2012OPTIONS ON EXPORT FREIGHT HEMANSHI M. BHARMANI HR SPECALIZATION 12/12/2012
OPTIONS ON EXPORT FREIGHTIntroduction: Export Procedure:How to Export – 1. Golden Rule: In order to be successful in exporting one must fully research its markets. No one should ever try to tackle every market at once. Many enthusiastic persons bitten by the export bug, fail because they bite off more than they can chew. Overseas design and product requirements must be carefully considered. Always sell as close to the market as possible. The fewer intermediaries one has the better, because every intermediary needs some percentage for his share in his business, which means less profit for the exporter and higher prices for the customer. All goods for export must be efficiently produced. They must be produced with due regard to the needs of export markets. It is no use trying to sell windows which open outwards in a country where, traditionally, windows open inwards. 2. Sell Experience: If a person cannot easily export his goods, may be he can sell his experience. Alternatively, he can concentrate on supplying goods and materials to exporters who already have established an export trade. He can concentrate on making what are termed own brand products, much demanded by buyers in overseas markets which have the manufacturing know-how or facilities.
3. Selling in Export: In todays competitive world, everyone has to be sold. The customer always has a choice of suppliers. Selling is an honorable profession, and you have to be an expert salesman. 4. On-Time Deliveries: Late deliveries are not always an exporters fault. Dock strikes, go-slows, etc. occur almost everywhere in the world. If one enters into export for the first time, he must ensure of fast and efficient delivery of the promised consignment. 5. Communication: Communication internal and external must be comprehensive and immediate. Good communication is vital in export. When you are in doubt, pick up the phone or email for immediate clarification. 6. Testing Product: The risk of failure in export markets can be minimized by intelligent use of research. Before committing to a large-scale operation overseas, try out on a small scale. Use a sample test, and any mistakes can then be corrected without much harm having been done. While the test campaign may appear to cost more initially, remember that some of the cost will be repaid by sales, so that test marketing often turns out to be cheaper. 7. Approach: If possible some indication of the attitudes towards the product should be established, like any sales operation. Even if the product is successful, to obtain reactions from the customer.Preliminaries for Starting Export Business: • Setting up an appropriate business organization. • Choosing appropriate mode of operations • Naming the Business • Selecting the company • Making effective business correspondence • Selecting the markets • Selecting prospective buyers
• Selecting channels of distribution • Negotiating with prospective buyers • Processing an export order • Entering into export contract • Export pricing and costing • Understanding risks in international tradeRegistrationRegister with Export Promotion CouncilDispatching SamplesAppointing AgentsSpecimen Copy of AgreementAcquire an Export LicenseAcquire Export Credit InsuranceArranging FinanceRates of InterestUnderstand Foreign Exchange Rates & Protect Against Their Adverse MovementForward ContractsProcuring/Manufacturing Goods for Export & Their Inspection by GovernmentAuthoritiesLabeling, Packaging, Packing & Marking GoodsNew Excise Procedure
Export Freight :Freight (or Cargo) is goods or produce transported, generally for commercial gain,by ship or aircraft, although the term is now extended to intermodal train, van ortruck. In modern times, containers are used in most long-haul cargo transport.TRANSSPORTATION TYPES :In the world of international trade, there are various forms of transportation thatyou can turn to get your products from South Africa to wherever the productneeds to go. These transportation types are the following:A. Sea freightB. Air freightC. Rail freightD. Road freightE. River freightSea freight and air freight are perhaps the two most common forms oftransportation for getting products from South Africa to distant markets in NorthAmerica, Europe, Asia and elsewhere.Road haulage and rail freight are more common within the local market in orderto get products from inland cities such as Johannesburg, Pretoria andBloemfontein to the coast. Of course, road haulage and rail links are importanttransportation alternatives for exports into Africa.
