International Logistics Chapter 12 MRKT 415 Instructor Evrim

International Logistics Chapter 12 MRKT 415 Instructor: Evrim Toren 1

Definition of International Logistics The negotiating, planning, and implementation of supporting logistic arrangements between nations, their forces, and agencies. It includes planning and actions related to the utilization logistic policies, systems, and/or procedures to meet requirements of one or more foreign governments, international organizations, or forces.

Government Influences Political Trade Restrictions of ◦ Tariffs ◦ Nontariff barriers Import quota ◦ Embargoes As of October, 2007, the United States has sanctions against: China, Ivory Coast, Cuba, Democratic Republic of the Congo , Iran, Myanmar, Sudan, Syria, Venezuela, and Zimbabwe International Transport ◦ Cargo preference rules 3

Challenges Economic Conditions ◦ Currency Changes Laws, Regulations, and Legal systems Cultural Considerations ◦ Language ◦ National Holidays 4

Exporting Requirements �Shipping a product overseas ◦ Packing ◦ Labeling ◦ Documentation ◦ Insurance requirements Note: Most exporters rely on an international freight forwarder to perform these services because of the multitude of considerations involved in physically exporting goods 5

Reasons Used Guidelines ◦ Move goods easily through customs ◦ Protect Products Pack in strong containers, adequately sealed and filled when possible. Make sure the weight is evenly distributed. Goods should be palletized and when possible containerized. Packages and packing filler should be made of moisture-resistant material. To avoid pilferage, avoid writing contents or brand names on packages. Other safeguards include using straps, seals, and shrink wrapping. Observe any product-specific hazardous materials packing requirements. Packing 6

Reasons Meet Markings on cartons to be shipped shipping regulations Ensure proper handling Conceal the identity of the contents Help receivers identify shipments Insure compliance with environmental and safety standards Shipper's mark Country of origin Weight marking Number of packages and size of cases Handling marks Cautionary markings, such as "This Side Up" or "Use No Hooks" Port of entry Labels for hazardous materials Labeling 7

Documentation Air waybills Bill of lading Commercial invoice Consular invoice Certificate of origin NAFTA certificate of origin Inspection certification Dock receipt and a warehouse receipt Destination control statement Shipper's Export Declaration(SED) Export license Export packing list Insurance certificate 8

Insurance Reasons Damaging weather conditions Rough handling by carriers, Other common hazards to cargo Type of covers Marine cargo insurance Cargo insurance 9

Schedule B and HS Numbers �The Harmonized System (HS) ◦ Assigns 6 digit number ◦ 4 additional numbers (by country) ◦ 10 Digits total �US use Schedule B system ◦ Based on the international HS system http: //www. census. gov/foreigntrade/aes/exporttraining/videos/uscs_videos/Classif ying_your_commodity/index. html 10

Schedule B and HS Numbers Reasons �To determine applicable import tariff rates and whether a product qualifies for a preferential tariff under a Free Trade Agreement; �The Schedule B number is needed to complete the Shipper’s Export Declaration, Certificates of Origin and other shipping documents; and �The HS Number may be needed on shipping documents, such as certificates of origin 11

Incoterms 2000 (International Commercial Terms) �What are they? ◦ A series of international sales terms published in 2000 by the International Chamber of Commerce (ICC) ◦ From the seller’s viewpoint: the different locations for quoting a price to an overseas buyer �How are they useful? ◦ Widely used in international commercial transactions ◦ Used to divide transaction costs & responsibilities between buyer & seller ◦ Reflect state-of-the-art transportation practices 12

Incoterm Groups (13 terms) �Group E – Departure ◦ EXW (Ex Works) �Group F – Main carriage unpaid ◦ FCA, FAS, FOB �Group C – Main carriage paid ◦ CFR, CIF, CPT, CIP �Group D – Arrival ◦ DAF, DES, DEQ, DDU, DDP 13

Group E �EXW – (Ex-Works) named place where shipment is available to the buyer, not loaded. The seller will not contract for any transportation. 14

Group F �International Carriage NOT Paid by Seller FCA – (Free Carrier) seller is responsible for arranging transportation to a specific carrier at a named place; suitable for all modes of transport FAS – (Free Alongside Ship) seller must arrange for delivery, and assume all risks, up to the ocean carrier at a port. Delivery is ‘within reach of ship’s tackle’ FOB – (Free On Board vessel) only for carriage by water; the point of title transfer occurs when the goods have passed over the 15 ship’s rail

