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3 International transport; 1. Packaging and packing. 2. Insurance. 3. Maritime transport. 4. Air Transport. 5. Transport by train and road. 6. Quotation.

4 Packaging and packing; 1. Responsability of the exporter is that the packaging and packing is Good Enough for the Trip. An therefore is linked directly to the knowlegde the exporters has about the trip, which depends on the incoterm. The ones that might focus on this are transport company and insurance company. 2. Worldwide most of damage to the goods happens when manipulating. Lets remember some figures of our GAP; ( Now you can better undestand it is important to know who has the risk in each Incoterm; 25-30% of goods in China, related to cold chain get lost/damaged.

5 1. PACKING VS PACKAGING. Packaging vs packing; Packaging. It is very linked to marketing and innovation, more than to international transport, but a good packaging, will avoid also damages on the goods will being packed and transported.

6 Japanese market; 1. Japanese consumers are worried about spaces, due to small houses and small refrigeratos. 2. Logistics are worried about transport costs. Lets see innovation working with marketing and logistics at the same time; Square water melons. Used as a present in Japan. ( Very easy to grow, just put the baby water melon on a glass With the shape of an square )

7 And of course you have to phone the lawyer; 1. Each country have some special rules, specially for packaging. 2. The rules aims to safe ward consumers rights and security. 3. They differ from country to country. 4. Therefore in each country you have to check out; 1. National legislation for packaging and labeling. 2. Those rules will tell you about things like; a. The material of the packaging. For example; Bottles of water or other liquids. The material sometimes is not good for help. Plastic glasses when pouring hot liquids on it. b. Consumers shall have the right to compare prices. Therefore 75 cl, 50 cl,. So it is easy to divide and compare prices. c. Labels contents. d. Environmental friendly packaging. Tips, First, you might start by doing some field research, then ask lawyers. This is very related to homologation of products. CE in Europe, CCC in China.

8 . Packing; 1. Packing goods that are packaged already. ( FCL; Full container load/ LFC; Less than container load.) 2. Packing goods that are not packaged. Raw materials, liquids, etc.

9 Pallets and containers 1. Standardization in order to easy international transport. 2. As for pallets the are different materials and measures depending on the country and sector of activity. There are some ISO rules for standardization. 3. As for containers, there are standardize by ISO ISO Length/height codes. ISO type codes. 4. I give you the references, they are uploaded in the platform, but keep in might that normally what you shall focus on is giving the transport agency the following measures; Volume/ Weight/ value of the goods. 5. Remember always FCL/LFC

10 . Travel insurance; 1. Can not make an insurance on a value higher than the real. 2. Can not make a double insurance covering same thing and same risk twice. 3. As for maritime transport: ( Same methodology for each transport ) Most commonly used are the ICC ( Institute of London Underwriters ) They have 3 types of insurance. Type A, B and C. A are the ones that cover more risks, C are the ones that cover less risk. Remember Incoterms.

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12 . International Transport; 1. Maritime. 2. Air. 3. Road. 4. Train. 5. Intermodal/multimodal

13 International transport; Sea freight Advantages o Ideal for transporting heavy and bulky goods o Suitable for products with long lead times o Cheap for large volumes Disadvantages o Very slow, longer lead/delivery times o Difficult to monitor exact location of goods in transit Air freight o Fastest for long distance deliveries o Customer perception is high, easy for order fulfilment o Very safe mode of transport o Reduces lead time on suppliers o Improved service levels o Expensive vs. other modes o Unsuitable for some goods, Rail Freight o Capacity o Cost effective o Safe mode of transport o Suppliers/customers are not always located near a rail freight depot Road freight o Cost effective (???, depends on the country ) o Fast delivery, Ideal for short distances o Ideal for transporting perishables (eg fruit and vegetables) o Easy to monitor location of goods o Easy to communicate with driver o Ideal for sending by courier shortages to customers o Transport subject to traffic delays o Transport subject to breakdown o Goods susceptible to damage through careless driving o Bad weather o Driving regulations can cause delays o Pollutes the environment o Less safe than alternatives o Can be expensive where there are congestion or road charges

