Standard Post Archives - Page 7 of 8 - Excelsior Worldwide Logistics Corp.

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.

Top Factors That Impacts Transportation Management

excelsior on February 10, 2017

Transportation management is a critical component for many importing/ exporting businesses. If planned carefully and properly, an effective transportation plan can be a potential area of significant savings. And with that, many are constantly trying to figure out the most cost-effective and efficient way to get their goods from one point to another.

That said, companies often consider multiple factors to achieve optimum cost in transportation. However, there are factors that can have the biggest impact on a company’s transportation management. These are:

1. Organization’s ability to negotiate for better rates from transportation carriers

2. Load Optimization

3. Proper selection of right carrier for each type of freights

Procurement of Carrier Contract

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One of the most daunting and time-consuming processes in shipping is managing the carrier bidding process. With tons of data to examine, companies must be able to identify which carrier offers the best service based on what is presented on their freight bill and internal systems. After that, they must also identify the trends and make forecasts for future business levels in various regions. The process is too complex and onerous that many companies do not execute this often, or just simply rely on spot rates.
After the bids are received, companies must compare them all and analyze which of them offers the most valuable on the table. However, with multiple bids at hand, it can be difficult for carriers to offer competitive price and discounts to the company. And when they offer special rates, companies must also weigh its advantages against other bids, which can take weeks or even months before a final decision can be made.

To address this issue, companies are now seeking the help of bid management tools. These tools are often embedded in their internal Transportation Management Software (TMS) system. The latest versions of this system have a web-based interface to make it easier for carriers to request and submit bids to companies. Many TMS providers also offer their solution “on-demand” format, allowing companies to have access to a rich database of freight rates. Some providers also offer “community benchmarking” services to help identify situations where carriers may have bid on some lanes.

Another way to expedite the complex bidding process is through the help of Online Procurement software. These are management tools often packaged in a web-based interface that allows carriers to submit conditional statements that related to specific conditions under which they can offer special discounts. These tools can analyze multiple bids at the same time. These helps both the carriers and the company to execute the whole bidding process more efficiently and effectively.

Load Optimization

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Load optimization is another process which is almost impossible to execute until when shipment volume is low enough for a shipping analyst to review each load on a case-to-case basis. For many companies, the complex analytical engine is important to manage high-volume shipments to maximize the space and achieve cost-efficiency.

Here are the four types of load optimization that most companies usually struggle with.

• Mode Optimization- While many companies often base their decisions on physical weights of multi-piece shipments to determine when their goods get shipped via a parcel, LTL, or truckload carrier, there are many instances where a sub-optimal gets selected.

• Consolidation Optimization- As shipment volume increases, it can become more difficult to identify and combine multiple loads that are scheduled to be shipped to the same location on the same day. This gets more challenging when shipments scheduled to be scheduled the next day are low in volume.

• Pool-point Optimization- Companies with multiple suppliers in distant locations often pool inbound shipments in a remote location before it is transported to its destination.

• Multi-stop Truckload Optimization- This form of optimization involves a single truck that can leave a distribution center full, and make multiple deliveries. Thought this is cost-effective, it can be difficult to create.

Carrier Selection and Load Tendering

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One of the factors that can affect the transportation management is selecting the best carrier for each shipment you have and tending the load to that carrier. But without the ability to rate-shop against multiple carriers, and to manage tiered tendering system, it can be very challenging for companies to select a carrier that can deliver the freight properly and in a timely manner.
Without the right tools to easily rate loads against electronic contracts, the transportation department will spend so much time calling carriers, getting quotes, and then calling back the selected carrier to tender the load- a process which can suck out all the time and focus of the team on improving efficiency.

This issue can be addressed by working with a freight forwarding agency that can help you handle your whole logistics operations more effectively and efficiently. With their large network of carriers, they can help you find the right carrier that is best suited to your business needs and budget and allows you to transport to its destination without the hassles of handling the whole operations in-house.

Some of the services offered by freight forwarders are:

• Inland Transportation Tracking

• Shipping and Export Documents Preparation

• Warehousing

• Booking Cargo Space

• Freight Consolidation

• Cargo Insurance/ Filing Insurance Claims

With the help of an efficient freight forwarding company, your freights will be transported to its destination at a much lower cost, allowing you to save significant amount of money which can be used to further enhance your logistics operations.

