INTERNATIONAL LOGISTICS Delivering The Goods

The Importance of a Logistics Partner… A “Logistics Partner” can simplify your export program by allowing you to concentrate on your business. We’ve listed a few options…  Do it Yourself? (Time consuming – knowledge and experience required) Not recommended unless you have experience

The Importance of a Logistics Partner…  Freight Forwarder (Also known as “Ocean Transport Intermediary” ‘OTI’) Federal Maritime Commission Licensed Bonded as a licensed requirement Background checked by FMC Coordinates movement of cargo, complete documentation including Letters of Credit, Export regulations assistance Provides complete transport cost analysis in advance. Also does Air Freight.

The Importance of a Logistics Provider…  NVOCC (Non Vessel Operating Common Carrier) “The Shipless Shipline” FMC licensed and bonded (may also be an OTI) Acts as a Common Carrier (issues own Bill of Lading) BL has same standing as vessel operator (most cases)

The Importance of a Logistics Provider…  NVOCC (Non Vessel Operating Common Carrier) “The Shipless Shipline”also… Contracts for space on vessels and guarantees volume to carrier in return for discount (buys wholesale) Re-sells space to customers at a charge somewhat more than cost but usually less than if customer went directly to carrier

The Integrator (FedEx, UPS, DHL, etc…)  Integrator (FedEx, UPS, DHL, etc…) Usually a larger company with significant capital investment Multiple offices and terminals Depends upon large volumes of freight to support network Acts as Common carrier, Forwarder, Trucker, Airline, Customs Broker, and Delivery Agent

Forwarder vs. Integrator… How do I choose? All of these different models have advantages to the exporter depending upon needs and requirements!!! Be flexible…  Generally speaking, the services offered by integrators have evolved from the business model which was based upon courier services for documents and small package shipments. Recently, as is evidenced by advertising, integrators are offering “large package” services both by air and ocean  The Freight Forwarder (MFC Licensed) has been doing this from the outset

Forwarder vs. Integrator  The major difference between utilization of an integrator and/or a licensed freight forwarder really boils down to size vs. personal service Integrator = Big, good for large quantity of small shipments. Freight Forwarder = Usually smaller, maybe family- owned, provides more personal service level. Better for complicated needs, Letters of Credit, etc…where quick access to experience is desirable.

The Contract of Carriage The Ocean Bill of Lading…  Contract between the shipper (You) and the Carrier Read the back – (Most are very similar) Ignorance is not an excuse or defense Read the front…Especially the “Declared Value” portion If you fill this in, you will be charged an additional fee It is cheaper to buy cargo insurance

The Contract of Carriage The Ocean Bill of Lading  Carriage of goods by Sea (COGSA) Limitation of Liability $500 per piece, package, or customary freight unit If you tender a full container, sealed at origin, the entire container maybe a single freight unit!!!

The Contract of Carriage The Airway Bill  Airway Bill Read the back – Limits of Liability IMPORTANT Ignorance is not an excuse or defense Read the front … “Declared Value” Total Liability … USD $20.00 per Kg (Approximate) Cheaper to insure…

Export Documentation… It has been said that “the fuel of international trade is paper”  A typical export transaction from the U.S. will have: Commercial Invoice (it must include a Destination Control Statement “These commodities, technology, or software were exported from the United States in accordance with the Export Administration Regulations. Diversion contrary to U.S. law is prohibited.”)

Export Documentation… Certificate of Origin Export Declaration Insurance Certificate Bill of Lading or Airway bill Packing List “Certificate of Free Sale” (not always but possible)

Export Documentation  If a Letter of Credit is involved, there could be any number of additional documentary requirements that add to the package  Additionally, export licenses may be required for certain items

Export Compliance with Target Market Regulations  Drugs, Medicines, Pharmaceuticals…  Radiation Emitting Appliances  Labeling  Country of Origin Marking  Electrical  Foods  Packing Materials  Language  Phytosanitary  Fumigation

Export Control and Licensing  Certain products and merchandise are subject to export controls. Military products, munitions, “precursor items”, Crime Control, things that hurt people, help an enemy or go bang!  Your Responsibility as an exporter to know your product  Forwarder can help  Penalties can be mind-boggling!!!

Freight Insurance: Why Insure? Carrier’s limit of liability (COGSA & Warsaw Convention)  Filing claims is problematic and can be complicated Insurance pays the claim and then files with the carrier You may have to file suit against the Carrier to get its attention Carrier will try to keep you talking until is “Time Barred”

Freight Insurance: Why Insure? Irritation, heartburn, frustration  Use “declared value” to increase carrier liability? Expensive and insurance is cheaper and easier to use  Usually required with Letters of Credit  Cost is usually less than 2% of value of shipment… (1.25% is average)

In Conclusion… So, you can “do-it-yourself”, or… Select a logistics partner that will allow you to concentrate on the marketing of your product!!!

Papa Omar Diop International Trade & Assistance Center Columbus State Community College Tel: Fax: