W9, W10- Apparel Merchandising and Sourcing.ppt

Merchandising and Sourcing

1. APPAREL MERCHANDIZING AND SOURCING
Dr. Shagufta Riaz
GM-4044
1
Week-9 & 10 (25-04-2023)

2. 2
Costing and Pricing

3. CONTENTSCONTENTS
Price
Cost
Pricing process
Incoterms in pricing process
Foreign commercial payments
3

4. LEARNING OUTCOMELEARNING OUTCOME
At the end of this lecture, you are going to learn about the
pricing, and costing procedure. What different terms have
been used in commercial national and international trade.

5. EXAMPLE: BUSINESS LETTER (INTRODUCTION LETTER)
Sears
Leixoes,
Toronto, Canada May, 19, 2023
Ref# MKT-101/19
Attn: Mr. Peter Nike (Apparels Sourcing Manager)
Dear Sir,
In today’s world where quality, timely deliveries and competitive prices matters, you
need to have supplier who can deliver products exactly to your requirements. This is what
exactly we can do!
Having been in textiles for about four decades with an annual turn over of US$ 210M, we use
the best quality of local as well as imported fabrics to manufacture into Apparels to supply you
consistent quality throughout the year. We are vertically integrated unit having 10,000 sewing
machines plant capacity to produce 2.5 Million garments per month with lead time of 30 days.
The confidence of quality is reflected in our huge export for world’s leading brand like Hanes,
Gap, Russell, Champions, Levies‘, JC Penny, Nautica etc. Our website www.xyztextile.com
will enable you to know more about us.
We look forward to your response so that we could send you the required samples along with
competitive prices. Hope to build long term and healthy relationship with your esteemed
organization.
Best Regards,
ABC (Director Marketing)
XYZ Textile Mills Ltd (Apparel Division) Faisalabad Pakistan
Contact Details:

6. EXAMPLE: BUSINESS LETTER (INQUIRY LETTER)
XYZ Textile Mills Ltd (Apparel Division)
Faisalabad, Pakistan
May, 19, 2023
Ref# IMP-31/19
Attn: Mr.ABC (Director Marketing)
This is with reference to your letter dated February 01. 2019 Ref# MKT-101/19, in
which you have given introduction about your company.
We are importers of Apparel Products from Asian countries and need competitive
prices for our regular work orders. Please send us few samples of your product lines
along with your best price for C&F Toronto L/C At Sight 1*40 FCL.
Hope to receive samples and prices within this week.
Best Regards,
Peter Nike (Sourcing Manager)
Sears Canada
Contact Details:

7. EXAMPLE: BUSINESS LETTER (QUOTATION LETTER)
Sears
Leixoes,
Toronto, Canada
Ref# MKT-102/19 December 3, 2023
Attn: Mr. PETER NIKE (Apparel Sourcing Manager)
Reference to your inquiry letter dated February 04. 2019 Ref# IMP-31/19, thank you for your keen
interest in our quality products.
Please find enclosed samples of our regular Apparel Products (Polo Shirts, Crew Neck, Fleece Hood)
sent as per requirement via DHL # 3165889607 dated 04.02.2019 Our introductory prices will be as
under.
S/S Polo Pique Shirt 175 gsm @ 7.5 US$/piece
L/S Crew Neck 150 gsm @ 5.5 US$/piece
Fleece Hood 220 gsm @ 9.5 US$/piece
These prices are based on 1*40” FCL each for C& F Toronto L/C At Sight. Shipment within 30 days
after receipt of L/C.
Please confirm so that we could issue our sales contract and plan the production accordingly.
Validity of offer: One Week
Looking forward to an early and positive response.
Best Regards,
ABC (Director Marketing)
XYZ Textile Mills Ltd. (Apparel Division) Faisalabad Pakistan
Contact Details

8. Costing is a calculation without profit.
Pricing is a calculation with profit.
This is the main difference between costing and pricing in
textiles. For apparel costing, one needs to have clear concept of
the raw materials’ price & CM (cost of manufacturing)
calculation of final apparel products.
“Pricing of products” plays the major role in profitability and
success of a project. Even a successful and smoothly running
order is futile if it carries no profits or gains. However
sometimes profitability is compromised for gaining new
markets or getting some new customers or orders.
DIFFERENCE BETWEEN COSTING & DIFFERENCE BETWEEN COSTING &
PRICINGPRICING

