Trading with the USA – An Introduction

The United States of America (USA) is one of the biggest economies and trading nations in the world. In 2017 its exports of goods and services totalled $2.35 trillion and about 60% of funds used in international trade are US dollars. Only major economies such as China and the European Union (EU) can rival its influence.

But what is it that makes the US tick? And what is the outlook for SMEs looking to trade with one of the world’s major powers?

We thought we’d break it down, because we know that before you trade with a country, having a strong picture of the market is important – you need to know that there’s a desire for your product and that there are viable partners for you to work with; or that regulations won’t get in your way.

Imports vs exports

The US has a highly diversified economy with a world-leading industrial sector. This is reflected in its main exports, which include aircrafts, fuel, cars and vehicle parts. Although it’s not all machinery – pharmaceuticals and even soybeans rank in its top 10 exports!

Interestingly, however, the US currently imports more than it exports. In 2017, total imports were $2.90 trillion, while exports were $2.35 trillion. Electronic equipment (like computers) currently stands as its main import – totalling over $386bn! – closely followed by machinery & engines ($367bn) and vehicles ($306bn).

Partners in trade

The US’ largest trading partner is the European Union, which accounted for $717bn in total trade in 2017. This is closely followed by China ($635bn) which is by far the largest single-nation trading partner.

Interestingly, two of the US’ strongest commercial partners sit at its borders – Canada and Mexico. They account for over $1 trillion in total trade between them!

Emerging major markets such as India and Brazil are also pushing their way up the list – and will no doubt continue to become close partners with the US in the future.

Tariffs and regulation

Tariffs are the taxes on imports and exports between different countries, and for the US, they are a core factor in government policy; which means they can change with administrations.

The energy sector, as an example, is currently tariffed higher than most sectors – though on the whole, US tariffs are not unusually high by world standards. It’s important to keep an eye on changing tariff announcements to understand how they might affect you.

In terms of regulation, the US Customs and Border Protection (CBP) Service and a number of government agencies regulate goods imported to the country. As you might expect, regulations are tougher on things like chemicals and animal products. You can get a fuller picture of this on the CBP website.

If you are importing cargo via ocean vessel, you are required to complete an Importer Security Filing – this is certain advance cargo information that must be submitted electronically to CBP before arrival. Failure to comply can result in penalties, increased inspections and delay of cargo.

The picture for SMEs

Small and medium enterprises (SMEs) are the backbone of the US economy, accounting for 30 million of its companies and it takes special care to accommodate those SMEs who might be new to trading – including tips for new importers and exporters.

For example, the CBP does not require an importer/exporter to have a licence or permit; however other government agencies may require one depending on what you’re importing – like alcohol or medicine.

Prior to importing or exporting, you also have the option to contact a CBP office at your chosen port of entry or exit. They have specialists for various commodities and can help you with information on specific requirements, possible duty rates and more.

The United States offers a world of opportunity for SMEs. If you’re looking to trade to or from the US – then get in touch with our team today to see how Twill could help you! – www.twill.net.

 

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Twill’s quick guide to incoterms

If you’ve recently started shipping your cargo, you will have encountered “Incoterms”. They’re the backbone of the logistics industry, but at first they can be confusing! What are they? Which one is right for you and your cargo? Don’t worry, Twill is here to help and guide you through your shipping journey.

The essential terms of trade

Incoterms (International commercial terms) are the world’s essential terms of trade for the sale of goods. They are used to clearly define the obligation of cost, risk and responsibility of the transportation of goods between a buyer and seller.

Incoterms are helpful because they mean you don’t have to spend all your time negotiating and agreeing every detail of risk and responsibility during a cargo’s journey.

Different Incoterms meet different needs for buyers and sellers – whether you’re taking control of your cargo straight from the seller’s warehouse, or at the final port of destination – there’s an Incoterm to suit your situation.

The definitions

So what are the different Incoterms? Well, there are some specific to sea and inland waterway transport – and others that apply to any mode of transport. Here’s an overview courtesy of the International Chamber of Commerce (ICC).

Rules for sea and inland waterway transport:

FAS – Free Alongside Ship – the seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) chosen by the buyer. The risk of loss of or damage to the goods passes to the buyer when the goods are alongside the ship.

FOB – Free On Board – the seller delivers the goods on board the vessel chosen by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes to the buyer when the goods are on board the vessel.

CFR – Cost and Freight – follows the same procedure as “Free On Board” but the seller must contract for and pay the costs of freight necessary to bring the goods to the named port of destination.

CIF – Cost, Insurance and Freight – follows the same procedure as “Cost and Freight” but the seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

Rules for any mode of transport:

EXW – Ex Works – seller delivers when it places goods at disposal of the buyer. They do not need to load goods or clear them for export.

FCA – Free Carrier – seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another specifically named place.