Similarly, road and rail are also likely to be important forms of transportationwithin the target market (say Australia) in order to get the goods from theincoming port to the final destination (be it a warehouse or factory). A. MARINESeaport terminals handle a wide range of maritime cargo. 1. Automobiles are handled at many ports and are usually carried on specialized roll-on/roll-off ships. 2. Break bulk cargo is typically material stacked on pallets and lifted into and out of the hold of a vessel by cranes on the dock or aboard the ship itself. The volume of break bulk cargo has declined dramatically worldwide as containerization has grown. One way to secure break bulk and freight in intermodal containers is by using Dunnage Bags. 3. Bulk cargo, such as salt, oil, tallow, and scrap metal, is usually defined as commodities that are neither on pallets nor in containers. Bulk cargoes are not handled as individual pieces, the way heavy-lift and project cargoes are. Alumina, grain, gypsum, logs and wood chips, for instance, are bulk cargoes. 4. Neo-bulk cargo comprises individual units that are counted as they are loaded and unloaded, in contrast to bulk cargo that is not counted, but that are not containerized. 5. Containers are the largest and fastest growing cargo category at most ports worldwide. Containerized cargo includes everything from auto parts, machinery and manufacturing components to shoes and toys to frozen meat and seafood. 6. Project cargo and the heavy lift cargo include items like manufacturing equipment, air conditioners, factory components, generators, wind turbines, military equipment, and almost any other oversized or overweight cargo which is too big or too heavy to fit into a container. B. AIR
Air cargo, commonly known as air freight, is collected by firms from shippers and delivered to customers. Aircraft were first used for carrying mail as cargo in 1911. Eventually manufacturers started designing aircraft for other types of freight as well. There are many commercial aircraft suitable for carrying cargo such as the Boeing 747 and the bigger An-124, which was purposely built for easy conversion into a cargo aircraft. Such large aircraft employ quick-loading containers known as Unit Load Devices (ULDs), much like containerized cargo ships. The ULDs are located in front section of the aircraft. Most nations own and utilize large numbers of cargo aircraft such as the C- 17 Globemaster III for airlift logistic needs.C. TRAIN Trains are capable of transporting large numbers of containers that come from shipping ports. Trains are also used for the transportation of steel, wood and coal. They are used because they can carry a large amount and generally have a direct route to the destination. Under the right circumstances, freight transport by rail is more economic and energy efficient than by road, especially when carried in bulk or over long distances. The main disadvantage of rail freight is its lack of flexibility. For this reason, rail has lost much of the freight business to road transport. Rail freight is often subject to transshipment costs, since it must be transferred from one mode of transportation to another. Practices such as containerization aim at minimizing these costs. Many governments are currently trying to encourage shippers to use trains more often because of the environmental benefits.
D. ROAD Many firms, like Parcelforce, FedEx and R+L Carriers transport all types of cargo by road. Delivering everything from letters to houses to cargo containers, these firms offer fast, sometimes same-day, delivery. A good example of road cargo is food, as supermarkets require deliveries every day to keep their shelves stocked with goods. Retailers of all kinds rely upon delivery trucks, be they full size semi trucks or smaller delivery vans.SHIPMENT CATEGORISE:Freight is usually organized into various shipment categories before it istransported. An items category is determined by: the type of item being carried. For example, a kettle could fit into the category household goods. how large the shipment is, in terms of both item size and quantity. how long the item for delivery will be in transit.Shipments are typically categorized as household goods, express, parcel, andfreight shipments: Household goods (HHG) include furniture, art and similar items. Very small business or personal items like envelopes are considered overnight express or express letter shipments. These shipments are rarely over a few kilograms or pounds and almost always travel in the carrier’s own packaging. Express shipments almost always travel some distance by air. An envelope may go coast to coast in the United States overnight or it may take several days, depending on the service options and prices chosen by the shipper. Larger items like small boxes are considered parcels or ground shipments. These shipments are rarely over 50 kg (110 lb), with no single piece of the
shipment weighing more than about 70 kg (154 lb). Parcel shipments are always boxed, sometimes in the shipper’s packaging and sometimes in carrier-provided packaging. Service levels are again variable but most ground shipments will move about 800 to 1,100 kilometres (497 to 684 mi) per day. Depending on the origin of the package, it can travel from coast to coast in the United States in about four days. Parcel shipments rarely travel by air and typically move via road and rail. Parcels represent the majority of business-to-consumer (B2C) shipments. Beyond HHG, express, and parcel shipments, movements are termed freight shipments.Shipping costsOften, an LTL shipper may realize savings by utilizing a freight broker, onlinemarketplace or other intermediary, instead of contracting directly with a truckingcompany. Brokers can shop the marketplace and obtain lower rates than mostsmaller shippers can obtain directly. In the LTL marketplace, intermediariestypically receive 50% to 80% discounts from published rates, where a smallshipper may only be offered a 5% to 30% discount by the carrier. Intermediariesare licensed by the DOT and have requirements to provide proof of insurance.Truckload (TL) carriers usually charge a rate per kilometre or mile. The rate variesdepending on the distance, geographic location of the delivery, items beingshipped, equipment type required, and service times required. TL shipmentsusually receive a variety of surcharges very similar to those described for LTLshipments above. In the TL market, there are thousands more small carriers thanin the LTL market. Therefore, the use of transportation intermediaries or brokersis extremely common.Another cost-saving method is facilitating pickups or deliveries at the carrier’sterminals. By doing this, shippers avoid any accessorial fees that might normallybe charged for liftgate, residential pickup/delivery, inside pickup/delivery, ornotifications/appointments. Carriers or intermediaries can provide shippers with