9. •Pricing is playing a crucial role specially after post quota scenario. The
fate of new projects mainly depends upon who will bid the least. It
seems “price” has become the only factor of winning or losing a
project. Usually in bidding, winning of a project is done at highest
price while in textiles it is totally opposite.
Methods of pricing
Pricing types or methods are no different than the ones used by other
industries. Keeping in view huge competition, prices are going down
and down while cost has upward trend. In textiles the pricing is being
done on the basis of “competition” more than on the basis of “cost”.
Different methods are Value-Based, Cost-Based & Competition-Based.

DIFFERENCE BETWEEN COSTING & DIFFERENCE BETWEEN COSTING &
PRICINGPRICING

10. A)Value based pricing: In value-based pricing, prices are quoted by
keeping in the view what value customers will perceive for the
product. This sort of pricing is done for “newly speciality products”.
Sometimes value-based pricing ideas can also be gotten from surveys
to different target customers/markets before launching the new
products. Once value is perceived in mind, then seller keep it in mind
at the time of getting quotations from different
suppliers/manufacturers.
B)Cost based pricing: In cost-based pricing, there are certain price
models (software or excel sheets) used to get the final cost of the
product. Cost-based method involves pricing by adding all
overheads of an organization. Then a certain profit margin is
added to get the quotable price to the customers.
DIFFERENCE BETWEEN COSTING & DIFFERENCE BETWEEN COSTING &
PRICINGPRICING

11. C) Competition-based pricing: In competition-based pricing, the prices
are quoted keeping in view what competitors are quoting. Although
price models are used to get the actual cost of the product, the final
quotation is made only keeping in view the competition. The
competition-based prices can be less or sometimes more than the cost-
based prices. Internet bidding is an example of acute competition
prevailing in the market.
D) Penetration Pricing: Setting a low initial price to quickly gain
market share. Once a customer base is established, prices may be raised.
E) Skimming Pricing: Setting a high initial price to "skim" revenue
layers from the market. Prices are then gradually lowered to attract more
price-sensitive customers.
DIFFERENCE BETWEEN COSTING & DIFFERENCE BETWEEN COSTING &
PRICINGPRICING

12. F) Premium Pricing: Setting a high price to convey a sense of
exclusivity and quality. This strategy is often used for luxury or high-end
products.
G) Psychological Pricing: Setting prices that appeal to customers'
psychological perceptions, such as setting prices at $9.99 instead of $10
to create the perception of a lower price.
H) Bundle Pricing: Offering multiple products or services for a lower
price than if they were purchased separately. This encourages customers
to buy more items at once.
H) Promotional Pricing: Offering temporary discounts or special offers
to stimulate sales. This can include sales promotions, coupons, or
limited-time offers.
DIFFERENCE BETWEEN COSTING & DIFFERENCE BETWEEN COSTING &
PRICINGPRICING

13. Pricing process involves several steps which have been explained in detail
below. Normally the process starts with getting some query from the
customer, however it can be commenced due to some in-house need to
cost some process or product.
1)Getting customer’s inquiry: First marketer or merchandiser will receive
inquiry from the customer for the submission of your price quotes. He or
she will look at the product requested and fix whether it can be produced
or not. Merchandiser makes sure that he/she have all necessary details (as
below) from his/her buyer before moving to the next step. The details
might include the below.
Product type
Yarn type
Yarn count
Required process type (knitting, weaving, bleaching, dyeing etc.)
Shades (white/dyed/melange)
PRICING PROCESSPRICING PROCESS

14. Special finishes or treatment required
Garment/apparel types & specs (if garment query)
Accessories
Embellishments
Sales terms (ex-mill, FOB, CIF, C & F etc.)
Target price
•Other than above, there might be some special requests of printing,
mercerizing, washing etc., for which the cost can be added
accordingly.
PRICING PROCESSPRICING PROCESS

