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Cargo Insurance: Top Reasons Why Your Import/Export Business Need It!

excelsior on June 26, 2017

In every type of business, it’s minimizing risk is equally important as achieving maximum return. If your business imports or exports its products, it means you’re putting an investment at stake every time you ship cargo. This is why it is extremely vital to have your cargo covered with cargo insurance because your business could lose an absolutely insane amount of money in case everything went spiraling down.

In the Philippines, under Sec.99 of Presidential Decree No. 612, also known as Insurance Code of the Philippines, a marine insurance should cover you against damages or loss on:

• Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, securities, chooses in action, evidences of debts, valuable papers, bottomry, and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit or transportation, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting shipment, or during any delays, storage, transhipment, or reshipment incident thereto, including war risks, marine builder’s risks, and all personal property floater risks;

• Person or property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including liability for loss of or damage arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to any person arising out of ownership, maintenance, or use of automobiles);

• Precious stones, jewels, jewelry, precious metals, whether in course of transportation or otherwise.

• Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers, wharves, docks and slips, and other aids to navigation and transportation, including dry docks and marine railways, dams and appurtenant facilities for the control of waterways.

• “Marine protection and indemnity insurance,” meaning insurance against, or against legal liability of the insured for loss, damage, or expense incident to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft or instrumentality in use of ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.

Whether exporting or importing or using an air freight or ocean freight for your international shipping, marine cargo insurance covers loss and/or damage of cargo while it is in transit between the points or origin and final destination.

Here are five reasons why your import/export business need to protect your freight with cargo insurance.

1. Reduce Risk of Financial Loss

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Whether you’re an exporter who has not been paid for the goods at the time of shipment or an importer who has paid for all of the goods prior to receiving the, having your cargo insured protects you from potential financial loss if the goods are lost or damaged during the transit.

2. General Average – Speed up the Release of Your Cargo

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In cargo insurance, general average means general loss. When the general average is declared, both the ocean carrier and the cargo owners are liable for loss or damage to all the cargos aboard in the ship, as well as the ship itself. Under this circumstance, you may be required to post a bond and/or cash deposit in order to obtain the release of your cargo following a general average – even though there was no loss or damage to your goods.

By availing cargo insurance, you take the load off your shoulder as the insurance company assumes the responsibility and expedites the release of your cargo.

3. Contractual Requirement

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If your customers obligate you through a contract to provide ocean cargo insurance, that is because they want to protect their interest and or their bank’s interest as well. This is especially true when selling goods in CIP or CIF (click the link to learn more about Incoterms). Failing to avail cargo insurance cannot only subject you to financial loss if there is loss or damage to the goods, but non-compliance with the terms of your contract with the buyer can also result in loss of sales and legal problems.

4. Coverage for Limited Carrier Liability

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By law, carriers are not fully responsible for many common causes of loss in transit e.g. Acts of God, general average, etc. In the event they are liable, their liability is also limited – either by contract stipulated in the bill of lading or by law. To make up for the limited carrier liability, the best thing that you can do is to purchase a cargo insurance.

5. More Control Over Terms

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While counting on your buyer’s or seller’s insurance may be a viable option, having a cargo insurance provides another layer of security and peace of mind. Purchasing a cargo insurance puts you on the higher ground by giving you more control over insuring terms, valuation, and limits provided by each insurer, ensuring that all these are a perfect match to your business’ needs. As an importer, purchasing your own cargo insurance saves you a lot of time and effort from dealing with foreign insurance company provided by the seller, especially from a country with a different language.

These are the top compelling reasons why you should definitely need a cargo insurance for your import/export business. Want to know more? Contact Excelsior Worldwide Freight Logistics Corp. and let us help you in your journey in the import-export industry this 2017 and beyond. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Tips to Grow Your Import/Export Business

excelsior on April 12, 2017

Starting an import and export business is one thing, knowing how to grow it from the ground up is another. It is true that this line of business can be so rewarding. But just like any other ventures, import/export also requires you to effectively move within the intricacies of its internal and external environment.

