basics of International Export Logistics - Max M. Fisher ... - International... · basics of...

J.J. SchultzLogistics & Supply Chain Columbus State

basics of International

Export Logistics

J.J. Schultz, Lead Faculty Columbus State

Community College

International

Logistics

• Excellent time to Export

– Favorable currency value of the US dollar

– Strong international interest in US products

– Export barriers & restrictions have been dropping over the past 10 years

– Ample logistics to move products overseas

– Many government programs designed for Exporting

J.J. Schultz, Lead Faculty Columbus State Community

College

International

Logistics

There are tremendous logistics activities

associated with

goods that are

sold across

international

boundaries.


College

International

Logistics

• Key Points:

1) Terms of Contract (read: secure good legal counsel)

2) Know what you can and cannot export, to whom, where, when and how (see above)

3) Understand currency fluctuations (hedging)

4) Cultural Aspects: their national holidays, customs &

traditions

5) Bottom Line: There is clear risks, but doing your homework, the rewards are high


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International

LogisticsThings to consider

There are specific export restrictions from the USA including bans on:

• Certain countries

• Certain individuals

• Certain groups

• As well as certain products

You are required to know these….J.J. Schultz, Lead Faculty Columbus State Community

College

• Product categories under certain restrictions include:

– Munitions

– Software

– Hardware

– Technology

– Information

International

Logistics


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Influences on

International Logistics

–Restrictions on international logistics can take a variety of forms

• Tariffs

• Nontariff barriers

–Import quota

• Embargoes


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Influences on


• Economic factors

– Currency fluctuations

– Market size for your product

– Economic integration between the USA and export country


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Influences on


• Cultural factors

– Religion

– Values

– Rituals

– Beliefs

– Languages

• National holidays!


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Beginning Dates for the

Chinese New Year, 2011-2018


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Some of the Symbols Used

for Packing Export Shipments


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International

Documentation

• Flow of documentation is as much a part of the main logistical flow as the flow of product

• Domestic shipments typically only require a couple pieces of documentation

• Export shipments typically require approximately 10 pieces of documentation

• In some extreme cases, trades can require more than 100 separate documents


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International

Documentation

• Necessary documents are required at the point of importation

• Commonly used documents include:

– Certificate of origin

– Commercial invoice

– Shipper’s export declaration (SED)

– Shipper’s letter of instruction (SLI)


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Terms of Sale –

The Devil is in the Details

• Terms of sale involves:– Determining when and where to

transfer the following between buyer and seller:• Physical goods

• Payment for the goods, freight charges, and insurance

• Legal title to the goods

• Required documentation

• Responsibility for controlling or caring for the goods in transit, example, livestock/dairy products


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Terms of Sale - Incoterms

• Terms of sale for international shipments called Incoterms.

– The Incoterms rules (International Commercial terms) are:

• Pre-defined commercial terms widely used in international commercial transactions.

• Series of three-letter trade terms related to common sales practices

• Intended to clearly communicate & delineate the tasks, costs and risks associated with the transportation and delivery of goods.

• Use is accepted by legal authorities, buyers, and sellers worldwide


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Terms of Sale

Incoterms 2014

EXW – Ex Works Seller makes

the goods available at its premises.

This term places the maximum obligation on the buyer and minimum

obligations on the seller.

The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included.


Community College

Terms of Sale

Incoterms 2014

FCA – Free Carrier Seller

hands over the goods, cleared for export, into the hands of the first carrier

CPT - Carriage Paid To Seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.


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Terms of Sale

Incoterms 2014

CIP – Carriage and Insurance Paid to Seller pays for

carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

DAT – Delivered at Terminal Seller pays for carriage to the

terminal and assumes all risks up to the point that the goods are unloaded at the terminal.


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Terms of Sale

Incoterms 2014

•DAP – Delivered at Place Seller pays for carriage and

assumes all risks prior to the point that the goods are ready for unloading by the buyer.

•DDP – Delivered Duty Paid Seller is responsible for

delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.


