Monday, August 1, 2011
Advising bank
Advising bank
An advising bank (also known as a notifying bank) advises a beneficiary (exporter) that a letter of credit (L/C) opened by an issuing bank for an applicant (importer) is available. Advising Bank's responsibility is to authenticate the letter of credit issued by the issuer to avoid fraud. The advising bank is not necessarily responsible for the payment of the credit which it advises the beneficiary of.The advising bank is usually located in the beneficiary's country. It can be (1) a branch office of the issuing bank or a correspondent bank, or (2) a bank appointed by the beneficiary. Important point is the beneficiary has to be comfortable with the advising bank.
In case (1), the issuing bank most often sends the L/C through its branch office or correspondent bank to avoid fraud. The branch office or the correspondent bank maintains specimen signature(s) on file where it may counter-check the signature(s) on the L/C, and it has a coding system (a secret test key) to distinguish a genuine L/C from a fraudulent one (authentication) .
In case (2), the beneficiary can request the applicant to specify his/her bank (the beneficiary's bank) as the advising bank in an L/C application. In many countries, this is beneficial to the beneficiary, who may avail the reduced bank charges and fees because of special relationships with the bank. Under normal circumstances, advising charges is standard and minimal. In addition, it is more convenient to deal with the beneficiary's own bank over a bank with which the beneficiary does not maintain an account.
Trade Document Creation
Trade Document Creation
Simply put, trade document creation is the creation of the necessary documentation to satisfy import, export, customs, security, safety, port, and carrier requirements. Numerous documents are required by government bodies, customs, ports, and carriers, just to name a few, to move your products internationally. One industry estimate has noted that a single global shipment can require approximately 35 documents consisting of over 200 data elements to be created for up to 15 different parties.Trade documentation is not something that should be taken lightly. Considering that a Purdue University Study concluded that the average cost per day of shipping time is approximately 0.5 percent ad-valorem and that a single error in documentation can cause a multi-day delay, it's easy to see how critical trade documentation can be.
This section overviews over five dozen different types of documents and variants that might be required when trading globally. The specific documents will depend upon the country being exported from, the country being imported o, the goods being shipped, the carriers shipping the goods, the ports and free trade zones being used, and other parties that the goods will come in contact with on their journey. In order to determine which specific documents are required, consult the affected customs agencies, ports, carriers, third parties, and a good lawyer versed in international law.
For more information on some customs and security regulations that mandate strict documentary requirements, please see the wiki-paper on Customs and Security Regulations.
- Airway Bill / Air Transport Documents
A document made out by, or on behalf of, the shipper which evidences the contract between the shipper and the carrier(s) for carriage of goods. - Application for Foreign-Trade Zone Admission and/or Status Designation
An application made to a government authority to allow goods to enter a foreign trade or special economic zone with appropriate status to take advantage of the special regulations and reduced taxes that the zone offers. - Application for Permit
An application made to a government agency for an import permit. - BCL: Bank Comfort Letter
A document from the buyer's bank to inform the seller that the buyer has the financial capacity to issue a Letter of Credit, subject to bank formalities, should the buyer contract with the seller. - Bill of exchange
An unconditional order issued by a person or business which directs the recipient to pay a fixed sum of money to a third party at a future date. - Bill of lading
A contract between an exporter and an international carrier for transport of merchandise to a foreign market. - CCD: Cargo Control Document / Cargo Declaration
An itemized list of shipment contents, also known as a manifest. - Certified Invoice
A signed invoice, usually witnessed by a third party, issued by an exporter to certify a statement required by the importer. - Certificate of Analysis
A certificate that contains an analysis of the goods in question. Often required to demonstrate compliance with regulations. - Certificate of Authenticity
A certificate is a document from a seller verifying that the goods being sold are indeed authentic. - Certificate of Compliance
A certificate that states the goods have been inspected by an appropriate third party and found to be in compliance with the appropriate regulation(s). - Certificate of Damaged Goods
A certificate that indicates the goods are damaged. This is often required if a shipper wants to avoid certain import duties on goods that are not going to be sold (as-is). - Certificate of Importation
A certificate that states the goods in questions were imported. - Certificate of Origin
A certificate used to authenticate the country of origin of the indicated goods. - Certificate of Ownership
A certificate used to specify the owner of the indicated goods. - Certificate of Registration
Usually used to specify the designated entity is registered to act in a certain authority with one or more government agencies. - Charter Party
A contract between a merchant and a ship owner by which a ship is hired for the conveyance of goods on a specified voyage. - CI: Commercial Invoice
A common document used for clearing a shipment through customs that is used by customs officials to classify merchandise for proper assessment of duties and taxes. - Consular Invoice
A document certified by a consular official of a foreign country that describes a shipment of goods and is used by customs officials to verify the value, quantity, and nature of the shipment. - Courier receipt