For most enlightened part of import and export business, having the right idea, the right amount of capital, and right tools and knowledge are the three basic components of success. Given that you have already established an import-export business you wanted to pursue, the next thing that you should do next is to learn how to grow your business in a smart way.

In this post, we will discuss the top five tips to keep your import-export business running and thriving this 2017 and beyond.

1. Build Relationship

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Perhaps the most obvious one. While the success of a business relies on relationship – whether with suppliers or customers – not all business owner knows this. If you are just starting out in your import-export business, then you should make networking with people in the countries you wish to export to one of your top priorities.

You can make use of social networking sites such as LinkedIn to help you with this task. It is a great place where many business owners engage with each other these days, as it allows you to expand your network and build a reputable name for your brand.

Also, while it is important to build a relationship with your suppliers, clients, and your own employees, you must not forget about those helping you with the logistics of your import-export business – your freight forwarder. If you don’t have a freight forwarder you trust, Excelsior Worldwide Freight Logistics Corp. is ready to be your partner and use our years of experience in importing and exporting to help you.

2. Keep Your Business Organized

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In any kind of business, efficient and organization and management is a must to ensure that all the company’s resources are maximized and is helping you reach your desired goals. This is especially true in import and export industry, where you will most likely deal with different trading partners from different regions.

To keep your business organized and make sure you don’t get lost on track with your international dealings, make sure to use online tools to your advantage. This could range from to-do apps such as Trello, Evernote, and Wunderlist, to online invoicing platforms such as Due, Sighted and Invoicera. The advantage of using an online invoicing service over email is that it keeps all your payments administration and communication in one place, plus it allows you to work collaboratively with your clients despite geographical constraints.

3. But Keep It Flexible

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Dealing with different clients and suppliers around the world also mean encountering and managing different cultures and preferences in doing business and completing transactions. It is important to keep your business adaptable and to work with your clients regarding their preferred modes of delivery and payment options. Doing so will allow you to build a stronger relationship with your clients which is essential to your business’s success.

4. Ensure a Healthy Cash Flow

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Just as important as an organized business is an efficient cash flow. Even if you know to yourself that you are perfectly profitable and have a number of pending payments and potential clients in the pipeline, it is still good to have a solid pool of working capital at hand to help your business manage cost when payments get delayed for any reason.

If you are exporting, you may consider asking your clients to pay at least half of the payment first before sending a lot of high-value product. Remember: facilitating a payment of an invoice, we take on all the risk of late payment – or worst, non-payment of that transaction.

5. Consider Improving Instead of Expanding

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While most busin ess people would want to expand their business to different regions, this is not the smartest thing to do for most of the time. If you export to China, there is nothing wrong with wanting to export to New Zealand, Japan, and European countries too. But as you spread your operations to those other countries, you must consider if your current business model can provide the same service you were giving to your clients in China.

Focusing in on how you can further improve the services you provide to your current customers and how you can be more effective in a region to which you already export can be much more profitable than exporting to a new region. Focus on what you do best first in order to ensure that your business is standing on a very strong foundation. This will result in expanding your client base in a region which you currently serve, and makes exporting to other regions much easier.

As the old adage goes: “Growth is never by mere chance; it is the result of forces working together”. To ensure that all your efforts will come to fruition, you must know how to steer your organization – from the employees up to top-level executive – towards a common a goal. Make sure to consider these tips and you will surely propel your import and export business forward into success.

Need a helping hand on starting your import and export business today? Contact Excelsior Worldwide Freight Logistics Corp. and let us help you in your journey in the import-export industry this 2017 and beyond. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph

Guide to Starting an Import and Export Business in the Philippines

excelsior on March 27, 2017

In our recent blog, we have talked about the latest business ideas that you should consider if you are planning to start an import and export business in the Philippines this 2017. As we have discussed, establishing an international trading business in the Philippines is a good idea for it allows you to take advantage of the most in-demand products from all over the world and earn above-average profit from it.

