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Exporting and Logistics


									Exporting and Logistics

  Daniel Simion   0624009
  Eric Hu         0624084
  Kjell Hanstad   0725010
  Jon Parsdis     9810910
•   Global Perspective
•   Export Restrictions
•   Import Restrictions
•   Terms of Sale
•   Foreign Commercial Payments
•   Export Documents
•   Packing and Making
•   Customs-Privileged Facilities
•   Logistics
                            Global Perspective

                                Exporting Process (International Marketing - Cateora, Graham & Bruning)

Leaving the Exporting Country                     Physical Distribution               Entering the Importing Country

Permits                                           Int. Shipping & Logistics           Tariffs, taxes

Individual                                        Packing                             Nontariff barriers

General                                           Insurance                           Standards

Validated                                                                             Inspection

Documentation                                                                         Documentation

Export Declaration                                                                    Quotas

Commercial Invoice                                                                    Fees

Bill of Lading                                                                        Permits

Consular Invoice                                                                      Special Certificates

Special Certificates                                                                  Exchange permits

Other Documents                                                                       Other barriers
         Export Restrictions
• A permit may be required for certain
  commodities and certain destinations
• Export Control Division
     • Area control list – countries (Angola & Myanmar)
     • Export control list – products
• UN Security Council Embargo – Iraq
• Canada – US bilateral agreement – US origin
  goods – permit – to be exported from Canada
• Certain chemicals, biological agents, nuclear
  components and armaments – require permit
          Export Restrictions
• Types of permits:
    • Individual Export Permit – specific products to be
      exported for a period 2-5 years

    • Special Permits
       – Temporary Export Permits – goods for trade shows
       – Single Shipment – expires after the completion of

    • General Export Permit – specific products to be
      exported to specific countries – no expiration
      date – clothing to Angola
        Export Restrictions
• The exporter has the responsibility to
  determine if there are any restrictions of a
  particular product for a particular country

• The exporter has the responsibility to
  determine if the product has dual use

• The exporter has the responsibility to
  determine if a permit is required
          Export Restrictions
• Export Import Controls Bureau – control exports
  – permits, fines & denial of exports

• Export Import Control System – web interface –
  processing permits applications & approval –
  import/export quota management – decisions
  are conveyed back to customs brokers
            Export Restrictions
• Reducing bureaucracy:
• Canadian Automated Export Declaration – allows
  exporters to transmit the information to the appropriate
  agencies electronically
• Summary Reporting Program – if the goods are not
  regulated – monthly summaries to Canada Customs
• Automated Customs Information Services – products
  that can be exported or imported, restrictions,
  exchange rates
• NEXUS Program: Canada – US customs immigration
  program – simplified border crossing for pre-approved
Import Restrictions
    •   Tariffs
    •   Exchange Permits
    •   Quotas
    •   Import Permits
    •   Standards
    •   Boycotts and Embargoes
    •   Voluntary Restrictions
    •   Other Restrictions
Import Restrictions
    • Tariffs
       – Raising revenues and protect
         home industry
       – Per pound or percentage of value
    • Exchange Permits
       – Restrictions on the amount of
         available foreign currency
       – Criminal offence without
         permission from government
Import Restrictions
    • Quotas
      – Limitation on the quantity
      – Specific goods or countries
    • Import Permits
      – More flexible than quotas
      – Case-by-case basis
      – The Import Control List identifies
        items excluded or requiring import
Import Restrictions
    • Standards
      – Health, safety and product quality
      – Protect the consuming public and
        comply with local laws
      – Can be manipulated to function as
        an absolute trade barrier
    • Boycotts & Embargoes
      – Boycotts are an expression of
      – Embargoes are more related to
        government actions (USA-Cuba)
      – Used to change policy or
        behaviour of other countries
Import Restrictions
    • Voluntary Restrictions
      – Japanese steel and automobile
        industries limiting sales to U.S.
    • Other Restrictions
      – Government standards set for
        health, sanitation, packaging and
      – WTO encourages to reduce tariffs
        and non-tariff barriers
      – Economic recession increases the
        use of non-tariff barriers to reduce
                Term of Sales
• CIF (cost, insurance, freight)
   – To a named overseas port of import
   – Quote includes: COGS, insurance, all transportation
     and miscellaneous charges
   – Ownership passes: goods delivered on board the
     shipping vessel
• C&F (cost and freight)
   – To a named overseas port
   – Quote includes: COGS, transportation charges to port
     of import
   – Ownership passes: goods delivered on board the
     shipping vessel
                   Term of Sales
• FAS (free alongside)
   – At a named US (Canada?) port of export
   – Quote includes: COGS, any charges for delivery of the goods
     alongside the shipping vessel
   – Ownership passes: goods alongside the carrier at the port of
• FOB (free on board)
   – At a named inland point, a named port of export, or a named
     vessel and port of export
   – Quote includes: COGS, delivery cost (may includes
     transportation, insurance and other miscellaneous cost) to the
     placed named
   – Ownership passes: depends on FOB terms
       • FOB shipping point
       • FOB destination
                  Term of Sales
• EX (named port of origin)
  – Quote includes: cost only at the point of origin
  – Ownership passes: good leaving the named port of
• Questions
  – Relationship between
     • FOB destination and CIF
     • FOB inland carrier at factory and EX factory
  – Given the same good (COGS) and other similiar
     • Highest quotes
     • Highest risk (to seller)
 Foreign Commercial Payment
Letters of Credit

 Foreign          Foreign         Domestic   Domestic
 Buyer            Bank            Bank       Seller

 Custom                                      Freight
 Broker Port of                              Forwarder
    Foreign Commercial Payment
•   Bills of Exchange
•   Cash in Advance
•   Open Accounts
•   Forfaiting
            Export Documents

• Required and imposed by exporting
  – Export Declarations
  – Consular Invoice or Certification of Origin
  – Bill of Lading
  – Commercial Invoice
  – Insurance Policy or Certificate
  – Permits
  – Other Documents
• Packing and Marking Considerations
  – DFAIT website
• Customs privileged Facilities
  – Foreign trade zones/Free trade zones
     • (Canada is the only G8 country without one)
  – Offshore Assembly (Maquiladoras)
     • Changed since NAFTA
     • Now spreading world wide
• MNC’s must practice Logistics Management –
  physical distribution system (PDS)– a decision
  involving one activity affects the cost or efficiency of one or all others.
  19 – 23% of total cost of international products

       • Air Freight vs. Ocean/Surface Freight
• Results of PDS
       • Optimal inventory levels
       • Better delivery and service to market
       • Reduces economic impact of geography
         Innovation of Logistics
•   Containerization
•   New growth of Air Freight
•   Intermodal transportation and IMC’s
•   Merge-In-Transit Method
•   Foreign Freight Forwarder
    – Licensee of Federal Maritime Commission
       • Acts as an agent for the shipping company and
         oversees all details of shipment to destination.
          Safety Concerns
• 24-Hour Rule – documentation prior to
• Ports become “Gatekeepers”
• Trucking – manifests prior to enter/exit US
Advent of Internet has allowed real time
  communication with all participants via one
  connection point. (Integration)
– Cisco Systems/Wal-Mart/Fed-Ex

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