/ By tjchinafreight ivy / Shipping

Maersk and GCT settle NY dock berthing deal

Maersk and terminal operator GCT New York have settled a two-year lawsuit involving the transfer of three Maersk vessel services from GCT to APM Terminals in Elizabeth, NJ.

Learn more about sea freight.

On Monday, lawyers for both sides filed a letter to the judge hearing the lawsuit, saying they plan to file a joint motion to dismiss the case. About a month later, lawyers for GCT New York filed a motion for summary judgment against Maersk, alleging the ocean carrier had "willfully breached" its terminal service contract and issued a settlement notice.

Terms of the settlement were not disclosed.

GCT New York, operated by Global Container Terminals, filed a lawsuit against Maersk in New York federal court in April 2020 over Maersk's decision to transfer the service of three vessels that have docked at Staten Island since 2015 to Maersk-owned APM Terminals . near Elizabeth, New Jersey.

GCT New York filed a lawsuit against Maersk on April 20, 2020, over the termination agreement, arguing that the agreement was announced 20 months before the agreement termination date.
In a statement to our publication, the port operator explained that it sought special remedies from the court in the form of an expedited preliminary injunction to avoid termination of disruption to labor, operations and other consequences.
GCT has been fighting Maersk's decision, fearing it would plunge it into a loss and cost the port operator more than 100 jobs.
The deal between the two was first established in 2015 and has since been extended several times.
Maersk announced the move in early April, explaining that the shift was aimed at achieving greater operational efficiency following a recent $200 million upgrade and expansion at APM Terminals Elizabeth.
A company spokesperson confirmed to Offshore Energy that the court rejected the restraining order on Friday, April 24, 2020, allowing Maersk to terminate the agreement from May 1.

Maersk offers termination fee
Maersk argued that it could exit the GCT deal through a clause in the contract that allowed for a termination fee based on expected volume. Maersk said in an April 2020 letter to GCT that it would pay $5.4 million to resolve the dispute.

Despite the loss of those services, GCT New York, like other terminals, has seen its fate amid a surge in U.S. imports over the past 18 months. According to the Port Authority of New York and New Jersey, rents and container throughput at GCT New York are up 53% in 2021.

The available berth space at GCT New York is one reason the port was able to handle more ships and cargo last year. Independent airline Wan Hai Lines launched its Asia-US East Coast route earlier this year and added a second Asia route called GCT New York. MSC has also switched the Asia-West Coast route to GCT New York.

/ By tjchinafreight ivy / Shipping

A container ship full of Chinese cargo explodes and catches fire

One wave has not settled, and another has risen. In the recent period of time, various maritime related accidents have continued, and accidents have followed one after another. …

According to foreign media reports, at about 12:00 on April 6, a container ship "CMA CGM RABELAIS" with a capacity of 6,500 TUE exploded in the western part of the Strait of Malacca between the Andaman Islands and Banda Aceh Sumatra, followed by a fire.

The vessel was en route from Tanjung Pelepas to Nhava Sheva, India when the incident occurred, and reports said the vessel's AIS was off and adrift since the explosion.

It is understood that the container ship "CMA CGM RABELAIS" has a capacity of 6570TEU. It was built in 2010 and flies the flag of Malta. At the time of the incident, the ship was serving the AS1 (Asia Subcontinent Express) route of CMA CGM, and the voyage was 0FF5HW1MA.

Also, according to the voyage information of CMA CGM RABELAIS provided by Shipxun.com for Xinde Maritime.com, this voyage has successively called at Qingdao, Shanghai, Ningbo, Guangzhou and other ports in China.

Therefore, it can be basically determined that this voyage is definitely loaded with goods from China.

CMA CGM RABELAIS is currently chartered and operated by CMA CGM, but its actual shipowner and manager company is DANAOS, an independent Greek shipowner company, which is a member of the Swedish Shipowners' Mutual Insurance Association.

The ship involves multiple shipping companies sharing cabins: ANL, APL, CMA CGM, CNC, COSCO SHIPPING, GOLD STAR LINE, OOCL, ZIM.

