Shipping office services, helpline, consultancy and supply chain security

Tuesday, 29 November 2011

Gary Grumble

I’m noted as a reasonable sort of guy, I mean when, recently, that blind man tripped me up with his white stick, accidentally, of course, I took a softly softly approach, I only punched him once.

I am however hot under the collar with some of UK’s exporters, the ones who buy from the USA or buy goods/ technology with U.S. Intellectual Property Rights (IPR). Some of them get so paranoid about U.S. export and re-export controls such as the military ones that are caught under what is known as ITAR (International Traffic in Arms Regulations) under the control of the U.S. Dept.of State that they seem to clean forget that they are themselves English (or British). They are that busy ploughing through ITAR that they forget that their first responsibility is to comply with U.K.and E.C. regulations and they in some cases when questioned about their U.K. licencing system point to the U.S approval and say “There you are Mr. Customs man, our U.S. friends have said it is OK to re-export from the U.K.

We know that failure to comply with U.S. controls can be very damaging, there have been some multi million dollar fines imposed on some U.K defense companies, it would be stupid for a company to get itself published in the U.S. Federal Register for transgressions because that could lead to the company being blacklisted and no U.S. company would be allowed to trade with them which could lead to bankruptcy. However achieving a balance is the best option, achieve a satisfactory level of compliance with both sides of the Atlantic and breathe easy or at least breathe easier.

Wednesday, 23 November 2011

Be positive about Exporting!

I’m starting this blog after a great Twitter discussion. It followed a tweet about how the CBI seeks £20bn state boost for UK exports to BRIC economies ( Was this announcement good news? Surely it has to be good news, to quote from the statement:

CBI study finds UK's share of global exports has declined to 4.1% from 5.3% in 2000.

The CBI has urged the government to provide a £20bn boost to the economy over the next decade through a radical overhaul of Britain's export strategy focusing on providing the right products for the world's high-growth markets.

John Cridland, CBI director general, said: "We need to capitalise on the booming success of the Bric countries, and look to future high-growth markets such as Indonesia, Mexico and Turkey. The middle classes in emerging economies will have needs that our producers are more than able to fulfil."

How could this not be good news … but there are always things to be aware of, be cautious of – but that shouldn’t stop the fact that getting on with EXPORTING is GOOD. We hear too many stories of companies who got into trouble because their goods got delayed in customs and it cost them loads of money, they didn’t do the paperwork right and they got fined, they didn’t understand international payment issues so they didn’t get their money, etc, etc, etc.

Though I know we need to temper enthusiasm with reasoned words of advice and caution can’t we be more positive with the public perception of EXPORTING? It's profitable! It’s fun! Companies are 34% more likely to survive a recession if they export! Here’s some more good news:
Taking your products (or indeed your services) to beyond the shores of the United Kingdom opens up almost limitless opportunities for expansion and growth. Why sell to 70 million people when you have a global market of 7 billion?

But you may argue: Isn’t it expensive to begin exporting and there are lots of the risks? Of course we can't ignore this. Companies can get caught out if they don’t do the homework but that's always been the case and it doesn't just affect UK exporters, other countries do it and the UK is still the 13th largest exporting country of merchandise in the world. Export/ import regulations are many and varied – but isn’t that part of the fun, the challenge, the reason I’m still involved in and excited by international trade. Companies make more money exporting than they can in home markets and it encourages growth and sustainability. We should be positive about exporting, encouraging them to try, and if there is a problem, try again.

Come on people …. Comment and Encourage!!

Monday, 17 October 2011

Gary Grumble

I’ve just talked to a mature gent (71) who is an honest exporter of non strategic industrial goods. He got an order from Iran which is not unusual for him as he has exported to Iran for 26 years, he knows the form, he went through all the hoops e.g. The Iran list etc. He was told his goods did not need an export licence, he went ahead and booked the shipment only to find it detained by HMRC and the Border security people. Despite prompt response to the questions asked it took him nearly 3 weeks to get the shipment reinstated, he was told (would you believe) that the goods did not need an export licence.

He was more than upset to find all this cost him about £2000 in demurrage, storage, reconsigning etc.

He read in the newspaper that the Government were looking for an export led recovery to solve our economy and recessionary ills. “They are having a laugh aren’t they?” he said “ I need some kind of recovery myself”

My advice to our friend who feels like an innocent man sentenced to working on the chain gang.?

Write to David Cameron !!!

Thursday, 13 October 2011

SMEs - Why should I worry about actually getting paid for my exports, more than any other factor involving my overseas sales?

Getting paid is probably the most important consideration for a Seller whether they are a multinational company or a sole trader when they enter into a commercial transaction. Since the global downturn commenced in 2008, there has been an intensive drive by the UK Government to encourage all companies to seek new markets around the world, and to effectively "export the UK out of recession". Whilst it is entirely true that new markets can present some very attractive opportunities, there are also greater commercial and financial risks associated with export sales. These risks are especially acute for SMEs who may be unable to bear a substantial bad debt.

In essence it is important for those smaller businesses who are less experienced in this area to invest time in some essential groundwork and due diligence in consideration of "Will I get paid?".

First steps -

  • International Credit reports which provide information on the creditworthiness of potential overseas buyers are available to order on line from Dun & Bradstreet and Experian.
  • Buyer's bank references are a possibility but are less commonly requested these days and the information provided is usually quite bland and non committal.
  • A local agent can be very useful in helping to provide on the spot "encouragement" to the buyer, when payment is due.

Consider the country risks & sanctions-

  • Carefully consider the likelihood of the country's involvement in, or being affected by acts of terror, war or internal violence within the country. Things can change very rapidly - Egypt, for example was a very different place 12 months ago!
  • Check with your bank regarding sanctions - they will provide you with an up to date view on which countries they will accept payment from, and others where they will simply return the funds to the remitter's bank and refuse to process, as it would breach their policy on sanction compliance.

How will payment be made?

If you are Seller on Advance Payment or Open Account terms insist that your Buyer sends funds via the SWIFT system and ensure that you clearly quote your IBAN number on your invoices. Most Buyer's will have an online banking system which allows them to format and send international payments. UK banks will charge around £6 - £15 on average to process an incoming payment from an overseas bank.

Avoid payment by cheques at all costs! - UK banks will batch up overseas cheques, and either "negotiate", i.e. pay you now, but charge interest and retain the right of recourse, which means they will debit you, if the item is unpaid. The other option involves "collecting" the cheques, which means they will send them, in a batch to a clearing agent in the overseas country, who will clear the cheques in the local system. This can take 4-6 weeks for proceeds to be paid.

