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MKT 360 > Exporting and Logiatics > Flashcards

Exporting and Logiatics Flashcards

1
Q

What are some of the reasons why countries impose export regulations?

A

Conserve scarce goods for home consumption
Control flow to actual or potential enemies
Comply with various regulations

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2
Q

What Department of the U.S. government regulates exports ?

A

Department of Commerce

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3
Q

Where would you find information on the present U.S. licensing requirements for exports?

A

Export Admission Regulations (EAR)

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4
Q

What are the two types of export licenses granted by the United States?

A

General license
Validated license

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5
Q

What is a general license?

A

Permits exportation of certain products that are not subject to EAR control with simple declaration of the product

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6
Q

What is a validated license?

A

issued only on formal application

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7
Q

What is the only requirement an exporter has to fulfill with the U.S. government when shipping goods out of the United States under a General License?

A

Shippers Export Deceleration (SED)

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8
Q

Who is presently mainly responsible for ensuring that EAR (Export Administration regulations) regulations are not violated?

A

exporter

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9
Q

What is a Commercial Invoice?

A

Bill or statement of goods sold– required for every international transaction

One which you are getting paid for

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10
Q

What is a Pro Forma Invoice?

A

Preliminary bill of sale sent to buyers in advance of a shipment or goods

Describes item, cost, shipping, weight, etc

Formalities only, customs purposes

Banking purposes

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11
Q

What is a Consular Invoice and why do countries require it?

A

a commercial invoice that has been stamped by the local consulate of that foreign country

Required so that council has a chance to look at what you are importing and make sure there is no law against you importing it

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12
Q

What are the 2 purposes of a Shipper’s Export Declaration?

A

Statistical purposes (big ticketed items)

Comply with requirements of the general license (blanket permit)

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13
Q

What are the 3 types of Certificates and their characteristics?

A

Certificate of origin
Certificate of quality/grade/purity
Certificate of Inspection (packing list)

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14
Q

What are the 3 purposes of a Bill of Lading (Cargo)?

A

contract between shipper and carrier

Receipt from carrier for shipment indicating that goods have been received in good condition

TITLE TO THE GOODS (certificate of ownership)

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15
Q

How is ownership of the goods determined in an export transaction?

A

Whomever has in their possession the ORIGINAL bill of lading is the owner at the moment

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16
Q

What is a “clean” Bill of Lading?

A

Issues by carrier declaring that the goods have been received in an appropriate condition – no damage

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17
Q

What is a “foul” Bill of Lading?

A

Notation that indicates damage of the goods or shortage of goods

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18
Q

What is an “ad valorem” duty(tariff) ?

A

based on a percentage of the determines VALUE of the imported goods

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19
Q

What is a specific duty (tariff)?

A

Stipulated amount per unit WEIGHT or some other measure of quantity

each item is taxed diff.

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20
Q

What is a compound duty (tariff)?

A

COMBINED both specific and ad valorem taxes on a particular item, that is, a tax per pound plus a percentage value

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21
Q

What is the dual meaning of the INCOTERMS (International Commercial Terms) terms of sale abbreviations?

A

Up to what point are costs included
Where does title (ownership) transfers/ change hands

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22
Q

What term of sale would be preferred by an exporter?

A

Ex Works or FOB Factory

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23
Q

What term of sale would be preferred by an exporter’s foreign customer (the importer)?

A

CIF Foreign Port or C&F

24
Q

What is the least risky term of payment that could be used by an exporter

A

Cash in Advance – Least Risky, Highest Cost

25
Q

What is the highest risk term of payment that could be used by an exporter?

A

Open Account – Most Risky, Least Cost

26
Q

What does a Letter of Credit do to a buyer’s credit risk?
Increases slightly 

A

-

27
Q

What does a Letter of Credit fundamentally change in an international transaction?

A

 Changed transaction from delivery of goods to delivery of documents

28
Q

What are the usual documents required by a bank in a Letter of Credit?

A

Original bill of lading (Clean)
Commercial invoice
Draft/Bill of Exchange
Packing list
Certificates (origin, quality, inspection)

29
Q

What is an irrevocable Letter of Credit?

A

Once letter is opened during period of validity, it can not be taken back or reversed/canceled

30
Q

Is a Letter of Credit a guarantee of payment to the seller?

A

No, because of discrepancies

31
Q

Is a Letter of Credit a guarantee of delivery of the goods purchased by the buyer?

A

No because of Fraud

32
Q

What are some of the document “discrepancies” that could cause delay in payment of letters of credit?

