THE INSTITUTE OF FINANCE

MANAGEMENT

BACHELOR IN BANKING AND

FINANCE

SECOND YEAR
12/09/2021 1
 Agenda One: International Trade

Part One;
The concept of International
Trade Finance

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Introduction
International trade, as the name implies, is
the exchange of goods, services and
capital/money across national borders.
International trade consists of goods and
services moving in two directions:
1. Import – flowing into a country from
abroad
 2. Export – flowing out to other countries.

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International Trade Vs. Domestic
Trade
Domestic Trade
 Common language & culture
 Same laws
 Absence of customs formalities
 Relatively simple documentation
 Single currency
 Simple transportation formalities
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International Trade Vs. Domestic Trade
International Trade
 Copying with customs formalities
 Dealing with different legal requirements
 Dealing with multiple currencies
 Complex documentation
 Complex transport arrangements

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Parties to International
Trade
Basically there are two major parties to
an international trade transaction;
the seller also called the exporter and
the buyer also known as the importer
Banks are not parties to international
trade transactions but they play an
important role in facilitating payment.
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Parties to International Trade
The countries of the exporter and
importer also play a vital role in
international trade. These are where the
importer and the exporter operate hence
rules and regulations of the respective
countries have to be applied and
complied with.

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Reasons for Going
International
Note: A country may import goods from
other countries and export other goods to
other countries; this is because it cannot
satisfy all its requirements from the
limited home production possibility.
There are various reasons that give rise to
the buyers and sellers entering into a
contract of sale internationally
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Reasons for Going
International
Differences in Technology
 Countries have different technological
abilities in producing goods and services.
 Technology refers to the techniques used
in turning resources into output.
Existence of Government Policies
 Government tax and subsidy programs can
be sufficient to generate advantage in
production of certain goods
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Reasons for Going
International
Differences in Resources Endowments
 Resources endowments refers to the
skills and abilities of a country’s
workforce; natural resources available
and sophistication of its capital stock
(machinery, infrastructure,
communication systems). OR
 Amount of land, labor, capital and
entrepreneurship
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Reasons for Going
International
Differences in Demand
 Demand or preferences for goods and
services of people in different countries
is not the same
Conducive Climate
 Some countries do have more
conducive climate for the production of
certain type of goods/raw materials than
others
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Reasons for Going
International
Existence of Economies of Scale
 The existence of economies of scale in
production is a good reason to generate
advantageous trade between two
countries
 Economies of scale refers to a
production process in which production
costs fall as production volume rises
 Comparative price advantage
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Reasons for Going
International
To extend product life cycle
 A product may be at the last stage of its
life cycle. But by introducing it in a new
market, it is seen as a new product. (by
reducing price and sell to different
countries)
To open new markets to sell its products
Exploiting the international trade
arrangements like AGOA (african growth
and opportunity act (to enhance market
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General Idea
Hence all countries need international trade for various
reasons much more as an extension of territorial
specialization that is based on;
Absolute advantage &
Comparative advantage
 ABSOLUTE ADVANTAGE
Absolute advantage is the ability of a producer to produce
a greater quantity of a good or a service with the same
quantity of input per unit of time, or to produce the same
quantity of a good or service per unit of time using a lesser
quantity of inputs than its competititors due to the
following;
Uneven distribution of Natural resources, Difference in 14
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EXAMPLE OF ABSOLUTE
ADVANTAGE
COUNTRY COMPUTER PER DAY NUMBER OF
EMPLOYEES
A 2 3
B 4 3

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EXAMPLE OF ABSOLUTE
ADVANTAGE
Country B has an absolute advantage in
manufacturing computers. It can produce more
computers with the same amount of resources than
country A.

