ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Customs clearing and Freight Forwarding TMA II

WUBETIF TIBEBU SENAY

ID NO- GSD/1236/12

JULY, 2020
Question One (9 Pts)

What roles transportation is playing in international trade? Which mode/type of transport

do you suggest for an Ethiopian exporter and importer respectively? What do you suggest
to compare one mode of transport to another mode? How do you see transport during this
pandemic- is it benefiting or exposing people?

Answer

The roles of transportation in international trade.

Transport enables trade between people, which is essential for the development of civilizations.
Transport plays an important part in economic growth and globalization. International trade
implies transport of specific quantity of goods to (frequently) large distances, the success of
which depends on the safety and speed of delivery. These are greatly conditioned by the quality
of means of transport and infrastructure. This is why international trade development is affected
by transport, and the development of means of transport and infrastructure is, to a great extent,
influenced by demand for international delivery of various commodities. This paper looks at the
interdependence of international trade and transport, showing how transport played a very
significant role in international trade development in the past as it does today, commensurate to
the role of international trade in the development of carriers and transport infrastructure.

Mode of transport, I suggest for an Ethiopian exporter and importer.

Transport in Ethiopia is overseen by the Ministry of Transport and Communications. Over the
last years, the Ethiopian federal authorities have significantly increased funding for rail and road
construction to build an infrastructure, which allows better economic development.

In 2018 Ethiopia was the number 67 economy in the world in terms of GDP (current US$), the
number 133 in total exports, the number 112 in total imports, and the number 111 most complex
economy according to the Economic Complexity Index (ECI).

In 2019, the top exports of Ethiopia are coffee, oily seeds, tea, spices ,cut flowers, dried legumes,
sheep and goat meat, live trees, plants, knit or crochet clothing, accessories, machinery including
computers, gems, precious metals, vegetables, raw hides, skins, leather and electrical machinery.

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The top imports of Ethiopia are Planes, Helicopters or Spacecraft, Gas Turbines, Packaged
Medicaments, Non-Knit Men's Suits and Wheat

So in comparison of other, modes of transport for Ethiopian exporters, I suggest water transport
and air transport. Because water transport is the oldest mode of transportation but there is a
phrase called “Old is Gold” so it is the best. It is used in transporting goods. It is categorized by
low cost and high capacity. It is suitable for the shipments of large volume of objects transported
for long distances. And also Ethiopia have a good capacity in shipping transport which
controlled by Ethiopian shipping & logistics services enterprise.

Air transport is the newest among all modes of transport. It is the best way for quick delivery and
distribution of goods. It is the safest methods of transport and variety of goods can be imported
or exported through this mode. And it is the most common procedure is exporters to rely on
cargo agents when adopting this mode. In aviation sector Ethiopia have best quality and also
have more experienced.

The other two sector are not suitable for Ethiopian exporter or importer, because it has various
risks as well such as a long distance cargo delivery would take more time to deliver due to
breakdowns and traffic delays. The goods have the risk of it being damaged. The toll charges are
high in certain countries. In rail way Ethiopia doesn’t have enough and proper rail system and
this is a huge setback.

Suggestion to compare one mode of transport to another mode

It is very crucial to understand and know what type of transportation will be cost effective and
efficient. For international trade, mode of transport and distribution are been considered as the
key factors. The choice would actually depend based on higher customer services, timely
delivery schedules, distance, the types of good they export, lower logistics cost and proper
inventory levels.

In general I suggest we have to consider some factor to choose or compare one mode of transport
to another mode those factors are:-

Transportation Cost -The budget should be most important factors when making decisions to
transport the products. The cost of transport varies on the type and amount of goods that need to

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be transported. To transport bulk products over a long distance, rail transportation will be
economical. To transport light and valuable products, air transport will be the efficient mode of
transport. Sea transport is the cheapest mode for high volume of products that need to be
transported across the borders.

Reliability and Regularity of Service -Our decision to choose the mode of transport should be
varied in reliability and regularity. The decision will be affected by the urgency and speed to
deliver the products.