15. 2) Preparing the price sheet
Although some special software is also prepared for pricing, but
merchandisers often prepare MS Excel sheets to calculate the prices. For
more basic products like cotton/ yarn etc., ongoing market rates are
commonly followed instead of sticking to price models because of less
complexity. Below is an example of fabric & garment “cost-based
pricing” Such price models can be developed for other textile items too.
Yarn rate/10 pounds or yarn rate/kg
Knitting charges/weaving charges
Knitting waste/weaving waste
Dyeing recipe cost
Overheads
PRICING PROCESSPRICING PROCESS

16. Dyeing losses
Reprocessing margin
Freight (in case you are quoting C&F,CIF,LDP)
Commission of agent (if any)
Duties (if any)
Finally choose your profit margin to quote the fabric price to the
buyer. It depends upon the buyer whether he/she needs fabric price in
kg or yards or meters or pounds etc.
For garment pricing, merchandiser will move ahead from the cost
calculated for fabric. For this he/she will use the below information
PRICING PROCESSPRICING PROCESS

17. Block weight (fabric consumption)
Cutting cost
Sewing cost (depends upon the type of garment)
Accessories cost
Embellishments cost (printing/embroidery /washing)
Overheads
Rejection cost
Freight (in case C&F,CIF required)
Commission of agent (if any)
Duties (if any)
PRICING PROCESSPRICING PROCESS

18. The price is then forwarded to the buyer after adding a specific profit,
usually depending upon the market situation and order booking.
3) Maintaining the record
The record is maintained both in soft and hard copy form for effective
follow-up and further negotiations.
4) Follow up & revisions
Quoting the price is not an end. It is the first phase for the launch of a
big project or an order. Follow-up is to be made with the buyer
regarding the price acceptability. The buyer may ask to revise the
prices. In this case, rework is done to get the target price for the buyer.
A sensible decision at this stage can make a difference between
winning or losing a project
PRICING PROCESSPRICING PROCESS

19. PRICING PROCESSPRICING PROCESS

20. Payment Methods
Final price also depends upon the payment method i.e., On cash
or on credit like LC, CAD or bill of exchange. The price is directly
proportional to credit tenure and level of risk involved.
Price denotation
For example, merchandiser is needed to quote for a textile product
CIF, Hong Kong with 2% commission. Suppose he/she calculates
and reaches at the price 5.25$/unit. He/she will denote it as CIF
2% Hong Kong: 5.25$/unit.
PRICING PROCESSPRICING PROCESS

21. The pricing for fibers and yarns is much simpler than fabrics and
garments. It's mainly due to less processes involved and hence less
complication than other value-added products. Like in dyed yarn, the
below things will be calculated to get the right price:
Cotton rate/bag
Yarn rate/bag
Dyeing recipe cost & losses
Overheads
Dyeing losses
Reprocessing margin
Freight/kg (in case you are quoting CIF,C&F,LDP)
Commission of agent (if any)
PRICING PROCESSPRICING PROCESS

22. Duties (if any)
Then desired% of profit is added in the cost to be quoted to the customer.
Pricing for new or speciality products
The pricing for new or speciality products will be different. It will mainly rest
on the company’s corporate decision whether to get more profits from the
target market for this new launch and getting the benefits out of less/no
competition (market skimming pricing) or to keep the price low with moderate
profits to attain more market share (market penetration pricing).
Value based pricing concept is also used for pricing such products. In this type
of pricing, the prices are set by keeping in view the value of the product
customers would perceive.
In textiles, usually first option of marketing skimming pricing is followed,
because as the competitors come in, the price war begins leaving little room
for profits. Major brands charge premium price for such new launches from
end customers.
PRICING PROCESSPRICING PROCESS

