| Author | Message | ||
| PeterS (Peters)
Intermediate Member Username: Peters Post Number: 1388 Registered: 1-2003 |
Mike...thank you! | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 2001 Registered: 11-2002 |
Peter, The guy I woke up is a director in one of my companies. Mike, As with anything, there is an easy way and a hard way. If Peter is moving items that are relatively low on the radar, you are correct in that there is little need for in-depth consultation. But, if he is shipping goods that are heavily regulated, taxed, or whatever, making this kind of incoterm decision can save you a bundle. I started this company because I realized that by hiring professionals to do this I would save a lot. Given the volume of stuff my various companies move this one shipping type company has saved me in the millions per annum. Also, shipping is a very common tool for negotiation. The more you know the better. Given the amount of stuff I move, I usually take on all the shipping expenses (apparently). As this guy said, my latest shipment is FOB. So I pay for a lot of the crap. Why? I know cheaper ways to do it than the buyer. So, while he might think I am paying x amount of dollars, due to volume and loopholes I am spending x-y amount of dollars. That y-z(negotiated price change) becomes sort of an additional margin. Anyway, Pete. Do with it as you see fit. Mike does bring up a lot of good points. I don't know to what scale you were asking so I got a response for you that is applicable in all scales of import/export. Cheers | ||
| Mike B (Srt_mike)
Member Username: Srt_mike Post Number: 328 Registered: 12-2002 |
Peter, It is a lot more simple than they are making it sound. You ship something, the country you are shipping it to will assess an import tax - sometimes it is based on what you are importing (i.e. food may be less than electronics, etc), and sometimes it is based on the quantity of stuff you are shipping, or whether it is being sold wholesale or retail, or as a gift, etc. Someone has to pay that tax. Either it's going to be you, the receiver, or the shipping company. The shipping company never pays it unless you are working with someone like FedEx who will just bill it to your account, or TNT or AeroNet who will arrange for you to pay the duties in advance (for ease of import) and they just pay whatever fees are due during the ship process. The other option is the receiver pays it. Let me give you a small bit of advice - ALWAYS PASS DUTIES ON TO THE RECIPIENT! The laws are often vague. We ship stuff all over the world - if I ship FedEx and say bill me, I always get a huge fee added. Usually the local recipient has more leverage to negociate the fees. A good example - I shipped 100 of a product to Australia. I listed it as "electronics parts" (low import duty fee) but they decided it was automotive parts, and charged it as such. I got a MUCH bigger bill than I was expecting! Now, we ONLY ship DDU (recipient pays). This means I do a tag for UPS to ship to Australia or wherever. I fill out a commercial invoice stating the product, what the valuation and price is, the insured value, and who the recipient is. UPS ships the package, then calls the recipient when it arrives and says "your package is here - the tax due on it is $X". The recipient can haggle or whatever they want to do, but I'm out of the loop. DDU (recipient pays) is good, because I don't want to adjust my pricing based on 80 countries varying import laws. Also, if the package is refused or doesn't make it in, I don't get an outstanding bill for import duties. I don't have to gather paperwork from foreign countries on what % of my income went towards paying taxes in those countries, and it's MUCH easier when a customer calls to say "here is the price, I can ship UPS which will cost (look at their website) $X to your country, and of course there may be import fees or such, but you should check with your customs office on that). Another tip - lots of folks I deal with will request I lower the value of the product to avoid them paying as much tax. That's all well and good, but you CANNOT insure a shipment for more than the taxable amount. So if you ship $5,000 worth of stuff to Australia and list it as $500 worth, it's only insured for $500. If it gets lost or damaged (which is much MORE likely than for domestic shipments), you just lost $4500 because they will only reimburse you $500. Anyone who handles import/export will know all of this. It generally comes up when you are dealing with a smaller outfit in a foreign place and they don't know the laws and ask for all sorts of grey-area things like devaluing the shipment, or "splitting the import fees" with you. NEVER do it - in my experience it always comes back to bite us. | ||
| PeterS (Peters)
Intermediate Member Username: Peters Post Number: 1384 Registered: 1-2003 |
Hi Taek..I thought you would get involved on this one! Thank you! First off, who did you call and woke up (LOL)? I gotta figure this one out because I will be doing business with both the UK and Australia. Right now, its confusing! It seems that UPS can not give me a straight answer when all I want to do is just ship the damn product at a US price! | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1999 Registered: 11-2002 |
