ABC’s OF CUSTOMS BROKERAGE (2.3) · 2020. 4. 6. · A freight forwarder, forwarder, or forwarding...

Introduction to International Logistics

ABC’s OF CUSTOMS BROKERAGE – Week 2 Lesson 3 (2.3)

ABC’s OF CUSTOMS BROKERAGE – Week 2 Lesson 3

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A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier (NVOCC), an Indirect Air Carrier (IAC), for Freight Forwarder (FF) is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution. Forwarders contract with a carrier or often multiple carriers to move the goods. A forwarder does not generally physically move the goods but acts as an expert in the logistics network. These carriers can use a variety of shipping modes, including ships, airplanes, trucks, and railroads, and often do utilize multiple modes for a single shipment. For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck, from the airport to a seaport by air, shipped to the destination city by ocean, and then moved from the airport to a customer's building by another truck. International freight forwarders typically handle international shipments and have additional expertise in preparing and processing customs documentation and performing activities pertaining to international shipments. Information typically reviewed by a freight forwarder includes the commercial invoice, shipper's export declaration (for US exports), bill of lading and other documents required by the carrier or country of export, import, and/or transshipment. Much of this information is now processed in a paperless environment. The FIATA shorthand description of the freight forwarder as the "Architect of Transport" illustrates the commercial position of the forwarder relative to its client. Some forwarders specialize in "niche" areas such as rail-freight, and collection and deliveries around a large port or specialized commodities movements. The original function of the forwarder was to arrange for carriage by contracting with various carriers. Forwarder responsibilities included advice on documentation and customs requirements in the country of destination. The term “logistics” was coined in 1950 by the military. International freight forwarders, NVOCCs, IACs and customs brokers often charge for transferring documents to another transportation company at destination. This fee is a part of the freight charges, being paid by the importer at the port of discharge in the International Commercial Term (Incoterm) FOB (free on board), and by the exporter at the origin in the Incoterms CFR (cost and freight) and CIF (cost, insurance and freight). This fee is separate from documentation fees charged by carriers, forwarders, and NVOCCs as part of the freight charges on a bill of lading and is separate from other fees for document preparation or for release of cargo. Companies that handle domestic U.S. freight by road must be registered with the U.S. Department of Transportation's Federal Motor Carrier Safety Administration. Such forwarders are "carriers" who accept freight for transport and are liable for delivering the freight under their own bill of lading.


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International ocean freight forwarders arranging for shipments to and from the US must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries. An Ocean Transportation Intermediary is either an ocean freight forwarder or a non-vessel-operating common carrier (NVOCC). An ocean freight forwarder is "an individual or company in the United States that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers; ocean freight forwarders prepare and process documentation and perform related activities pertaining to shipments.” An NVOCC is "a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent documents, but does not operate the vessels that transport cargo"; or, "a shipper in its relationship with the vessel-operating common carrier involved in the movement of cargo." Indirect Air Carrier (IAC) is an entity that moves cargo by air from the US to a foreign country. The IAC is regulated by the Transportation Security Administration (TSA). An IAC contracts space with an air carrier then resells to the shipper or buyer, and issues its own House Airway Bill of Lading. In the import world, the “IAC” is an Air Freight Forwarder who is also regulated, to some extent, by CBP and TSA. They arrange for cargo from a foreign country to the US. They also contract space with an air carrier then resells to the shipper or buyer, and issues its own HAWB. Entities in the international forwarding supply chain include, but are not limited to: Truckers Forwarders (air and ocean) Carriers (air and ocean) Ports (air and ocean) Governments


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Trucks: Cargo Van

Cargo vans are generally used for small packages and many times those needing “hot-shot” service. Cargo vans vary in size, but are smaller than a straight truck.

Dry Van (Enclosed Trailer)

Dry Van trailers are generally enclosed and are commonly used to carry and protect freight from the harmful elements of the weather or the roads. Your shipment can be loaded on the rear of the trailer, normally using a loading dock. In cases where a loading dock is not available, some trailers come equipped with liftgates that can help

get your freight from the ground to the trailer and back again.

Flatbed (Flat Bed) Trailers Flatbeds are extremely popular and are widely used because they are very versatile. Generally, a flatbed is used to load freights on its tip, sides, and rear. With these capabilities, flatbeds have become a primary and leading assets of the trucking industry.

Low boy

A Lowboy Trailer is an unpowered trailer which is commonly used to haul freight. These kinds of trailers are generally designed to carry and transport taller items. This means that the items to be carried by a Lowboy Trailer are taller than the legal height of items that are commonly carried by flatbeds. The types of trailers are also good for hosteling freight between loading docks or within a freight yard.

Refrigerated (Reefer) Trailer

A refrigerated trailer is a temperature-controlled unit. It is generally used for transporting chilled or frozen products. The temperature inside the trailer can be controlled no matter the outside weather conditions. Refrigerated trailers are very specialized and take additional fuel to keep the cooling mechanism running, and therefore more difficult to source and more expensive than standard equipment.

Straight Truck

A straight truck, also known as a cube truck, cube van, box van, or box truck, is a truck that carries cargo on the same chassis as the power unit and cab. These types of trucks are often used to move furniture, home goods, and smaller items,


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or for “hot-shot” expedited freight deliveries. They also have “lift gates”. Tractor

The “engine” for trailers. Tractors or “big rigs” can pull a varity of trailers.

Air Carriers:

Passenger planes

There are many restrictions for moving cargo on passenger aircraft.


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All Cargo Aircraft


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Ocean Carriers:


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Air freight containers The following guide to airfreight containers, also called Unit Load Devices (ULD), has been developed from materials supplied by IATA (International Air Transport Association) and the ATA (Air Transport Association of America). This guide lists and illustrates the average external dimensions and weight limitations of the primary containers in use today. Exact dimensions and weight limitations will vary by manufacturer and availability will vary by air carrier and trade lane.

88” PALLET

• IATA ULD Code: PIP Classification: 88” Pallet with net

• Suitable for: B747, B777, DC-10

• Maximum volume: 11.9 cu. m (420 cu. ft.)

• Maximum gross weight: 747/DC-10: 6033 kg (13300 lb)

• 767: 5103 kg (1127 lb)

• 777/DC-10: 4626 kg (10501 lb)

• Can be loaded to 96” (162 cm) and 118” (300 cm) on freighters

96” PALLET

• IATA ULD Code: P6P 10ft flat pallet with net

• Also knows as: P6A, P6C, P6Q, PMA, PMC, PMP, PQP

• Classification: LD-9

• Rate Class: Type 2BG

• Suitable for: A300, A310, A330, A340, B747, B767, B777, DC-10, MD-11, L1011

http://www.shapiro.com/assets/88%E2%80%9D-PALLET.jpg

http://www.shapiro.com/assets/96%E2%80%9D-PALLET.jpg


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• Maximum volume: 21.2 cu.m (747 cu. ft.)

