REVIEW

KNTHCM-QTKD QT

1
 Contents

1. Incoterms 2020
2. Sale contract
3. Int’l payment
4. Int’l transport and insurance
5. Customs procedure
6. Case study

2
 LO1

Incoterms ® 2020

Global Standard Trade Terms

3
 Definition

Incoterms are standard int’l trade terms developed by ICC and

widely through three-letter abbreviations. Incoterms notify the
buyer where the seller will deliver the goods (or hand them over to
the carrier). Incoterms are used in contract of sale to allocate
responsibilities between a seller and a buyer. Specifically,
Incoterms allocate the following key contract elements between
seller and buyer:
 Transport cost
 Risk of loss or damage to the goods in transit
 Insurance responsibilities (in the case of CIF/CIP)
 Export and import customs clearance and payment of duties
 Contract for carriage
 Information assistance duties
4
 Key Definitions

Risk transfer point  Delivery  Payment

Risk Risk

Cost transfer point  Selling Price

Cost Cost

5
 Shipment vs Arrival contracts

- Shipment contracts  E/F/C  the seller fulfils its

delivery obligation at the point of shipment
- Arrival contracts  D terms  the seller is responsible
for the goods until they arrive in the country of
destination

6
 CISG Passing of risk (articles 66-70)

Art 66:
“Loss of or damage to the goods after the risk has passed to the buyer does
not discharge him from his obligation to pay the price, unless the loss or
damage is due to an act or omission of the seller.”
Art 67:
a. …The fact that the seller is authorized to retain documents controlling
the disposition of the goods does not affect the passage of the risk.
b. …Nevertheless, the risk does not pass to the buyer until the goods are
clearly identified to the contract,
Art 68:
The risk in respect of goods sold in transit passes to the buyer from the time of
the conclusion of the contract….

Chapter 2-Incoterms 2020

 Sequence in allocation costs
between seller and buyer
Place Concept
1. Packaging and checking
2. Loading in seller´s premises
3. Transport in country of origin (pre-carriage)
Country of
4. Customs clearance (export)
origin
5. Terminal charges in origin

6. Main transport
International 7. Transport insurance

8. Terminal charges at destination

9. Customs clearance (import)
Country of 10. Transport in country of destination (on-carriage)
destination 11. Unloading is buyer´s premises
8
 How to use the Incoterms rules

• Creatures of contract and trade custom  not

legislation
• Incorporation of Incoterms into Contracts
• Specify your place or port as precisely as possible
• Variants of Incoterms rules  do not prohibit 
should clarify the meaning of the variations

9
 The rules doesn’t deal with the matter
 The law governing the contract
 The specifications and nature of the goods
 The method or time for payment
 Remedies which can brought by one party against the other for
breach of the contract and method of dispute resolution
 Most consequences of delay or failure of one of the parties to carry
out their obligations
 Sanctions and prohibitions
 Tariffs and Customs duties
 Force majeure
 Intellectual property rights
 Business to consumer sales online platforms
 Transfer of property, ownership or title of the goods sold
 Verified gross mass (VGM) declarations 10
 Specific changes

FCA Customs clearance

BL on board
Exp. / Transit / Imp.

CIP and CIF Inland transport with

own means
Insurance
coverage

DPU
Renaming of DAT

11
Review 2021- KNTHCMN
 CLASSIFICATION OF
INCOTERMS® 2020
FAS Free Alongside Ship (named port of shipment)
WATER WAY ONLY

FOB Free On Board (named port of shipment)

CFR Cost And Freight (named port of destination)

CIF Cost, Insurance and Freight (named port of

destination)

12
 CLASSIFICATION OF
INCOTERMS® 2020
All modes of transport

EXW Ex Works (named place of delivery)

FCA Free Carrier (named place of delivery)

CPT Carriage Paid To (named place of destination)

CIP Carriage And Insurance Paid To (named place

of destination)
DAP Delivered At Place (named place of destination)

DPU Delivered At Place Unloaded (named place of

destination)
DDP Delivered Duty Paid (named place of
destination)

13
 EX WORKS
EXW...(Named place), Incoterms® 2020

Notes:
The seller’s minimum obligation
Cautions to buyers:
 Loading risk
 Export customs clearance
 From Incoterms 2010  suitable for domestic
Delivery document: Delivery note or FIATA FCR
Variant: EXW loaded
 FREE CARRIER
FCA...(Named place), Incoterms® 2020

Notes:
- 1st carrier
- Cont.  FCA i/o FOB
- Buyer  On board B/L
 CARRIAGE PAID TO
CPT...(Named place of destination), Incoterms® 2020

Notes:
- Risk: Seller’s side
- Cost: Buyer’s side
- Unloading: Buyer
CARRIAGE AND INSURANCE PAID TO
CIP...(Named place of destination), Incoterms® 2020

CIP = CPT + I
V= 110% CIP
ICC (A) Institute Cargo Clauses (IUA/ LMA)
 DELIVERED AT PLACE
DAP...(Named place of destination), Incoterms® 2020

Notes:
- Unloading
- Imp customs clearance: Buyer
 DELIVERED AT PLACE UNLOADED
DPU...(Named place of destination), Incoterms® 2020

Notes:
- DPU = DAP + unloaded
- Imp customs clearance: Buyer
 DELIVERED DUTY PAID
DDP...(Named place of destination), Incoterms® 2020

Notes:
 The seller’s maximum obligation
 VAT ?  Variant : “DDP VAT unpaid” or DDP VAT excluded
 FREE ALONGSIDE SHIP
FAS...(Named port of shipment), Incoterms® 2020

Note:
 Container  FCA
 FAS Incoterms 1990  the buyer clears the goods for export
 FREE ON BOARD
FOB...(Named port of shipment), Incoterms® 2020

Notes:
 Container  FCA
 Incoterms 2000  ship’s rail  FOB = C
 COST AND FREIGHT
CFR...(Named port of destination), Incoterms® 2020

Notes:
 Risk: Seller’s side CFR= FOB+F
 Cost: Buyer’s side
 Unloading: Buyer =C+F
 Do not use: C&F, CNF, C+F (old versions)
 Container  CPT
 COST, INSURANCE AND FREIGHT
CIF...(Named port of destination), Incoterms® 2020

CIF = CFR + I
V= 110% CIF CIF= FOB+I+F
ICC (C) Institute Cargo Clauses (IUA/ LMA)
=C+I+F
 Classification of Incoterms 2020
Payment Transfer
Acronyms Incoterm Mode of of main of risks in
transport transport transport

EXW Ex Works
FCA Free Carrier
CPT Carriage Paid To
CIP Carriage and Insurance Paid To
DAP Delivered at Place
DPU Delivered at Place Unloaded
DDP Delivered Duty Paid

FAS Free Alongside Ship

FOB Free On Board
CFR Cost and Freight
25
CIF Cost, Insurance and Freight
 Classification of Incoterms 2020
Payment Transfer
Acronyms Incoterm Mode of of main of risks in
transport transport transport
EXW Ex Works Any mode Buyer Origin
FCA Free Carrier Any mode Buyer Origin
CPT Carriage Paid To Any mode Seller Origin
CIP Carriage and Insurance Paid To Any mode Seller Origin
DAP Delivered at Place Any mode Seller Destination
DPU Delivered at Place Unloaded Any mode Seller Destination
DDP Delivered Duty Paid Any mode Seller Destination