Given that you already have a specific product in mind that you want to import or export, the next step you need to take is to learn how to set up an import and export business properly. In this post, we will discuss a simple guide that will help you jumpstart on your international trading business today.

1. Types of Import/Export Business

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There are different variations of this business, which includes the following:

• Export Management Company (EMC) – Handles export operations for a domestic company that wants to sell its product overseas but doesn’t have the technical know-how or doesn’t have the resources to conduct the operation in-house.

• Export Trading Company (ETC) – Identifies the in-demand products in a foreign market and then hunts down domestic sources willing to export such products.

• Import/Export Merchant – More of like a freelance agent who purchases goods directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own.

2. Know the Top Trading Partners of the Philippines

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Below is a list of the top 5 countries with which Philippines trades (in order of largest import and export dollars to smallest) are:

• Japan

• United States

• China

• Hong Kong, China

• Singapore

You didn’t have to secure trade deals with importers and exporters in these countries since there are other emerging markets in other countries like in Europe and the Middle East. But as a beginner in the industry, you should familiarize yourself with the biggest trading partners and see what they have to offer.

3. Develop a Comprehensive Business Plan

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A comprehensive business plan is essential for every starting business. A business plan describes what you plan to do and how you plan to do it. It should include the following:

• Your business structure, industry, the product or service you specialize in.

• Start-up cost, income and billing, operations structure, budget forecast.

• Your target market; their demographics, buying motives and your plan to win them.

• Your projected income and cash flow statement, balance sheet and other financial ratios.

4. Make Your Business Legal

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After you developed a business plan, you will need to register your new business with the Department of Trade and Industry if it’s a sole proprietorship, and to Securities and Exchange Commission (SEC) if it is a partnership or corporation. You will also need various types of licenses depending on the types of products you will be importing and/or exporting. You will also need to register with the city or the municipality where you intend to operate the business as well as with the Bureau of Internal Revenue (BIR).

5. Coordinate with Other Local Start-ups

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As a beginner in the international trading scene, it is wise if you talk to other business owners who are already running a startup venture in the Philippines. They can give some useful advice on how to react to the challenges you will be facing as you take the first steps in your business, and even some practical tips on where to find a good source of suppliers for your products.

6. Find a Reliable and Trustworthy Freight Forwarding Firm

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One of the most crucial, yet often overlooked decision when it comes starting an import and export business is choosing the right freight forwarding partner. A reliable and honest freight forwarding company provide significant advantages that will not only help you gain a competitive edge but also ensures that all your import and export transactions are done legally, ethically, on budget and on time.

These are just some the basic steps that you should consider when starting an import and export business here in the Philippines. Follow these tips and you can certainly start your very own business that can literally take you all over the world today.

Need a helping hand on starting your import and export business today? Contact Excelsior Worldwide Freight Logistics Corp. today and let us help you in your journey in the import-export industry this 2017 and beyond. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Top 10 Ports in the World (Infographic)

excelsior on March 15, 2017

For centuries, ports have played a critical role in global commerce, making it possible for different countries to acquire its much-needed resources and products that are impossible to transport through other means. For importers and exporters, ports provide them with benefits that come from foreign resources and investments, as well as the advantage of having access to larger and more open markets.

With such importance, there has been a steady support for constructing new ports around the world in the past recent years. According to World Port Source, there are more than 4,500 ports that are currently serving the global market.
That said, there are ports that are “busier” than others. In this post, we will present the top ten ports in the world in terms of container traffic passing through them.

Why Shipping FOB is Better Than CIF?

excelsior on February 17, 2017

Choosing the right Incoterms is a vital part of the shipping process. This ensures that both parties – the seller and the buyer – understands their responsibilities, and at the same time, streamlines the whole shipping process so that the freights are delivered efficiently and in a timely manner.