• Maximum gross weight: 6,804 kg (15000 lb)

• Can be loaded to 96” (162 cm) and 118” (300 cm) on freighters 118” (300 cm) on freighters

HALF PALLET

• IATA ULD Code: PLA half pallet with net

• Also knows as: PLB, FLA, P9A, P9B, P9P, P9R, P9S

• Classification: HP

• Rate Class: 6

• Suitable for: Lower deck: B747, B777

• Main deck: B707F, B727F, B737F

• Maximum volume: 7.2 cu.m (254 cu. ft.)

• Maximum gross weight: 3175 kg (6999 lb)

16 FT PALLET

• IATA ULD Code: PRA 16ft flat pallet with net

• Also known as: PMA, P4A, P4M, PZA

• Classification: MDP

• Rate Class: Type 1P

• Suitable for: B747, B747Combi

http://www.shapiro.com/assets/HALF-PALLET.jpg

http://www.shapiro.com/assets/16-FT-PALLET.jpg


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20 FT PALLET

• IATA ULD Code: PGA 20ft flat pallet with net

• Also knows as: PGA, PGE, PGF, PSA, PSG, P7A, P7E, P7F

• Classification: M-6

• Rate Class: Type 1

• Suitable for: B747F, B747Combi



AQ6

• IATA ULD Code: AMA Rectangular Container on P6P Base

• Also known as: AMF, AMG, AMK, AMP, AQA, AQD, AQ6






http://www.shapiro.com/assets/20-FT-PALLET.jpg

http://www.shapiro.com/assets/AQ6.jpg


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AQ7

• IATA ULD Code: AMD Contoured Container on P6P Base

• Also known as: AQA, AQ7

• Classification: M1H

• Rate Class: Type 2H




M-6

• IATA ULD Code: AGA 20ft Box

• Container also known as: ASE






http://www.shapiro.com/assets/AQ7.jpg

http://www.shapiro.com/assets/M-6.jpg


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LD-26

• IATA ULD Code: AAF


• Suitable for: B747, B777, DC-10

• Maximum gross weight:

• 747/DC-10: 6033 kg (13300 lb)

• 777/DC-10: 4626 kg (10501 lb)

LD-29

• IATA ULD Code: AAU Contoured Container on P1P Base



• Suitable for: B747

• Internal volume: 14.2 cu. m (501 cu. ft.)


http://www.shapiro.com/assets/LD-26.jpg



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LD-1

• IATA ULD Code: AKC Contoured

• Container Also known as: AVC, AVD, AVK, AVJ Forkable: AVY



• Suitable for: B747, B767, B777, MD-11

• Maximum volume: 4.8 cu. m (169.5 cu. ft.)


LD-2

• IATA ULD Code: DPE Contoured Container

• Also known as: APA, DPA

• Forkable: DPN


• Rate Class: Type 8D

• Suitable for: B767






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LD-3

• IATA ULD Code: AKE Contoured Container

• Also known as: AKE, AVA, AVB, AVC, AVK, DVA, DVE, DVP, XKS, XKG

• Forkable: AKN, AVN, DKN, DVN, XKN



• Suitable for: A300, A310, A330, A340, B747, B767, B777, DC-10, MD-11, L1011



INSULATED LD-3

• IATA ULD Code: RKN



• Suitable for: A300, A310, A330, A340,B747, B767, B777, DC-10, MD-11, L1011



http://www.shapiro.com/assets/INSULATED-LD-3.jpg


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• Temperature Control Range: -20C to +20C

LD-4

• IATA ULD Code: ALP Rectangular Container

• Also known as: ALD, AWD, AWZ, DLP

• Forkable: ALB, ALC, AWB, AWC



• Suitable for: B767, B777



• Temperature Control Range: -20C to +20C

LD-6

• IATA ULD Code: ALF Contoured Container

• Also known as: AWD, AWF

• Forkable: AWC Classification: LD-6




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• Rate Class: Type 6W

• Suitable for: A300, A310, A330, A340, B747, B767, B777, MD-11, L1011



LD-7

• IATA ULD Code: XAW P1P Pallet with fixed angle wings and net



• Suitable for: Wide body: All aircraft

• Maximum volume with overhang: 14.0 cu. m (494 cu. ft.)


LD-8

• IATA ULD Code: DQF

• Also known as: ALE, ALN, DLE, DLF, DQP, MQP


• Rate Class: Type 6A Suitable for: B767




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LD-9

• IATA ULD Code: AAP Enclosed Pallet on P1P base

• Also known as: AA2, XAG, XAV



• Suitable for: A300, A310, A330, A340, B747, B767, DC-10,

• MD-11, L1011


• Maximum gross weight: 4624 kg (10194 lb), lower deck 6000 kg (13227 lb) main deck

LD-11

• IATA ULD Code: ALP Rectangular Container

• Also known as: ALD, AW2, AWB, AWD, AWZ, DLP, DWB, MWB

• Refrigerated version: RQB, RWD, RWZ






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• Suitable for: A300, A310, A330, A340, B747, B767, DC-10, MD-11, L1011



A-2

• IATA ULD Code: DAA

• Classification: A-2

• Suitable for: B767, B747F, DC-8, DC-10, A300/F



http://www.shapiro.com/assets/A-2.jpg


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Ocean freight containers (Evergreen Marine Lines)

Dry Cargo Container

20' Steel Dry Cargo Container

Exterior

Length Width Height 20'-0" 8'-0" 8'-6"

6.058 m 2.438 m 2.591 m Interior

Length Width Height 19'-4

13/16" 7'-8

19/32" 7'-9

57/64"

5.898 m 2.352 m 2.385 m

Weight Door Opening MGW TARE NET Width Height

67,200 lb 5,290 lb 61,910 lb

7'-8 1/8" 7'-5 3/4" 2.343 m 2.280 m

30,480 kg

2,400 kg

28,080 kg

CU.M CU.FT 33.1 1,169

40' Steel Dry Cargo Container

Exterior

Length Width Height 40'-0" 8'-0" 8'-6" 12.192

m 2.438 m 2.591 m

Interior Length Width Height 39'-5

45/64" 7'-8

19/32" 7'-9

57/64"

