/ By tjchinafreight ivy / International

Different types of letters of credit

What is a letter of credit?

A letter of credit is a guarantee or assurance to the seller that they will get paid on a large transaction. They are especially common in international or foreign exchange transactions. Think of them as a form of payment insurance provided by financial institutions or other accredited parties to the transaction. The earliest letters of credit were common in the 18th century and were called travelers' letters of credit. The most common contemporary letters of credit are commercial letters of credit, standby letters of credit, revocable letters of credit, irrevocable letters of credit, revolving letters of credit, and red-term letters of credit, although there are several others.

Commercial letter of credit
This is a standard letter of credit commonly used in international trade. It can also be called a "Documentary Credit" or "Import and Export Credit". 1 The bank acts as a neutral third party to release funds when all the conditions of the agreement are met.

Standby Letter of Credit
This type of letter of credit is different: it offers payment if something doesn't happen. 2 Standby letters of credit do not facilitate a transaction, but provide compensation in the event of a problem. A standby letter of credit is usually similar to a commercial letter of credit, but only pays if the payee (or "beneficiary") can prove they didn't get what was promised in the agreement. Standby letters of credit are a form of insurance that ensures you get paid, and they also guarantee that services will be performed satisfactorily. They can be used with negotiable letters of credit.

Irrevocable letter of credit.
This Letter of Credit may not be cancelled or amended without the consent of the beneficiary (Seller). This Letter of Credit reflects the Bank's (Issuer's) absolute liability to the other party.

Revocable Letter of Credit.
The bank (issuing bank) can cancel or amend this type of letter of credit at the customer's instruction without the prior consent of the beneficiary (seller). After the L/C is revoked, the Bank shall not assume any responsibility to the beneficiary.

Red Clause LC.
The seller may require prepayment of a letter of credit for an agreed amount prior to shipment of the goods and presentation of the required documents. This red clause is so called because it is usually printed in red on the document to draw attention to the "advance payment" clause of the letter of credit.

Revolving letter of credit
A revolving letter of credit can be used for multiple payments.
If buyers and sellers want to repeat business, they may not want to obtain a new letter of credit for each transaction (or each step in a series of transactions). This type of letter of credit allows a business to conduct multiple transactions using a single letter of credit before the letter of credit expires, and the validity period of the letter of credit may be three years or less.

Negotiable letter of credit
A transferable letter of credit can be transferred from one "beneficiary" (payee) to another. They are usually used when an intermediary is involved in a transaction.

Back to back
Back-to-back letters of credit can be used when an intermediary is involved but a negotiable letter of credit is not suitable.

What are the benefits of using a letter of credit?

A letter of credit places the risk of the transaction on the bank rather than the buyer or seller. They provide a secure payment method that ensures funds get where they need to be. Letters of credit also provide parties with the opportunity to incorporate safeguards, regulations or other quality control measures.

How to get a letter of credit?

Many banks offer letters of credit, so you can get one by contacting your bank's representative. Banks with dedicated international trade or business departments are likely to offer letters of credit. If your bank doesn't offer a letter of credit, it may point you to an institution that does.

/ By tjchinafreight ivy / International

Bank Guarantee vs. Letter of Credit

Bank guarantees are similar to letters of credit in that they both instill confidence in the transaction and the parties involved. The main difference, however, is that the letter of credit ensures that the transaction goes smoothly, while the bank guarantee reduces any losses that arise if the transaction does not go as planned.

Letter of Credit - Reduce Risk

A letter of credit is a financial institution's commitment to fulfill a buyer's financial obligation, thereby eliminating any risk that the buyer will not perform payment. Therefore, it is often used to reduce the risk of non-payment after delivery.

In addition, a letter of credit is issued to the buyer after the necessary due diligence has been carried out and sufficient collateral has been collected to cover the secured amount. The letter is then submitted to the seller as proof of the buyer's credit quality.