I would like to remind you that if there is a freight forwarding company carrying the ship, please pay attention to the dynamics of the ship and the cargo in time, keep in touch with the shipping company, and keep abreast of the latest situation of the ship and the cargo.

/ By tjchinafreight ivy / Shipping

South Korean shipbuilding industry returns to No. 1 after 7 years

With its strong performance in the field of LNG ships, the Korean shipbuilding industry has won half of the orders in the global newbuilding market.

According to data released by Clarkson on April 5, in the first quarter of this year, the global new ship order volume was 9.2 million revised gross tons (CGT), a decrease of 41% compared with the same period last year. Among them, South Korea undertook 4.57 million CGT, and the global The market share reached 49.7%, an increase of more than 12 percentage points from 37.2% in the first quarter of last year; China has undertaken 3.855 million CGT, and the global market share has dropped from 46% in the first quarter of last year to 41.9%; Japan has undertaken 248,400 CGT , the global market share fell to 2.7% from 12.8% in the same period last year.

This is the first time in the past seven years that a Korean shipping company has ranked first in the world in terms of orders received in the first quarter. At the same time, this is also the first time since Clarkson started statistics in 1996 that the number of orders received by South Korean shipping companies in the first quarter has reached about 50% of the global market share.

In addition, in March this year, the global order volume for new ships was 3.23 million CGT. The number of orders received by South Korean shipping companies also ranks first in the world in a single month, with a total of 1.64 million CGTs, accounting for 51% of the global share. Chinese shipbuilding companies ranked second with 1.36 million CGT orders, accounting for 42% of the global share.

As of the end of March, the number of global hand-held orders was 94.71 million CGT, an increase of 1.55 million CGT from the end of February. Among them, South Korean shipping companies have the largest increase in orders, reaching 1.12 million CGT; Chinese shipping companies have increased orders by 610,000 CGT, and Japanese orders have decreased by 240,000 CGT.

Industry insiders in South Korea said that last year, South Korea handed over the world's largest new ship order volume to China. In the first quarter of this year, the global new ship order transaction volume decreased significantly year-on-year, but South Korean shipbuilding companies worked hard and preemptively seized the place. The order finally overtook China to regain the first position. This is mainly due to the large number of LNG ship orders undertaken by South Korean shipbuilders. Regarding the reasons for the significant decrease in the number of orders received by Japanese shipbuilding companies, a Korean industry official explained that the data of the Japanese shipbuilding industry traditionally lags behind, so there may be changes in the future.

According to statistics, among the 38 large-scale LNG ships of 174,000 cubic meters or more ordered globally in the first quarter of this year, South Korea has undertaken 27 vessels, accounting for 71%; China has undertaken 11 vessels, accounting for 29%. In addition, a total of 44 container ships above 8000TEU have been ordered globally this year, of which South Korea has undertaken 21 ships, accounting for 47.7%.

A relevant person in the Korean industry said: "Although the number of new ship orders has decreased this year, Korean ship companies are benefiting from the booming LNG ship market. In the first quarter of this year, the number of LNG ships undertaken by Korean ship companies increased significantly, and the number of orders on hand It is also increasing, and the delivery time has been scheduled to the end of 2025. At present, European countries are looking for alternative sources of Russian energy, and the demand for LNG ships will continue in the future.”

/ By tjchinafreight ivy / Shipping

Vietnam accelerates container production to compete with China

Chinese factories now account for more than 96% of the world's dry container and 100% of the reefer container market, and Vietnam is joining the fray and is providing the world with a new container export destination.

Vietnam's Hoa Phat Group, Southeast Asia's largest steelmaker, is making a foray into container manufacturing.
It sees potential synergies with its core steel production business.
Hoa Phat started construction of its plant Hoa Phat Container Manufacturing in Vung Tau province in December and is expected to be operational by the end of this year with an annual production capacity of 500,000 TEUs, all using steel produced in-house.
Two South Korean companies - Seojin Systems and Ace Engineering - have also built container factories in northern Vietnam, which are expected to be operational later this year.