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General Idea Cont..
COMPERATIVE ADVANTAGE THEORY
[By David Ricardo]
In fact a country can have both absolute
advantage and comparative advantage
Comparative advantage refers to an ability of
the country to produce a good or service for a
lower opportunity cost than other countries.
Thus a county has to specialize in producing
(output) of those goods and services which
have a comparative advantage in production.
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COMPARATIVE ADVANTAGE
EXAMPLE
PRODUCT COUNTRY C COUNTRY D

1 COMPUTER 5 HOURS 24 HOURS

1 TELEVISION 10 HOURS 12 HOURS

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COMPARATIVE ADVANTAGE
EXAMPLE
Country C has absolute advantage in producing both
computer and television.
Country C has comparative advantage in producing
computer while country D has comparative advantage in
producing television.
Because in country C, producing 1 unit of computer creates
an opportunity cost of producing 0.5 of television while 1
unit of television creates cost of 2 computers
In country D producing 1 unit of computer creates an
opportunity cost of 2 televisions while 1 unit of television
creates cost of 0.5 of computer.
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Advantages of International
Trade
More variety of goods and services
available for consumption
 International trade will bring in
different varieties of a particular
product/service from different parts of
the world hence giving consumers a
wide choice

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Advantages of International
Trade
Efficient Allocation and Better
Utilization of Resources
 Countries will try to produce goods
which they have comparative
advantage and therefore wastage and
duplication of resources will be
minimizes
Creates good relationship between one
country and another
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Advantages of International
Trade
Promotes Efficiency in Production-
because of specialization in production

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Advantages of International
Trade
Creates More Employment
 As the market for country’s goods
widens through trade, new industries
come up and hence more employment
opportunities
Monetary gains to the countries involved
in trade
More exchange of technical know-how
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Disadvantages of International
Trade
Local industries may suffer due to
imported goods
 Cheap
 Good quality
Rich countries may influence
political decisions in other countries
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Disadvantages of
International Trade
Local industries may be over shadowed
by international competitors and kill them
It could lead to more rapid depletion of
natural resources (consumption of
resources faster than they can be replaced)
Dependence of one country for an
important commodity may have
undesirable circumstances
Country may be turned into a dumping
ground
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 The Role of Financial Institutions
in International Trade
Due to the fact that importers and
exporters are in different countries
and there is a marked distance
between them, Financial Institutions
play an important role in
international trade.
These roles include but not limited
to:
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 The Role of Financial Institutions
in International Trade
Provision of Foreign Exchange Services
Keeping accounts of exporters and
importers
Buying and selling foreign currencies
Currency conversion for customers
Bank’s treasury dept. provide forward
exchange cover to importers and
exporters
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 The Role of Financial
Institutions in International
Trade
Advise to importers or exporters of either
to hedge or not
Giving information on exporters and
importers
Administer exchange control regulations
Transfer and settlement through nostro &
vostro accounts
Handling of documents relating exports
and imports
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 The Role of Financial
Institutions in International
Trade
Provision of Credit Facilities
Banks can offer both, Pre-shipment
financing and Post-shipment financing in
terms of;
Loans, overdrafts and packing credits
(manufacturing, purchase, packing e.t.c)
Letters of credits, negotiation of
documents and acceptance facilities
Guarantees such as shipping guarantees,
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The Role of the Non-banking
sector
The non- banking sector has also a hand in
facilitating international trade;
 Laws
Regulations
Insurance
Transport
Standards
Etc
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CLASS ACTIVITY
1. Define international trade and international finance
2. Describe the differences between international trade
and international finance.
3. Identify other disadvantages of international trade.

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Part Two

Terms of sale

International Commercial TERMS

( INCOTERMS)