12.032 m 2.352 m 2.385 m


67,200 lb 8,820 lb 58,380 lb

7'-8 1/8" 7'-5 3/4" 2.343 m 2.280 m

30,480 kg

4,000 kg

26,480 kg

CU.M CU.FT 67.5 2,385

40' Hi-Cube Steel Dry Cargo Container

https://www.evergreen-marine.com/tei1/jsp/TEI1_Containers.jsp


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Exterior


m 2.438 m 2.896 m

Interior Length Width Height 39'-5

45/64" 7'-8

19/32" 8'-9

15/16"

12.032 m 2.352 m 2.69 m


67,200 lb 9,260 lb 57,940 lb

7'-8 1/8" 8'-5 49/64" 2.343 m 2.585 m

30,480 kg

4,200 kg

26,280 kg

CU.M CU.FT 76.2 2,690

45' Hi-Cube Steel Dry Cargo Container

Exterior


m 2.438 m 2.896 m

Interior Length Width Height

44'6 7'7''' 8'7''

13.556 m 2.352 m 2.700 m

Weight Door Opening MGW TARE NET Width Height 67,200

lb 10,858

lb 56,342

lb 7'-8 1/8" 8'-6"

71,500 lb

10,360 lb

61,290 lb 2.340 m 2.585 m

30,480 kg

4,870 kg

25,610 kg CU.M CU.FT

32,500 kg

4,700 kg

27,800 kg 86 3,040

Refrigerated Container

20' M.G.S.S. Refrigerated Container


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Exterior


6.058 m 2.438 m 2.591 m Interior

Length Width Height 18'-

17/32" 7'-6

15/32" 7'-5

39/54"

5.500 m 2.298 m 2.276 m

Nominal Weight Cubic Capacity MGW TARE NET

1,016 cu.ft. 67,200 lb 6,750 lb 60,630 lb 28.8 cu.m. 30,480 kg 2,980 kg 27,500 kg

40' M.G.S.S. Hi-Cube Refrigerated Container

Exterior


m 2.438

m 2.896 m

Interior Length Width Height

38'-19/64"

7'6-5/16"

8'4-35/64"

11.590 m

2.294 m 2.544 m

Nominal Weight Cubic Capacity MGW TARE NET

2,384 cu.ft. 74,960 lb 10,490 lb 64,470 lb 67.5 cu.m. 34,000 kg 4,760 kg 29,240 kg


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Special Container

20' Full Height Open Top Container

Exterior


6.058 m 2.438 m 2.591 m

Interior Length Width Height 19'-4" 7'9" 7'8"

5.898 m 2.352 m 2.348 m

Weight MGW TARE NET 52,910

lb 5,310

lb 47,600

lb 24,000

kg 2,410

kg 21,590

kg CU.M CU.FT 32.5 1,148

40' Full Height Open Top Container

Exterior


m 2.438

m 2.591 m

Interior Length Width Height 39'6" 7'9" 7'8"

12.032 m

2.352 m 2.348 m

Weight MGW TARE NET 67,200

lb 9,477

lb 57,701

lb 30,480

kg 4,300

kg 26,180

kg CU.M CU.FT 65.9 2,327

Ocean freight containers need chassis

40' Hi-Cube Open Top Container

Exterior


m 2.438 m 2.896 m

Interior


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Why cargo insurance is important –


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Some considerations when arranging an international import movement of cargo: What are the terms of sale? Shipper – point of origin. Does it have a dock? Transport mode – air, ocean, rail, truck?

• If by air, are they known or unknown? If unknown, must fly on cargo only aircraft. • If by ocean, is it FCL or LCL?

Commodity – is it hazardous, oversized, overweight, fragile?

• If by air, may require cargo only aircraft. • If by ocean, may not fit into a standard container.

Pieces – total number of packing units. Weight – weight per unit and total weight. Size – dimensions of each package (L x W x H). Total volumetric space needed. Country of destination or origin – any restrictions? Consignee – point of destination. Does it have a dock?


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Anatomy of a Commercial Import Transaction

Entities & Relationships - Importer (Buyer) & Supplier (Seller) / Forwarder & Broker

Overseas Agents Transportation Intermediaries Clearance Delivery


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Entities – nongovernmental – beneficiary cargo owners (BCO)

Grower Manufacture Seller Exporter Buyer Importer Deliver to party

Entities – nongovernmental – transportation intermediary Forwarder Foreign domestic trucker Foreign warehouse (CFS) Steamship line Non-vessel owning common carrier (NVOCC) Airline Indirect air carrier (IAC) Domestic warehouse (CFS) Broker Trucker

Entities – governmental – 48 in total regulate international trade Custom and Border Protection (CBP) USDA: Animal and Plant Health Inspection Service (APHIS); Food Safety and Inspection Service (FSIS) Department of Transportation (DOT) Fish and Wildlife Service (FWS) Food & Drug Administration (FDA) Environmental Protection Agency (EPA) Federal Maritime Commission (FMC) Transportation Security Administration (TSA) *just to name a few* Freight forwarders, customs brokers, and other service providers should endeavor to learn more about and understand their clients' internal transaction processing, export/import objectives and organizational trends. In particular, to remain in the picture as leading exporters and importers and re-engineer their logistics environment, transportation intermediaries and trade-related service providers must aggressively learn about and adapt to their client’s needs and objectives, and integrate this into their logistics systems. (Source: GistNet)


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One country’s import is another country’s export.

Exporter/Shipper > Importer/Buyer Freight Forwarder / Customs Broker

Container Station / Warehouse Customs Clearance (export & import)

Port of lading/unlading Carrier

Trucker


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Exporter / Shipper

Export Freight Forwarder /

Customs Broker / Trucker

Export Warehouse /

Container Station

Export Customs / Government

Authority

Export Port of Lading Carrier

Import Port of Unlading

Import Customs / Government

Authority

Import Warehouse /

Container Station

Import Forwarder / Customs Broker

/ Trucker

Importer / Consignee

Every entity in the supply chain has a part to play. Each entity in the supply chain is regulated and some entities are regulated by more than one agency and more than one country. The foreign exporter is regulated by the foreign government and in some cases by the US Government too. For example, products subject to FDA clearance such as food and medical devises require oversight of FDA regardless of where the manufacture or distributer of these commodities is located. In some cases, depending on who the manufacture or exporter is the import anti-dumping duty rate can be affected. The foreign forwarder can also be regulated by the US Government. If cargo is moving by ocean, FMC rules must be met and if by air, CBP and TSA. The carrier is regulated by FMC, TSA, and CBP. The US import port of unlading is regulated by port authorities, cities, and CBP. There are 48 US government agencies that have regulatory authority over imported cargo. The US warehouse and container stations are regulated by CBP and in some cases other agencies such as ATF, FDA, and USDA. The US import forwarder and broker are regulated by as many agencies as the importer of record – just not by the same rules. Even the Lil’ Shop is regulated and yes, you and I as consumers are too Let’s take a look at some of the responsibilities of the entities in the supply chain…