Things that You Should Know When Requesting Freight Rate Quote

excelsior on January 18, 2017

One of the first things that you should know when starting an importing and exporting business is how to get the right freight rate quote for your shipments. Referred to as the price at which a certain cargo is delivered from one point to another, getting the right freight rate quote is a critical step in achieving profitability in the shipping industry.

To maintain a relatively healthy cash flow, you have to make sure that the cost it takes to transport your goods from one point to other remains within your budget.

And to ensure that you get an accurate and affordable freight rate quote, there is information that you should collect and pass to your freight forwarder subsequently. To know the factors at play that can affect your freight rate quote, check our pointers below.

1. Mode of Transportation

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First and foremost, you have to consider the type of transportation required to transport your goods. For beginners, the most dominant type of transport in shipping process are aviation, ship transport, and land transport (rail, road, and off-road transport.). Each of these options has their own pros and cons. For instance, air is the fastest mode of transport, but also the most expensive, followed by ship transport, and then land transport.

2. Incoterms or Mode of Shipment

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Incoterms, which stands for International Commercial Terms, is a set of pre-determined commercial terms published by International Chamber of Commerce that serves as the basis of agreement between the buyer and the supplier. It details the risks, costs, and tasks that each party should assume with regards to the fulfillment of delivery and transportation of shipments.

If you are buying goods internationally, your best choices are Freight on Board, Ex Works, Cost and Freight, and Cost, Insurance, and Freight. These options offer the greatest control over shipping cost from your perspective as the buyer.

For instance, the FOB means that the seller leaves your shipments at the port of origin, all set-up for international transport. As a buyer, it gives you absolute control over all related expenses and coordination of delivery of your shipments to your warehouse or final area of destination. This option is the most recommended option for importers and buyers since it allows you to choose the shipping routes and times, as well as negotiate prices with the freight forwarder of your choosing.

3. Type of Goods You’re Shipping

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As obvious as it can be, knowing the specific type of goods is what many people forget to consider when requesting for a freight rate quote. This is critical because there are different pricing and handling rules that apply for each type of item you are shipping, so make sure to supply your freight forwarder with this information right away. For instance, how items such as raw pulp or lumber wood would be handled and stored inside the ship would be very much different for items like wooden furniture.

4. Details of Your Cargo

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Aside from the type of the cargo you’re shipping, your freight forwarder should also know the specific details about your shipment. This includes the following:

Dimensions – Typically observed in ocean freight shipping which utilizes containers. The usual sizes of containers are 40 ft. and 20 ft. As a rule of thumb, the larger the dimensions of your shipment, the higher the freight rate quote will be.

Weight – The weight of your shipments is important, especially if you plan to transport it via air. This because air freight prices are mostly based on weight, compared to ocean freight prices which depend mostly on size.

Hazard/ Toxic Cargo – Shipping hazardous items will require you to pass a Material Safety Data Sheet (MSDS) to avoid any issues while the container is being loaded. The MSDS entails all the data about your cargo such as the nature of toxicity, its chemical and physical properties, methods of storage and disposal, etc.

Pallet – If your shipments can be palletized, then it can be stored inside the container more efficiently and can reduce your transportation cost.

5. Delivery Options

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You have different options of how you want your shipments to be delivered. It’s best to choose the option that fits your budget can work well on the inland logistic network of your area and is in line with the needs of your business.

Door-to-Door – Offers the highest convenience to the buyer. In this option, the client is not involved with the sea freight container shipment as the shipper is tasked to handle everything.

Port-to-Port – The shipper handles the shipment from the port of origin to the port of destination.

Port-to-Door – Suitable for customers who have their own logistics networks, and can move their shipments from the port of origin to their warehouse.

6. Method of Loading

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There are several methods for loading your shipments in the container:

Live Load – In this option, an ocean freight container is loaded at your location. The trucker waits until you load, secure, and seal the container for the international shipment. There is a free loading time limit for live loads, which usually vary from one to two hours. Exceeding the free time limit means you have to pay a fee for every exceeding hour.

