1 Logistics Overview By Ray Bowman Director, Ventura and Santa Barbara County SBDC Hosted by The Economic Development Collaborative of Ventura County

Ray Bowman   Ray Bowman, M.S., is a business veteran with more than 27 years of international business' experience. He started three businesses and has a broad background in business consulting, serving as the principal of his own international trade consulting firm and working previously as a consultant, trainer and manager for several SBDC offices. As an expert on international trade, Ray has consulted and worked with multinational corporations, banks, developed programs and course curriculum, taught classes in international logistics, finance and import export at several colleges and universities, been a featured speaker and written several books and journal articles on the subject of international business.   2

The International Supply Chain 3

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5 International Documentation

Common International Document Data Fields  Shipper  Consignee  Net Weight  Gross Weight  Cube  Cubic Meter  Harmonized Code (HTS)  Country of Origin  Carrier  Notify Party  Incoterm  Currency  Forwarding agent  Quantity(QTY) 6

Common International Document Data Fields  Unit Price  Port of Embarkation  Purchase Order Number  Dimensions  Initial Carriage (Mode)  Port of Discharge  Place of Receipt  Marks and Numbers 7

Minimum Required Documents for Export aka Commercial Set Bill of Lading Bill of Lading Commercial Invoice Commercial Invoice Packing List 8

Other Important Documents 9 Insurance Certificate Certificate of Origin Wood Packaging Certification

Other Important Documents 10 Inspection Certificate Export License NAFTA Certificate

Other Important Documents Entry Declaration (3461) Entry Declaration (3461) Entry Summary Entry Summary Certificate of Free Sale Certificate of Free Sale 11

12 Other Important Documents Health Certificate Letter of Credit Draft

13 Other Important Documents Request for Quote Proforma Invoice Purchase Order

1. Request for Quote 2. Quote 3. Pro Forma 4. Purchase Order 5. Commercial Invoice 6. Packing List 7. Other Required Documents 8. Bill of Lading 9. Entry Documents 10. Delivery Order 14 Order of Documents

Tips for Organizing your Trade Documents  All documents must agree with the terms of the proforma invoice and/or purchase order.  All transactional documents should be filed together in order to show the flow of the entire transaction.  Use technology when ever possible to generate and check the accuracy of your documents.  Develop a numbering system for all quotes and reference them on all related documents and paperwork. 15

Resources for Documentation US Department of Commerce Help Line: usatrade UN Documentation Tool Kit: UNZ&Co: Shipping Solutions: SAP Global Trade Management: BNA Export Document Library: Exporters Encyclopedia: #db1c 16

What is Schedule B & When Is it Required? Schedule B: Statistical classification of domestic and foreign commodities exported from the United States. Automated Export System (AES): The Electronic Export Information (EEI) contained in the AES is confidential and is to be used solely for official purposes authorized by the Secretary of Commerce under Title 13 United States Code, Section 301 and Title 15, Code of Federal Regulations, Part The items being shipped requires Schedule B numbers when the items are valued over $2, per Schedule B (includes EAR99 items i.e.. pallet of cotton mittens/gloves), or when a license is required. ***Please familiarize yourself with Title 15, Part 30 of the US Census Bureau for full requirements and exceptions:

Part 16: My HS, Schedule B, or HTS Number  Check the census bureau to find out your product’s number  Example:  : Solar Cells Assembled Into Modules Or Panels

3CE: Census Schedule B/HS Classification engine

20 Product Classification (cont.)  Schedule B - Codes are for EXPORT and are administered by the U.S. Census Bureau - Codes are for EXPORT and are administered by the U.S. Census Bureau  HTS - Codes used to classify IMPORTS and are administered by the U.S.I.T.C.

21 Schedule B Resources gn-trade

22 Find your HTS using the C.R.O.S.S system. 

Incoterms

EX WORKS (EXW) (named place)  Named place is where the shipment originates – usually the seller’s premises  Seller must have goods available and packaged when promised  Buyer must arrange pre- carriage, export clearance, main carriage, import clearance and on carriage  Neither party is required to insure  Transport Mode: All

25 EXW Truck Bill of Lading

Free Carrier (FCA) (named place)  Named place is either the place where the shipment originates such as the seller’s premises or another place agreed within the seller’s country  Seller is to have goods available and packaged when promised, load collecting vehicle, pre-carriage and export clearance  Buyer must unload delivering vehicle, main carriage, import clearance and on carriage  Neither party is required to insure  Transport mode: All modes

27 FCA (Warehouse or Carrier Terminal) Truck Bill of Lading

Free Alongside Ship (FAS) (named port)  Named port is alongside a vessel at port on the seller’s side  Seller is to deliver goods, export packed alongside the buyer-designated vessel at the port on the seller’s side along with export clearance  Buyer loads vessel, arranges main carriage, import clearance and on carriage  Neither party is required to insure  Transport Mode: Vessel Only

29 FAS (Sea or Waterway) Carrier’s Receipt

Free on Board (FOB) (named port)  Named port is loaded on a vessel at a port on the seller’s side  Seller delivers the goods on board the buyer-designated vessel at the port on the seller’s side along with export clearance  Buyer arranges main carriage, import clearance and on carriage  Neither party is required to insure  Transport mode: Vessel Only

31 FOB (Ocean Only) Ocean Bill of Lading

Cost & Freight (CFR) (named port)  Named port is on the buyer’s side  Seller delivers goods export packed on board the seller’s designated vessel at the port on the seller’s side, pays transportation costs to the agreed port on buyer’s side, and arranges export clearance  Buyer arranges vessel unloading, import clearance and on carriage  Neither party is required to insure  Transport Mode: Vessel Only

