Logistics Functions in International Trade

1. Labeling Importers are required to comply with domestic labeling laws. Even though an imported product may comply with the labeling requirements of the country where it was manufac­tured, it may not comply with the labeling laws of the importing country. Labeling require­ments are imposed in many countries to ensure proper handling (e.g., “Do

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Risks in Foreign Trade

Businesses conducting export-import trade face a number of risks that may adversely impact their operations, such as the following: Political risk: Actions of legitimate government authorities to confiscate cargo, war, revolution, terrorism, and strikes that impede the conduct of international business Foreign credit risk: Nonpayment or delays in payment for imports Transportation risk: Loss

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Marine and Aviation Insurance

Export-import firms depend heavily upon the availability of insurance to cover against risks of transportation of goods. Risks in transportation are an integral part of foreign trade, partly due to our inability to adequately control the forces of nature or to prevent human fail­ure as it affects the safe movement of goods. Insurance played

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Claims and Procedures in International Trade

1. Claims Shippers can claim from carriers or insurers with respect to loss or damage to their cargo. Shippers often attempt to recover from carriers when they have a reasonable basis to believe that the loss or damage was caused by the negligent act or omission of the carriers that was easily preventable through

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Determinants of Export Prices

A number of variables influence the level of export prices. Some of these are internal to the firm; others are factors that are external to the firm. A major internal variable is the cost that is to be included in the export price. The typical costs associated with exports include market research, credit checks,

Pricing in Export Markets

The export price decision is distinct from the price decision in the home market. The export decision has to consider variations in market conditions and the existence of cartels or trade associations, as well as the existence of different channels of distribution. The presence of different environmental variables in export markets militates against the

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Export Pricing Objectives

An exporter’s pricing objectives have an important influence on its pricing strategy. If a firm prefers an aggressive expansion strategy into foreign markets, it may opt for a lower profit margin than it accepts for domestic sales. It will charge minimum prices in all markets to generate the highest volume of sales. This means

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Calculating the Export Price

Calculating Landed Cost and Distributor/Retail Price There are two steps involved in calculating the export price: Calculating the landed cost: Landed cost is the total cost of a product once it has arrived at the buyer’s door. It includes the original cost of the item, all brokerage and logis­tics fees, complete shipping costs, customs

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Trade Terms

Despite wide differences among national laws, there is a high degree of uniformity in con­tract practices for the export and import of goods. The universality of trade practices, includ­ing terms of sale, is due to the development of the law merchant by international mercantile custom. The law merchant refers to the body of commercial

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Incoterms rules history

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended

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Introduction to Incoterms 2020

Incoterms are universally recognised rules. They guide buyers and sellers when formulating and fulfilling a contract for the shipment of goods. A careful study of Incoterms 2020 will repay the effort by enabling more favourable trade terms. It allows the manufacturer and buyer to open the doors to more effective trade finance. The latest version of

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Harmonization of Export Sales Contract Law

Export sales contracts are central to international commercial transactions, and around them revolve a series of connected but distinct relationships, including cargo insurance, transportation, and payment arrangements. The rules and practices governing such con­tracts vary from one export transaction to another, based on the agreement of the parties as well as the legal system.

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CISG: Essential Elements

1. Oral Contracts/Statements A contract need not be concluded in or evidenced in writing. Import companies that negoti­ate contracts by phone may be under the impression that the agreement will not be enforce­able since it is not made in writing. However, they could be held liable under CISG if they verbally accept an offer

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Pertinent Clauses in Export Contracts

An export contract is an agreement between a seller and an overseas customer for the performance, financing, and other aspects of an export transaction. An export transaction is not just limited to the sale of final products in overseas markets but extends to supply contracts for manufacture or production of the product within a

China National Products versus Apex Digital, Inc

China National is a Beijing-based corporation organized under the laws of China with specific foreign trading rights. It facilitates the import and export of goods between Chinese and foreign companies. Apex is a company incorporated in Ontario, California, which engaged in the import and distribution of consumer electronic goods. In 2000, China National entered

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Documentation in Export-Import Trade

A number of documents are used in export-import trade. The completion and submission of required documents is critical to the successful shipment, transportation, and discharge of cargo at the port of destination. The documents used depend on the requirements of both the exporting and the importing countries. Much of the documentation is routine for

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Transportation for International Trade

Three modes of transportation are available for exporting products overseas: air, water (ocean and inland), and land (rail and truck). Whereas inland water, rail, and truck are suitable for domestic transportation and movement of goods between neighboring countries (e.g., the United States to Canada, France to Germany), air and ocean transport are appropriate for

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Air Transportation for International Trade

Airfreight accounts for less than 3 percent of world trade by weight and approximately 40 percent of world trade by volume. Demand for airfreight is correlated with world eco­nomic growth, fuel prices, and availability/competitiveness of surface transport options. (See Table 9.1 for advantages and disadvantages of this transportation type.) Air cargo traffic has shown

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Ocean Freight for International Trade

Ocean shipping is the least expensive and the dominant mode of transportation in foreign trade. It is especially suitable for moving bulk freight such as commodities and other raw ma­terials. Today, an increasing part of ocean freight travels by containers, which results in minimal handling at ports. In terms of value, containerized cargo accounts

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Land Transportation for International Trade

Land transportation carriers (trucks, trains) are used mainly to transport exports to neigh­boring countries as well as to move goods to and from an airport or seaport. A substantial volume of U.S. exports to Canada and Mexico is moved by rail and/or trucks. Compared to rail transport, trucking has the advantage of flexibility, faster

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