14 Maritime transport; 1. We are going to focus on documentation and its relation with Means of payment, Contract, etc.. 2. Bill of lading. It is; a. Transport contract. b. Probe of delivery of goods. c. Probe of insurance if contracted. d. Invoice. e. Value at customs. But what is most important is that is a title of property on the goods, and it can be endorse to others. What is the difference with Sea waybill? This latest is not a title of ownership of the goods, therefore no need to have it physically for endorsement, so it is most commonly use by EDI. Another really important thing is CLEAN OR UNCLEAN 3. Types of Bill of lading; a. Order bill of lading ( Negotiable ) b. Bearers bill of lading ( Ownership= bearer of the document ) c. Surrender bill of lading. ( Mean of payment ) 4. Hague rules for maritime transport.

15 Transport Prices Calculate INCOTERM Price E Price F Price C ( Without I) C ( With I ) D ( Less DDP ) DDP Product + Packing and packaging Clear goods for export National transport International transport International transport insurance National transport on destination Custom clearence for import Ask for quotation Product INCOTERM INSURANCE Currency Define Weight Height Price Indicate places. Yes or not Indicate Currency to use for paying transport Multimodal/ Intermodal contract How to read quotation for ordinary transport They will tell you if it is They will tell you Cost for each kind of transport Multimodal/intermodal trasnport They will give Taxes of airport/port/etc Price per waybills ( number of copies ) Currency adjustments Extra fuel adjustments Insurance FCL/LFc

16 Transport Prices Ask for quotation of special goods Product INCOTERM INSURANCE Currency Define Drawings Dimensions Price Indicate places. Yes or not Indicate Currency to use for paying transport Multimodal/ Intermodal contract How to read quotation for special transport Cost of handling the goods at arrival Stockage of goods Handling from stockage to Shipment Uploading to shipment Handling on board They will also add Cost for each kind of transport Multimodal/intermodal trasnport They will give Taxes of airport/port/etc Price per waybills ( number of copies ) Currency adjustments Extra fuel adjustments Insurance

17 Air freight; 1. The document is call Air Way Bill. 2. It is not negotiable like the Bill of lading. 3. It is the contract/ Invoice/ Custom value/ probe of delivery. 4. IATA rules. Road freight; 1. TIR Convention. Convention on International Transport of Goods Under Cover of TIR Carnets. 2. It allows goods to be transport on sealed containers in order not to be stopped at customs, while they are being transported by road by different countries. 3. It might be use in intermodal transport when part of the transit is by road. 4. CMR convention. (Convention on the Contract for the International Carriage of Goods by Road). CMR waybill. 5. General name of document; Road waybill Rail freight; 1. TIF convention for customs ( same idea as TIR but for rail transportation) 2. CIM convention and document. 3. Be aware that from country to country trains might have to chain buggies, that will be charge on your invoice. 4. General name of document; Rail waybill.

18 Intermodal; 1. Intermodal; the transport agency is in charge of transporting the goods using different means of transport; but it is not responsible for all the transits. Normally only for the maritime. 2. There are especial transport documents; Combined transport waybill. FCR. Forwarding agents certificate or receipt. FBL. Forwarders Bill of lading. ( When main mean of transport is maritime ) 3. Rules under FIATA. ( International association of forwarders ) 4. Intermodal versus multimodal. Intermodal, there is a main mean of transport. Only responsibility while the goods are on that main mean of transport. When dealing with combined mean of transport, you have to check, the document you are going to be supplied. Also the convention under which your goods are going to be ruled. Normally the document issued is a FIATA multimodal waybill. 5. When using combined transport check the document that will be issued to you.

19 Means of payment; These can be combined with Credit risk insurance. There 2 types of risk to be taken into account; Commercial risk/ Political Risk

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21 Payment of open account; 1. It means that goods and documents are delivered before payment is done. Normally from 30 to 90 days in advanced. 2. Normally the payment is done by bank transfer. 3. It does not cover commercial or political risk. 4. Exporter often contracts a export credit insurance. 5. Easy to get clients.

