Exporting Kitchen Equipment: Shipping Options, Requirements, And Contracts

Effects of the new Basel capital accord on bank capital requirements for SMEs.

In this report, shipping company indulged in exporter, or importer, of goods the different contracts brought together under the term ‘law of international trade has been taken into consideration. In this assignment Trade Law and other shipping business laws and contracts have been taken into consideration. This document will discuss the shipping options available to company, requirements to meet and contracts to enter while exporting its goods and services in other countries

A company from Spain is business organization selling kitchen equipment to North America and Asian countries is specialized in manufacturing of boilers and steamers (Ashmarina, et al. 2017. The name of the company is Kitchen Kiwi Import and export Company. The company is sourcing components to be fixed in the boilers from Italy, and Finland. It customizes all of its kitchen customizers as per the customer requirement in different countries. The component import and export pricing fluctuates often.  Price and lead time to supply depends on the complexity of the customer requirement.  Since the product is not standardized, the exporting requirement and procedures for the company varies on case to case basis. The product characteristics compliance to international standards, delivery procedures of the various sizes of steamers, packing requirements, documentation procedures are kept different for each consignment. Hence, the export documentation is a specialized activity in the steamer manufacturing company (Anderson, and Neary, 2015).

• Kitchen apparels and other necessary equipment’s to USA
• Entering into the strategic contract with the shipping company for the shipping purpose of its goods and services from one country to another (Wasser, et al.  2015).

There are several shipping companies which could be undertaken by the Kitchen Kiwi Import and export Company to for the shipping purpose of its goods and services from one country to another (Chan, et al. 2015).

• Nippon Yusen
• Maersek Line
• Evergreen Marin Corporatio

All of three companies will be analyzed in terms of benefits offered and amount of fees charged by company ( Foley, and Manova, 2015).

All the Kitchen apparels and other necessary equipment will be exported to USA through the shipping ports through different shipping carriers. Supply and delivery of the steamers is divided into three sections. One is choosing the Inco term type, i.e. related to choosing the mode of delivery, time and place, second is determining the clearance procedures such as nomenclature code, customs tariffs and export documentation, and the third is arranging transport and logistical risk management (Foley, and Manova, 2015).

The delivery of the streamer to clients also includes info terms which reflect the key details. If Kitchen Kiwi Company quotes as FOB price, the seller is responsible for customer’s clearance until the goods are loaded on a vessel (Bridge, 2017).

Shipping the good apples out? An empirical confirmation of the Alchian-Allen conjecture.

There are different types of trade modes in the International commerce which could be used by Kitchen Kiwi Import and export Company. I.e. free trade and protectionist. In free trade scheme, the governments of the countries (US, UK, Europe) involved in trade do not regulate the market; However, governments of related countries impose several rules and tariff on the shipping companies to control the flow of goods and to ensure the safety of the transactions. The free trade agreements among countries help the exporters to expand the markets for their products and become interdependent on the world economic systems. In international trade, export, import and transit activities are regulated and coordinated by the governments of the respective countries which need to be undertaken by Kitchen Kiwi Import and export Company. The customs authorities control the border movements of the commercial goods and levy taxes and duties as per the policies of the governments. The customs also prevents the illegal trade practices and work for the security of the country by preventing illegal arms and explosives trade.  The steamer manufacturer Kitchen Kiwi Company should identify the valid codes for their products and always includes the right codes in their invoices so that customs officer can refer the product quickly and clear the goods (Low, 2013).

There are several shipping methods which could be undertaken by Kitchen Kiwi Import and export Company while shipping the goods from one country to another. As the steamer is an industrial product and do not have any safety issues associated with the product, the company enjoys lesser complications in customs procedures.  However, the company should obtain certificate from authorities to demonstrate that the steamers are not linked to defense equipment’s (Klein, 2018).

Forward shipping- This shipping process is covered under the International logistics which covers all the acts details and activities such as movement of goods that include raw materials, work in progress inventory, finished goods inventory, and the accompanying information related to origin of the good up to consumption point (Brodie, 2013).