A

Wrong description of goods
stalemated documents

foul bill of lading
No “on board” stamp
Letter of credit expired

33
Q

What is a stalemated document?

A

Document that is presented to a bank that is over 21 calendar days after shipment; Documents are no longer fresh

expired docs

34
Q

What is a draft or bill of exchange?

A

Document that triggers the payment in an export transaction

35
Q

How is a draft typically used in international commercial payments?

A

Works like a check, authorizing the seller to draw the payment from the buyers bank. Seller deposits the draft in his bank who then sends it to the buyers bank for collection

36
Q

What is a “sight draft”?

A

A draft that is required to be paid on sight; in other words, endorse the check, then when bank sees payable at sight (+ 30 days or +60 days, etc. ) then they pay it/give credit (more time to pay)

37
Q

What is a Time Draft?

A

it’s a draft that is used to give credit to the buyer

38
Q

What happens in a “forfait” transaction?

A

When you borrow money against your time draft, you discount the amount being paid to you eventually

39
Q

What is the difference between forfaiting and factoring?

A

Forfaiting deals with capital goods, commodities and high value transactions; forfaiting is long term up to 5 years

Factoring deals with receivables on ordinary goods; Factoring is short term within 90 days 

40
Q

What is included in the price in each of the following international terms of sale (INCOTERMS): FOB factory (1)?

A

1) FOB Factory: The cost of placing them on the carrier

41
Q

What is included in the price in each of the following international terms of sale (INCOTERMS): FAS Port of Export?

A

Free-alongside, cost of goods, cost to place them on carrier, cost of transport the goods alongside the vessel at the Port

42
Q

What is included in the price in each of the following international terms of sale (INCOTERMS):C&F Foreign Port

A

Cost of goods, costs to transport to Port, cost to load them on vessel, plus cost of freight to deliver them to foreign port

43
Q

What is included in the price in each of the following international terms of sale (INCOTERMS): CIF Foreign Port ?

A

Same as C&F, plus the cost of cargo insurance

44
Q

What is included in the price in each of the following international terms of sale (INCOTERMS): FOB factory with freight allowed to inland destination

A

The cost of goods, plus the cost to place them on board the inland carrier, plus the cost of transporting the goods from the factory to the inland destination

45
Q

FOB Inland destination:

A

The cost of the goods, plus the cost to place them on board the inland carrier, plus the cost of transporting the goods from the factory to the inland destination

46
Q

Who is responsible for the cost of cargo insurance in a C&F transaction?

A

The Foreign Buyer

47
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale:
EX-WORKS ?

A

EX WORKS: title transfers when the goods are ready for collection at the seller’s premises (work, factory, warehouse, plant) on the date agreed upon

48
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB factory

A

Free on Board Factory: title transfers the minute the tires of the car hit the bed of the truck

49
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB factory with freight allowed to Miami ?

A

FOB Factory with freight allowed to Inland Destination: title transfers when goods are placed “ on board” the inland carrier

50
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB Miami dealership

A

FOB Inland Destination: title transferred when the goods (the car) are unloaded from the carrier at the inland destination

51
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FAS Port of Miami

A

FAS Port of Miami (FAS Port of Shipment): title transferred when the goods are alongside at the port of shipment and in the hands of air or ocean carrier, as evidenced by a dock receipt

52
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale:C&F Foreign Port

A

C&F Foreign Port: The cost of the goods plus all the costs to transport them to the port of shipment plus the cost to load them on the vessel or plane plus the cost of freight to deliver them to the Foreign Port; title transfers when goods are on board the vessel or plane at the port of shipment

53
Q

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: CIF Foreign Port

A

CIF Foreign Port: (Cost Insurance Freight) When the goods are on board the vessel at the Port of Shipment

54
Q

What are the 3 most common uses for Free Trade Zones (Area in a city where goods are kept temporarily before they are shipped outside)?

A

Used for Manufacturing
Used for Distribution
Used for Saving on customs duties temporarily (Cash Flow) - in-bond facility: where goods are kept temporarily in bond, under control of customs until a specific time

55
Q

What is the Total Cost Approach in international logistics management?

A

TCA (Total Cost approach) = don’t decide on your logistics based on the cost of transportation. Base it on total cost, warehouse cost, and damages

56
Q

What are some of the services that are provided by foreign freight forwarders?

A

They will book the shipment for you.
They will store your cargo before the ship arrives.
They will consolidate your cargo. (Combine your cargo with someone else’s going to the same place, you will save money)
Will do all the documentation for you. (Bill of lading, certificate of origin, etc.)

MKT 360 (25 decks)

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