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Exporter / Shipper Responsibilities:

⇔ Collect PO from the US buyer/importer; provide the desired product meeting all US regulations

⇔ Provide all necessary details and documents for the manufacture, distributor, or grower (if require)

• Commercial invoice / Packing list • Certificate of Origin • Export permits (CITIES) and other necessary documentation

⇔ Depending on the terms of sale, arrange for insurance and transportation Exporting Forwarder / Customs Broker / Trucker:

⇔ Forwarder – arrange the pickup, transfer, and international movement of the cargo * ⇔ Broker – submit all necessary data/documents to foreign government(s) for export

clearance * • * Some of these functions will be intertwined • Send all necessary data/documents to US forwarder/broker or importer

o ISF for ocean cargo. The Importer of Record is responsible for filing o ACAS for air cargo. The carrier is responsible for filing

⇔ Trucker – make pickup and delivery of the cargo Export Warehouse / Container Station:

⇔ Received cargo, consolidate the cargo (air or ocean), prepare cargo for shipping Export Customs / Government Authority:

⇔ Review/issue documents/data for export clearance • Certificate of Origin • CITES • Permits / Licenses

Export Port of Lading:

⇔ Airports, seaports, border crossings ⇔ Receives cargo in ready state for loading on to the carrier ⇔ Loads cargo on to the international transportation carrier (air craft, vessel, train, truck)

• Ground Handlers, Port authorities, stevedores ⇔ Some ports have US Customs officials on site for pre-screening of cargo

Carrier:

⇔ Arrange transport from origin to destination • Ocean lines and NVOCC’s will arrange door to door deliveries • Air carriers deliver port to port

⇔ Issue bills of lading (right to make entry) ⇔ Receive documents needed for transport, including HAZ MAT documents ⇔ Submits data/documents to government authorities

• Manifest data


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• Ocean: 2 data elements of ISF (10+2 – container status message and stow plan) • Air: ACAS data (forwarder can submit but the carrier is responsible)

Import Port of Unlading:

⇔ Receive transportation carrier at berth or airport ⇔ Receive documents/data required to unload cargo in the US ⇔ Arrange for the unloading of cargo from carrier

US Government Authorities:

⇔ Gives authorization for cargo to land in the US ⇔ Receives necessary documents/data from the US Customs Broker or Forwarder ⇔ Examines, detains, holds, refuses, and releases cargo

• CBP is responsible for assessing and collecting duties, taxes, and fees • OGA’s have some fees paid directly to them, CBP collects on behalf of some

⇔ Gives authorization for cargo to enter the commerce of the us Import Forwarder / Customs Broker / Trucker:

⇔ Forwarder (moves cargo) • Communicates with overseas trade partners to receive shipping information and

documentation/data needed for movement and clearance • Receives arrival information from the carrier, prepares for payment, in some

cases, of freight and handing charges by the carrier and airport/port cargo handlers

• Communicates with the importer and broker of arrival, available and free time information.

• Can arrange for further US inland moves under the In-bond Transportation process

• Provides all necessary documents/data to the Customs broker for entry to be submitted to CBP and OGA’s.

• Arranges delivery of cargo, in some cases, to the importer/consignee •

⇔ Broker (clears cargo) • Receives necessary documents/data from all entities in the supply chain • Prepares and submits necessary documents/data to CBP & OGA’s • Notifies correct party of release, arranges for payments of freight, THC, etc… • In many cases, collects and pays duties for the IOR • Issues delivery instructions on behalf of the importer/consignee

⇔ Trucker (delivers cargo) • Receives delivery information from the forwarder/broker/importer/consignee • Arranges the pick and deliver of cargo

o Airfreight and LCL pick up at CFS/Warehouse o FCL pick up at railyard, port, container yard o Responsible for returning container equipment o In some cases, arranges for the transfer of cargo from one CFS/Warehouse

to another


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Importer of Record:

⇔ Responsible for all informational data/documents submitted to the US Government for release, clearance and post summary processes

CBP identifies the following commodities as needing additional information to clear customs (CFR Title 19, Part 141.89) –

– Aluminum and alloys of aluminum – Articles manufactured of textile materials – Bags manufactured of plastic sheeting – Ball or roller bearings – Beads – Bed linen and Bedspreads – Chemicals – Colors, dyes, stains and related products – Copper - Copper ores and concentrates – Cotton fabrics - Cotton raw - Cotton waste – Earthenware or crockery ware – Fish or fish livers – Footwear – Fur products and furs – Glassware and other glass products – Gloves – Grain or grain and screenings - Screenings or scalpings of grains or seeds – Handkerchiefs – Hats or headgear – Hosiery – Iron or steel - iron oxide – Machines, equipment and apparatus – Machine parts – Machine tools - Rolling mills – Madeira embroideries – Motion-picture films – Paper - Printed matter – Plastic plates, sheets, film, foil and strip – Pulp – Refrigeration equipment – Rubber products – Textile fiber products- Wearing apparel - Woven fabric of man-made fibers – Tires and tubes for tires – Tobacco (including tobacco in its natural state) – Alcohol – Firearms – Watches and watch movements – Wood products – Wool and hair - Wool products


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Most forwarders consider the following to be “special cargo”

– Dangerous Goods – Fragile Cargo – Heavy/Oversized Cargo – Human Remains – Live Animals – Magnetized Materials – Perishable Cargo – Valuable and Vulnerable Cargo – Wet Cargo

Freight Forwarder: A Definition

Freight forwarders are defined as experts connected within the supply chain who concentrates on the logistics and physical transportation of cargo. They are in touch with any entity in the exporting process that handles or is aware of a shipment moving via truck, boat, plane or a combination thereof. Freight forwarders are in charge of assembling and completing a variety of documentation and compliance filings.

Customs Broker: A Definition

According to the Department of Homeland Security, a customs broker is defined as a private individual, partnership, association or corporation licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting U.S. government requirements governing imports and exports.

Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service. They must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.

A customs broker is a specific term used to identify the intermediary between the importer and the government’s customs department in the country of import. (Source: Shipping Solutions)

https://www.cbp.gov/trade/programs-administration/customs-brokers/becoming-customs-broker


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What is a freight forwarder?

A travel agent for cargo


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The regulations require the following (CFR Title 19, Part 163)

Appendix to Part 163—Interim (a)(1)(A) List

List of Records Required for the Entry of Merchandise

General Information

(1) Section 508 of the Tariff Act of 1930, as amended (19 U.S.C. 1508), sets forth the general recordkeeping requirements for Customs-related activities. Section 509 of the Tariff Act of 1930, as amended (19 U.S.C. 1509) sets forth the procedures for the production and examination of those records (which includes, but is not limited to, any statement, declaration, document, or electronically generated or machine readable data).

