The Treasurer’s Guide to Trade Finance

A Reference Guide to Trade Finance Techniques

shipping by the airline or shipping company.
For record-keeping purposes a minimum of
three copies of waybills are usually issued.
Unlike bills of lading, air and sea waybills
are not documents of title and they are
also non-negotiable. Because they are not
documents of title, the consignee (the importer
or importer’s agent) does not need the waybill
in order to take possession of the goods.
If a freight forwarder service is used,
a forwarder’s air waybill will be used. If a
shipment is to be carried by more than one
means of transport to its final destination, a
multimodal transport document is used.

Benefits

There are a number of benefits to the use of
waybills.
ƒ As a document, they provided a clear
contract of shipping (whether by sea or by
air). A waybill will show the route taken (in
the case of air freight, the airports used)
and the carrier (in the case of shipping,
the name of the ship). Unlike bills of
lading, waybills are not documents of title,
so the importer does not need to produce
one to take collection of the goods.
ƒ The waybill represents an agreed set of
terms and conditions of carriage, together
with any additional limits of liability.
ƒ The waybill provides evidence of
consignment (which may be necessary
when a letter of credit is used), as it carries
the date on which the consignment was
accepted for carriage. Waybills, particularly
AWBs, can usually be tracked electronically.
ƒ Waybills also aid the passage of the
consignment through customs in both the
country of final destination and any transit
countries. This is because the waybill
includes a description and valuation of
the goods. These should match other
accompanying documents.

Potential problems

As with other trade documents, there are
potential problems that can arise.
ƒ Waybills are not documents of title, so
the importer is likely to have to produce
other documentation to secure release of
the goods. This can cause difficulties if
the associated documents are lost or late
being delivered.

ƒ Waybills provide limited protection to

either party in the event of the loss of a

shipment, especially where the limits of

the shipper’s liability are below the value

of the shipment.

ƒ Similarly, the importer may face additional

costs if the shipment is delayed (resulting

in lost production time or lost sales) which

are not protected by the waybill.

Certificate of origin

Certificates of origin often accompany

imported goods to show the provenance of

the imported items.

Core characteristics

Many companies require that all imported

goods, or goods in categories which attract

import tariffs or other restrictions, are

accompanied by a certificate of origin. These

certificates are inspected by customs officials

to ensure import rules are applied. Countries

also use certificates of origin when import

quotas apply and also, in some cases, as a

tool to compile trade statistics.

Benefits

ƒ Certificates of origin are important tools

for the exporter, especially when there

are import restrictions, as they help the

passage of goods through customs control.

ƒ Where certificates of origin are not required

by the importing country’s customs

department, they can be a useful sales

tool for both the exporter and importer,

depending on the nature of the goods.

Potential problems

ƒ One of the biggest problems, especially

for manufactured goods, is establishing

the precise origin of the exported items.

Different countries apply different standards

for the compilation of certificates of origin.

ƒ It can also be complex to meet

regulatory requirements when a free

trade agreement is in place between the

exporter’s and importer’s countries. The

importer’s country, in particular, will be

keen to see that the terms of the free trade

agreement are not abused.

ƒ In some cases, formal documents may be

required to support the certificate of origin.

This will add time and cost to the trade