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Kreigers presentation

  1. 1. Krieger Worldwide Exporting Click to edit Process Overview & Role of thestyle & Broker Master subtitle Forwarder
  2. 2. Export Seminar Series Export Transportation & Logistics
  3. 3. Shipping in America • No Customs regulations between states • Goods are moved easily from origin to destination • Our experience leads us to believe shipping outside the USA is the same
  4. 4. American Image of Shipping
  5. 5. International Shipping • There are more than 100 countries in the world • Each has its own export procedures • Each has its own import procedures • Despite the advertisements there is no simple quick-fix solutions
  6. 6. Quick Overview • Lets look at international shipping as a series of related steps • This is a simplified view and covers the basic process only
  7. 7. Origin to Port FACTORY INLAND TRANSPORT FORWARDER WAREHOUSE
  8. 8. Export FORWARDER WAREHOUSE CUSTOMS EXPORT CLEARANCE PORT OF LOADING
  9. 9. International Shipping ORIGIN PORT CARRIAGE DESTINATION PORT
  10. 10. Ocean Freight Options • FCL - Full Container Load • Also flat racks even those out of gauge • LCL - Less-than-Container Load also known as NVOCC • Bulk - like ores, grains, or oil • RORO – roll on roll off such as autos • Breakbulk – tractors, yachts, etc.
  11. 11. Containerized Ocean Freight FCL LCL Shipper loads & seals container transferred to carrier Container CFS receives and loads Container for NVOCC carrier truck for CFS container transferred to loads Shipper
  12. 12. Airfreight Options • Consolidation (HAWB) • Direct airfreight (MAWB) • Tendered as pieces • Tendered as shipping pallets • Tendered as ULD’s
  13. 13. Airfreight Rates • By weight • Generally the greater the weight the lower the rate per weight unit (LB/KG). • By size • Size is converted to weight on the basis of 165 cu.in. = 1 pound. • The consolidator or carrier will charge whichever yields the greater cost.
  14. 14. Advantages of Consolidation • The consolidator has lower costs based on contracts or on higher volumes • The consolidator is obtaining a lower rate per weight unit based on all the cargo moving on one MAWB. • The consolidator shares part of these benefits in the form of lower rates than direct shipments.
  15. 15. Role of Freight Forwarder • Usually arranges pickup from factory • Often acts as agent to file export clearance paperwork for seller • Selects carrier and makes booking • In airfreight freight forwarders are generally consolidators as well • Controls largest portion of costs
  16. 16. Additional Forwarder Services • Packing & labeling • Letter of credit or draft negotiation • Export documentation • Cargo Insurance
  17. 17. Arrival DESTINATION PORT (CFS) CONTAINER FREIGHT STATION
  18. 18. Import CFS CUSTOMS CLEARANCE DELIVERY
  19. 19. Broker as Coordinator Carrier Pier Customs Importer CFS Cashier Trucker Customs Broker Exam Inland Site Carrier
  20. 20. Role of the Customs Broker • Assist importer in classification (how duty rates are determined) • Prepare and file Customs documents • Coordinate paperwork between carrier, CFS, and delivery trucker • Arrange Bonds & Insurance • Delivery and more
  21. 21. Other Broker Services • Arrange inland delivery • Provide warehouse and distribution services • Assist with Customs compliance
  22. 22. Overview Freight Forwarder Broker Origin Carriage Destination Factory Origin Import Port Customs Warehouse Carrier Exam Export Destination Customs Port Inland Move Loading CFS Warehouse
  23. 23. Export Order Process Flow • Determine export controls for product • Determine transport requirements. • Quote. • Review/Process Order. • Book shipment. • Prepare documents. • Ship goods & file customs formalities. • Process banking documents L/C S/D.
  24. 24. Export Requirements • Is your commodity controlled—does it require a license? • ITAR • BIS (Bureau of Industry & Security) • Are you able to ship to that consignee or that country? • BIS • AES (Automated Export System)—filing your export declarations
  25. 25. Transport Requirements • Dangerous goods? • Refrigerated? • Oversize or overweight? • Perishable or fragile?
