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FUNDAMENTAL PROCEDURES OF AN EXPORT BUSINESS – Step by step

This article is about the fundamental procedures and rudiments of an export business.  It’s a continuation of the exportation series we started yesterday. Incase you missed it, this is the link.

Getting started with an export business.

It can be slow at first and you will need to plan your trips, make contacts and SELL. But after you’ve made a few sales and signed multiple contracts, you’ll know your dedication has paid off.

MAKING CONTACT WITH FOREIGN BUYERS IN AN EXPORT BUSINESS

The most important step in building your online export business is finding the buyers’ contacts. One of the ways to get in touch with overseas buyers of Nigerian products is to go online to make instant contacts.

You can do this by signing up for FREE at ofarms.ng! or with most of the international business directories listed on the Internet. Some of these directories are listed on the following pages of this article.

Other sources of foreign buyers are foreigners

consulates (embassies)

Another way to make contacts is to go through the chamber of commerce in each city you are targeting.

are just a few of those companies that

why is there enough space for more?

Government agencies like the Nigerian Export Promotion Council (NEPC) are great places to find help. This agency promotes export activities.

ANALYSIS FOR THE EXPORT BUSINESS OF THE MOST EXPORTED GOODS

COAL

SESAME SEED

GINGER

KOLANUTS

CASHEW NUT

KOLA NUT

PEANUT

SNAILS ( If you are new to snail farming, you can learn it here)

DRIED FISH

ETC

TO GET A TRUE EXPORT BUSINESS CONTRACT, YOU NEED TO KNOW THE FUNDAMENTAL AND BASICS OF AN EXPORT BUSINESS PROCESS. THIS IS THE ESSENCE OF THIS DOCUMENT

BASICS OF AN EXPORT BUSINESS

INTERNATIONAL TRADE TERMS (INCOTERMS) INCOTERMS (International Trade Terms) are a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by International Chamber of Commerce (ICC) in Paris, France. Understanding this term is important for export business.

It defines the responsibilities and obligations of the commercial contract between buyer and seller. It is a valuable and cost-effective tool. The exporter and importer do not need to engage in a lengthy negotiation over the terms of each transaction.

After agreeing the terms of business, such as FOB, they can sell and buy from the FOB without discussing who will be responsible for the freight, freight insurance and other costs and risks.

TON (TON): It is the internationally recognized unit of measure used for export. 1 ton = 1000 kg of weight of any product. Therefore, if a foreign buyer orders a weight of 10 tons of goods, he orders a weight of 10,000 kg of

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product in question.

MT (METRIC TONNE): This incoterm can be used instead of the above, as they both mean the same thing on export.

EXW {+named place} Ex Works: Ex means de. Works means factory, mill or warehouse, which is the seller’s premise. EXW applies to products available only at the seller’s premises. Buyer is responsible for loading the goods in a truck or container at the seller’s premises, and for their subsequent costs and risks.

In practice, it is not uncommon for the seller to load the goods onto a truck or container at their premises without charging any loading costs. In the quote, include the named location (seller’s premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and the exporter (buyer), and the exporter resells on other commercial terms to foreign buyers. Some manufacturers may use the term Ex-Factory, which means the same as Ex Works.

FCA {+ designated point of departure} Free carrier: delivery of goods by truck, wagon or container to the specified point (depot) of departure, which is usually the seller’s premises, or a designated railway station or designated freight terminal or under custody of the carrier, at the seller’s expense.

The point (deposit) of origin may or may not be a customs clearance center. Buyer is responsible for freight / main freight, freight insurance and other costs and risks.

In air transport, technically speaking, goods placed in the custody of an air carrier are considered to be delivered on board the aircraft. In practice, many importers and exporters still use the term FOB in air transport.

The term FCA is also used in RO / RO (roll on / roll off) services. In the export quote, indicate the starting point (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle. Some manufacturers may use the above terms FOT (Free On Truck) and FOR (Free On Rail) when selling to exporters.