Hefa Group: Plans to supply containers to the market in the fourth quarter

Nguyen Manh Tuan, vice chairman of Hoa Phat Group, said: "Shipping containers are part of the Hoa Phat company ecosystem, and Hoa Phat started building the container manufacturing plant amid a global shortage of shipping containers."

Hefa Group planned to start construction of the factory in June 2021, but due to the impact of the fourth wave of the new crown epidemic, the project was officially launched in November 2021, five months later than planned.

But after 3 months of construction, 5 workshops, with a total construction area of ​​nearly 7 hectares, began to erect columns. On February 22, 2022, the construction of the first truss of workshop 5 was completed.

Vu Duc Sinh, head of the container manufacturing division of Hoa Fatt Group, said the first machines and equipment at the plant are expected to arrive this month and construction will be fully completed by April. The construction of the factory is accelerating. There are 3-5 contractors on the construction site, who distribute the projects equally and strive to complete the capital construction within 6 months from the date of commencement of construction. We want to build factories as soon as possible to take advantage of the shortage.

In Vietnam, Hoa Phat was the first container manufacturer. Tuan explained that the high price of weathering hot rolled coil steel used to make containers would cost the company if imported, and we at Hoa Phat can produce this steel.

The Hefa Group's container factory will be commissioned in the third quarter of 2022, and products will be brought to market from the fourth quarter of this year. The plant is expected to have a capacity of 200,000 TEU per year by the end of 2023.

/ By tjchinafreight ivy / FBA

What is the difference between overseas warehouse and FBA?

  • FBA, or Fulfillment by Amazon, means that sellers send products sold on Amazon directly to local warehouses. When a customer places an order, the Amazon system automatically completes the delivery.
  • Overseas warehouses refer to storage facilities established overseas. Cross-border e-commerce enterprises export goods to overseas warehouses in batches according to general trade methods. Once the order is placed, the item is delivered to the consumer.

Advantages of overseas warehouses

Faster delivery. It effectively reduces order response time by 50-70% compared to shipping from China. Additionally, it improves user experience and greatly reduces product turnaround time.

Reduce logistics costs. Through centralized delivery to overseas warehouses, local express delivery in the United States can reduce delivery costs by 30-50%.

FBA inventory adjustment is easy. For sellers, the overseas warehouse is the buffer warehouse of Amazon FBA, which is convenient and flexible to adjust the FBA inventory.

Disadvantages of overseas warehouses

Pay storage fees. The use of overseas warehouses requires payment of a certain fee, which is generally charged on a daily basis. And the cost of warehousing in different countries is also different, and sellers need to calculate the cost by themselves.

In stock. The premise of entering overseas warehouses is that sellers need to have a certain amount of inventory, which means that they need to stock up in advance, which will bring the risk of slow sales. And not suitable for sellers who sell special customized products.

Cash flow is inconvenient. Due to the large amount of stocking to overseas warehouses, the capital investment in stocking, logistics, warehousing, etc. is large, which can easily lead to a breakdown in the capital chain.

Sellers have high requirements for warehouse management data monitoring. Sellers need to monitor the detailed data of incoming and outgoing shipments, as well as putting on and off the shelves, otherwise it will easily lead to loss of goods or data mismatch. Some Amazon sellers responded that the inventory quantity did not match the actual number of products sold. Since Amazon has a complete warehouse management system, third-party overseas warehouses cannot guarantee that there will be no problems.

In essence, there is no difference between overseas warehouses and FBA. Both provide sellers with comprehensive warehousing and fulfillment services. However, there are obvious differences between the two in terms of service content and form.

1. The difference between service providers: FBA is Amazon's official warehouse distribution service, and after-sales service is provided by Amazon; overseas warehouses are provided by third-party service providers, responsible for the warehousing and distribution of sellers' products.