  26. 26. Transportation Control • If the seller has products with special conditions such as refrigerated, oversized, perishable, or dangerous goods the transportation arrangements will normally be more successful if the seller arranges them rather than the buyer’s freight forwarder.
  27. 27. Quote • Determine the applicable INCOTERM • Always ask for packing and document requirements to be specified by the buyer (this is your insurance card). • Always stipulate your conditions for payment.
  28. 28. Review/Process Order • Have payment conditions been met? • Can shipping terms/conditions be met? • Can document requirements be met? • Process order. • Ensure order and documents meet conditions set by the parties.
  29. 29. Book Shipment • Make sure all requirements/conditions are passed to carrier and confirmed. • Ensure special conditions such as temperature control, dangerous goods, etc. are passed and confirmed.
  30. 30. Documentation • Standard documents are: • Commercial invoice stating INCOTERM with detailed description of goods. • Packing list showing cartons by number and contents of each numbered carton. • Shipper’s letter of instruction and/or Export Declaration (to forwarder only). • Other documents as specified by the buyer.
  31. 31. Shipping • Ensure that the goods are ready and meet the conditions of the order and the booking. • Follow up with the carrier to ensure they are picked up. • Ensure that the forwarder or carrier is filing AES (Automated Export System) on your behalf and obtain a copy.
  32. 32. Banking Documents • If you are using your own forwarder it is more expeditious to have them file your letter of credit or sight draft documents. • If you are using the client’s forwarder it is recommended that you complete the drafts and present them to the bank.
  33. 33. Export Issues • Duty Drawback • Goods imported then re-exported • Fungible items • Complex—may not be worth the effort • Export Controls • Controversial Export • Difficult to understand Licenses
  34. 34. Carnet • Avoids duties and taxes in each country goods pass through • Covers many major countries • Covers: • Tools of the trade • Demonstration equipment • Samples not for sale or distribution
  35. 35. FTZ Benefits • Goods outside Customs Territory of US • Tariff shifts possible • Delays duty payment • Export without drawback headaches • Fix problematic goods • Reduce MPF
  36. 36. Who Arranges All This? • The INCOTERMS agreed to between the buyer and seller specifies which party is responsible for each step • Choosing the appropriate INCOTERM has very important benefits FO CF DD CI EX B R W U F
  37. 37. INCOTERMS 2000 • Spells out obligations of seller for each term of sale • Spells out obligations of buyer for each term of sale
  38. 38. INCOTERMS in Export • EXW (ex-works) • FOB is commonly misused • FCA (free carrier) • CFR (cost and freight to) • CIF (cost, insurance, & freight to) • DDU (delivered, duty & taxes unpaid) • DDP (delivered duty paid—taxes to be specified
  39. 39. FOB – Free On Board • Applies only to ocean or inland cargo • Seller: • Obtains licenses to export • Performs export customs formalities • Takes risk until good pass ships rail • Pays all costs up to goods passing ships rail
  40. 40. FOB Challenges • Loading costs are difficult to control. • The hand-off of goods from buyer to seller is complicated. • Typically applies to large cargo with special loading requirements such as yachts and large construction equipment.
  41. 41. EXW – Ex Works • Exporter places goods at their premises for buyer to pick up. Buyer takes all risks, performs all customs formalities, obtains all licenses, provides labor to load goods, etc.
  42. 42. EXW Challenges • Often conflicts with US export customs regulations as seller is the PPI. • Impractical loading as seller normally cannot permit buyers contractor on property to load without waivers. • Buyer is free to sell the merchandise anywhere—even in seller’s own market.
  43. 43. FCA – Free Carrier • Seller has the obligation to deliver the goods and documents to carrier selected by buyer with the appropriate licenses and customs formalities for export.
