Exporting and Logiatics Flashcards
What are some of the reasons why countries impose export regulations?
Conserve scarce goods for home consumption
Control flow to actual or potential enemies
Comply with various regulations
What Department of the U.S. government regulates exports ?
Department of Commerce
Where would you find information on the present U.S. licensing requirements for exports?
Export Admission Regulations (EAR)
What are the two types of export licenses granted by the United States?
General license
Validated license
What is a general license?
Permits exportation of certain products that are not subject to EAR control with simple declaration of the product
What is a validated license?
issued only on formal application
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?
Shippers Export Deceleration (SED)
Who is presently mainly responsible for ensuring that EAR (Export Administration regulations) regulations are not violated?
exporter
What is a Commercial Invoice?
Bill or statement of goods sold– required for every international transaction
One which you are getting paid for
What is a Pro Forma Invoice?
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
What is a Consular Invoice and why do countries require it?
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
What are the 2 purposes of a Shipper’s Export Declaration?
Statistical purposes (big ticketed items)
Comply with requirements of the general license (blanket permit)
What are the 3 types of Certificates and their characteristics?
Certificate of origin
Certificate of quality/grade/purity
Certificate of Inspection (packing list)
What are the 3 purposes of a Bill of Lading (Cargo)?
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)
How is ownership of the goods determined in an export transaction?
Whomever has in their possession the ORIGINAL bill of lading is the owner at the moment
What is a “clean” Bill of Lading?
Issues by carrier declaring that the goods have been received in an appropriate condition – no damage
What is a “foul” Bill of Lading?
Notation that indicates damage of the goods or shortage of goods
What is an “ad valorem” duty(tariff) ?
based on a percentage of the determines VALUE of the imported goods
What is a specific duty (tariff)?
Stipulated amount per unit WEIGHT or some other measure of quantity
each item is taxed diff.
What is a compound duty (tariff)?
COMBINED both specific and ad valorem taxes on a particular item, that is, a tax per pound plus a percentage value
What is the dual meaning of the INCOTERMS (International Commercial Terms) terms of sale abbreviations?
Up to what point are costs included
Where does title (ownership) transfers/ change hands
What term of sale would be preferred by an exporter?
Ex Works or FOB Factory
What term of sale would be preferred by an exporter’s foreign customer (the importer)?
CIF Foreign Port or C&F
What is the least risky term of payment that could be used by an exporter
Cash in Advance – Least Risky, Highest Cost
What is the highest risk term of payment that could be used by an exporter?
Open Account – Most Risky, Least Cost
What does a Letter of Credit do to a buyer’s credit risk?
Increases slightly
-
What does a Letter of Credit fundamentally change in an international transaction?
Changed transaction from delivery of goods to delivery of documents
What are the usual documents required by a bank in a Letter of Credit?
Original bill of lading (Clean)
Commercial invoice
Draft/Bill of Exchange
Packing list
Certificates (origin, quality, inspection)
What is an irrevocable Letter of Credit?
Once letter is opened during period of validity, it can not be taken back or reversed/canceled
Is a Letter of Credit a guarantee of payment to the seller?
No, because of discrepancies
Is a Letter of Credit a guarantee of delivery of the goods purchased by the buyer?
No because of Fraud
What are some of the document “discrepancies” that could cause delay in payment of letters of credit?
Wrong description of goods
stalemated documents
foul bill of lading
No “on board” stamp
Letter of credit expired
What is a stalemated document?
Document that is presented to a bank that is over 21 calendar days after shipment; Documents are no longer fresh
expired docs
What is a draft or bill of exchange?
Document that triggers the payment in an export transaction
How is a draft typically used in international commercial payments?
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
What is a “sight draft”?
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)
What is a Time Draft?
it’s a draft that is used to give credit to the buyer
What happens in a “forfait” transaction?
When you borrow money against your time draft, you discount the amount being paid to you eventually
What is the difference between forfaiting and factoring?
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
What is included in the price in each of the following international terms of sale (INCOTERMS): FOB factory (1)?
1) FOB Factory: The cost of placing them on the carrier
What is included in the price in each of the following international terms of sale (INCOTERMS): FAS Port of Export?
Free-alongside, cost of goods, cost to place them on carrier, cost of transport the goods alongside the vessel at the Port
What is included in the price in each of the following international terms of sale (INCOTERMS):C&F Foreign Port
Cost of goods, costs to transport to Port, cost to load them on vessel, plus cost of freight to deliver them to foreign port
What is included in the price in each of the following international terms of sale (INCOTERMS): CIF Foreign Port ?
Same as C&F, plus the cost of cargo insurance
What is included in the price in each of the following international terms of sale (INCOTERMS): FOB factory with freight allowed to inland destination
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
FOB Inland destination:
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
Who is responsible for the cost of cargo insurance in a C&F transaction?
The Foreign Buyer
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 ?
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
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
Free on Board Factory: title transfers the minute the tires of the car hit the bed of the truck
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 ?
FOB Factory with freight allowed to Inland Destination: title transfers when goods are placed “ on board” the inland carrier
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
FOB Inland Destination: title transferred when the goods (the car) are unloaded from the carrier at the inland destination
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
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
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
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
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
CIF Foreign Port: (Cost Insurance Freight) When the goods are on board the vessel at the Port of Shipment
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)?
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
What is the Total Cost Approach in international logistics management?
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
What are some of the services that are provided by foreign freight forwarders?
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.)