(2) Section 509(a)(1)(A) of the Tariff Act of 1930, as amended by title VI of Public Law 103-182, commonly referred to as the Customs Modernization Act (19 U.S.C. 1509(a)(1)(A)), requires the production, within a reasonable time after demand by the Customs Service is made (taking into consideration the number, type and age of the item demanded) if “such record is required by law or regulation for the entry of the merchandise (whether or not the Customs Service required its presentation at the time of entry).” Section 509(e) of the Tariff Act of 1930, as amended by Public Law 103-182 (19 U.S.C. 1509(e)) requires the Customs Service to identify and publish a list of the records and entry information that is required to be maintained and produced under subsection (a)(1)(A) of section 509 (19 U.S.C. 1509(a)(1)(A)). This list is commonly referred to as “the (a)(1)(A) list.”

(3) The Customs Service has tried to identify all the presently required entry information or records on the following list. However, as automated programs and new procedures are introduced, these may change. In addition, errors and omissions to the list may be discovered upon further review by Customs officials or the trade. Pursuant to section 509(g), the failure to produce listed records or information upon reasonable demand may result in penalty action or liquidation or reliquidation at a higher rate than entered. A recordkeeping penalty may not be assessed if the listed information or records are transmitted to and retained by Customs.

(4) Other recordkeeping requirements: The importing community and Customs officials are reminded that the (a)(1)(A) list only pertains to records or information required for the entry of merchandise. An owner, importer, consignee, importer of record, entry filer, or other party who imports merchandise, files a drawback claim or transports or stores bonded merchandise, any agent of the foregoing, or any person whose activities require them to file a declaration or entry, is also required to make, keep and render for examination and inspection records (including, but not limited to, statements, declarations, documents and electronically generated or machine readable data) which pertain to any such activity or the information contained in the records required by the Tariff Act in connection with any such activity, and are normally kept in the ordinary course of business. While these records are not subject to administrative penalties, they are subject to examination and/or summons by Customs officers. Failure to comply could result in the imposition of significant judicially imposed penalties and denial of import privileges.

(5) The following list does not replace entry requirements, but is merely provided for information and reference. In the case of the list conflicting with regulatory or statutory requirements, the latter will govern.


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List of Records and Information Required for the Entry of Merchandise

The following records (which include, but are not limited to, any statement, declaration, document, or electronically generated or machine readable data) are required by law or regulation for the entry of merchandise and are required to be maintained and produced to Customs upon reasonable demand (whether or not Customs required their presentation at the time of entry). Information may be submitted to Customs at the time of entry in a Customs authorized electronic or paper format. Not every entry of merchandise requires all of the following information. Only those records or information applicable to the entry requirements for the merchandise in question will be required/mandatory. The list may be amended as Customs reviews its requirements and continues to implement the Customs Modernization Act. When a record or information is filed with and retained by Customs, the record is not subject to recordkeeping penalties, although the underlying backup or supporting information from which it is obtained may also be subject to the general record retention regulations and examination or summons pursuant to 19 U.S.C. 1508 and 1509. (All references, unless otherwise indicated, are to the current edition of title 19, Code of Federal Regulations, as amended by subsequent FEDERAL REGISTER documents.)

I. General list of records required for most entries. Information shown with an asterisk (*) is usually on the appropriate form and filed with and retained by Customs:

§§141.11 through 141.15 Evidence of right to make entry (airway bill/bill of lading or *carrier certificate, etc.) when goods are imported on a common carrier

§141.19 *Declaration of entry (usually contained on the entry summary or warehouse entry)

§141.32 Power of attorney (when required by regulations)

§141.54 Consolidated shipments authority to make entry (if this procedure is utilized)

§142.3 Packing list (where appropriate)

§142.4 Bond information (except if 10.101 or 142.4(c) applies)

Parts 4, 18, 122, 123 *Vessel, Vehicle or Air Manifest (filed by the carrier)

II. The following records or information are required by §141.61 on Customs Form (CF) 3461, or its electronic equivalent, or CF 7533 or the regulations cited. Information shown with an asterisk (*) is contained on the

appropriate form and/or otherwise filed with and retained by Customs:

§§142.3, 142.3a *Entry Number

*Entry Type Code

*Elected Entry Date

*Port Code

§142.4 *Bond information

§§141.61, 142.3a *Broker/Importer Filer Number

§§141.61, 142.3 *Ultimate Consignee Name and Number/street address of premises to be delivered

§141.61 *Importer of Record Number

*Country of Origin


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§141.11 *IT/BL/AWB Number and Code

*Arrival Date

§141.61 *Carrier Code

*Voyage/Flight/Trip

*Vessel Code/Name

*Manufacturer ID Number (for AD/CVD must be actual mfr.)

*Location of Goods-Code(s)/Name(s)

*U.S. Port of Unlading

*General Order Number (only when required by the regulations)

§142.6 *Description of Merchandise

§142.6 *HTSUSA Number

§142.6 *Manifest Quantity

*Total Value

*Signature of Applicant

III. In addition to the information listed above, the following records or items of information are required by law and regulation for the entry of merchandise and are presently required to be produced by the importer of

record at the time the Customs Form 7501, or its electronic equivalent, is filed:

§141.61 *Entry Summary Date

§141.61 *Entry Date

§142.3 *Bond Number, Bond Type Code and Surety code

§142.3 *Ultimate Consignee Address

§141.61 *Importer of Record Name and Address

§141.61 *Exporting Country and Date Exported

*I.T. (In-bond) Entry Date (for IT Entries only)

*Mode of Transportation (MOT Code)

§141.61 *Importing Carrier Name

§141.82 Conveyance Name/Number

*Foreign Port of Lading

*Import Date and Line Numbers

*Reference Number


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*HTSUS Number

§141.61 *Identification number for merchandise subject to Anti-dumping or Countervailing duty order (ADA/CVD Case Number)

§141.61 *Gross Weight

*Manifest Quantity

§141.61 *Net Quantity in HTSUSA Units

§141.61 *Entered Value, Charges, and Relationship

§141.61 *Applicable HTSUSA Rate, ADA/CVD Rate, I.R.C. Rate, and/or Visa Number, Duty, I.R. Tax, and Fees (e.g. HMF, MPF, Cotton)

§141.61 Non-Dutiable Charges

§141.61 *Signature of Declarant, Title, and Date

*Textile Category Number

§141.83, 141.86 Invoice information which includes, e.g., date, number, merchandise (commercial product) description, quantities, values, unit price, trade terms, part, model, style, marks and numbers, name and address of foreign party responsible for invoicing, kind of currency