2. Different service forms. Once the seller has sent the goods to FBA, there is no need to deal with shipping related issues. The whole process from sorting to shipping is completed by FBA. The overseas warehouse is divided into two parts, first sorting and packaging in the warehouse, and then entrusting the local express company to complete the delivery service.

3. The service content is different. The service content of FBA is relatively simple, that is, it simply helps sellers deliver goods. The service content of overseas warehouses is more abundant. In addition to basic warehouse distribution, it also provides related services such as labeling and labeling, single-piece delivery, transit replenishment, quality inspection, and front-end logistics. For example, worry-free overseas warehouses can also realize customized services according to customer requirements.

4. Overall price difference. Combining all services, FBA is more expensive, while the overall cost-effectiveness of overseas warehouses is higher.

Other differences

Choose:

Amazon FBA warehouse has certain restrictions on the size, weight and category of products, so the choice is biased towards small, high and high-quality products

DH overseas warehouses have a wider range of choices than FBA warehouses.

Product:

FBA does not provide assembly services, and requires sellers to affix the outer box label and product label before entering the warehouse. If the product label is found to be damaged, it will be returned for repair.

DH overseas warehouses will provide sorting and assembly services before products are put on the shelves.

/ By tjchinafreight ivy / Shipping

The difference between virtual overseas warehouse and overseas warehouse

Cross-border e-commerce and cross-border logistics coexist synergistically. Compared with the booming cross-border e-commerce in my country, the shortcomings of cross-border logistics are becoming more and more prominent, which restricts the development of cross-border e-commerce to a certain extent. In addition to using the domestic direct mail mode, traditional cross-border e-commerce can also use the overseas warehouse mode. The virtual overseas warehouse is a mode between domestic only delivery and overseas warehouse delivery.

Virtual Warehouse is an international logistics model that combines the advantages of physical overseas warehouses, and is more intended to make up for its shortcomings. By generating a tracking number in the destination country of the domestic (Shenzhen) system, the centralized goods are directly delivered by high-quality air. In the destination country, the electronic express pre-clearing method is adopted to shorten the delivery time of the express in the destination country.

Overseas warehouse mode

1. Headway transportation
Cross-border e-commerce transports goods to overseas warehouses by sea, air, land or intermodal.

2. Warehouse management
Through the warehouse management system, cross-border e-commerce merchants can effectively view overseas warehoused goods and manage inventory in real time.

3. Local delivery
According to the order information, the overseas warehouse center distributes the goods to customers by local post or express.

Disadvantages: need to stock up, there is inventory risk and increase capital cycle costs, it is inconvenient to operate multiple SKUs at the same time, increase inventory storage costs and operating costs, overseas national policy changes will cause certain losses and troubles

Virtual overseas warehouse mode

1. First of all, the virtual overseas warehouse model does not require sellers to stock up, there is no inventory risk, and there is no financial pressure;

2. The virtual overseas warehouse mode is equivalent to having local overseas warehouse inventory at all sites on any platform;

3. The virtual overseas warehouse model shows local delivery, which improves consumers' purchasing confidence and purchasing experience, increases sales, and increases profits. At the same time, it also prevents buyers from malicious returns and exchanges because the delivery address is displayed in China;

4. The overall logistics cost of the virtual overseas warehouse model will be similar to the local delivery price, but the timeliness will be much faster. After all, it is equivalent to taking a special line to the destination country by yourself;

5. The virtual overseas warehouse model can respond to changes in foreign policies at any time, operate flexibly, reduce risks, and is more suitable for small sellers who are not particularly well-funded. Details (dimensional: ues5588)

Disadvantages: At present, virtual overseas warehouses are not recognized on e-commerce platforms.

Suitable for the crowd: small amount of capital, weak risk tolerance.

/ By tjchinafreight ivy / Shipping

International air transport knowledge

Eight elements of air freight inquiry:

1. Product name (whether it is dangerous or not)
2. Weight (charges involved), volume (dimensions and whether it's in stock)
3. Packaging (Wooden box or not, with or without pallet)
4. Destination airport (whether it is a basic point or not)
5. Time required (direct flight or transfer flight)
6. Requested flight (different flight services and prices)
7. Types of bills of lading (main and separate orders)
8. Required transportation services (customs declaration method, agency documents, whether customs clearance and delivery, etc.)