  44. 44. FCA Challenges • Seller must train multiple buyer’s carriers. • Multiple truck pickups. • Buyer staff must learn multiple carrier’s documents. • Scapegoating. • Buyer bears risk of refused shipment.
  45. 45. CFR – Cost & Freight • Seller’s invoice includes cost and freight to destination. • Seller arranges transportation. • Seller obtains export licenses and performs customs formalities. • Buyer takes all risks of transportation.
  46. 46. CFR Points • Seller uses forwarder who knows product and keeps shipping simple. • Seller can use forwarder to file customs formalities with confidence. • Seller is still at risk if buyer refuses shipment.
  47. 47. CIF – Cost, Ins. & Freight • Similar to CFR except that seller takes the risk and obtains insurance to cover the shipment to destination.
  48. 48. CIF Points • Seller uses forwarder who knows product and keeps shipping simple. • Seller can use forwarder to file customs formalities with confidence. • Seller’s risk for loss, except refusal, is covered by insurance.
  49. 49. DDU – Delivered Duty Unpaid • Seller is responsible for transportation arrangements and costs to the named place including export customs formalities. • Buyer is responsible for customs clearance arrangements and costs as well as unloading costs at destination.
  50. 50. DDU Points • Seller is at risk for storage charges resulting from buyer’s agent speed of customs clearance. • As the hand off is overseas from seller’s agents to buyers agents then back to seller’s agents and finally to buyer there are many opportunities for failure, cost, and liability
  51. 51. DDP – Delivered Duty Paid • Seller is responsible to deliver the goods to the named place customs cleared without risk to the buyer. • Seller arranges for export formalities • Seller arranges transportation • Seller arranges insurance • Seller arranges import clearance and pays duties
  52. 52. DDP Challenges • Seller must be able to legally file entry in seller’s name in a foreign country. If seller is unable to do so then buyer may insist on using their broker but seller still remains liable for service and costs. • Seller must have assets in place to comply with the foreign country’s import regulations.
  53. 53. More DDP Challenges • Seller is at risk for changes in duty and import requirements.
  54. 54. Can I Import? A DDP Issue • Trade sanctions Iran • Special limitations • Other government agencies FDA • Additional documents DO T VISAS USD EP A A
  55. 55. Forwarders – Who Benefits? For The Exporter For The Importer • Reduces workload • Controls carrier • Helps reduce selection – cost inland costs and transit time • Can assist in • Provides preparing and information about filing documents the location of • Familiarity with the goods product & special
  56. 56. Brokers – Who Benefits? For Exporters For Importers • Exporters • Legally liable for generally derive the documents no services or filed by brokers benefits from • Plays a vital role brokers in coordinating all parties at arrival
  57. 57. How Do Forwarders Profit? • Largest revenue source is freight profits • Trucking and insurance provides some additional revenue • Small amounts of revenue are from service fees
  58. 58. How to Brokers Profit? • Charges fees based on work performed • Make additional profit from providing insurance, trucking, or warehousing services
  59. 59. Typical Order of Costs 1. Cost of goods 2. Transportation cost 3. Warehousing & distribution 4. Duties 5. Insurance & bonds 6. Customs broker fees
  60. 60. Do The Math • Importers use Landed Cost Analysis to calculate the true cost • Exporters use only that portion of the Landed Cost Analysis that applies to their INCOTERM
  61. 61. Planning Is Key • Know the transport needs of your goods • Is export permitted? • Is import permitted? • Know the documentation requirements for your goods
  62. 62. Where Do I Get Advice? • Customs brokers • Freight forwarders • Government Export Promotion Agencies • Logistics consultants
  63. 63. Customs-Trade Partnership Against Terrorism (C-TPAT)
  64. 64. Brief History In 1965, Mr. Norman Krieger opened his first Customs brokerage office in downtown Los Angeles. Over the years, the company has grown from two employees to over 100. Today, his son Robert, is the President of Krieger Worldwide.
  65. 65. Thank You Click to edit Master subtitle style Gary Stratton

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