Post on 03-May-2018
transcript
J.J. SchultzLogistics & Supply Chain Columbus State
basics of International
Export Logistics
J.J. Schultz, Lead Faculty Columbus State
Community College
International
Logistics
• Excellent time to Export
– Favorable currency value of the US dollar
– Strong international interest in US products
– Export barriers & restrictions have been dropping over the past 10 years
– Ample logistics to move products overseas
– Many government programs designed for Exporting
J.J. Schultz, Lead Faculty Columbus State Community
College
International
Logistics
There are tremendous logistics activities
associated with
goods that are
sold across
international
boundaries.
J.J. Schultz, Lead Faculty Columbus State Community
College
International
Logistics
• Key Points:
1) Terms of Contract (read: secure good legal counsel)
2) Know what you can and cannot export, to whom, where, when and how (see above)
3) Understand currency fluctuations (hedging)
4) Cultural Aspects: their national holidays, customs &
traditions
5) Bottom Line: There is clear risks, but doing your homework, the rewards are high
J.J. Schultz, Lead Faculty Columbus State Community
College
International
LogisticsThings to consider
There are specific export restrictions from the USA including bans on:
• Certain countries
• Certain individuals
• Certain groups
• As well as certain products
You are required to know these….J.J. Schultz, Lead Faculty Columbus State Community
College
• Product categories under certain restrictions include:
– Munitions
– Software
– Hardware
– Technology
– Information
International
Logistics
J.J. Schultz, Lead Faculty Columbus State Community
College
Influences on
International Logistics
–Restrictions on international logistics can take a variety of forms
• Tariffs
• Nontariff barriers
–Import quota
• Embargoes
J.J. Schultz, Lead Faculty Columbus State Community
College
Influences on
International Logistics
• Economic factors
– Currency fluctuations
– Market size for your product
– Economic integration between the USA and export country
J.J. Schultz, Lead Faculty Columbus State Community
College
Influences on
International Logistics
• Cultural factors
– Religion
– Values
– Rituals
– Beliefs
– Languages
• National holidays!
J.J. Schultz, Lead Faculty Columbus State Community
College
Beginning Dates for the
Chinese New Year, 2011-2018
J.J. Schultz, Lead Faculty Columbus State Community
College
Some of the Symbols Used
for Packing Export Shipments
J.J. Schultz, Lead Faculty Columbus State Community
College
International
Documentation
• Flow of documentation is as much a part of the main logistical flow as the flow of product
• Domestic shipments typically only require a couple pieces of documentation
• Export shipments typically require approximately 10 pieces of documentation
• In some extreme cases, trades can require more than 100 separate documents
J.J. Schultz, Lead Faculty Columbus State Community
College
International
Documentation
• Necessary documents are required at the point of importation
• Commonly used documents include:
– Certificate of origin
– Commercial invoice
– Shipper’s export declaration (SED)
– Shipper’s letter of instruction (SLI)
J.J. Schultz, Lead Faculty Columbus State Community
College
Terms of Sale –
The Devil is in the Details
• Terms of sale involves:– Determining when and where to
transfer the following between buyer and seller:• Physical goods
• Payment for the goods, freight charges, and insurance
• Legal title to the goods
• Required documentation
• Responsibility for controlling or caring for the goods in transit, example, livestock/dairy products
J.J. Schultz, Lead Faculty Columbus State Community
College
Terms of Sale - Incoterms
• Terms of sale for international shipments called Incoterms.
– The Incoterms rules (International Commercial terms) are:
• Pre-defined commercial terms widely used in international commercial transactions.
• Series of three-letter trade terms related to common sales practices
• Intended to clearly communicate & delineate the tasks, costs and risks associated with the transportation and delivery of goods.
• Use is accepted by legal authorities, buyers, and sellers worldwide
J.J. Schultz, Lead Faculty Columbus State Community
College
Terms of Sale
Incoterms 2014
EXW – Ex Works Seller makes
the goods available at its premises.
This term places the maximum obligation on the buyer and minimum
obligations on the seller.
The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included.
J.J. Schultz, Lead Faculty Columbus State
Community College
Terms of Sale
Incoterms 2014
FCA – Free Carrier Seller
hands over the goods, cleared for export, into the hands of the first carrier
CPT - Carriage Paid To Seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.
J.J. Schultz, Lead Faculty Columbus State
Community College
Terms of Sale
Incoterms 2014
CIP – Carriage and Insurance Paid to Seller pays for
carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
DAT – Delivered at Terminal Seller pays for carriage to the
terminal and assumes all risks up to the point that the goods are unloaded at the terminal.
J.J. Schultz, Lead Faculty Columbus State
Community College
Terms of Sale
Incoterms 2014
•DAP – Delivered at Place Seller pays for carriage and
assumes all risks prior to the point that the goods are ready for unloading by the buyer.
•DDP – Delivered Duty Paid Seller is responsible for
delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.
