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Part 2.—THE IMPORT SHIPMENT
Chapter V.—THE IMPORT ORDER
The importer is concerned, in placing an order abroad, with certain essential details. He wants to be sure that the goods are packed properly so as to withstand the rigors of the ocean voyage and the rough handling they will receive in loading and unloading. He wants to make certain that the goods arrive at the time designated and that they are delivered and invoiced to him in such a way as to avoid difficulties with his customers or with customs officials. He wants them shipped on the steamship line that he designates, and insured in the way he specifies. If he cannot get a c. i. f. quotation, he wants to know as soon as possible what all the charges resulting from an f. o. b. shipment will be and whether the draft will be payable in dollars or in an equivalent foreign currency.
He needs some guaranty as to quality which he may obtain by an inspection abroad before shipment stipulated in his letter of credit, or by being afforded an opportunity to inspect the goods and compare them with samples after they arrive and before he takes
He wants to know how he will be expected to pay for the goods; whether he must open up a letter of credit in favor of the foreign exporter, send cash with order, have them shipped to him on open account, or, if he is to be drawn upon, how the drafts will be drawn, whether at sight, after sight, or after date, and how long he will be allowed to meet the sight drafts. He may also want the shipper to make arrangements so that he can take delivery of the goods in case the documents are delayed and thus avoid storage charges.
All these things can be made perfectly clear to the foreign exporter in the import order. They are the importer's terms, and as a buyer he can insist upon their acceptance or at least that the shipment be not made until alternate terms equally satisfactory to him are made by the seller and accepted by him—the buyer.
PACKING OF IMPORTS Foreign exporters may be just as unfamiliar with the necessity of packing goods to withstand rough handling as American exporters sometimes are. The experienced importer, if his product needs special protection because of its fragility, perishability, or for any other reason, will have special packing instructions printed and attached to each import order. In some instances these instructions may be printed on the back of the order form. This leaves no excuse for careless packing, which not only leads to breakage but also to pilferage. The Transportation Division of the Bureau of Foreign and Domestic Commerce has published numerous pamphlets on packing for the use of American exporters, and our importers may find these equally valuable in drawing up such instructions to foreign shippers.
The place of delivery of the goods into the custody (and subject to the responsibility) of the importer will depend upon the quotation. In f. o. b. quotations the importer, through agents abroad (foreign freight forwarders), will have to take delivery either at the foreign factory or point of production, or at the foreign port, as the case may be. Arrangements must then be made by the importer for ocean transportation. The more desirable arrangement would be a c. & f. or c. i. f. quotation, which many foreign exporters will make and which places the expense of the shipment to the account of the foreign exporter, although the responsibility for loss still remains with the importer, even after the goods are placed on board the vessel and the freight and insurance charges are paid by the exporter.
The responsibility for delivery within a given time will depend upon the point at which the importer assumes custody. Under an “F. o. b. factory" quotation, the foreign exporter cannot be held responsible for delays en route to the point of shipment, for delay in sailing, or for missing the designated vessel. In an “f. o. b. vessel” quotation the foreign exporter cannot be held responsible for delays in sailing, although, if a specific time or period is designated, he would be responsible for not having the goods on board the vessel within that period. In a c. & f. or c. i. f. quotation he would have like responsibility. A time of shipment specified in either an f. o. b. vessel, c. & f., or c. i. f. quotation, therefore, places the definite responsibility upon the foreign exporter to meet sailing dates, whereas an f. o. b. factory quotation would not.
The importer has the right to specify the steamship line he wishes used. An importer in Boston or Philadelphia does not, as a rule, want his goods shipped via New York, unless inordinate delay will be occasioned otherwise. The expense of transshipment being for his account, he may designate a slower line, with later sailings, that touches at the port where he wants the goods landed.
COMMERCIAL INVOICING OF IMPORTS
The inclusion of certain data in a commercial invoice from the exporter is essential to the importer, and should be so stated in the import order. In addition to the date and port from which the goods were shipped, the invoice, which should be in triplicate, should show the name of the steamer, the invoice and order numbers, the name and address of seller and buyer, marks and numbers placed on the packages, number and kinds of packages and contents of each, weight and measurement of each package, and a detailed description of each article. It should also contain the price per unit and the total price, the terms of sale, the insurance placed, together with a list of the documents attached with the number of copies of each, and code words for each article, for the order, and for the invoice itself. A statement of the country of origin, as well as the invoice itself, should be signed by an officer of the selling firm.
STATEMENT OF CHARGES
In addition to the cost of the goods, there should be included with the invoice a statement of charges so as to determine the total cost of the shipment delivered in the United States. These may include inland freight to seaboard abroad, cartage, warehousing, insurance premium, packing costs, United States consular fees, loading charges, forwarding fees, inspection charges, purchasing fees, stamps on documents, reconditioning, repacking, foreign-exchange charges, cablegrams and postage, and export duties. The order may designate that any or all of these charges incurred under the terms of the contract be included.