Documentary Collections - This is where shipping documents are sent forward usually by the exporter's own bankers, with a collection schedule which instructs the Buyer's bank how they should handle the documents and obtain payment from the Buyer. It would be fair to say that Documentary Collections are less popular these days, possibly because whilst providing a degree of structure to the payment process, (since both sets of banks are involved), neither bank guarantees that payment will be made. A recent quote from an SME exporter "I never really know whether my Documentary Collections will be truly paid, until I see the proceeds in my account".

Letters of Credit - A secure method of payment, especially if it has been confirmed by a trusted bank in the UK. It should be noted that UK bank's appetite to add their confirmation to Letters of Credit will change on a very regular basis. Incredible as it may seem now, in Q3 2010, there was some appetite (albeit limited) to add confirmation to Letters of Credit issued by a select few banks in Libya! Best advice is for exporters to check with their own bank/preferred trade finance bank regarding current risk appetite and charges to add confirmation to incoming Letters of Credit. It should also be emphasised that the exporter must ensure that their documentary presentation is compliant with the terms laid down in the Letter of Credit to ensure payment is guaranteed.

Export Invoice Finance/Factoring - An option for some SMEs, probably slightly larger companies, who are selling goods on a regular basis to a spread of overseas buyers/countries. Most banks offer this service, and it would involve them insuring on average between 70% - 90% of the value of invoices to approved buyers in approved countries. Set up and ongoing fees can be perceived as high, but it is a viable solution, which can help accelerate cash flow and ease political/economic worries.

Standby Letters of Credit - An increasingly popular choice for SMEs who are exporting on a regular basis, and who require some extra comfort that if payment is not received in accordance with the contractual terms, a claim may be lodged under the Standby Letter of Credit, and the Buyer's bank is obliged to pay that claim. Anecdotal feedback from Buyer's suggests that they are less willing to put these structures in place as their bank's will demand some security/collateral and the terms of these Standbys are usually very simple meaning that unfair claims are a possibility.

Be prepared to negotiate with your bank on all of the above payment methods and ask them for their published tariff. Some UK banks do not publish their international business tariff on their websites, but ask them for a copy! You are entitled to know what you are being charged!

Credit Insurance - The main players are Attradius, Coface and Euler Hermes. Worth considering but often the insurers may not be prepared to cover selected Buyers and will require your whole export book. They will cover proven insolvency of your Buyer, protracted default (Buyer failing to pay), but will need proof there is no contractual dispute.

When will I receive payment for my exports?

It is an indisputable fact that exporters have to be prepared to offer longer periods of credit to many overseas Buyers, than they would traditionally offer to their customers in the UK. In some territories, it is almost woven into their very fabric of life that 90 to 120 days should be offered by a Seller, and this can have a seriously negative effect on the Seller's cash flow. It can be a telling moment when an exporter realises the size of the funding gap which will exist (from received an export order, through manufacture, shipping and allowing a long credit period, to finally receiving in the proceeds of the sale).

There are possible steps that an exporter can take to help bridge this funding gap such as;

Building in stage payments - this is usual for sizable contracts involving the manufacture and installation of large pieces of capital equipment. The sting in the tail is that these types of contracts frequently involve the Seller's bank having to issue Tender/Performance/Warranty Guarantees which will tie up the Seller's banking facilities.

Letters of Credit can be discounted in many instances on the presentation of compliant documents by the Seller despite the fact that the Letter of Credit is actually payable, for instance 90 days after the Bill of Lading date. If the UK bank has added their confirmation, they will almost certainly offer to pay the Seller as soon as they have examined the documents and found these to be compliant. They will pay the Seller, less interest (and charges)on a non recourse basis, so if the buyer's bank won't or can't pay owing to political/economic factors, it is of no concern to the Seller.

In summary, securing payment for an export sale is key, and as one bank used to put it - "an export is a gift until it is paid for". SMEs can access some first class advice on securing payment, from UKTI, their local International Trade Manager (all banks will have regional trade specialists, who will be able to provide help and advice about securing cross border payments for exports.) So with some reasonable care and initial research a robust export sales policy can be established and the worry of bad debts having a serious effect on a the profitability of the business can be eased.

Written on 13th October 2011 by Richard Casburn MIEx (CITA), S&H LLP Associate & Trainer

Relevant Training:

Risk Management & Finance for Importers

Letters of Credit for Exporters

Export Essentials

Import Essentials

Friday, 7 October 2011

Gary Grumble wants the Ref to get out the Red card

“What’s happened to Gary?” I’ve heard people say Well mind yer own OK.

I feel like having a big grumble about the World Trade Organisation, I pick my victims carefully you see. The W.T.O. was supposed to introduce harmony and help traders around the world import and export in a fair and visible way, getting rid of what they called “Non Tariff barriers” such as obscure documentary requirements, pre-shipment inspections etc. and stamping out counterfeiting. The W.T.O opened its doors in 1995 and in the 16 years since then they have achieved some good things such as the complaints procedure.

So what is bugging me ? well to start with a recent statistic shows that in 2010 EU Customs seized more than 103 million products suspected of violating International Property Rights (IPR) The number of suspect shipments rose to almost 80,000 up from 43500 in 2009. China accounted for 85% of IPR infringing products.

China is a member of the W.T.O. and signed up to comply with their rules – Not doing too well are they?

On the same track Brazil is a member of the W.T.O. yet a recent article in “The Economist” issue dated September 24th-30th 2011 entitled “Protectionism in Brazil – A self made siege” recounts some severe protectionism obstructing trade with Brazil, for the full details get the article.

My grumble is that if the W.T.O. is serious about fair trade and compliant attitudes from its members why isn’t it getting tough with the transgressors, in football terms we are using the yellow card when it should be a straight red . Let’s hear from you--- do you agree.

Wednesday, 27 July 2011

Globally Harmonized System of Classification and Labelling of Chemicals (GHS)

Throughout the world there are different laws on how to identify the hazardous properties of chemicals we use in our daily lives and then how this information is passed to the users. This information is usually in the form of labels and Safety Data Sheets.

Because of the different laws it means that a chemical can leave one country being declared as non-hazardous for transport and use, but when it arrives at destination the authorities may deem it as hazardous for use and transport. This causes inevitable delivery delays and the need to undertake risk assessments before use.

The United Nations, together with experts from different countries, have created the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). The objectives of GHS are -

a) Enhance the protection of human health and the environment by providing an internationally comprehensible system for hazard communication

b) Provide a recognized framework for those countries without an existing system

c) Reduce the need for testing and evaluation of chemicals;

d) Facilitate international trade in chemicals whose hazards have been properly assessed and identified on an international basis.

In simple terms this means there is a global uniform basis for the evaluation of substance properties, how to label them and then pass the information on to users.

