LEARN TO IMPORT FROM SCRATCH

INTRODUCTION

At some point in our lives many of us have considered the option of importing goods from other countries either because of the high price of a product in the local market or because we can not get that product in our country and the only alternative is to import. However, because of this situation several questions arise: I only speak one language, how do I communicate with suppliers?; Where can I find a reliable supplier for the product I am looking for? What method of transportation should I use? What are the responsibilities I should assume as a buyer and what should the seller assume? etc. These are just a few of the many questions that many people often ask themselves when they lack experience as importers. If you are interested in importing products or you already have experience as an importer but you want to understand the logistics of some companies in China, I invite you to stay and read this article.

I WANT TO IMPORT PRODUCTS BUT I DON’T KNOW HOW TO START

Search for suppliers

The first step in the import process is the search for suppliers, that is the company or factory that has the ability to supply the product you need.

Technological progress and globalisation have made it easier to find suppliers in different countries, the selection is made according to the product you are looking for, so you can find suppliers for different products on platforms such as Alibaba, 1688, Europages, Aliexpress, etc. On these different platforms you will find thousands of suppliers that have passed different tests and have obtained the “Verified” badge, this means that the company has been in business for a long time and has complied with all the regulations of the platform and is a company that can be trusted based on the company’s track record on the platform.

Negotiation

This is a fundamental stage in the import process because it is not only limited to the negotiation of the price of the product, but there are many factors to be taken into account and to which it is recommended to pay close attention.

Negotiation
Negotiation

Although all factors are important, you should understand the following concepts before entering the negotiation stage:

  1. Unit price: the unit price assigned to a product.
  2. Total price: the sum of the total value of the order plus the value of transport.
  3. Unit of measure: it is mainly used to determine the price of a product, according to the characteristics of the product, the unit of measure can be kilo, meter, rolls, pieces, etc.
  4. Method of transport: mainly air and sea transport.
  5. Insurance: is a financial protection service, which assumes and indemnifies for the losses and/or damages suffered by the insured goods during transport.

Payment method: According to the platform or the supplier, you can choose between payment methods such as paypal, bank transfer, letter of credit etc.

On the other hand, it is recommended to find out the warranty period that a supplier offers for a certain product and if you need any document or certificate to be able to import that product.

THE INCOTERMS

What are Incoterms?

Incoterms or international trade terms are those that represent the agreement between the buyer and seller for the international sale and purchase and mode of delivery of goods. They are terms of three letters each that specify the responsibilities of the parties involved, as well as their rights, costs associated with the operation and other clauses negotiated in the contract.

What are Incoterms for?

Incoterms are used to establish standard definitions of the sharing of responsibilities, costs and the passing of risk between the importer and the exporter. Incoterms are mainly used to regulate four elements of the contract of sale:

  1. Delivery of goods: either directly or indirectly through an intermediary or with a carrier..
  2. Risk transfer: refers to how the assumption of risks and costs from one point to another is defined, at a specific time depending on the term chosen. The point of transfer can be the dock or a factory.
  3. Distribution of costs: this determines which costs the seller will bear to deliver the goods and which will be borne by the buyer.
  4. Customs formalities: although the documents for customs formalities are usually the responsibility of the seller, there is an Incoterm that delegates the responsibility to the buyer.

Types of Incoterms

There are 11 types of incoterms and they can be classified in groups of 4 letters: E, F, C, D. The following is a brief explanation of the clauses of the incoterms most commonly used in international trade.

Incoterms
Incoterms

Incoterms Exw (Ex Works): The seller formally delivers the goods from his warehouses, offices or factory to the buyer.

Incoterms FOB ( Free on Boad): only for maritime transport and normally without a container; the seller is responsible until the goods are taken on board, and from then on the risk is transferred to the buyer, including freight, unloading, import formalities and delivery at destination.

Incoterms CFR (Cost and Freight): also for sea transport. The seller bears the costs until the goods are delivered at the port of destination. With this Incoterm, however, it is specified that the risk during the voyage on the ship remains with the buyer.

Incoterms CIF (Cost Insurance and Freight): the seller takes out compulsory insurance and, as in the CFR, bears all costs until the goods arrive at the port of destination. The buyer bears the risks during the voyage as soon as the cargo is on board the ship and the import and transport costs are borne by the buyer.

Incoterms DAP (Delivered at Place): the seller bears all costs and risks, except for import clearance and unloading at destination. The seller is also responsible for the insurance in case of contracting. The buyer only bears the import clearance and unloading costs.

Incoterms DDP (Delivered Duty Paid): the seller assumes all costs and risks from the time the goods are packed until they reach the final product, including insurance if taken out. The buyer is only obliged to take delivery of the goods and to unload them, although the latter may be done by the seller under agreement.

METHODS OF SHIPMENT AND CUSTOMS CLEARANCE OF GOODS

Sea vs Air Transport.

This is one of the most important stages in the process of importing goods, although there are also other means of transporting the goods, however this article focuses on the development of the two most used means of transport at the international level. Since not all goods need to be transported by sea or by air to be delivered at their final destination, the choice between sea and air transport depends on several factors, the most important of which are: the total weight of the cargo, the size of the cargo, the distance, the characteristics of the cargo, the cost of the transport.