A receipt by a courier used to indicate that goods have been received and shipped by the courier. - Custom Clearance Document(s)
Generally used for goods which are the property of, or destined to be used by, the US Armed Forces. - Customs (Pro Forma) Invoice
A basic entry document accepted by customs brokers and officers that is used to declare returned goods. - Customs Value Declaration
A document used to declare the value of the goods in the shipment. - Declaration of Consignee
A declaration made by an agent on behalf of a buyer or seller when goods enter or leave a country. - Declaration of Owner
A declaration made by an owner of goods when they enter or leave a country. - Deed of Assignment
Banking arrangement, under a letter of credit, whereby the Beneficiary of a letter of credit assigns part of the proceeds to a third party. - Delivery Certificate for Purposes of Drawback
A certificate indicating goods that are to be drawn-back have been delivered. Goods that are to be drawn-back are to be exported or destroyed without having been used in the country of importation. - Delivery Ticket
A document meant to signify delivery of a shipment. - Drawback Entry
The document containing a description of the exported or destroyed article on which a drawback is claimed. - Drawback Notice
An official notice that a drawback is about to be claimed. - Entry/Immediate Delivery or Summary
Used when the immediate release of imported goods to an importer or customs broker is required. - (EIS) Export Information Sheet
A document that specifies all of the relevant information about the items being exported. - Export Permit
A document that allows a corporation or individual to export goods. - FCR: Forwarder Cargo Receipt
Used to provide validation that a vendor has delivered the specified cargo and all related documents to the designated receiver. - FCO: Full Corporate Offer
A document prepared by the seller in response to an ICPO (Irrevocable Corporate Purchase Order) from a buyer indicating receipt and acceptance of the ICPO. - Facilitated Transit Document
An authorization for facilitated transport across land. - Foreign Assembler's Declaration
A declaration by the foreign party that manufactured the goods that accurately describes the goods, their unit value, and the contact information of the foreign party. - Health certificate
A certificate that indicates the goods are compliant with any relevant health codes. - ICPO: Irrevocable Corporate Purchase Order
A purchase order that states the full details of an order, including the details that will appear on the (pro-forma) invoice, that cannot be revoked. - Import Declaration
Used to declare goods being imported to a customs agency. - Import Permit
A document that allows a corporation or individual to import goods. - Insurance document
A document that specifies the type of, and conditions for, insurance on the corresponding goods. - Inward Cargo Manifest
A document that must be prepared by a carrier and presented to customs before the goods can be imported. - Letter of Instructions
Usually a document prepared by a seller or a buyer for a third party handling import and export of goods that contains instructions for the third party on the transport of such goods. - LC: DL/C Documentary Letter of Credit
SL/C Standby Letter of Credit
RL/C Revolving Letter of Credit
A (documentary) letter of credit is a legal document issued by a buyer's bank that indicates payment will be made upon presentation of required documents. A revolving letter of credit is used for regular shipments of the same commodity between the same exporter and importer in place of a documentary letter of credit. A standby letter of credit allows for the pledge of securities in an eligible account as collateral in lieu of traditional cash or bond down payment. - LOI: Letter of Intention
A document that acknowledges a willingness and ability of the parties to do business together. - Manifest of Goods / Merchandise
A list of goods being shipped. - Multimodal transport document
A document that contains instructions and information for two ore more different modes of transport. - Non-negotiable sea waybill
A waybill that allows goods to be delivered to the consignee without transfer of the waybill as soon as the bill of lading is processed. - Notice of Intent
An informational document generally filed to specify an upcoming import or export activity. - Post receipts
Documents generally used to confirm payments. - Packing list (Export)
Another term for a manifest. - Power of Attorney
A legal instrument used to designate legal authority to another person or entity. - Pro-forma Invoice
A document that states a commitment from the seller to sell goods to the buyer at specified prices and terms. - Quality Certificate
A certificate, usually issued by a third party, that indicates the goods meet a certain recognized quality rating. - Returned Goods
A document that indicates the goods are goods that are being returned. - Road / Rail transport documents
A document used to transport goods by road and rail, commonly used in the European Union. - SAD: Single Administrative Document
A standardized document that has replaced most of the customs declarations forms existing in the European Union member states. - SED: Shipper's Export Declaration
A declaration made by an exporter of the goods being exported and their associated value. - SLI: Shipper's Letter of Instruction
A document that provides shipping instructions to the shipper's freight forwarder. - SSE: Shipper's Security Endorsement
Generally speaking, a certification that the cargo does not contain any unauthorized explosives, incendiaries, or hazardous materials. - Temporary Import License
A license to temporarily import goods from a first country into a second country for the purpose of exporting them to a third country. - Third party inspection certificate
A certificate that confirms the goods have been inspected by a third party and found to be in compliance. - Weight certificate
A certificate that verifies the weight of a shipment.