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Introduction and Importance of
Incoterms
International Commercial TERMS
commonly known as INCOTERMS were
first published in 1936 by the
International Chamber of Commerce .
They are internationally recognised as
international trade terms that refer to
the type of purchase contract and
shipping of goods internationally.
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 Introduction and Importance of
Incoterms
Incoterms are key elements of
international contract of sale as they
explain to the buyer, seller and other
parties what to do with respect to:
Shipment of goods from the seller to the
buyer who are in different countries
Customs clearance and
To explain the division of costs and risks
between the parties
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Introduction and Importance of
Incoterms
It is of paramount importance to
establish the cut off point where;
The responsibilities of the seller/exporter
end and where;
The responsibilities of the buyer/importer
begin.
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Introduction and Importance of
Incoterms
The purpose of INCOTERMS is
therefore;
To establish a set of standardized terms
of carriage contracts which mean
exactly the same to all parties and will be
interpreted in exactly the same way by
courts in every country.
Currently there are eleven incoterms as
explained hereafter;
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1. EXW (‘Ex Works’)
It requires the seller to only make the goods
available for the buyer at their warehouse or
dock. Once the buyer collects the cargo the
buyer assumes all the responsibilities and
costs.
SELLER'S primary duties:
Procure the contracted goods
Deliver the goods at his premises
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1. EXW (‘Ex Works’)
BUYER'S primary duties:
Take delivery of the goods at seller's premises
Contract for carriage and pay for freight
Provide for export clearance (preparation and
submission of documentations required by custom and
taking goods to custom authority to facilitate the
movement of cargo outside the country.)
Pay for insurance of the goods
Provide for import clearance
Pay for loading and off loading charges if not covered
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2. FCA (‘Free Carrier’)
It requires the seller to deliver goods to a named
airport, shipping terminal, warehouse or other carrier
locations specified by the buyer.Seller carry out
export formalities and buyer carry out import
formalities.
SELLER'S primary duties:
Procure the goods as contracted
Deliver the goods at the named point into the custody
of the carrier named by the buyer
Provide export clearance (export license, pay export
taxes and fees, if required)
Provide evidence of delivery of the goods to the
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2. FCA (‘Free Carrier’)
BUYER'S primary duties:
Nominate carrier
Contract for the carriage and pay for the
freight
Pay for insurance
Obtain import clearance (import license,
pay import taxes and fees, if required), in
the importer’s country
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3. CPT (‘Carriage Paid To’)
The seller incurs the risks and costs associated with delivering
goods to a carrier to an agreed upon destination.
With multiple carriers, the risk and costs transfers to the buyer
upon delivery to the first carrier
SELLER'S primary duties:
Contract for the carriage and pay the freight to the named place
of destination
Deliver the goods into custody of first carrier
Provide export clearance (export license, pay export taxes and
fees, if required)
Provide the buyer with the invoice, the usual transport
documents and the cargo insurance policy or other evidence of
insurance coverage
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 CPT (‘Carriage Paid To’) Cont...
BUYER'S primary duties:
Accept delivery of the goods when they
are delivered to the first carrier and when
the invoice, the cargo insurance policy or
other evidence of insurance coverage,
and, if customary, the usual transport
document are tendered to him, and
receive goods from the carrier at the
named place of destination

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4. CIP(‘Carriage and
Insurance Paid’)
SELLER'S primary duties:
Contract for the carriage and pay the
freight to the named place of
destination
Deliver the goods into the custody of
the first carrier
Provide export clearance (export
license, pay export taxes and fees, if
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4. CIP(‘Carriage and
Insurance Paid’)
SELLER'S primary duties cont.…:
Contract for the insurance of the goods
during the carriage and pay the insurance
premium
Furnish the buyer with the invoice, the
usual transport documents and the cargo
insurance policy or other evidence of
insurance coverage
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4.CIP (‘Carriage and
Insurance Paid’)
BUYER'S primary duties:
Accept delivery of the goods when they
are delivered to the first carrier and when
the invoice, the cargo insurance policy or
other evidence of insurance coverage,
and, if customary, the usual transport
document are tendered to him, and
receive goods from the carrier at the
named place of destination
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 DAT (‘Delivered at
5.

Terminal’)
SELLER'S primary duties:
Pay for transport to a specified terminal at the agreed
destination. Responsible for the goods and cost until they get
unloaded to the destination terminal.
Responsible for the goods until they get unloaded at the
destination terminal
BUYER'S primary duties:
Responsible for the cost (custom fee, delivery) of importing
the goods.
Take responsibility once the goods are unloaded at the
terminal.
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DIFFERENCE BETWEEN DAT
AND CPT

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 DAP (‘Delivered at
6.

Place’)
SELLER'S primary duties:
Pay for transport to the specified destination,
Takes responsibility for the goods until
they’re ready to be unloaded by the buyer.
Loading the goods on the truck from the
destination terminal to final destination
BUYER'S primary duties:
Pay the cost of importing the goods.
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DIFFERENCE BETWEEN DAP
AND CPT
Unlike DAP, under the CPT incoterm, risk transfers to
the buyers as soon as the goods are under control of
carrier at the origin.
Example, if the goods somehow get lost or damaged
while onboard an ocean vessel, the seller is not
responsible. If the buyer wishes to cover the goods for
the loss or damage, the buyer is responsible for that
cost, as well as the cost for customs import fees and
taxes.

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 DDP/DTP (‘Delivered
7.