22 Tips; Bills/ Notes; 1. Take into account that each country has each regulations regarding; Tranfering money to outside the country. Travelling with Notes/bills. Sending notes/bills. 2. Notice on airports, that above some amounts you must fullfilled some documentation. Both when going out your country, and when coming into the other country. 3. You must check your national regulations and also the one of the country of the other Party.

23 Open account back by; 1. Backed by; Demand guarantee or Standby letter. They are backed up guarantees, not especially design for credits. Very often you as performance guarantee, but also can be used for financial obligation. Do not get confused with documentary credit. ( they are specially design for credit on exports activities ) 2. There is plenty of legal confusion when referring to demand guarantee, but most countries treat it as same legal status as Standby letter. 3. If you follow ICC model of sales of contract, this problem disappears, because if you read Art 5.5 of general conditions, it refers to the rules that shall govern. 4. You have this rules in ICC web page. 5. Most important is that the are FIRST DEMAND. Therefore in the Demand guarantee shall appear everything that is related with the compliance of the parties. Lets see one example.

24 Documentary collections; 1. Documents against payment / Documents against acceptance. 2. Importer needs the goods documents in order to clear goods at customs, and get the goods from the transport agency. 3. Sometimes, exporter uses a courier and sends this documents directly to the importer. 4. BUT, sometimes, those documents are sent to a bank in the country of the importer. 5. Then, if the importer wants to get the goods that have arrived to destination, according the INCOTERM, then he must go to the bank and do as follows; Document against payment; Pay the goods, and then the bank give him the documents for getting the goods. Documents against acceptance; of a financial document, like for example a bank guarantee, or other financial systems that we are not going to focus on them because it depends on the actual legislation of each party. The idea, is that the exporters gets a guarantee of payment, once goods have already arrived to destiny before the exporter can get the documents to clear or to take received the goods from the transport agency. It is a good way to balance the security among parties. It is easier and cheaper that the documentary credit. There is a problem; Goods have already been sent! What if buyers says now I do not want them unless you give me a discount. Also remember; Clean not Clean document of transport.

25 Documentary credit; Irrevocable; It means once open, It will remain. Be careful it must say so. Confirmed; It shall be confirmed by a Bank of a country without political risk. Partial shipments and Transshipments: Unless it is somethign really specific, always marked allowed, because it is impossible to control what transport agency will do with it.

26 Documentary credit; NOTE; Important: Documents to be handed at the bank by the exporters shall be specified in the documentary credit. Types of documentary credit; REVOLVING: It is a simple L/C for multi-shipments over a long period. For a fixed amount of money or for a period of time or an amount per a fixed installment over a period of time. It can be cumulative or not cumulative. BACK TO BACK: It Is normally used to pay subcontractors. There is a principal documentary credit, that is used to open a second documentary credit. The sellers pays its subcontractors with the principal L/c. RED CLAUSE/GREENCLAUSE. Red clause; Seller can use part of the money before delivering of goods. Dangerous. Green clause; Seller can use part of the money if handing documents that probe part of the delivery of goods.

27 Credit insurance/forfaiting/factoring; Credit insurance 1. Political risk; Only special, normally governmental companies offer services for this type of risk. Normally they cover up to 95% of the amount of the contract. 2. Commercial risk; Either public or private insurance company can offer these services. They normally cover about 90% of the total amount of the contract. Factoring 1. Contract between exporter and the bank. 2. Exporter must inform in the invoice that the invoice is submitted to Factoring. 3. Bank will take the money out of Importers bank account/ or find the way to do so. 4. There are 2 kind of factoring. Factors that covers commercial risk. But be aware, if importer proves that exporter did not fulfilled contractual requirements then bank will not cover the risk. Factors that do not cover commercial risk. 5. Normally expensive, but also they offer a great administrative work, and they also analyse your potential clients beforehand. 6. Sometimes is difficult to get this kind of services, only countries like UK, etc have more chances.

28 Credit insurance/forfaiting/factoring; Forfaiting 1. Importer send to exporter financial documents as a promise of paying the price of the contract. It can be a guarantee, or other financial instruments. 2. The exporter sells this financial document to the bank. 3. The bank at its own risk will do teh proceedings to get paid by the importer by using those financial instrumets or rights to be paid. 4. Difficult to get. Not common. 5. Expensive.

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