J.J. Schultz, Lead Faculty Columbus State
Community College
IncotermLoading on truck (carrier)
Export-Customs declarati
on
Carriage to port of
export
Unloading of truck in port of
export
Loading charges
in port of export
Carriage to port of
import
Unloading charges in port of
import
Loading on truck in port of
import
Carriage to place
of destinati
on
Insurance
Import customs
clearance
Import taxes
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FCA Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FAS Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FOB Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer
CFR Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer
CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Seller Buyer Buyer
DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer
CPT Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer
DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
CIP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Duties of buyer/seller according to
Incoterms 2010
J.J. Schultz, Lead Faculty Columbus State
Community College
Additional
Terms
• Demurrage and Detention
– Demurrage is a penalty payment made to the railroad for keeping a railcar beyond the time when it should be released back to railroad
– Detention is the term used in the trucking industry
• Routing
– Process of determining how a shipment will be moved between consignor and consignee
J.J. Schultz, Lead Faculty Columbus State
Community College
Methods of Payment
• Methods of payment refer to the manner by which a seller will be paid by a buyer.
• Much more challenging in international logistics vs. domestic logistics
• Four methods of payment include:
– Cash in advance
– Letters of credit
– Bills of exchange
– Open account
J.J. Schultz, Lead Faculty Columbus State Community
College
Methods of Payment
• Payment method
– Should be established at the time that a shipment price is decided upon
– Can be influenced by key factors such as
• the country the product is to be sold in
• the seller’s assessment of buyer risk
J.J. Schultz, Lead Faculty Columbus State Community
College
International Trade
Specialists
• International Freight Forwarders specialize in handling either vessel shipments or air shipments.
J.J. Schultz, Lead Faculty Columbus State Community
College
International Trade
Specialists
• Principle functions of International Freight Forwardersinclude:– Advising on letters of credit– Booking space on carriers– Preparing an export declaration– Preparing a bill of lading– Obtaining consular documents– Arrange Insurance– Preparing shipping documents– Serving as general consultant
J.J. Schultz, Lead Faculty Columbus State Community
College
International Trade and
Supply Chain Specialists
• Nonvessel-operating common carrier (NVOCC)
• Export management company (EMC)
• Export packers
J.J. Schultz, Lead Faculty Columbus State Community
College
Transportation Considerations
in International Logistics
• Ocean shipping
• International airfreight
• Surface transportation
J.J. Schultz, Lead Faculty Columbus State Community
College
Ocean Shipping
• Approximately 60% of cross-border shipments move by water transportation
• Variety of ship types include:
– Dry-bulk
– Dry cargo
– Liquid bulk
– Parcel tanker
– Containerships
• Shipping conferences and alliances pool resources and extend market coverage
J.J. Schultz, Lead Faculty Columbus State Community
College
International Airfreight
• Three types of international airfreight operations include:
– Charted aircraft
– Integrated air carriers
– Scheduled air carriers
J.J. Schultz, Lead Faculty Columbus State Community
College
Surface Transport
Considerations
• Transit times can be significantly impacted by a country’s infrastructure and modal operating characteristics.
• Short sea shipping is an alternative to surface transporting
J.J. Schultz, Lead Faculty Columbus State Community
College
International Trade
Inventories
• Safety stocks may be larger due to greater uncertainties, misunderstandings and or delays.
• Inventory valuation can be difficult due to continually changing exchange rates
• Product return (reverse logistics) policies must be understood.
J.J. Schultz, Lead Faculty Columbus State Community
College
Logistics Performance
Index (LPI)
• Relatively new international logistics concept (2007)
• Created in recognition of the importance of logistics in global trade
• Incorporates data for approximately 155 countries
J.J. Schultz, Lead Faculty Columbus State Community
College
Logistics Performance
Index (LPI)
• Measures a country’s performance across six logistical dimensions– Efficiency of the clearance process by
border control agencies, including customs– Quality of trade- and transport-related
infrastructure– Ease of arranging competitively priced
shipments– Competence and quality of logistics
services– Ability to track and trace consignments– Timeliness of shipments in reaching the
destination within the scheduled or expected delivery time
J.J. Schultz, Lead Faculty Columbus State Community
College
Highest- and Lowest-Rated
Countries Based on Overall LPI
Score
J.J. Schultz, Lead Faculty Columbus State Community
College
International Business
Transparency International (TI) publishes the Corruption Perceptions Index (CPI) annually ranking countries "by their perceived levels of corruption”.
The CPI generally defines corruption as "the misuse of public power for private benefit.”
As of 2010, the CPI ranks 178 countries "on a scale from 10 (very clean) to 0 (highly corrupt).”
J.J. Schultz, Lead Faculty Columbus State Community
College
Gov’t Agency Assistance
• OFAC U.S. Treasury - Office of Foreign Assets Control
• EPA Environmental Protection Agency
• DOT U.S. Department of Transportation
• USA.gov
• ATF Bureau of Alcohol, Tobacco,
• FinCEN
• Department of Homeland Security
• U.S. Immigration and Customs Enforcement
• Transportation Security Administration
• Department of State
• FOIA Freedom of Information Act
• TRIP Traveler Redress Inquiry Program
J.J. Schultz, Lead Faculty Columbus State
Community College