How to Export from Canada

Presentation overview :

• What can you export• The export process.• 1. Pre export activities• 2. Exporting• 3. Post export • 4. Getting paid

• WHAT CAN YOU EXPORT?1. SERVICES2. GOODS or PRODUCTS

We will concentrate in exporting or trading GOODS or PRODUCTS.

If we classify them by how they are defined we can call them :

1. COMMODITIES (products price based) and2. NON COMMODITIES (products attribute based)

The Export Process

1. Pre-export activities

2. Export

3. Post-export activities

• Be prepared, execute precisely, follow up to improve!!!

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Pre-Export

1. Pre-exportBasic knowledge needed for international. trading:

1. INCOTERMS. You have to have a good command of your Incoterms. Know your purchase and selling terms.

2. SUPPLIER. Who is your supplier and where is located, your purchase and payment terms, all technical specs.

3. LOGISTICS. Deep understanding of all logistics involved in the exporting process.

4. DOCUMENTATION. Knowledge of all documentation and legal requirements at your exporting port and at your importing port.

5. IMPORTER. Who is your importer. Had he cleared all import requirements? Are pre shipment inspections needed? Are you allowed to export to that country? Can you get paid?

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1. Pre-exportINCOTERMS.

Terms internationally accepted that provide rules for trading. Buying or selling terms are based on :

1. Departure point : EXW (ex works)

2. Main Transportation Unpaid:FCA (free carrier)

FAS (free alongside ship)

FOB (free on board)

3. Main Transportation Paid:CFR (cost and freight)

CIF (cost, insurance and freight)

CPT (carriage paid to)

CIP (carriage insurance paid to)

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4. Arrival Point:DAF (delivered at frontier)

DES (delivered ex ship)

DEQ (delivered ex quay)

DDU (delivered duty unpaid) and DDP (duty paid)

1. Pre-exportSUPPLIER.

• Who is your supplier? Where is located?

• What are your purchase terms? EXW, FOB, CFR, CIF ?

• Clarify all technical specifications at purchasing : quality, packaging, quantity.

• After a Purchase Order is issued, all amendments will cost you money.

• Specify Payment Terms : COD, CAD, open terms (7,15,30,60, 90 days?), L/C sight or terms? Partial shipments allowed? etc

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Answer: Make sure you have good SC/PC that includes rules of dispute and always have a plan B or quantify your worst scenario.

PS: Good luck and have fun!

What happens if a supplier defaults me?

1. Pre-exportLOGISTICS

• All transportation, storage, loading and unloading activities involved from the point in which the product is received from the supplier to the point in which the product is appropriated by the buyer.

• Main controllable cost component of your cost structure.

• Important to coordinate shipping and arrival dates with market situation and payment terms.

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1. Pre-exportLOGISTICS

• Main logistics components before the export is done, all shipping cost from origin to shipping port, involves:

- Truck from plant to rail terminal (CP or CN)

- Intermodal (truck/rail) or rail (boxcar or hopper car or platform) movement to port

- Truck at arrival to move product to stuffing facility if not in container.

- P&D of marine container and stuffing facility cost.

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DOCUMENTS• The main pre-shipments issues are:- Preparation of B/L instructions before

loading.- Request of Export certificate 5 days before

loading to the CFIA if it’s food.- Request of Inspector if required by

destination country- Preparation of Export declaration or B-13

Documents are very important specially when L/C’s are involved

Special doc’s for high tech

1. Pre-exportIMPORTER

When issuing your Sales Confirmation or Sales Contract, be very clear with:

1. Product Specifications (same as purchase ones)

2. Payment Terms : COD, CAD, Open Terms (7, 14, 30, 60 or 90 days?) from arrival or B/L date?, Promissory Note? How many days? L/C payment? At sight, 30, 60, 90, 180 days? Is L/C confirmed and unconditional?, are partial shipments allowed? Can you meet all L/C requirements? No typos on the L/C? (typos cost money to amend)

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3. Shipping dates. Allow yourself a reasonable time frame to fulfill your shipping contract. Are partial shipments allowed?

4. Import Requirement. Be sure all import requirements are cleared by the importer BEFORE you load the product into a container: Import Permits or License, is a quota needed? Are pre-shipment inspections needed? Who is paying for them? Are special certificates needed? DO I NEED AN EXPORT PERMIT ?