Drop and Pick – Like the live load, the ocean freight container is delivered to your place of load, but the trucker will leave the container for a few days. After it is loaded, it will be picked up and returned to your freight forwarder’s yard.

Commercial vs Residential – A surcharge is added to your quote when shipping to residence instead to a commercial place or location.

7. Cargo Ready Date

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The freight rate quote is volatile, meaning it is only available for a determined amount of time – usually about 30 days. Although planning ahead of time is good, you can never really get an actual quote for your shipments until your cargo is ready to be shipped. However, you can ask your freight forwarder an estimate to get an idea of what your shipment might cost.

8. Duty Rate

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Another factor that will impact your freight quote is the duty tax. This is a kind of tax imposed by the government on shipments and is determined by calculating a percentage of the value of the commodity. In the Philippines, the duty rates can vary from 0% to 65%, with an industry average of 10.5%. Related: Why Should You Pay the Correct Customs Duty and Tax?

These are the factors that can affect the final quote of your shipments. As much as possible, partner with an efficient and professional freight forwarder and communicate to them all the details so that you can get a quote that is accurate and fits your budget.

Contact Excelsior Worldwide Freight Logistics Corp. now and let us help you get an accurate and affordable freight quote today. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Import Facts: What Are the Benefits If Your Customs Broker and Forwarder is Efficient?

excelsior on January 11, 2017

Cost-efficiency is one of the primary goals of many businesses, and the same holds true in import and export business. As such, choosing the right customs broker and freight forwarder is extremely important to make this goal a reality.

In this infographic, we will discuss how an efficient customs brokerage and freight forwarder firm can help your import and export business grow and keep the cost low in the long run.

1. Your Business Will Reach New Markets

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A successful small business needs to put its product in front of customers, even if those customers are in the other countries. An efficient customs broker that provides intercontinental coverage is imperative to helping your goods reach those customers quickly and efficiently.

And if you’re importing parts and components, a broker with locations at all major ports and border crossings can help ensure your goods get to you in a timely manner. Ask your broker about their coverage and what services they can offer to help you reach new markets.

2. Your Business Process Will Improve

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While you keep your efforts focused on your business, you can look to your broker for expert advice on moving goods across the border. Your broker should be able to offer guidance on customs regulations, tariffs, valuation, classification and more – advice that can help you reduce shipping times and save money.

To provide this advice, your broker must have licensed or certified customs professionals available who can answer questions about the customs process – all you need to do is ask. Don’t hesitate to inquire and take advantage of any guidance or services your broker provides that can improve your processes, help with your record keeping and prepare you for customs audits.

3. Save Time and Money

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Technology and automation have had a huge impact on business in the 21st century. All brokers are required to have, at a minimum, automated systems that exchange shipment data with U.S. and Canada Customs.

Many brokers offer additional technology tools and/or use specific systems in-house that can help you increase your efficiency, control your costs, and reduce your risk of non-compliance. These include proprietary imaging solutions, Electronic Data Interchange (EDI) solutions, e-billing options, File Transfer Protocol (FTP) tools and more.

These solutions can reduce paperwork, simplify your accounting and help keep your business in good standing with Customs. Check with your broker about the technology offerings they have at hand and how they can help you improve efficiency and reduce costs.

4. Better Manageability

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Manageability and organization are incredibly important for businesses which need a sense of control over their supply chain and can recover quickly in the event of a loss. Many third-party logistics companies may be too bulky to offer the transparency and personal touch that international shippers need. If a shipment is lost it could take multiple departments, phone calls, and repeated questions to get the answers you need. On the other hand, freight forwarders utilize their wide-ranging networks to quickly trace the problem directly to its source, enacting immediate solutions.

5. Freedom from Contracts

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In our natural quest for reliability, we often insist on contracts and binding documentation that guarantees a certain level or quantity of service. But the shipping industry is full of moving parts (both literally and figuratively) and it could actually hurt your business to stay tied to one carrier for a year or more. Freight forwarders give you a lot more freedom to do what is best for your business, and the awareness that you could switch firms at any time drives them to keep you constantly satisfied.