Security -The ability of transport system to protect goods from partial damage, loss or complete
destruction. Security is considered in terms of accidents but also in terms of possible crimes
since loading of goods until its takeover at final destination. In terms of safety of products, sea
transport is riskier than other modes of transport.

Availability -Availability should be considered in terms of transport from door to door. It

depends on the level and scope of the infrastructure of the transport system.

Transport during this pandemic- is it benefiting or exposing people?

A global health crisis of the magnitude we are experiencing has not struck the international
community for over a century. In this unprecedented crisis, all countries and all areas of our daily
life are profoundly affected and in disarray. The virus is incapable of travelling; it is we humans
who, inadvertently, carry it to new places where it can then wreak more havoc.

As a result, the world has come to a near standstill. From local transport to global supply chains,
nothing has been spared. In urban traffic and on global trade routes, bustling movement has
given way to eerie calm. Roads around the world resemble “arteries without blood”, as one
commentator put it. Activity in the aviation sector has fallen by 90% or thereabouts; car sales
have slumped by the same order of magnitude in some countries; in many cities the level of
citizens’ mobility is in the single-digit percentages compared to the pre-Coronavirus era.

A paradigm shift for transport -The transport sector finds itself in a totally unprecedented
situation. One of its chief roles in society is to enable citizens to meet face to face, it is perhaps

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the main facilitator of social interaction. Now, that function has come to a halt as result of the
restrictions in place around the world.

At the same time, it must continue to function where moving people and goods is an imperative,
not a choice. Doctors and nurses must be able to get to work. Hospitals must be able to receive
the supplies they need. Confined citizens rely on provisions being delivered to shops. Not least,
international supply chains must continue to move as seamlessly as possible to keep the
inevitable economic impact as limited as possible.

It is a paradigm shift. Never before have world leaders put such constraints on the movement of
people and goods. Now decisions have to be made on how to run transport services within these
constraints and how to help the sector survive this difficult time. To finalize this epidemic
irritates and exposing people through in different way like it affects economically.

Question Two (8 Pts)

Search for international conventions related to sea transport (Hague, Hague-Visby, and
Hamburg) and report on the improvements and why such improvements are necessitated.
Also comment on the implications of the modifications or improvements made. What did
the conventions say about the duties and responsibilities of shipper and carrier?

Answer

The Hague Rules

A report of the Maritime Law Committee of the ILA resulting from a Conference in the Hall of
Gray’s Inn in London was prepared in 1921, and subsequently adopted at a conference of the
ILA at The Hague later in that year: it is from this that the Rules take their name. After some
further modifications the proposed Rules went to a diplomatic conference at Brussels where they
were eventually adopted in 1924. It is worth reproducing the words of a resolution adopted at an
earlier International Shipping Conference in London in 1921.

This Conference is of the opinion that the interests of trade and commerce are best served by full
freedom of contract, unfettered by State Control, but that in view of the almost unanimous desire
manifested by merchants, bankers and underwriters for the adoption of the Hague Rules this
Conference is prepared to adopt them for voluntary international application Of what do the

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Rules consist? They are in effect a mini-code applicable to carriage under bills of lading, whether
in the liner trade, or where the bill is issued in a tramping context, under a charter party. The
initial wording suggests application to any contract of carriage by sea, but subsequent provisions
require a bill of lading and exclude charter parties. The structure at the beginning is fairly neat
and logical. After some definitions which are important in determining the scope of the
Convention a general introductory provision appears in Article 2, which indicates that such a
contract of carriage by sea subjects the carrier to the liabilities, and entitles him to the rights and
immunities, next set forth.

In general The Hague Rules is a set out to be a limited code for the obligations of carriers under
bill of lading contracts, with some, much less complete, reference to the obligations of shippers

Hague–Visby Rules

The Hague–Visby Rules is a set of international rules for the international carriage of goods by
sea. They are a slightly updated version of the original Hague Rules which were drafted in
Brussels in 1924.