In December 2010 the European Union implemented GHS and will classify chemical substances according to how dangerous they are and label them using standardised danger statements and pictograms, universally.

What will change on labels?

Risk phrases (R) become Danger statements (H phrases) – examples

H240 - Heating may cause an explosion

H320 - Causes eye irritation

H401 - Toxic to aquatic life

Safety phrases (R) become Precautionary statements (P phrases) – examples

P102 - Keep out of reach of children

P271 - Use only outdoors or in well-ventilated area

P410 - Protect from sunlight

The warning word that accompanied the pictogram will disappear and is replaced by “Warning” or “Danger” which will appear before the H and P phrases.

The pictograms will change. They will now be on a white background with a red frame. Some examples can be seen above on the right.

For products within the supply chain whose labels conform to the old classification, (this is covered by Directive 67/548/EWG), these can be continued to be delivered for up to two years.

Two deadlines for products labelled before GHS:

For re-labelling substances – 1st December 2012

For re-labelling mixtures – 1st December 2017.

Safety Data Sheets (SDS) provides both employers and employees with a comprehensive source of information about the hazards within a product. They should be used as a reference source for the management of hazardous chemicals in the workplace to ensure that a programme for employee protection is in place, training is given and consider any hazards relating to the environment.

The format should have 16 headings as follows:

1. Identification

2. Hazard(s) identification

3. Composition/information on ingredients

4. First aid measures

5. Fire fighting measures

6. Accidental release measures

7. Handling and storage

8. Exposure controls/personal protection

9. Physical and chemical properties

10. Stability and reactivity

11. Toxicological information

12. Ecological information

13. Disposal considerations

14. Transport information

15. Regulatory information

16. Other information.

Written on 27th July 2011 by Yvonne McCarthy, S&H LLP Associate

Wednesday, 13 July 2011

Europe’s small and medium-sized companies look to emerging markets for growth

Following in the footsteps of larger multinationals, Europe’s small and medium-sized enterprises (SMEs) are increasingly entering emerging markets to find and exploit niches for their businesses, according to new research from the Economist Intelligence Unit. The report, New horizons: Europe’s small and medium-sized businesses look to emerging markets for growth, also finds that the so-called BRIC countries (Brazil, Russia, India and China) lead the field as emerging market destinations for European SMEs.

The report, written by the Economist Intelligence Unit and commissioned by FedEx Express, the US air freight giant, examines the degree to which Europe’s SMEs are operating in emerging markets: which markets they are choosing, why they are going there, and the opportunities and challenges that they are encountering.

The analysis is based on the findings of a survey of more than 600 executives from SMEs in Europe, as well as the conduct of more than 15 in-depth interviews. “Europe’s small businesses are increasingly looking for opportunities outside their home markets, which have been hit hard by the recession and aftermath,” says Jason Sumner, senior editor with the Economist Intelligence Unit and project director. “Emerging markets still present risks for these businesses but our research shows that the potential to find new customers is causing many to take the plunge.”

While many businesses used to go to emerging markets in order to lower their production costs, Europe’s SMEs are primarily seeking to tap into the rapidly expanding middle classes of emerging markets, either directly or else via the larger multinationals that they supply directly to, such as firms that supply parts to carmakers, for example. Nearly six in ten (58%) say that they are in these markets to sell their goods and services, far ahead of those either manufacturing goods there (11%) or buying services (12%).

Indeed, 51% noted the potential for fast revenue growth as the most attractive reason for being in these markets.

Following are the key findings of the report:

  • The rise of emerging markets is not just a big business phenomenon. Many European SMEs are deeply engaged as well. Although only a minority of Europe’s millions of SMEs overall operate outside their home markets, many of those that do are looking to emerging markets for growth. Almost 90% of the SMEs surveyed for this report, all of which operate outside their domestic markets, are planning to do business in emerging markets in the coming year.
  • Most SMEs are pursuing new customers rather than lower cost inputs. While many businesses used to go to emerging markets in order to lower their production costs, Europe’s SMEs are primarily seeking to tap into the rapidly expanding middle classes of emerging markets, either directly or else via the larger multinationals that they supply.
  • The financial crisis acted as a catalyst for expansion abroad. Europe’s weak economic prospects and tight fiscal position is accelerating the process of looking for growth outside the EU. In all, 62% of respondents agree that “tepid growth” in Europe makes it imperative to look to emerging markets for growth.
  • The BRICs will attract most attention from European SMEs in the coming year, followed by other near-shore markets. Growth rates, the degree of risk, ease of access and historical links all guide the process of how markets are selected to operate in. The top-10 emerging markets that Europe’s SMEs plan to do business with in the coming year are, in order of preference: China, Brazil, India, Russia, United Arab Emirates, Poland, Czech Republic, Morocco, Romania and Turkey.
  • Of these markets, Brazil has made the greatest strides in terms of improved perceptions. Given their greater likelihood for volatility, the relative favourability of emerging markets shifts year by year. In the past 12 months it has been Brazil’s chance to shine. Nearly half (48%) of SMEs noted improved perceptions of the country, bolstered by a smooth transition of political power and increased infrastructure spending in the run-up to the FIFA World Cup in 2014 and Olympic Games in 2016.
  • Inflation and exchange rates are the primary macroeconomic concerns for SMEs. Given the political risks of operating in emerging markets, political stability is generally viewed quite positively. However, inflation and exchange rates are seen as key macroeconomic risks: 23% of firms say inflation has become less favourable in their main target market in the past year.
  • At an operational level, bureaucracy and corruption are, by far, the biggest challenges. Selected equally by 46% of respondents, these issues lie far ahead of other challenges, such as credit risk (20%), difficulties enforcing contracts (18%), language and cultural barriers (16%) or bad infrastructure (14%).

Thursday, 30 June 2011

How important is language and culture when entering overseas markets?

Your business survival increasingly depends on reaching out to the people and cultures of the world to sell your goods and services.

Culture has to with diverse groups of people – their customary beliefs, social forms and the material traits of a racial, religious group. The environment of international business is composed of language, religion, values and attitudes, law, education, politics, technology, and social organisations that are different.

Culture gives you a set of codes to deal with and sets priorities among those codes. Whatever a nation’s culture is, it works for them. So to be able to function within it you must know it, accept it and join it.

The key implication is that by getting it wrong one could lose the whole business in any given market. Cultural awareness is not limited to just interpersonal relationships, but it can also affect some or the entire export marketing & sales package. For example, packaging design, use of graphics and symbols, and choice of names, even launch dates could all be sensitive to cultural influences.

