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The second thing you need to do is find a
Freight Forwarder. Your customs broker should be the one that may
recommend the freight forwarder based on the country or place of origin
from which you intend to import.
Freight forwarders are companies that route your cargo from the point of
origin, for example, Bombay, India, to your point of destination, for
example, Denver, Colorado. They book your cargo on different carriers,
rail, truck, air or sea. You want to chose preferably a US based
forwarder with a branch office in the city you want to ship from. That
can save you money if the forwarder here in the US can help track your
shipment as opposed to you having to contact the shipper/forwarder you
used in the country you shipped from.
The forwarder the United States can assist you in the entire process
from here. You can book and prepay the freight from here or he can
recommend a forwarder you should use in the country of origin; in some
cases this may be an affiliated forwarder or the forwarder here will
recommend a forwarder they have had a good working relationship with in
the city you intend to ship from. In both of these instances you will
have a better recourse should you have some problems. If you are forced
to use shippers-forwarders overseas, be alert that in many Third World
countries you may encounter a shipper whose name sounds like that of a
recognized worldwide forwarder but in reality his shingle is but that of
an imposter! Beware!
In essence, the freight forwarders will give you a freight quote for
your cargo, a so called routing order. They’ll book your air or ocean
cargo, place a Marine Insurance coverage on your goods, prepare all the
necessary shipping documents, even arrange for warehousing an route, if
necessary. In many Third World countries, freight forwarders typically
call themselves by the generic term “shippers” and often will also be
AITA travel agents, ready to sell you an airline ticket; some will also
operate a trucking service, or perhaps be involved even in manufacturing
and exporting of their own products. Once again, beware!
Good freight forwarders will advise you on which Sea Line or Airline to
use. They can save you money on your freight bill thus in turn lower you
product landed price. Other forwarders in many Third World countries,
however, may cost you more money than you anticipated - beware!
In any case, the freight forwarder here in the United States should
advise you on the best routing and carriers to use and warn you of
possible problems.Price quote in
import/export businessOK, you have found a product you want to
buy, received a sample in the mail, or found a source of supply overseas
and now you are standing in the manufacturer’s/exporter’s office or a
showroom and you just asked him the price of the product.
In import/export business, the price quoted reflects responsibility for
the movement of goods. It clearly delineates which expense is for the
account of the Buyer and which for the account of the Seller.
Based on the Revised American Foreign Trade Definitions, 1941, following
are some of the most common ways how price is quoted in the
import/export business.
* Ex (point of origin): price at a shop/showroom/warehouse/factory
* FOB (Free On Board) Named inland carrier at named inland point of
departure/shipping point
-FOB Mysore, India (Madras Express, Indian Airlines, Tamil Trucking)
-freight-collect to the buyer or buyer prepays freight
-Seller provides Clean B/L (Bill of Lading)
-Seller at Buyer's request assists in obtaining necessary documents
* FOB Named inland carrier at named point of Exportation.
-FOB Madras (means that the Seller pays for the cost of transportation
up to the port of embarkation)
* FOB Vessel & Named port of shipment
-FOB Madras, APL President Lincoln
-Seller to place goods On Board the vessel designated
* FOB Named inland point in the country of importation
-FOB Seattle
-Seller to pay all costs of landing - taxes, wharf fees, all costs of
Customs Entry, customs duties
* FAS Vessel & Named port of shipment: Free Along Side
-FAS President Lincoln, APL, Bombay, India
-Buyer is responsible for storage charges in a warehouse or on a wharf
* C & F (cost and freight) Named point of destination:
-C&F Seattle
-Seller to pay freight to destination, provides Clean B/L
-Buyer takes delivery from vessel at named point of destination
-Buyer pays insurance
* C. I. F. Named point of destination (cost, insurance and freight)
-CIF Seattle
* Ex dock (Named point of importation)
-Ex dock Seattle
-Seller agrees to pay all freight costs to place the goods on the dock
at the named place of importation
Please note, if you will be buying from village markets, cottage
industries or small dealers which may not be licensed exporters in a
particular country, you will be quoted typically on the bases of a cash
price that will not include cost of anything else, whether
transportation or any necessary documents you may need to take the
product out of that country. Thus before you’ll decide to buy, make sure
you check with the shippers in that country what extra expenses you may
incur, if any difficulties may arise as a result of you buying from
unlicensed exporters.
Sales Contract
Sales contract is an instrument meant to be more psychological than
enforceable although it could be in countries where you may stand a
legal chance of having your case heard in court and a just decision may
be expected. Your chances of succeeding in such a legal battle will be
increased if you’re a recognized business. When you may be doing
business in a Third World country, however, where courts are notoriously
slow in acting on cases in front of them, not to mention possibly
corrupt, please do understand that this contract is but an agreement
between you, the Buyer, and the Seller for your mutual benefit, meant to
discourage either one of you from breaching your agreement, knowing that
you had agreed on some issues of importance and to a mutual benefit.
Any issue which you may feel could result in a disagreement can be
addressed in this form. Namely, you, the Buyer, and the Seller can agree
on some things that could potentially become unclear later on in your
transaction and addressing the issue beforehand may prevent the other
party from negligence or from unduly forcing the responsibility on the
other party. For example:
-Decide what expenses will be for the account of the Buyer, and what for
the account of the Seller; up to which point/from which point Buyer or
Seller are responsible for movement of goods.
-Not having a clear Sales Contract specifying whose responsibility
starts and ends where may be the reason why shipments end up at portside
and buyer's broker may have to arrange for inland transport to final
destination. Example: your shipment arrives to Los Angeles instead of
all the way to Denver, the final destination; you, the buyer, has to
provide for transportation to Denver, the final destination.
-Decide on who pays if there are losses while the goods are in port.
-Decide on the method of the inland transport, namely, how do you want
your goods to go from the inland point of origin, where you purchased
the goods, to the seaport, the point of embarkation, and, how do you
want your goods to go from the coast to destination in the United States
on arrival, say from Los Angeles to Denver - by air, rail or truck?
-Decide who pays warehouse fees, unloading, reloading, and document
handling?
-Remember, Buyer is to obtain Marine Insurance, but Seller may do it for
him if asked!
There are other reasons for Sales Contract and will be mentioned below.Packing
In most western countries, freight
forwarders are freight forwarders and call themselves freight
forwarders. In the Third World, however, freight forwarders may also
call themselves "export agents, shipping agents, and packers." And, yes,
in those countries, everybody has a cousin in an export/shipping
business! For that simple reason and many other reasons (e.g.
notoriously low wages), a bribe or a baksheesh may be at times the only
way to get your goods safely home!
In any case, a good freight forwarder, alias shipper, can do the
following for you: get your goods packed, prepare your documents, and
book your cargo (truck, air, sea).
When it comes to packing, I recommend when you are just starting to ship
from a particular country and you have had no experience with the
shipper you use, be there when your cargo is being packed!
Freight forwarders charge you by weight/kilo if you ship by air and by a
cubic meter if you ship by sea. In a Third World country, if you may not
be there when they pack your cargo, you may get “over-packed” and thus
overcharged, meaning you’ll end up with four cubic meters instead of two
you estimated to be the volume of your purchases... which means your
landed price will be higher than you anticipated, calculated, thus
diminishing your potential profit.
Bill of
Lading (B/L) or Airway Bill (AWB)
Bill of Lading is a receipt for the goods
shipped by sea and Airway Bill is a receipt for goods shipped by air.
It’s an evidence of the carrier's obligation to transport the goods to
the port of destination. It shows the name of exporter, carrying vessel,
port of shipment/port of embarkation, final destination, consignee, and
party to be notified on arrival at destination.Commercial Invoice
and Packing List
Commercial invoice shows goods sold, unit
costs and quantity. Typically, it will be in US dollars but it can also
be written in a local currency.
There are two things you need to watch out for. Watch out for mistakes
in extensions and watch out for discrepancy against the packing list!
The fact that the invoice and the packing list may not match will be
enough for the US Customs to ask your broker for the shipment to be
moved to an inspection site where the customs officials then look at the
goods to assure themselves that the discrepancy is but a typing error.
In any case, the move to an exam site constitutes an additional expense,
not to mention a delay, and often results in potential damages that may
occur during the inspection.
Quota
Documentation
Quota is a quantitative restriction on
some imports, i.e. farm products, pharmaceuticals, glass products etc.
but most well-known products that are subject to a quota are garments
and textiles.
Beware - without Quota documentation attached with your shipment's other
documents, the goods will not be allowed to enter the United States!
You must do research through your Broker before you buy and also check
with the US Embassy/US Dept. of Commerce overseas the current status
and/or forthcoming changes to the quota regulations on specific products
you intend to import!
Do not buy merchandise unless you know you can get the necessary quota
documentation to accompany your shipment, otherwise your goods may sit
for months at your point of origin, the place from where you bought and
want to ship from into the United States!
Textile Visa
Textile visa is a certification of goods
belonging to a specific product category - i.e. pillows, table cloth,
blankets, etc. - as listed in the Harmonized Tariff Schedule. It is a
document that must be attached to your goods in order for your goods to
clear US Customs. The document is typically obtained by the seller, the
company/people you bought from, or by the shipper/freight forwarder if
you had bought from unlicensed exporters. They get the document for you
from the Trade Department of their country.
In the event, your goods arrive into the United States without the
necessary documentation, you won’t be able to clear US Customs and your
broker will have to contact the seller and/or even the necessary trade
office in the country of origin in order to obtain the necessary
document. Needless to say, the process may often take a few weeks to
accomplish all the while your merchandise will sit in a US Customs
bonded warehouse of a carrier that brought it into the United States, a
service for which you’ll pay storage charges that in turn will diminish
your anticipated profit. To avoid such a problem, make sure your
shipment will have the necessary document attached.Leather
Certificate
Similar to the textile visa, Leather
Certificate is an assurance of quality, a compliance to certain
standards for specific leather products. It is established by a mutual
agreement between the US and foreign governments. As in the case of the
textile visa, the absence of the document with your shipment will result
in extra delays and costs before you’ll be able to clear the US Customs.
Insurance
Airlines do cover the damages to your goods in transit and the insurance
coverage is worked into the costs of the airfreight charges, however,
they do not cover the freight charges incurred unless you buy an extra
insurance coverage. This means that if you have a loss due to damages to
goods shipped, the airlines will reimburse you for the invoice value of
the goods shipped but not for the freight charges you paid!
For your sea freight cargo, you are advised to purchase Marine
Insurance. Before you buy the insurance, check what is and what isn’t
covered! Make sure, for example, that the coverage is All Risk, in other
words that Civil Strife induced damages are covered should you be
importing from or transit through a potential war zone. In any case, buy
the insurance preferably from a US-based insurance company for in the
event of a claim, there are good chances you’ll probably never collect
if the policy was underwritten by an obscure insurance firm in some
Third World country.
Certificate of Origin or
Form A
Certificate of Origin or Form A is an evidence of a country of
manufacture.
In the early 1970s, the US Congress set up the GSP classification. GSP
stands for the Generalized System of Preferences. It was designed to
help scores of developing nations to speed up their economic development
by allowing their exports to enter the United Sates duty free. The only
requirement was that a particular country be first approved for the GSP
list of countries. To meet such a standard was not only based on the
economic criteria but also subject to meeting certain political
guidelines. That meant that even though a particular country could meet
the economic criteria of being but a poor developing nation, having a
communist government in power or being subject to some other social form
of instability such as civil war, prone to violence, or human rights
violations and similar manifestations of an unstable regime (perhaps
with unfavorable political connotations, for example being governed by
an oppressive military regime), it was not included on the list or
thrown out of the list.
If a country is on the GSP list, you, as an importer, can import goods
from that country duty free provided that your shipment is accompanied
with a Form A document. If, however, your shipment arrives without such
a document or the country loses the GSP classification while your goods
are in transit, you will have to pay duty for your goods according to
each category under which your goods are entered through the US Customs.
The only products, typically, that do not qualify for the duty free
exemption, regardless of the economic condition of the country of
origin, are garments and textile products.
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