Topic 5 Logistics and Transportation Docs

1
TOPIC FIVE
LOGISTICS AND TRANSPORT DOCUMENTATION
DOCUMENTS USED IN LOGISTICS AND TRANSPORTATION

International Transport Documents
Transport documents not only facilitate the movement of goods but are also, in certain
cases, “documents of title”, i.e. whoever holds the document is entitled to possession of
the goods.
They are also usually stipulated in Documentary Letters of Credit. This means that the
documents are important for not only transportation but also provide for the ability to
control the goods after dispatch and control over payment timelines.
BILL OF LADING
The bill of lading (BOL) works as a receipt of freight services, a contract between a freight
carrier and shipper and a document of title. The bill of lading is a legally binding
document providing the driver and the carrier all the details needed to process the
freight shipment and invoice it correctly.
Thus, a bill of lading in shipping is a record of the traded goods which have been
received on board. It is a document that establishes an agreement between a
shipper and a transportation company for the transportation of goods.
Transportation Company (carrier) issues these records to the shipper.
A bill of lading indicates a particular carrier through which the goods have been placed
to their final destination and the conditions for transporting the shipment to its final
destination. Land, ocean and air are the means used for bills of lading.
What's in a freight bill of lading?

 Names and addresses: The full names and addresses of both the shipper and
receiver (consignee) should be legible and easy to locate on the document.
 Purchase orders or special reference numbers: These numbers may be
important to your business or a necessary reference in order for freight to be
released for pickup or accepted at delivery.
 Special instructions: Here is where you will note instructions for the carrier that
are not extra service requests like lift gate or delivery notification.
 Date: This is the pickup day, and it may be needed as a reference to track your
freight or when you reconcile shipping invoices.
 Description of items: Shippers should note the number of shipping units, the
dimensions and weight, as well as information about the material and its
makeup.
Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Social Media Accounts: Insta: kps_tanzania Twitter: kps_tanzania Facebook: Kp professional services-KPS
2
 Packaging type: Note whether you are using cartons, crates, pallets and/or
drums when shipping.
 NMFC freight class: Freight classes can impact the cost of your shipment.
Freight shipments are broken down into 18 classes based on weight, dimensions,
density, and storage capability, ease of handling, value and liability.
 Department of Transportation hazardous material designation: Hazardous
shipments must be clearly cited and special rules and requirements apply when
shipping.
AIRWAY BILL
An air waybill (AWB) is a legally binding transport document issued by a carrier or agent
that provides details about the goods being shipped. It provides detailed information on
the contents of the shipment, the sender and recipient, terms and conditions, and other
information.
The AWB is a standard form that is distributed by the International Air Transport
Association (IATA).
Consider the document as a receipt for the sender or consignor. An air waybill is also
referred to as a consignment note or dispatch note. The AWB is non-negotiable and acts
as evidence of the contract of carriage from airport to airport. There are three parties
involved in an air waybill – the sender, the airline, and the recipient.
Before goods are shipped, an air waybill must be filled out. Once the air waybill is signed
by the shipper and carrier involved, it becomes an enforceable contract. Because it is a
legally-binding document between parties, the details must be filled out clearly and
accurately.
 An air waybill (AWB) is a legally binding transport document issued by a carrier
or agent that provides details about the goods being shipped.
 It provides detailed information on the contents of the shipment, the sender and
recipient, terms and conditions, and much more.
 The AWB used to be a one-page physical paper document, but the e-AWB is
considered the standard nowadays and is filled out and stored electronically.
Functions of the AWB
 The air waybill serves many functions, including:
 Evidence of receipt of goods by an airline
 Contact information among all parties
 Contract of carriage between shipper and carrier
 Freight bill
 Customs declaration
 Description of the goods
 Guide for handling and delivering goods
 Tracking of shipment
DIFFERENCE BTN AIRWAY BILL AND BOL

3
SEAWAY BILL
A seaway bill is a receipt of goods issued by the ocean carrier to the customer (also
called the consignor or shipper). It is a contract by which the ocean carrier undertakes
to transport the customer's cargo in its vessel or vessels, from one point to the other.
Seaway bills are consignment notes for sea freight. They act as a receipt for the goods
“in apparent good order and condition” and are also evidence of a contract between the
exporter and the carrier(s). The carrier completes the form. Unlike Bills of Lading, Sea
Waybills are not documents of title, so that the holder does not necessarily have
ownership of the goods. They are increasingly used instead of Bills of Lading: they are
simpler, which helps, e.g. when only short sea crossings are involved, or for regular
shipments to established customers whose creditworthiness is not in doubt.
COURIER BILL
Courier Waybills are usually much shorter and simpler than Air or Sea Waybills. They
do not conform to a particular standard and are issued by individual couriers to meet
their own purposes.
A courier service invoice usually lists the services you've provided, the total amount
owed, clear payment instructions and more. Including all of this information ensures
that your client is well-informed and able to make the payment on time.
STANDARD SHIPPING NOTES
Standard shipping notes are completed by the exporter or his representative to arrange
shipments of non-hazardous goods. (A standard shipping note cannot be used for
shipments of hazardous or dangerous goods). The notes act as instructions for the
shipping line, and are delivered to the receiving authority at the port or freight terminal
either with, or in advance of, the goods.
For the export of goods that carry a UN hazard code, a Dangerous Goods Note DGN
must always be used in place of a Standard Shipping Note. In the case of uncertainty
about the hazard rating of your goods, advice could be sought from a reputable freight
broker. Note that UN hazardous goods codes differ from Control of Substances
Hazardous to Health (COSHH) ratings.