Terms of Sale

Shipping Quantities

Shipping Units of Measurements

Manifest Description of Goods

Foreign Trade Zone Designation and Status

Designation (if applicable)

Indication of Eligibility for Special Access Program (9802/GSP/CBI)

§141.89 CF 5523

Part 141 Corrected Commercial Invoice

141.86 (e) Packing List

177.8 *Binding Ruling Identification Number (or a copy of the ruling)

§10.102 Duty Free Entry Certificate (9808.00.30009 HTS)

§10.108 Lease Statement

IV. Documents/records or information required for entry of special categories of merchandise (the listed documents or information is only required for merchandise entered [or required to be entered] in accordance with the provisions of the sections of 19 CFR [the Customs Regulations] listed). These are in addition to any

documents/records or information required by other agencies in their regulations for the entry of merchandise:


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§4.14 CF 226 Information for vessel repairs, parts and equipment

§7.3(f) CBP Form 3229, or its electronic equivalent, Origin certificate for insular possessions Shipper's and importer's declaration for insular possessions

Part 10 Documents required for entry of articles exported and returned:

§§10.1 through 10.6 Foreign shipper's declaration or master's certificate, declaration for free entry by owner, importer or consignee

§10.7 Certificate from foreign shipper for reusable containers

§10.8 Declaration of person performing alterations or repairs

Declaration for non-conforming merchandise

§10.9 Declaration of processing

§10.24 Declaration by assembler Endorsement by importer

§§10.31, 10.35 Documents required for Temporary Importations Under Bond:

Information required, Bond or Carnet

§10.36 Lists for samples, professional equipment, theatrical effects

Documents required for Instruments of International Traffic:

§10.41 Application, Bond or TIR carnet

NOTE: additional 19 U.S.C. 1508 records: see §10.41b(e)

§10.43 Documents required for exempt organizations

§10.46 Request from head of agency for 9808.00.10 or 9808.00.20 HTSUS treatment

Documents required for works of art

§10.48 Declaration of artist, seller or shipper, curator, etc.

§§10.49, 10.52 Declaration by institution

§10.53 Declaration by importer

USFWS Form 3-177, if appropriate

§§10.59, 10.63 Documents/CF 5125 for withdrawal of ship supplies

§§10.66, 10.67 Declarations for articles exported and returned

§§10.68, 10.69 Documents for commercial samples, tools, theatrical effects

§§10.70, 10.71 Purebred breeding certificate

§10.84 Automotive Products certificate

§10.90 Master records and metal matrices: detailed statement of cost of production


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§10.98 Declarations for copper fluxing material

§10.99 Declaration of non-beverage ethyl alcohol, ATF permit

§§10.101 through 10.102 Stipulation for government shipments and/or certification for government duty-free entries, etc.

§10.107 Report for rescue and relief equipment

§10.905 PTPA records that the importer may have in support of a PTPA claim for preferential tariff treatment, including an importer's certification

15 CFR part 301 Requirements for entry of scientific and educational apparatus

§10.121 Certificate from the U.S. Department of State for visual/auditory materials

§10.134 Declaration of actual use (When classification involves actual use)

§10.138 End Use Certificate

§§10.171 through 10.178 Documents, etc. required for entries of GSP merchandise, GSP Declaration (plus supporting documentation)

§10.174 Evidence of direct shipment

§10.179 Certificate of importer of crude petroleum

§10.180 Certificate of fresh, chilled or frozen beef

§10.183 Civil aircraft parts/simulator documentation and certifications

§§10.191 through 10.198 Documents, etc. required for entries of CBI merchandise, CBI declaration of origin (plus supporting information)

§10.194 Evidence of direct shipment

§10.199 Documents, etc. required for duty-free entry of spirituous beverages produced in Canada from CBI rum, declaration of Canadian processor (plus supporting information)

§10.216 AGOA Textile Certificate of Origin

§10.226 CBTPA Textile Certificate of Origin and supporting records

§10.228 CBTPA Declaration of Compliance for brassieres

§10.236 CBTPA Non-textile Certificate of Origin and supporting records

§10.246 ATPDEA Textile Certificate of Origin

§10.248 ATPDEA Declaration of Compliance for Brassieres

§10.256 ATPDEA Non-textile Certificate of Origin

†[§10.306 Evidence of direct shipment for CFTA]

†[§10.307 Documents, etc. required for entries under CFTA Certificate of origin of CF 353]

[†CFTA provisions are suspended while NAFTA remains in effect. See part 181]


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§10.410 US-CFTA Certification of origin and supporting records.

§10.512 SFTA records that the importer may have in support of a SFTA claim for preferential tariff treatment, including an importer's supporting statement if previously required by the port director or Center director before January 19, 2017 or the Center director on or after January 19, 2017.

§10.522 SFTA TPL Certificate of eligibility.

§10.585 CAFTA-DR records that the importer may have in support of a CAFTA-DR claim for preferential tariff treatment, including an importer's certification.

§10.704 US-JFTA records that the importer may have in support of a US-JFTA claim for preferential tariff treatment, including an importer's declaration.

§10.723-10.727 AFTA records that the importer may have in support of an AFTA claim for preferential tariff treatment, including an importer's supporting statement.

§10.765 MFTA records that the importer may have in support of a MFTA claim for preferential tariff treatment, including an importer's declaration.

§10.805 BFTA records that the importer may have in support of a BFTA claim for preferential tariff treatment, including an importer's declaration.

§10.820 BFTA TPL certificate of eligibility.

§10.821 BFTA TPL declaration.

§10.848 HOPE Act Declaration of Compliance.

§10.865 OFTA records that the importer may have in support of an OFTA claim for preferential tariff treatment, including an importer's declaration.

§10.883 OFTA TPL certificate of eligibility.

§10.884 OFTA TPL declaration.

§10.1005 UKFTA records that the importer may have in support of a UKFTA claim for preferential tariff treatment, including an importer's certification.

§10.2003-10.2007 PANTPA records that the importer may have in support of a PANTPA claim for preferential tariff treatment, including an importer's certification.

§10.3005 CTPA records that the importer may have in support of a CTPA claim for preferential tariff treatment, including an importer's certification.

§12.6 European Community cheese affidavit

§12.7 HHS permit for milk or cream importation

§12.11 Notice of arrival for plant and plant products

§12.17 APHIS Permit animal viruses, serums and toxins

§12.21 HHS license for viruses, toxins, antitoxins, etc. for treatment of man

§12.23 Notice of claimed investigational exemption for a new drug


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§§12.26 through 12.31 Necessary permits from APHIS, FWS & foreign government certificates when required by the applicable regulation

§12.33 Chop list, proforma invoice and release permit from HHS

§12.34 Certificate of match inspection and importer's declaration

§12.43 Certificate of origin/declarations for goods made by forced labor, etc.