The exporter must:

  • study the local culture& language requirements in advance
  • include a linguist in your team
  • be culturally sensitive to everything in that market
  • do not impose one’s own culture on others
  • adopt/adapt to the other party’s culture
  • work at a speed suiting the other party
  • not use any behaviour that can offend the other culture

To do this you need to:

  • Understand that the cultural factors that contribute to international business success or failure.
  • Remember that our own cultural values affect the way we behave in the eyes of others
  • Understand that other cultures have different values from our own (they are not ‘better’ or ‘worse’ – just different)
  • Understand why conflict between cultures occurs as a result of different values.
Written 30th June 2011 by Dick Brentnall - S&H LLP Associate/ Trainer

Related Training:

Coming soon to Online Training ... 'Successful Investment in International Trade Shows & Market Visits'

Tuesday, 21 June 2011

Buyers - What do they know about importing? Well!

Once upon a time I became a buyer with the heavy engineering division of a legendary multiglobal Company, I was really proud to be joining an experienced group of well seasoned professionals, they sent me on a 3 day basics residential course and when I returned I was given a desk, a chair and a telephone and was expected to get on with it. I did get on with it but looking back I can see how old fashioned it all was. Jimmy, Ken, Mike and co were very technical and talked about EN8 grade steel and 'Reaming' to their hearts content, they knew about 'tin bashing' and lots of stuff about machining specs and tolerances. Supplier partnerships, Supplier Rating and Supplier selection were rarely, if ever, mentioned, and although a lot of parts came in from outside the UK there was no procedure for controlling the importations. Not only was there no procedure but the system of dealing with paperwork and any additional charges over and above the agreed unit price on the Purchase Order was primitive. Additional costs such as freight, Customs duties, VAT were put under a cost collection code and in due course were paid without query.
"Of course" I can hear you say " that was probably a long time ago and things have changed since then" and it may be true in some cases but when we in our current role of giving training in International trade procedures talk to import staffs in the supply chain we ask them what causes them most problems in their daily work they almost unanimously reply "Buyers !!". They find that their Purchasing people are not comfortable with Incoterms, with Duty Relief options, selection of service providers such as Freight and Forwarding companies aand how to determine the landed value of goods as opposed to the Purchase Order value. If this is true and we believe it to be so then it begs the question "WHY?". The answer would seem to be that Purchasing from overseas is not included in the core training of Purchasing staffs, this in a global market economy seems a glaring omission and is also an indictment of Managements who in turn may have a poor understanding of supply chain issues.
Let's hear from you out there.

Friday, 17 June 2011

Some information on the Tariff

These are some things about the structure and use of the Tariff and the Commodity Code system posted on my twitter account in June 2011.

1. Did you know that if you have the CAS/ CUS of a chemical you can cross ref to the com/code? see ECICS the European Customs Inventory of Chemical Substances. It is an information tool managed by the European Commission's Directorate General (DG) for Taxation and Customs Union which allows users to:
• clearly and easily identify chemicals;
• classify them correctly and easily in the Combined Nomenclature;
• name them in all EU languages for regulation purposes.
It was first published in 1974 and became an activity of the Group of European Customs Laboratories in 2009. It is available freely as part of DG Taxation and Customs Union's Data Dissemination System. ECICS lists chemical names in a number of EU languages (currently mainly eleven) along with their tariff classification in the European Community's Combined Nomenclature (eight-digit CN codes). As the CN codes are based on the "Harmonized Commodity Description and Coding System" emanating from WCO, the ECICS tariff classifications are helpful throughout the world.

2. Harmonized System (HS) for commodity codes came in 1 Jan 1988 it used 200,000 commodities traded internationl to make appropiately 9,000 codes. Managed by the World Customs Organisation (WCO) to is harmonised in over 200 countries which account for 98% of world trade by value.

3. There are 21 Sections in the structure of the tariff schedule each divided into Chapters. There are 97 Chapters in all. The HS Coding system is designed so that the more developed or manufactured a product is the later it comes in the tariff. This works for Chapters and within the headings and sub-headings of chapters.

4. The General Interpretative Rules (GIRs) give 6 rules that must be used if it is not clear which commodity code number is suitable for your goods. You do not choose the commodity code with the lowest duty rate or the one that describes the goods as "other". You must look at the goods not the additional information when deciding on a code, and if in doubt, ask Customs.

5. You can receive an "opinion" from Customs, but these are not legally binding. For a legal decision you must apply for a Binding Tariff Information (BTI) Ruling.

6. The commodity code number is important because it:
* corresponds directly to the rate of import duty payable
* points to any import restrictions
* indicates if any preferential agreement applies
* relates directly to any trade policy measure affecting the import of the goods
* is used in trade statistics
* Facilitates trade negotiations, eg preference agreements
* shortens customs clearance times
* reduces the number of disputes between Customs
* increases trade supply chain security

7. You must select commodity code numbers with care - here are some tips:
1. Need full product information
2. Need access to the commodity codes
3. Use Chapter Headings
4. Use Explanatory Notes
5. The European Inventory of Chemicals
6. Know the General Interpretative Rules

Need to go further ????
Check for EBTI rulings , Tariff Notices, the Compendium of Classification Opinions, Official Journal – Commission Regulations, HS Decisions – on World Customs Organisation website

Whatever you do when classifying goods - TAKE IT SERIOUSLY!

Further reading: S&H Articles
History of Customs Duty
General Interpretative Rules - the GIRs
Brief Guide to Tariff Classification
Relevant training: Tariff Classification Explained

Tuesday, 14 June 2011

It's only moving boxes. I'n it?

We worked in the corporate head office of a major global company with a wide product range in Civil and Defence markets. The department we were in looked after export and import activities for several manufacturing divisions, we kept the company compliant with import and export regulations and maximised the use of legitimate cash saving Customs regimes such as IPR (Inward Processing Relief).
One day the entire department were assembled in the Head Office dining room, about 20 of us were addressed by the Human Resources Manager, he said the department was being closed down and the activity decentralised, "Come to think about it" he said "I don't know what you people do" Impressive? No not really !.
Three months after this 'massacre' a bill dropped through the Head Office letterbox from Customs claiming nearly a million pounds sterling owed to them as suspended duties under the IPR system. It was at that moment that the penny dropped in the management's mind and they realised that the department was not a cost centre it was a profit centre. They hastily convened a new team of two and within a short time the debt was wiped away as evidence of export of the temporarily imported parts was produced to Customs.
Who was responsible for this Senior Management lack of knowledge? in the first instance they were, but the Shipping department itself displayed a great lack of self advertising, they should not have been' hiding their light under a bushel ' as the saying goes, but should have been declaring their successes to the company at large.
About 3 years after these events the Company went into Administrative Receivership after being defrauded by their new American partner. The two person team referred to above were encouraged to start up a partnership to provide shipping services to companies that were being formed from the Receivership wreckage. A year or two later they were asked to do a seminar at a Trade Exhibition in London, this short seminar (around an hour long) was to be free to ticket holders visiting the exhibition and was set to start at 09-15. The topic chosen was "Modern Shipping Departments -- Todays Cinderellas ??" The seminar was to take place in a big presentation room shaped like a cinema. Despite the early start it was full at ten past nine and it became clear that the delegates were there because they felt underrated in their supply chain
jobs, not given the respect they deserved and also were underpaid. They felt that managements did not see how the Supply Chain supervision was constantly being changed and required a great deal more skill than the days of "It's only moving boxes"
Our message was to encourage them to show their bosses how their work improved time scales, prevented delays, reduced costs and kept the company within the law.
Have things improved since those days in the mid nineties? Let us know your feelings.

