Exam 14: Export and Import Practices

In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.

The first step in finding a foreign market for a product is to determine whether a market exists for a firm's products.

If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.

CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.

Incoterms were created by the New York Chamber of Commerce and are revised every year.

Products placed in a bonded warehouse do not pay import duties until they are removed.

Exporters should consider both private and public export financing.

Reverse trade missions try to find import sources in foreign countries for U.S. producers.

Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.

Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules, and cash flow projections are all part of the export marketing plan.

An export bill of lading serves as:

Every importer should know how the U.S. Customs calculates import duties and know the importance of the product classification.

Export drafts must be paid before the buyer receives shipping documents.

In the area of shipment risk, ocean vessels assume:

In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destination.

Basic named perils marine insurance covers:

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?

Once a firm determines that a market exists for its products, it needs to decide to export directly or indirectly.

U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.

On an open account, the buyer assumes all of the payment risk.