Duty Paid’)
SELLER'S primary duties:
Deliver the goods at the named place of destination plus
transport cost to get the goods to the named delivery point
Provide import clearance (import license, pay import
duties, taxes and custom fees, if required)
Provide documents to enable the buyer to take delivery at
the named place of destination
Responsible incase of loss or damage along the way
BUYER'S primary duties:
Take delivery of the goods at the named place of
destination
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8. FAS (‘Free Alongside
Ship’)
SELLER'S primary duties:
Procure the goods
Deliver the goods alongside the carrying
vessel (origin port)
BUYER'S primary duties:
Nominate carrier and advise the seller
Provide export clearance (export license, pay
export taxes and fees, if required)
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8. FAS (‘Free Alongside Ship’)
BUYER'S primary duties cont.…..:
Contract for the carriage and pay the freight
Pay for insurance
Pay for the price of the goods
Everything else to get the shipment to the
destination
NB: IT IS USED ONLY FOR SEA AND
INLAND WATERWAY TRANSPORT
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9. FOB (‘Free on Board’)
SELLER'S primary duties:
Procure the goods contracted
Deliver the goods to the origin port and get
them loaded to the ship of buyer’s choice
Provide export clearance (export license,
pay export taxes and fees, if required)
Provide a clean on board receipt
Pay loading costs according to the custom of
the port to the extent that they are not included
in the freight
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9. FOB (‘Free on Board’)
BUYER'S primary duties:
Nominate carrier and advise the seller
Contract for the carriage and pay the freight
(after the goods loaded to the ship) and any
subsequent cost to get goods to the final
destination.
Pay for insurance
Pay for the price of the goods
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 . CFR (‘Cost and
10

Freight’)
SELLER'S primary duties:
Procure the goods as contracted
Contract for the carriage and pay the
freight to the named port of destination
Deliver the goods to the origin port
Provide export clearance (export license,
pay export taxes and fees, if required)
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 CFR (‘Cost and
10.

Freight’)
SELLER'S primary duties cont.….:
Furnish the buyer with the invoice
and the usual transport documents
Pay loading costs to the extent that
they are included in the freight

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 CFR (‘Cost and
10.

Freight’)
BUYER'S primary duties:
Accept the goods upon delivery, when the
invoice and the shipping document are
tendered to him, and receive the goods from
the carrier at the named port of destination
Pay for insurance of the goods (as the buyer
assumes the risk as soon as its loaded on
board)
Pay for the goods as invoiced by seller
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11. CIF(‘Cost, Insurance and
Freight’)
SELLER'S primary duties:
Procure the goods as contracted
Contract for the carriage and pay the
freight to the named port of destination
Deliver the goods to the origin port
Provide export clearance (export license,
pay export taxes and fees, if required)
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11. CIF(‘Cost, Insurance and
Freight’)
SELLER'S primary duties cont.….:
Furnish the buyer with the invoice, the
usual transport documents and the
insurance documents
Pay loading cost and handling
Pay unloading costs to the extent that
they are included in the freight

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11. CIF(‘Cost, Insurance and
Freight’)
BUYER'S primary duties:
Accept delivery of the goods upon receipt of
shipment documents, the invoice and the insurance
policy at the named port of destination
Contract for the insurance of the goods during the
carriage and pay the insurance premium
Pay unloading costs to the extent that they are not
included in the freight
Pay for the goods as invoiced
Pays for transportation to the final destination
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Part Three

Terms of Payments
Or
Methods of Payments

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Introduction
 Methods of payment or Terms of payment
reflect the extent to which the
seller/exporter requires a guarantee for
payment before he loses control of the
goods
 The more trustworthy and creditworthy the
importer is, the lesser will be the
exporter’s need for payment guarantee
before he loses control of the goods
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Introduction Cont..
There are four basic terms of payment
used in international trade, these are;
 Payment in Advance
 Open Account
 Documentary Collection
 Documentary Credit