Types of Letters of Credit

Just like bank guarantees, letters of credit vary according to need. Here are some of the most commonly used letters of credit:

  • An irrevocable letter of credit ensures that the buyer is obligated to the seller.
  • The confirmed letter of credit is from the second bank, which guarantees the letter of credit when the credit of the first bank is in question. If the company or the issuing bank fails to meet its obligations, the confirming bank will ensure payment.
  • An import letter of credit allows importers to make immediate payments by giving them a short-term cash advance.
  • An export letter of credit lets the buyer's bank know that it must pay the seller, provided that all the conditions of the contract are met.
  • A revolving letter of credit allows customers to make withdrawals within a certain range within a certain period of time.

Bank Guarantee – Failure to perform contractual obligations

Bank guarantees help companies mitigate any risk arising from both sides of a transaction and play an important role in facilitating high-value transactions. The agreed-upon amount is called the guaranteed amount and will always benefit the beneficiary.

In venture capital, both parties are obligated to perform certain duties in order to successfully complete a transaction, and both parties often use bank guarantees as a way to demonstrate their creditworthiness and financial standing.

Also, if one party fails, the other party can invoke the bank guarantee and get the guaranteed amount by filing a claim with the lender. Unlike a LOC, a bank guarantee protects the parties involved.

Types of Bank Guarantees

Bank guarantees are just like any other type of financial instrument - they can take a variety of different forms. For example, banks provide direct guarantees in both domestic and foreign operations. Indirect guarantees are usually issued when the subject of the guarantee is a government agency or other public entity.

The most common types of guarantees include:

  • Shipping Guarantee: This guarantee is provided to the carrier for shipments that arrive before any documentation has been received.
  • Loan Guarantee: An institution that issues a loan guarantee promises to assume financial obligations in the event of a borrower default.
  • Advance Payment Guarantee: This guarantee is used to support the performance of the contract. Basically, this security is a form of security to repay the advance payment if the seller does not deliver the goods specified in the contract.
  • Confirmed Payment Guarantee: With this irrevocable obligation, the bank pays the beneficiary a specific amount on behalf of the customer by a specific date.

Summary: What is the difference between a bank guarantee and a letter of credit?

Letter of Credit (LC)
A letter of credit is a promise by a bank to pay the beneficiary after certain conditions are met.
Often used by merchants engaged in the import and export of goods.
Protects both sides of the transaction, but benefits the exporter.
Example: A letter of credit can be used to transport goods or complete services.

Bank Guarantees (BGs)
A bank guarantee is a promise by the bank to pay the beneficiary in the event that the counterparty does not fulfill its contractual obligations.
Typically used by contractors to bid on large projects, such as infrastructure projects.
Protects both parties to the transaction, but benefits the beneficiary (usually the importer).
Example: A bank guarantee is used when a buyer buys an item from a seller, then the seller is in financial difficulty and cannot pay.

/ By tjchinafreight ivy / International

Export business risks

In recent years, the risk and even bad debts in the import and export business have been increasing, which not only causes interest loss, but also increases the risk factor with the passage of time, which has a serious impact on the sustainable development of foreign trade enterprises. Therefore, the issue of risk has increasingly become a topic of concern. Under normal circumstances, the risk of export receipts mainly includes the following six situations:

01The risk of receiving foreign exchange due to the inconsistency of the delivery specifications and dates with the contract

The exporter did not deliver as stipulated in the contract or letter of credit.

1. The production plant is late for work, resulting in late delivery;
2. Replace the products specified in the contract with products of similar specifications;
3. The transaction price is low, and it is shoddy.

02 Risk of foreign exchange collection due to poor document quality

Although it is stipulated that the foreign exchange should be settled by letter of credit and shipped on time with high quality, but after the shipment, the documents submitted to the negotiating bank did not match the documents and documents, so that the letter of credit promoted the due protection.

At this time, even if the buyer agrees to pay, it pays the expensive international communication fee and the deduction for discrepancies in vain, and the time for collection of foreign exchange is greatly delayed, especially for the contract with a small amount, the 20% discount will lead to a loss.

03 Risks caused by trap clauses stipulated in the letter of credit

Some letters of credit stipulate that the customer inspection certificate is one of the main documents for negotiation.
The buyer will seize the seller's eagerness to ship, deliberately picky, but at the same time propose various payment possibilities to induce the company to ship. Once the goods are released to the buyer, the buyer is very likely to deliberately inspect the goods for discrepancies, delay payment, or even empty both money and goods.

