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“LOGISTICS AND SHIPPING”
WORKSHOP
Presenter: Beverly Johnson June 26, 2015
UNDERSTANDING: Costing exports Trade Agreements and their requirements (considerations for key markets e.g. Europe & EUR 1 Form) Proforma invoice versus commercial invoices Understanding Inco-terms Transportation and logistics Shipping requirements (modes of shipment) Legal aspects of shipping Choosing a suitable carrier
Costing for Export There are many factors involved in costing for an export
transaction and these are not relevant to domestic sales. To derive the real costing for export, you should have a
cost analysis sheet completed to establish that all related cost pertaining to the export transaction are listed and built into the cost of products for exports.
This way quotations are prepared correctly and accurately. The shipper is not loosing out and the buyer is not over-charged
Cost for export vs Pricing
Export costing should not be confused with pricing. Costs: The total of all expenses associated
with producing and selling a product overseas. Price: The amount for which the exporter sells
the product and is determined by the exporter’s marketing strategy.
Margins: The difference between the total cost per unit and the export selling price which is determined by the producers/exporter/supplier’s corporate objectives.
EXPORT COSTING WHAT’S SHOULD BE INCLUDEDPRIMARY COST
COST OF RAW MATERIAL
COST OF MANUFACTURING
PACKING & BRANDING
FORMULATION AND MODIFICATION
(as requested by a buyer)
CREDIT TERMS – AGREED INTEREST RATE
WAREHOUSING & DISTRIBUTION
PORT FEES**
EXPORT ADMINISTRATION
FREIGHT (AIR, RAIL, LAND OR SEA)
SECONDARY COST FORMULATION &
MODIFICATION (Labelling, re-packaging, re-branding etc.)
Placement of a Product into a marketplace (5Ps – Price, place, products, promotion, people)
Bank Charges
Utilities
HR & Training
Insurance Risk (depending on terms)
Quality Controls
COSTING EXPORTSWill the product be competitive?
ORIGIN COST (JAMAICA) COST OF GOODS INLAND TRANSPORT EXPORT PROCESSING JAMPRO REGISTRATION PORT/AIRLINE FEES ORIGIN TERMINAL HANDLING
FEE
WAREHOUSING/CONTAINER MARINE INSURANCE FREIGHT (AIR OR SEA) OBTAIN CERTIFICATES OF
ORIGIN
DESTINATION COST TRANSHIPMENT
INSPECTION DESTINATION TERMINAL
HANDLING FEE CUSTOMS CLEARANCE STORAGE/DEMURRAGE
ETC CUSTOMS DUTY/TAXES INLAND HAULAGE WAREHOUSING DISTRIBUTORS’ MARK-UP
CERTIFICATES OF ORIGIN WHAT IS A EUR 1 CERTIFICATE?
An EUR1, also known as a ‘movement certificate’, enables importers in certain countries to import goods at a reduced or nil rate of import duty under trade agreements between the EU and beneficiary countries.
The condition of “Origin" is that the products must have been completely manufactured, processed or transformed in a member country.
The EUR.1 is used to certify the origin of a product, and if applicable, benefit from favorable trade terms (tariffs mainly) under a preferential trade policy of the European Union (EU).
Without a certified EUR 1 Certificate from the authorizing body (eg: Jamaica Customs), goods entering EU markets will be levied with the rate of duties applicable to the products and preferential treatment will apply. The full duty and taxes if chargeable are payable
A EUR 1 Certificate must be accompanied with the Supplier’s Invoice for certification to be done.
Shipping & Logistics Shipping is the physical process of transporting
commodities and merchandise goods and cargo
via sea or air)
Logistics is the management of the supply chain
in the flow of goods between the point of origin
and the point of consumption in order to meet
market demands
CHOOSING A SUITABLE CARRIER
EXPORTING YOUR PRODUCT? YOU MUST DETERMINE THE MOST SUITABLE MODE OF TRANSPORT
I. SEA (TO INCLUDE THE NVOCC) orII. AIR (TO INCLUDE AIR COURIER) orIII. MULTIMODAL (TO INCLUDE
TRANSHIPMENT)
FACTORS WHICH DETERMINES THE SUITABLE MODEFREQUENCY OF SERVICETRANSIT TIMESHELF LIFE OF THE PRODUCTINLAND TRANSPORTTRANSHIPMENT POSSIBILITIES
LEGAL ASPECTS OF SHIPPING
Understanding the 1.Terms of the Bill of Lading 2.Terms of the Airway Bill3.Terms of the Multimodal Bill of
Lading4. Pro-forma/Commercial Invoice
PROFORMA INVOICE VS COMMERCIAL INVOICEWhat’s the difference?
A Pro forma Invoice (or estimated invoice) is the document commonly used as preliminary invoices with a quotation, which shows negotiation between reached between the seller and the buyer. Its an estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges, terms of sales and terms of delivery. Pro forma invoices.
It is not a confirmation of a Sales Agreement
PROFORMA INVOICE VS COMMERCIAL INVOICE A Commercial Invoice is a document used in foreign
trade. It is used as a customs declaration provided by
Supplier/Shipper It’s used for exporting goods across international borders Information on all the parties involved in the shipping
transaction Detailed description of goods being transported, quantity &
Value The country of manufacture The Harmonized System codes for each item being shipped Must also include a statement certifying that the invoice is
true, and a signature. A commercial invoice is used to calculate tariffs, based on
the CIF value for customs purposes of duty and taxes payable
CONSIDER THE MOST SUITABLE
INCOTERMSTERMS OF DELIVERY – A standardized set of terms intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries for the movement of goods and where the responsibility change hands from the seller to the buyer
EX WORKS or FOB or C&F or CIF or DDU
INCOTERM RULES