Wednesday, 8 June 2011

So, why and how did you join the IoE

IoE & International Trade is a professional and educational body in the UK. Strong & Herd LLP training courses are accredited by the IoE and we are able to issue Continuous Professional Development (CPD) points to attendees. WE also issue a “Certificate of Competence in International Trade” for delegates attending 5 or more courses. All this is great but I have a feeling that the age range of IoE members is increasing and we need to get new people doing the educational packages – which run through to a diploma and (soon) a foundation degree – as well as getting people who have been involved in international trade more joining the only professional body I know of in the UK linked to international trade. If you have more than 10 years experience in international trade you can become a full member.

I joined the IoE because, as a trainee import/export clerk in a busy shipping office of a major company, I had to. I was told that they would pay for me to take the diploma and that I had better do well because the guy I was working with (Paul) came top in the country in all his exams. Well, I went to the night classes and had an afternoon in a classroom each week and, as a very new starter (only 19) it really helped me understand the world of international trade and started me on a journey I have (and still am) thoroughly enjoying.

I would love to hear your stories on why you joined, even why you left the IoE or what you think about joining now. You don't have to sit an exam to join unless you want to become a graduate, you can join at different levels depending on your experience. 10 years experience or more and you are a full member. If you are interested in becoming a member I would be happy to consider sponsoring you – email: .

Oh yes, how did I do in the exams – I won 3 major prizes and came top in the country (so there Paul!) and for that I got a £100 bonus from the company!

Tuesday, 7 June 2011

Participation in International Trade Shows

Plan for effective participation

As with all good business practice, detailed planning is paramount. Be absolutely clear on your objectives for participation. It could be some or all of the following:

  • To sell and secure new contracts
  • Raise awareness of exporter
  • Find new direct importers and customers
  • Identify potential agents & distributors
  • Solicit immediate direct export orders from stand
  • Maintain contact and entertain existing and new customers
  • Establish new contacts
  • Test acceptability and feedback on products or services
  • Introduce new products or technology
  • Work with another exhibitor on a cross-selling basis
  • Conduct market research
  • Assess competitive activity
  • Learn about new products, processes or technologies

From a list of possible objectives, identify a few prime objectives and set measurable targets for their achievement i.e. generate 200 sales leads, issue 5000 samples, meet top 20 buyers. This process is best carried through a brainstorming session with key members of your sales & marketing team.

Read full article here

Related Training Courses

Improving Export Sales Performance

Introduction to Export Marketing Sales

Export Essentials

Import Essentials

Thursday, 26 May 2011

THE ATA CARNET SYSTEM: What if something goes wrong?

ATA Carnets are marvellous documents (for further information see Article ATA CARNET SYSTEM) but don't let anything go wrong. An ATA Carnet allows goods to enter and leave overseas countries without special paperwork or the payment of customs duties so treat it with respect. Used mainly for taking goods to overseas exhibitions, demonstrations, to ease the customs paperwork when professional equipment (ie commissioning or test equipment) is needed overseas or for sales people to carry around valuable commercial samples. In situations like those just described you don't want to have to worry about customs issues, documents, paying duties - that's why the ATA Carnet was invented. A good way of thinking an ATA Carnet is to call it "a passport for goods" - an just think what problems you'd have if you lost your passport while overseas!

I don't want to put you off using ATA Carnets but sometimes things do go wrong and, if you plan to avoid the following happening, you should have a very happy time with your Carnets. So here are a few things that could go wrong and some guidance on what to do if it happens.

a) An export voucher has not been stamped by the relevant customs authority.
Ensure the goods are stamped into the UK. Return the carnet to the chamber with a letter of explanation (i.e. flight departed at 2am, no customs available) and ask them to "regularise" the carnet.

b) The carnet is not stamped back into the UK.
Contact your local customs office and request a "Certificate of Location". The carnet and all the goods covered by the carnet must be available for the customs officer to inspect - if this is at your premises there will be a call-out charge; if they are small enough to take to a local office it is free. Once the "Certificate of Location" has been raised return it with the carnet and a letter of explanation to the issuing chamber. Again there may be a regularisation fee.

c) The goods and carnet return after the validity period.
Firstly UK customs will not allow you to enter the goods using the Carnet documents. The import will have to be made under a different customs procedure = Return Goods Relief, duty/vat free. Ensure to ask the customs to still stamp the counterfoil of the carnet to evidence import - this may take some persuasion but they will do it. Then, lodge an appeal through the issuing chamber. The appeal must have evidence that the goods have returned to the UK (e.g. the import carnet vouchers duly stamped or certificate of location) and a letter of explanation. You cannot reclaim your guarantee amount and if any fines/penalties are incurred you have to pay them immediately. The appeal takes time but could result in a repayment of all or part of the guarantee/fines.

d) Suddenly the goods have to remain overseas, i.e. they've been sold.
This has to be negotiated with customs in the relevant overseas country. The temporary import entry that has been made against the carnet voucher needs to be amended to a permanent import with full payment of import duties and taxes. You will need assistance from a company registered in that country to succeed. On payment of full duty/tax a "Duty receipt docket" should be issued and the re-export voucher of the carnet duly stamped and endorsed by customs. The carnet should then be returned to the issuing chamber with a letter of explanation. You could be charged a fine or penalised, e.g. the chamber refuses to grant further carnet to the company, because this is a serious mis-use of a carnet.

e) Goods are lost or stolen.
It is advisable that the goods are insured for their value plus the guarantee amount so, if they are lost or stolen the insurance claim will repay the penalties/fines incurred.