The Global Trade Export Cycle
The Global Trade Export Cycle
- Customer Approval
Before an order can be approved, the buyer must be checked against restricted and denied party lists. - Sales Order Receipt
Entered into your CRM (Customer Relations Management) system. - Order Approval
Additional screening may be required if the product is a restricted export or is subject to regulatory compliance in the destination country. - Transport Insurance
Preferably from a 3rd party. - Receipt of Financing
Either a letter of credit, open account, or other acceptable promisory note would be required before shipment. - Carrier Selection
Who is going to ship the product and how are they going to ship it? - Document Creation
Local Customs, affected Government Bodies, Ports of Exit, and Carriers, to name a few, are going to require the proper documents before the goods will be allowed to move. - Shipment Tracking
Probably using RFID and an on-line web-portal that lets the buyer know when their goods reach certain checkpoints. - Exportation
If all of the documents were properly created, the goods are allowed to leave the country. - Goods Delivery
After they are imported into the buyer's country, a goods receipt is created by the buyer and sent to the supplier's system. - Invoice Creation
An invoice is generated by the CRM system and sent to the buyer's system. - Payment Receipt
The buyer sends an electronic payment through an e-Payment system or gateway. - Reconciliation
The payment is reconciled with the invoice. - Tax Reclamation
If the exports included refundable value added tax, for example, the appropriate data is collected and documentation created for tax reclamation.
The Global Trade Import Cycle
The Global Trade Import Cycle
- Supplier Selection
This stage would utilize Strategic Sourcing - Purchase Order Generation
Via the buyer's e-Procurement system. - Transport Insurance
Preferably by way of a 3rd party. - Financing
Either through a letter of credit, open account, or other form of an acceptable promisory note. - Carrier Selection
Who is going to ship the product and how are they going to ship it? - Document Creation
Foreign Customs, affected Government Bodies, Ports of Exit, and Carriers, to name a few, are going to require the proper documents before the goods will be allowed to move. - Goods Departure
Once the paperwork is in order, the goods are loaded and they leave the supplier's warehouse. - Shipment Tracking
Probably using RFID and an on-line web-portal that lets the buyer know when their goods reach certain checkpoints. - Importation
Assuming the buyer created the appropriate documents for Customs, affected Government Bodies, Ports of Entry, and local carriers, and, gave appropriate notice, the goods clear customs and begin the final stage of their journey to the warehouse. - Goods Receipt
The goods are received and a receipt is sent to the supplier's system. - Invoice Receipt
An invoice, generated by the supplier's system, arrives in the buyer's e-Procurement system. - Reconciliation
3-way matching is performed against the purchase order, goods receipt, and invoice and, if everything checks out, the purchase is approved for payment. - Payment
An electronic payment is sent to the supplier through an e-Payment system or gateway. - Tax Reclamation
If the purchases included refundable value added tax, for example, the appropriate data is collected and documentation created for tax reclamation.
FCR
FCR (FORWARDER CARGO RECEIPT)
A negotiable document issued by a forwarder which will satisfy legal requirements for a letter-of-credit. Since a forwarder is not an NVOCC it cannot issue actual Bills of Lading. The FCR is a legally binding substitute for the B/L which was pioneered by Sea-Land and is now an industry standard.
Used to provide validation that a vendor has delivered the specified cargo and all related documents to the designated receiver.
When forwader company, acting as agents for the consignee, have received the
goods and all necessary documentation and payment of charges from the seller,
we issue a Forwarder’s Cargo Receipt (FCR). The seller will use the FCR to
confirm to the buyer and/or the bank that he has delivered the goods for shipment
and that the carriage is being arranged by Maersk Logistics.
forwader company will arrange the ocean transport and the ocean carrier will issue a
B/L (or SWB). The B/L (or SWB) is used to obtain release of the goods at
destination.
It is also possible to combine the use of the FCR with a House B/L or House SWB
if the customer is using a NVOCC to supply ocean carriage. If forwader company is
the NVOCC and has issued a HBL or HSWB, there is no need to also issue a FCR
unless there are specific reasons to do so (for example that the vendor’s L/C
requires a logistic company FCR).
In many ways the FCR document looks similar to the Bill of Lading and House Bill
of Lading. But it is distinctly different than a B/L, SWB, HBL or HSWB in that it does
NOT evidence a contract of carriage.
A FCR cannot replace the B/L, SWB, HBL or HSWB. It is always used together
with one of these documents.
FCR – Issuing Party
A Forwarder’s Cargo Receipt (FCR) is issued by a freight forwarder who is acting
as agent on behalf of the consignee.
FCR – Functions
The FCR functions as:
1. Receipt for the cargo
Following functions are NOT applicable to the FCR:
2. Evidence of contract of carriage
3. Document of title
1. Receipt for cargo
The FCR is a receipt by the agent / forwarder that the goods are in his custody.
