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

2. 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

3. The International Supply Chain 3

4. 4

5. 5 International Documentation

6. 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

7. 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

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

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

10. Other Important Documents 10 Inspection Certificate Export License NAFTA Certificate

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

12. 12 Other Important Documents Health Certificate Letter of Credit Draft

13. 13 Other Important Documents Request for Quote Proforma Invoice Purchase Order

14. 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

15. 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

16. Resources for Documentation US Department of Commerce Help Line: 1-800- usatrade UN Documentation Tool Kit: http://unece.unog.ch/etrade/fill_doc_tk.aspx UNZ&Co: http://unzco.com Shipping Solutions: http://www.shipsolutions.com/ SAP Global Trade Management: www.sap.com BNA Export Document Library: http://www.bna.com/products/corplaw/exgw.htm Exporters Encyclopedia: http://www.loc.gov/rr/business/duns/duns1.html #db1c 16

17. 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 30.91. The items being shipped requires Schedule B numbers when the items are valued over $2,500.00 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: http://www.access.gpo.gov/nara/cfr/waisidx_02/15cfr30_02.html

18. Part 16: My HS, Schedule B, or HTS Number  Check the census bureau to find out your product’s number  Example:  8541.40.6020 : Solar Cells Assembled Into Modules Or Panels

19. 3CE: Census Schedule B/HS Classification engine http://uscensus.prod.3ceonline.com/#/p=0

20. 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. 21 Schedule B Resources www.census.gov/forei gn-trade

22. 22 Find your HTS using the C.R.O.S.S system.  http://rulings.cbp.gov/ http://rulings.cbp.gov/

23. Incoterms 2010 23

24. 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. 25 EXW Truck Bill of Lading

26. 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. 27 FCA (Warehouse or Carrier Terminal) Truck Bill of Lading

28. 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. 29 FAS (Sea or Waterway) Carrier’s Receipt

30. 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. 31 FOB (Ocean Only) Ocean Bill of Lading

32. 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. 33 CFR Ocean Bill of Lading

34. 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. 35 CPT -Carrier Receipt Included -Export Clearance

36. 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. 37 CIF -Ocean Bill of Lading -Insurance Certificate

38. 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. 39 CIP -Bill of Lading -Insurance Certificate

40. 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. 41 DAT Bill of Lading

42. 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. 43 DAP Truck Bill of Lading

44. 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. 45 DDP Truck Bill of Lading

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

47. 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

48. The Cubic Meter

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

50. Cubic Foot Formula Then divided by 35.314 to convert to cubic meters

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

52. Air and Ocean Price Comparison Airfreight U.S Inches Dim Weight Conversion 125" x 96" x 96“ / 166 = 6939lbs 6939lbs / 2.2046 = 3,147 Kilos x $3.25 per kilo Total Airfreight Charge= $10,227.75 $542.00 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= 18.87 cubic Meters 18.87 Cubic Meters x $95 per cubic meter Total Ocean LCL(Less Than Container Load) = $1,792.65

53. “Odd sized” Freight

54. Transportation methods 54

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

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

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

58. Calculating Duties and Taxes 58

59. 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

60. 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:.000125 of the value Customs Broker Fees: $100- 150 per entry….plus other charges..

61. 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

62. International Trade Resources 62 SBA.gov Export.gov Centers for International Trade Development (CITD) www.citd.org ELAN (Export Legal Assistance network) www.exportlegal.org US DOC Trade Information Center http://export.gov/exportbasics/eg_main_017483.asp U.S. Customs www.cbp.gov USDA http://www.fas.usda.gov/ Trade Information Center Hotline 800-USA-TRADE Inbound Logistics Magazine and resource http://www.inboundlogistics.com/cms/ Export911.com American Association of Exporters and Importers (AAEI) http://www.aaei.org/

63. Q&A 63