiable). The face of the bill will always show how many signed originals have been issued. Each original B/L is negotiable, but when one of them has been presented to the Line as proof of title to the goods, the others become void (i.e. can no longer be used).
Can the shipper (or any person) regain possession of the consignment before the ship reaches its destination?
Yes, but only if all the Original Bills of Lading are presented.
What is a clean Bill of Lading?
A clean Bill of Lading states that the consignment is in apparent good order and condition when shipped on board, and the carrier accepts the liability of delivering the goods in this same condition to the consignee.
Banks will only accept a clean Bill of Lading. (see reference section: letter of indemnity)
If the carrier cannot accept this responsibility for some reason, he will add a clause to the B/L, explaining why not. Then the B/L is a claused or "dirty" B/L, and will not be accepted by a bank. In this case, the carrier does his job, and must be paid, but the exporter will have delivered to him in correct condition.
Examples of such clauses, which may be typed or hand-written are:
two cases short shipped
one drum leaking
What does in apparent good order and condition mean?
It means that the goods show no visible signs of damage, but of course the carrier cannot guarantee the condition of the goods, which he received packed and ready for shipment.
What is the meaning of the statement "Said to contain"?
In this case of containerized cargo, or of palliated consignments or large consignments of conventional cargo, the cargo cannot check the statements made by the shipper as to contents. By using the statement "said to contain" the carrier places responsibility for the correct description of contents on the shipper.
What is a "Stale" Bill of Lading?
Often the expensive result of an error or hold-up in the issuing of a B/L, or of its loss! If the consignment arrives at the final destination, but cannot be handed over to the consignee, because the B/L is not available, then the expression "stale B/L" is used.
The extra charges for storing goods or for parking containers at the port until the documents are sorted out are called demurrage, and can be very expensive.
CFR OR C&F (Cost and Freight)
(...Named Port of Destination)
A Term of Sale where the seller pays the costs and freight necessary to bring the goods to the named port of destination, Terms of Sale but the risk of loss of or damage to the goods, as (continued) well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. The CFR term requires the seller to clear the goods for export.
CIF (Cost, Insurance and Freight)
(...Named Place of Destination)
A Term of Sale where the seller has the same obligations as under the CFR but also has to procure marine insurance against the buyer's risk of loss or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The CIF term requires the seller to clear the goods for export.
If upon delivery, you notice damaged or missing items you should mark the delivery receipts and inventory accordingly. You must then notify the insurer's of your intent to make a claim within 45 days of delivery.
If the claim exceeds U.S.$ 2500 (or the equivalent) it may be necessary to have an insurance surveyor verify the loss and damages. If the claim is less than U.S.$2500 ( or equivalent) in value, then a survey will not be necessary. Depending on the nature of the claim, you will be asked to provide repair estimates, original invoices or estimated replacement quotes. You will also be asked to provide the original insurance certificate, signed delivery receipts, copies of Bills of Lading, the original inventory and copies of any relevant correspondence. You must make your actual claim within 90 days of the initial notice of your intent to make a claim. There is a deductible on the policy of US$50.00 per claim (motor vehicles US$250.00).
Represents a complete record of the transaction between exporter and importer with regard to the goods sold. Also reports the content of the shipment and serves as the basis for all other documents about the shipment.
CONFIRMED LETTER OF CREDIT
A letter of credit, issued by a foreign bank, whose validity has been confirmed by a domestic bank. An exporter with a confirmed letter of credit is assured of payment even if the foreign buyer or the foreign bank defaults.
The bank that adds its confirmation to another bank's (the issuing bank's) letter of credit and promises to pay the beneficiary upon presentation of documents specified in the letter of credit.
A person or company to whom commodities are shipped.
1. A stock of merchandise advanced to a dealer and located at his place of business, but with title remaining in the source of supply.
2. A shipment of goods to a consignee.
A person or company shown on the bill of lading as the shipper.
