We’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.
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:
You will request:
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.
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:
You also need to include information about the cargo:
And you should add your payment information:
Last but not least, you must formalise the Proforma:
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.
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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