The letter of credit stipulates that the shipping documents will expire abroad within 7 working days after the issuance of the shipping documents, etc. Neither the negotiating bank nor the beneficiary can guarantee such terms, and must be carefully verified. Once a trap clause appears, it should be notified to modify it in a timely manner.

04 There is no complete set of business management system

The export work involves all aspects, and the two ends are outside, which is prone to problems.

If the enterprise does not have a complete business management method, once a lawsuit occurs, it will cause a rational and unwinnable situation, especially for those enterprises that only focus on telephone contact.

Secondly, as the company's customer base is expanding every year, in order for the company to have a target in trade, it is necessary to establish a business file for each customer, including creditworthiness, trade volume, etc., and screen them year by year to reduce business risks.

05 Risks caused by operations contrary to the agency system

For export business, the real practice of the agency system is that the agent does not advance funds to the client, the profit and loss is borne by the client, and the agent only charges a certain agency fee.

In actual business operations now, this is not the case. One of the reasons is that he has few customers and his ability to collect foreign exchange is poor, and he has to strive to complete the target;

06 Risks arising from the use of D/P, D/A forward payment methods or consignment methods

The deferred payment method is a forward commercial payment method, and if the exporter accepts this method, it is equivalent to financing the importer.

Although the issuer voluntarily pays the deferred interest, on the surface it only needs the exporter to make advances and loans, but in essence, the customer waits for the arrival of the goods and checks the quantity of the goods. If the market changes and the sales are not smooth, the importer can apply for the bank to refuse to pay.

Some companies release goods to classmates and friends who do business abroad. I thought it was a relationship customer, and there was no problem of not being able to receive foreign exchange. In the event of poor market sales or customer problems, not only the money cannot be recovered, but the goods may not be recovered.

/ By tjchinafreight ivy / International

Foreign exchange risk

What is foreign exchange risk?

Foreign exchange risk refers to the possible loss of international financial transactions due to currency fluctuations. Also known as currency risk, foreign exchange risk and exchange rate risk, it describes the likelihood that the value of an investment may decline due to changes in the relative value of the currencies involved. Investors may be exposed to jurisdictional risk in the form of foreign exchange risk.

Where does foreign exchange risk come from?

Foreign exchange risk arises when a company receives payments in one currency but pays fees in another. From the importer's point of view, the risk is that the foreign currency will appreciate because it means they will have to pay more for the imported goods. Instead, for exporters, the risk is that the foreign currency will depreciate against the Canadian dollar. If the exporter's foreign currency depreciates after selling to an international customer, the exporter's Canadian dollar will end up being lower than expected.

Companies are also exposed to foreign exchange risk when they create price lists at the start of the season, long before they invoice foreign customers, or when infrastructure projects require payment after each step of the project is completed. Once a formal agreement is reached with a supplier or customer, the company is at risk.

There is no one-size-fits-all strategy for reducing foreign exchange risk. A company's exposure is affected by many factors, including the volume of imports and exports, whether payment is made at the time of sale or at a later date, the currencies involved, and the countries where customers and suppliers are located.

All currencies fluctuate in value, and the Canadian dollar is no exception. Decisions about major interest rates by Canadian banks, energy prices, geopolitical conflicts, foreign acquisitions of Canadian businesses and many other factors can affect the value of our currency. Predicting currency movements is very difficult, and analysts' forecasts are not always reliable. That's why it's so important for companies to have policies in place to minimize this risk and protect their profitability.

Characteristics of foreign currency export sales

Applicability
Recommended for (a) highly competitive markets and (b) when foreign buyers insist on buying in local currency

Risk
Exporters are at risk of exchange rate losses unless foreign exchange risk management techniques are used

Advantage
Enhanced export sales terms to help exporters remain competitive
Reduce the risk of non-payment due to local currency devaluation

Shortcoming
The cost of using certain foreign exchange risk management techniques Foreign Exchange Risk Management
burden

Foreign exchange risk is divided into three categories:

Transaction Risk: This is the risk a company faces when purchasing products from a company located in another country. Product prices will be in the selling company's currency. If the selling firm's currency appreciates relative to the buying firm's currency, the firm making the purchase will have to make a larger payment in its base currency to reach the contract price.