For shipments that are transported through the inland waterway transport, shippers have four Incoterms to choose from: Free Alongside Ship (FAS), Free on Board (FOB), Cost and Freight (CFR), and Cost, Insurance, Freight (CIF). A detailed explanation of these Incoterms is provided in our previous blog Importer Facts: Choosing Your Agreement Between Your Supplier – Incoterms 2010.
In this post, we will focus on the advantages of FOB over CIF, and why it is a more convenient option for shippers.

Free on Board

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The seller fulfills their obligation when the goods have been delivered on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. This Incoterms indicates that the seller has to shoulder all the costs and risks of loss and damage to the goods until the goods have finally arrived on board the vessel, and the buyer will bear all costs from that moment onwards.

Cost, Insurance, Freight

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The seller fulfills their obligation to deliver when the goods are already placed on board the vessel nominated by the seller or procure the goods already so delivered. The risks of loss and damage pass when the goods are on board the vessel. Aside from freight and clearance cost, the seller needs to procure and pay for a marine insurance against the buyer’s risks of loss of or damage to the goods while in transit.

Advantages of FOB

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One of the main reason why many shippers choose FOB than CIF as the term of sale is because it allows for greater control over the freight and the freight expenses. This greater control can help you have an upper hand in minimizing the overall import cost while providing you with maximum convenience as possible.

Most first-time importers usually use CIF to transport small quantities of goods because it also offers convenience by having the seller deal with all the shipping and freight details. However, choosing this agreement can only lead to higher freight cost at the end. This is because the seller can collaborate with their forwarder to increase the markup of the freight cost, allowing them to make a profit. As an importer, you can’t do anything to affect the invoice given to you by the forwarder.

When shipping FOB, you have the power to control the overall shipping process, allowing to make significant cost savings. You can select your own freight carrier, you can choose which route has to be taken, select your own agents to handle the shipments when it arrives, organize an insurance policy as well as set your own transit time.

Another benefit that FOB provides is the convenience and transparency of working with only one contact agency throughout the process. This means that whenever you have questions or issues regarding your freight, you don’t have to meddle with different entities just to get a clear answer and feedbacks. This also ensures that the carrier will be working with only your best interest in mind because their sole purpose is to deliver your goods to its destination.

Shipping CIF on the other hand, is more disadvantageous, especially if your goal is to save money from your shipping cost. It relinquishes you with any control over your shipments while also passing more responsibilities and risks to your part.
The seller can use their preferred shipper and their own transit times. Delayed shipments are also harder to resolve since transportation is beyond your control, and there are other parties that may be involved in different stages which make it harder to obtain information about the cargo. Another factor to consider is that since it was the seller who paid the carrier, there is no obligation to fulfill your needs.

From the buyer’s perspective, FOB offers greater control over the shipping process compared to what CIF does. Not only it provides greater flexibility, but also gives you control over the shipping cost, and subsequently, the overall cost of the cargos.

Contact Excelsior Worldwide Freight Logistics Corp. now and let us help you in your journey in the international trade this 2017 and beyond. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Importer & Exporter Fact: Culture of Honesty, Find an Honest Broker (Infographic)

excelsior on January 4, 2017

The advent of new technology has made it easier for anyone to start their own import and export business nowadays. However, with tight competition, complex environment, and demanding processes, it is very sporadic for an importer-exporter to prepare the customs work on its own.

Customs broker is an individual that provides professional and expert service for customs clearance of goods during importing and exporting. Their help ensures that all your freights arrive at its point of destination without evading any rules and regulations of international trade.

6 Biggest Frustrations of Importers and Exporters

excelsior on December 19, 2016

6 Biggest Frustrations of Importers and Exporters

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No industry is free from problems and complaints, even the importing and exporting business. As complex as it would appear, the world of import and export can be one of the most daunting endeavors that you would get into, especially if you are not well-versed with its intricacies.

We will uncover some of the enduring pains and nuances that importers and exporters faced in their international trading business. From the struggles of finding an honest customs broker to unseen charges and changing regulations, knowing these situations that might occur in your trading business will make you prepared for the unexpected to a certain degree.

1. Lack of Access to Honest Customs Brokerage Firm

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Many companies are struggling to find an honest customs broker that they can fully trust. It could be because they are still new in the business, or they don’t have any criteria that can help them in the selection process.