Sea Transport

The 95% of the world’s trade volume is carried by sea transport, making it without doubt the pivot of the world economy. The following are the advantages and disadvantages of maritime transport:

Sea Transport
Sea Transport

Advantages

This is the preferred means of transport for the vast majority of people, mainly selected by :

  1. Low freight cost (25% of air freight).
  2. Large volume shipments and high tonnage products.
  3. Traceability in the logistics process with secure, labelled and sealed containers at the port of origin. The shipping container can also be used for subsequent transport by road or rail.
  4. By sea, practically all types of goods can be transported, especially dangerous goods. Meanwhile, by air, the transport of dangerous or liquid goods is prohibited.

Disadvantages

Weather conditions in the ocean can alter the goods and delay the delivery of the cargo, it is slower compared to other means of transport, it must be combined with land transport for loading and unloading of the goods, it is very slow for the shipment of goods that need to be used urgently.

AIR TRANSPORTE

This method of transport has remained one of the main options for the shipment of goods because it offers many advantages that, in the opinion of many, outweigh the high rates for this means of transporting goods. The following are the advantages and disadvantages of airfreight in international trade.

transporte aereo
transporte aereo

Advantages : The main advantage of international air transport is that it allows long distances to be covered in a short period of time compared to other modes of transport such as sea or land transport.

The possibility of long distances in a few hours allows any exporting or importing company to send or receive cargo, goods or merchandise that may be of vital importance for the supply of an industry or for the perfect functioning of a business. This means of transport offers greater cargo security, it is ideal for the shipment of light and space-saving packages, the delivery period is simplified to hours or days depending on the distance between the buyer and the seller.

Disadvantages: Very costly economically (it is the most expensive means of transport), Uncertain (air transport is conditioned, to a large extent, by weather conditions and this can cause the cancellation of scheduled flights and the suspension of air service), it is not recommended for cheap and large volume goods due to its limited capacity and high cost, and there are legal restrictions for the transport of many goods by this means of transport.

Customs clearance of goods

This procedure is carried out both in the exporter’s country and in the importer’s country, and is the set of acts and formalities relating to the entry of goods into and exit from the national territory, which, in accordance with the different established customs traffic and regimes, must be carried out before customs, the customs authorities and those who introduce or remove goods from the national territory, whether consignees, consignees, owners, possessors or holders in imports and shippers in exports, as well as customs agents, using the electronic customs system.

As an importer it is advisable to know the legal process of customs clearance of goods, this is mainly because it is mandatory to be registered as an importer and obtain the legal documents to perform customs clearance of goods, otherwise importers will have to subcontract the service of an import logistics company to perform this activity and nationalise the goods before being delivered to the owner of the cargo.

The registration process in the register of importers is done electronically in most countries and this procedure is free of charge. The waiting period for the result after submitting the application varies from country to country but is less than two months.

For importers from Mexico, you can register in the register of importers by following the steps below:.

  • First enter the SAT website, click on the INICIAR button on that page.
  • Then log in with your RFC and password or by using your e-signature and private key,
  • Register or select the patent number of the customs agent(s) who will provide your service.
  • Choose the term of the assignment and select add.
  • Select Add specific sectors to your application, if you require any. Attach the required information according to the chosen sector.
  • Select Submit to continue with the “Preview”, if it is correct, press the “Confirm” button, enter your electronic signature files and select confirm.

Complete your application and generate your acknowledgement of receipt.

FAQ

  1. How do I claim tariff preference?

In order to claim a tariff preference, the importer must have a Certificate of Origin, issued by the exporter, certifying that the product meets one of the origin criteria described in the agreement. This certificate must be presented to the respective customs office if requested.

  • What are the types of international logistics?

The types of international logistics include: import and export logistics, transport logistics (sea, air, land, rail), warehousing and distribution logistics, and reverse logistics, which deals with the return of goods.

  • How to choose an international logistics company?

To choose an international logistics company, it is vital to consider its experience in the target market, the network of partners, the services offered, its technological capacity, references and testimonials, and of course, the associated costs.

  • How to choose an international transport method?

When choosing an international mode of transport, factors such as the urgency of the shipment, the type and quantity of goods, costs, distance and the specific regulations of the countries involved must be considered.

  • What are the most commonly used incoterms?

The most commonly used Incoterms worldwide are: EXW, FOB and CIF. Although there are 11 Incoterms 2020 of the International Chamber of Commerce (of which we have spoken to you in different articles of the blog), in reality there are 3 Incoterms most used anywhere in the world

  • How long does it take for the funds to reach the beneficiary’s account in a T/T transfer?

Generally, a telegraphic transfer takes 2 to 4 days to complete, depending on several factors, including the origin and destination of the transfer, the currencies involved and the amount being transferred.

  • How many kilos can I fit in a 20′ container?

The maximum load capacity of a 20′ container is around 28 tonnes (28,000 kg), although it is advisable not to exceed 22,000 kg.

CONCLUSION

We often learn new concepts and ways of doing things, being a beginner or inexperienced in a certain subject is only temporary. Before importing goods, it is advisable to investigate the supplier’s information, establish the first contact with the company’s staff, if possible request the sending of physical samples in order to analyse the product and, based on all this information, decide to carry out the import process.

With regard to the logistics of shipping goods, it is advisable to know perfectly the dimensions, weight and characteristics that you wish to import. For products of high weight, high value and that travel long distances, sea transport is recommended, for products of low weight and that take up little space, air transport is recommended.

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