4
CERTIFICATE OF ORIGIN (CO)
A certificate of origin is a document that verifies a product's country of origin. It states

where the product was produced, manufactured or processed. It's usually required by
a country's customs authority as part of the clearance process when importing.
Certain destination countries require Certificates of Origin to prove the country of

origin of the goods. Many countries give a preferential tariff for products imported from
certain other countries. Conversely, countries that boycott goods from certain other
countries will seek an undertaking that goods do not break their import restrictions.
PROCEDURES INVOLVED IN CLEARANCE OF GOODS FROM CUSTOMS

CUSTOMS CLEARANCE PROCEDURE IN TANZANIA
Import means goods and services brought to Tanzania from a foreign country.
Import procedures have to be followed in order to clear goods from Customs control as
per the East Africa Community Customs Management Act (EACCMA) 2004.
Imports to Tanzania are subjected to different stages whereby the importer is advised to
make declaration through his appointed Clearing and Forwarding Agent by lodging
documents at least seven days before arrival of the vessel.
Importation procedures to Tanzania
 The importer is required to appoint a Licensed Clearing and Forwarding Agent
(CFA) to clear goods
 List of Clearing and Forwarding Agents
 Documentation process is done online through Tanzania Customs Integrated

System (TANCIS) and can be completed before arrival of the goods
 Customs agents/importers are urged to complete a Declaration and self-

assessment through Tanzania Customs Integrated System (TANCIS) and attach
along with other relevant import/ supporting documents at least 7 days prior to
the arrival of the goods
Import documents include:
 Final Invoice
 Agent’s Authorization Letter from the importer
 Import permits from TFDA, TBS etc.
 Exemption documents (If applicable)
 Packing List
 Transport documents i.e. Bill of Lading/Airway Bill/Road Consignment note

5
Note
TRA rejects illegible and incomplete with insufficient descriptions through Integrated
Query System (IQS) which is available in TANCIS.
IMPLEMENTATION OF AUTHORIZED ECONOMIC OPERATOR (AEO) PROGRAM

INTRODUCTION
 Tanzania Revenue Authority wishes to inform the business community that in a

bid to promote faster clearance of goods through Customs within the region, the
Authorized Economic Operator (AEO) program was introduced to enable
compliant traders to benefit from a special treatment at the regional level
throughout the cargo clearance process. Establishment of AEO program is meant
to enhance trade facilitation and promote partnership between Customs and
business as per World Customs Organization’s SAFE Framework of standards.
AEO is defined as an individual, a business entity or a company that is involved in

international trade and is duly authorized by the Commissioner for Customs to transact
business with Customs under special arrangements.
APPLICANT TO AEO PROGRAM
Any trader involved in the international supply chain and carries out Customs related
activity in the East Africa Community (EAC) can apply for the AEO status. An applicant
will be assessed in line with the respective nature of business, and AEO status will be
related to the specific trader’s categories that the trader has qualified for. The categories
are:
1) Importers
2) Exporters
3) Clearing and Forwarding Agents
4) Transporters
5) Manufacturers (engaged in import and export), and
6) Bonded Warehouse Operators
REGIONAL AEO BENEFITS
The AEO shall enjoy benefits applicable for the category/ categories that they are
authorized for, throughout the EAC countries. The Regional AEO shall be uniquely
identified throughout the clearance process. The benefits include:
Importer/ Exporter/ Manufacturer

6
Expedited processing of customs declarations (entries). All AEO declarations will be

given priority throughout the whole clearance process. This will include:
1. Automatic processing of declaration, access to log in
2. No physical or document examination except for random or risk based
interventions/exceptional cases
3. Electronic Cargo Tracking System (ECTS) requirement waiver where
applicable
4. Expedited payment of refund claims
5. Reduced Customs security wherever applicable
Clearing and Forwarding Agents
1. Guaranteed renewal of Customs agent’s license

2. Priority to participate in Customs initiatives
3. Priority treatment in cargo clearance chain
4. Waiver of movement bond requirements for AEO
NB: This benefit shall not absolve the Clearing Agent from any liability in the event that
the consignment is lost or short-landed.
Transporters
1. Guaranteed renewal of transit goods license and any other licenses issued
by Customs.
2. Exemption from the mandatory use of Customs Electronic Cargo Tracking
System (ECTS).
3. Priority clearance at the borders.
Warehouse Operators
1. Self-management of bonded warehouse
2. Guaranteed renewal of Warehouse Operator’s license
3. Reduced Customs security wherever applicable
ELIGIBILITY REQUIREMENTS
To be eligible for authorization, the Commissioner of Customs may require to verify any
statement in an application. The applicant should be able to provide information
pertaining to all of the following or any other:
1) Company details
Company details should indicate company profiles, contact persons, nature of business
and employee profile.
2) Record of Compliance

