W1: Lecture slides

Question 1

Freight forwarders

Answer 1

Documentation, payment, and carrier selection

Question 2

Export management companies

Answer 2

Deal with export documents and operate as the firm’s agent and distributor

Question 3

Export trading companies

Answer 3

Provide comprehensive exporting services, including export documentation, logistics, and transportation

Question 4

Export packaging companies

Answer 4

Advise companies on appropriate design and materials for the packaging of their items. Assist companies in minimising packaging to maximise the number of items to be shipped

Question 5

Customs brokers

Answer 5

Offer a firm a complete package of services that are essential in dealing with potential pitfalls when a firm is exporting to a large number of countries

Question 6

Letter of credit

Answer 6

Issued by a bank at the request of the importer. Companies are likely to trust reputable banks. The importer must pay a fee

Question 7

Draft (Bill of Exchange)

Answer 7

Normally used in international commerce to effect payment. Used to settle trade transactions. In domestic transactions, the buyer can often obtain possession of the merchandise without signing a formal document acknowledging his or her obligation to pay. In international transactions, payment or a formal promise to pay is required before the buyer can obtain the merchandise

Question 8

Banker’s acceptance

Answer 8

When a time draft is drawn on and accepted by a bank

Question 9

Trade acceptance

Answer 9

When a time draft is drawn on and accepted by a business firm

Question 10

Bill of Lading

Answer 10

Three purposes: a receipt, a contract, and a document of title. Can also function as collateral against which funds may be advanced to the exporter by its local bank before or during shipment and before final payment by the importer

Question 11

Export-import bank

Answer 11

Assists in the financing of U.S. exports of products and services to support U.S. employment and market competitiveness. Supplements private capital lending with various loan and loan-guarantee programs. Guarantees repayment of medium- and long-term loans that U.S. commercial banks make to foreign borrowers for purchasing U.S. exports. Also lends dollars to foreign borrowers for use in purchasing U.S. exports

Question 12

Export credit insurance

Answer 12

Provided by the Foreign Credit Insurance Association (FCIA)