It is described under the Contracts of carriage The Kitchen Kiwi Company will accept the contracts by carriage goods by Sea Act 1992(Howse, Eliason, and Trebilcock, 2005).

It is applied to the contract of carriages undertaken by Kitchen Kiwi Company with the shipping companies. When goods are transported to other countries, the customs authorities check for the authenticity of the international trade and compliance of Hauges rules. Hence, it is essential to appear for custom clearance from customs authorities and pay the applicable duties related to import or export. The different documents that involved in international trade as we have seen it include documents that assure that goods are sold by a party to another, the goods are shipped in right order, the goods have reached in right condition, the buyers agents have produced the appropriate documents, the insurance documents are in order, and the product literature is available to the customs authorities (Brodie, 2013).

Improve customs systems to monitor global wildlife trade.

All the documents ready for the customs officers will be checked under the bill of landing and will approved by the custom authority. Often the goods sent by the company are cleared in a day or two as the documents produced proved the legitimacy of the business deal.  

• Lack of appropriate documents can result in unnecessary delays in clearing of the goods.
• Customs procedures vary in different countries as the laws and regulations are different for each country. It is critical for the buyers and sellers to understand the customs procedures beforehand(Murrayand., Cleave, 2015).
• The customs may seize the goods if they are not convinced about the legality and intentions of the transacting parties.
• Customs procedure for export and import are different. Since the steamer manufacturer do not deal in any prohibited items, special certificates are not required for customs clearance (Akerman, 2018).

The seller whosoever will sell the goods will be responsible for cost and insurance of the fright to the named port (Akerman, 2018).

The buyer will be responsible for unloading charges for the shipment

The contracts could be viable on the mutual understanding of the buyer and seller (Altman, and Sabato, 2005).

Cost and fright

• Shipping cost will be borne by Kitchen Kiwi Company
• Seller is required to take the minimum coverage of insurance

This is the insurance covered required to be taken under 600 documentary credits. It has been to done by either by buyer or seller. All the material will be exported to USA therefore; the insurance covers will be taken from the insurance companies in USA (Antras, and Foley, 2015). 

In order to facilitate international trade, simplify and integrate the responsibilities of the buyers and sellers with respect to delivery of the goods International chamber of Commerce has devised a set of rules called Inco terms. The Inco terms help the parties involved in international trade to interpret, use and express the trade related standard terms (Carr, and Sundaram, 2016). 

It is accompanied by the list work program which shows the detailed list of ship cargo in form of receipts is given to the person consigning the goods by the master of the ship. The transaction is called the bill of lending which is given as promise and assigning authority to Cargo Company for shipping the cargo goods to the clients (Hummels, and Skiba, 2014).

  The bill of Exchange is the written order used primary in international trade that bids the one party to pay fix amount of money to another at stipulated future date.  In international trade the money is received as part of the services of goods exchanged. Since time and amount of payment is very critical in international trade, terms of payment are managed separately in a legal framework. Terms of payment have various components which include the time allowed to make payment, the credit period allowed, such as 30, 60, 90, 180, days  (Foley, and Manova, 2015). Another term for payment is sight payment, i.e. when the goods are received at the buyers destination, the buyer is required to pay the amount immediately, without delay. Each mode of payment has different risks associated with it. In technical terms, payment methods in international trade include open account, documentary collections (bills of exchange), and documentary letters of credit and cash in advance (Jensen et al. 2018).

When Economists Agree, but (Many) Others Do Not: Dueling Narratives on International Trade.

An advance payment is considered as the most secure mode of payment, as the seller has realized the payment even before the goods are delivered. However, for competitive reasons, this mode of payment is very rare. In the bill of exchange and letter of credit modes of payment, banks are involved. Kitchen Kiwi Import and export Company could use the bill of exchange as payment mode to encounter the foreign risk exposure.  In the bill of exchange payment mode, all the legal documents are collected by the bank, and are not released to the buyer until the bank realizes the agreed amount from the buyer. The buyer can take charge of the goods only when it produces the documents to the shipper (McGovern, 2018).

