International Shipping, Export Regulations

It is very necessary to have a good international freight forwarder who acts as an agent for the exporter in moving cargo to overseas customers. Transporting goods internationally requires proper documents and correct packing. The freight agent needs to be familiar with the import/export laws and rules of the USA and of foreign countries you are shipping too.

My guidelines for a good freight forwarder are: They need to be able to handle customs export documents. They should have a warehouse to act as a staging area before loading onto a boat or airplane. They must be able to correct any packing problems. Certain hazardous goods require special packing. They must know what materials might require an export license. They must file the necessary export declaration papers. They must be able to pick up goods at your location and ship to their warehouse staging area.

When you receive an inquiry from overseas, you must set the shipping terms. Who is going to pay for the shipment freight charges? How is the material going to be shipped, by air or ocean? Before you can quote the customer, you may need to obtain a freight charge estimate from your freight agent if you are to pay the freight. This charge will need to be added to your invoice price either built into the material cost or listed by itself in the invoice.

If the customer pays the freight, he may have his own freight agent to use or he may want to use your freight agent and bill him. In most cases, it is best to control who will be the freight agent. If the agent does not do the documents correctly and in a timely manner, your letter of credit payment or documents against payment could be delayed by a considerable time. If you control the shipment by using your agent then you can control the whole transaction to your benefit.

If shipping using a letter of credit, the freight agent needs to have a copy of the letter of credit, invoice, and packing list so he can prepare the wording correctly in the bill of lading. If shipping by documents against payment or acceptance, the freight agent only needs a copy of the invoice and packing list.

The typical steps for making a shipment are as follows: 1. After you obtain the order and the letter of credit, you must make ready your documents and goods to make the shipment. 2. Send a copy of all documents and the letter of credit to your shipping agent. Advise him when and where to pick up the goods for shipment and what date you need the goods shipped by. This may depend on the letter of credit. 3. Your agent will pick up the goods and make a booking on a ship or plane. 4. He will review the goods in his warehouse for correct packing and quantity. 5. He will issue an ocean bill of lading or an air waybill. Note: At this point, it is best to have the agent send you the original bill of lading as fast as possible. 6. After you receive the bill of lading, it needs to be reviewed to make sure it is correct, and then send all required documents to your advising bank by UPS or special delivery so they do not become lost in the mail system. Always make several copies just in case the documents become lost.

Ocean bills of lading provide evidence to the title of the goods being shipped. There are two types of ocean bills, which are nonnegotiable and negotiable. In almost all cases, negotiable is used, and this is stamped right on the bill of lading. Air waybills are only issued in nonnegotiable form since the goods shipped by air need to be delivered right away. This way, the customer can take claim of the goods on delivery. So shipping by air, one needs to be careful that the customer is trustworthy. Even with a letter of credit, if shipped by air, the customer can obtain the goods before payment is made unless it is a confirmed letter of credit that stipulates payment must be made upon presentation of the air waybill.

In most cases, it is not necessary to have an export license when shipping to countries friendly to the United States. Most goods are shipped and stamped No License Required, or NLR, on the invoice. There are, however, some materials such as certain metals and chemicals that do require an export license; so it is a good idea to check on this with your freight agent. He can provide you the ECCN or Export Control Classification Number, and you then check it with the Bureau of Industry and Security to see if a license is required.

If an export license is required, then you will need to apply for one. It takes about thirty days to obtain an export license, and there is a lot of paperwork. It is necessary to have your customer sign and date the application statement for the export license. The export license will only be good for the time you specify in the application, and it will only be good for a certain quantity that you have advised the customer will purchase over that time. Some export licenses may only be good for one shipment. An export license is only good for one customer at a time. If you are shipping the same materials to different customers in the same or different countries, you will need an export license for each customer and country.

The bill of lading needs to have the same description and consignee name, and the export license number needs to be put on all documents. This information also needs to be put into the SED or Shipper's Export Declaration. Note if there are any riders and conditions spelled out in the export license.

The Shipper's Export Declaration or SED is needed for all shipments over $2,500.00 and any shipment that requires an export license. The SED is normally filled out by your freight agent and must be presented to the carrier before the shipment can be made. It is now filed electronically at www.aesdirect.gov. The SED is now called the EEI or Electronic Export Information. Once again, your freight agent should be able to handle this requirement.

Some other important points for export shipping are: 1. The export packing list must contain the net weight of the goods and the gross weight of the shipment. The gross weight includes packing materials and any pallets used. 2. Goods should be marked with the invoice number, LC number, bill of lading number, and the export license. 3. The goods, as well as the invoice should be marked with the country of origin and export license number. 4. For your protection, it is advisable to carry insurance on the goods to cover the cost of any damage during shipment. Normally marine insurance is equal to 110 percent of the invoice value. This is offered by your freight agent who obtains it from a maritime insurance company. Insurance is cheap and provides you protection in case the ship sinks or becomes involved in some type of accident that may damage or lose your goods. 5. Sometimes it is necessary to repackage your goods depending upon what your freight agent advises.

The final remaining problem is how you will ship the goods and who pays for the freight. This must be decided in negotiations with your customer before he places the order. In other words the Terms of Sale need to be spelled out clearly. Terms of Sale are used to spell out how sellers and buyers will fulfill their obligations. These are three letter expressions that set out the rights and obligations of each party when it comes to transporting the goods. Following, are the thirteen terms of sale in international trade that can be used, as shown in the recent amendment to the International Chamber of Commerce Terms of Trade (INCOTERMS), effective July 1990: exw, fca, fas, fob, cfr, cif, cpt, cip, daf, des, deq, ddu, and ddp.

Doing business overseas the most commonly used terms are: CFR, CIF, FOB, and EXW. It is suggested that if you are paying the freight to use CIF and pay a little extra for the insurance protection, just in case some accident happens during shipment. If the customer pays the freight, then FOB or EXW can be used, but make sure they understand the rules, that they are responsible for the goods once loaded, and if any damage happens during shipment or the goods become lost, the problem is theirs. This means they still have to pay you if anything happens. It is a good idea to send them a copy of the definitions. As you can see, shipping is very involved and if you have a good freight agent, he can save you a lot of work, time, and money.

References: www.marad.dot.gov/publications/glossary/Glossary.html, www.sba.gov, www.aesdirect.gov, www.sba.gov