True cost of export documentation
Certain products require an export permit by the relevant government organisations or industry groups authorising the export of specific goods in specific quantities to a particular destination. If a permit is required, make sure you have accounted for the cost and issue time as it might not be possible to ship the goods until received.
When creating an export packing list, make sure to include considerably more details than a standard domestic packing list. You need to itemise the material in each individual package and indicates the type of package, such as a box, crate, drum, or carton. It also shows the individual net, legal, tare, and gross weights and measurements for each package. Package markings should be shown along with the shipper’s and buyer’s references.
An insurance certificate is used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. If you are exporting in accordance with the incoterms CIF, DES, DEQ, CIP, DAF, DDU and/or DDP, it is important to consider marine insurance.
Documentation must be precise because slight discrepancies or omissions may prevent merchandise from being exported, result in non-payment, or even result in the seizure of the exporter’s goods by customs. Most documentation is routine for freight forwarders and customs brokers, but the exporter is ultimately responsible for the accuracy of its documents. The number and kind of documents the exporter must deal with varies depending on the destination of the shipment. Because each country has different import regulations, the exporter must be careful to provide all proper documentation. It is important to do your research with customs, your industry association, government departments, freight forwarders and the overseas buyer to be fully aware of the procedures per product and per country of export.
It would be a waste of time and money to go through researching the specific needs of your export and not having the internal knowledge to implement a process. Training yourself and your staff in the intricacies of export including documentation, logistics, finance as well as cultural issues can make the difference between being successful for years to come or failing after the first shipment.
International trade carries high levels of risk. Knowing how to avoid the pitfalls is the key to success.
—Corinne Campbell is the founder of Xdoc, a company specialising in helping businesses mitigate import/export risks by providing information, knowledge, education and support. For more information, visit www.xdoc.com.au
Glossary
Bill of lading (also BOL or B/L): Acknowledges that specified goods have been received on board as cargo to a named place for delivery to the buyer.
Demurrage fee: Charged according to a level of damage and payable for delays in loading or discharging the vessel.
Letter of credit: A contract issued by a bank authorising the payment of money to a beneficiary against specific documents evidencing the shipment of goods.
Incoterm: International commercial terms
What affects document costs?
There are no hard and fast rules about how much export documentation will cost you but as a general guide, the final figure will depend on what you’re sending, where you’re sending it, and the method of payment.
Perishable items need more permits, and would also require closer inspection by quarantine, for example, so you would need to factor that in. Some countries may just require an invoice, while others are more rigorous when it comes to paperwork. The method of payment and the checks required to ensure the goods have been paid for, and by whom, will also affect costs.
People who read this, also liked:
Need for investment into export research
True cost of finance
True cost of foreign exchange
Becoming Export ready