23. Costing of embellishments
The costing of embellishments ( printing, embroidery, garment washing,
garment dyeing etc.) depends upon its type, size, coverage and negotiation.
There is also some rejection% during this process which is based on its type and
coverage. This cost and rejection factor is the part of pricing. Costing and
handling can be controlled in case of in-house facility of this embellishments
like embroidery or washing.
Costing of accessories
The costing of made ups or garments is not complete without knowing its
accessories and its costs. On receiving a product enquiry, the specification sheet
(if available) are studied in detail in order to find out “accessories list” required.
In general cases, initially it is not always possible to get the exact prices for
accessories being asked by the buyer, an approximate figure is taken to quote the
product price to the buyer.
In order to have exact costing of accessories, merchandisers need to get
PRICING PROCESSPRICING PROCESS

24. Exact details from the customer as per below.
a)Total number of accessories required per unit.
b)Type of accessories required.
c)Any recommended sources.
As the above information is received, merchandiser will be able to do the
exact costing for accessories. For costing, the prices of accessories are
received from the sources and then negotiated and added to get the cost of
accessories per unit.
Merchandiser must have knowledge of price range of different sort of
accessories so that if buyer does not provide information, he/she can
calculate the tentative price.
PRICING PROCESSPRICING PROCESS

25. Pricing in buying house/sourcing houses is more dependent on
manufacturing facilities. The merchandisers in buying house gets the
target price from the customer and ask the suppliers to submit their quotes
as per specifications required. After the reception of quotes,
merchandisers forward it to the customer for the confirmation.
The pricing in brands is based on the research results received to find out
how much price the customers are ready to pay for a certain style.
Merchandisers complete costing of their chosen styles/designs and make
sure they will not cross the limit of a certain cost which customers are
willing to pay. In order to verify their costing, merchandisers send their
styles to various suppliers in order to check the actual cost suppliers are
seeking.
PRICING PROCESSPRICING PROCESS

26. Price war after elimination of trade restrictions
After the elimination of trade restrictions, post-quota scenario 2005 means
nothing but more competition and lower prices. More and more customers
are asking for bids on the internet in which the suppliers with the least offers
are selected. Competition-based pricing is all over found these days.
Price is nowadays a decisive factor. So, the manufacturers are now seeking
ways to drop their costs to be competitive. It’s true that a lot of customers
keep ridiculously low target prices and get unfair benefits of this
competition. Normally even a mediocre level project is offered to the whole
world instead of any particular supplier or country.
PRICING PROCESSPRICING PROCESS

27. Check list for Pricing
PRICING PROCESSPRICING PROCESS

28. Undertaking price quotations for buyers
There are the following processes for fixation price:-
1.FOB ( Free on Board) or FOA (Free on Air):
An exporter does not bear the cost of freight by ship or air. The exporter is only
responsible for dispatching goods from the factory to the nearest port or specified
point but not the transportation beyond that point or any associated import duties or
taxes.
It is a buyer who bears the freight from the port to the destination point and clears
all duties and taxes.
2. C & F ( cost & freight)
Free on board(fob) + freight = C & F
In this case ship or air freight is carried by the exporter while quoting price.
This price is a bit higher than FOB
28
VARIOUS IMPORTANT INCOTERMS VARIOUS IMPORTANT INCOTERMS
CONSIDERED DURING PRICINGCONSIDERED DURING PRICING

29. 3. CIF ( Cost, Insurance & Freight)
C& F+ insurance = CIF
In a CIF arrangement, the seller is responsible for arranging and paying for the
transportation of the goods to a destination port specified by the buyer, as well as
obtaining insurance coverage for the goods while they are in transit.
4. CM ( Cost Of Making / Manufacturing)
Manufacturer or exporter will get only making a charge of that garment/apparel.
Fabric, trimmings, and other materials are supplied by the buyer.
5. CMT (Cost Of Manufacturing and Trimming) or (Cut, Make & Trim)
The manufacturer or contractor typically provides labor and expertise for the cutting,
making, and trimming stages of production, while the client or brand supplying the
design and materials retains control over the fabric sourcing, design specifications, quality
standards, and distribution.
This arrangement also allows for flexibility in scaling production based on demand
fluctuations and reduces the manufacturer's investment in materials and inventory.
29
VARIOUS IMPORTANT INCOTERMS VARIOUS IMPORTANT INCOTERMS
CONSIDERED DURING PRICINGCONSIDERED DURING PRICING