It is another payment mode which could be taken by Kitchen Kiwi Import and export Company for the payment receipt from the clients. The letter of credit is a service provided by the bank to facilitate a specific international transaction. When the buyer’s bank receives the documents from the seller, the bank pays to the seller on behalf of the buyer and realizes the amount in ninety days or 180 days from the buyer. Both the systems i.e. bill of exchange and letter of credit payments are secure as the valid banks are involved. However, there is a risk of exchange rate of currencies. Since the buyer pays only after 180 days, the exchange rates of the international currencies may vary (Cass, 2005).  The letter of credit requires opening accounts in separate bank. Open account is another mode of payment in export-import operations.  In open account, the seller sends the goods to the buyer on faith and expects to receive the payment once goods are delivered to the buyer (Pauwelyn, Guzman, and Hillman, 2016). For the buyer, open account is very convenient as risk of non delivery of goods is small. In countries of EU and North American countries of USA and Canada, open payments are in practice. The company that produces steamers often enters into deals that have letter of credit payments. As the supply cycle is long and various responsibilities are to be completed before the goods can be delivered, the company practices letter of credit payments (Singer, 2007). 

Transportation refers to movement of products/goods/consignment from one location (exporting country) to another (importing country). Transportation involves the movement of goods from origin until it reaches to the customer’s hand. In international trade transportation is considered as most expensive component.  Several risks are involved in transportation, as the movement of goods can be delayed due to umpteen reasons. Often the transportation is accompanied by insurance services till the goods are delivered to the customer. Documents are crucial in international trade, and the critical documents that are generated along with transportation of goods include, bill of lading, payment documents, and insurance policies (Viner, J., 2016). 

Shipping Options Available to Company

Most often the steamer manufacturing company from Spain use sea transport to deliver their goods. And in some cases where emergency delivery has to be completed, it uses air freight.  Sea delivery is the appropriate mode of transport used by Kitchen Kiwi Import and export Company for intercontinental transportation of goods, especially when it exports its goods and services to Europe and North America. Since the size of the steamers is large, the company uses sea transport often. Though, sea transport is not expensive as air freight or road transport, it is very slow in transporting the goods. There are various pricing options available to reduce the cost of sea transport. The steamer manufacturer contains cost of the delivery by negotiating special prices from the shippers (Yeats, 2014).

It is observed that Kitchen Kiwi Import and export Company will be facing several problems exporting excessive plastic material to Canada and USA.  Containerization is also part of packing which needs to be complied primary protection from weather conditions and pilferage (Limao, and Venables, 2011). 

• All the procedure an rules given by World Customs Organization (WCO) needs to be followed by Kitchen Kiwi Company. WCO simplifies and harmonizes customs procedures among the member countries(Grainger 2016).  As the countries are expecting to have a mutual trading relationships having common rules, modes of communication and types of behavior,
• The exporting and importing goods by the Kitchen Kiwi Company must classify their products appropriately based on the coding system and present documents to prove the nature of the goods (Haberler, 2016).
• Kitchen Kiwi Company will use the letter of credit approach to accept the payment from the clients in USA.

• The letter of credit will save the Kitchen Kiwi Company from the possible foreign exchange risk exposure such as transaction risk, translation risk and economic exposure. (Marvel, and Ray, 2013).

Conclusion

As we have seen that International trade involves compliance to various laws and regulations, goods and services transactions between countries is complex. There are different stages to the procedures of international trade such as invoicing, packing, and transportation, generation of payment documents, gathering of certifications, collecting shipping documents, payment of insurance, customs clearance, and finally transporting to the destination country. North America and Asia is a good place for selling the kitchen equipment of Spanish company. With respect to practicality of the international trade, two main parts should be cleared in the business i.e. finding customers and satisfying the customs regulations and prompt delivery of the goods.