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1. Payment in Advance
Definition: The buyer places the funds at the
disposal of the seller prior to shipment of the
goods or provision of services
Time of payment : Before shipment
Goods available to buyers : After payment
Risk to exporter : None
Risk to importer : Relies completely on
exporter to ship goods as ordered
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2. Open Account
Definition; an arrangement between the buyer
and the seller whereby the goods are
manufactured and delivered before payment is
required
Time of payment : after receipt of goods by
buyer (as agreed upon)
Goods available to buyers : Before payment
Risk to exporter : Relies completely on buyer
to pay account as agreed upon
Risk to importer : None
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3. Documentary collection
Definition; an arrangement whereby
the goods are shipped and the
relevant bill of exchange is drawn by
the seller to the buyer, and / or
documents are sent to the seller’s
bank with clear instructions for
collection through one of its
correspondent banks located in the
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3. Documentary collection
The documentary collection is of the most
customary methods of payment in international
trade.
Under documentary collection goods are
shipped to the buyer and the documents
covering the shipment as well as the seller’s
draft (or BOE) are presented through the
buyer’s bank for payment.
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DOCUMENTARY COLLECTION
A key document in a documentary collection
is the bill of exchange or draft, which is a
formal demand for payment from the exporter
to importer.
To facilitate the transaction, two banks are
usually involved, one in the exporters country
(remitting bank) and one in the importer’s
country (collecting bank). The banks may be
independent banks or branches of the same
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TYPES OF DOCUMENTARY
COLLECTION
A documentary collection falls into two basic categories,
depending on when the payment is made to the exporter:

1. Documents against payment require the importer to pay the

face amount of the draft at sight. In other words, the payment
must be made to the bank when the buyer is presented with the
draft, and before any shipping documents are released. This is
the most common form of documentary collection because of
the reduced risk for the seller.
69
 2. Documents against acceptance require the importer
to pay on a specified date. Once the buyer accepts the
time draft, the bank releases the documents to the buyer.

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Steps in export and
Documentary Collection
Below is the step-by-step process:
1. The sale is made when the buyer and seller
agree on the amount to be paid, the shipping
details, and that the transaction will be a
documentary collection. Then, the exporter
delivers the goods to the port or location
where the merchandise will be exported from,
which is usually through a freight forwarder.
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Steps in export and
Documentary Collection
2. The documents are prepared and sent to the exporter's
bank, which is also known as the remitting bank. The
exporter's bank then forwards the documents to the
importer’s bank, which is known as the collecting bank.
3. The importer's or buyer's bank receives the
documents and notifies the buyer that documents have
been received. The buyer's bank requests payment from
the buyer in exchange for the documents.
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 4. Once the buyer's bank has been paid, or the
buyer has accepted the time draft, the bank
releases the documents to the buyer. The buyer
uses the documents to collect the merchandise.
Advantages;

1. Banks fees are less expensive, usually a

specific sum for each service as opposed to a
percentage of transaction amount which is used
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 2. Increase the likelihood of payment for the seller, as
the buyer may not be able to obtain the goods without
payment or acceptance of the collection;
3. Provide some assurance to the buyer that the
shipment will arrive, although the buyer will often not
be able to examine the goods before payment or
acceptance of the collection;

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DISADVANTAGES OF
DOCUMENTARY COLLECTION
Disadvantages;

1. There is no guarantee of payment or immediate

payment by the buyer
2. His capital is tied up until the fund is received.
3. Should the collection be unpaid, the costs of
protecting the goods can be high. Finding an alternative
buyer, willing to pay a fair price, in a far country, may
be difficult, particularly for perishable goods.
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4. Documentary Credit
Letters of credit is a payment technique whereby a
bank commits itself, on behalf of its client (importer)
to pay to the beneficiary (exporter) within a fixed
period, the price of goods or services against the
delivery by the exporter of previously agreed and
compliant documents proving the value and shipment
of goods or services.
In short, a documentary credit is ‘ an instrument by
which a buyer’s bank undertakes to pay seller against
stipulated documents for his goods provided the seller76
12/09/2021
4. Documentary Credit
Therefore, a Letter of Credit is:
A written undertaking by a bank
Given to a seller at the request of and in
accordance with instructions of the buyer
To effect payment up to a stated sum of
money
Within a prescribed time limit
Against presentation of stipulated
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STEPS OF DOCUMENTARY
CREDIT
1. The signature of the contract between the exporter
and the importer
2. The request for the opening of a documentary credit
3. The issue of the documentary credit
4. Notification of documentary credit confirmed or not
5. Shipment of goods
6. Delivery of documents

12/09/2021 78
 7. Sending of documents
8. Payment (by the issuing bank)
9. Payment (by the notifying bank to the exporter)
10. Delivery of documents (by importer’s bank to importer)
11. Payment (by importer to his bank)

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Conclusion
From the above, it can be concluded
that a documentary letter of credit is
more secured to both importers and
exporter.
While open account terms favour the
buyer, advance payment favours the
seller and Documentary collection is
in between in the two .
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Part Four

Documents Used
In
International Trade.