Air freight is divided into heavy cargo and bubble cargo.

1CBM=167KG The volume weight is compared with the actual weight. Which one is larger is charged according to which one. Of course, there is a little secret in the air freight bubble, which all colleagues should know, and it is inconvenient to talk about it here. Manufacturers who do not understand can figure it out for themselves.

Air freight structure composition - did you know?

There are many people who do air freight. Do you know how the air freight rates of airlines are calculated? A brief introduction, I hope to help everyone.

Air freight composition:

1. Airfreight freight (charged by the airline)
2.Fuel sur charge fuel surcharge (depending on the airport, the price of the destination point is different, Hong Kong is generally about the first 4 yuan now, before 3.6, last year the highest 4.8, the price is adjusted by the airport, generally 2 yuan to Asia)
3. Security check fee (fixed fee of 1 yuan/kg in Hong Kong)
4. Airport operation fee (HKD283/ticket in Hong Kong, the airport is responsible for transporting goods on the plane, etc.)
5. Terminal fee: 1.72/kg When the goods are handed over to the dealer, the dealer is responsible for the board and other things, and finally handed over to the airport for collection)
6. Air main bill fee: HKD15/bl is the fee for issuing the bill of lading - document of title.

The above is the composition of accounting fees for most airlines, mainly Hong Kong Airport. Because Hong Kong is a super-large free trade port, and Hong Kong Airport is the largest airport in the world, it has fewer restrictions, a wide range, and a large number of cargo aircraft. There are currently 78 airlines. There are more than 100 flights every day, which can be the first choice when the space and service are guaranteed. However, the cost is generally about 2 yuan higher than that in China!

What are the types of air cargo?

When you decide to ship your goods by air, you should know that there are two main types of air freight:

  • Special shipment
  • General shipment

Special cargo allows heavy, hazardous material and temperature managed cargo. It also allows human tissue samples, organs, fragile, value items and animals.
General Crago allows digital machinery, hardware, consumer goods, retail goods, toys, clothing and textiles, and more.
Air cargo is transported using different types of aircraft including passenger, cargo, charter or helicopter.

What are the factors that affect the cost structure of air freight?

Many factors contribute to the cost of air freight, such as:

  • Special event or holiday
  • Traditional/New Regulations
  • Economic situation
  • Technology (robotics, augmented reality, drones, artificial intelligence and big data)
  • Other additional charges such as cargo insurance, airline terminal handling charges, customs clearance and security surcharges are also included in the fee.

Common air freight nouns:

ATA/ATD (Actual Time of Arrival / Actual Time of Departure)
Abbreviation for actual arrival/departure time.

Air Waybill (AWB)
A document issued by or on behalf of the shipper, which is proof of the carriage of goods between the shipper and the carrier.

Unaccompanied Baggage (Baggage, Unaccompanied)
Baggage that is not carry-on but checked in, and luggage that is checked in.

Bonded Warehouse
In this type of warehouse, goods can be stored indefinitely without paying import duties.

Bulk Cargo
Loose shipments that are not palletized and boxed.

CAO (Cargo for Freighter Only)
Abbreviation for "Cargo Aircraft Only", meaning that it can only be carried by cargo aircraft.

Charges Collect
List the charges to the consignee on the air waybill.

Charges Prepaid
List the charges paid by the shipper on the air waybill.

Chargeable Weight
The weight used to calculate air freight. The billable weight can be the volumetric weight, or when the cargo is loaded in the vehicle, the total weight of the load minus the weight of the vehicle.

CIF (Cost, Insurance and Freightage)
Refers to "Cost, Insurance and Freight", which is C&F plus Seller's insurance for loss and damage to the Goods. The seller must sign a contract with the insurer and pay the premium.

Consignee (Consignee)
The person whose name is listed on the air waybill and who receives the goods carried by the carrier.