Errr...took the liberty of acting as you and shot this email out as if I had made the inquiry to UPS.  For some reason I thought you had made the post at around 1 AM. I thought it might be urgent so I called this guy up. Turns out he is in the U.S. I totally woke him. If you have a question just let me know. Just don't make me read this stuff again. I think I have a headache. And this is the idiot version too.  The response: Mr. Kwon, It is difficult to tell exactly what response you were looking for in regards to this shipping problem based on the brevity of your inquiry. I have added some descriptive text explaining some common shipping terminology and hope you can use it as a guideline to find what suits your needs best. If you would like further information I will gladly furnish it as per your request. Again, these are common industry terms and their definitions are taken from our library of current best practices use cases. I have comprised the contents piecemeal with responses from my assistants. I am surprised you have not used the services of your own company to handle this inquiry. We are available to answer your questions at anytime. If you feel UPS is best suited for this transaction I will advise as best I can. The following are what people in the industry refer to as incoterms. I have referred to them as either shipping methods or terms in the contents. DDU (mentioned in UPS's response) means [D]elivery [D]uty [U]npaid. You would have to bear the costs and risks involved in bringing the shipment thereto (excluding duties, taxes and any other official charges payable upon importation) as well as the costs and risks of completing customs requirements. Your buyer would have to pay any additional costs and would have to assume any risks caused by his failure to clear the goods for import in time; which is dependent on the destination port and said country's laws. As an added note on DDU, this method of shipping is applicable in every mode of transport. --- DDP (also mentioned in UPS's response) means [D]elivery [D]uty [P]aid. You would have to assume the risks and costs of delivering the goods thereto (including duties, taxes and other charges), cleared for importation. Some notes on DDP. This method of shipping is also applicable to all methods of transportation. Also, this method of shipping should not be pursued if you do not want to leverage your access to acquire an import license. If we are involved this is of no consequence. Keep in mind that the license may be obtained indirectly through an agent or other sources if you choose to maintain your corporate anonimity. DDP is a good representation of a term ("shipping method" in this response) that maximizes the seller's obligation. For the opposite (a term that represents the minimum obligation) you would want EXW. I will elaborate on this term later. --- FOB (also mentioned in UPS's response) means [F]ree [O]n [B]oard. You would have to bear all costs and risks of loss of or damage to the goods from the point of shipment. This method requires you to clear the shipment for export. Please note, this method of shipping can only be used for sea or inland waterway transportation. You are currently using this in your newest shipments from Asia. A similar term that applies to all methods of transportation is FCA which stands for Free Carrier. --- EXW (mentioned in the body of my notes on DDP) means Ex Works. You shall not be responsible for loading the shipment on the vehicle provided by the buyer or for clearing the shipment for export, unless otherwise agreed (anything can be customized for you by the appropriate language.) The buyer assumes all costs and risks involved in taking the shipment from your premises to the specified destination. Please keep in mind that if your buyer is unable to take care of the export requirements of the country you may not use this method. The most adviseable way would be FCA which I also mentioned in my editorial on FOB. --- As you well know, all of these terms are highly customizable based on your needs with the appropriate language. Contractual ammendments in all shipping terms is not uncommon, so these are just guidelines based on common shipping terms. Although we have a full workload, please let us know if you would require us to shift scheduling to accomodate a one-time shipping job. If you wish to add a permanent shipping route with either variable or fixed contracts we can accomodate you in less than a day. I appreciate your call to bring to my attention this correspondance. This is the quickest informative answer I can get you in such short notice and at this time of night (guess you were not aware that I was in Seattle!) I will speak to you tomorrow; or is it today?!. Your employees at HQ send their well wishes as well! --CONTENT DELETED-- ----- Original Message ----- From: --DELETED-- To: --DELETED-- Sent: Wednesday, August 27, 2003 1:13 AM Subject: What the hell is UPS telling me here? I asked: When we make our shipment, which party actually pays the 10% tax and how is it paid? I trust that the receiver of the goods is liable for the taxes. UPS responded: This will depend on the incoterm used in the contract of sale. If the value is DDU (f/p) then the importer pays. If the Shipment is DDP (Free Domicile) then the shipper pays. If FOB then the importer pays. Goods are entered as per the commercial invoice presented so the invoice MUST state the incoterm. The UPS billing terms will simply direct the account that the amount is billed to. I need a translation on this please. No clue what any of this means. T | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1997 Registered: 11-2002 |
Pete, you still there? I just received this email and I don't think I can decipher it without butchering the content. I guess I can just post it here. I'll delete the contact info and some of the content towards the end that has to do with me and the rest you can take as you wish. It looks like a pretty good breakdown on what some of these things mean. If what you are doing is complicated, I stronly suggest you contact a shipping agent. Cheers | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1996 Registered: 11-2002 |
OK Pete, In short... UPS is saying the following: It depends. I just shot an email to my import/export guy and he should send me a response shortly. I'll let you know. Cheers | ||
| PeterS (Peters)
Intermediate Member Username: Peters Post Number: 1382 Registered: 1-2003 |
I am hopeful somebody can explain in simple English what the flip this means. Please read my question and UPS's reply! ME: When we make our shipment, which party actually pays the 10% tax and how is it paid? I trust that the receiver of the goods is liable for the taxes. UPS:This will depend on the incoterm used in the contract of sale. If the value is DDU (f/p) then the importer pays. If the Shipment is DDP (Free Domicile) then the shipper pays. If FOB then the importer pays. Goods are entered as per the commercial invoice presented so the invoice MUST state the incoterm. The UPS billing terms will simply direct the account that the amount is billed to. |