7
Applicant should not have contravened any laws, rules and regulations pertaining to
Customs, Domestic Taxes and all relevant Government Agencies for a period of 3 years
prior to application for authorization.
3) Maintenance of records
The applicant shall maintain timely, accurate, complete and verifiable records relating
to its customs transactions. The applicant must demonstrate that the computer
systems, the organizational internal operational procedures and processes will ensure
compliance
4) Financial Solvency
The applicant must demonstrate adequate financial standing. The applicant shall be
deemed to have met the conditions of solvency if it can be proven for the past 3 years.
The applicant must have fulfilled his obligations regarding payments of Customs duties,
taxes and other charges for last three years.
5) Security and safety standards
The applicant must demonstrate a high level of awareness on security and established
safety measures, internally and in its business activities with clients. Understanding
and implementation of safety and security controls must extend to the applicants
personnel.
6) Volume of business
The volume of the applicant’s business will be used to gauge eligibility (Risk assessment)
for authorization.
7) Nature of Goods Traded
The applicant shall be assessed as to the nature and flow of goods traded in.
8) Trade Partners
The applicant shall have to prove to the satisfaction of Customs that its trade partners
demonstrate high level of awareness of security and established safety measures.
PRE – ARRIVAL DECLARATION PROCEDURE

What is Pre – Arrival Declaration?
Pre – Arrival Declaration (PAD) is the system used by Customs and Excise department
to process importation documents during clearance of goods. However the initial process

8
starts with the importer through his/her appointed Clearing and Forwarding Agent.
(CFA)
Note: The following regimes do not undergo Pre – Arrival Declaration Process
 Diplomatic cargos
 Qualified returning residents Baggage Declaration forms
 Post Parcel and courier services
 ZNZ cases
 Temporary Importation
 EPZD
 Export declarations
 Petroleum products
 Goods cleared under Provision declarations
 Transit declarations
The importer hands over the importation documents either manually or electronically
to the CFA who uploads them in the PAD system and lodges the same to TRA; whereby
a reference number is automatically generated; these include:
 Final Invoice
 Declaration Form C 36
 Agent’s Authorization Letter
 Import permits i.e. TFDA, TBS, chemical permit etc.
 Exemption documents
 Packing List
 Transport documents i.e. Bill of Lading/Airway Bill/Road Consignment
 TIN Certificate (importer)
Note: Legible copies of Pro-forma invoices are acceptable for verification and registration
purposes only but not for issuance of any clearance report (P-PAD, A-PAD etc.)
TRA will verify the submitted PAD application for completeness, legality and confirm
acceptance by registering the number generated upon submission by the agent. An
automatic email notification is sent to the CFA.
 TRA performs Customs Tariff Classification and Valuation and issues a Pre-
Assessed PAD (P-PAD) for PADs registered with complete set of final documents.
PAD registered with incomplete set of final documents are held pending for
submission of same.

9
 TRA issues a Pre-Assessed PAD (P-PAD) which is available for download by CFAs
from the TRA PAD online for review.
 The agent is supposed to pass over the P- PAD to the importer to go through and
check for correctness for accepting the P-PAD or reject the same through IQS
 If P-PAD is accepted by the importer; CFA will apply for an Assessed PAD (A-PAD)
via www.trapad.co.tz along with scanned documents as applicable, such as
permits and/or certificates issued by Other Governments Departments (TBS,
Government Chemist, TDFA etc.) and supporting documentation to justify tax
exemptions, if any.
 TRA verifies the application and issues an Assessed PAD (A-PAD) available for
download by CFA’s from this website. An automatic email notification is sent to
the CFA.
 The A-PAD EDI data becomes available for download by CFAs from this website
for upload into On the basis of the A-PAD issued the CFA will assess
Duties and Taxes through TANZANIA SINGLE ADMINISTRATIVE
DOCUMENT(TANSAD)
 The agent will hand over TANSAD to the importer ready for payment of duties
and taxes to the Bank.
 TRA perform the selectivity process by subjecting the TANSAD to Computerized

Risk Management System (CMRS); basing on the results.
INTERNATIONAL COMMERCIAL TERMS, THEIR USES AND ROLES OF EACH

PLAYER
INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)
These were established by in order to regulate international trade so as to avoid
confusion as who has to take risk where or at which point and who bears the cost of
insurance,freight, loading, unloading, wharfage charges etc, they are 11 after DAF, DES,
DEQ, DDU being eliminated in 2010, as a result they were replaced by DAT and DAP.
EXW: Ex Works
Named Place Required: Place of Delivery, Usually Seller’s
EXW, short for “Ex Works,” places most responsibility with the buyer. The seller is
expected to have the goods ready for collection at the agreed place of delivery (commonly
the seller’s factory, mill, plant or warehouse). The buyer is accountable for all
subsequent costs and risk, including all export procedures, starting with loading the
goods onto a transport vehicle at the seller’s premises.

