International Trade/Offshore Manufacturing/Sourcing/Export/Import/Consulting Top 10 List of Ways To Avoid Pitfalls By Richard Boger Aside from obtaining the order and receiving payment, the next most important aspect of international trade is delivering the goods safely and efficiently to the customer. With apologies to David Letterman, I would like to offer my own "Top Ten List of Ways to Avoid International Pitfalls." 10. Penny Rich and Pound Foolish. Just like anything else, you get what you pay for. Use quality materials and services and don't scrimp on pennies when you have thousands of dollars of merchandise at risk. Deal with reputable professionals and service providers who will stand behind the services they render and carry them out effectively and efficiently as promised. 9. Proper Labeling. Madison Avenue is the place for glitz in packaging and labeling. Make sure your labels contain all the information necessary to move the goods along the transportation route, but are anonymous so as not to entice a potential thief from helping himself to your valuable goods. Use a set of codes known only to you and your customer to adequately (but not excessively) identify the contents of the shipping packages. American goods make attractive targets for all types of criminal activity. Don't take any unnecessary chances. 8. Select the Right Ports. You wouldn't let your local butcher perform open heart surgery, nor would you show up at the tennis courts with your golf clubs. For the same reasons, you need to match the ports of export and import with your products. Do the ports have the facilities to handle your products? If you need temporary storage, are these facilities available at the ports you are considering? What security is available at these ports? What reputation does each port facility have? If you avoid problematic ports, your chance of safe, efficient delivery is maximized. 7. Proper Stowage. Just as you select the right port facility, select a vessel and shipping line that have the capability of handling your specific cargo. Match your cargo with the most efficient vessel. The range of vessels spans a wide spectrum. Terms such as: break bulk, bulk handling, containers, Ro-Ro, LASH and others, can be confusing and a mismatch can be devastating to the delivery of your goods. Make sure the vessel you have selected can properly stow and secure your cargo. 6. Containers. The most popular conveyance for shipping general merchandise and products internationally is the container. Containers come in all types and sizes for both ocean and air shipments. Careful inspection of each container before loading can prevent a possible loss in the future. Is the container in sound condition? Are there any visible marks, punctures or other physical deterioration that exhibit past mishandling or abuse? Are the seals in good order and secure to prevent break-ins or theft? The proper container will eliminate several possibilities for losses during shipment. 5. Invest in Good Packaging. The most common causes of loss in international shipments are water and motion. To minimize the potential for water or motion damage, properly securing the goods in quality packaging is a must. Cartons can be made of wood, reinforced corrugated cardboard, barrels or drums, or reinforced bagging. Packages should be securely packed in the cartons to avoid motion damage. Loose packages, being jostled about, are a certain cause of breakage or damage during shipment. To avoid oxidation on parts subject to moisture damage, techniques such as spray coating with a water resistant lubricant or shrink-wrapping can be employed. The latter can be used even if the goods are bolted onto flats outside of shipping cartons. Money invested in good quality packaging will pay dividends many times over. 4. Accurate Documents. Make sure you know and have selected a complete set of documents necessary for each specific voyage. A missing document can cause lengthy hold-ups in clearing your goods through to their destination. Once the package of documents is identified, care should be taken to complete each document thoroughly and accurately. Information must be complete and in a form necessary for the reader to properly process the document. 3. Seek Out Assistance. There are a wealth of competent professionals and service providers who can help you every step of the way in the international shipment. Packaging surveyors and loss adjusters can be retained to consult on proper packaging techniques to minimize loss. International freight forwarders and customs house brokers can not only assist with the proper selection of a shipping line and vessel, but also with documentation necessary to clear your goods for export and import. International bankers can identify and review the necessary documents for securing payment for the goods. Marine insurance brokers can counsel on the requirements for insurance with each shipment and provide open marine (cargo) policies designed especially for you, and competitively priced to protect your interests in the shipment via insurance. Federal and state governments have resources available to provide assistance. U.S. Department of Commerce and state departments of commerce and trade have people and publications available to assist with everything from marketing to payment, and everything in between. Regional export assistance centers conveniently located throughout the United States, including Atlanta, are available as "one-stop shops" for assistance when dealing with various governmental agencies in the international trade spectrum. Private service providers are referred by these governmental personnel as needed. Seek out publications available in the Export Yellow Pages, The Export Hotline 1-800/USA-XPORT (1-800/872-9767), and the Internet/Worldwide Web. Don't be afraid to ask, or be intimidated by the sheer volume of assistance available. Seek out sources that can work best for you. 2. Beware the "Unpaid Vendor." Most international payments are facilitated through the use of letters of credit. Among other things, letters of credit identify, in conformance with the precise "INCOTERMS" of the transaction, who is responsible for marine insurance, and what type. Often, certificates of insurance or special marine policies are required. As trade with familiar and established customers grows, more and more exporters are quoting "open account" repayment terms. Unlike letters of credit, open account sales shift the "money risk" to the exporter, hence, the "unpaid vendor." Until you are paid, the unpaid vendor should control the marine insurance. This may be counter to the business instinct of shifting as much responsibility as possible to the other party in the transaction. "A sale is a gift until it is cash!" is a well-known axiom. It is surprising how many exporters are exposed to the money risk and fail to insure that risk properly through their own tailored marine (cargo) insurance policies. 1. Know thy Customer. This is the principle axiom to any business transaction. It is especially true in international trade because of the distance and cultural barriers that naturally exist. While bad apples will always cause problems, a quality, good customer will not only honor his/her word but also provide an invaluable resource for facilitating and completing the international transaction. Your good customer can assist with complying with local red tape in its country, and provide access to a network of service providers located there to be called upon as needed. Problems can always arise from unexpected sources, so competent local contacts will always be useful to successfully complete the deal. When this article was first published, Richard Boger was president of Atlanta-based Export Insurance Services. Special thanks for information for this article go to Kristen Smith, Marine Insurance Services, of Atlanta. Advertise on this site Put your company on this site!