FAS Free Alongside Ship Sea Buyer Origin

FOB Free On Board Sea Buyer Origin
CFR Cost and Freight Sea Seller Origin
CIF Cost, Insurance and Freight Sea Seller Origin
26
 Customs procedures
Export Transit Import
Transport Incoterm
Clearance Clearance Clearance
EXW
ANY FCA
CPT
MODE
CIP
DAP
DPU
DDP
FAS
FOB
SEA
CFR
27
CIF
 Customs procedures
Export Transit Import
Transport Incoterm
Clearance Clearance Clearance
EXW Buyer Buyer Buyer
ANY FCA Seller Buyer Buyer
CPT Seller Buyer Buyer
MODE
CIP Seller Buyer Buyer
DAP Seller Seller Buyer
DPU Seller Seller Buyer
DDP Seller Seller Seller
FAS Seller Buyer Buyer
FOB Seller Buyer Buyer
SEA
CFR Seller Buyer Buyer
28
CIF Seller Buyer Buyer
 Transfer of risks
Mode of
Incoterm Transfer of risks
Transport
EXW
ANY FCA
CPT
MODE
CIP
DAP
DPU
DDP
FAS

FOB
SEA
CFR
CIF 29
 Transfer of risk
Mode of
Incoterm Transfer of risks
Transport
EXW Origin
ANY FCA Origin
CPT Origin
MODE
CIP Origin
DAP Destination
DPU Destination
DDP Destination
FAS Origin

FOB Origin
SEA
CFR Origin
CIF Origin 30
 Allocation of costs
seller (S) and buyer (B)
INCOTERMS
Transport Transport Unloading
Mode of transport Packaging Loading Customs Terminal Terminal Customs
in origin Main Transport to Buyer´s
and seller´s clearance charges charges clearance
(pre- transport insurance destination premises
checking premises export origin destination import
carriage) on-carriage

EXW

FCA

FAS

FOB

CPT

CFR

CIP

CIF

DAP

DPU
31
DDP
 Allocation of costs
seller (S) and buyer (B)
INCOTERMS
Transport Transport Unloading
Mode of transport Packaging Loading Customs Terminal Terminal Customs
in origin Main Transport to Buyer´s
and seller´s clearance charges charges clearance
(pre- transport insurance destination premises
checking premises export origin destination import
carriage) on-carriage

EXW S B B B B B b B B B B

FCA S S S S B B b B B B B

FAS S S S S B B b B B B B

FOB S S S S S B b B B B B

CPT S S S S S S b B B B B

CFR S S S S S S b B B B B

CIP S S S S S S S B B B B

CIF S S S S S S S B B B B

DAP S S S S S S s S B S B

DPU S S S S S S s S B S S
32
DDP S S S S S S s S S S B
 Review

C
S
D

FCA CY/CFS/AIRPORT/…
Other place FAS ALONGSIDE SHIP/QUAY
F?
Delivery FOB ON BOARD (SHIP’S RAIL: I2000)
B E
F FCA
S
E clearance
Seller’s premise
EXW
FCA

B
EXW
S: Seller
33
B: Buyer
 Review

CIF
S CIP
CFR Delivery FOB CFR/CIF Insurance
CIF
S CPT
FCACPT/CIP
Risk CIP
C B CFR
D DAT/DPU CPT
S
B Unloading
DAP
DAT/DPU
S
DDP DDP
Imp clearance
B DAP
S: Seller DDP
34
B: Buyer B DAP
 Test your knowledge

1. If the parties fail to make explicit reference to Incoterms 2020

in their contract documents, courts will apply national legal
definitions of the relevant terms?
2. With the FOB and CIF Incoterms, the transfer of risk from
seller to buyer takes place at the same point ?
3. Incoterms variants such as “CIF landed” are officially defined
by the ICC?
4. Contracts incorporating the DAP, DPU or DDP Incoterms can
be classified as “arrival” contracts ?
5. CIF and CIP are the only two Incoterms that place an
affirmative duty to procure insurance on the seller?

1.F, 2.T, 3.F, 4.T, 5.T

35
 Match the definition with the Incoterms
for the cases below

a. The seller delivers cleared goods at his warehouse in Singapore, and

load onto the buyer’s collecting vehicle.
b. The seller deliver goods to the first carrier at Tan Son Nhat Airport,
HCMC and also pays airfreight up to Kansai airport, Osaka, clear for
export.
c. The seller in HCMC must deliver the cleared goods on board the
vessel nominated by the Buyer in Hong Kong and located in the seller’s
country and from thereon the buyer arranges insurance against damage
to the goods in transit.
d. The seller pays all transport costs up to the buyer’s bonded
warehouse in HCMC, Vietnam. The seller bears the risk until the goods
have delivered to place of destination.

36
 Match the definition with the Incoterms
for the cases below

a. The seller deliver goods at his warehouse in Binh Duong Province,

Vietnam. The buyer must clear for export and load onto his collecting
vehicle.
b. The seller deliver goods to the first carrier at Kimpo Airport, Seoul
and also pays airfreight upto Tan Son Nhat airport, clear for export.
c. The seller in BangKok, Thailand must deliver the goods on board of
the vessel nominated by the Buyer in HCMC, Vietnam and located in
the seller’s country and from thereon the buyer arranges insurance
against damage to the goods in transit.
d. The seller pays all costs (including of Customs formalities) up to the
buyer’s premise in HCMC, Vietnam. The seller bears the risk until the
goods have delivered to place of destination.

37
 LO2

CONTRACT OF SALE OF
GOODS

38
 FORM OF CONTRACT

Marketing materials
1 Seller 2 Buyer

Inquiry/ Request for quote

3 Offer (RFQ)

Price quote/ Pro-forma

Invoice Counter
4
-offer
Purchase Order
5 Acceptance
Confirmation
Contract
39
 Business Letter

Inquiry Counter-offer
Offer

Order

Firm offer Acceptance

 An offer with offeror’s engagement w/i a
stated period of time/ dead line.
 Express/ imply these words: firm offer,
for acceptance within X days or similar
qualifying words
Confirmation
 Once accepted, firm offer can not be
withdrawn  contract concluded
Review 2021- KNTHCMN
 Example

 1 Mar. B Company (Singapore) sent an inquiry for 5,000 Mts of Peanuts

Grade 1 to S Company (VN)
 2 Mar, S made an offer subject to acceptance within 20 days at unit price of
Usd 450/MT FOB Cat Lai port including packing. Payment was to be made
by L/C A/S opening 10 days after the contract was concluded. The goods
could be shipped within May.
 21 Mar, B accepted the offer
 1 Apr, B opened a L/C A/S in favor of S, date of expiry: 15 May, date of
shipment: 10 May
 1 May, S requested to revise the price of Usd 520/MT (market price),
delivery by 15 June
 5 May, B amended L/C accordingly
 9 June, S stated that S would cancel the transaction due to the contract was
not signed.
 30 Jul, B sued S to the court.
41
 Evaluate
Export cost for foreign exchange ratio is calculated the
total amount of home currency cost (Ce) to an unit of
foreign currency turn-over (Te) on FOB basic.

If Re < E/R  export?

If Re > E/R  export?
E/R: commercial exchange rate

Review 2021- KNTHCMN

 Evaluate
Import cost for foreign exchange ratio is calculated the
total amount of home currency turn-over (Ti) to an unit
of foreign currency expense (Ci) on CIF basic.

If Ri < E/R  import?

If Ri > E/R  import?
E/R: commercial exchange rate

Review 2021- KNTHCMN

 Ex.

Export price: Usd 800/ MT CFR Le Harve port,

Incoterms 2020
Ocean freight: Usd 30/ MT
EXW cost: Vnd 10.000.000/ MT
Inland transport to Cat Lai port: Vnd 1.000.000/MT
Port charge+ loading on board: Vnd 500.000/ MT
Export Exchange Rate ?

44
 Which offer?

Supposed you receive 03 offers asf:

Offer 1: Usd 750/ MT CIF HCMC port
 Offer 2: Usd 719/ MT CFR HCMC port
 Offer 3: Usd 715/ MT FOB Pusan port, Korea
Choose the appropriate offer. Where as:
Oceanfreight from Pusan port-HCMC port: Usd
30/ MT
Insurance rate: R= 0.25%
Other conditions and terms are the same

Review 2021- KNTHCMN

45
 DEFINITION

An agreement between a seller and a buyer

(whose places of business located in different
countries) for the sale and purchasing of
goods.

