EXPORT ABCS - FRANK REYNOLDS KNOWING THE TERMINOLOGY HELPS AVOID THOSE EXPORT BREAKDOWNS

EXPORT ABCS - FRANK REYNOLDS KNOWING THE TERMINOLOGY HELPS AVOID THOSE EXPORT BREAKDOWNS

Pogo the possum was a little comic strip character living in Florida's Okefenokee Swamp. When it comes to exporting, he hit the nail right on the head when he said, "We have met the enemy, and they are us."

Many export-related problems are self-inflicted, and therefore avoidable. They happen when novices break into foreign trade. They also happen with well- established exporters when communications break down, either internally or between the exporter and outside service providers.Like football, export is a game of inches. It is highly detailed and requires specialized know-how. For convenience, we can roughly group export- related specialties into sales, credit and transportation. Problems happen when details fall into the cracks among these specialties.

The ideal remedy is to have specialized knowledge plus a general idea of what others on the export team do. This provides a big picture approach and reduces the likelihood of details slipping out of sight.

This column covers the basic elements of the export business and new export-related developments as they take place.

SOME BASIC TERMS

The following export definitions provide a common starting point for new- to-export and experienced readers. They are deliberately kept simple. Subsequent columns will cover them in detail, so please bear with us as we set the stage.

Export - sale and shipment of goods from one country to another.

Exporter - the seller.

Importer - the buyer.

End user - an importer purchasing for its own use or consumption.

Sales representative - a party offering imported products for local sale, usually on a sales commission basis.

Importing distributor - an importer purchasing goods for its own account for inventory and resale.

Document - a piece of paper or electronic message indicating that an event has taken place.

Commercial invoice - a document showing the particulars of a sale and shipment.

Pro forma invoice - a sales quotation resembling an invoice.

Sales contract - an offer (often a pro forma invoice) and a matching acceptance (usually a purchase order).

Incoterms - sales terms widely used in foreign trade.

Packing list - a document describing how a particular shipment was packed.

Certificate of Origin - a document indicating where designated goods were made.

WTDR - a U.S. government credit report on a foreign firm.

Letter of Credit (L/C) - a conditional bank guarantee.

Sight draft documents against payment - international method of COD payment using banks as collection agents.

Usance drafts - international method for selling on promissory notes using banks as collection agents.

Banker's acceptance - a usance draft accepted by a bank.

Export control - government supervision of exports.

Bureau of Export Administration (BXA) - primary U.S. government export control authority.

Export Administration regulations (EAR) - BXA rules.

Shippers export declaration - a U.S. government reporting form required for most U.S. export shipments.

Schedule B number - 10-digit commodity classification number.

Harmonized system - worldwide commodity classification system.

Harmonized number - a six-digit Harmonized System classification number (also the first six digits of the Schedule B number).

FT 447 - listings of U.S. exports by Schedule B number and destination country used for marketing analysis and strategy.

Marine cargo insurance - insurance used in foreign trade.

Insurance certificate - document indicating that insurance coverage was placed on a particular shipment.

All risk, warehouse to warehouse - most comprehensive marine cargo insurance coverage.

War risk - additional marine cargo insurance coverage.

Strike & civil commotion - additional marine cargo insurance coverage.

Export freight forwarder - a travel agent for cargo and a documentation expert.

Freight tariff - carrier price list, usually commodity specific.

Bill of lading (B/L) - a transport document.

Pre-carriage - inland freight movement on the exporter's side.

Main carriage - freight movement from the exporter's side to the importer's side.

On-carriage - inland freight movement on the importer's side.

Pure freight - actual transportation cost.

Freight surcharges - additional transportation costs covering variable carrier expenses.

Customs - government authority regulating imports.

Import duty - tax payable on imports.

Customs tariff - import duty schedule, usually commodity specific, often categorized by harmonized numbers.

Customs broker - individual or company representing importers in dealings with their Customs services.

Armed with these bare-bones definitions, we will examine the total export process. Since selecting overseas trading partners seems a logical place to start, I will cover it in the next column.