Documentation, Shipping, And Logistics

          When preparing to ship a product overseas, the exporter

          needs to be aware of packing, labeling, documentation, and

          insurance requirements.  Because the goods are being

          shipped by unknown carriers to distant customers, the new

          exporter must be sure to follow all shipping requirements

          to help ensure that the merchandise is

         

          *    packed correctly so that it arrives in good condition;

         

          *    labeled correctly to ensure that the goods are handled

               properly and arrive on time and at the right place;

         

          *    documented correctly to meet U.S. and foreign

               government requirements as well as proper collection

               standards; and

         

          *    insured against damage, loss, and pilferage and, in

               some cases, delay.

          

          Because of the variety of considerations involved in the

          physical export process, most exporters, both new and

          experienced, rely on an international freight forwarder to

          perform these services.

         

          FREIGHT FORWARDERS

         

          The international freight forwarder acts as an agent for

          the exporter in moving cargo to the overseas destination.

          These agents are familiar with the import rules and

          regulations of foreign countries, methods of shipping, U.S.

          government export regulations, and the documents connected

          with foreign trade.

         

          Freight forwarders can assist with an order from the start

          by advising the exporter of the freight costs, port

          charges, consular fees, cost of special documentation, and

          insurance costs as well as their handling fees _ all of

          which help in preparing price quotations. Freight

          forwarders may also recommend the type of packing for best

          protecting the merchandise in transit; they can arrange to

          have the merchandise packed at the port or containerized.

          The cost for their services is a legitimate export cost

          that should be figured into the price charged to the

          customer.

         

          When the order is ready to ship, freight forwarders should

          be able to review the letter of credit, commercial

          invoices, packing list, and so on to ensure that everything

          is in order. They can also reserve the necessary space on

          board an ocean vessel, if the exporter desires.

         

          If the cargo arrives at the port of export and the exporter

          has not already done so, freight forwarders may make the

          necessary arrangements with customs brokers to ensure that

          the goods comply with customs export documentation

          regulations. In addition, they may have the goods delivered

          to the carrier in time for loading. They may also prepare

          the bill of lading and any special required documentation.

          After shipment, they forward all documents directly to the

          customer or to the paying bank if desired.

         

          PACKING

         

          In packing an item for export, the shipper should be aware

          of the demands that exporting puts on a package. Four

          problems must be kept in mind when an export shipping crate

          is being designed: breakage, weight, moisture, and

          pilferage.

         

          Most general cargo is carried in containers, but some is

          still shipped as breakbulk cargo. Besides the normal

          handling encountered in domestic transportation, a

          breakbulk shipment moving by ocean freight may be loaded

          aboard vessels in a net or by a sling, conveyor, chute, or

          other method, putting added strain on the package. In the

          ship's hold, goods may be stacked on top of one another or

          come into violent contact with other goods during the

          voyage. Overseas, handling facilities may be less

          sophisticated than in the United States and the cargo may

          be dragged, pushed, rolled, or dropped during unloading,

          while moving through customs, or in transit to the final

          destination.

         

          Moisture is a constant problem because cargo is subject to

          condensation even in the hold of a ship equipped with air

          conditioning and a dehumidifier. The cargo may also be

          unloaded in the rain, and some foreign ports do not have

          covered storage facilities. In addition, unless the cargo

          is adequately protected, theft and pilferage are constant

          threats.

         

          Since proper packing is essential in exporting, often the

          buyer specifies packing requirements. If the buyer does not

          so specify, be sure the goods are prepared with the

          following considerations in mind:

         

          *    Pack in strong containers, adequately sealed and

               filled when possible.

         

          *    To provide proper bracing in the container, regardless

               of size, make sure the weight is evenly distributed.

         

          *    Goods should be packed in oceangoing containers, if

               possible, or on pallets to ensure greater ease in

               handling.

         

          *    Packages and packing filler should be made of

               moisture-resistant material.

         

          *    To avoid pilferage, avoid mentioning contents or brand

               names on packages. In addition, strapping, seals, and

               shrink wrapping are effective means of deterring

               theft.

         

          One popular method of shipment is the use of containers

          obtained from carriers or private leasing concerns. These

          containers vary in size, material, and construction and can

          accommodate most cargo, but they are best suited for

          standard package sizes and shapes. Some containers are no

          more than semi-truck trailers lifted off their wheels and

          placed on a vessel at the port of export. They are then

          transferred to another set of wheels at the port of import

          for movement to an inland destination.  Refrigerated and

          liquid bulk containers are readily available.

         

          Normally, air shipments require less heavy packing than

          ocean shipments, but they must still be adequately

          protected, especially if highly pilferable items are packed

          in domestic containers. In many instances, standard

          domestic packing is acceptable, especially if the product

          is durable and there is no concern for display packaging.

          In other instances, high-test (at least 250 pounds per

          square inch) cardboard or tri-wall construction boxes are

          more than adequate.

         

          For both ocean and air shipments, freight forwarders and

          carriers can advise on the best packaging. Marine insurance

          companies are also available for consultation. It is

          recommended that a professional firm be hired to package

          for export if the exporter is not equipped for the task.

          This service is usually provided at a moderate cost.

         

          Finally, because transportation costs are determined by

          volume and weight, special reinforced and lightweight

          packing materials have been devised for exporting. Care in

          packing goods to minimize volume and weight while giving

          strength may well save money while ensuring that goods are

          properly packed.

         

          LABELING

         

          Specific marking and labeling is used on export shipping

          cartons and containers to

         

          *    meet shipping regulations,

         

          *    ensure proper handling,

         

          *    conceal the identity of the contents, and

         

          *    help receivers identify shipments.

         

          The overseas buyer usually specifies export marks that

          should appear on the cargo for easy identification by

          receivers. Many markings may be needed for shipment.

          Exporters need to put the following markings on cartons to

          be shipped:

         

          *    Shipper's mark.

         

          *    Country of origin (U.S.A.).

         

          *    Weight marking (in pounds and in kilograms).

         

          *    Number of packages and size of cases (in inches and

               centimeters).

         

          *    Handling marks (international pictorial symbols).

         

          *    Cautionary markings, such as "This Side Up" or "Use No

               Hooks" (in English and in the language of the country

               of destination).

         

          *    Port of entry.

          

          *    Labels for hazardous materials (universal symbols

               adapted by the International Maritime Organization).

         

          Legibility is extremely important to prevent

          misunderstandings and delays in shipping. Letters are

          generally stenciled onto packages and containers in

          waterproof ink. Markings should appear on three faces of

          the container, preferably on the top and on the two ends or

          the two sides. Old markings must be completely removed.

         

          In addition to port marks, customer identification code,

          and indication of origin, the marks should include the

          package number, gross and net weights, and dimensions. If

          more than one package is being shipped, the total number of

          packages in the shipment should be included in the

          markings. The exporter should also include any special

          handling instructions on the package. It is a good idea to

          repeat these instructions in the language of the country of

          destination. Standard international shipping and handling

          symbols should also be used.

         

          Exporters may find that customs regulations regarding

          freight labeling are strictly enforced; for example, most

          countries require that the country of origin be clearly

          labeled on each imported package. Most freight forwarders

          and export packing specialists can supply necessary

          information regarding specific regulations.

         

          DOCUMENTATION

         

          Exporters should seriously consider having the freight

          forwarder handle the formidable amount of documentation

          that exporting requires; freight forwarders are specialists

          in this process. The following documents are commonly used

          in exporting; which of them are actually used in each case

          depends on the requirements of both the U.S. government and

          the government of the importing country.

         

          *    Commercial invoice. As in a domestic transaction, the

               commercial invoice is a bill for the goods from the

               buyer to the seller. A commercial invoice should

               include basic information about the transaction,

               including a description of the goods, the address of

               the shipper and seller, and the delivery and payment

               terms. The buyer needs the invoice to prove ownership

               and to arrange payment.  Some governments use the

               commercial invoice to assess customs duties.

         

          *    Bill of lading. Bills of lading are contracts between

               the owner of the goods and the carrier (as with

               domestic shipments). There are two types. A straight

               bill of lading is non-negotiable. A negotiable or

               shipper's order bill of lading can be bought, sold, or

               traded while goods are in transit and is used for

               letter-of-credit transactions. The customer usually

               needs the original or a copy as proof of ownership to

               take possession of the goods.

         

          *    Consular invoice. Certain nations require a consular  

               invoice, which is used to control and identify goods.

               The invoice must be purchased from the consulate of

               the country to which the goods are being shipped and

               usually must be prepared in the language of that

               country.

         

          *    Certificate of origin. Certain nations require a

               signed  statement as to the origin of the export item.

               Such certificates are usually obtained through a

               semiofficial organization such as a local chamber of

               commerce. A certificate may be required even though

               the commercial invoice contains the information.

         

          *    Inspection certification. Some purchasers and

               countries may require a certificate of inspection

               attesting to the specifications of the goods shipped,

               usually performed by a third party. Inspection

               certificates are often obtained from independent

               testing organizations.

         

          *    Dock receipt and warehouse receipt. These receipts are

               used to transfer accountability when the export item

               is moved by the domestic carrier to the port of

               embarkation and left with the international carrier

               for export.

         

          *    Destination control statement. This statement appears

               on the commercial invoice, ocean or air waybill of

               lading, and SED to notify the carrier and all foreign

               parties that the item may be exported only to certain

               destinations.

         

          *    Insurance certificate. If the seller provides

               insurance, the insurance certificate states the type

               and amount of coverage. This instrument is negotiable.

         

          *    Shipper's export declaration. The SED is used to

               control exports and compile trade statistics and must

               be prepared and submitted to the customs agent for

               shipments by mail valued at more than $500 and for

               shipments by means other than mail valued at more than

               $2,500. In addition, an SED must be prepared for all

               shipments covered by an IVL, regardless of value.

         

          *    Export license. U.S. export shipments are required by

               the U.S.  government to have an export license, either

               a general license or an IVL.

