E305 Export

Reference: https://thescarbroughgroup.com/ 

I think we’ll start off with a 1,000 ft view of what the export process, and kind of what even an export is for those of you who may not even know or have not endeavored into that area.

An export is just any shipment that is sent from the United States or the origin country to anywhere in the world; it could be as close as Canada, or it could be as far away as the other side of the globe.

So, the slide that we are looking at now is kind of, in the picture form, kind of an 8-step process and verified simplified manor of what takes place in the export process.

It starts at your loading facility or where the freight is originating at; maybe your warehouse or a separately located warehouse, and a transport via truck or courier or some mode of operation to the terminal, if it’s a FCL shipment or Full Container Load. 

It might actually get stuffed at the loading facility and then transported off to the terminal to get loaded onto the vessel; if it’s an LCL shipment it might get transported buy a courier or a trucking outfit that would take it to a container freight station, to be consolidated into a container, which is then loaded onto a vessel or airplane if it’s an air shipment.

You can see that once it gets loaded onto the vessel, it then travels and traverses the world via air or water to wherever the country is, and then the container gets offloaded, or the the cargo gets offloaded from the airplane and deconsolidated either via a terminal or the container might be brought directly to the destination facility where it is unloaded, because they have this facility.

So, who’s involved in export,  who’s the core parties, who gets involved? That’s going to be the shipper, the consignee, the names, you know, they have a relationship of some sort; that could be the buyer and seller as well, but they could be different. There’s also a freight forwarder that’s involved, like us, the best there is! 

Now the buyer and the seller could also be the shipper and the consignee, like I said earlier, or they could be two other separate parties; and also you have two acronyms that follow after: The USPPI which is the United States Principal Party of Interest and the FPPI, or Foreign Principal Party of Interest.

Those parties as well, could be the shipper and consignee, depending on the buying terms and who’s all incorporated in this process; sometimes they could be other parties as well.

And then you have the carrier, that’s another party that gets involved, because they are the ones who, whether it’s rail or airline, you know, air transport or vessel that works for the ocean carrier, whoever owns and operates the vessels; and then you also have the trucker who gets the cargo from your facility to the terminals or the port.

So who’s, of of all those parties, who’s responsible for what?  That relies on the Incoterms; it’s kind of a word that’s some people may be scared of, some people may know a lot about, but there’s a lot of information that comes with that.

(Alice) Yeah, we have this chart here, by the way you get a follow-up email after this webinar is over and you’re going to copy this recording as well as the slides from today’s presentation and it’s handy dandy pickup, the Incoterms chart which is a very popular around here.  We kind of put on here which circled what we think is the best terms to buy your freight on, and the best terms to sell your freight on. And you can look at this chart here and decide based on, you know, which Incoterms you decide to sell on, what you’re going to be responsible for, whether you were delivering, you know, to just a port, or an airplane, whether you have to pay for insurance, or destination fees. It can  answer all of your question, and, you know, we all rely on this chart every day. It’s a really great piece we have hear, so we’ll get you all the copy of it.

Yes, and so, as you look at the chart you may go: Why does it matter?  Why does it matter which in Incoterm I choose? I just need to get it to this port, why all these other boxes on there.

Uh, well, all of those boxes and all of the different Incoterms really play into the total landed cost; and that can vary quite; it can have a vast array of charges, depending on which in which Incoterm you choose.  It’s not really a movable figure, I mean to get shipment A from point A to point B; it’s going to cost the same no matter how you move it, or I should say no matter who moves it; it’s the same, just a matter of who pays for what portion of that. And as you can see from the little chart on this slide here, the total cost of the good is $10,000. And the inland charges and the ocean charges total, with insurance, about $11,000. That’s about a $10,000 or, I’m sorry, a 10% increase in the cost of the good, just to get the to the destination port; and that’s what you see: Cost, Insurance and Freight, CIF term.  That would get it up to the destination country’s port, but no further. After that you have all the landing charges, like import duties, the VAT, merchant marine, terminal handling charges, even the compulsory Union contribution which sometime you have no (say); they can can be high, they can be low; it varies depending on Port and Country around the globe.

All that to say that’s another $3,000.  In essence, you’ve got it all the way across the globe to the destination country for less than half the destination charge.

So that you can really advance the cost of the goods, and how you sell. You may be able to make money on your goods going up to the port, but once you factor in all the destination charges you can make it not so profitable for your company. That’s why it’s so appropriate to select the correct Incoterms so that it doesn’t bite the bottom line at the end.

So how do I decide why decide to send my shipment? How do I get it going in the right manner?

Like we say, there are so many carriers before this. There’s truck you can do, if it’s just going to a neighboring country like Canada or Mexico.  You can send it (via) in a Full Truck Load, or you know, consolidated the other shipments going the same direction, in a truck that’s an LTL shipment, Less Than Truck Load, or you can send it via ocean, if it’s a country that’s not connected to us and that’s a much more economical way of shipping than Air but it is a lot slower way; there’s no fast boats, they’re all the same, roughly, they all go at the same speed

(Alice) You know you have the option of all water services, versus maybe land bridge

TO BE CONTINUED