EXPORT

Export Decisions and their Impact

Export Decisions and their Impact

Q. Some of the exports that Casardis sends out take up all the space in a 20' container, while other consignments are small and do not use very much space at all. The CEO has asked you to explain the meaning of the term consolidation, and how it applies to Casardis's exports.

In most of the cases, the shipping companies charge rates per container. So the freight amount is calculated by the number of containers used for shipping. If an exporter is able to completely fill a container, then it all well and good, but if exporters are unable to fill a container, they would still have to pay for the entire container; thus making in not economically feasible for the exporting company. An alternative option for the company would be to send their shipment via air freight, which again is still not as economically feasible.

Fortunately, shipping companies started providing consolidated services for their potential customers to benefit. These consolidated services provide opportunities to customers to send their shipments via sea in an economically feasible rate. Customers are charged either via weight of their freight order or through the space taken up by their freight order in the container, whichever is higher.

The consolidator, who receives the combined through bill of lading, has a contract with the shipping service provider. The consolidator then divides the combined through bill of lading into house bill of lading and then provides the divided bill of lading to the exporter. The exporter then pays for the services which he or she utilized and the consolidator keeps a margin for himself. For Carsardis, this consolidated method of shipping would be most economically feasible for their shipments that do not fill up an entire container.

Q.Cardaris received new inquiries from unknown companies, interested in Casardis's products. The CEO is concerned at the risk of bad debt and has asked you to explain how new customers can be checked for creditability to enable Casardis to avoid bad debts.

In the export business, there's always a risk of bad debt since customers are generally from a different country following a different jurisdiction. Therefore, it becomes exceedingly important to thoroughly check a potential customer's credibility to prevent non-payment or bad debts. Fortunately for exporters, there are various ways through which they can accurately predict the possibility of a potential non-payment by customers, resulting in bad debt for the company.

One of the best ways to evaluate any customer is to check for the company he or she is representing. Evaluating becomes significantly easier if that company has some presence on the internet. Once you have access to the necessary information, find out more about that company's customers. Read the importing company's reviews left by its customers and get a general idea on the reputation of the importing company. It is very important to note that the greater the number of stages between the company and its final consumers, the harder it will be to evaluate ...