text_TITL pruh_TITL logoC Documents in International Logistics Ondrej Castek www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi The role of documentation nControl and liability n nPurposes of documentation: 1.Fulfill regulations 2.Manage risk 3.Common understanding 4.Record keeping The basic principle of documentation in trade is control and liability: who is in control of goods should be liable for it. 1.customs, duties, export permit, import license etc. 2.States, who is responsible for what 3.Different languages and different cultures mean different understanding of terms. Written documentation should express common understanding of these terms. 4.Such as for book keeping etc. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Example BusLog_Docs_Example The basic principle of documentation in trade is control and liability: who is in control of goods should be liable for it. 1.customs, duties, export permit, import license etc. 2.States, who is responsible for what 3.Different languages and different cultures mean different understanding of terms. Written documentation should express common understanding of these terms. 4.Such as for book keeping etc. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Types of documents 1.Transportation 2.Banking 3.Commercial 4.Government 5. nOr n nBusiness-related and Law-related 1.For the physical movement of the cargo 2.For financing of the shipment 3.For the purchase of the goods 4.To fulfill government regulations www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi IT and documentation nTime and costs n nTime – to deliver documentation and to collect information nCosts – Pocuca et. al found in 2000, that for a set of 103 documents in one shipment the electronic handling: ndecreases costs by 39 % ndecreases government importance by 73 % n nThe government is represented by consulate, export and import licensing, health control, chamber of commerce, export and import customs, port authority and police. Usually about 10 documents Can be over 103 documents, as in this example I US foreing trade in 1982 avg costs of documentation was 395 USD per one set of documents In UK 3 – 4 % of costs of SME import and export companies spent on trade facilitation. In 1990 air cargo: it takes 36 separate handling functions generating 16 documents as same as 26 years ago. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Pocuca et al research model Difference in time: 33 hours!!! Costs of documents 4 – 7 % of the value of the goods www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi IT and documentation - example nOne piece of information, port of discharge (POD). POD is used by the: nexporter, nthe port terminal operator (to know where to load the freight on the ship or airplane), the carrier, nthe insurance company, nthe bank (particularly in letters of credit), nthe customer’s customs broker, ncustoms, nthe customer. produce, send, read and key manual documents www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Documentation as a non tariff trade barrier 1.import license (quantity, value, other) 2. 2.consular legalization 2. has to be processed by consular offices located in exporters country or near (closest Australian embassy is located in Vienna) www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Commercial invoice 1.more information than domestic invoice 2.not only a collection document, but also 3.used by governmental authorities: 1.duties 2.admission under quota www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Consular invoice 1.special form and data or just a copy of commercial invoice 2.language of importing country 3.might require legalization or approvement by consul www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Ocean Bill of Lading 1.contract of carriage 2.documentary evidence of title 3.receipt for goods www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi n www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Other documents 1.carnets 2.dock receipts 3.certificate of origin 4.air waybill 5.collection letter 6.customs invoice 7.delivery instructions 8.export license 9.hazmat bill of lading 10.import license 1. sample goods carried by salespeople – duty free, usually has to return without change within a period given to the country of origin 2. proof of delivery in ocean transport 3. Might be required by importing country government or by importer. Might need to be signed by shipper, chamber of commerce, consulate or notarized 4. non negotiable bill of lading in air traffic. Receipt for cargo and trasportation contract. No „to order“ allowed. 5. says what, when and with what information to collect. eg. for LoC purposes 6. bears information needed for customs 7. from exporter to the shipper or from the shipper to the carrier – specific port, pier, terminal, airport, connection, route 8. individual, general etc. 9. for hazardous material www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Other documents 11.inland bill of lading 12.inspection certificate 13.packing list 14.phytosanitary inspection certificate 15.pro forma invoice 11. non negotiable 12. by third parties – independent companies – to protect the one, who is handing the cargo over to another chain member 13. describes items in box, crate, pallet, container – dimensions, pieces, weight – usually not a price 14. plants and plant products – to comply quarantine import regulation (Austrálie) 15. not for payment purposes, but for all other – customs, duties, licenses etc. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi „Clean“ documents n nDocument, which has been processed and no objection were raised. nObjection might be breakage, leaking, shortage. nUsed with dock receipts, bills of lading and other. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Insurance n n www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Insurance n n Package for domestic trade is not good enough for long and rough transportation in international trade. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Sea transport n n Condensation (falling like rain) Waves Corrosive salt water Rain, sun, frost www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Hull insurance n n Japanese 1.00 Norwegian 1.10 American 1.25 Greek 1.50 US is 3x mor risky than Japanese US repairs are more expensive US crew is more expensive Insurance of the vessel itself www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi War risk and pirates n n Standard 0.1 % of hull value and 0.0275 % of cargo value Might climb to 7.5 % and 3 % (Persian gulf in 1984) Pirate attacks in 1990: 100, 2000: 450, 2009: 406. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Study material: Chapter 12 n International Logistics (2nd Edition) Wood, Donald F. Barone, Anthony Murphy, Paul Pages: 456, Publisher: AMACOM Books ISBN: 9780814426739 n nAvailable at: http://site.ebrary.com/lib/masaryk/ Risk and costs, sellers’ and buyer’s view LoC fees: 0,5% - 2% or more, minimum fees, amendment fees (50 – 100 USD per amendment)