Documents Used In Foreign Trade

Transactions - Shipping
Post: Gaurav Akrani. Date: 3/02/2011. Comment (1). Label: Economics.

The Shipping Documents Used In Foreign Trade

Following is a list of various types of documents used in foreign trade transcations. The
documents are related to either export trade or import trade.

Image Credits Whitecat Singapore.

1. Indent

Indent is an order placed by the importers to the exports. It contains the essential information
regarding the goods to be imported i.e. quality, quantity, packing, packaging, mode of payment,
insurance, price of good, etc.

When the price at which the goods are to be purchased by the importer is clearly stated in an
order (Indent), with no options to the exporter, then it called "Closed Indent".
If the prices are not mentioned by the importer and it is left to the discretion of the exporter, then
it is known as "Open Indent".
Indent can be sent by the importer directly to the exporter or it may be sent through the indent
agencies.

2. Mate's Receipt

Mate's Receipt is a receipt issued by Captain / Master / Mate of the ship.

The Mate of the ship after receiving the goods on the board and after inspection of the goods
issues this receipt.
The loading of the goods on the ship is possible only after presentation of 'shipping order'. Mate's
receipt contains details regarding name of ship, date on which the goods are loaded, description
of goods, numbers and marks on the packages, conditions of cargo, etc. This receipt is issued to
the exporter who has to present the mate's receipt in the office of shipping company by which he
will get bill of lading. Mate Receipt may be clean or qualified. It is qualified if there is some
defect in the cargo loaded on the ship, in such case the captain makes adverse remark on the
receipt. In case of clean receipt, the cargo in good condition and the adverse remark is not
mentioned. The bill of lading is always prepared on the basis of mate's receipt. In short mate's
receipt is an acknowledgement of the receipt of goods on board of the ship.

3. Bill of Lading

Bill of lading is one important shipping document necessary and useful in export-import trade
transactions. It is a document issued by the shipping company after the shipment of goods. In
simple, Bill of lading is a contract between the exporter or the shipper and the shipping company
for the carriage of goods from the port of loading to the port of destination.
Bill of lading is a document to title of goods and is transferable by endorsement and delivery.
Hence, it is a semi-negotiable instrument. The bill of lading is prepared on the basis of mate's
receipt. The importer has to produce this receipt for securing the deliver of goods.
The bill of lading contains following information :-

1. Name and address of the exporter and the shipper.

2. Name and address of shipping company.
3. Name and address of importer or agent.
4. Quantity, weight and value of goods sent.
5. Place of loading and port of destination.
6. Date of loading of goods on the ship.
7. Mark description and number of packages.
8. Port at which the goods are to be discharged.
9. Freight paid or to be paid.
10. Signature of the issuing authority with date.
11. Any other relevant details.
Important functions of bill of lading are as follows :1. It is useful to the importer for obtaining delivery of goods from the shipping company
and port authorities.
2. It is a document of title to goods. A possessor of the bill of lading is entitled to take the
delivery of goods.
3. It is a semi negotiable document and it is transferable by endorsement and delivery.
4. It is a legal document including the contract for carrying goods.
5. It is a proof of the fact that the goods are handed over to the shipping company for
transportation to the port of destination.

4. Letter of Credit

Letter of Credit is an important document in international trade. It is for safety and security of the
exporter as regards payment for the goods to be exported.

Letter of Credit can be defined as "an undertaking by importer's bank stating that payment will
be made to the exporter if the required documents are presented to the bank".
Before executing an export order, the exporter of goods desires to have adequate proof regarding
the credit worthiness of the importer. It is issued by the bank (in the importer's country) in favour
of the foreign supplier, it contains a guarantee or an undertaking by one bank that the bill of
exchange drawn on the importer will be honoured on presentation to the extent of the amount
specified in the letter. Letter of Credit may also be issued on the strength of the business of the
importer with the bank.
The Letter of Credit also contains certain conditions such as date of bill, date for shipment,
shipment by approved vessels with approved flags packing, etc.
The advantages of the letter of credit to the exporters are many such as :1. Exporter gets safety and security of payment for the goods exported.
2. The exporter gets discounting facility from the bank.
3. It enables the exporter to take more initiative in promoting exports and earns foreign
exchange for his country.