NB:
- Exclusive customs area
- Neither the nationality of the parties

46
 OBLIGATIONS OF THE SELLER

The seller must (Art. 30):

 Deliver the goods: conformity/when/ where?

 Hand over any documents relating to them, and
 Transfer the property in the goods

47
 OBLIGATIONS OF THE BUYER

The buyer must (Art. 53):

 pay the price for the goods: where/ when?

 take delivery of the goods

48
 PERTINENT CLAUSES

MANDATORY OPTIONAL
Article 1: Commodity Article 7: Packing and
Article 2: Specification/ marking
Quality Article 8: Penalty
Article 3: Quantity Article 9: Insurance
Article 4: Price Article 10: Force majeure
Article 5: Payment Article 11: Claim
Article 6: Shipment Article 12: Arbitration
Article 13: Other terms and
conditions
49
 ARTICLE 2: QUALITY
• 2 Ways:

 Sale by sample
 Sale by description
1. Sale by specification, content (min/max)
2. Sale by Category, Grade, Standard or Technical
documents
3. Sale by FAQ/ GMQ
4. Sale by brand name or trade mark
5. Sale by name of origin
6. Sale by description of goods, nature
7. Sale by inspected and approved
8. Sale by tale quale (as it is/as is sale)
50
 Example

• Sale by descriptionis applicable to commodities of

which quality can be expressed by some scientific
indices.
Sale by sample

• ____________ is used when it is difficult to describe

quality of the commodity by words.

51
 ARTICLE 3: QUANTITY

Goods can be divided into 2 cats:

- Bulk or grain
- Break bulk or general cargo

Ex. Ore, coal, grain, and liquid chemicals, etc… not sold
with individual container all belong to the …….category.

52
 More or less clause

About 5,000 MTS / Approximately 5,000 MTS

From 4,500 MTS to 5,500 MT S
5,000 MTS ± 10% at seller’s option
5,000 MTS more or less 10% at buyer’s option B/L quantity
NOTE:
- UCP600 rules that if there is any word like “about”,
“approximately” in the quantity clause in the letter of credit, it
should be interpreted that 10% more or less in quantity is
allowed
- Unless the letter of credit declares that the goods to be delivered
should not be more or less in quantity or the goods are to be
calculated by number of packages, 5% more or less of the goods
in quantity should be accepted 53
 Example

According to UCP 600, in absence of any more or less clause

specifying the quantity, a tolerance not exceeding …. more or less
is allowed, provided the quantity is not stipulated by number (of
packing units or individual terms) and provided that the total
amount of the goods does not exceed the amount of the credit.

According to UCP 600, “approximately” allows the quantity to be

…. more or less.

54
 The Calculation of the Weight of Goods

COMMERCIAL WEIGHT WC
- The weight of the goods derived from such a process with which the
moisture content of the commodity is removed and standardized
moisture content is added by scientific means.
- Commercial weight is chiefly applicable in the calculation of the
weight of such commodities like raw silk, wool, etc., which are of
high value and with unsteady moisture content

Where as:
100  M S
WC : commercial weight WC  WA 
WA: actual weight 100  M A
MS: standard moisture
55
M : actual moisture
 EXAMPLE

Contract for 120MTS of Wool with agreed standard rate

of water as 10%. When receiving the goods, the actual
rate of water as 15%. The conditioned weight?
WC = 120 MTS x (100 + 10)/(100+ 15)=
If the actual net weight of a shipment of wool is 35 MT
with an actual regain of 20%, suppose the standard regain
is 12%, the conditioned weight is ?

WC = 35 MTS x (100 + 12)/(100+ 20)=

56
 The Place identified of the Weight of Goods

- Intaken quantity/ B/L quantity  at the port of loading

- Delivered quantity  at the port of discharge  Anglo-
American system countries

57
 ARTICLE 4: PRICE

The methods of calculation of price:

1. Fixed price
2. Flexible price/ Revisable price
3. Deferred price
4. Sliding price
Currency Unit price Incoterms Total amount

Unit price: USD 250/MT FOB Saigon port, HCM city, Vietnam.
(Incoterms 2020)
Total amount: USD 2,500,000.
Say: United States Dollars two million five hundred thousand only.
58
 Example

Price: “if the market price of the goods shipped is 5%

higher, the price will be accordingly increased by 3%.” is
an example of ……?

59
 ARTICLE 5: PAYMENT

The contract should specify:

- The currency of payment

- The time of payment
- The method of payment: T/T, D/P, D/A, CAD,L/C
- The required documents

60
 ARTICLE 6: SHIPMENT

The contract should specify:

 Date of shipment
 Place of shipment
 Place of discharge/ delivery
 Partial shipment NB: Article 31(b) Partial Drawings or Shipments
 Transhipment
 Shipping advice

61
 Example
L/C:
- Partial shipment: not allowed
- Port of loading: Pusan port, Korea
- Commodity: 25 Hyundai Trucks
The seller presents 03 B/Ls, the details are as follows:
- B/L 1# 10 Trucks Date of issue 07/03/20xx POL: Ulsan port
POD: Cat Lai port on board MV. Hanjin V.001S
- B/L 2# 05 Trucks Date of issue 07/03/20xx POL: Ulsan port
POD: Cat Lai port on board MV. Hanjin V.001S
- B/L 3# 10 Trucks Date of issue 15/03/20xx POL: Shanghai port
POD: Cat Lai port on board MV. Hanjin V.001S
- Partial shipment? Date of shipment?
62
 LO3

Int’l payment

63
 Methods of payment

• Remittance : T/T, M/T

• Open Account Group: Clean
payment
• Collection:
– Clean collection
– Documents against payment D/P
– Documents against acceptance D/A Group:
• Cash against documents (CAD) Documentary
payment
• Documentary of Credit (L/C).

Review 2021- KNTHCMN

64
 The Trade Transaction Timeline

Time and Events

Price Export Goods Documents Goods Cash

Quote contract are are are settlement
request signed shipped accepted received of the
transaction

Negotiation Production

Documents are
presented

Financing Period
Review 2021- KNTHCMN
65
 The time of payment
• Advance payment: T/T in advance, T/T x days before
shipment date, T/T x days after contract date
• Prompt payment: (T+2)
– Delivery: T/T upon shipment date
– Document: NB: based on receiving goods ?
• T/T upon receiving set of original/copy documents
• D/P at sight, L/C at sight
• Time payment: (T+3~360 days)
– Delivery: T/T x days after shipment date/ B/L date
– Documents:
• T/T x days after receiving set of original/copy documents
• D/A at x days sight, L/C at x days sight

Review 2021- KNTHCMN

66
 L/C

Advising
Issuing bank
bank

-
L/
TS

C
EN

AP
M

PL
CU
DO C

IC
L/

AT
-

IO
-

N
Beneficiary Applicant
- SALE CONTRACT
- GOODS

Review 2021- KNTHCMN

67
 Bill of Exchange

Drawer

Beneficiary

Drawee

L/C # COLLECTION ?
Review 2021- KNTHCMN
68
 SET OF DOCUMENTS
• Full set 3/3 originals of "Clean on Board" Bill of Lading
made out to the order of "L/C opening bank" and notify
"Applicant".
• Commercial Invoice  SIGNED
• Packing list
• Certificate of origin  Form?
• Certificate of quality/quantity/ weight  3rd party?
• Fumigation certificate
• Insurance Policy / Insurance certificate ?
• ….