TRANSPORTATION DOCUMENTS It is also desirable that the order specify what documents should accompany the invoice. These may include, on f. o. b. shipments handled through a forwarder, copies of the contract for shipping space (sometimes known as a "booking permit”), the dock permit, the dock receipt, and the bills of lading, which often are “rail and ocean combined" and may sometimes cover shipment to overland common points in the United States (“0. c. p. steamer ladings”). They may be negotiable, that is, they may be made out to the shipper's own order, and endorsed in blank, or made out to the consignee and non. negotiable. If negotiable, care must be taken that they are endorsed by the proper officer of the exporting firm. The marine insurance policy or certificate and the United States consular invoices, together with food, health, and animal certificates required on United States imports of certain products complete the documents usually required. On c. & f. and c. i. f. shipments, only bills of lading, marine insurance policies, and United States consular invoices and necessary certificates need be included.
DELIVERED COST An importer should know exactly what his goods will cost him, delivered at destination and in American dollars, before he places the order. If all the charges cannot be ascertained with exactness in advance the next best thing is an estimate, and the best basis of an exact estimate is a knowledge of the cost of previous shipments. This is the main reason for demanding details of charges from the shipper as well as the perfectly obvious desire to see that overcharges are not made. The most successful importers are those who keep the most comprehensive and exact records of what the goods have cost them at each stage in their progress from the foreign factory to the warehouse in the United States over a term of years, showing any changes in classification resulting from customs decisions or actual changes in customs law.
CURRENCY OF THE IMPORT QUOTATION The currency in which the importer asks that the price be quoted is important. If the quotation is in dollars, and the import order
stipulates dollars, then the draft is payable in dollars. The importer need not worry about the rate of exchange. If the quotation is in a foreign currency and the order stipulates a foreign currency, the draft will be drawn in that currency and, when presented for collection, will be payable in dollars at the current rate of exchange of that currency. The latter method places the responsibility for loss due to exchange fluctuation on the American buyer. Where foreign exporters refuse to quote in dollars, and the importer, in order to do business, must accept a foreign-currency quotation, he may always protect himself by buying forward, for delivery approximating time of delivery of the goods, the foreign currency he will have to acquire to meet the drafts.
QUALITY GUARANTEES The most common method of guaranteeing quality is to arrange for foreign inspection of the goods before they are shipped. This may be done by stipulating in the order that the drafts presented against a letter of credit opened by the importer in favor of the foreign exporter must be accompanied by an inspection certificate. The exact kind of inspection certificate and the person by whom it shall be signed may be specified. In other words, the importer may select some firm which specializes in the inspection of merchandise abroad, and specify that an inspection certificate, signed by that firm, accompany the draft before the foreign bank will honor it under the letter of credit.
Another common form of quality guaranty is by duplicate sample. The importer, in placing an order, may submit a sample which may be described and otherwise identified in the order itself. A duplicate of this sample may then be sent to an agent abroad, who as a representative of the buyer will compare the sample with the finished product, and upon his approval the shipment will be made.
Most importers reserve the right to inspect the goods on arrival before they pay or accept the drafts accompanying them. Where a letter of credit has been opened, however, this is an idle gesture, because every letter of credit becomes irrevocable upon negotiation of the drafts against it abroad, and the bank will look to the importer to take up the drafts, even though he refuse to accept the goods after inspection upon their arrival.
FORM AND METHOD OF PAYMENT FOR IMPORTS
Aside from cash with order, or open-account shipments, the importer has only two forms which he may specify in tħe import order, as the method of paying for the goods. He may agree to open a letter of credit, or he may specify that the exporter draw on him at sight, so many days after sight, or so many days after date. He may further specify whether documents shall be delivered against payment (D/P) or against acceptance (D/A). The latter constitutes asking for the granting of credit. Each group of commodities has its customary forms and methods of payment. Commodities which do not fluctuate greatly in price and for which there is always a ready market in the United States are often sold with date or sight drafts drawn against payment. Specially manufactured goods or goods which fluctuate widely in price, on the other hand, are usually sold
only against letter of credit. The marketability of the product as well as the credit standing of the importer will both determine whether requests that the drafts be drawn against acceptance will be agreed to by the foreign exporter.
Drafts often arrive with documents incomplete, and goods often arrive before the draft to which is attached the bill of lading carrying title to the goods. If only one original copy of the “To order” bill of lading is available, the carrier will often take a "customs certificate" which, when compared with the one available original bill of lading for the customs, approved by the carrier, will release the goods. Importers may avoid late delivery of documents and the consequent expense of customs bonds by specifying in the order that drafts be sent by air mail if they miss the boat on which the goods are shipped. If air mail facilities are not available, the import order may specify that all costs incident to late arrival of documents shall be for the account of the exporter where he is clearly at fault.