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A sight or time draft a negotiable instrument of

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Unformatted text preview: ssion serves as evidence of title to the goods • BL’s may be negotiable instruments or « straight » (non- negotiable). Key Import Documents Key export participants: • Foreign purchasing agents • Export brokers • Export merchants • Export management companies • Manufacturer’s export agent or distributor • Export commission representative • Cooperative exporter • Freight forwarders (the most important one) Distinction between agents and merchants: • Export agents work for a commission or fixed fee; they assume no ownership of the goods. Generally the manufacturer controls prices and terms • Export/Import Merchants assume ownership of the goods and accept the selling risk. They set prices and terms with the final customer 8- 5 Export Delivery Terms of sale / Freight Forwarders: • They are licensed spets who can assume many of the foreign trade tasks that many companies are not organized to handle eg. • Arranging best shipping routing and modes • Arrange insurance • Export packing • Filling in documents etc Common Delivery Terms of sale • « EXW », ex- Works, named factory. Price quoted covers costs to the seller’s factory gate, packed but not loaded. All other costs are for the buyer. • « FOB », Free- on- Board: goods delivered and loaded on a named inland carrier (truck or train) at a named inland point. • « FCA », Free- carrier (or free delivered or franco): material is delivered to carrier or freight forwarder at an inland point • « FAS », freight alongside. Seller delivers goods to a named port of embarkation, goods not loaded onto vessel. Buyer pays all further costs. • « C&F » or « CPT », Carriage, freight and insurance paid to: seller pays all costs of packaging, shipment and documentation to the named point (usually harbor in importer’s country) at the agreed time. • « CIF » or « CIP », same as above with insurance included • « DDU » or « DDP », delivered customs duty unpaid or paid to named point in importing country. Cover shipment of goods to a point in buyers country, duty paid or unpaid as negotiated. Business enterprises and global corporations conduct trade and very often for those companies exporting is the first step to take to enter a foreign market. – Arms length- relationship you don’t get to really know your clients, you don’t really learn about the market, but is the first step. Export Selling vs. Export Marketing (know the difference). 8- 6 Export Methods of Payment • A basic feature of export payment is that often the seller does not really “know” the buyer esp. his ability to pay. • A number of factors must be considered • Currency availability in buyer’s country • Credit worthiness of the buyer • Seller’s relationship with the buyer • Payment method • • • • • Export Payment Methods Documentary credits (letter of credit) Documentary collections (bills of exchange) Cash in advance Sales on open account Sales on consignment basis Flowchart of Documentary Credit (L/C) Documentary Collections • This involves bills of exchange (ie. a sight or time draft): a negotiable instrument of payment that is easily transferred from one party to another • A written order from one party (the drawer, eg buyer) to a second party (the drawee eg a bank) to pay to the order of the third party (the payee, the seller) • Credit risk is borne by the seller • It is negotiable, banks may buy at a discount 8- 7 Logistics & physical distribution Logistics comprises all activities involved in physically storing, handling and moving goods between the...
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