FAS {+ the designated port of origin} Free alongside the ship. The goods are placed in the dockside hangar or alongside the ship, on the dock or in the lighter, within reach of your freight equipment so that they can be loaded on board the ship, in the seller

Picture credit: Maksym Kaharlytskyi 

fresh. The buyer is responsible for the cost of loading, shipping / main freight, freight insurance and other cost and risk. In the export quote, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen. The term FAS is popular with split shipments and importing countries using their own vessels.

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FOB {+ designated port of origin} Free on board

CFR cost and freight {+ designated port of destination}

CIF {+ the designated port of destination} Cost, insurance and shipping

CPT {+ the named place of destination} Carriage paid until Delivery of the goods to the named place of destination (unloading) at the expense of the seller. The buyer assumes cargo insurance, import customs clearance, payment of customs duties and taxes and other charges and risks.

In the export quotation, indicate the place of destination (unloading) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP {+ indicated place of destination} Transport and insurance paid on delivery of the goods and cargo insurance at the indicated place of destination (unloading) on ​​behalf of the seller. The buyer assumes the customs clearance of importation, payment of customs duties and taxes and other costs and risks. In the export quotation, indicate the place of destination (landing) after the acronym CIP, for example CIP Paris and CIP Athens.

DAF {+ designated border point} Delivered at border Delivery of goods at specified border point at seller’s expense. The buyer is responsible for customs clearance of importation, payment of customs duties and taxes and other costs and risks.

In the export quotation, indicate the point on the border (landfill) after the acronym DAF, for example DAF Buffalo and DAF Welland.

DES {+ the named port of destination} Delivered Ex Ship The delivery of the goods on board the ship at the named port of destination (unloading), on behalf of the seller. The buyer bears the costs of unloading, customs clearance for importation, payment of customs duties and taxes, freight insurance and other costs and risks.

In the export business quotation, indicate the port of destination (landing) after the acronym DES, for example DES Helsinki and DES Stockholm.

DEQ {+ designated destination port} Delivered Ex Quay. Delivery of the goods at the wharf (port) of destination on behalf of the seller. The seller is responsible for customs clearance of imports and payment of customs duties and taxes in the buyer’s order.

The buyer assumes the cargo insurance and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the abbreviation DEQ, for example DEQ Libreville and DEQ Maputo.

DDU {+ designated point of destination} Delivered Duty Unpaid Delivery of goods and cargo insurance to the final destination point, which is often the project site or buyer’s premises, at seller’s expense. Buyer assumes import

customs clearance and payment of customs duties and taxes. The Seller may choose not to insure the Goods at its own risk and expense. In the export estimate, indicate the point of destination (unloading) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.

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DDP {+ designated point of destination} Delivered Duty Paid Seller is responsible for most expenses, which include insurance of freight, import clearance, and payment of customs duties and taxes at the end of the trip. the buyer, and delivery of the goods to the final point at the destination, which is usually the project site or the buyer’s premises. Seller can choose To not insure the goods at your own risk and expense.

In the export business estimate, indicate the destination point (Unloading) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.

In practice, commercial terms are written in upper case (eg FOB, CFR, CIF and FAS) or in lower case (eg fob, cfr, cif and fas). They can be written with periods (for example F.O.B. and c.i.f.).

In international trade, it would be preferable for exporters to refrain, to the extent possible, from negotiating trade terms which would make the seller responsible for the clearance of imports and / or the payment of customs duties and import taxes. and / or other costs and risks on the buyer’s side, for example, the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid).

Often times, the buyer’s charges and expenses can cost the seller more than expected. To overcome losses, hire a trusted customs broker or broker in the importing country to handle import routines. Likewise, it would be preferable for importers not to trade in EXW (Ex Works), which would make the buyer responsible for export business custom clearance, payment of customs duties and export taxes and other costs. and risks on the seller’s side.

Don’t miss out on our export business masterclass. Link to Export business opportunities you should know about.

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