Review 2021- KNTHCMN

69
 Ví dụ

Trong phương thức thanh toán tín dụng chứng từ, ngân hàng mở
thư tín dụng có quyền từ chối thanh toán cho người hưởng lợi khi:
a/ Người xin mở L/C bị phá sản.
b/ Ngân hàng mở L/C gặp khó khăn về tài chính.
c/ Bộ chứng từ do người hưởng lợi xuất trình có bất hợp lệ.
d/ Hàng hóa bị hư hỏng toàn bộ khi đang trên đường vận chuyển từ
nước người bán đến nước người mua.

70
So với phương thức nhờ thu, phương thức tín dụng chứng từ có ưu
điểm:
a/ Thanh toán nhanh hơn với chi phí thấp hơn.
b/ Nhà nhập khẩu chắc chắn nhận được hàng.
c/ Nhà xuất khẩu chắc chắn nhận được tiền nếu giao hàng đúng hợp
đồng.
d/ Nhà xuất khẩu chắc chắn nhận được tiền nếu bộ chứng từ phù
hợp với L/C.

71
Cty xuất nhập khẩu Inteco thành phố Hồ Chí Minh ký hợp đồng
mua 360 xe máy với 1 Cty của Hồng Kông, bên phía Hồng Kông
xuất trình bộ chứng từ phù hợp với L/C và ngân hàng đã thanh
toán. Nhưng khi nhận hàng thực tế chỉ có 104 chiếc xe. Ngân hàng
có chịu trách nhiệm trong trường hợp này không ?
a/ Không vì ngân hàng thanh toán trên cơ sở bộ chứng từ.
b/ Có vì số lượng hàng giao không đúng hợp đồng
c/ Có vì số lượng hàng giao không giống bộ chứng từ
d/ Không vì nhà nhập khẩu phải chịu trách nhiệm.

72
 LO4

Int’l Transport

73
 Carriage of goods by sea

• Voyage Chartering
• Containerization: FCL/LCL
• Bill of lading  Rules  liability ?

Review 2021- KNTHCMN

74
 Voyage charter and C/P

• The voyage chartering means that the shipowner

promises to carry on board a specific ship a particular
cargo for a single voyage from one or more loading
ports to one or more discharging ports.
• The payment is called freight Loading and
discharging costs are divided between the shipowner
and the charterer in accordance with the agreement
from case to case
• The contract is called a voyage charter party (C/P)
75
 The important clauses - highlighted
 Cargo clauses  More or Less (±): MOLOO , MOLCO, Deadfreight
 Laytime Commencement of laytime (loading and discharging):“Laytime
for loading and discharging shall commence at 1300 hours, if notice of
readiness is given up to and including 1200 hours, and at 0600 next working
day if notice is given during office hour after 1200 hours”
 Demurrage an agreed amount payable to the owner in respect of delay to
the vessel beyond the laytime, for which the owner is not responsible.
Rules:
 Once on demurrage, always on demurrage  not be subject to laytime
exceptions.
 2 dispatch money
 Despatch  an agreed amount payable by the owner if the vessel completes
loading or discharging before the laytime has expired
 ON (ALL) WORKING TIME SAVED" (WTS) or "ON (ALL)
LAYTIME SAVED“
 ALL TIME SAVED (ATS)
76
 The important clauses - highlighted
 Time allowed: CQD
 WWD, SHInc: weather working days of 24 consecutive hours, Sundays,
holidays included
 WWD, SHEx: working days of 24 consecutive hours, Sundays, holidays
excepted
 WWD, SHEX UU  unless used
 WWD, SHEX EIU  even if used
 Loading and discharging cost  Allocation of costs
 Owner’s account: Gross terms/ Liner terms
 Charterer’s account: Free of any (I/O/S/T)  FIO, FIOST
 EX: FREIGHT RATE: USD 30/MT LINER TERMS

77
 Example

The discharging term of a foreign trade contract regulates

that the unloaded quantity rate per day is
2,000MT/WWDSHEXEIU and Demurrage rate is USD
3,000 per day. The vessel is actually carrying 12,000MTS.
When it arrives the port of destination in HCM city, the
captain advises the consignee of the Notice of Readiness
at 2.00 pm Monday 28th Aug. The consignee finishes
unloading on 3rd Sep.

78
 Example

• Vessel arrived: 0900, Monday 9 September

• Notice of Readiness tendered: 0930, 10 September
• Notice of Readiness accepted: 0930, 10 November
• Vessel berthed: 0930, 11 September
• Cargo weight/quantity: 5,000 MTs
• Loading commenced: 1500, 11 September
• Loading completed: 0930, 19 September
• Laytime allowed for loading: 5 WWDSHEXUU

79
 Container owners
CONTAINER
SOC
(SHIPPER OWNED CONTAINER)
Container
1 container SOC chứa 100 CTNS  1 kiện

COC
Transport (CARRIER OWNED CONTAINER)
equipment
1 container COC chứa 100 CTNS  100 kiện

Review 2021- KNTHCMN

80
 Volume-to-payload ratio

𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚
𝑹=
𝑷𝒂𝒚𝒍𝒐𝒂𝒅

20' container = 33.5 m³ /

21.75 t = 1.54 m³/t

40' container = 67.7 m³ /

26.74 t = 2.53 m³/t

81
 Example

Consignment 1:
• 200 MTs/ 440 CBM
• Broken Storage: 10%
SF = 2.42 CBM/MT  40’

Consignment 2:
 230 MTs/ 300 CBM
 Broken Storage: 15 %
SF = 1.30 CBM/MT  20’

82
 Container movement methods

• FCL/FCL
• LCL/LCL
• FCL/LCL
• LCL/FCL

Review 2021- KNTHCMN

83
 Full container load-FCL

Review 2021- KNTHCMN

84
 Full container load-FCL

• Movement: FCL/FCL or CY/CY

• B/L

85
 Freight FCL
Rate based on 40’GP:
20’GP=75% x 40’GP
 BASIC FREIGHT RATE: 40’HC= 112.5% x 40’GP
 FAK : Freight All Kind 45’HC= 126.6% x 40’GP
 CBR : Commodity Box Rate
 SURCHARGE:
 CAF : Currency Adjustment Factor
 BAF : Bunker Adjustment Factor/EBS (Emergency
Bunker Surcharge)
 GRI : General Rate Increase
 PSS : Peak Season Surcharge
 LSS : Low Sulphur Surcharge
 THC : Terminal Handling Charge…
 Freight All-in= Basic Freight
Review 2021- KNTHCMN + Surcharge
86
 Full container load-FCL

The inbound charges:

1. Lift on/off
2. THC
3. Handling charge
4. D/O fee
5. Cleaning fee
6. CIC
7. Normally: 5 free days  detention + demurrage
charge
8. ….
87
 Three major shipping alliances

Review 2021- KNTHCMN

88
 Less than container load-LCL
3 HB/Ls
3 D/Os

1 D/O

Review 2021- KNTHCMN

89
 BILL OF LADING

• CFS/CFS or LCL/LCL
• HB/Ls + MB/L + MANIFEST  direct consol  co-
loader
• L/C: HOUSE BILL OF LADING ACCEPTABLE

90
 Freight and Charges

• Unit of freight ( Freight ton/ Revenue ton)

• Ratio 1:1  1000 KGS<>1CBM
• Freight + charges

91
 W/M rule

1. AIR FREIGHT 1 CUBIC METER = 167 KGS

2. SEA FREIGHT 1 CUBIC METER = 1.000 KGS
3. Inland point in USA: 1 CBM = 363 KGS
4. ROAD FREIGHT 1 CUBIC METER = 333
KGS

92
 Freight and Charges

• Handling fee/ Destination delivery charge

• B/L, D/O fee
• THC, CFS charges
• Cleaning container fee
• Demurrage charge
• AMS (Advanced Manifest System fee)/ISF
(Importer Security Filing)
• CIC (Container Imbalance Charge) hay
“Equipment Imbalance Surcharge”

93
 Revenue ton (RT)

Step 1: Calculate the volume/GW of the LCL shipment

Step 2: Convert GW to the weight based volume

(ratio=1:1)

Step 3: Compare the volume with the weight

based volume  which is higher  RT
 Exe.

One shipper usually sent the 20 pallets of the cargo to Japan

with 20ft container. One day, they recommended to arrange
LCL shipment for the 14 pallets (1 Plt=1 CBM) of the cargo
because of the volume reduction. If you were Cnee (the
Incoterms at this time was CIF), do you accept to use LCL i/o
FCL as shipper’s suggest?
Known as:
Ocean Freight: USD 300/ 20’, USD10/CBM
Port charge: THC: JPY 35,000/20’, THC: JPY 1,500 /CBM,
CFS: JPY 3, 980 / CBM
Exchange Rate: as USD 1 = JPY 100

95
 Exe.

Your Japanese company import a shipment from VN under

FOB term, the details as follows:
 Cargo volume: 1.1m x 1.1m x 1.0m / palett / G.W: 500kg /
pallet
 Q’ty: 10 pallets
 Ocean Freight to Japan
FCL: USD 300/20′ all in
LCL: USD 10/RT
 Port Charges in Japan
FCL: THC – JPY 35,000/20 ‘
LCL: THC – JPY 1,500/CBM, CFS – JPY 3,980/CBM
Do you consider to use FCL or LCL? Why ? Exchange Rate: as
USD 1 = JPY 100
96
 Bill of Lading- B/L

Functions of B/L:
 As receipt for goods shipped
 Receipt as to quantity
 Receipt as to condition
 Receipt as to leading marks
 As evidence of the contract of carriage
 As a document of title

97
 Kinds of B/L

 Two main kinds of B/L:

 Shipped on board B/L
 Received for shipment B/L
 Others:
 According to beneficiary
 According to voyage/ mode of transport
 According to receipt as to condition

98
 Others classification

• Others- Misc.
Master Bill of lading

House Bill of lading

Charter Party Bill of
lading
Surrendered Bill of
Lading
Express B/L
Switch Bill of Lading

Seawaybill
99
 Application of the conventions/rules

• The Hague Rules: The International Convention For

The Unification Of Certain Rules Of Law Relating To
Bill Of Lading  adopted 1924
• The Hague-Visby Rules: The Protocol To Amend The
Brussels International Convention For The
Unification Of Certain Rules Of Law Relating To Bill
Of Lading + The protocol (SDR) to the Hague Visby
Rules 1979
• The Hamburg Rules: The United Nations Convention
On The Carriage Of Goods By Sea, 1978  entered
into force on 1 November 1992
100
 Application of the conventions/rules

• The Carriage of Goods by Sea Act ("COGSA"):

United States statute governing the rights and
responsibilities between shippers of cargo and ship-
owners regarding ocean shipments to and from the
United States
• The Rotterdam Rules: Convention of Contracts for
the International Carrying of Goods Wholly or
Partly by Sea  not yet in force
• VN Maritime Code 2015

101
Liability Limitation

102
 Carriage of goods by air

• Air freight
• Air waybill

103
 Acceptance of Goods

• Valuable cargo
• Perishable cargo
• Wet cargo
• Live animals
• Human remain
• Personal effects
• Over sized or heavy cargo
• Dangerous cargo
• Other cargo needing special handling

104
 Valuable cargo (VAL)

• Any article having a

Gold bullion
declared value of
carriage of USD
Legal bank notes 1000.00 (or equivalent)
or more, per gross
Bank cards and/or credit kilogram;
cards
• In The UK: GBP
450.00, or more per
Jewellery
gross kilogram
 No special marking
Diamonds
 Valuation charge
applied

105
Valuation charge = (Declared value – SDR17/SDR22 x GW) x 0.75%

106
 Types of Airfreight rates
Min……………
N ( - 45 kgs )…..
General cargo rate (GCR) + 45…………….
+ 100…………..
+250……………

Specific commodity rate (SCR) Special rates for some commodities

• Valuable cargo S

Class rates (CCR) • Newspapers,books, periodicals….

R
• Live animals S
• Human remains S
• Baggage shipped as cargo R
107

R …. Reduction rate
S ….. Surcharge rate
Minimum (M) General Cargo Rate (GCR)
Normal (N) Quantity (Q)

108
 CHARGEABLE WEIGHT (C.W)

Step 1: Calculate the volume of the air freight

shipment
Step 2: Finalize the volumetric weight

Step 3: Compare the gross weight with the volumetric

weight  which is higher = C.W
Step 1
 Step 2

h t Length
id
W
Heigh
t

Volumn (V)
Gross Weight (GW)

Volumn Weight (V.W)

Factor
• 0.001 kg to 0.5 kg → 0.5 kg cm3 : 6000  Kg
• 0.501 kg to 1.0 kg → 1.0 kg in3 : 366  Kg
in3 : 166  lb
 Note

Express firms (e.g Fedex, DHL…/ courier service)

normally calculate volume weight as below

• Volume weight = Volume (cbm) : 5000

• or in simple way: 1 CBM have volume weght

200 kg

112
 Step 3

Chargeable weight is the greater value

 Example

1. 3 CTNS / Dims: 22x16x45 in / GW: 325 lbs

2. 4 Drums / Diameter: 17 in, Height: 22 in/ G.W:129
lbs
3. 4 Boxes / Dims:54x42x28 cm/ G.W: 38 Kgs
4. 2 Drums / Diameter: 60 cm, Height: 120 cm/
G.W:356 Kgs
3 Crates/ Dims: 162x86x49 cm / G.W: 213.2 Kgs
5 CTNS / Dims: 66x53x49 cm / G.W: 94.7 Kgs
CHARGEABLE WEIGHT
 Int’l Convention on Carriage by
Air
Warsaw-system convention:
 Warsaw Convention 1929
 Warsaw-Hague Convention
1955
 Warsaw-MAP 1 Convention
1975
 Warsaw-MAP 2 Convention
Montreal Convention
1975 OR
1999
 Warsaw-MAP 4 Convention
1975

Supplementary to each of the above

conventions:
Guadalajara Convention 1961
116
 Air waybill (AWB)

Warsaw-system + MC 99  AWB or Cargo

receipt is prima facie evidence:
of the conclusion of the contract,
of the acceptance of the cargo and of the
conditions of carriage mentioned therein

117
 Description of air waybill

The air waybill shall be made out by the consignor in three

original parts:

COPY NUMBER DISTRIBUTED SIGNED BY

TO
The 1st Original For Carrier Consignor
(green)
The 2nd Original For Consignee Consignor +
(pink) Carrier
The 3rd Original For Shipper Carrier
(blue)

118
 Contents of AWB

Warsaw-Hague-MAP 4 1975 + MC 99 :
(a) "an indication of the places of departure and
destination;
(b) if the places of departure and destination are
within the territory of a single [Contracting State],
one or more agreed stopping places being within the
territory of another State, an indication of at least one
such stopping place; and
(c) an indication of the weight of the consignment."

119
 Limitation of liability

 Warsaw 1929: 250 Fr/kg (1Fr Pháp#65.5mg Vàng

90%)
 Montreal Protocol 1975: 17 SDR/kg
 The Montreal Convention 1999 (MC99) In 2009
this was increased to 19 SDRs, where it has
remained for the last decade. In November 2019,
ICAO announced the limitation on cargo damage
liability would increase to 22 SDRs/kg effective 28
December 2019.

120
 Example

We have an air shipment with the details as follows:

- Routing: Saigon, Vietnam (SGN) to JFK
- Q’ty: 1 box/ G.W: 25 K / Dim: 50x55x75 cm
- Applicable rates: GCR N Usd 12.36 GCR 45K Usd
9.30
- Surcharges: FSC : Usd 0.10/K ISC: Usd 0.05/K
AWB: Usd 2/set AMS: Usd 25/set
 CW to achieve the lower transportation charge
 Total cost ?