5. Certificate of Origin

Certificate of Origin is an important shipping document sent by the exporter alongwith the other
document to the importer. This document is showing or giving the information of the fact that the
goods which are exported are manufactured in a particular country i.e. the document certifies that
certain goods are manufactured within a specific country only. It is a proof about the origin of
goods exported. This certificate is generally issued by the "Chamber of Commerce" or "Export
Promotion Council" or "Trade Association" or "Such Other recognised body" on behalf of
Government. It is issued to the exporter. It is very useful document to save custom/import duties.
As a general rule the rate of import duty is not same for imports from all countries. The goods
imported from some other countries are subject to less import duty. Thus, to get the benefit of
saving import duty the importer can use the Certificate of Origin, because the government of
importing country grants concession in import duty to the importer on the basis of certificate of
origin.

6. Consular Invoice

Consular Invoice is an important document used in foreign trade. It is issued by the Trade
consulate of the importing country stationed in the exporters country. Consular is a government
officer having office in other countries. This document is also obtained by the exporter and is
sent to the importer along with other shipping documents. This invoice is also useful for importer
at the time of payment of importy duty. For obtaining document from the consular the exporter
has to pay the prescribed fees. This document contains information about goods and the value of
goods.
Sometimes, the custom authorities desire to open the packages and scrutinize the goods for the
purpose of calculating custom duty. Due to which there is delay in clearing the goods from dock
or port. To avoid this, one copy is sent to the custom authorities of the importing country, second
copy is retained by the consulate office for reference and the third copy is given to the exporter
which is forwarded by exporter to the importer with other documents.

7. Bill of Entry

Bill of entry is a document required in case of import of goods. It is like shipping bill in case of
exports. A Bill of Entry is the document testifying the fact that goods of the stated value and
description in specified quantity are entering into the country from abroad. The customs office
supplies this form which is prepared in triplicate. Three different colours are used to prepare bill
of entry. One copy is retained by custom department, other is retained by port trust and the third
is kept by the importer.
The bill of entry is divided into three classes :1. Entry for duty free goods.
2. Entry of goods which are meant for consumption at home.
3. Entry for goods to be re-exported.
In India, all these entries are on the same form.
The contents of Bill of Entry are :1. Name and address of importer.
2. Import License number of importer.
3. Name and address of exporter.
4. Name of port where goods are to be cleared.

5. Value of goods.
6. Description of goods.
7. Rate and amount of import duty payable.
8. Other relevant details.

8. Dock's Receipt

Dock authorities issue dock's receipt once the goods are stored in the sheds at the docks. The
Clearing and Forwarding agent clears the documents from the customs authorities. Then he
approaches the Port Trust authorities and obtains the Carting Order. The Carting Order is the
permission to cart the goods inside the docks. The goods are then brought inside the docks. The
goods may be loaded immediately on the ship. Many-a-times immediate loading on ship is not
possible. The goods are then stored in sheds at the port or docks. The dock authorities then issues
the dock receipt as an acknowledgement for goods received in sheds.

9. Commercial Invoice

Commercial invoice is a basic export document. It contains all the information, which is required
for preparation of all other documents. It is the exporter's bill for goods which the importer has to
pay.
Commercial invoice contains the following information :1. Name and address of exporter and importer.
2. Description of goods (weight, quality, quantity, rate, etc.)
3. Value of goods after discount, if any.
4. Net amount payable by the importer.
5. Terms and Conditions of sale
Other details of shipment to be included are :-

1. Name of ship on which goods are loaded.

2. Letter of Credit Number.
3. License number of exporter.
4. Bill of lading number.
5. Packaging Specifications.
6. Shipping terms and Conditions, etc