§12.61 Shipper's declaration, official certificate for seal and otter skins

§§12.73, 12.80 Motor vehicle declarations

§12.85 Boat declarations (CG-5096, or its electronic equivalent) and USCG exemption

§12.91 FDA form 2877 and required declarations for electronics products

§12.99 Declarations for switchblade knives

§§12.104 through 12.104i Cultural property declarations, statements and certificates of origin

§§12.105 through 12.109 Pre-Columbian monumental and architectural sculpture and murals

Certificate of legal exportation

Evidence of exemption

§12.110 Pesticides, etc. notice of arrival

§§12.118 through 12.127 Toxic substances: TSCA statements

§12.140(b) and (c) Canadian-issued Export Permit, Certificate of Origin issued by Canada's Maritime Lumber Bureau.

§12.142 Softwood Lumber Importer Declaration Supporting Documentation, Softwood Lumber Home Packages and Kits Documentation.

§12.152 Kimberley Process Certificate for rough diamonds.

§54.5 Declaration by importer of use of certain metal articles

§54.6(a) Re-Melting Certificate

§102.25 NAFTA textile requirements

Part 113, Appendix B—Bond to Indemnify Complainant Under Section 337, Tariff Act of 1930, as Amended

Part 114 Carnets (serves as entry and bond document where applicable)

Part 115 Container certificate of approval

Part 128 Express consignments

§128.21 *Manifests with required information (filed by carrier)

§§132.15, 132.17 Export certificates, respectively, for beef or sugar-containing products subject to tariff-rate quota.


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§132.18 License, or written authorization, as applicable, for worsted wool fabric subject to tariff-rate quota

§132.23 Acknowledgment of delivery for mailed items subject to quota

§§133.21(e), 133.22(c)(3) and 133.23(e) Consent from trademark or trade name holder to import otherwise restricted goods

§§134.25, 134.36 Certificate of marking; notice to repacker

§141.88 Computed value information

§141.89 Additional invoice information required for certain classes of merchandise including, but not limited to:

Textile Entries: Quota charge Statement, if applicable including Style Number, Article Number and Product

Steel Entries: Ordering specifications, including but not limited to, all applicable industry standards and mill certificates, including but not limited to, chemical composition.

§143.13 Documents required for appraisement entries Bills, statements of costs of production Value declaration

§143.23 Informal entry: commercial invoice plus declaration

§144.12 Warehouse entry information

§145.11 Customs Declaration for Mail, Invoice

§145.12 Mail entry information (CF 3419 is completed by Customs but formal entry may be required.)

Part 148 Supporting documents for personal importations

Part 151, subpart B Scale Weight

Part 151, subpart B Sugar imports sampling/lab information (Chemical Analysis)

Part 151, subpart C Petroleum imports sampling/lab information Out turn Report 24. to 25—Reserved

Part 151, subpart E Wool and Hair invoice information, additional documents

Part 151, subpart F Cotton invoice information, additional documents

§181.22 NAFTA Certificate of origin and supporting records

19 U.S.C. 1356k Coffee Form O (currently suspended) Other Federal and State Agency Documents

State and Local Government Records Other Federal Agency Records (See 19 CFR part 12, 19 U.S.C. 1484, 1499)

Licenses, Authorizations, Permits Foreign Trade Zones

§146.32 Supporting documents to CF 214


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Three, no four, perspectives to transportation • Shipper • Carrier/service provider • Consignee • AND don’t forget the government agencies !!!

There are 2 Basic Types of International Freight Services

• Ocean Freight o Full Container Load (FCL) o Less than Container Load (LCL)

• Air Freight O/F Container Specs:

Equipment Interior Cubic Cap. Payload 85% Load

Factor

20’ Dry

L: 5.919m 19’5” 33 CBM 22,100

KG. 27-29 cbm W: 2.34m 7’8” 1,165 CFT 48,721

LBS. H: 2.38m, 7’9.5”

40’ Dry

L: 12.051m 39’7” 67.3 CBM 27,397

KG. 55-57 cbm W: 2.34m 7’8” 2,377 CFT 60,401

LBS. H: 2.38m 7’10”

L: 12.056m 39’7” 76 CBM

62-65 cbm

40' HQ

W: 2.347m 7’8” 2,684 CFT 65,256

LBS. H: 2.684m 8’10”

45' High Cube

L: 13.582m 44’7” 85.7 CBM 28,390

KG. 69-72 cbm W: 2.347m 7’8” 3.026 CFT 62,589

LBS. H: 2.690m 8’10”

FCL Movement Key Considerations: 1. Direct – West Coast, East Coast, Gulf Coast 2. IPI/MLB – West Coast discharge then rail to inland hub 3. RIPI – East Coast discharge then rail to inland hub 4. Canada – Vancouver, Prince Rupert, Halifax, Montreal…


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LCL Movement Key Considerations:

1. Not enough cargo to fill a 20’ container 2. Cost 3. Damage, theft, delivery times 4. Will be deconsolidated for US destination movement

Movement types:

1. Port to Port 2. Port to Door 3. Door to Port 4. Door to Door

Air Cargo Key Facts:

1. Faster than ocean (1-5 days vs 15-30 days) 2. More expensive than ocean (5-10 times more) 3. Rates are based on the greater of gross weight vs dimensional weight. Chargeable weight

could be based on the size a box of feathers or the weight of a box of lead balls. 4. Some cargo must move on “all cargo only” aircraft.

Calculations for international transportation moves

Length x width x height x number of pieces / 1,000,000 = CBM Volume Ratio: 6000 cubic centimeters to one kilogram (air) 800 lbs or 363 kgs = 1 CBM 1) Number of pcs x (length x width x height) in inches = cubic inches

Divide cubic inches by 166 = volume weight in lbs Divide cubic inches by 366 = volume weight in kgs 2) Number of pcs x (length x width x height) in centimeters = cubic centimeters Divide cubic centimeters by 2715 = volume weight in lbs Divide cubic centimeters by 6000 = volume weight in kgs


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INTERNATIONAL TERMS OF SALE INCOTERMS 2010

The International Chamber of Commerce created Incoterms as a worldwide standard to be used in contracts of sale for expressing the rights and obligations of buyers and sellers – specifically, regarding the delivery of the goods. We have provided definitions for the two classes of Incoterms, any transport mode and maritime only.

