Exporting and Trading info

Bills of Lading A bill of lading is a contract between the owner of the goods i exporter) and the carrier. It is evidence that the shipment has been made and is your receipt for the goods that have been shipped. Figure 4-14 is a Bill of Lading for an air carrier, called an Air Waybill. Figure 4-15 shows an ocean bill of lading. Straight Bills of Lading.  These forms are nonnegotiable bills that consign the goods to an importer or other party named on the document. Once consummated, the seller and/or the seller's bank loses title control because the goods will be delivered to anyone who can be identified as the consignee. Order Bill of Lading. This form is a negotiable bill; that is, unlike the "straight" bill, it represents the title to the goods in transit and the original copy must be endorsed before it is presented to the bank for collection. In other words, the "order" bill can be used as collateral in financing—as documentation to discount or sell ...

Documentation "Attention to detail" is the byword when preparing documentation. The naive pass it off as a by-product of the transaction, but the experienced trader knows that inattention detains shipments on the pier for weeks. As ex-Yankee baseball player Yogi Berra once said, "It ain't over 'til it's over," and that's the way it is in international trade. The exporter doesn't get his or her money and the importer doesn't get his or her goods unless the paperwork is complete and accurate! Therefore, be attentive to detail!! Basically, documentation falls into two categories: shipping and collecting. Shipping Shipping documents permit an export cargo to be moved through customs, loaded aboard a carrier, and shipped to its foreign destination. These documents are: • Export licenses • Packing lists • Bills of lading • Export declarations Collection Collection documents are those needed for submission to the importer (in the ca...

Checklist for Shipping   Write your customer's name and address or shipping code on the package.   Use black, waterproof ink for the stencils.   Include port of exit and port of entry on your label.   Place package and case number on container.   Include dimensions (inches and metric).   Mark exports, "Made in U.S.A." to get through customs in most foreign countries.   Express gross and net weight in pounds and/or kilograms.   Use cautionary markings such as "this side up" or "handle with care" in both languages.   Don't use brand names or advertising slogans on packages.   Make sure any shipments that carry explosives or volatile liquids conform to local law and international agreements.

Physical Distribution (Shipping and Packing) Physical distribution, sometimes referred to as logistics, is the means by which goods are moved from the manufacturer in one country to the customer in another. This section discusses two vital aspects for which the importer/exporter should have an appreciation: shipping and packing. Shipping. The importer/exporter can arrange directly land, ocean, and air shipments of international cargo. You handle inland transportation much the same as a domestic transaction, except that you must add certain export marks to the standard information shown on a domestic bill of lading. Also include instructions to the inland carrier to notify the ocean or air carrier. Water Transportation. Three types of ocean service are available: conference lines, independent lines, and tramp vessels. An ocean conference is an association of ocean carriers that have joined together to establish common rates and shipping conditions. Conferences have two rates: t...

Agency/Distributor Agreements Earlier, in chapter 3, I discussed your relationship with overseas distributors. A manufacturer or importer/exporter will seldom agree to meet all of a distributor's conditions. Most terms are negotiable, and a firm that is not internationally known might have to grant more demands than others in a more favorable position. The following five tips might help to avoid risk in doing business with distributors: 1. Put the agency agreement in writing.  The rights and obligations resulting from a written agreement require no extraneous proof and are all that is necessary to record or prove the terms of a contract in most countries. 2. Set forth the benefit to both parties in the agreement. Well-balanced agreements should not place an excess of profitless burden on one of the parties. Performance of the agreement might be impossible to enforce against a party who has no apparent benefit from it. 3. Give clear definition and meaning to all contra...

Insurance In addition to the various methods of avoiding nonpayment, insurance against marine, commercial, and political risk also is available. Avoiding Shipping Risks.  Marine cargo insurance is an essential business tool for import/export. Generally, you purchase coverage on a warehouse-to-warehouse basis (i.e. from the sender's factory to the receiver's platform). Coverage usually ceases a specific number of days after the ship or plane is unloaded. You purchase policies on a per shipment or "blanket" basis. Freight forwarders usually have a blanket policy to cover clients who do not have their own policy. Most insurance companies base cargo insurance on the value of all charges of the shipment, including freight handling, etc., plus 10% to cover unseen contingencies. Rates vary according to product, client's track record, destination, and shipping method. Ocean cargo insurance costs about $.50 to $1.50 per $100.00 of invoice value. Air cargo is usually...

Avoiding Bad Credit Pick your customer carefully. Just as in the domestic American market, bad debts are avoided more easily than rectified. If there are payment problems, keep communicating and working with the firm until you have settled the matter. Even the most valued customers have financial problems from time to time. If nothing else works, request tbat the Department of Commerce or tbe International Chamber of Commerce begin arbitration on your behalf. Information that is current and accurate is the food for good financing decisions. Basically, two types of international credit information exists: (1) the ability and willingness of importing firms to make payment, and (2) the ability and willingness of foreign countries to allow payment in a convertible currency. Following are several ways to obtain credit information about companies and their countries: Information about United States Firms. • Commercial Banks • Commercial credit services, such as Dun and Bradstreet ...

Getting Paid Ensuring prompt payment often worries exporters more than any other factor. The truth is that the likelihood of a bad debt from an international customer is less than from an American company. It might surprise some people that the foreign bad-debt ratio is less than half of the United States ratio. In the United States, the average bad-debt ratio often runs 1.25% or more of sales. In the experience of most international businessmen, overseas bad debts seldom exceed .5% of sales. The reason is that, in the United States, credit is a way of life. In overseas markets, credit is still something to be earned as a result of having a record of prompt payment. Use common sense in extending credit to overseas customers, but don't use tougher rules than for your American clients. The methods of payment, in order of the risk to the seller, are: open account, consignment, time draft, sight draft, authority to purchase, letter of credit, and cash in advance. Open Account.  ...

AVOIDING RISK Doing business across international borders always involves risks related to financial exposure. However, avoiding or controlling risks in global trade is an everyday occurrence for importers and exporters, and understanding the instruments available for avoiding risk is not difficult. Essentially four kinds of risks exist: BUSINESS or COMMERCIAL   Not being paid; nondelivery of goods; insolvency or protracted default by the buyer; competition; and disputes over product, warranty, etc. FOREIGN EXCHANGE       Foreign exchange fluctuations POLITICAL        War, coup d'etat, revolution, expropriation, expulsion, foreign exchange controls, or cancellation of import or export licenses SHIPPING Risk of damage and/or loss at sea or via other transportation Most risks allow for a method of avoidance. Of course, there is no insurance for such problems as disputes over quality or loss of markets due to competition, but there ...

FINANCING Why do we need financing in the import/export business? To start, expand, or take advantage of opportunities, all businesses need new money sooner or later. By new money, we mean money that we have not yet earned, but which can become the engine for growth. For the importer, financing offers the ability to pay for the overseas manufacture and shipment of foreign goods destined for the United States market. For the exporter, financing could mean working capital to pay for international travel and the marketing effort. New money also can be loans to foreign buyers so that buyers can purchase an exporter's goods. American importers seldom have problems finding financing. United States dollars are plentiful, and if you do the homework phase well and you have purchase orders for the product(s), banks or factors are waiting to assist. The Bank Commercial banking is the primary industry that supports the financing of importing and exporting. Selection of a banking partn...