1. Erin C. Butler Senior International Account Executive March 23, 2010
INTERNATIONAL LOGISTICS
Erin C. Butler
Senior International Account Executive
March 23, 2010

2. INTERNATIONAL LOGISTICS
Today’s Topics
Importance of a Logistics Solutions Provider
The Contract of Carriage – Bills of Lading; Airway Bills
Commodity Classification
Export Documentation
INCOTERMS
Regulatory and Compliance Requirements
Proper Labeling & Packing
Freight Insurance
International Logics
Export University 101

3. The Importance of a Logistics Solutions Provider
A Logistics Solutions Provider can simplify your export program by allowing you to concentrate on your business.
A few options……
Do it Yourself
Freight Forwarder
Integrator (FedEx, UPS, DHL, etc.)
Each has advantages based on your logistics strategy
Do It Yourself - (Time consuming- Knowledge & Experience required) Not recommended unless you have experience
Freight Forwarder - (Also known as “Ocean Transport Intermediary” ‘OTI’ Federal Maritime Commission Licensed, Bonded as a license 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.
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)– 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
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
International Logics
Export University 101

4. Transportation Mode
The good news is that there are choices. Choose one or more to fit your specific needs.
Ocean
Railway
Trucking
Air
A combination of the above
International Logics
Export University 101

5. The Contract of Carriage
All modes of transportation require documentation.
Form of documentation differs between modes of transportation
The Ocean Bill of Lading
Contract between the Shipper (You) and the Carrier
Carriage of Goods by Sea (COGSA) Limitation of Liability
Air Waybill – Samples provided
Trucking – Bill of Lading
Rail – Bill of Lading
The Ocean Bill of Lading –
Contract - 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
COGSA – Limitation of Liability - $500 per piece, package or customary freight unit….
If you tender a full container, sealed at origin, the entire container may be a single freight unit
Airway bill - Read the back, Ignorance is not an excuse or defense, Read the front…… “Declared Value”, Total Liability…..USD$20.00 per Kg. (Approximate), May be lower cost to Insure……
International Logics
Export University 101

6. Commodity Classification
Classification of goods will have direct impact to your duty and tax rates and documentation requirements.
Avoid Vague Descriptions - a good description should answer these questions –
What is it? What is it made of?
What will it be used for or with?
How many are there?
Harmonized System (HS) numbers
Worldwide coding system for classifying all commodities
Used no matter where the shipment originates
First six digits are the same
Some countries utilize an additional four digits (ex: Schedule B)
International Logics
Export University 101

7. Export Documentation
A typical export shipment from the U.S. could require any or all of these documents
Most common documents
Commercial Invoice
Certificate of Origin
Export Declaration
Insurance Certificate
Bill of Lading or Airwaybill
Packing List
In addition:
If a Letter of Credit is involved, there could be any number of additional documentary requirements that add to the “package”
Export licenses may be required for certain items
International Logics
Export University 101

8. International Commercial Terms - INCOTERMS
International traders use a widely agreed-upon shorthand type of terminology called INCOTERMS to define the basis for the sale. (INternational COmmercial TERMS)
Once the buyer and seller agree on one of these terms, it will clarify: (1) where in the journey the seller releases the goods to the buyer; (2) what charges and documentation are the seller’s responsibility prior to that point; and (3) what charges and documentation are the buyer’s responsibility after that point.
An INCOTERM is always paired with a location and is meaningless without it. For instance, FCA Memphis is quite a different price from DAF Laredo, but the same goods may pass through both points en route to a customer in Mexico.
While the terms of sale in international business often sound similar to those commonly used in domestic contracts, they often have different meanings. Confusion over these terms can result in a lost sale or a financial loss on a sale. Thus, it is essential that you understand what terms you are agreeing to before you finalize a contract.
By the 1920’s international traders had developed a set of trade terms to describe their rights and liabilities with regards to the sale and transport of goods. These trade terms consisted of short abbreviations for lengthy contract provisions. Unfortunately, there was no uniform interpretation of them in all countries and therefore misunderstandings often arose in cross-border transactions. To impove this aspect of international trade, the International Chamber of Commerce (ICC) in Paris developed ‘INCOTERMS’ (INternational COmmercial TERMS), a set of uniform rules for the interpretation of international commercial terms defining the costs, risks, and obligations of buyers and sellers in international transactions. First published in 1936, these rules have been periodically revised to account for changing modes of transportation and document delivery. The current version is Incoterms Copyright 1999 by ICC Publishing S.A.
The actual text of INCOTERMS 2000 is contained in IC publication NO Contaqct: ICC Publishing, Inc.
Source: Dictionary of International Trade, 7th Edition, 2006, World Trade Press.
International Logics
Export University 101