121
 LO5

Cargo Insurance

122
 Contract for Insurance

 Importer/ Buyer  Incoterms ? E/F/CFR and CPT

 Send offer  filling in the requested details, you
send the form to the company  choose one of
A/B/C clause
 Receive acceptance from the insurer
 Consideration  compute the premium  on the
basis of the proposal value and clause
 Policy Issuance  once the premium is paid
I= R x (C+F)/(1-R)

123
 Contract for Insurance

 HDMB HDBH
CIF V=110%CIF
FOB/CFR V=CIF = (C+F)/(1-r)

124
 Contract for Insurance

 Exporter/ Seller  Incoterms ? CIF/CIP + D terms

 D  self-insured
 CIF/CIP  buyer’s interest  Insurance clause of
Sale Contract  if not:
 CIF  minimum coverage : I = RC x 110% CIF
 CIP (Incoterms 2020)  maximum coverage: I = RA x 110%
CIP
 CIF/CIP  seller would obtain marine insurance 
assign it to the overseas buyer  the buyer claims
for any loss or damage directly

125
 General Average Adjustment

L= Expenditure + sacrifice GA losses/damages/expenses

V= VGA - PA Contributory Value

L
ti  x100 % Apportionment of GA
V

Contributory value
ci  vi x t i

Ri= Ci - Li Balance in GA
 Example

On a voyage, the cargo ship had an accidental fire. To save the ship
(A, B shipment) , the captain ordered to have water poured into the
compartment. The fire was put out.
a. A shipment burnt amounted to 10% of USD 0.5 million cargo
b. B shipment were damaged due to water poured accounted for
20% of USD 1 million cargo
c. The ship’s engine was damaged due to fire equaled 1% of USD
50 million of the value of the ship
d. Extra wage for seamen totaled USD 50,000
GA contribution?

127
 Overview

• ICC Lost
Contra Premium (A)/(B)/( • PA • Money
Risks C) Damag • GA Claim •≤ V
ct document
• Addition
e

I=RXA  PA Claim:
A=V  = value A=V  Claim = V1- V0
A<V  under value A<V  Claim = (V1- V0 ) X
V: Insurance Value
 GA Claim: according to
FOB/CFR  V=CIF=
CIF  V=110% CIF contribution

128
 Example

A shipment of goods has value: 15,000 USD, shipper

bought A (Amount insured): 10,000 USD, C clause
( ICC1982). In case, Goods was fired, damage 3,000
USD/ How much insurer must indemnify?

129
 Institute Cargo Clauses 1/1/2009

All Risks – Institute Cargo Clauses (A) (1/1/09)

The (A) clauses provide the widest cover of all of the
Institute Cargo Clauses, stating:
“This insurance covers all risks of loss of or damage to the
subject-matter insured except as excluded by the provisions of
Clauses 4, 5, 6 and 7 below”
(Clauses 4, 5, 6 and 7 list certain types of loss or
damage that are excluded (ie not covered) by
the policy)

130
131
 Types of loss and measures of
indemnity
• Partial loss – measure of indemnity
60 cases of A are valued at CIF $60,000. All 60 cases
are delivered wet damaged by an insured peril. The
surveyor agrees a 25% depreciation with the Assured.
The claim is:

60 cases insured value $66,000 x 25% depreciation

= $16,500

132
 Types of loss and measures of
indemnity
• Partial loss – measure of indemnity
If only 37 of the 60 cases (see the previous slide) had
been delivered damaged and the rest were sound, the
percentage depreciation 25%. The claim is?

60 cases insured value $66,000

37 cases insured value in proportion
($66,000/60 x 37) = $40,700
Depreciation thereon at 25%
($40,700 x 25%) = $10,175
133
 Types of loss and measures of
indemnity
Partial loss – measure of indemnity with auction
60 cases of A are valued at CIF $60,000. All 60 cases
are delivered wet damaged by an insured peril. The
goods are sold at auction for $40,000. The amount the
Assured receives after sale charges of $1,200 is
$38,800. The claim on the policy is?

60 cases value in sound condition $60,000

Sold for gross proceeds of $40,000
Depreciation is $20,000 or 33.33333%
The claim on the policy is the insured value of
$66,000 x 33.33333% = $22,000
Plus sale charges $1,200
Claim on the policy $23,200
134
 Types of loss and measures of
indemnity
Partial loss – measure of indemnity with auction
If only 15 cases (see previous slide) had suffered damage
and these were sold for gross proceeds of $10,000, with
the Assured receiving $9,700 after deduction of sale
charges of $300. The claim on the policy is?
60 cases CIF value $60,000
Insured value $66,000
15 cases in proportion – CIF value $15,000
Insured value $16,500
15 cases sold for gross proceeds of $10,000
Depreciation is $5,000
or 33.33333%
The claim on the policy is the insured value of
$16,500 x 33.33333% = $5,500
Plus sale charges $300
Claim on the policy $5,8000 135
 PA recovery

When unloading the goods from the ship, the surveyor record
reads:
1. 10 bags with broken packaging, reduce weight by 50%
2. 20 bags were soaked in sea water, completely damaged
3. 10 bags fell into the sea when unloading from the ship
4. 15 bags stolen
5. 25 bags were burned and damaged completely
In case of an ICC (C) policy applied, which kind of damage/lost
can be claimed on the policy?

136
 LO5

Customs Procedure

137
 CONTENTS

 PART 1: CUSTOMS FORMALITIES

 PART 2: CUSTOMS VALUATION
 PART 3: HARMONIZED SYSTEM + RULES
OF ORIGIN

138
PART 1

CUSTOMS FORMALITIES
 DEFINITION

• Customs formalities mean activities to be

carried out by customs declarants and customs
officials in accordance with this Law for goods
and vehicle
(ARTICLE 4/ ITEM 23/LAW ON CUSTOMS)

140
 DEFINITION

“Electronic customs procedures” refers to customs

procedures under which the information used for the
customs declaration shall be provided, received and
processed, and the exchange of other information
between parties involved shall be carried out through the
electronic data processing system, as stipulated by the
applicable law on customs procedures.
(Article 3/ Decree 08)

141
 VNACCS/VCIS

“Electronic customs declaration system” refers to the

system that enables customs declarants to follow
electronic customs procedures for their customs
declaration, receipt of information and responses from
customs authorities
(Article 3/ Decree 08)

142
 VNACCS/VCIS

Hãng vận chuyển, giao nhận

I. CĂN CỨ LẬP KẾ HOẠCH

Hệ thống thông quan điện tử và SW

Các hệ thống
VNACCS khác

DN XNK, Đại lý HQ
Chi cục

Firewall

Kho bãi, cảng Internet

VCIS
Chi cục

Các cơ quan Ngân hàng

quản lý
24x7 143
 Customs procedure

While carrying out customs procedures, the customs

declarant shall be responsible to:
a) Fill in and submit customs declaration forms;
submit or produce documents of customs files
prescribed in Article 24 of this Law;
b) Take goods and means of transport to prescribed
places for physical inspection;
c) Pay duties and fulfill other financial obligations
in accordance with law provisions on taxes, charges
and fees and other relevant laws
144
145
PART 2

CUSTOMS VALUATION
 CUSTOMS VALUATION?

1/ Import duties (Tariffs)  major

2/ Non-tariff measures (NTMs)
a/ Generally prohibited: Quota/ import
license
b/ Regulated: Sanitary and Phytosanitary
Measures (SPS), Technical Barriers to
Trade (TBT), trade remidies…

147
 TAX CALCULATION

Type of Exampl
duty e
• 5%
Ad valorem
• $5 per kg
Specific
• 10% + $2 per kg
Compound
• 10% or $2 per kg, whichever is higher
Mixed

148
 Example A. Why
rules?

Value of
Rate of duty
x imported
specified = Customs duty
goods

15% x $2.000 $3000

= $150

149
IMPORT-EXPORT TAX

150
 Valuation applicable to exported goods

The Customs value is the selling price of goods at

exporting checkpoint exclusive of international
insurance cost (I), international freight cost (F)

151
 M1 based method
 The selling price of goods at exporting checkpoint includes:
 the selling price stated in the goods sale contract or
commercial invoices. and
 expenses related to exported goods at exporting checkpoint
matching relevant documents if these expenses are not
included in the selling price
 For exported goods not delivered to exporting checkpoint
 If the place of delivery is outside of Vietnam's territory
 If the place of delivery is in Vietnam's inland area Selling Price-I-F
Selling Price + pre-carriage + loading +…
 Valuation applicable to imported
goods
The customs value of imported goods is the actual
buying price calculated at the first port of entry
determined by applying successively 6 methods of
customs valuation
NB: CIF/CFR  W/O THC

153
 Example

CUSTOMS VALUE= Eur 12,500

154
 Example

CUSTOMS VALUE= Eur 11,830

155
 Example

CUSTOMS VALUE= Eur 12,300

156
 A (VN) imported goods from B (Malaysia) under the terms
asf:
Commodity Q’ty Unit price Amount (USD)
(USD/pc)
Glass Disk pcs 1,440 2.00 2,880.00
Glass Pot pcs 500 3.00 1,500.00
EXW 4380
Freight, packing and insurance 100
CIF (Incoterms 2020) 4480
- Quality: 100% brand new
- Payment: L/C
Customs value of the item : Glass Disk ? Known as: E/R 1 USD
= 21.036 VNĐ
61.966.869 VNĐ

157
PART 3

HS
Harmonized System (HS)
What are the Composition of the Harmonized System?

6 Rules

21
Sections

Chapter 77 is
99 reserved for
Chapters future use

> 1,200
Chapters 98 & 99 are
reserved for special uses
by contracting parties to
> 5,000 the HS Convention

160
General Rules of Interpretation

161
 DESCRIPTION
OF GOODS

GRI yes
1
No RULES CHART
GRI 2

yes No
GRI 3
yes No

GRI 4

yes

GRI 5

GRI 6 Classified

162
PART 3

ROO
 Certificate of origin (C/O)

"C/O" means a documentary proof issued by an

issuing authority of an exporting country, group of
countries, or territory based on relevant regulations
and requirements on origin, clearly identifying the
origin of the good

164
 There are two kinds of

Rules of
Origin

1. Non-
Preferential 2. Preferential

165
 C/O

Preference Non-Preference

Special
Preference Form B
preference

GSP/MFN FTA/EPA

Bilateral Multilateral
Form A
(VK/VJ…) (AK/CPTPP…)

166
 VN-JAPAN
ATIGA
VN-KOREA
ASEAN-China
VN-CHILE
ASEAN-Japan
FTA
concluded VN-EAEU
ASEAN-Korea

ASEAN-Australia- VN-CUBA
New Zealand
VN-EU
ASEAN - India
ASEAN-HK
In
negotiation
VN-UK
RCEP

ASEAN + 5 (w/o India) CPTPP (TPP11)

VN-IL VN-EFTA
167
 VCCI
http://www.covcci.com.vn

• GLOBAL SYSTEM OF TRADE

FORM GSTP PREFERENCES/ G77
• GSP (Generalized System of
FORM A Preferences)
• 70 countries/ mainly: USA/ EU/

FORM B • Tất cả các nước

• Textile export
FORM T • VN-EU
• O-Form: các nước thành viên
FORM O/X • X-Form: các nước không là thành
viên
168
 VCCI
http://www.covcci.com.vn

FORM S / X • LAOS/CAMBODIA

FORM • Hand-made goods (trừ textile)

HANDRICAFT

FORM • Hand-made textile

HANDLOOM

Others • Venezuela/ GSTP/ MEXICO/DA 59

169
 Exemption from proofs of origin

Exemption for the following:

 Low value shipments;
 Low valued small packages from private persons to private
persons;
 Private luggage.

Chapter 4- ROO
170
 How to determine origin?

1. Wholly obtained
– from the ground
– from the sea
– animals
2. Substantially transformed – 3 main
methods:
− Change of tariff heading
− Value added rule
− Special Technical Requirement
(sometimes used in combination)

171
Change of tariff heading

172
Example CTC

173
 VALUE ADDED RULE

Build-up, Build-down

174
EX: Japan-Australia EPA
PSR 87.03 (>40%)

80 % (>40%)
175
 Example
• FTA: ATIGA
• Commodity: Biscuit (HS. 1905.31)
• ROO: RVC 40% RVC = 36%  NON-ORIGINATING GOODS

RAW MATERIAL ORIGIN AMOUNT (USD)

FLOUR AU 4
SUGAR AU 2.50
FLAVOUR ESSENCE SG 1
EGGS CN 3

DIRECT LABOUR 2
&OVERHEAD
PROFIT 2.50
FOB 15

176
 LO6

EXERCISES AND CASES

177
EXE.1
EXE.2
EXE.3
EXE.3
EXE.4
EXE.5
EXE.6
 EXE.7
Buyer A and Seller B entered into a sales contract on Coffee-beans with the price term FOB Cat Lai
port, Incoterms 2020. The contract stated:
+ Specifications: Water content of the Coffee beans: should not exceed 10%, Impurity should not
exceed 2%, the shipment should contain no live insects or hemp seed;
+ Delivery date: Before March;
+ Payment term: The [Seller] should receive from the [Buyer] an irrevocable and transferable L/C 20
days before the delivery, expiration date should be 20 days after the delivery day);
+ Inspection: SGS Vietnam should inspect the quality and quantity of the goods;
A had informed B that it had contracted to resell the goods to Malaysia. So to simplify the delivery, A
had in vain tried to make the inspection by Malaysian inspectors in port of loading as part of the
agreement. Nevertheless, B allowed the Malaysian inspectors to inspect the first delivery (about two
thirds) of the goods in the warehouse in Cat Lai port. Most of the goods passed the inspection, but the
inspectors violated the warehouse rules. After that the seller refused to submit the remainder of the
goods to the inspectors. However, it notified B that the goods had been prepared. A refused to take
delivery without the Malaysian inspection before and sought damages in an arbitration proceeding,
alleging that B had fundamentally breached the contract by not submitting all goods to the Malaysian
inspectors.
Who broke the contract ? Why ?
EXE.8
 EXE.8
On 31 Aug 2016, one of the world’s largest container shipping lines, Hanjin Shipping of
South Korea, declared bankruptcy, throwing international trade markets into confusion
and uncertainty
Over Usd13 billion of merchandise were trapped at sea- Hanjin bankrupt vessels could
not afford to berth and unload in their ports of destination. Panicked importers, among
them Apple, sought extreme measures to obtain their goods. Apple went so far as to hie
vessels to recover their merchandise from the stranded Hanjin vessels. Importers of
seasonal goods faced disastrous consequences if their goods could not be recovered
promptly.
Exporters, meanwhile, scrambled to find alternative shipping, the sea freight from
China to west coast of the USA jumped over 100% in a matter of days. While such
“black swan” events are by definition rare, international traders have developed a
number mechanisms and strategies that can help manage or avoid the consequences of
such contingencies. Unfortunately, inexperienced or poorly-trained export-import
managers may fail to make use of such safeguards. Your suggestions (3) for the possible
repercussions of events such as Hanjin’s bankruptcy?
 EXE.9

