Once you’ve made the sale, you still have to get the goods to the buyer. Often the buyer is thousands of miles away, where different rules may apply. When shipping a product overseas, you must be aware of packing, labeling, documentation, and insurance requirements and regulations. Because of the multitude of considerations involved in physically exporting goods, exporters often receive assistance from their air carrier or freight forwarder to perform those services.
International freight forwarders—agents who ship cargo to overseas destinations—are familiar with foreign countries’ import rules and regulations, the U.S. government’s export regulations, different shipping methods, and necessary documents for foreign trade. They assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and the freight forwarders’ own handling fees.
They recommend packing methods that will protect the merchandise during transit, or they can arrange to have the merchandise packed at the port or put in containers. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their services is a factor that should be included in the price charged to the customer.
Whether or not you opt to use a freight forwarder, exporting adds a lot of requirements compared to domestic selling, including:
Packing: International shipping puts particular demands on packaged goods. You should keep four potential problems in mind when designing an export shipping crate: breakage, moisture, pilferage, and excess weight.
Labeling: Export shipping cartons and containers have specific markings and labeling. The overseas buyer usually specifies which export marks should appear on the cargo for easy identification by receivers. Products may require many markings for shipment.
Air Waybill: Covers an air freight shipment and can never be made negotiable.
Bill of Lading: The customer usually needs an original bill of lading as proof of ownership to take possession of the goods.
Commercial Invoice: Many governments use these to determine the true value of goods when assessing customs duties and will often specify the invoice’s form, content, and number of copies; language to be used; and other characteristics.
Consular Invoice: Describes the shipment of goods and shows information such as the consigner, consignee, and value of the shipment.
Certificate of Free Sale: Required in some countries for certain kinds of goods.
Certificate of Conformity: Exporters are required to have the product analyzed and tested by an authorized third party.
Certificate of Origin: A signed statement as to the origin of the export item.
NAFTA Certificate of Origin: Required for products traded among the NAFTA signatory countries.
Inspection Certification: Required by some purchasers and countries to attest to the specifications of the goods shipped.
Dock Receipt/Warehouse Receipt: Sometimes required for countries involved in special trade agreements, such as NAFTA.
Destination Control Statement: Appears on the commercial invoice and on the air waybill or bill of lading to notify the carrier and all foreign parties that the item can be exported only to certain destinations.
Shipper’s Export Declaration: Used to control exports and is a source document for official U.S. export statistics.
Export License: A government document that authorizes the export of specific goods in specific quantities to a particular destination.
Export Packing List: Itemizes the material in each package and indicates the type of package, such as a box, crate, drum, or carton. The shipper or forwarding agent uses the list to determine the total shipment weight and volume, and whether the correct cargo is being shipped. In addition, U.S. and foreign customs officials may use the list to check the cargo.
Insurance Certificate: Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit.
In addition to insurance covering physical hazards, exporters should also seriously consider insurance against the possibility of non-payment. As noted in Chapter 4, Export Credit Insurance offered by the U.S. Export-Import (Ex-Im) Bank can cover 90 to 100 percent of the commercial and political risks of exports.
A final factor to consider is tariffs, which, along with port handling fees, can be high. Thus it’s necessary to consider their effects on your product’s final cost. Although the importer typically pays the tariffs, these costs will nonetheless influence how much the buyer is willing to pay for your product.
This chapter’s Success Story is Bassetts Ice Cream Company, America’s oldest ice cream company. After making its first sale in China, Bassetts worked with the U.S. Commercial Service in Beijing, the Foreign Agricultural Service, the Ex-Im Bank, the World Trade Center of Philadelphia, and the Small Business Administration to land a long-term deal for more sales. Six years later, exports to China account for nearly 20 percent of Bassetts’ overall sales, and they continue to grow.