Page 40 - Export and Trade

Freight and Logistics

If you’rethinking aboutexporting,it’slikelyyou’ve ontotheshiporaircraftattheorigin.However,you
succeededintheNewZealandmarketandmayhave are responsible for the costs of export and loading,
alreadyfoundan overseasbuyerordistributortotake as well as freight and insurance to the named port of
your products to the world. Exporting is the next step to destination.
growingyourbusiness.Thereare afewchallengesalong • Delivery At Place/Delivery Duty Paid (DAP/
thewaybutifyoutreadcarefullyandfollowthewell- DDP). Your buyer takes ownership of the cargo at the
beaten path you’ll reap the rewards. destination. You are responsible for all the costs and
%HIRUH\RXWDNHWKHSOXQJH GR\RXUKRPHZRUN¿UVW± risks of moving the cargo to the destination. In the case
ask yourself these questions: of DAP, your buyer pays any duties and taxes due on
import. With DDP, these costs are met by you.
Do my products comply?
Each country has different legislation governing imported How do I get paid?
JRRGV <RXQHHGWR¿QGRXWZKDWWKHORFDOODZVDUH IRU Credit risk is something every exporter should consider.
every foreign market you plan to enter. For example, what It is much harder to take legal action to recover money
labellingisrequired?Isyourproductregulated?Doyou you are owed if your debtor is in another legal jurisdiction.
need to have your product tested or approved? If you have From your point of view, the safest arrangement would be
abuyeroradistributor,talktothemastheyarealready for your customer to pay you before you ship the goods.
operating in the market. Other sources include industry That way there’s no risk that you won’t get paid. From
bodies, such as New Zealand Trade and Enterprise, and your buyer’s point of view, the safest arrangement would
New Zealand regulators, including the Ministry for Primary be to pay after the goods arrive. That way there is no risk
Industries and the Customs Service as well as customs that they will pay for goods that don’t arrive. You will
brokers and freight forwarders. need to come to an arrangement whereby you and your
EX\HU DUH FRQ¿GHQW DQG UHDVVXUHG
HaveIagreedallthetermswithmybuyer? One option is to ask your buyer for a letter of credit.
As well as agreeing the price of your products, you also This is a bank guarantee that you will be paid, provided
need to consider who is responsible for insuring them, that the documents presented to the bank comply with the
who’spayingforthefreightandatwhatpointdoes the letter of credit terms. Generally, the documents required
ownershipofthecargochangehands–whenitleaves are evidence that you have actually shipped the goods
NewZealand?Orwhenitarrivesatitsdestination?Make – as agreed. This is advantageous for both you and your
sureyouandyourbuyerarebothclearabouttheterms buyer, but it can be expensive to set up both in time and
of the trade. Use these International Commercial terms money.
,QFRWHUPV SXEOLVKHG E\ WKH ,QWHUQDWLRQDO &KDPEHU RI A more cost-effective option, for sea freight only,
Commerce, to ensure that communication is clear (for a LV WR UHFHLYH SD\PHQW YLD D WUDGH ¿QDQFH FROOHFWLRQ
complete list of Incoterms turn to the Glossary at the back arrangement, where documents are released against
of this publication – Ed payment. This allows you to ship the goods before
•ExWorks (EXW). Your buyer takes ownership of the receiving payment, but still maintain control over the
cargoasitleavesyourpremises. Theyareresponsible cargo until payment has been received. It gives your
for the cargo for the entire journey and for all the freight EX\HU FRQ¿GHQFH WKDW WKH FDUJR LV JRLQJ WR DUULYH 7KLV
and insurance charges. has the advantage that you will either keep the cargo or
•FreeonBoard<namedportoforigin>(FOB). Your get paid. However, if the buyer doesn’t pay, you will be
buyertakesownershipofthecargoasitisloadedonto stuck with your cargo sitting in a foreign port. This can be
theshiporaircraftatanamedportoforigin.Youare GLI¿FXOW DQG H[SHQVLYH WR UHVROYH
responsible for the costs of the export documentation,
clearing export customs and loading the cargo onto the Have I organised all the logistics?
ship or aircraft. International freight is considerably more complicated
•Cost, Insuranceand Freight(CIF). Like FOB, your than domestic freight. You need to have your goods
buyertakesownershipofthecargoasitisloaded picked up from your premises in New Zealand; packed for

38 NZ Export & Trade Handbook 2018