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The foreign trade knowledge

Posted by: Jenny | 2016-09-09 10:11:22

Some basic knowledge of foreign trade is not be an armchair strategist but the practicality theoretical guidance, so you have to know that they like the "black mainland" which needs foreign friends to understand and apply.

I have thought that it is no need to talk about these points but I found from a variety of forums and exchange groups that many people don't understand them and even a few days ago someone asked a basic foreign trade problem in the group which raised the jokes. I can not help thinking that to firmly master some basic skills is very necessary.

1. Straight bill of lading.

Many people ask that when the LC requires the straight bill of lading, how to do? I said u need to list the specific consignee details and to order of the consignee's name.

In the straight bill of lading, the consignee should be a company's  specific name.

All the BL with "to order" is the indicative bill of lading. Whatever follows "to order" gives the instructions. So how to instruct? It need to be completed by endorsement.

to order, to order of shipper, to order of shipper names are the same. To the order of the shipper is not the straight bill of lading.

We need to know that straight bill of lading is non-transferable and non-negotiable and non-endorsement, but we find that some LC consignee is the bank name which is the bank straight bill of lading. In theory, for this kind of bill of lading, the goods must be picked up by the bank which is non-transferable. But legally speaking, the bill of lading is a property that can be transferred, such as trading or the named consignee can issue the guarantee to ensure other named consignees to pick up the goods.

In the United States, the copy of straight bill of lading can be used to pick up the goods.

2. The role of PI.

In the international trading practice, PI is not necessarily the synonymous of the deal. PI means the Proforma Invoice or the Proforma Contract. 

Three roles of Proforma Invoice:

(1). Confirm the quotation

(2). Confirm the order

(3). For the importer to apply the relevant documents or letters of credit

People all the last two points but fewer know the first one. The PI is used to confirm the quotation because the PI has more legal effect than the quotation.

For example, I quoted to customers today and the customer needed the PI to confirm the price, amount, quantity, delivery, payment terms, account number, etc. This is a complete legal document. The customer may ask a few supplier for PI and he just choose one to cooperate.

This phenomenon is very common, especially in European countries.

3. Risk of CIF.

The classification of the CIF cost is the ship's rail of the destination port. But there is one question that you may not know which is the shipper only prepaid the freight and insurance in advance. That is to say, these freight and insurance should be borne by the consignee, but in this terminology, the shipper pay in advance.

Disbursements comes out of the problem of risk. Since it is payment advanced, the shipper just has the obligation of disbursement and when the goods across the ship's rail in the port of loading, the shipper does not assume the risk and responsibility.

What is the significance of know this theory?

It is of great importance. When the cargo occurs the problem, many people may find the shipping company but the shipping company does not take the responsibility and so as the insurance company. Then the shipper and consignee negotiate with each other. When the shipper confirm the goods is well loaded on board, he doesn't take any responsibility to the incidents happen in the process.

4. The settlement of claims of insurance company.

Many answers said the the insurance company take the responsibility to the goods problem. Why?

The settlement of claims of insurance company is based on the damaged goods!

You don't have the right to claim the insurance if the goods is not damaged. For example, the goods in transportation in the sea and there occurs the war, and the vessel is forced to turn around to a port for refuge. At this time, the insurance company generally does not compensate because if your goods is not damaged and it just hasn't reached the destination port temporarily and the goods may be re-transported and you will get the goods later, the insurance company will lost money.

But there is an exception insurance which is the failure to delivery risk. 

The failure to delivery risk means that the insurance company must make the total loss compensation for whatever reason if the goods can not reach the destination port within 6 months after loading. 

There are more basic knowledge of foreign trade which need us to learn and accumulate in working process no matter we are the newcomer of the experienced trader. It is the first step that costs troublesome, and so as doing the foreign trade. It is a hardworking industry. But we will succeed with hard work and competitive products. We need to be confident and sum up every day at work, looking for the best methods.Best wishes!

Tags: Knowledge, Foreign Trade, L/C, CIF

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