Importer A in Binh Duong Province, Viet Nam orders goods to install from
Producer B (with a value of USD 12,000), under DAT ICD Song Than Binh
Duong, Incoterms 2010 conditions. Shipment is unloaded in Cat Lai port then
delivered in ICD Song Than Binh Duong (cost of transport HCMC-Binh
Duong province: USD 200)
B packages the goods in specific containers, intended to accompany the goods
but whose price is not included in the initial order and will be subject to
separate invoicing (with a value of USD 150). B intervenes for the installation
of the products in Binh Duong Province (installation value included in the
invoice: USD 200). A asks C to intervene for final work on the products in the
country of production. C invoices its intervention directly to A (for an amount
of USD 100). The invoice from B indicates a 2% discount on payment within
eight days of delivery of the products
Question: How do you determine the customs value?
 EXE. 10
A contract of sale was entered between a US company, ABC Inc (the buyer), and a
Vnese manufacturing firm, XYZ (the seller), for the sale of Furniture. XYZ sent
the requested furniture to buyer aboard the ship, MV APL Hari V.001, in good
condition. However, when it reached its final destination, it had been damaged
and was in need of extensive repair. The buyer and its insurance company believe
that the goods was damaged in transit. ABC’s insurance company covered the
cost of the damage, which was $350,000. In turn, the insurance company intends
to recover from XYZ. However, XYZ claims that, since the goods were shipped
under CIF (New York port) term, they were under no obligation for the loss, that
is, its contractual obligation with regard to risk of loss ended when it delivered
the machine to the vessel at the port of shipment. The buyer (its insurance
company) contends that Incoterms were inapplicable since they were not
specifically incorporated into the contract. They also argue that the seller’s
explicit retention of title modified the risk of loss.
Q: Do you agree with the buyer and its insurance company? Why/why not?
 EXE.11
ABC Co Ltd (VN) purchased an industrial dish washing machine from XYZ Co Ltd (JP).
Sale contract was concluded on 20/1, the details asf:
Price: US$ 30,000 (CIF HCMC port, Incoterms 2020), which has to be paid within 30 days
after the shipment by T/T.
If an advance payment of 10% of the contract price or more is made before the end of
March, the price of the machine is discounted by 10% of the amount of such advance
payment.
The industrial machine is to be shipped to ABC before the end of June.
In addition to the payment of the contract price, A will pay B the amount equivalent to 2%
of the contract price, if the industrial machine is shipped to ABC before the end of April.
Goods was shipped on board 25/4, Commercial Invoice showed information:
 Industrial machine CIF US$ 30,000
 Advance payment US$ 5,000
 Discount US$ 500
 Early shipment bonus US$ 600
 TOTAL US$ 25,100
Customs value of import goods?
 EXE.11b

Import tax? E/R: 23,000 VND/USD.

8422 Dish washing machines; machinery for cleaning or
drying bottles or other containers; machinery for
filling, closing, sealing or labelling bottles, cans,
boxes, bags or other containers; machinery for AJCEP ATIGA VAT
capsuling bottles, jars, tubes and similar (%) (%) (%)
containers; other packing or wrapping machinery
(including heat- shrink wrapping machinery);
machinery for aerating beverages.

- Dish washing machines:

84221100 - - Of the household type 11 15 10
84221900 - - Other 20 30 10
 EXE.12

ABC Co Ltd purchased 400 bags/20,000 Kgs of Wheat Flour from

XYZ Co Ltd (New Zealand) in 1x20’DC at Usd 22,725 CIF Cat Lai
port, HCMC VN. One day later, the carrying vessel was in collision
with another vessel, the carrying vessel was holed below the water
line but managed to make her way to Port Klang, a port of refuge.
On survey it was found that all 400 bags were thoroughly soaked by
water (the container having been fully submerged under the water
that entered the hold), It was agreed with the consignees that the
cargo was totally damaged.
Questions:
- Premium? RA = 0.3%, RB=0.2%, RC=0.1%
- How much would the claim be recovered?
 EXE 13

The seller delivered 02 units of a fire tender which was sold

by a contract of sale under CIF terms of Incoterms 2020 to
a carrier and a bill of lading had been was issued which
Hague Rules are applicable. As the cargo was being lifted
out of the ship, before it landed the quay of the port of
destination, it was dropped and subsequently damaged.
How much could the plaintiffs recover?
 EXE 14

A imported 200 MTs of Flour, packed in PP bags of 50 kg/bag from New

Zealand to HCMC, CIF unit price of 1,500 USD/ MT. Throughout the journey,
the ship encountered a great storm and crashed into the reef making it stop at
Penang port (Malaysia) then headed to Cat Lai port. When unloading goods at
Cat Lai port, the goods were damaged, the results of inspection recorded that:
 300 bags were completely damaged by the crash.
 800 bags were infiltrated with seawater due to the large waves entering the
ship.
 80 bags got moldy due to steaming heat in the cargo, reducing the value by
40%.
 60 bags were dropped off the vessels, completely damaged due to the
careless unloading of Cat Lai port.
Q: Premium if R=0.35% ? How much can the insurable interest claim?
 EXE 15

A imported a cargo (Methanol - solid forms) from Japan with the

quantity of 200 products which are packed in a container 40’.
Providing the information as below:
 Price per product: 40 USD FOB Tokyo Port, Incoterms 2020
 Ocean Freight: 300 USD from Tokyo Port to Catlai Port
 On-carriage to site: 500 USD
 Installing fee at Viet Nam: 200$ not included in price
Q: Import tax? If : E/R: 23,000 VND / USD, C/O form VJ is accepted
by VN customs HS Code Description of Goods MFN VJCEP VAT
Methanol or Alcohols or of
2903
other olefins
29031030 - In dispersion 10 4 10
- In the form of liquids or
29031040 15 5 10
pastes
29031090 - In solid forms 20 6 10
 EXE 16

Your FWD receive a booking for port-to-port FCL from Cát Lái
port to Singapore. Design a suitable procedure as shipment to be
prepaid in HCMC?
 EXE 17

Your FWD received 02 booking asf:

• Anh Thu Co Ltd 50 Ctns/ 150 K/ 3 CBM
• An Co Ltd 100 Ctns/500 K/ 5 CBM
Q: Calculate the company's profit?
FWD’s quotation (All-in, in USD:

Airline’s quotation (All-in, in USD:

-45 +45 +100 +300 +500 +1000
SGN-SIN 2.80 1.70 1.30 1.20 0.90 0.6
 EXE 18

Your FWD received a request to quote a port to door service from

Cat Lai port upto warehouse in Hamburg. The details asf:
• 13,000 pcs of Shirt, 50 pcs/CTN (dimension: 60 cm x 40 cm x
40 cm)
• 15kgs/CTN
• Freight from HCMC port-Hamburg warehouse:
• LCL 53 Usd/RT
• FCL: 1,128 Usd/20’, D. THC: 114 Usd/20’, Destination
delivery charge: 71 Usd/20’
• Import Customs clearance (if any): 38 Usd/declaration
Q: Total charges for FCL / LCL if profit sharing is 50/50 ?
 EXE 19

EC Co., Ltd offered to sell goods at “USD100 per case CIF New
York, Incoterms®2000”. The importer requested a revised quote
for CFRC5%. The premium rate for insurance was 1.05% and
mark-up for insurance was 10%. To get the same export revenue,
what would EC’s new offer be?
 EXE 20

AA Co., Ltd offered to sell goods at “USD3000/MT CIF Toronto,

Incoterms®2010 with ‘all-risks’ and ‘war risk’ for 110% of the
value”. The importer requested a revised quote for FOB
Guangzhou, Incoterms®2010. The freight for Guangzhou –
Toronto was USD60/MT, and the premium rates for “all risks” and
“war risk” were 1% and 0.3% respectively. To get the same export
revenue, what FOB price should the exporter offer?