10
In practice, it is not uncommon for a seller to load goods onto the vehicle instead, at the
risk and cost of the buyer—or even free of charge. However, such an agreement must
be made within the contract of sales.
The buyer must carry out all tasks of export & import clearance. Carriage & insurance is
to be arranged by the buyer.
If the buyer cannot handle the export processes and procedures, use FCA instead of
EXW shipping.
Applies to:
NOTE: The buyer covers all costs from seller’s door to final destination.
EXW Incoterm - Obligations
Seller’s Obligations
o Goods, commercial invoice and documentation
o Place goods at buyer’s disposal at the named place on the agreed upon date
o Notice to the buyer to enable delivery
o Export packaging and marking
Buyer’s Obligations
o Pay the price of the goods as stated in sales contract

o Provide seller with evidence of having taken delivery
o Loading at seller’s location (unless otherwise agreed upon)
o Export licenses and customs formalities
o Pre-carriage to terminal
o Loading charges
o Main carriage
o Discharge and onward carriage
o Import formalities and duties

11
o Cost of pre-shipment inspection
FCA: Free Carrier

Named Place Requirement: Place of Delivery
Under the shipping terms for the FCA Incoterms (short for “Free Carrier”), the seller is
responsible for export clearance and delivery of goods to the carrier at the named place
of delivery.
Unless otherwise agreed upon, the seller is only responsible for loading the goods if the
seller’s place of business is the named place of delivery.
A carrier is any person or company who undertakes the carriage, such as a shipping
line, airline, trucking company, railway or freight forwarder.
Applies to:
NOTE: Buyer must clearly specify the precise point of delivery in the contract of sales
or carriage.
FCA Shipping Incoterm Obligations
o Delivery to named place of delivery

12
o Proof of delivery
o Payment for goods at price agreed upon in sales contract
o Unloading from arriving means of transportation
o Loading charges
o Main carriage
o Cost of pre-shipment inspection (for import clearance)
FAS: Free Alongside Ship

Named Place Requirement: Port of Shipment
In the Incoterms rules for FAS (short for “Free Alongside Ship”), the seller clears goods
for export and places them alongside the vessel at the named port of departure. The
named port of departure location can be a loading dock or a barge, but not a container
terminal.
The buyer is responsible for loading the freight onto the vessel, as well as handling
local carriage, discharge, import formalities and duties and onward carriage to the
final destination.
FAS only applies to ocean or inland waterway transport. It is popular with bulk cargo,
such as oil or grain.
For containerized shipments delivered only to a terminal, use FCA instead.
Applies to: Sea and inland waterway only

Free Alongside Ship Incoterm Obligations

13
o Delivery alongside vessel at port of shipment
o Proof of delivery
o Pay the price of the goods as provided in the sales contract
o Loading charges
o Main carriage
Free on Board
Named Place Requirement: Port of Shipment
Under the terms of FOB (short for “Free on Board”), the seller clears the goods for export
and ensures they are delivered to and loaded onto the vessel for transport at the named
port of departure.
The buyer takes over risk and costs, including import clearance and duties, as soon as
the goods are loaded onto the transport vessel at the port of departure.
FOB only applies to ocean or inland waterway transport. As such, the named place is
always a port. It does not apply if the main carriage is via air, ground or rail.
This term is commonly used for bulk cargo (such as oil or grain) or freight from Asia.

14

NOTE: Seller pays all costs up to main carriage, then buyer takes over all cost
responsibility.
FOB Incoterm Obligations
o Pre-carriage and delivery
o Loading charges
o Delivery onboard vessel at named port of shipment
o Proof of delivery
o Payment for goods as specified in sales contract

o Main carriage
CFR: Cost and Freight

Named Place Requirement: Port of Destination

15
Under CFR terms (short for “Cost and Freight”), the seller is required to clear the goods
for export, deliver them onboard the ship at the port of departure, and pay for transport
of the goods to the named port of destination.
The risk passes from seller to buyer when the seller delivers the goods onboard the ship.
The buyer is responsible for paying all additional transport costs from the port of
destination, including import clearance and duties.
Only use CFR for ocean or inland waterway transport.
If the freight is containerized and to be delivered to a terminal only, use CPT instead.

NOTE: Risk and cost transfer from seller to buyer at different points.
CFR Shipping | Incoterms Obligations
o Loading charges
o Delivery at named port of destination
o Proof of delivery

16
o Risk starting with onboard delivery
CIF: Cost, Insurance and Freight

Named Place Requirement: Port of Destination
Under CIF (short for “Cost, Insurance and Freight”), the seller delivers the goods, cleared
for export, onboard the vessel at the port of shipment, pays for the transport of the goods
to the port of destination, and also obtains and pays for minimum insurance coverage
on the goods through their journey to the named port of destination.
The buyer assumes all risk once the goods are on board the vessel for the main carriage;
however, they don’t take on any costs until the freight arrives at the named port of
destination.
CIF applies to ocean or inland waterway transport only. It is commonly used for bulk
cargo, oversized or overweight shipments.
If the freight is containerized and delivered only to the terminal, use CIP instead. If using
CIP instead, insurance coverage defaults to all-risk; however, the parties may negotiate
a lower coverage requirement.

17
NOTE: The seller is obligated to secure insurance for the buyer, but only for minimum
coverage.
CIF Incoterm Obligations
o Loading charges
o Delivery at named port of destination
o Proof of delivery
o Minimum insurance coverage
o Cost of import clearance pre-shipment inspection
CPT: Carriage Paid To

Named Place Requirement: Place of Destination
Carriage Paid To (CPT) rules require the seller to clear the goods and arrange carriage
(by one or more transport modes) to the named place of destination. The seller does not
need to obtain or pay for insurance.
A carrier is any person or company who undertakes the carriage of the goods, such as
a shipping line, airline, trucking company, railway or freight forwarder.
In multimodal shipments, the place of shipment is the first carrier used.
Under CPT rules, the seller’s risk ends, and the buyer’s risk begins, when the first carrier
receives the goods from the seller. However, the buyer is only responsible for additional
costs after the goods arrive at the final destination.

18
CPT is often used in air freight, containerized ocean freight, small parcel shipments
and “Ro-Ro” shipments of motor vehicles.
Applies to:
NOTE: The transfer of risk and cost from seller to buyer occur at different points.
CPT Incoterm Obligations
o Loading charges
o Cost of delivery at named place of destination
o Proof of delivery

CIP: Carriage and Insurance Paid To

19
Named Place Requirement: Place of Destination
Applies to:
In Carriage and Insurance Paid To (CIP), the seller assumes all risk until the goods are
delivered to the first carrier at the place of shipment—not the place of destination. Once
the goods are delivered to the first carrier, the buyer is responsible for all risks.
However, the seller is responsible for the cost of carriage as well as all-risk insurance
coverage until the freight reaches the named place of destination.
A carrier is any person or company who undertakes the carriage of goods, such as a
shipping line, airline, trucking company, railway or freight forwarder.
In multimodal shipments, the place of shipment is the first carrier used.
NOTE: Same as CPT, but the seller is obligated to secure all-risk insurance coverage.
CIP Incoterm Obligations
o Loading charges
o Cost of delivery at named place of destination
o Proof of delivery
o All-risk insurance coverage

20

DPU: Delivered at Place Unloaded

Named Place Required: Place of Destination, Where Seller Unloads
Applies to:
Delivered at Place Unloaded (DPU) (formerly referred to as DAT for “Delivered at Terminal”)
requires the seller to deliver the goods at the disposal of the buyer after they’ve been
unloaded from the arriving means of transport.
DPU is the only Incoterms rule that requires the seller to unload goods at the place of
destination.
DPU can apply to any—and more than one—mode of transport. The buyer and seller
should specify and agree upon a named place of destination.
DPU requires the seller to clear goods for export, where applicable, without any
obligation to clear the goods for import, pay import duty or carry out import customs
formalities.
NOTE: Specify the precise point of destination to unload and deliver goods.
DPU Incoterm Obligations

21

o Loading charges
o Main carriage
o Delivery at named place of destination
o Unloading charges
o Proof of delivery
o Onward carriage and delivery to buyer (depending upon named place)
DAP: Delivered at Place

Named Place Required: Place of Destination
Applies to:
Under the Delivered At Place (DAP) Incoterms rules, the seller is responsible for delivery
of the goods, ready for unloading, at the named place of destination.
The seller assumes all risks involved up to unloading. Unloading is at the buyer’s risk and
cost.

22
DAP can apply to any—and more than one—mode of transport. The buyer and seller
should specify and agree upon the precise unloading spot at the named place of
destination.
Unless otherwise agreed between both parties, the seller cannot request remuneration
for unloading costs incurred under the contract of carriage.
DAP rules require the seller to clear goods for export, where applicable, without any
obligation to clear the goods for import, pay import duty or carry out import customs
formalities.
DAP Shipping Obligations
o Loading charges
o Main carriage
o Delivery to named place of destination
o Proof of delivery
o Unloading from arriving means of transportation
o Onward carriage and delivery to buyer (depending on named place)
DDP: Delivered Duty Paid

