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MKT 464 > Test 2 > Flashcards

Test 2 Flashcards

1
Q

Cash In advance

A

The exporter requests that the customer gives payment in advance before shipment of the goods can take place.

Risk is entirely on the importer. Very risk free for exporter

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2
Q

Open Account

A

The exporter sends an invoice to the importer along with the shipment and expects a payment within 30 - 90 days. It is very risky for the exporter. If the payment is not made they have to go through an expensive and time consuming process in importing country.

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3
Q

Factoring

A

Used in an open account. The exporter is paid by the factor and the factor then needs to get the money from the importer. Usually happens when importer requests a longer amount of time to pay than the exporter can afford

Used most frequently domestically

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4
Q

Letter of Credit

A

A document where the importers bank essentially promises to pay the exporter if the importer does not pay.

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5
Q

Stand by Letters of Credit

A

Is similar to letter of credit expect it usually has much longer validity period. It also usually applies more than one shipment

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6
Q

URC 522

A

Describes rules that banks and importers/exporters have when dealing with each other . Explains that presenting bank has to notify the importer to come in and sign the draft

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7
Q

Documentary collection

A

process by which an exporter asks a bank located in the importers country to safeguard the exporters interests. (hold the products until the payment is made.) This way if the importer doesn’t pay they only lose the cost of shipping rather than everything

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8
Q

Sight draft
Time draft
Date draft

A

Sight draft - A draft in which the importer promises to pay the exporter immediately
Time draft - A draft in which the importer promises to pay exporter a certain amount of time after draft is signed
date draft - Same as time draft but they have the amount of time from shipment date, not when importer has signed draft

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9
Q

Instruction letter

A

In a documentary collection, a document prepared by the exporter that instructs the presenting bank on the steps to take before releasing the documents to the importer

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10
Q

Trade acceptance

A

Takes place in documentary collection when importer signs the draft

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11
Q

Forfaiting

A

Financing an international sale in which the exporter can collect drafts from the importer and resell them to the forfaiting company without recourse. Can be used for terms as long as 7 years

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12
Q

TradeCard

A

A propretary process that combines payment and documents and facilitates international transactions

charges only $150 for transactions up to 100k. Letters of credit and Procurement cards usually have 2-3 percent interest. Not widely accepted among the trade world

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13
Q

Bank guarantees

A

A contract from a bank in which the bank guarantees the exporter will perform as required by the importer

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14
Q

What are the 4 invoices

A

Commerical invoice, Consular Invoice, Specialized Commerical Invoice, pro forma invoice

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15
Q

Commerical Invoice

A

Document that the seller sends to buyer that lists what goods were purchased

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16
Q

pro forma invoice

A

A quote provided by exporter to the importer for the purpose of obtaining a letter of credit or an import license (pretty much a request to actually send an invoice)

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17
Q

Consular Invoice

A

An invoice printed on stationery paper provided by the importing country’s Consulate. becoming less necessary. Needed when shipping to a few Latin American countries. It is considered a trade barrier

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18
Q

Specialized commerical invoices

A

Must be printed on standard form. The purpose is to simplify the work of Customs employees

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19
Q

Export Licenses

A

an express authorization by a country’s government to export a specific product before it is shipped.

Needed for 2 reasons:

  1. Gov is controlling export of raw materials to conserve natural resources
  2. gov is controlling the export of national treasures
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20
Q

US export controls (3 elements)

A

US export control polices focus on 3 elements:

  1. the product considered for export
  2. the entity abroad that is buying the product
  3. the final destination for the product
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21
Q

Certificate of origin

A

The most common type of required document. The exporter must have it signed by its Chamber of Commerce. It attests that the good originated in the country that the exporter is in

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22
Q

Certificate of Manufacture

A

Attests that the goods were manufactured where the exporter is located

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23
Q

Certificate of Inspection

A

A document signed by an independent company (third party) that attests the accuracy and authentic y of the shipment

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24
Q

Phyto-Sanitary certificate

A

Provided by agricultural authorites of exporting countries. Attests that agricultural products do not have disease or pests

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25
Q

Certificate of free sale

A

issued by exporter that attests the goods can be legally sold in exporting country

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26
Q

Uniform Bill of Lading

A

A bill of lading used for transportation by truck or train. Domestically or Internationally

27
Q

Intermodal bill of lading

A

A bill of lading used for transportation that uses more than one mode of transportation - domestic or international