30. Ex-factory/Ex-works/Ex-mill:
In Ex-factory/Ex-mill, Supplier/Exporter is responsible for dispatching the
products from its factory premises.
The charges to take the goods to the port and freight will be paid by the
customers.
LDP:
Landed Duty Paid (LDP) refers to a pricing term used in international trade and
commerce. It indicates that the price of goods includes all costs up to the point of
delivery to the buyer's specified location, including duties and taxes. In other
words, the seller is responsible for paying all expenses associated with transporting
the goods to the agreed-upon destination, as well as any import duties or taxes that
apply in the buyer's country.
When using the LDP pricing term, the seller assumes greater responsibility and
risk compared to other pricing terms like Free On Board (FOB) or Cost,
Insurance, and Freight (CIF).
30
VARIOUS IMPORTANT INCOTERMS VARIOUS IMPORTANT INCOTERMS
CONSIDERED DURING PRICINGCONSIDERED DURING PRICING

31. DTS:
Also termed as Direct to Stores or Direct to Shelf. The DTS is a
distribution strategy where products are delivered directly from the
manufacturer or distributor to individual retail stores located in different
locations., bypassing a centralized distribution center or warehouse.
The supplier will bear all freight charges and other duties taxes etc.,
Implementing a DTS model requires strong coordination between
manufacturers, distributors, and retail stores to ensure seamless delivery
and inventory management.
Other incoterms: Some other incoterms are also used which can be
understood by picture demonstration in the next slide.
31
VARIOUS IMPORTANT INCOTERMS VARIOUS IMPORTANT INCOTERMS
CONSIDERED DURING PRICINGCONSIDERED DURING PRICING

32. 32

33. Various payment term methods are commonly used depending
upon the circumstances and as agreed by the contract.
There are following payment terms during order confirmations-
1.LC (letter of credit)
The Letter of Credit (LC) process is a common method used in
international trade to facilitate secure transactions between buyers
and sellers, particularly when they are located in different countries
A letter from a bank guaranteeing that a buyer’s payment to a seller
will be received on time and for the correct amount. LC is a
banking mechanism that allows to offer of secure terms to
exporters. 33
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

34. Steps involves in the LC process:
1.Agreement: The buyer and seller agree to use a Letter of Credit as the
method of payment for the transaction. This agreement typically includes
the terms and conditions of the sale, such as the price, quantity, delivery
terms, and specifications of the goods.
2.Opening the LC: The buyer (importer) applies to their bank, known as
the issuing bank, to open a Letter of Credit in favor of the seller
(exporter). The buyer provides instructions to the issuing bank regarding
the terms and conditions of the LC, including the amount, expiration
date, shipping documents required, and any other relevant details.
3. Issuance: Upon receiving the buyer's instructions, the issuing bank issues
the LC, which serves as a guarantee of payment to the seller. The LC is
typically sent to the seller's bank, known as the advising or confirming
bank, if applicable.
34
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

35. 4. Advising the LC: The advising bank forwards the LC to the seller,
verifying its authenticity and terms. If necessary, the advising bank may also
confirm the LC, adding its guarantee of payment to the seller.
5. Shipment and Documentation: The seller prepares and ships the goods
according to the terms specified in the LC. The seller must also ensure that
the required shipping documents, such as the bill of lading, commercial
invoice, packing list, and certificate of origin, are prepared accurately and in
compliance with the LC's terms.
6. Presentation of Documents: The seller presents the shipping documents
to the advising or confirming bank, along with any other required
documents specified in the LC. The bank reviews the documents to ensure
they conform to the terms and conditions of the LC.
35
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

36. 7. Payment: If the documents are in order, the advising or
confirming bank forwards them to the issuing bank. The issuing bank
verifies the documents and, if everything is correct, makes payment
to the seller as specified in the LC.
8. Delivery of Goods: Upon receiving payment, the seller releases
the shipping documents to the buyer, allowing the buyer to take
possession of the goods from the carrier.
9. Settlement: The buyer reimburses the issuing bank for the
payment made under the LC, either immediately or according to the
agreed-upon terms.
36
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