33 CFR Ocean Bill of Lading

Carriage Paid To (CPT) (named place)  Named place on buyer’s side  Seller delivers goods export packed to the carrier for transportation to the named place of destination and will pay all transportation costs thereto along with arranging export clearance  Buyer arranges import clearance and on carriage  Neither party is required to insure  Transport mode: All modes

35 CPT -Carrier Receipt Included -Export Clearance

Cost, Insurance and Freight (CIF) (named port)  Named port is on buyer’s side  Seller delivers goods export packed on board the seller’s- designated vessel at port on seller’s side, pays all transportation costs to agreed port on the buyer’s side and arranges export clearance  Buyer arranges import clearance and on carriage  Seller must provide at least minimum coverage  Transport Mode: Vessel Only

37 CIF -Ocean Bill of Lading -Insurance Certificate

Cost, Insurance Paid (CIP) (named place)  Named place on buyer’s side  Seller delivers goods export packed to the carrier for transportation to the named place of destination and pays all transport costs thereto along with arranging export clearance  Buyer arranges import clearance and on carriage  Seller must provide at least minimum insurance coverage  Transport Mode: All Modes

39 CIP -Bill of Lading -Insurance Certificate

Delivered at Terminal (DAT) (named place)  Named place at terminal on buyer’s side (a terminal at the destination port or a terminal not far beyond the destination port where it’s yet to be cleared by Customs)  Seller arranges export clearance and delivers goods export packed to the named destination terminal, pays all transport costs thereto and unloads  Buyer arranges import clearance Neither party is required to insure  Transport Mode: All Modes

41 DAT Bill of Lading

Delivered at Place (DAP) (named place)  Named place on buyer’s side  Seller arranges export clearance, delivers export packed goods to the named place of destination and pays all transportation costs thereto  Buyer arranges import clearance and on carriage  Neither party is required to insure  Transport mode: All Modes

43 DAP Truck Bill of Lading

Delivered Duty Paid (DDP) (named place)  Named place is on buyer’s side  Seller arranges export clearance, delivers export packed goods cleared for import at the named destination and pays all transportation costs thereto  Buyer possibly responsible for unloading, on carriage  Neither party is required to insure  Transport Mode: All Modes

45 DDP Truck Bill of Lading

Logistics Pricing Introduction to “Weight or Measure” Calculations for freight

Freight Pricing Factors Factors that influence the rate charged for any particular type of cargo. 1. The weight of the goods being shipped 2. The dimensions of the goods being shipped 3. The shape of the goods 4. Ease of damage

The Cubic Meter

Weight and Measure 1 cubic meter — 1000 liters — of water weighs 1000 kilograms or 1 metric ton.

Cubic Foot Formula Then divided by to convert to cubic meters

Air Freight Dimensional Factor DIMENSIONAL WEIGHT = Length x Width x Height = Cubic Inches 166 (International)

Air and Ocean Price Comparison Airfreight U.S Inches Dim Weight Conversion 125" x 96" x 96“ / 166 = 6939lbs 6939lbs / = 3,147 Kilos x $3.25 per kilo Total Airfreight Charge= $10, $ per cubic meter Ocean Freight Weight and Measure(metric) 317cm x 244cm x 244cm Convert to Cubic meters 3.17M x 2.44M x 2.44 M= cubic Meters Cubic Meters x $95 per cubic meter Total Ocean LCL(Less Than Container Load) = $1,792.65

“Odd sized” Freight

Transportation methods 54

Considerations when choosing modes of Transportation 55 Cost Timing Cargo considerations Customer needs Distribution considerations

Considerations when choosing modes of Transportation 56  Air Freight  Ocean Freight  Surface Transport

International logistics service providers 57 Freight forwarders Customs brokers 3PL’s Carriers Trade Attorneys Banks Load Brokers

Calculating Duties and Taxes 58

Who Is Responsible?_________ What Does Customs Do? Owner; agent; purchaser Step A.ISF Importer Security Filing 1. Entry: Shipment arrives within port a. Decide consumption or bonded warehouse/FTZ b. If consumption, file entry documents c. Documents required: 1. Entry manifest 2. Right to make entry 3. Invoices 4. Packing lists 5. Entry summary 6. Evidence of bond 2. Valuation 3. Classify/appraise 4. Estimate and pay tariff (check or cash) Step A. Your U.S. Customs Broker 1.Check and verify. Store in general warehouse? Check Verify 2. Examine 3. Validate a. Classification b. Appraisement 4. Authorize entry 5. Liquidate transaction

Typical Entry Fees 60 Duty Fees: Based on transaction value in most cases. Merchandise Processing:.21 % of the value ( over $2,000 value) $25-$485 Harbor maintenance: of the value Customs Broker Fees: $ per entry….plus other charges..

Reasons for Customs Holds 61 Inconsistent information with the 42 plus data elements of an entry Targeted commodities New Importer Marking issues Country of origin Valuation Missing documents or requirements Average inspection can cost over $1,500 and 5 days of delay

International Trade Resources 62 SBA.gov Export.gov Centers for International Trade Development (CITD) ELAN (Export Legal Assistance network) US DOC Trade Information Center U.S. Customs USDA Trade Information Center Hotline 800-USA-TRADE Inbound Logistics Magazine and resource Export911.com American Association of Exporters and Importers (AAEI)

Q&A 63