Import/Export

Question 1

Export process

Answer 1

exporter does not want to take the risk from the whole export process. Therefore, the transactions often ends at port (importing or exporting countries)

• inscurance cost
• logistic cost

Question 2

What are INCOTERMS

Answer 2

define how costs, risks and responsibilities are divided between the seller & buyer
- determine at which point the responsibilities are switching

what they dont do:

• determine when ownership is transferred
• not a contract
• only deal with tangible goods

Question 3

Letters of credit

Answer 3

assures:

• Exporter of payment
• Importer of product
• -> costs 5-8% of transaction cost
• -> when trust is not earned using letters of credit is benefitial , after trust is earned you dont need them

Question 4

Export Documents

Answer 4

Documents required for export to foreign countries/ Individuals:

• License needed or not (if not, proof that no license is needed)
• What product
• who is product being shiped
• which country and final receiver

Question 5

Factors that can lead to price escalation for exporters

Answer 5

• tariffs
• packaging
• inscurance
• security (Export/Import compliance)
• transportation (depends on from where to where)

–> use of intermediaries (export agents etc.)

Question 6

EXIM Bank

Answer 6

Export Import Bank:

• provides tools and aid to support american exports
• financing when private sector is unwilling to borrow money for american firms

Question 7

Reasons why US ports are considered uncompetetive

Answer 7

1) more Imports than exports –> shipping of empty containers
2) Cannot handle large ships (shallow)
3) do not have sufficient infrastructure (lack of automation)