The FCR does not confirm shipment and can therefore be issued before the carrier
B/L has been issued.
2. The FCR is NOT evidence of contract of carriage
The FCR does not evidence of a contract of carriage with the ocean carrier, freight
forwarder or NVOCC. The evidence of contract of carriage will be the document
issued by the ocean carrier (ie. the B/L or SWB) or the NVOCC (HBL or HSWB).
3. The FCR is NOT a document of title and it not used at destination
The FCR is NOT a document of title. It cannot be negotiated, and it cannot be
endorsed to other parties. The consignee cannot be “to order” and the consignee’s
name must be entered in full.
There is no requirement that a FCR is presented at destination to obtain release of
the goods. The release of the goods take place based on the B/L (or SWB). In fact,
the FCR is seldom used at destination. It is primarily a document for origin use.
Although the client’s SOP specifies that a FCR is to be issued together with a Sea
Waybill, there may be a few situations where a vendor insists to receive a
document of title / a negotiable document, a House Bill of Lading (DSL Star
Express B/L) can be issued instead of the FCR but it requires:
a. Confirmation from consignee (MLOG acts as agents for the consignee. We
should therefore seek confirmation from the consignee before we issue a
different document than the FCR. Preferably, we ask the consignee to ensure
that the shipper (and his bank and L/C) will accept the FCR instead of a HBL.
But, sometimes it can be difficult to change a L/C after is has been issued. The
consignee may therefore ask that a HBL is issued for this shipment. The
consignee should ensure that future L/Cs require a FCR instead of a document
of title)
b. If a HBL is issued, the carrier SWB or B/L must not be consigned to the same
person as the HBL. If Maersk Logistics issue a HBL, the carrier bill must be
consigned to logistic company , not the customer.
c. Clear notification and follow-up with logistic's company at destination (If a HBL is
issued instead of a FCR, MLOG at destination must receive a duly endorsed
original HBL at destination before the goods are released to the consignee.
MLOG at origin must ensure that MLOG at destination is made aware of this
requirement. For customers that usually operate under FCRs, it is an unusual
situation to have a HBL involved in the shipment. MLOG at destination will
therefore not be aware of the release requirements under the HBL unless they
receive clear notification from logistic company at origin).
FCR – Originals and Copies
The FCR is not a document of title and an original is not needed to effect release of
goods at destination. As such, there is no reason why the FCR should be issued as
an original document.
However, often the shipper (and the bank) will insist to receive an original FCR and
therefore the FCR is often issued in 3 originals and a reasonable number of copies.
It is actually more correct to issue 1 original FCR and a reasonable number of
copies (but 3 originals is market practice in some areas of the world today).
FCR – Forwarder’s Responsibility
The two main areas of responsibility of an agent / freight forwarder issuing FCRs
are:
1. Responsibility for correct description of the goods
2. Responsibility to care for the goods while in the agent’s custody
1. Responsibility for correct description of the goods
The consignee and the bank will rely on the description of the goods in the FCR
(quantity, condition, etc) to effect payment to the seller.
It is essential that logistic company clearly notes any damages or shortcomings on
the FCR or refuse to accept the cargo if the physical goods received do not match
the description.
logistic's company , acting as agents for the consignee, will arrange a carrier Bill of
Lading or Sea Waybill that covers the carriage performed by the ocean carrier.
logistic's company should ensure that the description in the carrier B/L (or SWB)
corresponds with the description in the FCR.
The consignee will expect to receive the goods as described in the B/L or SWB.
If a shipper requests a “clean FCR” in order to meet the requirements in his Letter
of Credit but the carrier will not issue a clean B/L (without any notation of
shortcomings or damages), Maersk Logistics cannot meet his request.
2. Responsibility to care for the goods while in the agent’s custody
This is closely related to what we have just discussed. Maersk Logistics is
responsible to take good care of the goods while they are in our custody. If we
damage the goods, we become liable towards the consignee.
However note that when goods are delivered to the carrier and covered by a
transport document (B/L or SWB), it becomes the carrier’s responsibility to care for
the goods.
Maersk Logistics is only responsible for the goods under the FCR as long as the
goods are in our custody. (This is distinctly different from a HBL/HSWB where we
take on responsibility as carrier).
FCR – Amendment
Should the shipper request an amendment to the FCR, the issuing agent should
ask to have the original FCRs returned.
Amendments should be made in writing and are subject to acceptance by the
forwarder. The forwarder must ensure that no changes to the description of the
goods are made that can affect his position towards the consignee.
FCR – Cargo Description
The procedures for FCRs follow the same rules as Bills of Lading and Waybills.
Cargo description
The transport provider cannot physically verify the contents of the cartons and
packages received from the shipper. For legal reasons, the description of the
goods must therefore always include the wording “Said To Contain” or “S.T.C.” to
signify that the transport provider is relying on the description of the goods supplied
by the shipper. Example: S.T.C. 1020 cartons of CD players.
