All the pretty ducks in a row

All the pretty ducks in a row

Images of multiple freight modesWe’re almost at the place where you can actually issue the Proforma; there are just two more important preparations you need to make.

All this preparation is happening while you’re in discussions with your customer, about pricing, shipping, incoterms, insurance, payment terms and the rest. Once you’re able to issue a fully-researched Proforma, the rest of your document set will fall into place quite easily.

Freight options

First, you and your customer need to identify the best transport method. The major factors are the cost of transportation and the transit time required to meet the buyer’s needs. Before you ask your forwarder for freight options, you need to have the approximate weights and dimensions of your shipment, including the number of cartons, pallets or the bulk weight. Your forwarder will then be able to advise you about choosing from the available choices:

Seafreight has two modes: LCL (less than a container-load, but shipped in a container) and FCL, a full container load., where the cargo is shipped in a sealed container.

Airfreight also has two modes; loose, where cargo is shipped  in pallets, cartons, boxes or other packaging methods that aren’t containerised, and unitised where cargo is shipped in a sealed airfreight container.

Express Courier is a third mode, where cargo is always loose; this is used for small shipments that need the shortest possible transit times.

You will also ask for the available options for the Port of Loading; in most instances, this will be your nearest port, but  if you want to ship directly from the factory or a third party, you should provide your forwarder with that location so they can advise you on the best port of loading. You should also provide your forwarder with the address of your consignee, so they can advise you on the best Port of Discharge; your customer may have a preferred port of discharge, so you should know this before you request the options from your forwarder. You should also ask about sailing or flight schedules, so you can work out prospective shipping routes and transit times with your customer.

Lastly, you must request all the associated costs and charges, including domestic transport if your forwarder is arranging that, so you can add them into your pricing structure as appropriate for your chosen Incoterm.

When you make a request for freight options from your forwarder, you can do so with a simple email that seeks relevant information from your freight forwarding agent, or you can use a form that is the beginning of your document chain.

To recap, you will supply your forwarder with:

  • Your details including address, contact name, phone numbers and email;
  • Source of the goods, if this is different from your address;
  • Consignee’s details including delivery address, phone, fax and email;
  • Quantity, description and approximate weights and dimensions of the cargo.

You will request:

  • The best Port of Loading;
  • The best Port of Discharge;
  • Sailing frequency and transit times;
  • Costs and charges as appropriate for your chosen Incoterm.

Special documents

Depending on what you are shipping, and where it’s going, you may need to provide extra documents. We’ve already discussed Import Permits, where the customer may need to provide a copy of their import permit before the goods can clear outbound customs; however, there are other documents you might need to provide to help with clearance at destination.

Certificate of Origin

Certificates of Origin are needed if the destination country or consignee requires them, as well as whenever your customer’s country has entered into a Free Trade Agreement with your country. Australia has several current FTAs: Austrade has a list.

 Phytosanitary or Health Certificates

If you’re exporting primary produce such as grain, animal or pet food, fruits and vegetables, meat, dairy or fish, you will probably require a Phytosanitary or Health Certificate. Check the MICoR Database, and consult with DAFF Biosecurity about the process for obtaining the certificate. You will need to add the time this takes to your lead time, and factor the costs in to your price for the Proforma.

ISPM15 Packing Declaration

Whether or not you use wooden or bamboo packing materials, you will also need to complete a Packing Declaration for ISPM15 compliance. Compliant packaging is marked, so no further testing or certification is required, but the declaration is mandatory in many countries. Consult your forwarder for the correct format.

Export Permit

An Export Permit or RFP (Request for Permit) will be required to export prescribed goods. Check whether your goods fall under this heading by consulting DAFF Biosecurity and Customs.

Dangerous Goods

There are strict controls on the the export of Dangerous Goods, which is an umbrella term covering many different kinds of goods.

To determine whether your goods are considered dangerous for shipping by sea or air, obtain the  MSDS (Material Safety Data Sheet) for the product. This document is provided by the manufacturer of the goods; it has all of the safety information about the product, including whether or not it is deemed “Dangerous Goods for transport by sea or air”. If so, the MSDS will contain information regarding the Dangerous Goods UN number and packing group.

Consult with a certified Dangerous Goods expert; your forwarder may be accredited, or they will be able to refer you to an accredited company. Once you have established whether or not you can export, you must then pack your goods according to the relevant dangerous goods regulations and complete a dangerous goods declaration for sea or air, whichever is appropriate. Again, note any costs or  lead times to be added to your initial estimate.

We now have all the information required for a Proforma Invoice to be issued. Information that must be  included:

  • Shipper – you as exporter or your designated shipper;
  • Consignee – the company or entity you are selling or shipping to;
  • Notify Party – any third party that needs to be kept informed of shipment details;
  • Buyer’s Reference, if any;
  • Exporter’s Reference – your reference, if any;
  • Invoice Number – your invoice number;
  • Country Of Origin – the country where the goods are manufactured or produced;
  • Country of Final Destination – the country the goods are to be shipped to;
  • Incoterm;
  • Method of payment (payment terms);
  • Port of Loading – the port the goods are to be shipped from;
  • Port of Discharge – the port the goods are to be shipped to;
  • Final Destination – location of delivery if not port of discharge;
  • Proposed shipping method and transit time, and transport frequency if applicable;
  • Lead Time – the time between receiving order confirmation and shipment readiness.

You also need to include information about the cargo:

  • Quantity;
  • Description of Goods;
  • Price;
  • The period for which this price will be applicable;
  • Currency to be used for the transaction.

And you should add your payment information:

  • Name of your bank – the branch address isn’t needed, as your BSB/Sort Code will give that;
  • Account name;
  • BSB or Sort Code & Account Number;
  • SWIFT or BIC  – International Bank Identification Code.

Last but not least, you must formalise the Proforma:

  • Place of issue of Proforma Invoice (your city);
  • Date of Issue;
  • Name of Authorised Signatory;
  • Authorised Signature.

Plug all this information into your Proforma, and it’s ready to send to your customer. Once they give you written acceptance of the Proforma, you have made a sale.

Be careful – Letters of Credit

After the Proforma is accepted, you might be waiting for a Letter of Credit, which will be based on the Proforma.

Check Letter of Credit documents very carefully before acceptance. Your export documents – including the Proforma – must match the Letter of Credit, so look for any spelling changes, quantity changes or other pitfalls. Do not hesitate to request changes to the L/C document to make sure that it agrees with the Proforma and does not introduce any new terms and conditions; if your documents or shipment don’t match it, payment could be delayed or worse.

Once you and your customer are both happy with the Proforma and any associated L/C, you can go ahead and start preparing to ship – and you can begin preparing the next documents, which will be much simpler now you’ve done all the preparation!

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