Named Place Required: Place of Destination

23
Applies to:
Under the Delivered Duty Paid (DDP) Incoterm rules, the seller assumes all
responsibilities and costs for delivering the goods to the named place of destination. The
seller must pay both export and import formalities, fees, duties and taxes.
The seller is not obligated to insure the goods for pre-carriage or main carriage.
The buyer is free of any risk or cost until the goods are unloaded from the vehicle at the
named place of destination, usually the buyer’s place of business.
DDP is the only Incoterms rule that places responsibility for import clearance and
payment of taxes and/or import duty on the seller.
These last requirements can be problematic for the seller. In countries with complex or
bureaucratic import clearance procedures a seller with local knowledge may prefer to
take on these responsibilities.
NOTE: The seller is responsible for all costs and risk until the goods are unloaded.
DDP Incoterm Obligations
o Loading charges
o Main carriage
o Proof of delivery

24
o Cost of all inspections

o Assist seller in obtaining any documents or information necessary for export or
import clearance formalities
OTHER INCOTERMS
DAF – Delivered at Frontier
Title, risk and responsibility for import clearance pass to buyer when delivered to named
border point by seller. Used for any mode of transportation.
DDU – Delivered Duty Unpaid
Title, risk and responsibility of import clearance pass to buyer when seller delivers goods
to named destination point. Used for any mode of transportation. Buyer is obligated for
import clearance.
Seller fulfills his obligation when goods have been made available at the named place in
the country of importation
DES – Delivered Ex Ship
Titles, risk, responsibility for vessel discharge and import clearance pass to buyer when
seller delivers goods on board the ship to destination port. Used for sea or inland
waterway transportation.
DEQ – Delivered Ex Quay (Duty Paid)

Title and risk pass to buyer when delivered on board the ship at the destination point
by the seller who delivers goods on dock at destination point cleared for import. Used
for sea or inland waterway transportation.
INTERNATIONAL PAYMENTS
1. Cash in Advance
The seller requires receipt of payment from the buyer before shipping goods. Payment
may be made by wire-fund transfer from the buyer’s bank to the seller’s bank, or by
company check, credit card, or other agreed means.
Receiving payment by cash in advance of the shipment might seem ideal. In this
situation, the exporter is relieved of collection problems and has immediate use of the
money. A wire transfer is commonly used and has the advantage of being almost

25
immediate. Payment by cheque may result in a collection delay of up to six weeks.

Therefore, this method may defeat the original intention of receiving payment before
shipment. .
For the buyer, however, advance payment tends to create cash flow problems, as well
as increase risks. Furthermore, cash in advance is not as common in most of the world.
Buyers are often concerned that the goods may not be sent if payment is made in
advance. Exporters that insist on this method of payment as their sole method of doing
business may find themselves losing out to competitors who offer more flexible payment
terms.
T/T payment in advance
T/T means telegraphic transfer, or simply wire transfer. It's the simplest and easiest
payment method to use.
T/T payment in advance is usually used when the sample and small quantity
shipments are transported by air. The reason why, is that the documents like air
waybill, commercial invoice and packing list will be sent to you along with the shipment
by the same plane. As soon as the shipment arrives, you can clear the customs and
pick up the goods with the documents. As it's acknowledged, T/T payment in advance
presents risk to the importer if the supplier is not an honest one.
2. Open Account
Open Account
A seller ships the goods and all the necessary shipping and commercial documents
directly to a buyer. This buyer agrees to pay the seller’s invoice at a future date as per
their agreement.
In a foreign transaction, an open account can be a convenient method of payment if the

buyer is well established, has a long and favorable payment record, or has been
thoroughly checked for creditworthiness. With an open account, the exporter simply
bills the customer, who is expected to pay under agreed terms at a future date. Some
of the largest firms abroad make purchases only on open account. There are several
ways to reduce credit risk, through such means as export credit insurance.
Exporters contemplating a sale on open account terms should thoroughly examine the
political, economic, and commercial risks. They should also consult with their bankers
if financing will be needed for the transaction before issuing a pro forma invoice to a
buyer.
3. Documentary collection
Documents against payment= uses sight draft
Documents against acceptance=uses time draft
D/P (documents against payment) =CAD

26
The exporter makes shipment and sends the shipping documents to the exporter's bank
for collection. The exporter’s bank then sends the shipping documents along with a
collection letter to the importer's bank, which then sends a collection notice to the
importer. The importer makes payment upon receiving the notice =sight draft, and only
after payment does the importer receive the original shipping documents with which
take the physical possession of the goods. If payment is not done the importers bank
has the right to retain the goods until the same is done as already he possess the goods
as long as he has original documents
The major advantage of the use of cash against documents payment or DP is the low
cost, versus using a letter of credit. But, this is offset by the risk that the importer will
for some reason reject the documents (or they will not be in order). Since the cargo
would already be loaded (to generate the documents), the exporter has little recourse
against the importer in cases of non-payment. So, a payment against documents
arrangement involves a high level of trust between the exporter and the importer.
D/A (documents against acceptance)
The D/A transaction utilize a term or time draft. In this case, the documents required
to take possession of the goods are released by the clearing bank only after the buyer
accepts a time draft drawn upon him. In essence, this is a deferred payment or credit
arrangement. The buyer’s assent is referred to as a trade acceptance.
D/A terms are usually after sight, for instance “at 90 days sight”, or after a specific
date, such as “at 150 days bill of lading date.”
As with open account terms, there are some inherent risks in selling on D/A:
- As with a D/P, the importer can refuse to accept the goods for any reason, even if they
are in good condition.
- The buyer can default on the payment of a trade acceptance. Unless it has been
guaranteed by the clearing bank, the seller will need to institute collection procedures
and/or legal action.
4. Documentary Letters of Credit and Documentary Drafts = LC
Confirmed irrevocable letter of credit
When L/C is to be confirmed the payment process is different and is shown in the
following diagram:

27
1) The Applicant and the Beneficiary negotiate terms and conditions of the L/C
2) The Applicant applies to the Issuing Bank to issue the L/C
3) The Issuing Bank issues the L/C and forwards it to the Advising Bank
4) The Confirming Bank confirms the L/C to the Advising Bank
5) The Advising Bank checks the apparent authenticity of the L/C and advises the
L/C to the Beneficiary
6) The Beneficiary checks if the L/C complies with the commercial agreements and
if all terms and conditions specified in the L/C can be satisfied and ships the
goods
7) The Beneficiary assembles the documents specified the Issuing Bank in the L/C
checks the documents for discrepancies with the L/C and presents them to the
Advising Bank
8) The Advising Bank bears the documents against terms and conditions of the L/C
and forwards them to the Confirming Bank
9) The Confirming Bank checks if the documents comply with the L/C and makes
payment immediately (if the L/C is available by sight) or on a certain date (if L/C
is available by deferred payment)
10) The Issuing Bank reimburses the funds to the Confirming Bank immediately
after the payment.
A confirmed L/C may be used not only for securing the payment under the L/C but
also as a security to obtain additional funds from the Advising Bank. Generally, the
Advising Bank can discount the L/C in your favor as soon as the documents stipulated
in the L/C are presented to the bank and checked. The funds will be considered as a

28
loan, which will be automatically reimbursed by the Confirming Bank on the maturity
date indicated in the L/C.
Information that an L/C must have
Although the buyer applies for L/C, it is essential to be absolutely sure that the L/C
was prepared correctly and there is no legitimate ground for refusal of payment under
the L/C.
L/C must enclose:
 Full Applicant's name and address
 Full Beneficiary's name and address
 Issuing Bank details
 Advising Bank details
 Form and type of credit (e.g. irrevocable, transferable)
 Issue date
 Expiry date
 The latest date of shipment (usually "no later than")
 Expiry date for presentation of documents
 Amount payable under L/C
 Currency of payment
 Port of loading
 Port of discharge
 Terms of delivery
 Indication of the payment of the freight (Freight Prepaid/Freight Collect)
 Allowances for partial shipment or transshipment if needed
 Type of payment availability (e.g. at sight, on the maturity date)
 Description of goods (must correspond with the description given in the invoice)
 List of documents required for the payment
 Accountability for bank charges

Documents that may be stipulated in an L/C

29
The list of additional documents depends on the agreement made between exporter and
the buyer. Usually the buyer will include documents needed for the customs clearance.
The list may include:
- Certificate of origin
- Certificate of quality
- Weight certificate
- Pre-shipment inspection certificate
- Packing declaration
- Packing list
- Fumigation certificate, and so on
The detailed explanation of the above documents is given in the "Export

Documentation" section of these tutorials.
In relation to L/C, there are several issues about the documents you should keep in
mind:
- Specify how many original documents and how many copies are to be presented.
- The description of goods stipulated in the L/C must correspond with the description
given in the invoice. "Must", in this case, means "must". If the invoice states "100%
Fruit Juice" and the L/C – "Australian Fruit Juice", it is enough for the bank to refuse
the payment and this decision most likely be supported by the court.
- L/C may require a "clean" transport document. That means the document "which
bears no clause or notation which expressly declares a defective condition of the goods
and/or the packaging". (UCP 500, Article 32, a)
Delays cause troubles
L/C indicates three dates, which must be met to be paid:
- the latest date for shipment,
- the expiry date for presentation of documents and
- the expiry date of the L/C
Terms Ranked from LEAST RISK to MOST RISK for the Seller.
Terms Ranked from LEAST RISK to MOST RISK for the Seller.
When establishing international terms of payment it is a good idea to consult your
banker.
Method Usual Time of Goods Risk to Seller Risk to Buyer

Payment Available To
Buyer

30
1.CASH IN Before After None Complete -

ADVANCE shipment payment relies on seller
to ship exactly
the goods
expected, as
quoted and
ordered
2.DOCUMENTARY After After If payment Assures

shipment payment not honoured, shipment but
COLLECTION
goods must not content,
DP=CAD be returned unless
or resold. inspection or
DA Storage, check-in is
handling, allowed before
return freight payment
expenses may
be incurred
3. LC Confirmed After After Gives the Assures

shipment is payment seller a shipment is
Irrevocable letter
made, double made but
Of Credit documents assurance of relies on
presented to payments - exporter to
the Bank Depends on ship goods as
the terms of described in
the letter of documents.
credit. Terms may be
negotiated
prior to letter
of credit
agreement,
alleviating
buyer's degree
of risk.
4.OPEN As agreed, Before Relies None