6. Timely Arrival of Shipments

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Freight forwarders offer unique versatility which can come in handy for meeting tight deadlines or when dealing with unforeseen obstacles. A seasoned forwarder has the resources to handle unfortunate circumstances like rerouted shipments or delays at sea.

Imagine you’re shipping goods to Panama from China, Europe, and the United States, and one of your shipments is diverted to another port due to stormy seas. How prepared are you to react and handle that smoothly? To a freight forwarder, situations like this are just another day at the office.

As a business owner, having the right customs broker and freight forwarder to help you with your shipment is a wise business decision that will help you and your business remarkably. It is not only practical but also time and cost-efficient.

At Excelsior, we value your business and your time. This is why we want to offer you a customs brokerage service that is efficient, professional, and ethical. For more information about our customs brokerage services, call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

Customs Audit: How Will It Affect Your Importation?

excelsior on December 29, 2016

Customs Audit is one of the most critical parts of the importation process. In May 2001, the Philippine Congress passed the Republic Act 9135 establishing the Port Entry Audit (PEA) System. This was shortly followed by the Customs Administrative Order No. 5-2001, which allows for the system to be fully implemented all over the country. The procedure was strengthen by the new passed law in the Congress and Senate last September 2015, the R.A 10863 also known as a Customs Modernization and Tariff Act.

What is Customs Audit?

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The law designates power on the Bureau of Customs to conduct a Post Clearance Audit of imports for three years from the date of importations (Final payment of duties or customs clearances). Operationally, customs audit means that the importer is obliged to open its import and business records specified in the said law and give full & free access to customs officer authorized by Bureau of Customs for purpose of authenticating the accuracy of the information declared in the corresponding import entries covered by the audit period..

What are the Consequences of Noncompliance?

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Noncompliance with laws and regulations may result in very stiff penalties. Any person who, after being subjected to post clearance audit and examination is found to have incurred deficiencies in duties and taxes paid for imported goods, shall be penalized according to two degrees of culpability.

First when negligence committed and found guilty for deficiency results from an offenders failure to exercise reasonable care and competence in ensuring that a statement/declaration made is correct, shall be penalized with a fine equivalent to 125% of the revenue loss.

Worst, When the customs officers found out that there is fraud involved (committed knowingly, voluntarily and intentionally) the auditee if found guilty is subject to a separate investigation and may further be liable to criminal prosecution aside from the penalty of not more than six times the revenue loss.

How to Avoid Noncompliance

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Certainly, post clearance audit greatly impacts the way importers will be doing business with customs. Corporate officials are also expected to be aware that violations of the post clearance audit law make them liable to civil- or worst, criminal prosecution. To avoid this, here are the three things that a responsible corporate official should consider to ensure compliance with the new law:

1. Determine as to what office or who within the organization should be responsible for the storage and retrieval of relevant documents and information needed for customs audit.

2. Provide to the Customs Officer the correct information when the same is required or asked during post clearance audit at any time for that matter.

3. The storage and retrieval pertain to a system of keeping these records, whether manually or electronically.
It is very important to systematically keep the records.. A disorganized record-keeping system is highly associated with negligence, which is one factor that can affect the importer’s level of customs compliance.

What to Do If You Are Audited

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Should your company receive notice of an audit, contact a person (Licensed Customs Broker) who is familiar with customs compliance to help you prepare for the audit.

To prepare for a post-entry audit, consider the following:

Prepare your in-house procedures and controls in such areas as record-keeping, classification, and valuation by making sure they are in writing and that your company’s transactions are well documented
Be sure that your documentation shows all corrective actions that have been implemented
Review the audit questionnaire and prepare your response in advance

Some of the import and business documents that are reviewed by Customs in an audit include:

Customs entry records (both manual records and electronic records)
General ledger accounts
Foreign vendor payments
Inventory and disbursement records
Correspondence with foreign suppliers

Understanding how the audit procedure works and how the results can affect a business are very important as violating the law may have a severe business and personal ramifications. With a sensible approach, companies can avoid potentially disastrous results.

Avoid any discrepancies in customs audit by partnering with an honest and capable customs broker today.
Excelsior Worldwide Freight Logistics Corp. provides services that can improve your import process, help you with your recordkeeping and prepare you for the customs audits as well. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph.

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#

Why Should You Pay the Correct Customs Duty and Tax?

excelsior on November 30, 2016

In the importing industry, paying the right customs duties and taxes does not only ensure a smooth flow of importation but also saves you from a lot of headaches in the long run. Going back to the basics, all goods coming from a foreign country needs to be declared, such as their description, quantity, and their value which will be the basis for assessment of duties and taxes.

Import duty can also be ad valorem – based on the value of the goods, or specific – based on weight, dimensions, or other units of measure. In the Philippines, the dutiable value of a cargo is the sum of the actual value of the goods, plus the insurance and transport/freight/shipping cost. It will then be multiplied by the rate of duty which may vary according to the type of goods being shipped.

To arrive at Value Added Tax, the dutiable value is combined with customs duty, brokerage fee, and other charges (customs documentary stamp, import processing fee, and BIR documentary stamp) then multiplied to 12% Expanded Value Added Tax rate.

Cutting off the chase, what really are the benefits of paying the correct customs duty and tax? In this post, we will discuss the reasons why paying the correct customs duty and taxes is not only beneficial to you and your business but to the society as well.

Peace of Mind

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Being reviewed by the Bureau of Customs may cause a high amount of stress especially to a taxpayer who intentionally or illegally, decreases their tax payments. Sometimes it can affect even your personal life which gives you sleepless nights and anxieties.

If you pay the right amount of tax, you can eliminate these stress and anxieties. You will have more peace of mind and you can focus on growing your business.

Honest Income Tax Return

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Some importers, who do not file the correct amount of tax, encounters a problem when they need to generate an Income Tax Return for purposes of loan applications. As such, they resort to preparing inaccurate income tax returns in order to produce the said requirements. Producing an inaccurate tax return is extremely risky because if the agency verifies it to the BIR, it might cause a lot of trouble.

However, if you are diligently filing and paying the right amount of tax, it’s easy to produce accurate income tax return without any risk.

Good Investor Reputation

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To grow your business, at some point, you will need people or institutions with money that are willing to invest in your company. These investors will aspect into your financial and tax records to support their investment decisions.

Maintaining a truthful and accurate accounting and tax records will boost the confidence of investors. On the other hand, fraudulent and inaccurate will create an impression that the company is not trustworthy to invest with.

Social Responsibility and Contribution to the Country

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Paying the right amount of duty and tax is a social responsibility to the country. The duties we pay from importing goods has the purpose of protecting our country’s economy, residents, local jobs, environment and so on. The taxes we pay will go to the government funds that will be used in developing and improving the government facilities and life of our countrymen, inside and outside our country.

Overall, as a responsible importer, paying the correct customs duty and tax will ultimately benefit your business as it will make your name more credible in the eyes of the authorities, to your stakeholders, and ultimately, to your 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.

Importer Facts: Choosing Your Agreement Between Your Supplier – Incoterms 2010

excelsior on November 28, 2016

If you are planning to start an import and export business on an international basis, or you are expecting to receive or ship goods from an overseas market and you already have a list of potential suppliers at hand, the next step that you will take now is to choose the appropriate delivery agreement between you and your supplier.

By that point, you should have already familiarized yourself with the International Commerce Terms or Incoterms, which is a set of standardized trade terms published the International Chamber of Commerce or ICC. As the basis of delivery agreement between you and your overseas supplier, Incoterms usually includes the information on how goods will be delivered, who will cover the payments, who is responsible for insurance, and who handles specific shipping procedures.

The latest edition of Incoterms was released in 2010 and includes eleven rules which are divided into two classes – 1. Rules for Any Mode or Modes of Transport, which may be used without regard to any kind of transportation used; and 2. Rules for Sea and Inland Waterway Transport, which emphasizes that the point of delivery and the destination of the equipment are both ports.

To decide which of these rules is best for your import and export business, we will discuss all the Incoterms 2010 rules and weigh down the advantage of each in terms of passing on responsibilities and cost.

RULES FOR ANY MODE OR MODES OF TRANSPORT

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EXW – Ex Works

According to ICC, Ex works means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place. This rule places the minimal responsibility to the seller or supplier since they only have to make the goods available, properly packaged at the specified place which is usually at the supplier’s factory or warehouse.

