Import export trade

Import export trade is concerned with the purchase or sale of goods carried out by traders living in different countries. An importer is a dealer who buys goods from a seller living in another countries, can be: a manufacturer, usually imports two kinds of products: raw materials required for the manufacturing process and machinery needed to carry out the production. A wholesaler, buys goods in large quantities from producers and sells them in smaller quantities to retails; retails, in turn, sell goods in even smaller quantities to consumer.

Limitation(import)may concern either the quantity of imported goods or the type of product and are often meant to protect domestic manufacturing or reduce the demand for foreign-made products. Quotas is maximum number of items which can be imported; are fixed by the Department of Trade and Industry. When a trader wants to buy abroad goods which are subject to quotas, he must obtain a specific Import Licence that is an authorisation to introduce such goods into his country.

An exporter is a manufacturer who sells his products to a buyer operating in a foreign country. There are the question that the exporter can his-set: demand for the product, foreign competition, to adapt the product, the most effective way, transportation and insurance costs, restrictions, laws. This is a: direct selling, the manufacturer sellers his product to the consumer, either personally or through an agent. Indirect selling, the manufacturer sells the goods to a local import company which in turn sells them to the consumer.

Trade restriction may concern goods or payment: restrictions regarding goods prevent traders from dealing with a particular country and may have a politic or an economic background. Trade restriction may be general(all the products)or specific(only a particular product).The exporter can need an Export Licence authorizing him to sell abroad. In Britain exporters are assisted by the British Overseas Trade Board. ICE is a government agency with a world-wide organisation; the institute its fundamental but not unique task is to promote Italian exports by providing businessmen with market and trade information, assistance and consultancy besides strickly promotional services; the institute draws up an annual promotional programme.

TRANSPORT BY LAND

Goods may travel by land, sea or air.

Over short distances is usually effected by land.

The factor that the exporter has to examine are: time, safety and costs.

Transport by land may be effected either by rail or by road.

TRANSPORT BY RAIL

The advantages are: economy, safety, suitability and speed; the disadvantages are lack of flexibility, risk of theft, uneconomical rates and delays. Rates depend on four basic factors: weight or size of cargo, kind of train used, distance and amount of liability.

THE RAIL CONSIGNMENT NOTE (D.D.T.)

The contract of carriage used in transport by rail is called the Rail Consignment Note. It can be obtained from a local station and it is of several copies; the original copy will be given to the recipient of the consignment, called the consignee, when he collects it; another copy is given to the sender, called the consignor. The essential data are: name and address of both consignor and consignee, description of cargo, carriage charges and stations of departure and destination.

TRANSPORT BY LORRY

The advantages are: completeness of service, elimination of the damage, economy and speed; the main disadvantages are costs and possible delay.

small consignments may be entrusted to couriers; couriers are transport companies which operate on fixed routes.

large consignments for export to a country outside the European Community may be loaded on TIR.

INTERNATIONAL ROAD CONSIGNMENT NOTE

The document used for transport by lorry is the International Road Consignment Note, a form filled in by the carrier, which constitutes the contract of carriage. The main data are: name and address of both sender and consignee, carrier's name and address, place where and date when goods are entrusted to carrier, description of cargo, carriage charges, signatures of carrier and sender and date of contract.

TRANSPORT BY AIR

The main advantages are: speed of delivery and reduction of risks; the principal disadvantages is cost: carriage is still the most expensive method of transportation.

Transport by air is particularly suitable for: small consignment of high value, perishable goods, emergency delivery items (medicines) and items that that must meet a sudden widespread demand. Transport by air is effected by: scheduled flights o charter flights.

The documents used in transport by air are:

the Air Waybill, which corresponds to the Consignment Note in road transport.

the Air Charter Party, which is the contract drawn up when a whole aircraft is chartered.

TRANSPORT BY SEA

The advantages are: versatility, competitive costs and terminal facilities; the main disadvantages are its relative slowness and the number of moves the cargo is submitted to when its departure and destination points are not harbour cities.

This is two classes of ships handle cargo:

Conference liners are owned by shipping companies which do not operate in competition with one another; cargo ships may be: general cargo carriers, container ship and lash ship.

Non-conference liners belong owners that operate in competition with one another and charge freight rates according to the type of cargo, the distance to be covered and the conditions of the market.

In sea transport the most important element is space; other factors are: weight of the cargo, hazard of the goods and value of the goods.

CONTRACTS

The contract between an exporter and a conference shipping company is called a Bill of Lading: the exporter, the shipping company, the importer, the name of the ship, the name of the cargo, the quantity of packages and cost of transport.

The BL has different functions:

it is a contract obliging the shipper and the carrier to respect a number of stipulated conditions.

it is a receipt stating that the goods have been loaded onto the ship and are travelling under the responsibility of the carrier.

it is a document entitling the person named in it as "the consignee" to take possession of the cargo on arrival.