ACCOUNT usually by payment completely on
invoice buyer to pay
account as
agreed
Other Payment Mechanisms

31
Countertrade
Countertrade is a reciprocal form of international trade in which goods or services are
exchanged for other goods or services, rather than for hard currency. International
trade conducted in this matter is more common in lesser-developed countries with
limited foreign exchange or credit facilities. Countertrade can be classified into three
broad categories: 1.barter, 2. counter purchase and 3.offset.
BREAKING DOWN 'Countertrade'
In any form, countertrade provides a mechanism for countries with limited access to
liquid funds to exchange goods and services with other nations. Countertrade is part of
an overall import and export strategy that ensures a country with limited domestic
resources has access to needed items. Additionally, it provides the exporting nation
with an opportunity to offer goods and services in a larger international market,
promoting growth within the industry.
Barter
Barter forms the oldest countertrade arrangement, and essentially involves the direct
exchange of goods and services having an equivalent value but with no cash settlement.
Often, the act involved in bartering is referred to as a trade.
Counter Purchase
In a counter purchase, the overseas seller agrees to buy goods or services sourced from
the buyer's country up to a defined amount. The value of the goods or services being
supplied to the buyer is generally considered equal to the amount the seller agrees to
purchase.
Offset
In an offset arrangement, the seller assists in marketing products manufactured by the
buying country or allows part of the assembly of the exported product to be carried out
by manufacturers in the buying country; this practice is often found in the aerospace,
defense and certain infrastructure industries, and is more common for big ticket items.
An offset arrangement may also be referred to as industrial participation or industrial
cooperation.
BENEFITS AND DRAWBACKS

A major benefit of countertrade is it facilitates conservation of foreign currency, which
is a prime consideration for cash-strapped nations, and provides an alternative to
traditional financing that may not be available in developing nations.

32
Other benefits include increased employment, higher sales, better capacity utilization
and ease of entry into challenging markets.
A major drawback of countertrade is the
1. Value proposition may be uncertain, especially in cases where the goods being
exchanged have significant price volatility. Other disadvantages of countertrade include
2. Complex negotiations
3. Higher costs and logistical issues.
4. Additionally, concerns about how the activities interact with various trade policies
can also be a point of concern in regards to open market operations, opportunities for
trade advancement, and the shifting terms and conditions instituted by the developing
nations that could lead to discrimination in the marketplace.


Topic 5 Logistics and Transportation Docs

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Topic 5 Logistics and Transportation Docs

Uploaded by

Copyright:

Available Formats

1

DOCUMENTS USED IN LOGISTICS AND TRANSPORTATION

What's in a freight bill of lading?

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

STANDARD SHIPPING NOTES

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

CERTIFICATE OF ORIGIN (CO)

A certificate of origin is a document that verifies a product's country of origin. It states

Certain destination countries require Certificates of Origin to prove the country of

PROCEDURES INVOLVED IN CLEARANCE OF GOODS FROM CUSTOMS

 Documentation process is done online through Tanzania Customs Integrated

 Customs agents/importers are urged to complete a Declaration and self-

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

IMPLEMENTATION OF AUTHORIZED ECONOMIC OPERATOR (AEO) PROGRAM

 Tanzania Revenue Authority wishes to inform the business community that in a

AEO is defined as an individual, a business entity or a company that is involved in

REGIONAL AEO BENEFITS

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Expedited processing of customs declarations (entries). All AEO declarations will be

1. Guaranteed renewal of Customs agent’s license

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

PRE – ARRIVAL DECLARATION PROCEDURE

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

 TRA perform the selectivity process by subjecting the TANSAD to Computerized

INTERNATIONAL COMMERCIAL TERMS, THEIR USES AND ROLES OF EACH

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Pay the price of the goods as stated in sales contract

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Cost of pre-shipment inspection

FCA: Free Carrier

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

FAS: Free Alongside Ship

Applies to: Sea and inland waterway only

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Applies to: Sea and inland waterway only

o Payment for goods as specified in sales contract

CFR: Cost and Freight

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Applies to: Sea and inland waterway only

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

CIF: Cost, Insurance and Freight

Applies to: Sea and inland waterway only

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

CPT: Carriage Paid To

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Payment for goods as specified in sales contract

CIP: Carriage and Insurance Paid To

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Named Place Requirement: Place of Destination

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Payment for goods as specified in sales contract

DPU: Delivered at Place Unloaded

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Export licenses and customs formalities

DAP: Delivered at Place

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

DDP: Delivered Duty Paid

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

Contacts: +255-710302814/+255684091436/0767111381 E: kpstanzania@gmail.com W: www.kps.co.tz

o Cost of all inspections