Either way, choosing a truthful and straight to point customs brokerage firm can be very beneficial to a business, simply because they make the whole importing and exporting process much easier for you: From doing customs transaction on your behalf to payment of duties and taxes, they make sure that all your freights will arrive at its destination on time, while making significant cost-savings along the process.

2. Faulty and Inefficient Logistics

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Logistics plays a very critical role in a trading business, that is why even a simple glitch can cause pains and nuances to both importer and exporter. This may include delay at the port of loading, delay at transshipment, withdrawal of inbound vessels and many others.

These delays can escalate to a lot of troubles, primarily because these delays are never communicated to consignee until they asked. It also gets worse when the shipping line keeps on giving faulty arrival dates just to save their grounds. This fallacious information can lead to the company not being able to take an alternative course of action, resulting in bigger shipping expense.

3. Insufficient Expertise of the Broker

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Aside from honesty and reliability, another factor or quality that many businesses struggle to find nowadays are an equally capable customs broker. Many small to medium sized companies that import or export their products and doesn’t have someone on staff to manage their customs obligations experience this struggle first.

Instead of making the process much easier for you, partnering with a broker that lacks knowledge about the constantly changing regulations international trade can result in delayed shipments, costly penalties, fees, or worse – a lost customers due to a bad experience.

Their lack of knowledge can also inhibit companies from expanding their sales opportunities beyond their current market. If the customs broker doesn’t have a solid understanding of international trade, then the business may not be able to know the various marketplaces and tariff schedules that they can take advantage of and make significant savings.

4. Hidden Charges

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If dishonesty and lack of knowledge didn’t get you, hidden charges surely will. Because of its complexity, identifying hidden charges in importing and exporting is quite a challenge, especially if you don’t have the service an honest and capable customs brokerage provider.

Some of the cost that is often not accounted for in landed cost calculations are:

• Customs Exams
• Less than Container Load (LCL)Charges
• Port Fees
• Chassis Fee
• Wait Time Fee
• Terms of Sale

These are just some of the factors that can come into play and affect the price you turn out paying for your imported products. You need to be keen to these costs because no matter how well you calculate your landed cost, these “hidden” costs are likely to show up in the final computations of your imports.

5. Severe Document Backlogs

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There are rules and regulations that need to be met in the importing and exporting world to ensure that goods are moved legally without any impediment developing in the process. That is why a delay in documentation process can immensely affect the whole importing process, thus increasing expenses such as storage cost, fines, and penalties.

Customs clearance requires set of documents to be submitted by the importer, by the airline, shipping line or concerned freight forwarder, as well as the customs documentation prepared and submitted by clearing agent on behalf of the importer. So, to avoid any delays, it is important to provide complete and accurate information to the customs broker/freight forwarders so that the clearance process will be smoother and your shipment is less likely to face with any exams

6. Sudden Change of Rules and Regulations

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One of the most terrible situations in the importing/exporting industry are the sudden changes in rules and regulations of the importing and exporting country. For instance, a huge quantity of cargo is in transit, and the country of destination suddenly issues an order that bans the import of that same item that the importer has in-transit.

Since the vessel can no longer unload the freights into the destination country, either the seller or the buyer should bear the loss or will need to look for an alternate buyer in some other country to dump the cargo. Likewise, sudden new taxes and duties on export items may also result to exporter not being able to fulfill the order.

Contingency planning, along with little precautions can help you overcome these notorious headaches in the importing and exporting world. Likewise, these can also be avoided if you partner with a seasoned and competent customs brokerage firm that is driven on giving quality and upright service to their clients.

Let Excelsior Worldwide Freight Logistics Corp. help you throughout the whole importing and exporting process. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Source:
http://www.posteverywhere.com/customs-clearance-problems/
http://www.managementstudyguide.com/imports-documentation-in-customs-clearance.htm#

Incoterms 2010: What’s the Responsibility of Supplier and Buyer? (Infographic)

excelsior on December 9, 2016

Whether you are new in the importing and exporting industry or not, you might have already encountered the term Incoterms in your business. For starters, International Commercial Terms or Incoterms , which the latest edition was released in 2010, is a set of standardized trade terms created and published by International Chamber of Commerce in 1936 to serve as the basis of agreement between the supplier and the buyer that trades internationally.

The latest edition, the Incoterms 2010, contains 11 rules which are divided into two classes: 1. Rules for any mode or modes of transport; and 2. Rules for Sea and Inland Waterway Transport. Both differs in the mode of delivery, but understanding the difference between each rule is critical to know where and when the responsibility of the buyer and the supplier ends.

Detailed below are the duties of buyer and supplier in accordance with the 11 rules in Incoterms 2010.

Types of Bill of Lading That Affects Your Import & Export Business (Infographic)

excelsior on November 21, 2016

Bill of Lading (BOL, Waybill) is a legal document between the shipping carrier and the business which acts as 1) a proof of contract of carriage, 2) receipt of goods, and 3) document of title of goods. It is considered as one of the most important documents in the whole shipping and freight process. Unknown to many, bill lading has many types, and each of these has its own purpose and set of specific instructions for the shipping carrier.

Check out this visual guide as we present some of the most common types of bill of lading used in the importing and exporting business.

New Cebu international port project may start in August

excelsior on June 24, 2016

Lorenciana, Carlo and Braga, Michael Vencynth (2016, June 24). The Freeman. New Cebu international port project may start in August. Retrieved from http://www.philstar.com/cebu-news/2016/04/29/1577985/new-cebu-international-port-project-may-start-august

CEBU, Philippines – The new Cebu international container port may start construction by August this year if the National Economic and Development Authority Board would approve the project.

Cebu Port Authority General Manager Edmund Tan, however, could not say if the port project will be approved within President Aquino’s term which ends this June. The President chairs the NEDA.

Tan said he was hoping the project would be approved as soon as possible.

Speaking at the Visayas Shipping Conference 2016 yesterday in Cebu City, Tan said NEDA is currently awaiting from the Department of Transportation and Communications “the submission of requisite documents for the said project to facilitate NEDA Board-ICC (Investment Coordination Committee) processing and approval.”

These documents include the feasibility study which was completed in July 2015 and ICC project evaluation forms.

The project, Tan added, is scheduled to be presented to DOTC secretary for approval and subsequent endorsement to the NEDA Board-ICC.

According to the project’s implementation timeline, the target schedule for the construction is August this year and completion is second quarter of 2019.

The feasibility study on the new Cebu port, done by Korean experts, pointed a location in Tayud, Consolacion as the project site.

Among the study’s recommendations include funding from the Korea’s Economic Development Cooperation Fund as the project, which has an estimated project cost of P10 billion, has a poor financial viability.

Tan said the new port will need an access road to connect the port to and from the Cebu North Coastal Road.

The study noted that the traffic on the existing road linked to the access road to the new port will increase due to the increased cargo transport.

“It is recommended to expand lane of the existing road and set up a countermeasure for traffic improvement,” Tan said.

He said the CPA will have to ask the Department of Public Works and Highways for the possibility of funding the road access project.

The study also recommended the application of Korea’s container port development experience to Cebu new port.

The new container port is geared to meet the demands of dynamic and growing economy of Cebu and of the region.

It is expected to provide a long-term solution to the congestion at the existing Cebu International Port due to increasing cargo volume and the shallow water depth of its container berths.

The new port project was included in the Comprehensive and Integrated Infrastructure Program (CIIP) on April 11.

The municipality of Consolacion welcomes the idea of establishing the international port in Barangay Tayud.

Mayor Teresa Alegado believes that transferring the port to other areas like Consolacion will decongest the traffic in the cities of Mandaue and Cebu.

She added that it would also spur economic development of the town.

The traffic congestion at the Cebu International Port area is reportedly caused by big trucks hauling cargoes inside the area.