References

Akerman, A., 2018. A theory on the role of wholesalers in international trade based on economies of scope. Canadian Journal of Economics/Revue canadienne d’économique, 51(1), pp.156-185.

Altman, E.I. and Sabato, G., 2005. Effects of the new Basel capital accord on bank capital requirements for SMEs. Journal of financial services research, 28(1-3), pp.15-42.

Anderson, J. and Neary, P., 2015. Restrictiveness of International Trade Policy.

Antras, P. and Foley, C.F., 2015. Poultry in motion: a study of international trade finance practices. Journal of Political Economy, 123(4), pp.853-901.

Brodie, P., 2013. Commercial shipping handbook. Informa Law from Routledge.

Carr, I. and Sundaram, J., 2016. International Trade Law Statutes and Conventions 2016-2018. Routledge.

Foley, C.F. and Manova, K., 2015. International trade, multinational activity, and corporate finance. economics, 7(1), pp.119-146.

Haberler, G., 2016. International trade and economic development (No. 1).

Hummels, D. and Skiba, A., 2014. Shipping the good apples out? An empirical confirmation of the Alchian-Allen conjecture. Journal of political Economy, 112(6), pp.1384-1402.

Ics Pr.Low, P., 2013. Trading free: The GATT and US trade policy. Twentieth Century Fund.

Jensen, T., Vatrapu, R. and Bjørn?Andersen, N., 2018. Avocados crossing borders: The problem of runaway objects and the solution of a shipping information pipeline for improving international trade. Information Systems Journal, 28(2), pp.408-438.

Limao, N. and Venables, A.J., 2011. Infrastructure, geographical disadvantage, transport costs, and trade. The World Bank Economic Review, 15(3), pp.451-479.

McGovern, E., 2018. International trade regulation (Vol. 2). Globefield Press.

Pauwelyn, J.H., Guzman, A. and Hillman, J.A., 2016. International trade law. Wolters Kluwer Law & Business.

Singer, D.A., 2007. Regulating capital: Setting standards for the international financial system. Cornell University Press.

Viner, J., 2016. Studies in the theory of international trade. Routledge.

Yeats, A.J., 2014 Shipping and development policy: An integrated assessment. Praeger Publishers.

Chan, H.K., Zhang, H., Yang, F. and Fischer, G., 2015. Improve customs systems to monitor global wildlife trade. Science, 348(6232), pp.291-292.

García, M., 2015. The European Union and Latin America:‘Transformative power Europe’versus the realities of economic interests. Cambridge Review of International Affairs, 28(4), pp.621-640.

Wasser, S.K., Brown, L., Mailand, C., Mondol, S., Clark, W., Laurie, C. and Weir, B.S., 2015. Genetic assignment of large seizures of elephant ivory reveals Africa’s major poaching hotspots. Science, 349(6243), pp.84-87.

Chan, H.K., Zhang, H., Yang, F. and Fischer, G., 2015. Improve customs systems to monitor global wildlife trade. Science, 348(6232), pp.291-292.

Bridge, M.G., 2017. The International Sale of Goods. Oxford University Press.

Klein, M., 2018. When Economists Agree, but (Many) Others Do Not: Dueling Narratives on International Trade. Fletcher F. World Aff., 42, p.5.

Brack, D., 2017. International trade and the Montreal Protocol. Routledge.

Howse, R., Eliason, A. and Trebilcock, M., 2005. The regulation of international trade. Routledge.

Murray, C. and Cleave, B., 2005. Schmitthoff’s export trade. Sweet & Maxwell.

Cass, D.Z., 2005. The constitutionalization of the World Trade Organization: legitimacy, democracy, and community in the international trading system. OUP Catalogue.

Marvel, H.P. and Ray, E.J., 2013. The Kennedy Round: Evidence on the regulation of international trade in the United States. The American Economic Review, 73(1), pp.190-197.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order