A truck trailer body that can be detached from the chassis for loading into a vessel, a rail car or stacked in a container depot. Containers may be ventilated, insulated, refrigerated, flat rack, vehicle rack, open top, bulk liquid or equipped with interior devices. A container may be 20 feet, 40 feet, 45 feet, 48 feet or 53 feet in length, 8'0" or 8'6" in width, and 8'6" or 9'6" in height.
A bank that, in its own country, handles the business of a foreign bank.
Government agency charged with enforcing the rules passed to protect the country's import and export revenues.
A penalty charge against shippers or consignees for delaying the carrier's equipment beyond the allowed free time. The free time and demurrage charges are set forth in the charter party or freight tariff.
Through transportation of a container and its contents from consignor to consignee. Also known as House to House. Not necessarily a through rate.
An order issued by a seller against a purchaser; directs payment, usually through an intermediary bank. Typical bank drafts are negotiable instruments and are similar in many ways to checks on checking accounts in a bank.
Shipment of goods to a foreign country.
FOB (Free On Board)
(...Named Port of Shipment)
An International Term of Sale that means the seller fulfills his or her obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks to loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.
FCL OR FULL CONTAINER LOAD
Sole use of a steamship metal container. Normally come in 20ft or 40ft lengths. Can be loaded and sealed at or near your residence. (subject to access) and after Customs clearance at destination may be delivered direct to your residence for unloading (subject to local Customs / Agricultural laws).
A person whose business is to act as an agent on behalf of the shipper. A freight forwarder frequently makes the booking reservation.
GROUPAGE OR CONSOLIDATED
For use with smaller shipments. Freight delivers to a warehouse for consolidation with other freight moving to the same destination. The container is dispatched to the port as soon as there are enough consignments to fill the container. A very cost effective way to ship small to medium size shipments but will take longer than LCL shipments.
To receive goods from a foreign country.
A document required and issued by some national governments authorizing the importation of goods.
An itemized list of goods shipped to a buyer, stating quantities, prices, shipping charges, etc.
IRREVOCABLE LETTER OF CREDIT
Letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee and which cannot be revoked without joint agreement of both the buyer and the seller.
LCL OR LESS THAN CONTAINER LOAD
For use with smaller shipments, boxes, crates etc. The shipment is then delivered to a forwarder's or shipping line's consolidation point to be shipped on a specific vessel.
LETTER OF CREDIT (LC)
A document, issued by a bank per instructions by a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time.
Broadly, insurance covering loss or damage of goods at sea. Marine insurance typically compensates the owner of merchandise for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier.
PRO FORMA INVOICE
An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and specifications (weight, size, etc.)
An offer to sell goods at a stated price and under stated terms.
A shortening of the term, "Roll On/Roll Off." A method of ocean cargo service using a vessel with ramps which allows wheeled vehicles to be loaded and discharged without cranes.
Ships specially designed to carry wheeled containers or trailers using interior ramps.
The person or company who is usually the supplier or owner of commodities shipped. Also called Consignor. A classification, storage or switching area.
VALUED INVENTORY LIST
Enclosed in the Insurance Proposal Form is a valued inventory list. Simply list the number of each particular item to be included in your shipment and declare the full replacement value at destination. The more specific you can be, then the greater the likelihood of a swift and full settlement in the event of a claim.
Once you have prepared your fully valued inventory, you should add all the values together and transfer to the "total" column on the application form. You can insure your goods in any currency you choose, but you must declare the currency on the form, otherwise it assumes that the values are in United States Dollars.
You also have the option to insure the cost of your moving charges. If the shipment is lost, then the insurance company would reimburse your moving expenses. To benefit from this protection simply itemize the actual moving charges on your valued inventory, then add the value of your goods to the shipping costs to calculate the " Grand Total."
As a rough guideline you should consider the difference between the cost of living in different countries. If, for example, the cost of living is 20% higher at your destination than in a country you're shipping from, then simply add 20% to the valuation of your shipment.