CPT – Carriage Paid To – seller delivers the goods to the carrier or another person nominated by the seller. The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP – Carriage And Insurance Paid To – the same as “Carriage Paid To” but the seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

DAT – Delivered At Terminal – the seller delivers when the goods, once unloaded from transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. The seller bears all risk until that point.

DAP – Delivered At Place – the seller delivers when the goods are placed at the disposal of the buyer before being unloaded at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

DDP – Delivered Duty Paid – the seller delivers when the goods are placed at the disposal of the buyer and cleared for import, before being unloaded at the destination. The seller has an obligation to clear the goods not only for export but also for import, to pay any duties and to carry out all customs formalities.

The risk factor 

As you can see from the individual definitions, picking the right Incoterm depends on your product and the level of risk which you, or the seller, is willing to take on during its journey. If a seller decides the price they’ve agreed with you is profitable, they’ll be willing to take on more risk.

Equally if you’re a buyer from a large company, for example, you may have your own teams who handle processes like customs – in which case you’ll be willing to take on more risk and responsibility. This will keep costs lower.

All of this means that the contracts you have with suppliers are very important – if you pay more, then you can take on less risk.

Twill is here to help

So how does Twill fit into the world of Incoterms? Well, as your freight forwarder we can guide, but not decide on your behalf! That means we can’t decide which Incoterm you should use, but we can offer advice on which might be best suitable for your specific needs.

Incoterms also help us in our job, because if an issue does occur – for example if your cargo didn’t get on the vessel it was scheduled to board – then Incoterms let us know who takes responsibility for any risks or extra costs involved.

Our customer care team is award-winning and we pride ourselves on supporting customers and keeping you informed throughout all the shipping processes and stages.

Got any more questions? Get in contact with our team today and see how we can help you! – www.twill.net.

Articles referenced:

Full Incoterm descriptions – https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-rules-2010/

SMEs: Overcoming the challenges of going global

by Juan Cajiao, Twill Head of Growth

As a small or medium enterprise (SMEs), you may not know it, but your business is critical not just to the economy of your city or your country, but to the entire world. Your business, and other SMEs like it, represent 95% of all companies.

Despite this, SMEs often find it difficult to go global. Only 25% of EU-based SMEs (1) export at all and an even smaller portion export beyond the EU.

This doesn’t need to be the case and the potential influence of SMEs is clear. For example, looking outside of the EU, a sample of companies from 17 Organisation for Economic Co-operation and Development (OECD) countries – as well as Brazil – showed SMEs account for 63% of total employment (2).

As well as generating employment, stronger participation from SMEs in global markets can create incredible opportunities to scale-up, accelerate innovation and sustain competitive economies (3).

What’s stopping you going global?

At Twill more than 95% of our customers are SMEs, so we spend a lot of time making sure we understand your position in the global market and the challenges you face – whether that’s resources, technology or knowledge and experience.

Setting up a new business, or taking your business global, is a big task and you need to know that people will want what you’re selling. We know the next challenge is finding reliable partners. They might not always be based in the country you’re looking to import/export with – but it’s a huge relief when you find them and they’ll be important to the success of your company as it grows.

As well as this, we know that a lack of knowledge and experience in documentation and regulation is a major barrier for SMEs. If you’re in the UK and want to export into Brazil, you need to understand the regulations and laws of that country. This isn’t always easy because every country will have its own specific regulations and it can take some searching to find the information you need!

As well as this, these regulations and laws are always changing so keeping on top of updates can be difficult if you’re tackling it on your own.

Finally, there is the need to be cost-effective without sacrificing quality. As an SME you naturally don’t have the resources available to huge multi-national companies – but that doesn’t mean you need to miss out.

Twill can help you break through

Right from the start, Twill was created to help SMEs. Being designed with your interests at our core makes us strong partners, able to help you break through the barriers you’re facing – and we do it simply, while keeping costs low.

When working with us, you’re getting more than a platform – you’re getting an award-winning team that will follow your cargo across its entire journey. We stay updated on changes to regulation or documentation around the world and will guide you through the entire process, letting you know when your approval is required, or you need to sign a document.

Through our platform every booking has its own ‘digital clock’ making sure your cargo is at the right milestone in its journey at the right time – and you can see those milestones 24/7.

Then of course there’s cost, and our price transparency approach ensures that the price you’re quoted when you book is the price you pay when your cargo arrives safely. There are no surprises and if anything changes, we’ll always be in touch well in advance.

SMEs inspire change

As you saw at the start of this article, you may think of yourself and your business as a tiny player in the scheme of our global economy – like a small fish in a very big pond. But the truth is that as an SME you play a huge part in our economy and together with other SMEs you are the biggest fish there is!

