9 Exporting And Importing Flashcards by Charlotte Eggers

Incoterms and what happened to the in 2010

Establish world standard norms regarding obligation to sellers and buyers in intl transactions -> convention about what price means
2010: divided into 2 groups, according to means of transport/delivery of merchandise

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Maritime transportation incoterms (4)

FAS - free alongside ship
FOB - free on board
CFR - cost and freight
CIF - cost, insurance & freight

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FAS

Free alongside ship - sell when at port of origin

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FOB

Free on board - sell when placed on ship (responsible for everything beforehand), risk transferred to buyer when loaded on ship
BUYER PAYS FOR SHIPPING

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CFR

Cost and freight - corresponds to FOB (sell on ship), risk transferred to buyer when loaded on ship, but:
SELLER PAYS SHIPPING

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CIF

Cost, Insurance and freight - corresponds to CFR but seller covers insurance of shipment, buyer covers unloading coasts

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Incoterms for any means of transport

EXW - ex works
FCA - Free Carrier
CPT - Carriage paid to
CIP - Carriage and Insurance paid to
DAT - delivered at terminal
DAP - delivered at place
DDP - delivered duty paid

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EXW

Ex works - sell at factory (price includes nothing after production)

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FCA

Free carrier - deliver goods to place of transfer

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CPT

Carriage paid to - delivers to shipment origin, but dont cover insurance for delivery, load goods onto chosen mode of transport

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CIP

Carriage and insurance paid to - deliver to shipment origin and take over insurance cost for delivery

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DAT

Delivered at terminal - deliver to place of destination, unload, buyer must clear goods for import

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DAP

Delivered at place - deliver to place of destination not unloaded, buyer must unload and clear customs

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DDP

Delivered duty paid - deliver at destination and pay clear for import, don’t unload
DELIVER TO CUSTOMERS DOORS

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Meaning free in incoterms

Seller must deliver goods to place of transfer (shipping, airport…) or sellers business location

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Is FOB or CIF better for buyer

If CIF cheaper than getting insurance and freight independently, then CIF better, otherwise FOB

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bill of lading - Export documents

Receipt for goods deceivers to carrier for transportation

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Certificate of origin - Export documents

Indicates products origin

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Commercial invoice - Export documents

Describes goods, buyer/seller address, delivery and payment terms

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Consular invoice - Export documents

To monitor imports

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EEI (electronic export information) - Export documents

Most common export document: exporter declares key element of transaction => involved parties, dates, destination…

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Export-packing list - Export documents

Attached to outside of package: declares materials inside of each package

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Pro forma invoice - Export documents

From exporter to importer: selling terms, price, delivery: importer must accept before payment is made

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Countertrade

Goods/services exchanged for other goods/services rather than just using cash

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Classic Barter - Countertrade

Products exchanged for products

Counter-Purchase - Countertrade

Sell product to foreign country promotion to make future purchase of product in that country

Compensation arrangements or buy back - Countertrade

Supplier of capital/equipment agrees to accept future output generated by investment as future payment

Switch trade /swap trading - Countertrade

Company sells its obligation of purchasing sth in a foreign country to another company

Cash in advance - forms of payment: need to hedge (protect yourself financially)?

No need to hedge

Consignment - forms of payment (explain and need to hedge)

Payment only received for items actually sold - moderate need to hedge

Open account - forms of payment (explain and need to hedge)

Complete trust: Payment due at later date than shipping, both can debit or credit anything according to the transactions done - no hedge

Sale with deferred payment - forms of payment (explain + need to hedge)

Receive goods now but pay later (30, 45 days), Any part can debit or credit the other part but requires previous validation from other part (form of hedging) need to hedge depends on creditor quality and risk associated to foreign location

Letter of credit - forms of payment (explain)

Most used instrument of hedging against risk of default (=risk of invoice not being paid) - guarantees goods will be delivered and paid Also finance instrument - associated to it capacity of financing the transaction through banks

Bill of ladding

Proves that goods are dispatched

Letter of credit can be…

Confirmed/unconfirmed Irrevocable/not

Offset - forms of countertrade

Exporter sells products for cash and helps importer to find opportnuites to earn hard currency for payment

Two preferred means of payment in intl trade?

Cash and credit

What option is there for payment if cash or credit not available

Countertrade - inefficient way of doing business (sometimes necessary: non-convertible currencies, lack of reserves, insufficient credit or currency tools)

Forms of countertrade

1. barter - product exchange 2. buyback - future output from investments as payback 3. offset - help importer get cash 4. switch/swap trading - sell obligation to purchase sth in country 5. counter-purchase - promise future purchase in country

What does accepting countertrade signal

- sellers good faith/flexibility: gain preferential market access in future

Role of private agents

Help companies manage international trade (e.g. exporter intermediaries)

Export intermediary: two types

- export management company (exclusive representation) - export trading company (represents multiplem companies in specific market)

Freight forwarders

Arranges fastest, cheapest transportation

Third party logistics (with example)

Integrated transport and logistics service (UPS)

Custom brokers

Trade consulting

International banks

Processing trade credit and payment

Global marketplace: - coronavirus has … shift to online

Turbocharged

Global marketplaces - … barriers of entry, operating costs …, price transparencies ….

Few, Lower, increased

Global marketplaces - … barriers of entry, operating costs …, price transparencies ….

Few, Lower, increased

Global marketplace - companies such as amazon have access top vast amount of capital, prepared o tolerant … margins for … period in order to win market share

Low, long

Global marketplace fees are very high, SME may struggle if sales not … enough

High

SME

Small and midsize enterprise

Ebay, amazon, alibaba group alll examples for

Global market place

Four different types of marketplaces

- global, regional, national, local marketplaces

What are market places?

marketplace is a location or platform where buyers and sellers gather to exchange goods and services

Fnac online is what kind of market place

Regional marketplace

Pingo doce and olx is what kind of marker place

National market place

Mercado de Leiria is what kind of market place

Local market place

Debit vs credit

Deliver good: debited Pay good: credited

When is LC bullet proof

- confirmed by importer bank - irrevocable by exporter bank

Letter of credit is guarantee made by banking system: what if not accepted

Must make own judgement whether to go ahead