12/09/2021 81
Introduction
In international trade transactions,
banks deal only in documents which
represent the goods and services and
not otherwise.
Documents are sets of materials to
justify the international trade and
thus are the base for international
settlement.
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Introduction
Fundamental requirements for preparing
documents mentioned are:
Accuracy. (correct)
Documents should be reported with the
conformity with other documents related
and certificates involved.
Integrity.
Documents should be integrated in terms
of contents, copies and sets.
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Introduction
Without delay.
Documents do control the goods and
therefore it is important to ensure that the
documents are at the right place and at
the right time in order to facilitate
delivery and payment for the goods

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Introduction
Documents required for an international
sale can vary significantly from
transaction to transaction depending on
the destination and the product being
shipped.
At minimum, there will be two
documents;
the invoice and
the transport document.
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Introduction
The buyer will usually provide the
seller with a list of documents
needed to get the goods into his
country as fast and at the cheapest
cost as possible.
Some documents are not open to
discussion as they are needed by the
buyer to clear customs at the port of
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Introduction
Because of their importance,
documents must be correct in all
aspects
Any discrepancy will cause the
buyer or make the buyer have an
excuse of not paying for the goods

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Introduction
Documents in international trade may be
grouped in four categories;
Financial documents
Transport documents
Insurance documents, and
Other documents
At least one of each document presented must
be an original document.

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Financial Documents
Bill of Exchange (BoE)
Is an unconditional order in writing,
addressed by one person to another,
signed by the person giving it, requiring
the person to whom it is addressed to pay
on demand or at a fixed date or at a fixed
determinable future date a sum certain in
money to or to the order of a specified
person, or to bearer.
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Financial Documents
The BoE is a document which establishes a
legal undertaking to pay a sum of money.
BoE is drawn by a seller requiring the buyer to
make payment;
On demand
Fixed date in future

Fixed determinable future date

Gives a credit period to the buyer

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Financial Documents
Promissory Note
Unconditional promise to pay in writing
by the buyer/debtor to the seller/creditor
on;
Demand
Fixed future date
Fixed determinable future date
A promissory note is not a Bill of
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Financial Documents
Commercial Invoice
Is the accounting document by which the
seller claims payment from the buyer for
the value of the goods or services
supplied
Some of the information which must
appear in a commercial invoice will
include;
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Financial Documents
Date of issue
Invoice number
Order/contract number, quantity, description of
the goods, unit price and the total price
Name and address of the buyer
Shipping marks and numbers
Shipping details
Terms of delivery and payment
 Any other information as per contract of sale
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Financial Documents
Pro forma Invoice
It is a declaration by the seller to provide
products
This document is very similar to the
commercial invoice but has no shipping marks
and clearly stated Pro Forma Invoice
Gives price quotations with no guarantee to
sell or buy
Assists in obtaining import/export licence
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Financial Documents
Consular Invoice
Is a certificate issued by the trade
consulate of importers country stating that
good of articular value are imported from
a particular country
These invoices evidence that the
shipment meets certain statutory or
regulations of the importing country.
It is a copy of the invoice which has been
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Transport Documents
Bill of Lading ( B/L )
Issued by the shipping company
acknowledging receipt of goods and
forms a contract of carriage
Some of the information contained in a
bill of lading are;
Name of the shipping company-Carrier
Name of the shipper-Exporter
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Transport Documents
Name of the consignee/order
Name of the carrying vessel
Ports of loading and discharge
Description of the goods

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Transport Documents
Functions of a bill of lading
A bill of lading serves a number of
functions;
Receipt for goods
It is a document in which the carrier
acknowledges receipt of goods-’’received
in apparent good order and condition’’;
‘Clean Bill of Lading’
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Transport Documents
Contract of Carriage
Evidence of a contract of carriage either
between the exporter and the carrier and
or between the importer and the carrier