If the forwarder knows that the description of the goods supplied by the shipper is
not correct (for example that cartons are damaged), the forwarder should note the
discrepancy on the FCR or refuse to accept the cargo and issue the FCR.
No. of packages
If cargo is lost while in the forwarder’s custody, it is the number of units as stated in
the “no. of pkgs” field that will be used for calculation of potential compensation to
the owner. For this reason, this field should always reflect the smallest number of
shipping units. Example: “5 pallets” instead of “50 cartons”.
Clauses
The transport provider should insert the clause “Shipper’s load, stow and count” if
the customer is loading the container at his premises.
FCR – Document Date
The receiving date on the FCR date must be the date on which the goods were
received by Maersk Logistics (or the CY-container was delivered to the carrier’s
terminal).
In some cases, the shipper may ask that the FCR is dated earlier or later than the
actual date in order to comply with conditions in his Letter of Credit. We should not
issue the FCR with an incorrect date - it would be seen as an attempt to defraud
the consignee.
FCR – Payment
The issuing agent / freight forwarder of a FCR, will usually not release the FCR to
the shipper until he has not only delivered the goods but also delivered all required
documents (export licence, commercial invoice, etc.) and paid all local charges that
are for the account of the shipper.
You should note that the FCR is not an invoice. It is a cargo receipt. Even though
the FCR is used in connection with the payment of charges at origin, it cannot
replace the issuance of an invoice. But origins may use the same number for the
FCR and the invoice.
FCR – Filing
There are no international requirements for filing of original FCRs. Please check
local procedures. There is no need to collect an original FCR at destination.
FCR – Why use this document?
The FCR document is used to facilitate payment.
When the shipper has delivered his goods to the agent / freight forwarder (and any
required documentation), he will receive the FCR as proof that the goods have
been delivered for shipment.
The L/C will stipulate which documentation must be in place before payment for the
goods will be effected. If the buyer and seller have agreed that the FCR is to act as
proof that the goods have been made available for shipment, the L/C must clearly
state that payment can be effected upon presentation of a Maersk Logistics FCR.
The advantage to the shipper of using the FCR to effect payment (instead of a B/L,
SWB or HBL) is that the FCR can be issued before the goods have been shipped
by the ocean carrier. Therefore, the seller can obtain payment for his goods faster
than if he had had to wait for the B/L to be issued.
To the consignee, there is an advantage when logistic company consolidates
goods from multiple shippers into one container. In such case, a separate FCR will
be issued to each of the shippers but only one carrier B/L (or SWB) will be issued
by the carrier. This will save the consignee documentation and customs clearance
fees at destination.
As you know, when a FCR is issued by Maersk Logistics, the carrier will issue a
B/L or a SWB. When a carrier B/L or SWB is issued, the shipper/seller under
normal circumstances has the right to amend the release instructions (e.g.
consignee name and destination).
By accepting a FCR, the shipper assigns the benefit of these forwarding
instructions to the consignee (buyer). In other words, the seller waives his right to
revoke any delivery instructions after he has delivered the goods to logistic's company , and logistic's company is not legally obliged to comply with the shipper’s
instructions after receipt of the cargo and issuance of the FCR.
logistic's company will comply with the buyer’s instructions.
You should note that although the FCR is used as a vehicle for payment, logistic's company is not involved in the monetary transaction and change of ownership
between the seller and the buyer. We issue the FCR as a receipt for the cargo.
FCR – Differences between FCR and carrier B/L
The B/L is issued by the ocean carrier. The FCR is issued by a freight
forwarder, acting as agent on behalf of a consignee.
The B/L is a document of title and can be endorsed. The FCR is not. The FCR
cannot be consigned “to order”.
The B/L is evidence of contract of carriage with the carrier. The FCR is not.
A duly endorsed B/L must be presented to the carrier at destination to obtain
release of the goods. The FCR does not have this function.
Under a FCR, logistic's company is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and carrier SWB
The SWB is issued by the ocean carrier. The FCR is issued by a freight
forwarder, acting as agent on behalf of a consignee.
The SWB is evidence of contract of carriage with the carrier. The FCR is not.
The carrier will release the goods at destination to a person who can identify
himself as a representative of the consignee stated in the SWB. The FCR does
not have this function. The FCR is only used at origin and is not a release
document.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and HBL
The HBL is issued by Maersk Logistics when we act as NVOCC.
As NVOCC we act as agents of DSL Star Express and take on the
responsibilities and liabilities as a principal carrier. Even when sub-contracting
the ocean carriage to an ocean carrier such as Maersk Sealand, we have the
responsibility and liability of a carrier under the HBL.