9. INCOTERMS – Examples Any Mode of Transport, including Multimodal
EXW - Ex Works (+ named place)
FCA - Free Carrier (+ named place)
CPT - Carriage Paid To (+ named place of delivery)
CIP - Carriage and Insurance Paid to (+ named delivery place)
DAF - Delivered at Frontier (+ named place along border)
DDU - Delivered Duty Unpaid (+ named place of delivery)
DDP - Delivered Duty Paid (+ named place of delivery)
Sea and Inland Waterway Transport Only
FAS - Free Along Side (+ named port of shipment)
FOB - Free on Board (+ named port of shipment)
CFR - Cost and Freight (+ named destination port)
CIF - Cost, Insurance and Freight (+ named destination port)
DES - Delivered Ex Ship (+ named destination port)
DEQ - Delivered Ex Quay (+ named destination port)
The International Chamber of Commerce released the first version of INCOTERMS in 1936.
Here are a few thumbnail examples from the U.S. exporter’s perspective:
EXW New Orleans means, "Here are the goods; come and get them." Any export permits are the buyer’s concern; seller does not even have to load the truck.
FCA New Orleans shows where goods properly cleared for export will be turned over to the main carrier for shipment abroad. Whatever means of conveyance picks up the goods from seller’s place of business, exporter pays any cost of loading it aboard. If main carrier does not provide cargo pickup services free to the exporter, he pays cost of inland delivery to that carrier’s terminal in New Orleans. Overseas buyer is liable for transportation and insurance expenses once main carrier receives the cargo. (If railroad in New Orleans issues a Maersk bill of lading, accepting cargo destined for shipment by Maersk Lines out of a California port, exporter has documented FCA compliance.)
CPT Istanbul means the vendor’s price includes freight all the way there, but insurance is up to the buyer. Seller has no stake in insuring anything past the point where he turns the cargo over to the export carrier.
CIP Lisbon means vendor’s price includes freight and insurance all the way to Lisbon. Once it comes over the ship’s side or down the plane’s ramp at the other end, the buyer takes full possession.
FOB vessel Houston means the vendor undertakes to get the cargo that is properly cleared for export loaded onto the outbound vessel. (Documentary evidence of FOB compliance is a clean on-board bill of lading.)
International Logics
Export University 101

10. Regulatory and Compliance Requirements
Knowledge of the regulatory requirements for your goods will ensure a smooth transit with minimal delays and that your company remains compliant.
Customs regulations - considering the product type
Compliance - important to company survival
Keep accurate records
Fines can be very expensive
Resources and training are available
Expectations for carrier’s performance?
What can shipper and recipient expect from carrier during the cycle..
Online tools are available
Knowledgeable resource to manage your program
Certain products and merchandise are subject to export controls and additional documentation. Examples –
Drugs, Medicines, Pharmaceuticals……
Radiation Emitting Appliances
Labeling
Country of Origin Marking
Electrical
Foods
Packing Materials
Language
Phytosanitary
Fumigation
Military products, munitions, “precursor items” Crime Control, * things that hurt people, help an enemy
􀂃 Your Responsibility as an Exporter to Know your Product
􀂃 Forwarder can help
􀂃 Penalties can be mind-boggling !!!!!!
International Logics
Export University 101

11. Proper Labeling & Packing
Recommendations for small packages
Always ship in sturdy, non-descript boxes and seal with high-quality packing tape
Use boxes larger than 7" x 4" x 2"
Pack boxes with care
Include contact information inside the inner box
Address your packages carefully
If shipping multiple packages, do not tape boxes together
Never ship valuables in any type of envelope or folder.
Use packaging material to properly cushion your items and avoid shifting or rattling of box contents
Place a copy of your company’s packing slip inside the inner shipping box. Include contact information for both the sender and the recipient
International Logics
Export University 101

12. Proper Labeling & Packing – cont’d
Recommendations for Skid Loading
Follow all carton orientation symbols or verbiage when able
Distribute weight evenly on the skid/pallet to avoid excess weight being placed on carton contents
Stack cartons squarely on the skid/pallet to the edge (do not overhang) and corner-to-corner to maximize compression strength
Top of skid/pallet must be flat to minimize chances of lost or damaged cartons (pyramid stacking is unacceptable)
Shipments must be securely banded, bolted and/or stretch/shrink-wrapped to the forkliftable base
Individual cartons should include the origin, destination address whenever possible
Remove or mark through all old labels
Use a 70-gauge minimum stretchwrap or shrinkwrap and ensure it is secure to the base of the skid.
Banding material can include steel, rayon, polypropylene,nylon or polyester strapping.
Use a minimum of two bands (tightly secured) through the skid/pallet voids and around all cartons..
If applicable when bolting, consider using shockabsorber connections or cushioned skids.
International Logics
Export University 101

13. Freight Insurance VS Declared Value
Obtaining Insurance is a choice that warrants careful consideration.
Why Insure?
Carrier’s limit of liability (COGSA & Warsaw Convention)
File claims timely with complete information
Insurance pays the claim and then files with the Carrier
Use “declared value” to increase carrier liability when needed
Based upon replacement value of the goods
Insurance or declared value may be a requirement when using Letters of Credit
Insurance Cost - usually less than 2% of shipment value (1.25% is avg.)
Insurance VS Declared Value – Choose your best option
International Logics
Export University 101

14. FedEx Resources Web Sites Global Trade Manager - http://www.fedex.com
EEI Filing Options Guide -
FedEx Export AgentFile Tool –
FedEx Global Regulatory Services
Toll Free
FedEx International Customer Service
Toll Free GoFedEx
(say “International Services")
International Logics
Export University 101

15. INTERNATIONAL LOGISTICS
Questions?
Thank you!
Erin Butler
Sr. International Account Executive, FedEx
What questions do you have?
International Logics
Export University 101