ACT OF GOD
An act beyond human control, such as lightning, flood or earthquake.
What does an Air Waybill (AWB) consist of?
Each Air Waybill consists of a set of three originals:
Original 1 (green) - retained
by the carrier (airline) - signed by the shipper
Original 2 (red) - forwarded
to the consignee - signed by the shipper and the carrier
Original 3 (blue) - returned
to the shipper - signed by the shipper and by the carrier on receipt of
the goods for transit.
Plus at least 6 copies (unsigned) for the use of forwarders, customs
Who issues the Air
Air Waybills are sets of forms, following the IATA standard form. They
are issued by the airlines (or their accredited agents), and each one
has on it a serial number and the name and the three-digit
identification number of the issuing airline. The contracting or main
airline can issue an AWB to cover the whole route, even when, as is
often the case, parts of the route are flown by other airlines.
What is a "Neutral Air Waybill"?
Many airlines of their agents print their own Air Waybills
electronically. They are allotted a set of AWB numbers, and print the
serial numbers and identification number on the forms themselves. These
"unmarked" AWBs can be called "neutral AWBs".
Who is responsible for filling in the Air Waybill?
The IATA conditions state that the Air Waybill must be filled in by the
shipper, or in his name. The AWB may be filled out by the airline, or
by an IATA agent, but in the name of the shipper. The shipper is
responsible for the fact that the information given on the AWB is
correct and complete: this means he is responsible for any damage to
property or injury to persons which may be the result of giving false
What is the function of the Air Waybill?
An Air Waybill is a documentary proof of the contract of carriage
between the shipper and the carrier.
It also serves as:
- a receipt of goods for shipment
- a dispatch note, bearing a list of all accompanying documents, and
any special instructions given by the shipper
- a form of invoice for the carriage of the goods
- a document required for Customs clearance
- a delivery receipt
- an insurance certificate (if the insurance cover was arranged through
An Air Waybill is not a title document, it is not negotiable. An Air
Waybill is a document which has the same importance in airfreight as a
Bill of Lading has in sea freight, but, whereas a B/L is a title
document, (i.e. it is a document which proves ownership of the goods
mentioned in the B/L, and which can be bought and sold, entitling the
buyer to ownership of the goods), an AWB cannot be used in this way.
The words non-negotiable are printed at the top of the Air Waybill, and
must not be changed or removed.
Who makes the rules for international air traffic?
1. The Warsaw Convention / Warsaw Agreement
Each mode of international transport is regulated by a Convention or
international agreement which standardises the documentation and the
contract of carriage, and rules on legal questions concerning
international transport of baggage, goods or persons. The convention
which applies to air transport is the Warsaw Convention (as amended at the Hague in
1955). Section 3 (Article 5-11) of this convention deals with the Air
Waybill, (definition, number of originals, details which must be
included, function of the AWB).
2. IATA = International Air Transport Association
IATA is a non-political international organisation, with headquarters
in Montreal and in Geneva. Membership is open to all
scheduled airlines registered in countries eligible for membership of
the ICAO (International Civil Aviation Organisation: this organisation
is a branch of the United Nations). Charter companies are not eligible
The objects of the IATA are to promote commercial air traffic, and to
increase safety, speed and efficiency.
The IATA promotes:
- cooperation between airlines, and exchange of information
- cooperation with international organisations (e.g. ICAO)
- the standardisation of rates and conditions
- the reduction of the bureaucratic formalities to a minimum
Approximately 80% of all airlines are members: IATA can find solutions
to international problems which no single airline could solve: it can
also guarantee international standards. This is an advantage to the
airlines, as forms and handling procedures are standardised; and an
advantage to the user, who can count on high standards of service from
the airlines and their agents and on intentionally agreed fares and
Accredited IATA agencies (air forwarding agencies, travel agencies)
have satisfied the standards of the IATA. Any Forwarder who regularly
deals with air transport must be accredited as an IATA Cargo Agent.
All in rate
Freight rate which is inclusive of all surcharges and extras.
charge. Charge for added expense, such as transshipment charges
or ice-breaking charges.
notification by carrier of ship's arrival to the consignee, the
"Notify Party," and - when applicable - the "Also Notify
Party." These parties in interest are listed in blocks 3, 4 and
10, respectively, of the Bill of Lading.
- Entity to whom money is payable.
- The entity for whom a letter of credit is issued.
- The seller and the drawer of a draft.
BILL OF LADING (B/L)
A document that establishes the terms of a contract between a shipper
and a transportation company. It serves as a document of title, a
contract of carriage and a receipt for goods.
A Bill of Lading serves three separate important functions:
1. A B/L is a receipt for a consignment; the shipping company or
carrier certifies that it has received the goods mentioned in the B/L
for transportation to the specified destination
2. A B/L is evidence of a contract between shipper and shipping company
for the transportation of the goods mentioned in the B/L
3. A B/L is a title deed, i.e., it is a document which proves ownership
of the goods mentioned in the B/L
Why is a Bill of Lading so important?