This is not typically used in the cross-border transaction since it presents many transportation difficulties. The buyer also bears all the cost and risks involved in collecting the goods from the seller’s premises to the designated destination.

FCA – Free Carrier

ICC defines Free Carrier as the agreement when the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.” When the goods have already been cleared, it can then be delivered by the seller to the carrier at the designated location stated in the contract.

When the goods arrive at the point of location, the buyer will then assume the responsibility. If the location to deliver goods is not mentioned in the contract, the seller may choose within the place or range stated where the carrier take the goods into his charge. This term is usually used in container transport movements such as RO/ RO (roll on – roll off) used by trailers and ferries.

CPT – Carriage Paid To

Carriage Paid To means that the seller fulfills his obligation if they deliver the goods to the carrier or another person nominated by the seller at an agreed place. This is only applicable when the seller contract for and pay the cost of carriage necessary to bring the goods to the named place of destination. Like FCA, the seller may select the point at the named place of destination which best suits its purpose.

The risk of loss and damage to the goods, as well as any additional cost incurred after the goods have been delivered into the custody of the carrier is then transferred to the buyer. If ever that there are several successive carriers, the transport risk passes from the seller to the buyer when the goods are delivered to the first carrier in the chain.

In this term, the seller has no obligation to hire insurance transport to cover the goods from the point place of delivery to the point of destination. The seller is also tasked to complete all the formalities and carry all the costs of customs clearance for export, but not the import clearance needed in the place of destination.

CIP – Carriage and Insurance Paid To

In its most basic format, Carriage and Insurance Paid To means that the goods will be delivered by the seller to carrier or person nominated by the buyer at the place mutually agreed by the seller and the buyer, and that the seller arranges and pays for all costs for the transportation, including insurance (which is usually kept at minimum) of the goods up to the agreed port of destination.

Like CPT, the obligations of the seller end when he successfully delivered the goods to the carrier, but typically do not end until the carrier reaches the agreed destination. Unlike other Incoterms, the stipulated point of delivering under this terms does not necessarily mean that it is the final delivery point.

DAT – Delivered at Terminal

Incoterms “Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” may include place any place, whether covered or not, such as factory, warehouse, container yard or road, rail or cargo terminal.

Under this Incoterms, the seller must complete all the formalities and shoulder all the costs of customs clearance for export. The seller also bears all the risk involved in bringing the goods to and unloading them all at the terminal at the named port or place of the destination.

DAP – Delivered at Place

Incoterms “Delivered at Place” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Under this Incoterms, the seller agrees to pay all costs and assumes all risks related to bringing the goods up to the place of destination.

DDP – Delivery Duty Paid

Incoterms “Delivery Duty Paid” means that the seller fulfills their obligation when they successfully delivered the goods at the named place in the country of importation. Under this terms, the seller has to shoulder all the costs and risks related to delivering the goods to the place of destination. Unlike the other Incoterms, the seller has also the obligation to clear the goods not only for export but also for import, which means that they have to pay any duty for both export and import and to carry out all customs formalities. While Ex Works is Incoterms that represents the minimum obligation by the seller, Delivery Duty Paid represents the maximum obligation.

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

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FAS – Free Alongside Ship

Free Alongside Ship basically means that the seller fulfills their obligation when the goods have been placed alongside the vessel on the quay or on a barge at the named port of shipment. This means that the seller has to carry all the risks of loss and damage to the goods until the goods are alongside the ship. Under this terms, the buyer is required to clear the goods for export, and should only be used when the buyer does not have the capacity to carry out directly or indirectly the export formalities.

FOB – Free on Board

Incoterms Free on Board states that 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.

CFR – Cost and Freight

Cost and Freight Incoterms mean that seller delivers the goods on board the vessel or procures the goods already so delivered. The seller covers all the risks of loss and damage to the goods until the goods are on board the vessel. However, the seller has to shoulder the costs of bringing the goods from the point of origin to the place of destination. They are also tasked to clear the goods for export, but never on insurance.