f) The carnet is lost.
You then have to revert back to standard export and import procedures. The goods should be exported from the overseas country with a "Shipping Invoice" quoting the carnet number, a copy of this invoice must be stamped and endorsed by the export customs authority in the same way he would have stamped the carnet. On return to the UK the goods will have to be entered with payment of import duties/VAT on deposit (unless you have some other form of evidence to support the original export in which case enter them to RGR). A Certificate of Location can then be asked for from your local office, a copy of this, with an explanation letter, should be sent to the UK customs point from where the goods were originally exported. This customs office will have their copy of the carnet export voucher. Ask them to certify in writing that the goods were originally exported under that Carnet and on what date, this letter plus a copy of the carnet voucher should be sent to you. The stamped export shipping invoice, the Certificate of location and a copy of customs letter and export voucher should be sent to the issuing chamber to cancel your obligations under the ATA carnet regulations. To reclaim the import duty paid, a copy of the stamped export invoice, the original export voucher, the original of the customs letter and your request for repayment should be submitted to your local customs office.

g) An engineer wants to visit a country not already allowed by the carnet.
First check it is a carnet signatory country, if not revert to normal temporary import bond procedures. If it is a carnet country and you know well in advance, you may request from the issuing chamber an addition to the carnet countries. As long as the guarantee amount is sufficient or additional funds are paid and it is within the validity period of the carnet this is usually arranged, though additional vouchers will have to be couriered out to the engineer.

We would love to hear your comments or ATA Carnet experiences , please comment

First written as an article published 19th February 2011 by Sandra Strong MIEx (Grad) CITA, Managing Partner Strong & Herd LLP HERE

Friday, 6 May 2011

Who says we don't manufacture?

For all you sceptics out there – YES, the UK does manufacture and YES we do export. The UK is not just a theme park country with nothing but services and it’s official. The UK is the 6th largest manufacturing country in the world and the 10th largest exporter of merchandise goods. OK, so we are the 2nd largest exporter of commercial services in the world but that’s good too – isn’t it?

Recent newspaper reports show that, though our core exports may have taken a hammering in the past but, as the figure show, many small-scale products are thriving. Exports of toilet soaps, for example, was up 15% in 2009, pharmaceutical export up by 19% (to £19.5 billion) and in 2010 dairy exports alone were up by 24.6% on the previous year (up to £977 million).

It is said that UK firms gain an 34% uplift in productivity when they start exporting and there are certain free services to help – check out “Are you Ready to Export?” In 2010 UK’s top 5 export destinations are:
1. USA £37,561 million
2. Germany £28,390 million
3. Netherlands £20,514 million
4. France £20,137 million
5. Ireland £16,261 million

And we have some great oddities: UK exports tea to China and India, clocks to Switzerland, chocolates to Belgium, ice cream to Iceland, whisky to Ireland, sausages to Germany, pasta to Italy, cheese and wine to France and toys to China. Who said we don’t export – for a small country we are still hitting above our weight!

Related training:
Export Essentials
Letter of Credit Workshop for Exporters
EC Trade and Intrastat

Friday, 15 April 2011

Tips on Controlling Agents & Distributors

Good management practice prescribes that one needs to check ‘what was done is what one originally wanted to be done.’ Easy to say but particularly difficult when doing business with partners in remote locations. It is further complicated by the nature of overseas operations – arguably business being done through agents should be easier to control than that being transacted through distributors.

Using Agents

If using an agent, you retain direct contact with end-customers as the agent is selling on your behalf and selling at your price. The task is to control salesmen who act like any other salesmen throughout the world. The core requirements are to ensure the agent is:

•calling on all suitable customers
•spending the right amount of time with each customer
•selling the appropriate range of products
•gaining the correct size of order
•seeking new business
•feeding back competitor and market information
In other words, each order you receive from the agent is a direct measurement of his performance and can be evaluated by traditional sales productivity criteria i.e. in a given sales period:

•Number of orders, by customer
•Number of products sold, by customer
•Average order size and value, by customer
•Orders received this year to date, versus last year to date, versus this year’s planned forecast
•Customer retention
•New customers
•Spread of customers across assigned territory
Using distributors

Dealing through distributors is more difficult. They sell stock purchased from you to their own customers in their own way at their price. Legally you cannot control their margin or their sales-out price. The problem is you may not know to whom and how well they sell.

If you subscribe to the view that ‘I give my distributor the best price and expect him to get on with it’ then this article is of no value to your business. If, however, you believe overseas business is best developed by nurturing partnerships please read on.

There are three main elements:

1.Key result areas
2.Reporting methods
3.Making market visits
Key result areas

The main issue is the reporting of in-market sales. At the outset the exporter only knows what is shipped to a distributor, but has no idea where these products are sold in the market. In-market sales provide the actual measurements of performance and the basis on which future marketing and sales decisions can be made. Additionally, information on distributor stock inventory is of particular value in assessing the distributor’s ability to order the right quantities at the right time to satisfy future demand.

Examples of basic reporting will include:

•In-market sales by product & variant/packing
•Key trade sector in-market sales
Then dependent upon the level of distributor sophistication and cooperation:

•Stock inventory by product & variant/packing
It may be of commercial benefit to understand more about how this business was achieved, similar to assessments made on an agents’ performance:

•Distribution of product, by outlet and/or trade channel
•Salesmen coverage and number of visits.
•Number of salesmen employed full or part-time on sale of exporter’s products
Reporting methods

It is critical that the distributor provides a series of regular reports. This level of formal reporting will be supported by informal and regular contact on current issues. The two basic requirements should be, at least, the provision of a regular report, say monthly and an ad-hoc market research questionnaire. It is recognised that this requirement can often be a contentious issue between both parties with the distributor either not able or not wishing to provide information. This article cannot address the management skills required to handle this but a number of rules must be agreed at the appointment stage of a new distributor.

Recognising that many distributors sincerely believe it is an intrusion into their own business, the exporter must be clear on what and why he requires regular reporting and find an early amicable solution to the issue. If not, he will operate remotely and in the dark. The basic requirements of a regular report would be to:

•Measure performance against standards, targets and objectives
•Obtain feedback
•Prompt corrective action as required
As a minimum, the distributor should possess the necessary internal systems to report on:

•Actual in-market sales this year
•Cumulative sales this year to date
•Actual sales for same month last year
•Cumulative sales for last year to date
•Sales performance versus budget
Ideally he could also provide:

• Sales by customer & trade sector
•Stock and sales
◦Opening stocks
◦Shipments received during reporting period
◦Market sales
◦Closing stocks
◦Forward orders
Again the matter of inventory management is potentially a complex issue in that the exporter cannot dictate what a distributor should purchase to his own account, yet must ensure he is ahead of the business in terms of production and shipping planning. The less reactive the exporter is in the supply of product, the more proactive he can be promoting in-market sales effort.