the address and phone number for the closest shipping terminal to the originand/or destination.Shipping experts optimize their service and costs by sampling rates from severalcarriers, brokers and online marketplaces. When obtaining rates from differentproviders, shippers may find quite a wide range in the pricing offered. If a shipperuses a broker, freight forwarder or other transportation intermediary, it iscommon for the shipper to receive a copy of the carriers Federal OperatingAuthority. Freight brokers and intermediaries are also required by Federal Law tobe licensed by the Federal Highway Administration. Experienced shippers avoidunlicensed brokers and forwarders because if brokers are working outside the lawby not having a Federal Operating License, the shipper has no protection in theevent of a problem. Also, shippers normally ask for a copy of the brokersinsurance certificate and any specific insurance that applies to the shipment.A) Following are the steps involved in the movement of shipment by road andstuffing of shipment in container is done at CFS, port:1. Transfer of cargo into truck2. Storage of cargo in truck3. Road (truck) journey4. Breaking out of cargo from truck5. Transfer of cargo from truck to storage point/shed/yard in CFS6. Unpacking for customs examination7. Repacking for customs examination8. Consolidation of cargo according to destination9. Stuffing of cargo in the container10. Locking and sealing of container11. Loading of container on truck
12. Transportation of loaded container to container yard in port13. Unloading of container in container yard in port14. Stacking of container tin container yard in port15. Loading of container on truck to move container alongside ship16. Truck journey from container yard to alongside ship, i.e., Quay17. Loading of container from truck to cellular hold of ship18. Sea voyageB) Following are the steps involved in the movement of factory stuffed FCLshipment container:1. Central excise clearance2. Transfer of cargo into container in presence of Central Excise Inspector3. Stowage of cargo in container4. Central excise sealing5. Loading of container on truck6. Road journey7. Unloading of container from truck and storage/stacking of container inbuffer yard in CFS.8. Customs clearance/sealing of container9. Loading of container on truck10. Transportation of loaded container to container yard in port11. Unloading of container in Container Yard in Port12. Stacking of container in Container Yard in Port
13. Loading of container on truck to move container alongside ship14. Truck journey from Container Yard to alongside ship i.e., Quay.15. Loading of container from truck to cellular hold of ship16. Sea voyageFactory stuffing serves certain advantages over CFS stuffing. It reduces multiplehandlings of packages/cases, etc., thus reducing labour cost and material handlingequipment hiring cost. Further, it also reduces risk related to loss or damage dueto theft, mishandling.C) Following are the steps involved in the movement of shipment by road and railand stuffing done at ICD:1. Transfer of cargo into truck2. Stowage of cargo in truck3. Road journey4. Breaking out of cargo from truck5. Transfer of cargo from truck to shed/place of examination in ICD6. Unpacking for customs examination7. Repacking after Customs examination8. Consolidation (in case of LCL)9. Stuffing of cargo in container10. Locking and sealing of container11. Loading of container on flatbed wagon12. Rail journey
13. Unloading of container from flat bed wagon and storage of container incontainer yard in port.14. Loading of container on truck to move container alongside ship.15. Truck journey from container yard to quay.16. Loading of container from truck to cellular hold of ship17. Sea voyageINCOTERMS 2012INCOTERMS are a set of three-letter standard trade terms most commonly usedin international contracts for the sale of goods. It is essential that you are awareof your terms of trade prior to shipment. EXW – EX WORKS (… named place of delivery)The Seller’s only responsibility is to make the goods available at the Seller’spremises. The Buyer bears full costs and risks of moving the goods from there todestination. FCA – FREE CARRIER (… named place of delivery)The Seller delivers the goods, cleared for export, to the carrier selected by theBuyer. The Seller loads the goods if the carrier pickup is at the Seller’s premises.From that point, the Buyer bears the costs and risks of moving the goods todestination. CPT – CARRIAGE PAID TO (… named place of destination)The Seller pays for moving the goods to destination. From the time the goods aretransferred to the first carrier, the Buyer bears the risks of loss or damage. CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination)The Seller pays for moving the goods to destination. From the time the goods aretransferred to the first carrier, the
Buyer bears the risks of loss or damage. The Seller, however, purchases the cargoinsurance. DAT – DELIVERED AT TERMINAL (… named terminal at port or place of destination)The Seller delivers when the goods, once unloaded from the arriving means oftransport, are placed at the Buyer’s disposal at a named terminal at the namedport or place of destination. “Terminal” includes any place, whether covered ornot, such as a quay, warehouse, container yard or road, rail or air cargo terminal.The Seller bears all risks involved in bringing the goods to and unloading them atthe terminal at the named port or place of destination. DAP – DELIVERED AT PLACE (… named place of destination)The Seller delivers when the goods are placed at the Buyer’s disposal on thearriving means of transport ready for unloading at the names place of destination.The Seller bears all risks involved in bringing the goods to the named place. DDP – DELIVERED DUTY PAID (… named place)The Seller delivers the goods -cleared for import – to the Buyer at destination. TheSeller bears all costs and risks of moving the goods to destination, including thepayment of Customs duties and taxes.