CIF – Cost, Insurance, and Freight

Cost, Insurance, and Freight Incoterms is almost identical to CFR – with an exception for the insurance portion. Under this Incoterms, the seller fulfills their obligation to deliver when the goods are already placed on board the vessel or procure the goods already so delivered. Like CFR, the risks of loss and damage passes when the goods are on board the vessel. Aside from freight and clearance cost, the seller has to procure and pay for a marine insurance against the buyer’s risks of loss of or damage to the goods while in transit.

Choosing the appropriate Incoterms is one of the most important step in the shipping process as it ensures that both parties – the seller and the buyer – understands their responsibilities. It also streamlines the whole shipping process so that goods will arrive at the point of destination with less time and hassle, which is a win-win situation both for the seller and buyer.

If you have any questions about Incoterms, feel free to call Excelsior Worldwide Freight Logistics Corp. Call us at (+632) 525-9775 or email us at wecare@excelsior.ph

Advantage of Having the Services of a Freight Forwarding Company

excelsior on October 29, 2016

Advantage of Having the Services of a Freight Forwarding Company

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In the shipping world, one of the most common catchphrases that we often hear is the freight forwarder or forwarding agent. As one of the most critical elements in the global supply chain, freight forwarder has the task to assist and support you in the importing and exporting process- ensuring that all your goods are delivered to your warehouse safely and efficiently.

As your business grow and expand, and the competition in the industry becomes stiffer, you must also keep up with the number of shipments that must be delivered to your customers locally and abroad. To achieve that, you can have the services of a freight forwarding company to manage the shipping function on your behalf, while you stay focus on the things you do best. Detailed below are some the key advantages of using a freight forwarder in your business.

Freight Forwarders Offers Services That Are Rather Complex for You to Handle

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Choosing a freight forwarding service instead of handling the whole logistics functions in-house or another type of logistics provider can bring in a lot of difference especially on the type of services that they can handle. A lot of small and medium enterprises doesn’t have the capability and resources to manage all the shipping requirements effectively, in which case a freight forwarder does have.

Using their knowledge and skills in the importing and exporting industry, they can transport your cargo to any destinations more efficiently. They have the resources to handle unexpected circumstances like redirected shipments or delays, saving you a lot of time and effort in the process.

Some of the services that a freight forwarding provides includes:

Inland Transportation Tracking- Freight forwarding firms track your shipments while they are in transit by truck, rail, or air.
Shipping and Export Documents Preparation- Because shipping a high volume of goods is just another day for freight forwarders, they have all the required skills in the shipping documentation.
Warehousing- They either have their own warehouse in several locations or lease one in an area they don’t service themselves.
Booking Cargo Space- They know which carriers are best at serving a location so they have the advantage when it comes to shipping abroad or even to various regional domestic markets.
Freight Consolidation- They can turn several small shipments into one large shipment at a lower cost.
Cargo Insurance/ Filing Insurance Claims- Because of their knowledge about the intricacies of shipments, they can obtain insurance coverage for your shipments as well as how to deal with insurance should anything go wrong with a shipment.
Freight Forwarders Offers a Specific Set of Services at an Ideal Cost

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Another advantage of having the service of a freight forwarding company in relation to other outsourcing logistics solutions, such as third-party logistics companies or freight brokers, is that they offer a specific set of services which prices are ideal and more cost-effective than 3PL companies that have a broader range of services and freight brokers whose scope of services is only limited to arranging the mode of transportation and does not issue their own bill of lading.Freight forwarders, because of their large network of connections for their services, can negotiate with carriers for lower cost due to the high volume of containers they ship. They can find better freight quotes and have the knowledge which carrier has the most cost-effective routes, allowing your shipments to reach their final destinations faster and at an ideal price.

Freight Forwarders Brings Simplicity

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Truth be told, the shipping industry is indeed full of complexities and volatility. Dealing with these by yourself might result into an expensive shipping process or worst- lost shipments. By having the services of a freight forwarding company, your shipments can move much easier because you are only communicating with one entity.
For one aggregated cost from a single freight forwarding company, you can save a lot of time, money and frustrations. You do not have to mingle with the different trucking company, air carrier, and an ocean carrier to negotiate for services and compare prices because freight forwarders combine these to give you more flexible shipping options.