Conversion risk: A parent company with a subsidiary in another country may face losses when the subsidiary's financial statements (which will be denominated in that country's currency) must be converted back to the parent's currency.

Economic Risk: Also known as forecast risk, refers to the continued exposure of a company's market value to the risk of inevitable currency fluctuations.
Companies exposed to foreign exchange risk can implement hedging strategies to reduce this risk. This often involves forward contracts, options and other exotic financial products that, if done right, can protect companies from unwanted foreign exchange fluctuations.

Currency Exchange Tips

Please be aware of any issues with currency exchange. Not all currencies can be freely or quickly converted into dollars. Fortunately, the U.S. dollar is widely accepted as an international trade currency, and U.S. companies can often ensure payments are made in U.S. dollars.
If the buyer requires payment in a foreign currency, you should consult an international banker before negotiating a sales contract. Banks can advise on any foreign exchange risk associated with a particular currency. The most direct way to hedge foreign exchange risk is forward contracts, which enable exporters to sell a certain amount of foreign currency at a pre-agreed exchange rate, with a delivery date ranging from 3 days to 1 year in the future.
If you can do business entirely in U.S. dollars, you may be able to avoid many of the difficulties and problems associated with currency exchange.

/ By tjchinafreight ivy / Shipping

Export documentary collection

What is it?

The exporter (a client of UniCredit Bulbank) ships the goods to the buyer and presents the bank with documents related to the goods and their shipment, such as commercial invoices, bills of lading, cargo insurance, etc., with collection instructions. In the collection instruction, the exporter identifies the foreign buyer (payer), full details of the buyer's bank (collecting bank), a brief description and value of the exported goods, a full description and value of the type and number of documents submitted, and Conditions for handing over documents to the drawee.

UCB processes the documents and forwards them to the collecting bank, usually the buyer's bank, for processing and delivery to the buyer in accordance with the collection instructions. As instructed, the collecting or presenting bank releases the documents to the payer after paying the value of the documents, or according to a written commitment to accept/pay when due, or not to pay.

Under export documentary collection, the bank only receives and transmits documents according to the exporter's instructions on how to handle the documents, without any payment obligation to the exporter. Payment for documents sent on a collection basis depends solely on the goodwill and creditworthiness of the buyer.

A step-by-step guide to understanding export documentary collections

Broadly speaking, from your (as the exporter) perspective, the export documentary collection process can be broken down into five steps:

1. Terms and Conditions:

You and your importer agree to terms of transaction and payment, including the use of export documentary collections. At this point, you should also negotiate whether:

Acceptance Document (DA) – Once the importer agrees to pay later, a document related to the sale of the goods will be provided.
Payment Document (DP) – Once payment is made and finalized, the importer will get the document.

2. Shipment and receipt of documents:

You ship the goods and receive documentation from the carrier or freight forwarder that the shipment has occurred.

3. Submit documents to the bank:

First, fill out the export documentary collection application form and the draft. Next, submit these documents along with your shipping documents to OCBC, which is also known as the remittance bank during the process. Your remittance bank will then proceed to:

Forward these documents to your importer's bank, the collecting bank.
The collecting bank will then notify your importer that the documents have arrived and will release the documents when the payment terms are met (this depends on whether your payment term is DA or DP, as described in step 1 above).

4. Receive payment from importer and own the goods:

Importers will pay their bank and obtain documentation via DA or DP (as above).

5. Payment receipt from OCBC Bank to exporter:

OCBC Bank will deposit funds into your account immediately upon receipt of funds from the importer's bank (in the case of DP) or on the scheduled date when the draft has been accepted (in the case of DA).

Key point

D/C is less complex and less expensive than LC.
Under a D/C transaction, the importer is not obligated to pay for the goods before shipment.
If properly structured, the exporter will retain control of the goods until the importer pays the draft amount at sight or accepts the draft to meet the legal obligation to pay at a later date specified.
Although sea transportation can control the goods, it is more difficult to control air and land transportation. Foreign buyers can receive the goods with or without payment, unless the exporter hires an agent in the importing country to pick up the goods until the goods arrive for payment.
The exporter's bank (the remittance bank) and the importer's bank (the receiving bank) play a vital role in the letter of credit.
Although banks control the flow of documents, they neither verify documents nor take any risk. However, they can affect the mutually satisfactory settlement of D/C transactions.