There are two types of Bill of Landing:

a clean BL states that the goods named in it have been received on board in good condition.

a foul BL states that some apparent damage was found when receiving the cargo on board.

PAYMENT IN INTERNATIONAL TRADE

Payment may be effected at different stages of the transaction:

the importer may remit the amount due on sending the order, or on receipt of the letter confirming the order, or when he is notified that the goods are ready for shipment; advance payment are required when the exporter does not know whether his customer is reliable and solvent and the size of the order does not justify an investigation into the matter.

the exporter may trust customer enough to allow him to pay on receiving the goods, or he may agree to be paid after a certain period, or after a number of sales have been effected; the exporter will grant his customer credit only after evaluating the extent of the financial drawbacks.

PAYMENT THOUGH THE POST OFFICE

GIRO SERVICE (conto corrente postale)

The Giro Service is a system designed to transfer remittances though Post Offices; it is used by firms which often have to correct small sums of money or by public or private institutions to collect registration or association fees, or funds. In order to collect these payments, a current account is opened with the local Post Office. The number given to the current account is then made known to subscribers or customers.

POSTAL ORDERS (vaglia postale)

A Postal Order may be bought at Post Office for the required amount and is then mailed to the beneficiary who cashed it at a Post Office in his country. Postal Orders are particularly suitable for payments of small private transactions.

PAYMENT THROUGH THE BANK

BANK TRANSFER (bonifico bancario)

The Bank Transfer is a simple transference of money from the bank account of the importer to the bank account of the exporter. The customer only has to fill in a form at his bank and have his account debited with the sum he wants to remit. In terms of banking charges, bank transfers are the cheapest form of payment.

BANK DRAFT (assegno circolare)

The Bank Draft is a cheque that the importer orders from his bank. He pays the sum stated in advance, or he has his account debited with it and the bank issues an order of payment in favour of the payee named on it. The importer then sends the draft to the payee who will present it to the bank named and will collect payment. As the bank draft is drawn on a bank, it is considered as god as cash and involves no risks for the creditor who accept it in payment.

BANK MONEY ORDER

Like Post Offices, some major banks issue Money Orders. Customers may purchase them from the issuing bank and mail them abroad where they are cashed in correspondent banks.

BILL OF EXCHANGE (effetto, tratta)

The Bill of Exchange is a written order by which a person, the drawer, requires another person, the drawee, to pay on demand or at a future date the sum of money stated to a third person, the payee.

The parties:

the drawer (traente), i.e. the person who issues the bill ordering payment.

the drawee (trattario), i.e. the person who pays the sum of money.

the payee (beneficiario), i.e. the creditor, the person in whose favour the Bill is issued.

The data:

the place and date of issue; the sum of money to be paid, in ures and in letters.

the name and address of the payee and the drawee; the rime of payment.

the name and signature of the drawer.

The acceptance:

When the bill has been drawn, the drawer sends it to the drawee to have it accepted; this operation, called acceptance, is the official obligation to pay. The drawee writes accepted followed by the signature across the face of the bill. If after the word "accepted" he writes the name of a bank, the draft is domiciled with that bank, where the payee will have to present it to collect the money. The draft is negotiable i.e. can be transferred to another person by endorsement.

The maturity (scadenza):

As to the time of payment, the maturity, the bill can be:

at sight (a vista), when no fixed date is stated and it can be cashed at any time on presentation to the bank.

at 30-60-90 days sight, when the drawee will effect payment 30-60-90 days after receiving the bill.

at a fixed date.

If the drawee fails to pay the bill within 3 days after maturity, the bill is said to be "dishonoured"; if the payee wants to collect his money by law he must start a series of legal procedures.

The payment:

The payee can dispose of a draft in different ways:

he can wait for maturity and then ask the drawee to honour it.

he can use it to pay a debt by endorsing it another payee.

he can discount it with the bank.

DOCUMENTARY COLLECTION (rimessa documentaria)

As soon as the goods are ready for despatch, the exporter hands over to his bank the documents relating to the shipment and a Bill of Exchange drawn on the customer at sight or at some future date. The bank then transfers the documents to a corresponding bank in the importer's country; the latter bank asks the importer to pay the draft or to accept it in exchange for the documents enabling him to take possession of the goods.

Documentary collection is advantageous for both the importer and the exporter:

the exporter carries out the order and ship the goods knowing that the importer will be able to collect them only after paying the invoice or undertaking to pay by accepting a draft. Only then will the bank release the documents giving him possession of the goods. As an accepted draft is a legal document, the exporter will be able to take legal measures to recover his credit should importer fail to pay it.

the importer pays for the goods or accepts the draft the relative amount when the consignment is already available and be can examine the documents and check if the order has been correctly fulfilled. Moreover, if the draft is payable at a future date he is being granted credit.