28
Q

Air waybill

A

bill of lading used for transportation by air, domestically or internationally

29
Q

Charter Party

A

A type of contract of carriage that happens when the shipper uses all or most of the ships space to transport goods

30
Q

Packing list

A

A detailed document provided by the exporter that spells out how many containers there are in the shipment and which merchandise is packaged in each container

31
Q

Shippers letter of instruction

A

A document that the shipper say how it wants the carrier to handle the good while they are in transit (for example, when dealing with livestock)

32
Q

Manifest

A

A document that the shipping company creates that lists the exact makeup of the cargo, ownership, and its port of destination

33
Q

Risk Retention

A

The shipper decides that it will assume the risks of loss for a specific shipment

34
Q

Risk Transfer

A

Shippers who use this risk manangement stratagy have insurance. And in exchange pay a premium

Shippers that use this:

  • they have a lot of exposure
  • lack experience
  • a loss would hurt their business a lot
35
Q

Mixed approach

A

Shipper decides it will take some of the loss, and transfer others

36
Q

What are the three methods for managing risks for shippers

A

Risk Retention, Risk transfer, Mixed approach

37
Q

3 types of marine insurance policies

A

Marine Cargo Insurance, Hull insurance, Protection and Indemnity

38
Q

Marine Cargo Insurance

A

Covers all shipments of insured as long as they are reported

39
Q

Hull Insurance

A

covers ship owners risk of damage or loss of ship

40
Q

Protection and Indemnity

A

Offers protection against liability to other parties when ship sinks or is damaged.

41
Q

What are the three steps to filing an insurance claim?

A
  1. Notification of loss
  2. Protection of cargo
  3. actual filing of the claim
42
Q

Notification of loss when filing a claim

A

must be in writing always. This is the most important step. A surveyor should be hired immediately. (surveyor is someone who is a seperate party not affiliated with insurance, shipper or carrier)

43
Q

Protection of cargo

A

The insured must protect the property as “if it were not insured” as the insured has an “onus of good faith” and must protect the interests of the insurance company.

44
Q

Types of service?

A

Liner ships and tramp ships

45
Q

Liner ships vs Tramp ships

A

Liner ships have scheduled routes that they take and they don’t deviate from it. Tramp ships go wherever there is a market for them. (Taxi cab is a tramp ship while public bus is a liner ship)

46
Q

Dead weight tonage

A

The maximum weight that a ship can carry

47
Q

gross registered tonnage

A

The volume capacity of a ship, calculated in a way that meets the requirements of specific authority

48
Q

box ship

A

Another name for containership

49
Q

RORO

A

a ship where the cargo is rolled on and off rather than taken off by a train

50
Q

Trot-on/trot-off

A

A type of ship designed to carry livestock

51
Q

Combination ship

A

A type of ship that is versatile and can carry different types of cargo

52
Q

Product carrier

A

A liquid bulk ship that carries refined oil products

53
Q

flag

A

The ship carries a flag of the country where the ship is registered

54
Q

Hague limit, Hague-Visby limit, Hamburg limit

A

The original Hague limit for ocean cargo restricted the carrier to $500 per customary freight unit. Hague-Visby raised it to $666.67 and Hamburg raised it to $833

55
Q

NVOCC (Non-Vessel-Operating Common Carriers)

A

A shipping company that does not own or operate a ship. They purchase ship space and then resell it to companies that need to ship cargo

56
Q

Two main securites measures in international cargo

A

Cargo Inspections - A percentage of all shipments entering the US are inspected upon arrival (ranges from 1 to 5 percent)
Advanced Shipping Notifications - shippers have to notify the importing country’s customs authorities 24 hours in advance

57
Q

Combi Aircrafts

A

carry freight on main deck

58
Q

Freighters

A

aircrafts equippted to carry cargo

59
Q

Quick-Change Aircraft

A

A type of airplane that can be coverted from a passenger plane to cargo plane in a matter of hours

60
Q

Charter airfreight

A

type of cargo that can only be shipper on charter aircraft because it is too heavy or too bulky

61
Q

Factoring with recourse

A

After the exporter is paid, the factor is responsible for getting their money from the importer

62
Q

Factoring without recourse

A

After the exporter is paid, if the factor does not recieve their money from the importer, then they can turn back to the exporter

63
Q

What three roles does the Bill of Lading play in an international transaction

A
  1. It is a contract
  2. It is a receipt for the goods
  3. certificate of the title

MKT 464 (6 decks)

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