- a B/L is a negotiable document which can be used to transfer the
ownership of the goods named on it to somebody else
- it is evidence of the goods being shipped
- it is evidence of the goods being in apparent good condition when
- it is evidence of the contract of carriage, and a promise by the
carrier to deliver the goods
- in international trade where payment by Letter of Credit is arranged,
a clean B/L is required by the banks before any payments will be made
When is a Combined Transport Bill of Lading, e.g. FBL, needed?
When the document covers transport to and/or from the ports of
departure and destination, using another mode of transport.
What alternatives are there to be a Bill of Lading?
If there are no Letter of Credit requirements, which make it necessary
to use a B/L, then a non-negotiable document, such as a Sea Waybill or
a Certificate of Transport can be used.
What must be stated in a Bill of Lading?
- The name and address of:
- the carrier (the shipping company responsible for transport)
- the shipper (the consignor/sender, or his agent)
- the consignee (the buyer or his agent)
- The name and nationality of the ship
- The port of departure and port of destination (through B/L / FBL:
Places of departure and destination)
- Description of the goods
- Instructions for the payment of freight (collect or prepaid)
- Place and date issued
- The number of original B/Ls
How many Originals are normally issued?
2 or 3 originals which are all signed, and a number of copies (unsigned
and non-negotiable). The face of the bill will always show how many
signed originals have been issued. Each original B/L is negotiable, but
when one of them has been presented to the Line as proof of title to
the goods, the others become void (i.e. can no longer be used).
Can the shipper (or any person) regain possession of the consignment
before the ship reaches its destination?
Yes, but only if all the Original Bills of Lading are presented.
What is a clean Bill of Lading?
A clean Bill of Lading states that the consignment is in apparent good
order and condition when shipped on board, and the carrier accepts the
liability of delivering the goods in this same condition to the
Banks will only accept a clean Bill of Lading. (see reference section:
letter of indemnity)
If the carrier cannot accept this responsibility for some reason, he
will add a clause to the B/L, explaining why not. Then the B/L is a
claused or "dirty" B/L, and will not be accepted by a bank.
In this case, the carrier does his job, and must be paid, but the
exporter will have delivered to him in correct condition.
Examples of such clauses, which may be typed or hand-written are:
two cases short shipped
one drum leaking
What does in apparent good order and condition mean?
It means that the goods show no visible signs of damage, but of course
the carrier cannot guarantee the condition of the goods, which he
received packed and ready for shipment.
What is the meaning of the statement "Said to contain"?
In this case of containerized cargo, or of palleted consignments or
large consignments of conventional cargo, the cargo cannot check the
statements made by the shipper as to contents. By using the statement
"said to contain" the carrier places responsibility for the
correct description of contents on the shipper.
What is a "Stale" Bill of Lading?
Often the expensive result of an error or hold-up in the issuing of a
B/L, or of its loss! If the consignment arrives at the final
destination, but cannot be handed over to the consignee, because the
B/L is not available, then the expression "stale B/L" is used.
The extra charges for storing goods or for parking containers at the
port until the documents are sorted out are called demurrage, and can
be very expensive.
CFR OR C&F (Cost and Freight) (...Named Port of Destination)
A Term of Sale where the seller pays the costs and freight necessary to
bring the goods to the named port of destination, Terms of Sale but the
risk of loss of or damage to the goods, as (continued) well as any
additional costs due to events occurring after the time the goods have
been delivered on board the vessel, is transferred from the seller to
the buyer when the goods pass the ship's rail in the port of shipment.
The CFR term requires the seller to clear the goods for export.
(Cost, Insurance and Freight) (...Named Place of Destination)
A Term of Sale where the seller has the same obligations as under the
CFR but also has to procure marine insurance against the buyer's risk
of loss or damage to the goods during the carriage. The seller
contracts for insurance and pays the insurance premium. The CIF term
requires the seller to clear the goods for export.
If upon delivery, you notice damaged or missing items you should mark
the delivery receipts and inventory accordingly. You must then notify
the insurer's of your intent to make a claim within 45 days of
If the claim exceeds U.S.$ 2500 (or the equivalent) it may be necessary
to have an insurance surveyor verify the loss and damages. If the claim
is less than U.S.$2500 ( or equivalent) in value, then a survey will
not be necessary. Depending on the nature of the claim, you will be
asked to provide repair estimates, original invoices or estimated
replacement quotes. You will also be asked to provide the original
insurance certificate, signed delivery receipts, copies of Bills of
Lading, the original inventory and copies of any relevant
correspondence. You must make your actual claim within 90 days of the
initial notice of your intent to make a claim. There is a deductible on
the policy of US$50.00 per claim (motor vehicles US$250.00).