Consignment
The carrier receives one or more pieces of goods from the shipper at a certain time and place, and carries it to a certain destination with a single air waybill.

Consignor
Equivalent to shipper.

Consolidated ConsignmentA consignment of goods consigned by two or more shippers, each of which has signed an air freight contract with a consolidation agent.

/ By tjchinafreight ivy / Shipping

Inspection Requirements for Limited Quantity Packaging of Hazardous Chemicals

With the release of the "Measures for the Safety Administration of Road Transport of Dangerous Goods" (hereinafter referred to as the "Measures"), the mode of transport in small packages has once again entered the public eye. Small pieces of dangerous goods such as aerosols, 84 disinfectants, daily chemical reagents, etc. The transportation of highly hazardous products has always been a hot topic in the industry.

These dangerous goods themselves are transported in small quantities, and if they are packaged in reliable, strong and durable packaging, or if certain conditions are met, their transport will be much less dangerous.

One of the major features of the "Measures" is the introduction of the exemption of small package transportation, which clarifies the legal and legal transportation behavior of small package transportation in my country from the level of administrative enforcement of laws and regulations.

01 Legal and regulatory basis

In Chapter 3.4 of the International Maritime Dangerous Goods Regulations, it is clarified that a limited quantity of dangerous goods shall be packaged according to the limited quantity and comply with the provisions of this chapter, except for the 7 cases listed (there is no test requirement for relevant packaging testing in 4.1.1.3) , without any other provisions of these Rules.
For this reason, if an enterprise uses a limited quantity of packaging when exporting hazardous chemicals by sea, it is not necessary to provide the "Outbound Cargo Transport Packaging Performance Inspection Result Sheet".

02 Packaging Restriction Requirements

Combination packaging should be used: Dangerous goods should be transported in limited quantities in inner packagings with suitable outer packagings, and intermediate packagings may be used. When transporting items such as aerosols or small gas containers, inner packaging is not required.
With the exception of 1.4 S explosives, shrink-wrapped or stretch-wrapped pallets that meet the specified conditions may be used as outer packaging. If fragile or breakable inner packagings made of glass, porcelain, coarse ceramics or certain plastics are used, they should be placed in qualified intermediate packagings.
Glass or ceramic inner packagings containing liquid corrosives of Class 8 (packing group II) shall be placed in compatible and rigid intermediate packagings as required.
In a word, combined packaging is required when transporting in limited quantities. Inner packaging and outer packaging are necessary, but for intermediate packaging, it can be judged whether it is necessary or not.
However, unlike exception packaging, a limited number of packaging testing requirements are not mandatory.

03 Package Weight

For example, the more common recent alcohol spray, UN No. 1170, is available in a limited quantity of 5L for Group III packaging. That is to say, the maximum volume of each small package cannot exceed 5L. If the small package is fragile or fragile, such as the inner package made of glass, porcelain, coarse ceramics or some plastics, it needs to be placed in an intermediate package that meets certain requirements, and then placed in the outer package. The total gross weight of the package should not exceed 20 kg. If the inner packaging is not fragile or breakable, no intermediate packaging is required, and the total gross weight of the package should not exceed 30 kg.
Notice! Limited quantities do not apply to all dangerous goods.

04 Packaging Marking Requirements

Of course, in addition to the selection requirements of the packaging itself, the packaging marking requirements are also another important feature that distinguishes the limited quantity from other modes of transportation.
After selecting the correct limited quantity packaging mark, you also need to choose the size of the limited quantity packaging mark reasonably according to the size of the actual product packaging.

05 Contents of limited quantity packaging inspection

For the packaging of dangerous chemicals exported in limited quantities, the customs shall comply with Chapter 3.4 of the International Maritime Dangerous Goods Transport Regulations, as well as the "Limited Quantity and Packaging Requirements for Dangerous Goods" (GB 28644.2-2012), and the "Export Dangerous Goods Packaging Inspection Regulations for Limited Quantities" (SN/T 4149-2015) and other requirements for inspection.

/ 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

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.