Market visits
Whilst there are no set rules with regard to frequency, the exporter must ensure regular market visits are undertaken. Nothing can replace ‘seeing is believing’ and benefits both agent and distributor arrangements. Recognising that making visits are costly both in time and expense, the exporter must be clear on setting specific market visit objectives which could include a number from the following list: The bottom line must be that the visit must generate future business.

• To present new products, advertising plans and promotions
•To review sales performance - achievement against current plans and programmes
•To provide feedback on company and general distributor performances i.e. comparisons with other markets
•To resolve administrative problems arising from communication restraints
•To concentrate the distributor’s focus onto the exporter’s products
•To motivate by resolving any distributor problems in generating business and ensure the visit is not perceived as wasting the distributor’s time
•To review status of distributor’s overall business
•To review skills and training needs of distributor team and provides solutions
•To generate business and goodwill.
•To plan annual (or other periods) sales and marketing programmes
•To set action plans to counter deviations from plan and to handle new objectives
In summary, the main dilemma for any exporter is how much does he need to know about the sale of his products in each market and how can he find out? This requires the setting of practicable performance measurements, agreeing formal methods for regular reporting and the actual checking in-market to see what is being done.

Written 4th April 2011 by Dick Brentnall - S&H LLP Associate/ Trainer

Back to Articles


Managing Agents & Distributors

Introduction to Export Marketing and Sales

Improving Export Sales Performance

Incoterms 2010

Friday, 1 April 2011

UK/ EC Export Documents & Procedures

Exporting to countries outside the European Community (EC) can be daunting so a planned, structured appropriate is essentials. Strong & Herd LLP are publishing some key points to help in the practical movement of goods, to ensure you are compliant and, also, to ensure key elements of the international trade agreement are not forgotten.

Exporting doesn't end with the order being received, practical issues must be addressed such as which documents do we need: what information must go on the forms, do we need anything special, have we organised the transport in a cost effective way, are we using an Incoterm that helps us rather than cause us problems? All of these issues are covered in our Export Training courses.

Here are a few tips:

1. Check the trade relationship between the EU and your clients' countries. The EU has negotiated preferential trade agreements with lots of overseas countries which allow goods made in the EU (which meet the qualification rules) to enter these countries at a reduced - often zero - rate of customs duty. This gives EU/UK manufacturers an advantage over non-EU companies. The new Free Trade Agreement coming into for on 1 July 2011 is the EU-S.Korea FTA.

2. Make sure the Incoterms rules in the contract, eg FCA, FOB, CIF, DDU, DAP, are clearly understood and that you don't do more than you are legally obliged to do. Also, makes sure you understand the full implications of what your company has agreed too - ie DDP requires you to be registered in your customers' countries so you can organise the import customs clearance and pay relevant duties and taxes.

3. Clear description of goods on the paperwork is essential. Most shipments move internationally under cover of an invoice, and this document is important because it will be seen by all parties in the supply chain. Just having part numbers or abbreviated descriptions is not helpful - at the very least there should be a plain language general description.

4. A lot of companies use system generated invoices which includes pre-loaded commodity codes (aka tariff numbers). EU Customs require a 8-digit commodity code (called the Combined Nomenclature - CN) to be made on the export declaration. Some companies show the 10-digit EU import commodity code (TARIC) on export paperwork. Remember only the first 4 or 6 numbers will match the code numbers applicable in other countries. This is under the Harmonised System (HS) Codes. Be aware that if you show full UK/EU commodity codes on the invoice you may get questions from the customer's country.

5. Value of goods - you must always show the true value of the transaction on an export invoice. Do not be tempted to under declare a value because an overseas customers says "it will help the goods get through customs quicker". There is some confusion when goods are shipped free of charge; following the WTO/GATT valuation rules for imports if there is no charge you must still price the goods at a true costs, following the principles of a) indentical pricing (not being sold this time); b) similar goods; c) cost of materials/overheads and profit.

6. Evidence of export. Under UK VAT rules you are allowed to VAT zero-rate an export, but you must be able to provide evidence that the goods have left the UK. This evidence must be in the exporting companies name (or cross-reference to them as the supplier) and show that the goods left the UK within 3 months of despatch or payment received (whichever is first). This can cause problems to exporters if they sell ExWorks as the overseas buyer is then in control of the export.

7. In the UK HM Revenue & Customs (HMRC) use an electronic export customs presentation system called NES (the National Export System) based on EU SAD Form which replaced the paper C88 Form. NES links to the customs computer CHIEF and records all exports. It is recommended that exporters receive a copy of this declaration from freight companies.

8. Indirect exports from the UK, via other EU member states, to non-EU countries must be tracked on the electronic system with a Movement Reference Number (MRN) issued on the Export Accompanying Document (EAD). Exporters who ship goods, for example, by road to Switzerland, Russia, Ukraine, etc must ensure they receive the MRN. This can be check on the Europa Database under Export.

9. Don't confuse "origin" of goods with "preference" - though preference rules use origin as a starting point the qualification regulations under preference are more than just that the goods were made in the EU. Additional rules of preference include a percentage of EU components, materials requiredin the manufacture, a named process to take place in the UK/EU, a change of commodity code between materials and finished goods or a combination of all three. The preference rules depends on the customer country and the commodity code of the goods.

10. Export licensing controls affect the supply of certain goods - though only about 5% of exports from the UK are controlled there are embargoes and sanctions to check. If your goods are of a high capability or technology level that could be used in a military, nuclear, space environment or have been specially designed, modified or reconfigured for millitary/ defence use then you will have to check the export licensing regulations . And, if your technology or goods originate from the USA you may also require US Department of Commerce or Department of Defence approval to re-export.

Friday, 4 March 2011

10 Key points UK + USA Export Controls

Strong & Herd LLP offer consultancy, training and helpline advice on both UK and USA Export Licensing Controls here are a few key points based on questions we regularly receive from clients.

1. SPIRE - Shared Primary Information Recourse Environment - UK computerised export licensing system links export licence information with the UK customs computer CHIEF - Customs Handling of Import and Export Freight.

2. Dual-use does NOT mean a commercial item sold to the military. To be controlled as dual-use the goods/technology must be listed in the dual-use list (in the UK/EC known as DUEC; known as EAR in the USA). This list is highly technical and lists the technology levels of controlled goods.

3. Dual-use list, high technology levels are set in the Wassenaar Arrangement by member countries and is common to all member countries. Key members are the 27 EU member states, Australia, New Zealand, Japan, Switzerland, Norway, Canada and the USA.

4. Dual-use controls are known as the Export Administration Regulations (EAR) in the USA and goods caught on the EAR are subject to extra-territoriality controls if re-exported or incorporated into other equipment which is subsequently re-exported. Need to check the rules.