/ By tjchinafreight ivy / Shipping

What are the types of export risks?

Political risk

Geopolitical risk, also known as political risk, occurs when a country's government unexpectedly changes its policies, which now negatively affects foreign companies. These policy changes may include things like trade barriers that restrict or prevent international trade.

Some governments will demand additional funds or tariffs in exchange for the right to export items into their home countries. Tariffs and quotas are used to protect domestic producers from foreign competition. It can also have a huge impact on an organization's profits, as it either reduces revenue taxed on exports or limits the amount of revenue that can be earned.

Legal Risk

Laws and regulations vary around the world. What is common practice in one country may not be so in another. As a result, exporting companies may face legal issues related to many areas of business, including customs, contracts, currency, and liability and intellectual property rights related to the products they sell.

One of the best ways to mitigate export legal risk is to engage legal counsel located in a particular country jurisdiction or with proven expertise in dealing with local laws. The last thing a company wants to do is get into a protracted legal battle in an unfamiliar country with local legal issues. Relying on trusted legal counsel can largely avoid or even anticipate and proactively handle potential legal issues.

Economic risk

In markets with less stable economies, consider the possibility of economic changes that could affect your export business.

High inflation

High inflation could mean customers can't pay their invoices on time, or potential customers will be interested in extending their credit terms. The worst-case scenario of high inflation could lead to hyperinflation, which in turn could lead to economic collapse. Sold only on safe terms to avoid default.

Exchange rate fluctuations

The exchange rate is the level at which a country's currency can be exchanged for another. It fluctuates continuously throughout the day, with closing prices for buying and selling published at the end of the day. You can eliminate any exchange rate risk by always selling in GBP.

Your customers may insist on paying in foreign currency. Make sure this is a freely convertible major currency. When you invoice in another currency, you can limit your exposure by fixing the exchange rate using forward foreign exchange contracts. This is a process where you basically determine the current exchange rate to use at a future date. You can discuss this with your bank, or read more about export invoice currency.

Foreign exchange control

The government can impose foreign exchange controls on the buying and selling of local currencies. Today, the countries with foreign exchange controls are mostly emerging markets.

The impact on UK exporters could be delayed payments as the country's central bank won't release foreign currency. Often, these controls lead to a black market in currencies, with two exchange rates: an official market rate and an unofficial market rate. The difference from the official exchange rate is known as the black market premium.

A distinction should be made between situations where the country's central bank is only causing delays, and areas where there are local problems leading to export invoicing and widespread smuggling. You should not engage in any conduct that violates the laws of this market or violates bribery, as the penalties can be severe.

Shipping and Logistics Risk

Making an export sale is just the beginning of the process. Goods sold now need to be delivered to customers in a timely and safe manner. This is where exporters may encounter a range of shipping and logistics risks, which may vary depending on the goods being shipped and shipping requirements. Some items require refrigeration, must not be exposed to excessive heat or cold, or have a shelf life. Other items are very fragile and require careful handling or must be assembled before delivery to the customer. All shipments must be tracked. If something goes wrong, the buyer may try to negotiate a price reduction or reject the shipment altogether.

Reducing transport and logistics risks often involves quality control and careful tracking procedures throughout the process. Specialized transportation and logistics companies can also bring expertise to the job, and some insurance companies provide coverage for damages caused by delays and problems in transit.

Language and cultural risk

Doing business with importers and customers in another country requires a certain level of trust. Differences in language, culture, religion and many other aspects of life require careful handling. For example, when exporters and their customers speak different languages, important details and nuances can be lost in translation.

Different cultural practices affect everything from "normal business hours" to ethical behavior to whether customers are willing to buy a product. In many areas, well-meaning exporters can unknowingly create tensions or offend customers, government officials and others important to timely product shipments and other aspects of the business.

The best way to prevent such problems is to have employees who speak the local language or have experience living in a particular culture or region. Additionally, exporters can focus on building local business relationships in the countries where their products are imported to help resolve issues and increase the exporter’s local connections and presence.