37. 37
LCLC

38. 38
LCLC
 The LC process provides security and assurance to both
buyers and sellers in international trade transactions by
minimizing the risk of non-payment or non-delivery.
It ensures that payment is made only when the seller meets the
specified conditions and provides the required documentation

39. 39

40. To documents representing the goods” not the goods themselves. Banks are not in the
business of examining goods on behalf of their customers. Typically, the documents
requested will include a commercial invoice, a transport documents such as a bill of lading or
airways bill, an insurance documents but there are many others. Letter of credit deal in
documents not in goods.
2. CAD (Cash Against Documents)
Payments for goods in which a commission house or other intermediately transfers title
documents to the buyer upon payment in cash. If the importer and exporter know each other
very well and have a good business relationship, they can do business using this method. The
seller sends the documents evidencing the shipments to the buyer's bank and the bank makes
payment against representing the goods. The required documents are:
•Commercial invoice
•Certificate of origin
•Insurance certificate
•Bill of lading 40
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

41. 3. Cash in advance
This is the simplest form of payment in which buyer makes full payment before the seller ships it
to him/her. But this is the riskiest situation for the buyer as he/she makes payment before taking
control of the goods, while this is the safest situation for the seller.
4. Bills of exchange
It is a noninterest bearing written order used primarily in international trade that binds one to pay
a fixed sum of money to another party at a predetermined future date. Bills of exchange are
similar to cheques and promissory notes. They can be drawn by individuals or banks and are
generally transferable by endorsements. The difference between a promissory note and a bill of
exchange is that this product is transferable and can bind one party to pay a third party that was
not involved in its creation. If these bills are issued by a bank, they can be referred to as bank
drafts. If they are issued by individuals, they can be referred to as trade drafts.


41
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

42. 42
CASH AGAINST DOCUMENTSCASH AGAINST DOCUMENTS

43. 43
CASH IN ADVANCECASH IN ADVANCE

44. 44
BILL OF EXCHANGEBILL OF EXCHANGE

45. For the exporter, cash in advance is of course the most desirable method of all since
the shipper is relieved of collection problems and has immediate use of the money.
5- Factoring: Factors are companies which manage account receivables for certain
charges. Through this facility, credits can be obtained against orders placed by
recognized credit worthy retailers to finance fabric purchases. Factoring involves the
below functions.
1)Credit assessment of customers
2)Payment collection
3)Discounting
Factors charge certain percentage from exporters on the invoice value for their
services and give assurance of payment to exporters in case of default or financial
disability of any customers approved by them. Factors evaluate customers for their
financial status and reject them in case of any discrepancy found or if the customers
cancel or refuse to disclose any information required.
45
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

46. FACTORING
46

47. Export documents
Almost all reputed international companies give complete guidelines to
their suppliers for error-free export documentation. For this, these
companies have also developed and adopted special software and require
their suppliers to follow them via the Internet.
They send manuals and arrange special training programs for the suppliers
to make them understand the actual process to avoid errors in future. Such
errors can delay some shipments or payments to the suppliers resulting in
penalties or fines, so all efforts are made to remove the chances of mistakes.
Some of the important export documents are as follows.
47
FOREIGN COMMERCIAL PAYMENTSFOREIGN COMMERCIAL PAYMENTS

48. Commercial invoice:
A commercial invoice is a document used in international trade that serves as a bill
for the goods shipped from the seller (exporter) to the buyer (importer). It contains
essential information about the transaction
Key information typically included in a commercial invoice includes:
Seller and Buyer Details: Name, address, contact information of the seller (exporter) and buyer
(importer).
Invoice Number: A unique identifier for the invoice.
Date of Invoice: The date when the invoice is issued.
Description of Goods: Quantity, description, and value of the goods being sold.
Unit Price and Total Amount: The price per unit and the total amount owed for each item.
Currency: The currency in which the transaction is denominated.
Payment Terms: Details of payment terms, such as payment method and due date.
Shipping Details: Method of shipment, shipping date, and other relevant shipping information.
Terms of Sale: Incoterms specifying the responsibilities of the buyer and seller for transportation,
insurance, and other aspects of the transaction.
48
SHIPPING DOCUMENTSSHIPPING DOCUMENTS