5. The USA extends export licensing controls to the re-export of controlled goods/technology both under EAR and under the military controls of ITAR - International Traffic in Arms Regulations. This denies re-exports to embargoed/sanctioned countries, controls re-export of EAR and ITAR items and controls "re-transfer" (ie moving to another party in the same country) for ITAR goods/technology.

6. EU DUEC and USA EAR - both based on same dual-use regulations and category numbers in both control lists are the same. EU call them category numbers, USA call them the Export Control Classification Number (ECCN). An example of one is: 3A001.b

7. The type of goods named in dual-use regulations headings, eg computers, sensors, etc but which are below the levels of technology specifically listed are not subject to export licence controls - except to embargoed/ sanctioned countries. These goods are known as EAR99 in the USA and LIC99 in the UK

8. Goods/ technology specially (specifically) designed, modified or configured for military purposes are subject to export licence controls.

9. Military goods/ technology are subject to national controls. The USA has the Munitions List (ML) under ITAR. UK has the Military List (ML). Germany, for eg, has the Ammunition List (AL). None of them are the same - though EU looking at standardising military controls. USA ITAR controls are very strict, including re-export and re-transfer of ITAR items/ technology.

10. USA extra-territoriality controls may affect any country buying USA controlled goods/ technology (both EAR and ITAR) whether it is purchased direct from an US supplier or not.

If you have any questions regarding this complicated topic we will try to help. Contact us at

Thursday, 27 January 2011

WCO announces HS code changes for 2012

Doesn’t it seem like we just went through this? Well, actually that was back in January 2007! Yes, it is time for the 5-year changes to the Harmonized Tariff Codes.

The WCO has published a paper describing (at the 6 digit levels) the changes that are being implemented and each WCO member state will make changes to their tariffs accordingly. As you may remember from the last go around, depending on what you are shipping, this may have a minimal impact to your parts database or a radical one. There seems to be a lot of changes in Chapter 3 (Fish) and 29 (Chemicals) and then a smattering of other changes throughout the tariff. It definitely doesn’t seem to be as huge in apparel and other retail areas as the last time but more focus on foodstuffs.

If you do have to make changes to your classifications on a grand(ish) scale, make sure all your service providers or systems get these updates to ensure you maintain the highest levels of Customs Compliance.

Since this is only a year or so away, it would be best to do an analysis to make sure you don’t have to go through such a review/reclassification exercise. You don’t want to go down to the wire and find that you not only have to reclassify your goods but then you have to distribute to all your providers to ensure you don’t put yourself into an error and thus penalty situation.

Sunday, 23 January 2011

Strong & Herd LLP Blog - Import / Export Services: Freight companies and Customs Compliance

Strong & Herd LLP Blog - Import / Export Services: Freight companies and Customs Compliance: "Though I know this doesn't apply to all freight forwarders and clearing agents but why are so many still getting import declarations and exp..."

Freight companies and Customs Compliance

Though I know this doesn't apply to all freight forwarders and clearing agents but why are so many still getting import declarations and export declarations to customs wrong - even when they have been given clear instructions. What can we do about it? HM Revenue & Customs and the Export Control Organisation expect exporters and importers to control their freight companies - you given them written instructions with key information: EORI (VAT Number), Customs Procedure Code (CPC), commodity code (tariff number), export licence number, customs authorisation numbers, eg for IPR, OPR, Warehousing, etc. The import or export customs declaration comes back from the freight forwarder (if you are lucky) and one or most of the details are wrong. Perhaps with the increase in AEO approved companies this problem will fade but it seems that training for both companies exporting from the UK and companies importing into the EU is essential. In the meantime customs compliance takes up a lot of time in our office - instructing, checking, double checking, chasing forms, reporting errors and chasing amendments. Any comments?

Saturday, 22 January 2011

Are Incoterms Perfect?

Also see our Incoterms-2010 blog for debates just on Incoterms 2010.

It is interesting to consider the point that the Incoterms ® Rules are not intrinsically perfect despite the many revisions that have taken place since 1936. They are certainly a brave and robust attempt to provide an international trade language to define where delivery takes place legally in supply contracts. That is not to say that in the wide and complicated world of international trade there are not some inconsistencies and disagreements as to the interpretation of some elements of individual terms.

The ICC publication ‘The Incoterms 2000 Forum of Experts’ (Publication No. 617) is a transcript of the international forum held in Paris in September 1999 to launch the latest version. It illuminated some of the difficulties of interpretation but in the overview to the publication it stresses that Rules are the perfect illustration of a global standard, elaborated by business to respond to the need of business to provide flexible rules for governing its activity. We hope to receive a similar overview to the new 2010 set.

Terms that businesses appear to struggle with when trying to put them into practical use are ExWorks, FCA, the 4 remaining sea freight terms (FAS, FOB, CFR, CIF)and Group C in general. Why isn't Exworks suitable for international trade? If it isn't suitable why didn't the ICC take it out of the new Incoterms 2010 set? Why must a seller not only be responsible for export customs clearance but also have to pay for it under FCA Seller's Premises? And, how in practice, does a seller pay for export customs clearance when using air express operators such as UPS, TNT, DHL and Fedex who do not split down the costs? Why can't I have goods moving in a sea freight container delivered on board the ship under FOB - why must it be FCA port of departure? Moving away from FOB increases the costs and risks of the buyer?

We could go on. It appears to some that in the new set of Incoterms the ICC are hoping to shape the way international trade uses delivery terms rather than following what the international trading companies actually do. Incoterms Training is essentials and it must be done for the business as a whole not just a couple of logistics people. Incoterms in sales contracts and the use of Incoterms in purchasing departments should be given a higher profile than it appears to have in the majority of businesses.

Friday, 21 January 2011

Incoterms 2010

As you will be aware the ICC has up-dated Incoterms - the international delivery terms. The old version - Incoterms 2000 - was updated in 2010 and from 1 January 2011 Incoterms 2010 came into force. Two new terms have been added - DAT and DAP - while the terms DAF, DES, DEQ and DDU have been removed. The ICC Incoterms 2010 are now suitable for domestic contracts. A lot of the other changes are, what we would call, "tweaks" but there are significant "tweaks" within each of the 4 Incoterms Groups - Group E, Group F, Group C and Group D. ExWorks is recommended for domestic use only. FAS, FOB, CFR and CIF is recommended for non-containerised freight only and, for FOB, CFR and CIF, the risk passes once the goods are loaded on board not when they cross the ship's rail at loading. The diffferences between the transfer of risk and the costs within Group C (Incoterms CPT, CIP, CFR, CIF) has been clarified.

While you are here, look at our Incoterms 2010 blog

For further information on Strong & Herd Incoterms services, including Incoterms 2010 books, Incoterms 2010 charts and Incoterms training visit: