INTERNATIONAL TRADE
FOCUS FEATURE
involved in as destinations can vary wildly in terms of freight costs, regulations and documentation requirements. As an example, a 200kg airfreight to JFK Airport in New York would cost approximately £350 but the same shipment to Port Moresby in Papua New Guinea would be £2,110. Similarly, a 40ft-high cube container to Port Kelang in Malaysia would cost around £550 but the same container to Freetown, Sierra Leone, would be £2,500. Remember to recognise and acknowledge that your overseas buyer will already
know their own territory and the issues and pitfalls that importers may face so be guided (but not dictated to) by them. Keep the end in mind and line up the challenge; take the first things first by
understanding your contract – both the terms of shipment and terms of sale. Your terms of sale will identify the method of payment and how and when you
are going to get paid. There are only four ways that this can happen and the terms that you agree will be dependent on the negotiation power of each party, the country of destination and any foreign exchange rules, the trust in each party and any credit or risk factors.
The four methods are: 1 Prepayment in Advance of Shipment 2 Cash Against Documents 3 Documentary Letter of Credit 4 Open Account
Your terms of sale need to be accompanied by your terms of shipment – the two
work hand-in-hand together. More commonly referred to as Incoterms, written and published by the International Chamber of Commerce, these terms dictate where the transfer of cost and risk will pass from the seller to the buyer. Abbreviated to three letter acronyms, the term on its own is worthless unless it is followed by a named place. It is vital for each party to know their responsibilities with reference to shipment and delivery, documentation, insurance, customs formalities and licensing. Use your Incoterms to build up your quotation and proposal and include the
costs for freight, handling, packing and insurance. Be certain what you are quoting for and your obligations; don’t get caught out by any surprises.
AND THEN HOW… Once new markets have been identified and a sale secured, the physical activity in arranging shipment and delivery comes into play and you should approach this with confidence. Your freight forwarding partner is able to advise and assist on all areas of the
actual physical movement to ensure that this is seamless, hassle free and provides a positive experience for all parties. Your chosen forwarder has a duty of care and vested interest to make sure that
you look good overseas and, if handled professionally and competently, it will future proof the relationship and ensure repeat orders and future business for you. When choosing a freight partner, it’s worth considering that while price is an important factor, it certainly isn’t the only thing to think about. Your freight partner should be accredited to the relevant trade associations (BIFA, UKWA, RHA) demonstrating commitment to standards, terms and conditions and insurance liabilities.
‘Your freight forwarding partner is able to advise and assist on all areas of the actual physical movement to ensure that this is seamless’
business network June 2019 55
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