The premise of the Hague–Visby Rules (and of the earlier English common law from which the
Rules are drawn) was that a carrier typically has far greater bargaining power than the shipper,
and that to protect the interests of the shipper/cargo-owner, the law should impose some
minimum affreightment (legal term used in shipping) obligations upon the carrier. However, The
Hague and Hague–Visby Rules were hardly a charter of new protections for cargo-owners; the
English common law prior to 1924 provided more protection for cargo-owners, and imposed
more liabilities upon "common carriers"

The official title of The Hague Rules the "International Convention for the Unification of Certain
Rules of Law relating to Bills of Lading". After being amended by the Brussels Amendments
(officially the "Protocol to Amend the International Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading") in 1968, the Rules became known colloquially as the
Hague–Visby Rules.

A final amendment was made in the SDR Protocol in 1979. Many countries declined to adopt the
Hague-Visby Rules and stayed with the 1924 Hague Rules. Some other countries which
upgraded to Hague-Visby subsequently failed to adopt the 1979 SDR protocol.

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The Hague–Visby Rules were incorporated into English law by the Carriage of Goods by Sea
Act 1971; and English lawyers should note the provisions of the statute as well as the text of the
rules. For instance, although Article I(c) of the Rules exempts live animals and deck cargo,
section 1(7) restores those items into the category of "goods". Also, although Article III declares
a bill of lading to be a mere "prima facie evidence of the receipt by the carrier of the goods", the
Carriage of Goods by Sea Act 1992 section 4 upgrades a bill of lading to be "conclusive
evidence of receipt".

Under Article X, the Rules apply if ("a) the bill of lading is issued in a contracting State, or (b)
the carriage is from a port in a contracting State, or (c) the contract (of carriage) provides the
Rules are to govern the contract". If the Rules apply, the entire text of Rules is incorporated into
the contract of carriage, and any attempt to exclude the Rules is void under Article III.

The Hamburg Rules

The Hamburg Rules are a set of rules governing the international shipment of goods, resulting
from the United Nations International Convention on the Carriage of Goods by Sea adopted in
Hamburg on 31 March 1978. The Convention was an attempt to form a uniform legal base for
the transportation of goods on oceangoing ships. A driving force behind the convention was the
attempt of developing countries' to level the playing field. It came into force on 1 November
1992.

Article 31 of the Hamburg Convention covers its entry into force, coupled to denunciation of
other Rules. Within five years after entry into force of the Hamburg Rules, ratifying states must
denounce earlier conventions, specifically The Hague and Hague-Visby Rules.

The main features, implications of the modifications and the importance of improvements
of conventions

The application of the Hague-Visby rules firstly focuses to document. The rules apply only bill
of lading or any similar document of title, other than charter-parties and a waybill. The Rules do
not apply non-negotiable documents, because these documents are not a document of title.
However, straight bill of lading is an exception of this rule. According to Mr. Milligan is that,
“even if the parties contemplated the issue of a straight bill of lading, such a bill would be a bill
of lading or similar document of title within the meaning of the Hague-Visby rules.

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Second important thing for the Hague-Visby Rules is the voyage. The rules apply only to export
voyages from in contracting states’ port or bills issued in a contracting state. However, under the
Hamburg Rules, the parties can apply both inward and outward voyages. It can also be described
as an improvement on the Hague-Visby Rules.

According to carriage of goods by sea act (COGSA) 1971 article I[e] defines, “carriage of goods
covers the period from the time when the goods are loaded on to the time they are discharged
from the ship.” This rule’s mean is that, the article does not cover the whole period of the
carrier’s responsibility. However article II of the COGSA 1971 mentions that, “… under every
contract of carriage of goods by sea the carrier, in relation to the loading ……. of such goods,
shall be subject to the responsibilities and liabilities…” This means, the carrier is responsible for
the loading period. The confusion arises from this point, whether the responsibility of the carrier
covers the whole period of loading or not. So Devlin J held that, “’loading’ covers the entire
operation of loading and not just that part that is performed once the goods cross the ship’s rail.”

Furthermore, the contract of carriage is always concluded before the bill of lading is issued. The
bill of lading must cover the whole terms of the contract. Otherwise the bill of lading would not
be evidence of the contract. According to the Devlin J. that, “whenever a contract of carriage is
concluded, and it is contemplated that a bill of lading will, in due course, be issued in respect of
it, that contract is from its creation “covered” by a bill of lading, and is therefore from its
inception a contract of carriage within the meaning of the rules and to which the rules apply.”

Another main feature of the rules is that, the carrier’s duty is to make the ship seaworthy.
According to the COGSA article III, the carrier is required to exercise due diligence to make a
ship seaworthy before and at the beginning of the voyage. The carrier will be responsible not to
exercise due diligence. When any loss or damaged occurred as a result of unseaworthiness, the
carrier would have to prove that he has exercised due diligence to make a ship seaworthy. The
exercise due diligence is a personal obligation of the carrier and it cannot be delegated.

The Hamburg Rules apply to all contract of carriage by sea except charter-parties. This approach
differs from Hague-Visby Rules which apply only “contracts of carriage covered by a bill of
lading of any similar document of title.”

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It can be said for the Hamburg Rules that they extend their application of the rules. It is not
important for them, whether a bill of lading or non-negotiable receipt is issued. It can operate in
any contract of carriage to carry the goods from one port to another. Whereas it can be argued
that, the Hague-Visby rules apply a bill of lading or any similar document of title. Resulting from
that, the Hague-Visby rules restrict their application of the rules by operating only bill of lading
or any similar document of title.

The Hamburg Rules also determined to responsibility of the carrier for the goods. The carrier
shall be responsible throughout the entire period “during which the carrier is in charge of the
goods at the port of loading, during the carriage and at the port of discharge.” This means, the
carrier’s responsibility is covered the full period of the carriage. And also there is no confusion
the responsibility of the carriers under the Hamburg Rules. However, as mentioned before, it is
narrowed under the Hague-Visby rules which are not covered the full period of the carriage.

Under the Hamburg Rules, the carrier is divided into the contractual carrier and the actual
carrier. The Hamburg Rules imposed the liability to the contractual carrier. According to the
Hamburg Rules article X, the contractual carrier still remains responsible the whole carriage.
This means, his responsibility is including performance of the actual carrier. However, the carrier
can exclude his liability for loss or damage happened to the goods under the supervision of the
actual carrier. In contrary to that, under the Hague Visby Rules, there is only single carrier. It can
be the ship owner or the charterer. One of them can be liable, if any loss or damaged happened to
the goods during the carriage.

The Hamburg Rules introduced unified system of liability. This means, the carrier’s liability
based on fault. The carrier is responsible his own fault or his servants and agents fault caused the
loss or damage to the goods. Once the goods were damaged while they were in charge of the
carrier, the carrier should be liable. However, if he proved that he took all necessary measures to
prevent the damage or loss, he would not be liable any more, even if the loss or damage were
happened to his servants or agents fault. On the other hand, the Hague-Visby Rules introduced a
list of exceptions of liability of the carrier, but it does not in fact involve fault on the part of the
carrier.

Resulted from unified system of liability, under the Hamburg Rules, the carrier must provide a
seaworthy ship the whole period of the carriage. So the carrier must take all necessary measures

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to prevent the damage or loss and its consequences. However, under the Hague-Visby Rules, this
duty of the carrier was limited. His duty only to exercise due diligence, but at the same time he
was required to look after to the goods carefully throughout the carriage. It made unclear the
carrier’s duty under the Hague-Visby Rules. On the other hand, the introduction of the unified
system of liability which based on the fault, made the carrier’s duty much clear.

Furthermore, under the Hague-Visby Rules article III that, “the carrier shall properly and
carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.” This rule
imposes to the carrier which has to take all necessary measures to prevent the damage or loss
occurred to the goods. However, in contrary to that, article IV mentions a list of exceptions
which the carrier shall not be liable for the damage or loss under these exceptions. As a matter of
fact, these two articles conflicts each other and another problem comes to the light is that how to
deal with the burden of proof. In practice, the court generally finds it difficult to interpret to these
provisions.

On the other hand, The Hamburg Rules have introduced a new measure to resolve this problem.
They adopted a unified burden of proof rule. According to the rule, the burden of proof is on the
carrier, because the carrier’s liability shall be based on fault in all cases of loss or damaged to the
goods.

As stated before, the burden of proof is on the carrier under the Hamburg Rules. However, there
are two exceptions of this rule. Under these exceptions the claimant has to prove that the
damaged or loss was resulted from carrier or his agent or servants fault.

First exception of the rule is the fire. Where the goods are damaged or lost as a result of fire, the
carrier will be liable if the claimant can prove that the fire arose from the “fault or neglect on the
part of the carrier, its servants, or agents.” However, the burden of proof must be on the party
who is most likely to have knowledge of the facts. In this case, it could be difficult for the
claimant to prove the fire, because it was happened by fault of the carrier. And also his goods has
already been lost or damaged. On the other hand, as a carrier, it is also difficult to establish the
precise origin of the fire at sea.

In addition, there are a little difference about fire exception between the Hague-Visby Rules and
the Hamburg Rules. Under the Hague-Visby Rules, same as the Hamburg Rules, the claimant is

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under a burden of proof to prove that the fire occurred on account of the fault of the carrier.
However, in this case, when the claimant proved that the fire happened as a result of
unseaworthiness of the vessel, the carrier would not be rely on the fire exception.

Second exception of this rule is the live animals. The live animals can have a special risk such as
sickness of infection which does not possible to be known by the carrier. Thus, where the carrier
can prove that the damage was caused by such a risk, then the claimant has to prove that the
carrier was negligent. On the other hand, the Hague-Visby Rules are not applicable to the live
animals, but the parties of the contract can have liberty to negotiate the terms of the carriage of
such cargo.

The Hamburg Rules do not make any difference between deck cargo and any other cargo.
Whereas it can be argued that, deck cargo was separated from any other cargo under the Hague-
Visby rules. So as to make a deck cargo, some conditions have to be met. First one is the cargo
must be put on a deck and second one is that, this situation has to be shown on the face of the bill
of lading.

There is no specific definition made for deviation under the Hamburg Rules. However, it was
only mentioned the article V that, “The carrier is not liable, except in general average; where
loss, damage or delay in delivery resulted from measures to save life or from reasonable
measures to save property at sea.” Contrary to the Hague-Visby rules, this provision is much
narrower than given by the Hague-Visby rules. The Hague-Visby rules allow to the carrier to
make a reasonable deviation.

In addition, any deviation is made under the Hamburg Rules, the carrier has to prove that, “all
measures has been taken to prevent the loss or damage to the goods, otherwise he will be
responsible all loss or damaged.”

The Hamburg Rules impose two years limitation period to bring any action relating to the
carriage of goods. However, this period is one year under the Hague-Visby Rules. In contrary to
the Hamburg Rules, the one year period under the Hague-Visby rules, is a very short time for the
cargo owner to take an action against the carrier.

Moreover, the Hamburg Rules made an improvement for the shipment of dangerous goods.
According to the Hamburg Rules, “the shipper must mark or label in a suitable manner

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dangerous goods as dangerous, and also he must inform the carrier of that, finally the bill of
lading must include an express statement that the goods are dangerous. On the other hand, under
the Hague-Visby Rules, the shipper can only put to the dangerous goods with the consent of the
carrier.

According to the two rules, the carrier’s another duty is to issue shipping documents. This is also
an obligation to the carrier. A main difference between two rules is that, under the Hamburg
Rules, these documents much more detailed than the documents under the Hague-Visby Rules.

According to the Hamburg Rules article 16 that, the bill of lading has an evidential effect.
However, it made a chance from the Hague-Visby Rules which the carrier has to record the
apparent condition of the goods on the bill of lading, if he fails to record it; he is deemed to have
recorded on the bill of lading.

Another improvement is that, the Hamburg Rules made a specific provision for jurisdiction.
However, the Hague-Visby Rules do not contain any specific jurisdiction.

In conclusion, The Hamburg Rules made several important improvements on the Hague Visby
rules. They achieved a great uniformity to the Carriage of Goods by Sea than do the Hague-
Visby rules. Such as, they introduced a port to port responsibility of the carrier than being a
tackle to tackle period of responsibility under the Hague-Visby rules. As we can see from this the
Hamburg Rules sorted out many problems or confusions, which was accommodated in The
Hague-Visby Rules. Moreover, the court sometimes was having difficulties to interpret the
Hague-Visby Rules. On the other hand, The Hamburg Rules were not ratified by many of the
trading countries. Even if the Hamburg Rules made several improvements, they associated some
problems in its structure. For instance, the rules did not mention anything about the independent
contractor so they are not under the umbrella of the Hamburg Rules.

Summarization of shipper and carrier duties and responsibilities

Carriers' duties

Under the Rules, the carrier's main duties are to properly and carefully load, handle, stow, carry,
keep, care for, and discharge the goods carried" and to "exercise due diligence to make the ship
seaworthy" and to properly man, equip and supply the ship. It is implicit (from the common law)

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that the carrier must not deviate from the agreed route nor from the usual route; but Article IV
provides that "any deviation in saving or attempting to save life or property at sea or any
reasonable deviation shall not be deemed to be an infringement or breach of these Rules".

The carrier's duties are not strict, but require only a reasonable standard of professionalism and
care; and Article IV allows the carrier a wide range of situations exempting them from liability
on a cargo claim. These exemptions include destruction or damage to the cargo caused by: fire,
perils of the sea, Act of God, and act of war. A controversial provision exempts the carrier from
liability for neglect or default of the master in the navigation or in the management of the ship.
This provision is considered unfair to the shipper; and both the later Hamburg Rules (which
require contracting states to denounce the Hague–Visby Rules) and Rotterdam Rules (which are
not yet in force) refuse exemption for negligent navigation and management.

Also, whereas the Hague–Visby Rules require a ship to be seaworthy only "before and at the
beginning" of the voyage, under the Rotterdam Rules the carrier will have to keep the ship
seaworthy throughout the voyage (although this new duty will be to a reasonable standard that is
subject to the circumstances of being at sea).

Shipper's duties

By contrast, the shipper has fewer obligations (mostly implicit), namely:

1. To pay freight;
2. To pack the goods sufficiently for the journey;
3. To describe the goods honestly and accurately;
4. Not to ship dangerous cargoes (unless agreed by both parties)
5. To have the goods ready for shipment as agreed; ("notice of readiness to load").

None of these shippers' obligations are enforceable under the Rules; instead they would give rise
to a normal action in contract.

Question Three (8 Pts)

Illuminate on the role harmonized system, documents, INCOTERMs and transportation

have on international trade from Ethiopian context. Try to substantiate your discussion by

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providing local examples or evidences. Discuss what should be included in the sales
contract and why?

The role of harmonized system - The Harmonized Commodity Description and Coding System
generally referred to as "Harmonized System" or simply "HS" is a multipurpose international
product nomenclature developed by the World Customs Organization (WCO).

It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a
legal and logical structure and is supported by well-defined rules to achieve uniform
classification.

 The system is used by more than 200 countries and economies as a basis for their Customs
tariffs and for the collection of international trade statistics. Over 98 % of the merchandise in
international trade is classified in terms of the HS. 

The HS contributes to the harmonization of Customs and trade procedures, and the non-
documentary trade data interchange in connection with such procedures, thus reducing the costs
related to international trade.

It is also extensively used by governments, international organizations and the private sector for
many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules
of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of
national accounts, and economic research and analysis. The HS is thus a universal economic
language and code for goods, and an indispensable tool for international trade.

Under the sponsorship of the EU-WCO HS Programmed for Africa, a national workshop on the
HS 2017 amendments for the Ethiopian Customs Commission (ECC) was held in Addis Ababa,
Ethiopia, from 11 to 15 November 2019. The overarching goal of the workshop was to assist the
ECC, which has just completed the migration to the HS 2017 version, to understand the scope of
the amendments and align its classification work on the new version of the national tariff.

The HS was designed to be an international standard system to avoid such duplication, but it was
recognized that it could not be eliminated entirely. Developed as a multipurpose nomenclature,
the HS is now used as the basis for:

 Customs tariffs

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  Collection of international trade statistics

 Rules of origin

 Collection of internal taxes

 Trade negotiations (e.g., the WTO schedules of tariff concessions)

 Transport tariffs and statistics

 Monitoring of controlled goods (e.g., wastes, narcotics, chemical weapons, ozone layer
depleting substances, endangered species)

 Areas of Customs controls and procedures, including risk assessment, information

technology and compliance.

The role of documents system - Those exporters (or potential exporters) who are not fully
familiarized with the nuances of international trade transactions may be unaware of the
importance that transport documentation represents. To explain it, let’s start with the basics. In
this sense, an analogy with post service is useful.

The transport document represents the freight carrier’s commitment to transport the merchandise
to a specific destination, under certain conditions, in exchange for a monetary sum. It should be
added that the shipper must include in this document, as indicated by the sender, a list of
recipients, whether an individual or legal entity, entitled to claim the shipment at the place of
destination.

According to the Ethiopia ministry of trade, export or import documentation is required in

importing countries to clear goods from customs and effect bank payment. It can also be used to
as proof of origin in order to claim preferential duty rates.

The documents often become more important than the goods, as without the correct paperwork,
the products can’t clear customs. Goods stuck in customs are not stored free-of-charge and it is
the exporter or seller that pays these charges. Most of all, export documentation must be accurate
and contain the correct information.

As such, why is the transport document so important? It is important because:

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  It represents the contract of carriage,
 It is proof that the merchandise has been delivered for transport
 It shows that the goods were delivered in good conditions. 
 It shows the ownership of the goods

The role of incoterm system - It stands for International Commercial Terms and they are an
internationally recognized system of establishing clearly, in sales contracts, the legal obligations
of the buyer and seller with regard to the delivery of goods. It is beneficial to all parties
involved, in international transactions especially, to have any vagueness, misunderstandings and
confusion in international contracts removed. Incoterms have been written to do just that in this
important area of delivering the goods.

The main aim of the Incoterms Rules is to clearly establish the “delivery point” in the contract. 
Deciding on the delivery point is very important and it must be a point that is acceptable to both
the buyer and the seller.  Only when the seller knows to where they have to deliver the goods can
they accurately calculate a selling price.  Only when the buyer knows where they have to take
responsibility for the goods and any additional charges after that point can them accurately know
the “cost of ownership”.  For example, the delivery point may be at the seller’s premises in
which case the buyer would be paying all shipment costs so the seller’s export price would only
be the selling price of the goods plus any extra for packing but the buyer would have to organize
transport, pay all costs to bring the goods to their door and take the maximum risk.  If the seller
has to deliver to the buyer’s premises overseas then the costs of transportation, etc. should be
added to the price of the goods to get to a true selling price. The “delivery point” is important in
international transactions because once the seller has delivered the goods they, generally:

 Can claim payment;

 Have no further shipment costs to pay;
 Have no further responsibility for the goods if they are lost or damaged after that
specific point named.

The role of Transportation

The transportation branches for which data are available in Ethiopia are road transport, air
transport, rail transport and water transport. Of these four types, the biggest service provider is

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the road transport branch. Accordingly, 90% of freight transportation both in the import and
export sectors and 95% of the public transportation services are provided by the road transport
branch.

When we look at the total manpower employed by the government, the share of the labor force
employed by government institutions in the transport sector, namely, Transport Authority,
Ethiopian Road Authority, Road Fund Administration, is 46.7%. This figure does not include the
manpower employed by the regional transport institutions. Following in second place, the air
transport sector's share of manpower is 39.3%. At the moment, of all the branches of the
transport sector, these two branches have the best performance records.

The contribution of transportation to a country's development is high. Its share of contribution to

the GDP of a country is incontrovertible, though the nature and extent of the contribution varies
from country to country. Transportation plays a big role in what is known in both national and
international trade as invisible trade. It has been confirmed that its share in this respect in many
developed countries is as high as 26%.

Examples of Ethiopian companies or exporter which uses the above systems

 Ambo Mineral Water (bottled mineral water)

 Ethio Telecom (mobile, fixed line, broadband services)

 Marathon Motors Engineering (automobiles)

 Yebbo Communication Network (software, websites)

 Yousran International (sesame seeds, spice seeds, edible oil

What should be included in the sales contract and why?

A sales contract is an agreement between a seller and a buyer which includes the delivery and
sales of goods, various securities, and many other personal properties. It is also known as sales or
goods agreement or purchase agreement. In addition to buyer and seller, their witnesses will
become legally binding of the party at the time of signing a contract.

Important elements of a sales contract

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  Description of Goods
 Delivery instruction
 Inspection period
 Warranties and guarantees from the seller
 Payment details

Why should those elements included in sales contract

Sales Contract have the following Advantages:-

Minimizes Risks -A sales contract is always advantageous as it reduces the risks of loss and
company getting sued. A proportion of risk reduces by mentioning terms of a particular
agreement clearly and get it signed from all the important parties. Doing this will provide you
grounds to take legal action in the failure of meeting conditions mentioned in the contract.

Clarity -Besides reducing risks of the lawsuit, contracts are useful to provide clarity to
employees and both seller and buyer. Sales contract contains all important details related to
contract and expectations from each party. Contracts make both parties stay true to what they
have agreed on while writing a contract and avoid risks of the lawsuit.

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 REFERENCE

 ANDERSON, J. van WINCOOP, E.: Trade costs. Journal of Economic Literature, Vol.
42, 2004.
 BAIER, S. L. BERGSTRAND, J. H.: The Growth of World Trade: Tariffs, Transport
Costs, and Income Similarity. Journal of International Economics, Vol. 53, No. 1, 2001.
 BERGOEING, R. KEHOE, T. J.: Trade Theory and Trade Facts. Federal Reserve Bank
of Minneapolis Staff Report 284, 2001.
 Ethiopian Ministry of Trade, Certificate of Conformity for Exports to Ethiopia,
December 2013.
 Evans, Carolyn and James Harrigan, “Distance, Time, and Specialization”, 2003.
 KOPP, A., Summary of Discussions, Transport and International Trade, Round Table
130, ECMT 2006.
 Ministry of Transport, Annual Statistical Bulletin. Addis Ababa, Ethiopia, February
2004.
 Temesgen. A, the role of the transport sector in Ethiopia’s economic development, 2009
 The economic and commercial implication of the entry to force of Hamburg rules and the
multi modal transport conventions, by united nation conference on trade and
development, Geneva 1991.
 United Nations convention on the carriage of goods by sea, United Nation 1994.
 Www. wikipedia.org
 www.2merkato.com
 www.africaphonebooks.com
 www.akellawfirm.com/yayinlar/THE_MAIN_FEATURES_OF_THE_HAMBURG_RU
LES_AND_THE_HAGUE-VISBY_RULES.pdfwww.exporthelp.com

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  www.blog.intradebook.com
 www.eslse.et
 www.etmaritime.com
 www.exportgenius.com
 www.exporthelp.com
 www.iiiem.com
 www.itf-oecd.org
 www.lawexplores.com
 www.marketing91.com
 www.mastercardbiz.com
 www.oec.world.org
 www.opentoexport.com
 www.trade.gov
 www.uncitral.org
 www.unece.org
 www.wcoomd.org
 www.worldstopexports.com

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