49. COMMERCIAL INVOICE
49

50. Bill of lading:
A Bill of Lading (B/L) is a crucial document in international
trade and shipping. It serves as both a receipt for goods shipped
and a contract between the shipper (seller) and the carrier
(usually a shipping line or freight company.
The B/L acts as evidence that the goods described in the
document have been received by the carrier for shipment. It
includes details such as the quantity, description, and condition
of the goods being transported.
It provides legal protection and ensures smooth transactions
between parties involved in the movement of goods.
50
SHIPPING DOCUMENTSSHIPPING DOCUMENTS

51. BILL OF LADING
51
BILL OF LADINGBILL OF LADING

52. Certificate of origin (COO):
COO is a document used in international trade to certify the country of
origin of the goods being exported. It provides important information about
the origin of the goods.
The COO is often required by customs authorities in the importing country
to verify the origin of the goods and determine eligibility for preferential tariff
treatment under trade agreements or for assessing import duties and taxes.
The COO helps ensure compliance with trade regulations and requirements
related to the origin of goods.
Key information typically included in a Certificate of Origin includes:
Exporter Details: Name, address, and contact information of the exporter or seller.
Importer Details: Name, address, and contact information of the importer or buyer.
52
SHIPPING DOCUMENTSSHIPPING DOCUMENTS

53. Description of Goods: Details of the goods being exported, including quantity, description, and
value.
Origin Criteria: Statement certifying the origin of the goods and specifying the criteria used to
determine origin, such as manufacturing process or percentage of local content.
Authorized Signatures: Signature of the exporter or authorized representative, along with the
date of issuance.
Certification Body: Name and contact information of the organization or authority issuing the
Certificate of Origin.
Depending on the trade agreement or import regulations of the importing country, the format
and requirements for a Certificate of Origin may vary. Some countries may require the COO to
be certified or authenticated by a designated authority or chamber of commerce.
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54. CERTIFICATE OF ORIGIN
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55. Freight forwarders:
A freight forwarder is an independent business that handles export shipments
for compensation. At the request of the shipper either the buyer or seller
depending on incoterm, the forwarder makes the arrangements and provides
the necessary services for expediting the shipment to its overseas destination.
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56. FREIGHT FORWARDERS
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57. Packing list:
A list showing the number and kinds of items being shipped as well as
other information needed for transportation purposes.
In place, logistics management is the key. The dealing with international
shipping lines, airlines, freight forwarders etc.
Is a challenging task. It is not easy to take the goods to the customers
without any hurdles.
These logistics companies do not take responsibility for any delay caused
due to them. The logistics complexities increase with the sales terms like ex
mills (works/factory) orders will be much easier to handle than LDP ones.
Also, logistics cost is important in pricing, the selection of the mode of
shipment can make a difference between profit and loss.
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58. PACKING LISTS
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59. Modes of shipments:
There are three modes of shipment by air, by sea, or by train/truck.
A)By Sea (ocean shipping)
It is the most used and least expensive mode of shipment especially for
heavy and bulk shipments. But it takes more time than other modes. The sea
shipments are made in containers. FCL means full container load, when full
container capacity is booked while LCL is less container load, when less
than container load capacity is booked. Some important ocean carriers are
Hanjin, APL, NYK, CMA, MSC, PIL, and Maersk line.
B) By Air (Air Freight)
This mode is getting more and more shared especially for less weight
products. It is the quickest of all but three to five times more expensive than
ocean shipments.

MODES OF SHIPMENTMODES OF SHIPMENT

60. All international airlines provide a cargo facility. Some airlines
operate their cargo planes for this purpose.
C) By Truck/Train
This mode is used as an effective method of shipment for
taking the goods to neighbouring countries but is not suitable
for far-off countries. It is also used as a mix with sea or air
shipments. If the vessel reaches the port, then it is taken to the
desired destination by truck/train.
MODES OF SHIPMENTMODES OF SHIPMENT

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