When we issue FCRs, we act as agents for the consignee but do not take on
the responsibility and liability for the carriage of the goods. Maersk Logistics is
only responsible and liable for the goods while they are in our custody.
The HBL is a document of title and can be endorsed. The FCR is not.
The HBL evidences a contract of carriage between the NVOCC and the
customer. The FCR does not evidence a contract of carriage.
A duly endorsed HBL must be presented to the NVOCC (Maersk Logistics) at
destination to obtain release of the goods. The FCR does not have this
function. The FCR is not a release document.
When cargo is moving under a HBL, the shipper or the consignee will agree
freight rates with the NVOCC (Maersk Logistics). When a FCR is issued, the
customer will have agreed freight rates directly with the ocean carrier and the
goods will move under a B/L or SWB.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and HSWB
The HSWB is issued by Maersk Logistics acting as NVOCC (agent for DSL Star
Express).
Neither the HSWB nor the FCR are documents of title. None of them can be
endorsed or consigned “to order”.
Version 1.1. June 2004 Page 48 © A.P.Møller – Mærsk A/S
TMW Basic Transport Documentation
The HSWB is evidence of contract of carriage with the NVOCC. The FCR is
not.
The NVOCC will release the goods at destination to a person who can identify
himself as a representative of the consignee stated in the HSWB. The FCR
does not have this function. The FCR is only used at origin and is not a release
document.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
A negotiable document issued by a forwarder which will satisfy legal requirements for a letter-of-credit. Since a forwarder is not an NVOCC it cannot issue actual Bills of Lading. The FCR is a legally binding substitute for the B/L which was pioneered by Sea-Land and is now an industry standard.
Used to provide validation that a vendor has delivered the specified cargo and all related documents to the designated receiver.
When forwader company, acting as agents for the consignee, have received the
goods and all necessary documentation and payment of charges from the seller,
we issue a Forwarder’s Cargo Receipt (FCR). The seller will use the FCR to
confirm to the buyer and/or the bank that he has delivered the goods for shipment
and that the carriage is being arranged by Maersk Logistics.
forwader company will arrange the ocean transport and the ocean carrier will issue a
B/L (or SWB). The B/L (or SWB) is used to obtain release of the goods at
destination.
It is also possible to combine the use of the FCR with a House B/L or House SWB
if the customer is using a NVOCC to supply ocean carriage. If forwader company is
the NVOCC and has issued a HBL or HSWB, there is no need to also issue a FCR
unless there are specific reasons to do so (for example that the vendor’s L/C
requires a logistic company FCR).
In many ways the FCR document looks similar to the Bill of Lading and House Bill
of Lading. But it is distinctly different than a B/L, SWB, HBL or HSWB in that it does
NOT evidence a contract of carriage.
A FCR cannot replace the B/L, SWB, HBL or HSWB. It is always used together
with one of these documents.
FCR – Issuing Party
A Forwarder’s Cargo Receipt (FCR) is issued by a freight forwarder who is acting
as agent on behalf of the consignee.
FCR – Functions
The FCR functions as:
1. Receipt for the cargo
Following functions are NOT applicable to the FCR:
2. Evidence of contract of carriage
3. Document of title
1. Receipt for cargo
The FCR is a receipt by the agent / forwarder that the goods are in his custody.
The FCR does not confirm shipment and can therefore be issued before the carrier
B/L has been issued.
2. The FCR is NOT evidence of contract of carriage
The FCR does not evidence of a contract of carriage with the ocean carrier, freight
forwarder or NVOCC. The evidence of contract of carriage will be the document
issued by the ocean carrier (ie. the B/L or SWB) or the NVOCC (HBL or HSWB).
3. The FCR is NOT a document of title and it not used at destination
The FCR is NOT a document of title. It cannot be negotiated, and it cannot be
endorsed to other parties. The consignee cannot be “to order” and the consignee’s
name must be entered in full.
There is no requirement that a FCR is presented at destination to obtain release of
the goods. The release of the goods take place based on the B/L (or SWB). In fact,
the FCR is seldom used at destination. It is primarily a document for origin use.
Although the client’s SOP specifies that a FCR is to be issued together with a Sea
Waybill, there may be a few situations where a vendor insists to receive a
document of title / a negotiable document, a House Bill of Lading (DSL Star
Express B/L) can be issued instead of the FCR but it requires:
a. Confirmation from consignee (MLOG acts as agents for the consignee. We
should therefore seek confirmation from the consignee before we issue a
different document than the FCR. Preferably, we ask the consignee to ensure
that the shipper (and his bank and L/C) will accept the FCR instead of a HBL.