Group C � International Carriage Paid by the Seller CFR – (Cost and Freight) seller must deliver over the ship’s rail, assuming risks. Once loaded, risk transfers to buyer. Cargo insurance from port of loading is not included. For waterborne shipments only. CIF – (Cost, Insurance and Freight) seller retains risk of loss up to the foreign port of unloading. For waterborne shipments only. CPT – (Carriage Paid To) seller will pay all freight costs all the way to the foreign port; buyer assumes all risk of loss beyond the loading port. For all modes of transport. CIP – (Carriage and Insurance Paid To) similar to CIF; used in multimodal transactions. Place of receipt & delivery may be different from port of loading or unloading 16

Group D � Arrival At Stated Destination DES – (Delivered Ex-Ship) seller pays all costs & bears all risks of transport up to foreign port of unloading, except cost or risk of unloading cargo from ship DEQ – (Delivered Ex-Quay) similar to DES; seller pays the costs of unloading the cargo from the vessel and the cost of import clearance DAF – (Delivered At Frontier) seller’s responsibility is to deliver goods to a named frontier (border crossing point) & clear the transaction for export. Buyer’s responsibility is to arrange for pickup of goods after cleared for export, carry them across border, clear them for importation, and pay duties DDP – (Delivered Duty Paid) Seller pays everything to the buyer’s warehouse door and passes on all related costs in the merchandise price 17

Tariffs and Imports fees �Tariff is a tax set by governments on the value of products imported from one country into another. �Tariffs are assesses before importing the product. �Types of Tariffs: ◦ Sales and state taxes, ◦ Customs fees

Tariffs and Imports fees (cont. ) �Steps to determine the Tariff Rate ◦ Step 1: Determine your HS or Schedule B Number ◦ Step 2: Determine Tariff Rates �Country Specific Tariff and Tax information �U. S. Government Tariff Resources for Agricultural Exports �Online Tariff Database provided by Customs Info LLC. �Review Export. Government’s disclaimer �Tariff and Tax Information for U. S. Territories �Sending Gifts �Additional Tariff Resources

Common Export Documents �There are commonly Export Documents used in exporting, but specific requirements vary by destination and product. ◦ Airway Bill ◦ Bill of Landing ◦ Commercial Invoice ◦ Export Packing List ◦ Electronic Export Information Form

Certificate Of Origin �The Certificate of Origin (CO) is required by some countries for all or only certain products. �The exporter should verify whether a CO is required with the buyer and/or an experienced shipper/freight forwarder or the Trade Information center. �Most common are Certificate of Origin for claiming benefits under Free Trade Agreements

OTHER CERTIFICATES �Certificate of Analysis �Certificate of Free Sale �Dangerous Goods Certificate �Fumigation Certificate �Health Certificate �Ingredients Certificate

International Trade Defined as economic transactions that are made between countries. International trade transactions are facilitated by international financial payments, in which the private banking system and the Central Banks of the trading nations play important roles.

Trade Agreements �The purpose of US Trade Agreements is to create opportunities for Americans and help to grow the U. S. economy. �Administering trade agreements involves: ◦ Monitoring the trading partners’ implementation. ◦ Negotiating and signing trade agreements that advance the President's trade policy �An important type of trade agreement is the Trade and Investment Framework

International Logistics Agencies Examples �World Courier: ◦ Private Company handling Specialty & Custom Shipment �USPS: ◦ Government Agency handling mail and parcel �Fed. Ex: ◦ Public Company handling a variety of shipping needs 25

World Courier � Largest most successful specialty courier in the world � Areas of Service: ◦ ◦ Clinical trial logistics Clinical trial supply storage Cold Chain Solutions Courier services: �Advertising & media �Aircraft on Ground �Automotive �Biopharm �Food �High. Tech � Serve in 50 Countries, 140 offices 26

USPS (United States Postal Service) � Independent agency of the U. S. Government � Responsible for providing postal service in U. S. � Second largest civilian employer in U. S. after Wal-Mart � Has contractual agreement with Am. Trak and various airlines for mail and package delivery � Offers international services to over 190 countries, including ship letters and packages with the aid of Fed. Ex � International Parcel Shipments: ◦ Maximum weight: 70 pounds ◦ Maximum length + girth: 130 inches ◦ Costs almost triple for Parcel Post shipments that are "oversized" (Length + girth is greater that 108 but less than 130 inches) 27

USPS Mail Flow Through National Infrastructure 28

Fed. Ex � Headquartered in Memphis, Tennessee � Offers international services to over 220 countries � Strong ties to the White House and members of Congress allow access to international trade and tax cut debates as well as the rules of the business practices of the United States Postal Service � In 2001, Fed. Ex sealed a $9 billion deal with the USPS to transport all of the post office's overnight and express deliveries � International Next Flight Urgent shipments: ◦ Up to 2, 200 lbs. per piece (or more with prior approval). Unlimited total shipment weight � Other International parcel shipments: ◦ Up to 150 lbs. each (unlimited total shipment weight), 108" in length, 130" in length plus girth (L+2 W+2 H) 29