Freight Forwarders Gives You Sense of Control

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Manageability and organization are one of the most important aspects for many businesses today, especially in logistics function. Freight forwarders give its clients a sense of control over their supply chain, allowing them to foresee the risks as well as to recover quickly in the event of loss of shipments. Compared to many 3PL companies who have a broader breadth of service and stiff structure, freight forwarders have a unique combination of services which allows you to modify the shipping plan to make sure all your shipments reach their destination safely and in a timely manner.

Furthermore, many 3PL companies, due to their wide-ranging scope of services, cannot offer transparency and personal touch that international shippers need. If your shipment is lost, it could take a very long time before you get the answer you need. Freight forwarders, on the other hand, utilize their wide range of networks to quickly trace the issue to its roots, acclaiming solution at first-hand.

These are just some of the many reasons why partnering with a freight forwarder can help your import or export business grow and expand. Knowing these benefits, what you should do now is to evaluate if your needs do qualify for a freight forwarding service since not every shipment demands this type of shipping arrangement.

Finding an Honest and Reliable Freight Forwarder?

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You’ve found one! As an international freight forwarder, Excelsior Worldwide Logistics Corp. ensures that each cargo arrives at its destination safely and in a timely manner. We act as your shipping agent to transport your cargo from point A to point B without hassle. Plus, our wide network of air, sea, and land carriers allows your shipments to travel on the most effective routes across different channels. Let Excelsior guide you in the world of shipment today. Call us at (+632) 525-9775 or send us an email at wecare@excelsior.ph

Importer Tips: How to Avoid Shipping Storage and Demurrage

excelsior on October 19, 2016

If you’re new in the importing or exporting world, you might be surprised to receive an unexpected bill showing demurrage, storage & detention charges – terms that you haven’t even heard yet, let alone know the cause. Or you might have experienced this already for some time now, but either way, these costs might hurt your pockets big time. So, to clear up your confusion, let’s talk about when you might see these charges, and how you can avoid them.

Storage

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Storage charges accumulate at port facilities, airline terminals, and bonded warehouses when a container remains at the site beyond the allotted “free days” provided by the airline, warehouse or Arrastre operator after arrival.

Storage Fee- with standard rate for FCL (see PPA memo). Standard Free time 5 days.

for LCL (see BOC CMO 41-15)

Cut your losses by following these tips to avoid storage cost:

Ensure that there are no issues with the shipping documents. It is the common reason for delaying the release of container.
For regular cargo, consider a Seaway Bill of Lading/Telexed Release instead of an Original Bill of Lading.
Always keep a keen eye over your shipment and the arrival of the vessel, so you will know exactly when you free time initiates and expires.
Advise broker for immediate releasing.

Demurrage

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Demurrage fee is levied by shipping lines for containerized shipments only, however, this fee is charged when the containers are still full and has not been cleared up by the consignee within the seven (7) days free time & extendable as per approval of the shipping line.
Menacing as it is, here are some tips to avoid demurrage charges:

Talk with your freight forwarder and know in advance a number of free days granted.
Dispatch your shipment as early as possible. Excelsior Worldwide Logistics can help you clear your cargo ahead of time provided that all documents handed in a timely manner.
If your shipment comes in volumes, you may request an additional free time from your freight forwarder or carrier. (Most often, the volume of your shipments should be close to 1,000 containers per year to be granted for extended free time.)?
Ensure that your trucking company can pick up the shipments within the allotted free time, and a trucker has been assigned to your shipment. Set-up a backup or alternate trucker in the case of any circumstances that will prevent them from picking up your cargo in a timely manner.
Analyze all the papers containing the terms and conditions of your transportation, warehousing, and sales contracts to find out the situations under which your company may be held responsible for demurrage charges.

Detention

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When the container has been picked up and out gated from the terminal, it must be returned within 72 hours otherwise detention charges will be imposed.

As always, it is important to seek the help of a licensed customs broker and freight forwarder to help you avoid or lessen this unplanned additional charges you might incur in importing/exporting process. They can help you understand the whole shipping process, and makes sure that you stay ahead of schedule and your cargo will move in a timely manner.

Allow Excelsior Worldwide to help you ensure a storage free -demurrage free clearance of shipments. Contact us today to learn more about our global logistics. Call (063) 5259775 or visit our website www.excelsior.ph