Quality risk

Customers may complain about the quality of these products once the goods are shipped. This may be a genuine objection based on the buyer's specific requirements and expectations. It could also be a way for buyers to gain leverage and negotiate discounts on shipped products after the fact.

One way to deal with quality risk is to hire an independent third party to inspect the shipment before it is shipped. If this is not possible, the exporter can send samples to the importer or end customer so that they can inspect the product themselves and determine if the quality is acceptable before any order is shipped.

/ By tjchinafreight ivy / Shipping

Shipping companies are buying container ships?

According to Alphaliner, some ocean carriers are turning to buying ships to increase capacity, rather than chartering them, reducing capacity in the containership leasing market by 1.6 million TEU.

In addition, there are concerns in shipbroker circles that this reduction in open capacity will weaken the industry's ability to cope with the normal seasonal peak and low seasons of liner trade.

According to shipbrokers, the loss of capacity controlled by NOOs (non-operating shipowners) began in August 2020, when shipping lines, flush with cash due to soaring freight rates, began to add capacity to their own fleets.

In just 18 months, more than 500 container ships have been sold to liner operators through the secondary market, a massive fleet exodus rooted in high demand for freight post-COVID-19, Alphaliner said.

"The huge demand for container ships has caused container ship rents to soar to levels never seen before in the history of container shipping, almost overnight."

"MSC has been the main buyer so far, buying 169 second-hand container ships with a total capacity of 636,900TEU," Alphaliner said.

CMA CGM was the second most active shipping company in the container ship market, purchasing 62 vessels with a total capacity of 207,000TEU; Maersk ranked third with 27 vessels purchased with a total capacity of 141,600TEU; followed by Wanhai with 23 vessels ship with a total capacity of 139,700TEU.

However, some shipping companies have decided to take advantage of the freight rate gained on newbuildings to increase dividends to shareholders, or to seize opportunities in the charter market for longer-term fixed charters.

According to Alphaliner data, in the past 20 months, non-operating shipowners have ordered 175 ships with a total capacity of 710,321TEU, more than half of which have signed long-term charter contracts with shipping companies.

“The low number of newbuildings relative to the loss of capacity suggests that non-operating owners’ fleets need to order more 1,000-9,000 TEU-sized container ships,” the shipbroker said.

But he added that several factors were preventing owners from ordering new ships, including soaring costs, longer lead times, and uncertainty over environmental regulations and fuel options.

Meanwhile, sources at shipbrokers said they were concerned about the current lack of open container ship capacity in the market, as well as the lack of spare container ships in the future.

"At the moment, the outlook is not very good," said one broker. "However, we think that when the situation returns to some form of normalcy, shipping companies may consider moving some of the excess smaller ships they have purchased. Rent out, that will give us something to sell," he said.

/ By tjchinafreight ivy / International

Australia wants to build a new port in Darwin, but breaking the contract will not be a new move?

Australia

It is unclear whether the new port will be for industrial use only, or will it be able to accommodate naval ships from strategic partners in the US and UK?

Darwin Port has a significant geographical location. It is the closest modern deep-water port to Asia and China. It is the commercial gateway for Australia to connect with the Asian market. In 2015, Landbridge Group won the 99-year lease for the commercial operation of Darwin Port with a contract price of 506 million Australian dollars. After the deterioration of Sino-Australian relations, there have been voices in the Australian government claiming that the lease posed a security threat and demanded forced divestment. In May 2021, the Australian government asked the Ministry of Defence to review the lease agreement, but the Ministry of Defence's investigation report pointed out that there was no national security reason for the Australian government to overturn the lease agreement.

The Australian government will announce the construction of a new port in the strategically important city of Darwin after leasing existing facilities to a Chinese company, the Australian Broadcasting Corporation reported on March 31.
The ABC said it was unclear whether the new port would be for industrial use only or a facility that could accommodate visiting naval ships from US and British strategic partners. It added that it is understood that Prime Minister Scott Morrison's government will make an announcement during the Australian election campaign in the coming weeks.