But, sometimes it can be difficult to change a L/C after is has been issued. The
consignee may therefore ask that a HBL is issued for this shipment. The
consignee should ensure that future L/Cs require a FCR instead of a document
of title)
b. If a HBL is issued, the carrier SWB or B/L must not be consigned to the same
person as the HBL. If Maersk Logistics issue a HBL, the carrier bill must be
consigned to logistic company , not the customer.
c. Clear notification and follow-up with logistic's company at destination (If a HBL is
issued instead of a FCR, MLOG at destination must receive a duly endorsed
original HBL at destination before the goods are released to the consignee.
MLOG at origin must ensure that MLOG at destination is made aware of this
requirement. For customers that usually operate under FCRs, it is an unusual
situation to have a HBL involved in the shipment. MLOG at destination will
therefore not be aware of the release requirements under the HBL unless they
receive clear notification from logistic company at origin).
FCR – Originals and Copies
The FCR is not a document of title and an original is not needed to effect release of
goods at destination. As such, there is no reason why the FCR should be issued as
an original document.
However, often the shipper (and the bank) will insist to receive an original FCR and
therefore the FCR is often issued in 3 originals and a reasonable number of copies.
It is actually more correct to issue 1 original FCR and a reasonable number of
copies (but 3 originals is market practice in some areas of the world today).
FCR – Forwarder’s Responsibility
The two main areas of responsibility of an agent / freight forwarder issuing FCRs
are:
1. Responsibility for correct description of the goods
2. Responsibility to care for the goods while in the agent’s custody
1. Responsibility for correct description of the goods
The consignee and the bank will rely on the description of the goods in the FCR
(quantity, condition, etc) to effect payment to the seller.
It is essential that logistic company clearly notes any damages or shortcomings on
the FCR or refuse to accept the cargo if the physical goods received do not match
the description.
logistic's company , acting as agents for the consignee, will arrange a carrier Bill of
Lading or Sea Waybill that covers the carriage performed by the ocean carrier.
logistic's company should ensure that the description in the carrier B/L (or SWB)
corresponds with the description in the FCR.
The consignee will expect to receive the goods as described in the B/L or SWB.
If a shipper requests a “clean FCR” in order to meet the requirements in his Letter
of Credit but the carrier will not issue a clean B/L (without any notation of
shortcomings or damages), Maersk Logistics cannot meet his request.
2. Responsibility to care for the goods while in the agent’s custody
This is closely related to what we have just discussed. Maersk Logistics is
responsible to take good care of the goods while they are in our custody. If we
damage the goods, we become liable towards the consignee.
However note that when goods are delivered to the carrier and covered by a
transport document (B/L or SWB), it becomes the carrier’s responsibility to care for
the goods.
Maersk Logistics is only responsible for the goods under the FCR as long as the
goods are in our custody. (This is distinctly different from a HBL/HSWB where we
take on responsibility as carrier).
FCR – Amendment
Should the shipper request an amendment to the FCR, the issuing agent should
ask to have the original FCRs returned.
Amendments should be made in writing and are subject to acceptance by the
forwarder. The forwarder must ensure that no changes to the description of the
goods are made that can affect his position towards the consignee.
FCR – Cargo Description
The procedures for FCRs follow the same rules as Bills of Lading and Waybills.
Cargo description
The transport provider cannot physically verify the contents of the cartons and
packages received from the shipper. For legal reasons, the description of the
goods must therefore always include the wording “Said To Contain” or “S.T.C.” to
signify that the transport provider is relying on the description of the goods supplied
by the shipper. Example: S.T.C. 1020 cartons of CD players.
If the forwarder knows that the description of the goods supplied by the shipper is
not correct (for example that cartons are damaged), the forwarder should note the
discrepancy on the FCR or refuse to accept the cargo and issue the FCR.
No. of packages
If cargo is lost while in the forwarder’s custody, it is the number of units as stated in
the “no. of pkgs” field that will be used for calculation of potential compensation to
the owner. For this reason, this field should always reflect the smallest number of
shipping units. Example: “5 pallets” instead of “50 cartons”.
Clauses
The transport provider should insert the clause “Shipper’s load, stow and count” if
the customer is loading the container at his premises.
FCR – Document Date
The receiving date on the FCR date must be the date on which the goods were
received by Maersk Logistics (or the CY-container was delivered to the carrier’s
terminal).
In some cases, the shipper may ask that the FCR is dated earlier or later than the
actual date in order to comply with conditions in his Letter of Credit. We should not
issue the FCR with an incorrect date - it would be seen as an attempt to defraud
the consignee.
FCR – Payment
The issuing agent / freight forwarder of a FCR, will usually not release the FCR to
the shipper until he has not only delivered the goods but also delivered all required
documents (export licence, commercial invoice, etc.) and paid all local charges that
are for the account of the shipper.
You should note that the FCR is not an invoice. It is a cargo receipt. Even though
the FCR is used in connection with the payment of charges at origin, it cannot
replace the issuance of an invoice. But origins may use the same number for the
FCR and the invoice.