         

          *    Export packing list. Considerably more detailed and

               informative than a standard domestic packing list, an

               export packing list itemizes the material in each

               individual package and indicates the type of package:

               box, crate, drum, carton, and so on. It shows the

               individual net, legal, tare, and gross weights and

               measurements for each package (in both U.S. and metric

               systems). Package markings should be shown along with

               the shipper's and buyer's references.  The packing

               list should be attached to the outside of a package in

               a waterproof envelope marked "packing list enclosed."

               The list is used by the shipper or forwarding agent to

               determine (1) the total shipment weight and volume and

               (2) whether the correct cargo is being shipped. In

               addition, customs officials (both U.S. and foreign)

               may use the list to check the cargo.

         

          Documentation must be precise. Slight discrepancies or

          omissions may prevent U.S. merchandise from being exported,

          result in U.S. firms not getting paid, or even result in

          the seizure of the exporter's goods by U.S. or foreign

          government customs. Collection documents are subject to

          precise time limits and may not be honored by a bank if out

          of date.  Much of the documentation is routine for freight

          forwarders or customs brokers acting on the firm's behalf,

          but the exporter is ultimately responsible for the accuracy

          of the documentation.

         

          The number of documents the exporter must deal with varies

          depending on the destination of the shipment. Because each

          country has different import regulations, the exporter must

          be careful to provide proper documentation. If the exporter

          does not rely on the services of a freight forwarder, there

          are several methods of obtaining information on foreign

          import restrictions:

         

          *    Country desk officers in the Department of Commerce

               are specialists in individual country conditions.

         

          *    Industry specialists in the Department of Commerce can

               advise on product classifications.

         

          *    Foreign government embassies and consulates in the

               United States can often provide information on import

               regulations.

         

          *    The Bureau of National Affairs Export Shipping Manual

               contains complete country-by-country shipping

               information as well as tariff systems, import and

               exchange controls, mail regulations, and other special

               information. Contact the Bureau of National Affairs,

               1231 25th Street, N.W., Washington, DC 20037.

         

          *    The Air Cargo Tariff Guidebook lists

               country-by-country regulations affecting air

               shipments. Other information includes tariff rules and

               rates, transportation charges, air waybill

               information, and special carrier regulations. Contact

               the Air Cargo Tariff, P.O. Box 7627, 1117 ZJ Schiphol

               Airport, Netherlands.

         

          *    The National Council on International Trade

               Documentation (NCITD) provides several low-cost

               publications that contain information on specific

               documentation commonly used in international trade.

               NCITD provides a free listing of its publications.

               Contact National Council on International Trade

               Documentation, 350 Broadway, Suite 1200, New York, NY

               10013; telephone 212-925-1400.

         

          SHIPPING

         

          The handling of transportation is similar for domestic

          orders and export orders. The export marks should be added

          to the standard information shown on a domestic bill of

          lading and should show the name of the exporting carrier

          and the latest allowed arrival date at the port of export.

          The exporter should also include instructions for the

          inland carrier to notify the international freight

          forwarder by telephone on arrival.

         

          International shipments are increasingly being made on a

          through bill of lading under a multimodal contract. The

          multimodal transport operator (frequently one of the modal

          carriers) takes charge of and responsibility for the entire

          movement from factory to the final destination.

         

          When determining the method of international shipping, the

          exporter may find it useful to consult with a freight

          forwarder. Since carriers are often used for large and

          bulky shipments, the exporter should reserve space on the

          carrier well before actual shipment date (this reservation

          is called the booking contract).

         

          The exporter should consider the cost of shipment, delivery

          schedule, and accessibility to the shipped product by the

          foreign buyer when determining the method of international

          shipping. Although air carriers are more expensive, their

          cost may be offset by lower domestic shipping costs

          (because they may use a local airport instead of a coastal

          seaport) and quicker delivery times. These factors may give

          the U.S.  exporter an edge over other competitors, whose

          service to their accounts may be less timely.

         

          Before shipping, the U.S. firm should be sure to check with

          the foreign buyer about the destination of the goods. 

          Buyers often wish the goods to be shipped to a free-trade

          zone or a free port, where goods are exempt from import

          duties.

         

          INSURANCE

         

          Export shipments are usually insured against loss, damage,

          and delay in transit by cargo insurance. For international

          shipments, the carrier's liability is frequently limited by

          international agreements and the coverage is substantially

          different from domestic coverage. Arrangements for cargo

          insurance may be made by either the buyer or the seller,

          depending on the terms of sale. Exporters are advised to

          consult with international insurance carriers or freight

          forwarders for more information.

         

          Damaging weather conditions, rough handling by carriers,

          and other common hazards to cargo make marine insurance

          important protection for U.S. exporters. If the terms of

          sale make the U.S. firm responsible for insurance, it

          should either obtain its own policy or insure cargo under a

          freight forwarder's policy for a fee. If the terms of sale

          make the foreign buyer responsible, the exporter should not

          assume (or even take the buyer's word) that adequate

          insurance has been obtained. If the buyer neglects to

          obtain coverage or obtains too little, damage to the cargo

          may cause a major financial loss to the exporter.