The government has allocated A$1.5 billion ($1.1 billion) for new port infrastructure in the Northern Territory, where Darwin is the capital, Infrastructure Minister Barnaby Joyce said in a statement on Tuesday, the NBC said.
China Landbridge Group secured a 99-year lease for Darwin Harbour commercial operations for A$506 million in 2015. Australia's northernmost city is the naval entry point into the increasingly competitive Indo-Pacific and is part of a decade-long security deal with a key Australian ally, and is home to about 2,500 US Marines.

Since the Landbridge takeover was criticised by then US President Barack Obama, Australia's diplomatic and trade relations with the world's second-largest economy have fallen sharply amid moves to limit Chinese investment in critical infrastructure and utilities. Several lawmakers in the Morrison government said Chinese ownership of the port had posed a security threat and called for forced divestment.
In May 2021, Defence Minister Peter Dutton said the Australian government was looking into whether Landbridge should abandon its leases under a set of tough laws passed in 2018 on foreign investment in infrastructure. Two months ago, an Australian parliamentary inquiry asked the government to consider revoking the lease on national security grounds.
In December, an Australian defence review found there was no national security reason to overturn the 99-year lease of Darwin Port to the Chinese company. dard

/ By tjchinafreight ivy / Shipping

What is the Low Sulphur Surcharge

The low sulphur surcharge (LSS), low sulphur fuel surcharge or low sulphur fuel surcharge (LSF) is known to be derived from regulations originally agreed by the International Maritime Organization (IMO) in 2012 to reduce sulphur fuel emissions in ports and densely populated The coastline was burnt by cargo ships. Fuels with high sulfur content result in large emissions of sulfur dioxide, which are known to be harmful to public health.
From January 1, 2015, carriers will require ships passing through designated Emission Control Areas (ECAs) to use fuel with a sulphur content of 0.1% or less, a significant reduction from the 1.0% concentration fuel currently used in maritime transport . The Emission Control Area (ECA) to be enforced in 2015 includes the Baltic Sea, the English Channel, the North Sea, and an area 200 nautical miles from the coast of the United States and Canada.

The low sulphur surcharge is a surcharge imposed by the line to cover costs associated with the use of low sulphur fuels compliant with the IMO 2020 sulphur cap.
Despite the use of the term, different shipping lines have referred to it by different names - Low Sulphur Surcharge (LSS), Green Fuel Surcharge (GFS), Emission Control Area Surcharge (ECA), various amounts of low Sulphur Fuel Surcharge (LSF). ! !
All routes are said to be preparing to impose mandatory surcharges in addition to freight and other surcharges in 2019 on all trade routes, especially the ECA area.

Should the low sulphur surcharge be included in the dutiable value?

Article 5 of the "Measures of the Customs of the People's Republic of China on Examination and Approval of the Dutiable Value of Imported and Exported Goods" stipulates that the customs value of imported goods shall be reviewed and determined by the customs on the basis of the transaction value of the goods, and shall include the time from the arrival of the goods to the place of import within the territory of the People's Republic of China. Transportation before unloading and related costs, insurance. Article 35 stipulates that the transportation of imported goods and related expenses shall be calculated according to the expenses actually paid or payable by the buyer.

The low sulphur surcharge is a fee charged by the logistics provider to the relevant parties for the use of low sulphur fuel oil for its ships in the emission control area, which is closely related to the transportation process and is It happened before, so it belongs to the transportation and related expenses described in the "Measures of the Customs of the People's Republic of China on the Verification of the Dutiable Value of Imported and Exported Goods".

Under normal circumstances, if the transaction method of imported goods adopts FOB (free on board) terms, and the low-sulfur surcharge is clearly borne by the consignee of the imported goods, it should be included in the dutiable value of the goods and truthfully declared to the customs. If the transaction method of imported goods is CIF or CNF (cost plus freight) terms, it needs to be determined according to the specific agreement between the buyer and the seller. If it has been included in the freight and related expenses paid by the foreign seller, it will not be included in the customs value; such as If it is not included in the freight and related expenses paid by the foreign seller, and is actually borne by the consignee of the imported goods, it should be included in the dutiable value of the goods and must be truthfully declared to the customs.

