Transportation of Exports

Related Terms: Exporting

An important part of the international trade process for exporters of any size is ensuring that the goods that are shipped reach their destinations intact and in a timely fashion. Appropriate packaging and proper documentation are essential in meeting these goals.

INTERNATIONAL FREIGHT TRANSPORTATION OPTIONS

The exporter's options for transporting goods are dictated in large measure by their final destination. American exporters preparing goods for shipment to Mexico or Canada, for instance, will often make arrangements to transport their merchandise over land routes via truck or rail, while exports that are headed for destinations unreachable via land routes have to be transported by air or water.

Exporters who are faced with the choice of air or water modes of transport need to be cognizant of the advantages and disadvantages of those two options. While shipping by water is generally less expensive than transporting by air, the difference in cost is narrowed somewhat by ancillary costs associated with sea transport, such as the cost of transporting goods to the dock. Merchandise shipped over water also takes longer to reach its ultimate destination, and since some export transactions do not require the importer to pay until they are in possession of the goods, exporters in immediate need of cash infusions will need to weigh this factor carefully.

Of course, the sheer size and tonnage of some export shipments render air transportation impractical.

EXPORT PACKAGING

Consultants to companies who engage in exporting note that the merchandise they ship will generally be subject to more handling and potentially damaging forces during transport than will goods headed for domestic destinations. Intelligent packaging, then, is a key component of the exporting process. Ideally, exporters should use a packaging approach that minimizes the cost of transportation while simultaneously ensuring that the goods reach their destination intact. Many small exporting companies that do not have the financial or operating resources to take care of packaging themselves utilize firms that specialize in providing such services.

Exporting firms need to keep abreast of labeling and marking requirements on goods intended for international destinations as well. Pharmaceutical products, for instance, require special labeling that varies from country to country. In addition, many countries enforce regulations requiring that imported goods bear the name of the country of origin on the outside of their packaging. Packaging containing merchandise intended for foreign ports also typically includes markings indicating the height and weight of the packages, as well as any additional handling instructions.

NECESSARY EXPORT DOCUMENTS

The documentation required for international trade is quite extensive (and potentially confusing), but exporters need to make certain that they have their papers in proper order if they wish to avoid potentially damaging delays in shipment. Documents required for the export of goods include the following:

Export License. While most merchandise can be shipped to overseas customers without benefit of an actual license, some goods are subject to additional regulations and require an Individually Validated Export License (IVL). "Should your particular export be subject to export controls," explained the Small Business Administration, "then a 'validated' license must be obtained. In general, your export would require a 'validated' license if export of the goods would: threaten United States national security; affect certain foreign policies of the United States; or create short supply in domestic markets."

Shipper's Export Declaration (SED). This important document is required for mail shipments of $500 or more, all shipments of more than $2,500 value, and any shipment that is covered by an IVL. SEDs are utilized by the U.S. Bureau of the Census to track export trends in the United States.

Commercial Invoice. The commercial invoice is used by both exporters and importers. Exporters use the document as proof of ownership and an aid in securing payment for goods delivered, while importers use it to confirm that the merchandise they have received matches what they ordered. Commercial invoices are also used by Customs officers to figure the correct duty on the goods being imported, so U.S. exporters generally provide translated copies of the invoice when shipping goods to destinations for which English is not the primary language spoken.

Consular Invoice. This kind of invoice serves the same general purpose as the commercial invoice, but it must be worded in the language of the nation for which the goods are intended. Consular invoices are so named because they can be obtained from the destination country's consulate.

Bill of Lading. This document serves as evidence of ownership of the goods being exported, and also specifies the responsibilities of the transporting company. Two types of ocean bills of lading can be used. The first, known as the straight bill of lading, provides for delivery of merchandise only to the person named in the bill of lading. Under the second bill of lading option, called the shipper's order, goods can be delivered not only to the person named in the bill but also to other designated people. Under the latter option, financing institutions are empowered to take possession of the goods being exported if the buyer defaults; they retain title on the merchandise until all payments and conditions of sale have been fulfilled. For exports that are transported by air, documents known as air waybills serve the same general purpose.

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