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IncotermLoading on truck (carrier)

Export-Customs declarati

on

Carriage to port of

export

Unloading of truck in port of

export

Loading charges

in port of export

Carriage to port of

import

Unloading charges in port of

import

Loading on truck in port of

import

Carriage to place

of destinati

on

Insurance

Import customs

clearance

Import taxes

EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FCA Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FAS Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FOB Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer

CFR Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer

CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Seller Buyer Buyer

DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer

CPT Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer

DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

CIP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Duties of buyer/seller according to

Incoterms 2010


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In-country Transportation


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Additional

Terms

• Demurrage and Detention

– Demurrage is a penalty payment made to the railroad for keeping a railcar beyond the time when it should be released back to railroad

– Detention is the term used in the trucking industry

• Routing

– Process of determining how a shipment will be moved between consignor and consignee


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Methods of Payment

• Methods of payment refer to the manner by which a seller will be paid by a buyer.

• Much more challenging in international logistics vs. domestic logistics

• Four methods of payment include:

– Cash in advance

– Letters of credit

– Bills of exchange

– Open account


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Letter of Credit


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Methods of Payment

• Payment method

– Should be established at the time that a shipment price is decided upon

– Can be influenced by key factors such as

• the country the product is to be sold in

• the seller’s assessment of buyer risk


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International Trade

Specialists

• International Freight Forwarders specialize in handling either vessel shipments or air shipments.


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International Trade

Specialists

• Principle functions of International Freight Forwardersinclude:– Advising on letters of credit– Booking space on carriers– Preparing an export declaration– Preparing a bill of lading– Obtaining consular documents– Arrange Insurance– Preparing shipping documents– Serving as general consultant


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International Trade and

Supply Chain Specialists

• Nonvessel-operating common carrier (NVOCC)

• Export management company (EMC)

• Export packers


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Transportation Considerations

in International Logistics

• Ocean shipping

• International airfreight

• Surface transportation


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Ocean Shipping

• Approximately 60% of cross-border shipments move by water transportation

• Variety of ship types include:

– Dry-bulk

– Dry cargo

– Liquid bulk

– Parcel tanker

– Containerships

• Shipping conferences and alliances pool resources and extend market coverage


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International Airfreight

• Three types of international airfreight operations include:

– Charted aircraft

– Integrated air carriers

– Scheduled air carriers


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Surface Transport

Considerations

• Transit times can be significantly impacted by a country’s infrastructure and modal operating characteristics.

• Short sea shipping is an alternative to surface transporting


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International Trade

Inventories

• Safety stocks may be larger due to greater uncertainties, misunderstandings and or delays.

• Inventory valuation can be difficult due to continually changing exchange rates

• Product return (reverse logistics) policies must be understood.


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Logistics Performance

Index (LPI)

• Relatively new international logistics concept (2007)

• Created in recognition of the importance of logistics in global trade

• Incorporates data for approximately 155 countries


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Logistics Performance

Index (LPI)

• Measures a country’s performance across six logistical dimensions– Efficiency of the clearance process by

border control agencies, including customs– Quality of trade- and transport-related

infrastructure– Ease of arranging competitively priced

shipments– Competence and quality of logistics

services– Ability to track and trace consignments– Timeliness of shipments in reaching the

destination within the scheduled or expected delivery time


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Highest- and Lowest-Rated

Countries Based on Overall LPI

Score


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International Business

Transparency International (TI) publishes the Corruption Perceptions Index (CPI) annually ranking countries "by their perceived levels of corruption”.

The CPI generally defines corruption as "the misuse of public power for private benefit.”

As of 2010, the CPI ranks 178 countries "on a scale from 10 (very clean) to 0 (highly corrupt).”


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Transparency International


Community College

Gov’t Agency Assistance

• OFAC U.S. Treasury - Office of Foreign Assets Control

• EPA Environmental Protection Agency

• DOT U.S. Department of Transportation

• USA.gov

• ATF Bureau of Alcohol, Tobacco,

• FinCEN

• Department of Homeland Security

• U.S. Immigration and Customs Enforcement

• Transportation Security Administration

• Department of State

• FOIA Freedom of Information Act

• TRIP Traveler Redress Inquiry Program


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Questions?


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