As well as this, it is you and your needs that accelerate and inspire the innovators of our world – in logistics and beyond. You deserve the best possible service for your business – to help it break through and go global.

 

Check out who are the SMEs and their roles in global economy

 

Articles referenced: 

 

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Getting the most from your freight costs

By Raju Kariya, Twill Pricing Manager

Whether you’re new to shipping your cargo, or you’re used to handling logistics and have always wondered how freight costs are broken down – ultimately you want to make sure you know what you’re paying for and that you’re getting the most for your money.

At Twill, we understand how important that is and so we decided to break down what our freight prices mean. Our featured infographic in this blog uses freight prices between China and the UK as an example and read on to discover the added benefits of booking with us!

A price based on your needs

At its core, the price you receive for shipping your cargo will depend on the services we need to provide for you – and this will be based on the needs of your shipment. As your freight forwarder, we can consolidate all parts of the complete service – so we work with carrier companies, ports and more to get your cargo from Point A to Point B.

Of course, where exactly Point A and Point B are will have an effect on our freight costs and your final price. This is because there are costs beyond our service that will need to be considered – for example customs clearance and the mandatory costs that must be covered to adhere to international trade and certain countries’ regulations.

Introducing instant pricing

A common concern for customers in the logistics industry is that you’ll often have to wait one or two days to get a quotation after making a request. Apart from the frustration that comes with having to wait up to two days for as single quotation; prices can fluctuate in this space of time, which means you don’t always get the price you’re looking for.

At Twill we’re tackling this issue across a number of our trade lanes, by introducing instant pricing – meaning you get a quotation instantly and avoid having to wait hours or days to know what you’ll pay.

The difference with Twill – price transparency

It’s not just our instant pricing that sets us apart from the crowd. In the logistics industry, it is a common occurrence that the invoice you (the customer) receive is different to the price you received on quotation. This is because the invoice is usually based on the rates on the day the cargo is shipped.

At Twill, we’re changing this by implementing price transparency that ensures you don’t have any sudden surprises with extra costs when you receive your invoice.

In practice, what this means is that the price you receive on the day you book with us is the price you pay when your cargo has been delivered! Our terms and conditions reflect what you’ll receive for the price you pay – and the implications if anything extra comes along.

Going the extra mile

Of course the world of logistics isn’t always smooth sailing – there are lots of parties involved in every shipment and it’s always possible that something will go wrong. This is where we look to go the extra mile for our customers.

For the price you pay with us, you’ll be in the hands of our award-winning customer care team – who pride themselves on being pro-active whenever an issue or opportunity arises. They work with various people throughout the supply chain, to make sure that your cargo is prioritised in its journey.

You’re also receiving the benefits of our technology, which ensures you know exactly where your cargo is at various milestones in its journey. We’re always tweaking and introducing new innovations to our platform too, to deliver the best system and service for you.

So at Twill, we like to make sure you get the most for your money. Why not visit our website and give our team a call today to find out how we can make shipping simple for you! – www.twill.net.

 

Find out what are the main freight costs involved from China to UK

 

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Cargo travels on paper and here are the key documents you’ll encounter

Cargo travels on paper – here are the key documents you’ll encounter

According to the International Maritime Organisation (IMO), over 90% of the world’s trade is carried by sea. There are various parties involved in making sure all of these goods arrive at their final destination – from freight forwarders like us at Twill, to shippers, carriers, and of course you the customer!

So how exactly does a global logistics industry function? The answer is documentation! Or better saying, the so called freight documents.

Your cargo travels on paper. You can have all of the containers and carrier space you need, but without the right documentation, your cargo won’t move an inch. The right documents establish everything from ownership and responsibility right down to individual costs and receipts. This is how the shipping industry works – it is still very paper-driven!

At Twill, one of our key responsibilities is ensuring our customers have all the right documentation at each stage of the process. So, here are some of the key documents you’ll likely encounter as you start shipping your cargo.

Bill of Lading

The Bill of Lading is the most important document in the entire transportation process. It is required by any carrier before a shipment is taken and acts as a receipt and contract for the carriage of goods as well as proof of ownership. It contains the following information:

  • Seller’s and Buyer’s (that’s you!) names
  • Names of the ports of departure and destination
  • Name of the vessel
  • Dates of departure
  • Itemised list of goods being transported
  • Weight and/or volume of the cargo

A Bill of Lading is required in all claims for compensation for any damage, delay, or loss, as well as for the resolution of disputes regarding ownership of the cargo. So it’s an important document and is increasingly being created and transferred digitally, to minimise the risk of loss.

Shipper’s Letter of Instruction (SLI)

An SLI is a note from the exporter to the freight forward of your cargo, with instructions on how a shipment is being sent and where it’s going. Each freight forwarder has their own SLI form, but they all request the same details, such as: routing info, shipment dimensions and weight, contact info for seller/buyer and more.

