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    Export International Trade Transport Risk.




    Introduction

    It is quite important to evaluate the transportation risk in international trade for better financial stability of export business. About 80% of the world major transportation of goods is carried out by sea, which also gives rise to a number of risk factors associated with transportation of goods. 
    The major risk factors related to shipping are cargo, vessels, people and financing. So it becomes necessary for the government to address all of these risks with broadbased security policy responses, since simply responding to threats in isolation to one another can be both ineffective and costly.

    While handling transportation in international trade following precaution should be taken into consideration.

      • In case of transportation by ship, and the product should be appropriate for containerization. It is worth promoting standard order values equivalent to quantities loaded into standard size containers.
      • Work must be carried out in compliance with the international code concerning the transport of dangerous goods.
      • For better communication purpose people involve in the handling of goods should be equipped with phone, fax, email, internet and radio.
      • About the instructions given to the transport company on freight forwarder.
      • Necessary information about the cargo insurance.
      • Each time goods are handled; there risk of damage. Plan for this when packing for export, and deciding on choice of transport and route.
      • The expected sailing dates for marine transport should be built into the production programme, especially where payments is to be made by Letter of Credit when documents will needs to be presented within a specified time frame.
      • Choice of transport has Balance Sheet implications. The exporter is likely to received payments for goods supplied while they are in transit.
      • Driver accompanied road transport provides peace of minds, but the ability to fill the return load will affect pricing.

    Transport Insurance

    Export and import in international trade, requires transportation of goods over a long distance. No matter whichever transport has been used in international trade, necessary insurance is must for ever good.

    Cargo insurance also known as marine cargo insurance is a type of insurance against physical damage or loss of goods during transportation. Cargo insurance is effective in all the three cases whether the goods have been transported via sea, land or air.

    Insurance policy is not applicable if the goods have been found to be packaged or transported by any wrong means or methods. So, it is advisable to use a broker for placing cargo risks.

    Scope of Coverage

    The following can be covered for the risk of loss or damage:

    • Cargoimport, export cross voyage dispatched by sea, river, road, rail post, personal courier, and including associated storage risks.
    • Good in transit (inland).
    • Freight service liability.
    • Associated stock.

    However there are still a number of general exclusion such loss by delay, war risk, improper packaging and insolvency of carrier. Converse for some of these may be negotiated with the insurance company. The Institute War Clauses may also be added.

    Regular exporters may negotiate open cover. It is an umbrella marine insurance policy that is activated when eligible shipments are made. Individual insurance certificates are issued after the shipment is made. Some letters of Credit Will require an individual insurance policy to be issued for the shipment, While others accept an insurance certificate.

    Specialist Covers

    Whereas standard marine/transport cover is the answer for general cargo, some classes of business will have special requirements. General insurer may have developed specialty teams to cater for the needs of these business, and it is worth asking if this cover can be extended to export risks.

    Cover may be automatically available for the needs of the trade.

    Example of this are:

    • Project Constructional works insurers can cover the movement of goods for the project.
    • Fine art
    • Precious stonesSpecial Cover can be extended to cover sending of precious stones.
    • Stock through put cover extended beyond the time goods are in transit until when they are used at the destination.

    Seller's Buyer's Contingent Interest Insurance

    An exporter selling on, for example FOB (INCOTERMS 2000) delivery terms would according to the contract and to INCOTERMS, have not responsibility for insurance once the goods have passed the ship's rail. However, for peace of mind, he may wish to purchase extra cover, which will cover him for loss or will make up cover where the other policy is too restrictive . This is known as Seller's Interest Insurance.

    Similarly, cover is available to importers/buyers.

    Seller's Interest and Buyer's Interest covers usually extended cover to apply if the title in the goods reverts to the insured party until the goods are recovered resold or returned.

    Loss of Profits/ Consequential Loss Insurance

    Importers buying goods for a particular event may be interested in consequential loss cover in case the goods are late (for a reason that id insured) and (expensive) replacements have to be found to replace them. In such cases, the insurer will pay a claim and receive may proceeds from the eventual sale of the delayed goods.

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    What is New?

    Date: 26-09-2016
    Central Excise Notification No. 46/2016 CE (NT)
    Seeks to amend Notification No. 20/2016-CE (NT) dated 01.03.2016 [Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable and other Goods) Rules, 2016]

    Date: 26-09-2016
    Service Tax Notification No. 42/2016 (ST)
    Services by way of advancement of Yoga provided by entities registered under Section 12 AA of Income-tax Act, 1961.

    Date: 23-09-2016
    Trade Notice No. 18/2016
    Clarification in respect of definition of service provider under Common Service Providers (CSP) in Export Promotion Capital Goods (EPCG) scheme.

    Date: 23-09-2016
    Customs Notification No. 51/2016
    Seeks to further amend notification No.12/2012-Customs dated the 17th March, 2012, so as to: 1. Reduce import duty on potatoes from 30% to 10% up to 31.10.2016. 2. Reduce import duty on wheat from 25% to 10% up to 29.02.2017. 3. Reduce import duty on palm oil from 12.5% to 7.5% for crude palm oil of edible grade, and from 20% to 15% for refined palm oil of edible grade.

    Date: 23-09-2016
    DGFT Public Notice No. 33/2015-2020
    Amendment in ANF-5A [Applicationj for issue of EPCG Authorisation ] incorporating the guideline for designating/certifying a Common Service Provider (CSP) under Para 5.02 (b) of FTP 2015-20-reg.

    Date: 23-09-2016
    Customs Notification No. 52/2016
    Seeks to further amend three Customs notifications namely 104/2009-Cus, 16/2015-Cus and 17/2015

    Date: 23-09-2016
    Customs Circular No. 45/2016
    Explains option extended by DGFT for surrendering one benefit in case of simultaneous issuance of SHIS and Zero duty EPCG/PE EPCG

    Date: 22-09-2016
    Customs Notification No. 122/2016 (NT)
    Rate of exchange of conversion of the foreign currency with effect from 23rd September, 2016

    Date: 22-09-2016
    Customs Circular No. 44/2016
    Regarding setting up of 'Custom Clearance Facilitation Committee' (CCFC) for Land customs stations and Inland Container Depots-reg

    Date: 22-09-2016
    Trade Notice No. 17/2016
    Refund of Terminal Excise Duty(TED) under Deemed Exports where Duty has been paid from CENVAT Credit and ab-initio waiver is not availabe.



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