Details of the contract of carriage appear

on the bill of lading
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Transport Documents
Document of Title to Goods
A B/L acts as a document of title for the
goods and goods will be released on
production of one of the original copies of
the bill of lading
Quasi-Negotiable Document
Any transferee for value who takes
possession of the endorsed B/L has a good
title if the transferor had one.
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Transport Documents
Types of Bill of Lading
Clean (On Board) Bill of Lading
Issued when goods received are in
apparent good order and condition
Dirty or Foul Bill of Lading
Issued when the goods received are
defective; e.g., if oil, two drums leaking
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Transport Documents
Received for Shipment Bill of Lading
This is a bill of lading in which the
shipping company acknowledges receipt
of the goods with no guarantee as to when
the goods will be shipped.
Therefore, it is not a good document as
goods may remain without being shipped
for a considerable time.
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Transport Documents
Combined Transport or Through B/L
This is a B/L which allows goods to be
transported using more than one mode of
transport. Also known as Multimodal B/L
Transshipment Bill of Lading
Where more than one ship is going to be
used in transporting the goods, the
Transshipment B/L is issued
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 Transport Documents
Container Bill of Lading
Issued when goods are sealed in
containers i.e. what are received are the
containers
Charter Party Bill of Lading
Issued by a hirer of a ship to the shipper.
Terms of the B/L will also take into
account the terms of the contract of hire
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Transport Documents
Air Waybill / Air Consignment Note
These are issued when goods are
transported by planes-air freighted,
therefore, they are issued by Airlines.

UCP Article 27, stipulates that only

‘clean’ transport documents will be
accepted, and that the word clean need no
appear.
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Insurance Documents
The contract of sale will tell who is
responsible for insuring the goods from
when the consignment leaves the seller’s
premises up to the time the buyer takes
delivery of the goods-goods in transit.
The shipping terms will indicate, e.g.
FOB; the buyer
CIF; the seller
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Insurance Documents
Open Policy
This is issued when the exporter makes
regular sells, therefore the policy covers a
series of exports for a specific period
The insurance cover is for all times and
within the same terms and conditions
For each shipment, details be given to the
insurer and premium be paid
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Insurance Documents
Insurance Policy
This is issued when the exporter sells
goods on a one-off basis.
 The exporter will have to negotiate with
the insurers on terms and conditions of
the policy
Each time an export is made, a new
policy has to be issued
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Insurance Documents
The insurer issues an Insurance Certificate
with the following details;
Name and signature of the insurer
Name of the exporter
Risks covered and the sum insured
Description of the goods
The place where the claims are payable
Date of issue and signature of the exp

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Other Documents
Certificate of Origin
This document shows the originality of
the goods.
Relevant details are inserted by the
exporter and authenticated by an
independent party such as Chamber of
Commerce in the exporting country.
Details must match with other documents
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Other Documents
Black List Certificate
This is necessary in some of the countries
to certify that goods have no connections
with certain countries
Packing List
It itemizes the merchandise by number of
cartons, packages, etc, and the contents of
each.
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Other Documents
Inspection Certificate
This certificate is issued by an independent
third party confirming that merchandise
conforms to the buyer’s criteria
The criteria should be specifically spelled
out in the letter of credit.
If there are any defects, the certificate must
state exactly the condition of the goods
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Other Documents
Inspection of the goods can be carried
out before or after shipment of the goods,
under Pre-shipment Inspection Program
or Destination Inspection Program.
Prior to July, 2004, goods entering into
Tanzania were verified before entering the
country. However, the system was
changed from July, 2004, to DI System.
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The Role of Customs & Excise
Department in Documentation
The movement of goods into and out any
country is controlled by the Customs
Administration.
Goods crossing the borders should pass
through Customs clearance formalities.
Clearance of the goods is facilitated by
the documents submitted to the Customs
Administration.
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The Role of Customs & Excise
Department in Documentation
These documents assist the
Customs Administration to
authenticate the legality and
genuineness of the goods and levy
the appropriate taxes.

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The Role of Customs & Excise
Department in Documentation
For imports into Tanzania, the documents submitted
include;
Bill of Lading,
Commercial Invoice,
Import Declaration Form ,
Packing List, Permit for restricted goods,
Certificate of Origin, and
Other certificates if any.
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