/ By tjchinafreight ivy / Shipping

Easily handle international returns

If you sell online, you will inevitably be rewarded. While many online sellers see international sales as a one-way ticket to business growth, few seem to think about international returns.
While cross-border trade is a key focus for online retailers looking to expand sales, it also faces challenges. Specifically, one of the main reasons small and midsize companies shy away from international sales is the fear of returns.
That said, the process is getting easier as governments and postal service operators work together to optimize cross-border e-commerce deliveries and returns.

Take care of taxes and duties

One of the biggest challenges mentioned by small businesses when dealing with international returns is managing taxes and duties. This is because different countries—even states, provinces, republics, and territories—have unique tax laws. Failure to properly calculate taxes can result in delayed shipments, or worse, forfeitures.
In some cases, taxation can be a simple process. For example, there are no taxes or duties on items under $40 shipped from the U.S. to Canada. Others may be more complex and the tools available are invaluable for estimating these potential costs.

Why are products being returned?

A lower rate of return means more profit and more satisfied customers. That's why it's important to find out why a product was returned. Here are some common reasons:

  • Customer receives wrong product or wrong size
  • Product does not match product description
  • Damage to the customer when the order arrives

Of course, the reasons may vary depending on what you sell, your industry, and many other factors.

5 Tips for Handling International Returns

1. Let your customers choose how to return

The first and easiest option for you is to leave the return method to your customers. The only thing that is fixed is the address your client has to send to (that is, your address).
Your customers choose which carrier to ship with and which delivery point to ship the package to. However, this is the least customer friendly solution, so it may cost you switching costs in international online stores.
The advantage is that once you receive the product, you can evaluate it yourself and add it back to your inventory faster.
As an online retailer, you are not reimbursed for returns.
However, if the customer returns their entire order (within the EU), you will have to reimburse the outbound shipping. In addition to that, you can choose whether to let your customers pay for returns. You can make this return method more customer-friendly.
But how?
Extend the return period. Your customers will then become attached to the product or care less about it. This also reduces the chance of returns.

2. Arrangements with International Carriers

If you're shipping a lot, including returns, you can make a lot of deals with international carriers.
A good example is fashion chain Zalando, which has a partnership with DHL for both shipping and returns. By making a custom arrangement with a carrier, you can often not only discuss lower rates, but also get more services from the carrier, such as pickups and returns.
Furthermore, with Sendcloud you can offer multiple shipping methods and optimal integration with local and international carriers. In this way, you can provide a more efficient and budget-friendly return process.

3. Subtly offset return costs for your customers

Our research shows that 74% of European consumers would not reorder from an online store if they had to pay for the return themselves. 77% agree that free returns are more convincing to order from online stores more frequently.
However, if you don't want to incur the return costs yourself but still want some form of service, you have another option. You can add a return label to your order and deduct the return fee from your order refund. This method is allowed since you do not need to be reimbursed for returns.
This is great for customers because they don't have to pay immediately when they return the package. This eases the pain of returns, especially the cost of returns.
More importantly, it makes returns a little easier. 37% of European consumers say they would reorder from an online store if they were offered a quick and easy return process.
So it's also in your favor: your customers will come back to you faster thanks to your easy return policy.

4. Outsource international returns to a local party

Have you ever thought about processing returns through your local party? By doing this, you allow customers to return their products to the party you are working with in the country of sale.
This party specialises in handling consignment/returns and therefore ensures that processes, including administration, run as efficiently as possible.
When there are many packages, the parties can return to your warehouse in large quantities, which is cost-effective. Working in this way also allows you to pay back your customers faster, as the product can be received and evaluated faster locally.
This option is relatively expensive because you are doing external collaboration. However, if you receive a lot of returns (like fashion), it can help you save as much as possible.
Create clear protocols and ensure good connections between your online store, inventory and external parties. When you receive a return notification for a product, you can immediately refund the customer or ship a new product, even before your warehouse receives the order.

5. Easily process returns for you and your customers

Would you rather take your online store's returns process into your own hands?
Then use smart solutions to process returns more efficiently. With the Sendcloud returns portal, you can provide your customers with a simple and smooth returns process.
You can offer other refund options and let your customers decide how to return them using flexible returns.