1. TERMS FOR ANY TRANSPORT MODE

• EXW – EX WORKS (… named place of delivery) o The Seller’s only responsibility is to make the goods available at the Seller’s premises. The Buyer bears

full costs and risks of moving the goods from there to destination. • FCA – FREE CARRIER (… named place of delivery) o The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller loads

the goods if the carrier pickup is at the Seller’s premises. From that point, the Buyer bears the costs and risks of moving the goods to destination.

• CPT – CARRIAGE PAID TO (… named place of destination) o The Seller pays for moving the goods to destination. From the time the goods are transferred to the first

carrier, the Buyer bears the risks of loss or damage. • CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination) o The Seller pays for moving the goods to destination. From the time the goods are transferred to the first

carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance.

• DAT – DELIVERED AT TERMINAL (… named terminal at port or place of destination) o The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at

the Buyer’s disposal at a named terminal at the named port or place of destination. “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

• DAP – DELIVERED AT PLACE (… named place of destination) o The Seller delivers when the goods are placed at the Buyer’s disposal on the arriving means of transport

ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place.

• DDP – DELIVERED DUTY PAID (… named place) o The Seller delivers the goods -cleared for import – to the Buyer at destination. The Seller bears all costs

and risks of moving the goods to destination, including the payment of Customs duties and taxes.


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2. MARITIME-ONLY TERMS

• FAS – FREE ALONGSIDE SHIP (… named port of shipment) o The Seller delivers the goods to the origin port. From that point, the Buyer bears all costs and risks of

loss or damage. • FOB – FREE ON BOARD (… named port of shipment) o The Seller delivers the goods on board the ship and clears the goods for export. From that point, the

Buyer bears all costs and risks of loss or damage. • CFR – COST AND FREIGHT (… named port of destination) o The Seller clears the goods for export and pays the costs of moving the goods to destination. The Buyer

bears all risks of loss or damage. • CIF – COST INSURANCE AND FREIGHT (… named port of destination) o The Seller clears the goods for export and pays the costs of moving the goods to the port of destination.

The Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo insurance.

The brief definitions above were paraphrased from the ICC publication, Incoterms 2010: ICC Official Rules for the Interpretation of Trade Terms, effective January 1, 2011.

http://www.miq.com/wp-content/uploads/2014/06/Incoterms-Image.png


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EXPLANATION OF INCOTERMS The International Chamber of Commerce (ICC ) published the 8th and current version of its International Commercial Terms, also known as INCOTERMS® on January 1, 2011. As of 2014, we are not aware of any edits to the current version.

The revised rules, originally designated “INCOTERMS 2010“, contain a series of changes, such as a reduction in the number of terms to 11 from 13. The DAF, DES, DEQ, and DDU designations have been eliminated, while two new terms, Delivered at Terminal (DAT) and Delivered at Place (DAP), have been added. INCOTERMS 2010 also attempt to better take into account the roles cargo security and electronic data interchange now play in international trade.

WHAT INCOTERMS ARE INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. First published in 1936, INCOTERMS provide internationally accepted definitions and rules of interpretation for most common commercial terms. In the US, INCOTERMS are increasingly used in domestic sales contracts rather than UCC shipment and delivery terms.

WHAT INCOTERMS DO INCOTERMS inform the sales contract by defining the respective obligations, costs and risks involved in the delivery of goods from the Seller to the Buyer.

WHAT INCOTERMS DO NOT DO INCOTERMS by themselves DO NOT:

• Constitute a contract; • Supersede the law governing the contract; • Define where title transfers; nor, • Address the price payable, currency or credit terms.

These items are defined by the express terms in the sales contract and by the governing law.


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PRACTICE POINTS

• BE SPECIFIC: o If you use INCOTERMS in the Sales Contract or Purchase Order, you should identify the appropriate

INCOTERM Rule [e.g. FCA, CPT, etc.], state “INCOTERMS 2010″ and specify the place or port as precisely as possible.

• RECOGNIZE WHERE THE RISK OF LOSS TRANSFERS: o A common misconception when the Seller pays the freight is that the Seller has the risk of loss until the

goods are delivered to the place or port specified on the bill of lading or airway bill. Actually, when using INCOTERMS CPT, CIP, CFR or CIF, risk transfers to the Buyer when the Seller hands the goods over to the carrier at origin, not when the goods reach the place or port of destination.

o Understand that under CIP and CIF, the Seller is only obliged to obtain insuranceon minimum cover. • UNDERSTAND WHO HAS RESPONSIBILITY FOR LOADING AND UNLOADING CHARGES. FOR

EXAMPLE: o DAT obliges the Seller to place the goods at the Buyer’s disposal after unloading at the named terminal

at port or place of destination. o DAP and DDP oblige the Seller to place the goods at the Buyer’s disposal on the delivering carrier ready

for unloading at the named place of destination. o CPT, CIP, CFR or CIF on the other hand, require the parties to identify as precisely as possible the point

at the agreed port of destination because the costs up to that point are for the account of the Seller. o Under FCA terms, the seller satisfies his obligation to deliver when he has handed over the goods,

cleared for export, into the charge of the carrier named by the buyer at the named place or point. The buyer is responsible for inland freight, unloading at port of embarkation and loading on ocean carrier/airline.

• UNDERSTAND WHO HAS RESPONSIBILITY FOR U.S. CUSTOMS ENTRY DECLARATIONS: o DDP is the only INCOTERM where the Seller has responsibility for U.S. Customs entry declarations. o IMPORTANT NOTE: An important factor to be considered when asking the Seller to be responsible for

international carriage, is if the goods ship by Ocean Freight, an Importer Security Filing (ISF) must be electronically submitted to Customs 24 hours before the cargo is laden on the vessel bringing the cargo to the U.S. The Buyer should specify in the contract either (a) the shipper is responsible for the ISF or (b) the Seller is responsible for providing the required data in a timely manner (i.e. 72 hrs before lading) to the Buyer’s appointed agent (e.g. Customs Broker). In practice, when the broker and the international forwarder are unrelated parties, this requirement is honored more in the breach than in the observance. The Buyer responsible for customs entry should indemnify against the penalties (US$5,000) for filing a late, inaccurate or incomplete ISF. The ISF does not apply at this time to airfreight shipments

• DETERMINE THE IMPORTANCE OF SUPPLY CHAIN VISIBILITY o When CPT, CIP, CFR or CIF are used the Seller fulfills its obligation to deliver when it hands the goods

over to the carrier, not when the goods reach the place of destination. o DAT, DAP and DDP the Seller fulfills its obligation to deliver at the named destination. The Seller has no

obligation to provide transit status updates.

ABC’s OF CUSTOMS BROKERAGE (2.3) · 2020. 4. 6. · A freight forwarder, forwarder, or forwarding...

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