Represents a complete record of the transaction between exporter and
importer with regard to the goods sold. Also reports the content of the
shipment and serves as the basis for all other documents about the
LETTER OF CREDIT
A letter of credit, issued by a foreign bank, whose validity has been
confirmed by a domestic bank. An exporter with a confirmed letter of
credit is assured of payment even if the foreign buyer or the foreign
The bank that adds its confirmation to another bank's (the issuing
bank's) letter of credit and promises to pay the beneficiary upon
presentation of documents specified in the letter of credit.
A person or company to whom commodities are shipped.
1. A stock of merchandise advanced to a dealer and located at his place
of business, but with title remaining in the source of supply.
2. A shipment of goods to a consignee.
A person or company shown on the bill of lading as the shipper.
A truck trailer body that can be detached from the chassis for loading
into a vessel, a rail car or stacked in a container depot. Containers
may be ventilated, insulated, refrigerated, flat rack, vehicle rack,
open top, bulk liquid or equipped with interior devices. A container
may be 20 feet, 40 feet, 45 feet, 48 feet or 53 feet in length,
8'0" or 8'6" in width, and 8'6" or 9'6" in height.
A bank that, in its own country, handles the business of a foreign
Government agency charged with enforcing the rules passed to protect
the country's import and export revenues.
A penalty charge against shippers or consignees for delaying the
carrier's equipment beyond the allowed free time. The free time and
demurrage charges are set forth in the charter party or freight tariff.
Through transportation of a container and its contents from consignor
to consignee. Also known as House to House. Not necessarily a through
An order issued by a seller against a purchaser; directs payment,
usually through an intermediary bank. Typical bank drafts are
negotiable instruments and are similar in many ways to checks on
checking accounts in a bank.
Shipment of goods to a foreign country.
(Free On Board)
(...Named Port of Shipment)
An International Term of Sale that means the seller fulfills his or her
obligation to deliver when the goods have passed over the ship's rail
at the named port of shipment. This means that the buyer has to bear
all costs and risks to loss of or damage to the goods from that point.
The FOB term requires the seller to clear the goods for export.
OR FULL CONTAINER LOAD
Sole use of a steamship metal container. Normally come in 20ft or 40ft
lengths. Can be loaded and sealed at or near your residence. (subject
to access) and after Customs clearance at destination may be delivered
direct to your residence for unloading (subject to local Customs / Agricultural
A person whose business is to act as an agent on behalf of the shipper.
A freight forwarder frequently makes the
For use with smaller shipments. Freight delivers to a warehouse for
consolidation with other freight moving to the same destination. The
container is dispatched to the port as soon as there are enough
consignments to fill the container. A very cost effective way to ship
small to medium size shipments but will take longer than LCL shipments.
To receive goods from a foreign country.
A document required and issued by some national governments authorizing
the importation of goods.
An itemized list of goods shipped to a buyer, stating quantities,
prices, shipping charges, etc.
LETTER OF CREDIT
Letter of credit in which the specified payment is guaranteed by the
bank if all terms and conditions are met by the drawee and which cannot
be revoked without joint agreement of both the buyer and the seller.
OR LESS THAN CONTAINER LOAD
For use with smaller shipments, boxes, crates etc. The shipment is then
delivered to a forwarder's or shipping line's consolidation point to be
shipped on a specific vessel.
OF CREDIT (LC)
A document, issued by a bank per instructions by a buyer of goods,
authorizing the seller to draw a specified sum of money under specified
terms, usually the receipt by the bank of certain documents within a
Broadly, insurance covering loss or damage of goods at sea. Marine
insurance typically compensates the owner of merchandise for losses
sustained from fire, shipwreck, etc., but excludes losses that can be
recovered from the carrier.
An invoice provided by a supplier prior to the shipment of merchandise,
informing the buyer of the kinds and quantities of goods to be sent,
their value, and specifications (weight, size, etc.)
An offer to sell goods at a stated price and under stated terms.
A shortening of the term, "Roll On/Roll Off." A method of
ocean cargo service using a vessel with ramps which allows wheeled
vehicles to be loaded and discharged without cranes.
Ships specially designed to carry wheeled containers or trailers using
The person or company who is usually the supplier or owner of
commodities shipped. Also called Consignor.
A classification, storage or switching area.
Enclosed in the Insurance Proposal Form is a valued inventory list.
Simply list the number of each particular item to be included in your
shipment and declare the full replacement value at destination. The
more specific you can be, then the greater the likelihood of a swift
and full settlement in the event of a claim.
Once you have prepared your fully valued inventory, you should add all
the values together and transfer to the "total" column on the
application form. You can insure your goods in any currency you choose,
but you must declare the currency on the form, otherwise it assumes
that the values are in United States Dollars.
You also have the option to insure the cost of your moving charges. If
the shipment is lost, then the insurance company would reimburse your
moving expenses. To benefit from this protection simply itemize the
actual moving charges on your valued inventory, then add the value of
your goods to the shipping costs to calculate the " Grand
As a rough guideline you should consider the difference between the
cost of living in different countries. If, for example, the cost of
living is 20% higher at your destination than in a country you're
shipping from, then simply add 20% to the valuation of your shipment.