FCR – Filing
There are no international requirements for filing of original FCRs. Please check
local procedures. There is no need to collect an original FCR at destination.
FCR – Why use this document?
The FCR document is used to facilitate payment.
When the shipper has delivered his goods to the agent / freight forwarder (and any
required documentation), he will receive the FCR as proof that the goods have
been delivered for shipment.
The L/C will stipulate which documentation must be in place before payment for the
goods will be effected. If the buyer and seller have agreed that the FCR is to act as
proof that the goods have been made available for shipment, the L/C must clearly
state that payment can be effected upon presentation of a Maersk Logistics FCR.
The advantage to the shipper of using the FCR to effect payment (instead of a B/L,
SWB or HBL) is that the FCR can be issued before the goods have been shipped
by the ocean carrier. Therefore, the seller can obtain payment for his goods faster
than if he had had to wait for the B/L to be issued.
To the consignee, there is an advantage when logistic company consolidates
goods from multiple shippers into one container. In such case, a separate FCR will
be issued to each of the shippers but only one carrier B/L (or SWB) will be issued
by the carrier. This will save the consignee documentation and customs clearance
fees at destination.
As you know, when a FCR is issued by Maersk Logistics, the carrier will issue a
B/L or a SWB. When a carrier B/L or SWB is issued, the shipper/seller under
normal circumstances has the right to amend the release instructions (e.g.
consignee name and destination).
By accepting a FCR, the shipper assigns the benefit of these forwarding
instructions to the consignee (buyer). In other words, the seller waives his right to
revoke any delivery instructions after he has delivered the goods to logistic's company , and logistic's company is not legally obliged to comply with the shipper’s
instructions after receipt of the cargo and issuance of the FCR.
logistic's company will comply with the buyer’s instructions.
You should note that although the FCR is used as a vehicle for payment, logistic's company is not involved in the monetary transaction and change of ownership
between the seller and the buyer. We issue the FCR as a receipt for the cargo.
FCR – Differences between FCR and carrier B/L
The B/L is issued by the ocean carrier. The FCR is issued by a freight
forwarder, acting as agent on behalf of a consignee.
The B/L is a document of title and can be endorsed. The FCR is not. The FCR
cannot be consigned “to order”.
The B/L is evidence of contract of carriage with the carrier. The FCR is not.
A duly endorsed B/L must be presented to the carrier at destination to obtain
release of the goods. The FCR does not have this function.
Under a FCR, logistic's company is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and carrier SWB
The SWB is issued by the ocean carrier. The FCR is issued by a freight
forwarder, acting as agent on behalf of a consignee.
The SWB is evidence of contract of carriage with the carrier. The FCR is not.
The carrier will release the goods at destination to a person who can identify
himself as a representative of the consignee stated in the SWB. The FCR does
not have this function. The FCR is only used at origin and is not a release
document.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and HBL
The HBL is issued by Maersk Logistics when we act as NVOCC.
As NVOCC we act as agents of DSL Star Express and take on the
responsibilities and liabilities as a principal carrier. Even when sub-contracting
the ocean carriage to an ocean carrier such as Maersk Sealand, we have the
responsibility and liability of a carrier under the HBL.
When we issue FCRs, we act as agents for the consignee but do not take on
the responsibility and liability for the carriage of the goods. Maersk Logistics is
only responsible and liable for the goods while they are in our custody.
The HBL is a document of title and can be endorsed. The FCR is not.
The HBL evidences a contract of carriage between the NVOCC and the
customer. The FCR does not evidence a contract of carriage.
A duly endorsed HBL must be presented to the NVOCC (Maersk Logistics) at
destination to obtain release of the goods. The FCR does not have this
function. The FCR is not a release document.
When cargo is moving under a HBL, the shipper or the consignee will agree
freight rates with the NVOCC (Maersk Logistics). When a FCR is issued, the
customer will have agreed freight rates directly with the ocean carrier and the
goods will move under a B/L or SWB.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
FCR – Differences between FCR and HSWB
The HSWB is issued by Maersk Logistics acting as NVOCC (agent for DSL Star
Express).
Neither the HSWB nor the FCR are documents of title. None of them can be
endorsed or consigned “to order”.
Version 1.1. June 2004 Page 48 © A.P.Møller – Mærsk A/S
TMW Basic Transport Documentation
The HSWB is evidence of contract of carriage with the NVOCC. The FCR is
not.
The NVOCC will release the goods at destination to a person who can identify
himself as a representative of the consignee stated in the HSWB. The FCR
does not have this function. The FCR is only used at origin and is not a release
document.
Under a FCR, Maersk Logistics is only responsible for the goods while they are
in our custody. If goods are lost or damaged during transit, the client must file
claim against the ocean carrier under the B/L (or SWB).
Mastering Management (Supply-chain In Rmg)
Mastering Management
Supply-chain In Rmg
The hidden lever to success
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