2. ExportingIf all previous issues before loading the goods are covered, the Exporting process comes down execute the following :

1. EXPORT LOGISTICS. Shipping cost from country of origin to destination country.

2. DOCUMENTATION. As required at exporting and importing.

3. INSURANCE. Transportation insurance and risk insurance.

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2. ExportingExport Logistics

Basically there are 2 main costs to control:

- Shipping cost at port of origin :

Involves main freight : Marine / Rail / Truck / Air, THC at origin, storage if needed to roll booking.

- Shipping cost at destination port:

THC at unloading (usually paid for by customer), storage charges (port) and demurrage charges (line) if container is not pick up within the free time. Demurrage charges (line) if container is not returned within the free time.

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2. ExportingDocumentation

• Documents needed to :

1. Report your Export : from Canada a B-13, from USA a Shippers Export Declaration (SED)

2. Imports : The standard for most countries are: Commercial Invoice, B/L (Bill of Lading), Certificate of Origin and Export Certificate ( can be called Phytosanitary for agricultural goods, Zoosanitary or Health for animal products or Export Certificate for other goods that require it)

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Additional requirements by some destinations :

- Loading Inspection by independent company like SGS, Cotecna, Bureau Veritas and others, certificate of inspection required by some destination countries.

- Non Radioactivity certificate, Quality or Grade certificate, Analysis certificate, Weight certificate, Clean Container certificate, Packing list, etc, etc

Pre-Inspection certificate is not required anymore to Peru. Good to check for other

destinations.

2. ExportingDocumentation

YOUR INVOICE.This is your main instrument to be paid, always be sure to

clearly indicate : 1. Product : Clearly describe it and its main quality specs.2. Your company’s information, invoice number and date.3. Price : With the Incoterms you agreed with your Sales Confirmation and the CORRECT

CURRENCY clearly indicated.4. Quantity and Packaging 5. Shipment : shipment period within the contract and means ( marine, air, train, etc) 6. Payment terms : When, How and Where you will be paid. 7. Special conditions : If there is an special condition or special documents tied to your

contract or special permits, mention where are them on your invoice.8. Mention your rules to solve disputes.

2. ExportingTransport Insurance The standard transportation insurance

to be paid depending on your Incoterms, if you sold the product CIF, then you have to organize the insurance payment.

Risk Insurance Also known as Export Insurance, it

covers your receivables against your customer not paying for the product (if the sale was open terms) or abandoning the goods at destination port. Very costly but needed in many cases.

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• WHO CAN PROVIDE YOU WITH RISK INSURANCE ?

In Canada the EDC is your best alternative.The EDC ( Export Development Canada) can

insure your invoice for up to 90% of its value.

Please do not confuse Transport Insurance (for damages or losses that happen during transportation) with Risk Insurance (Basically insuring your invoice)

3. Post Export Activities

An export operation is not finish until you are fully paid and the importer confirms you their total satisfaction with the product received.

Be ready for export problems such us:

- Importer can’t meet financial obligation after the goods arrived

- Market collapses and importer wants to cancel order.

- Goods do not arrived in good conditions.

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• Your best buyer is a satisfied customer, always :

- Give your buyer accurate information. Market information, logistic information, documentation information, etc, etc

- Be sure you are shipping the right quality and quantity

- Always look for an alternative destination for your product (always have a plan B)

4. GETTING PAID

Payment of goods exported are the usual confirmation that a business transaction is finalized. The most usual payment terms are :

Advance payment at purchase confirmation.Partial advance and balance CAD.COD cash on deliveryCAD cash against documentsOpen Terms at 7, 30, 60 o 90 days from arrival or from B/L date. Promissory Note at xx days from arrival or B/L. L/C or Letter of Credit, at sight? Or 30, 45, 60, 90, 120 days? Is the L/C going to be confirmed, irrevocable and negotiable ?

Are partial shipments allowed? Are the documents requested the right ones? Each condition cost money and corrections or amendments to an L/C cost too. Who will pay for the amendments??

4. GETTING PAID HOW CAN YOU SECURE PAYMENT ?

You can try to secure payment or lower your risk of not being paid in a number of ways.

1. HAVE A CLEAR INVOICE

2. INSURE YOUR GOODS.

3. GET A RISK INSURANCE

4. HAVE A SECURED PAYMENT INSTRUMENT LIKE AN L/C

THE MOST IMPORTANT OF ALL IS TO KNOW YOUR CUSTOMER, KNOW WHO YOU ARE SELLING TO, KNOW THEIR BUSINESS AND FINANCIAL LIMITS.

Good Luck in your Exporting Business! Jose Zlatar 

Directeur,Developpemnt des Affaires Amerique Latine 

Business Development Director, Latin America  

AGROPUR Export Group Inc.