Packing List

A Packing List is for inspection and shipping purposes and shows how your cargo has been packed. It includes info about the shipper/buyer, description of goods, hazardous information if applicable and details about the type of packaging used.

Commercial Invoice

A Commercial Invoice is a key accounting document for any cargo being transferred from the seller to the buyer. It’s used to determine the true value of goods for assessing any Customs duties and to clear it through Customs.

It must be completed in full and include – among other things – the Incoterms rule, net and gross weights, description of the goods, value, currency and certifications.

Customs Documents

Laws and regulations differ from region to region – and this makes Custom documents a little more complicated than the other more standard documents covered here. Customs documents will be created when the buyer and supplier take their Commercial Invoice and Packing List and complete the Customs procedure with the local authorities; making sure they’re paying everything and are compliant with all local laws and regulations.

Buyers and suppliers will usually reach out to freight forwarders, like us at Twill, and we will help them complete this documentation.

Don’t forget Incoterms!

While not a document in itself, an International Commercial Term – or Incoterm as it’s more commonly known – is a universal term that defines a transaction between importer and exporter so that both parties understand their tasks, costs, risks and responsibilities. It forms part of your Commercial Invoice.

There are currently 11 different Incoterms which define these responsibilities in different ways. Some refer to all modes of transport and others to sea/water transport only.

This isn’t an exhaustive list and you’ll encounter others while shipping your cargo – but if you’re feeling a little daunted then don’t worry, that’s why we’re here! At Twill we can help you prepare the necessary documentation for your cargo. Get in touch with our team and book with us today – www.twill.net.

 

5 key freight documents in international shipping

Five peak periods in logistics to be aware of

by Curtis Doyle

2019 is a new year and that means a fresh calendar of activity for the logistics industry, and your business, to prepare for. In this blog we take a look at five peak periods to be aware of and the effect they could have on your cargo.

Chinese New Year

Chinese New Year is a yearly festival that is celebrated in varying forms across Asia – causing the largest annual mass human migration in the world! Beginning on 5th February this year, it will see almost all factories in the region close for over a week, with full productivity not resuming for almost a month.

This is easily the biggest holiday in the logistics calendar and prior to New Year, we see the number of containers raise 50% as people prepare their cargo. It also results in a busy start to the year as logistics companies, carriers and shippers deal with this demand and the subsequent backlogs once normal working resumes. Read more about it in our dedicated Chinese New Year blog.

Carnival

Carnival is a festive season that occurs before Lent, involving public celebrations, parades and street parties. While it actually occurs in many countries around the world, the biggest and most famous Carnival celebration is in Brazil – where, like Chinese New Year, much of the country comes to a standstill for a week of festivities. This year it kicks off on 1st until 6th March.

Brazil is the largest economy in Latin America and 8th largest in the world – so when the country’s production slows the world takes notice!

It also means you have two of the world’s largest economies (Brazil and China) holding big holidays within weeks of each other. So it’s important to be aware of when these dates crossover in order to plan appropriately.

Holiday season

It may seem like a world away, but the holiday season will come around quickly! For those of us in the northern hemisphere our summer months are July and August; but of course on the southern hemisphere summer is already here. Depending on where you’re shipping your cargo from or to, you could be affected by the summer season as workers head off on their holidays.

The holiday season also sees heightened demand for certain commodities and produce – from food to garden furniture – so if you’re shipping anything seasonal it’s probably time to start planning for it now, well enough in advance that you’ll get your cargo when you need it most.

Black Friday / Cyber Monday

Black Friday and its recent partner, Cyber Monday, are huge dates on the consumer calendar. Starting in the United States – where Black Friday falls on November 29th following Thanksgiving – it has now spread across the globe from the UK to Mexico as other countries look to get a slice of the vast amounts of money that will be spent over the course of these two days.

Americans alone spent $5bn in 24 hours on Black Friday in 2018, while the UK spent over £7bn across the two days. In order to accommodate this huge demand, you’ll see many companies getting their cargo prepared as early as September.

Christmas / New Year

Before you know it, you will have made it through another year and the busy time of Christmas and New Year will be here. Add to this all the people starting to take holidays as well as more severe weather and it can get pretty stressful and disruptive – so it’s important to plan for this period well in advance.

You will have noticed the words ‘planning’ and ‘awareness’ popping up a lot in this blog – they’re both key to avoiding delays to your cargo during peak periods; as well as strong relationships with your shippers, carriers and freight forwarders like us!

In the coming weeks we’ll have separate blogs on those subjects, but for now get the diary out and plot these key periods in your calendar.

Don’t forget you can contact Twill today to book your cargo throughout the year – www.twill.net.

 

Have you ever thought how Carnival, Chinese New Year or Christmas might affect your whole planning throughout the year?