DIVINE WORD COLLEGE OF LAOAG

School of Business and Accountancy

International Trade Practices: The Parties

THE PARTIES IN AN INTERNATIONAL TRADE PRACTICES

1. THE EXPORTER
Exporter is considered to be the seller and shipper of goofs from one country
to another.
Exporter is the natural or legal individual that makes a sale to a from one
country to another.
Exporting’s name appears as the shipper of goods to imply that the exporting
company is making the sale and has a title on the goods.
The exporter may or may not be the actual seller of the goods, it can be an
entity acting on their behalf.

Types of Exporter
 Direct Exporters
 They manage their own operation without involvement of any
intermediaries.
 They sell their product directly to the buyer
 They are responsible for the export, commercialization, price
negotiation and maintenance of the brand in the international market.

 Indirect Exporters
 They sell their products to intermediaries such as trading companies,
which then handle the export process and sell the products in a foreign
market
 They will only be responsible for the manufacture and disposal of the
product.
 The exporting commercial company/intermediary will be responsible in
negotiating the price with the interested importer, and may also be
responsible for attracting new customers, given that they are the most
interested in maintaining the business relationship with the product
made available to the partnership.

2. THE IMPORTER
Importer refers to the buyer of goods or ultimate consignee.
Importer’s name appears on all relevant documents which serves as an
evidence that an export sale has occurred.

Angel Fei I. Garduque

Jessica Rhein E. Salvador
 DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy

In this context, the receiving nation is known as an importing country. On the

opposite, the nation that sends goods to another is an exporting country.
Importer would be responsible for making payment on the goods shipped.

Types of Importer
 Direct Importers
 They buy the goods directly from foreign manufacturers without the
involvement of any intermediaries
 They handle all aspects of the importing process themselves

 Indirect Exporters
 They buy the goods from a foreign country through an intermediary.
 They rely on third parties or intermediaries to facilitate the importation
process

3. THE FREIGHT FORWARDER

A freight forwarder is an organization or a person that plans the movement of
cargo on behalf of a consignee or shipper.
It is also the responsibility of the freight forwarder to prepare all export and
shipping documentation on behalf of the exporter and to present the documents
to an international bank for collection. Additionally, they can provide specialized
services including distribution, warehousing, and door-to-door delivery.
They play a crucial role in international trade by ensuring the efficient
movement of goods and compliance with shipping regulations.

Types of Freight Forwarder

 Air Freight Forwarders
 They focus on the transportation of goods via air
 They are one of the fastest forwarders, making it ideal for cargoes of
small dimensions, high value, time-sensitive or perishable.
 Air freight forwarders typically have established relationships with
airlines, allowing them to negotiate affordable rates and secure priority
space for their clients’ shipments. In addition, they manage every facet
of air freight operation, such as paperwork, customs clearance, and
delivery to the intended location.

 Sea Freight Forwarders

 They focus on the transportation of goods via ocean vessels.
 They ship large quantities of goods over long distances
 Sea freight forwarders are responsible for negotiating contracts with
ocean carriers, booking cargo space, and arranging for the loading

Angel Fei I. Garduque

Jessica Rhein E. Salvador
 DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy

and unloading of goods at ports. They also handle all documentation

and customs clearance requirements.

 Land Freight Forwarders

 Also known as road or trucking freight forwarders
 They are specialized in arranging the transportation of goods via
vehicles like trucks or vans
 They are the one who are responsible of the transportation of goods
that are needed to be shipped domestically or within a region
 Road freight forwarders handle all aspects of road transportation,
including route planning, cargo tracking, and delivery to the final
destination.

 Rail Freight Forwarders

 They are specialized in the transportation of goods via rail networks
 They are the one who transport goods over long distances, particularly
for heavy or bulky cargo
 Rail freight forwarders have established relationships with rail carriers,
allowing them to negotiate competitive rates and secure priority space
for their clients’ shipments. They also handle all aspects of rail
logistics, including documentation, customs clearance, and delivery to
the final destination.

 Multimodal Freight Forwarders

 They offer services that involves the use of multiple modes of
transportation, such as sea, air, rail and road
 They coordinate the entire shipping process, from pickup at the point
of origin to delivery at the final destination, using a combination of
transportation modes to optimize cost and efficiency.

4. THE CUSTOMS BROKER

They represent the importer.
On behalf of the buyer, the customs broker is a legal person authorized to
perform the formalities of customs clearance of goods. This includes the payment
of all import taxes and charges, producing documents required, and arranging for
the transport of the goods to the buyer’s facility.
They make sure the customs declaration is correct, duties and taxes are
provided accurately, and payment is received so that goods can transit across
borders smoothly and without disruption.

Angel Fei I. Garduque

Jessica Rhein E. Salvador
 DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy

5. International Banks
International banks are designed to facilitate trade by helping exporters and
importers expedite the flow of documents and payments. It is important that both
the seller's and the buyer's banks have correspondent relationships. This means
that each bank may represent the other in specified transactions.

6. The correspondent relationship.

In effect, the exporter's bank should have power of attorney to act on behalf of
the importer's financial institution. If there is no correspondent relationship, extra
expenses and delays can be expected.

For example, if an importer in Indonesia banks at Standard Bank and an exporter

bank at Citibank in the United States and both insist on using their respective
banks, then Citibank and Standard Bank will act as correspondent banks for one
another for this transaction, assuming they already enjoy such a relationship.

In fact, most multinational banks like Citibank and Standard Bank maintain
correspondent banking affiliations with most major banks throughout the world. It
would nevertheless be more convenient, faster, and more cost effective for the
buyer and seller to agree to use only one of the two banks, as Citibank and
Standard Bank both have banking subsidiaries in both countries.

If a correspondent relationship between the two banks is not possible, either

bank will usually locate a third-party bank with which both original banks have a
correspondent arrangement. Again, this situation should be avoided because it
increases processing costs and can create delays.

7. The Common Carrier

The common carrier is the transportation firm that hauls the freight. Goods move
via truck, airfreight, ocean freight, or through any combination of these modes.
Most shipments are now containerized, or bulk/canker shipped. The traditional
break-bulk (less than container load) methods of shipment that prevailed in
earlier generations exist mainly in lesser-developed areas where new materials
management technologies have not yet been introduced.

Individual pieces of equipment, unless they are too heavy or oversize, are
generally shipped by airfreight despite what may appear to be a higher initial
cost. Greater speed and safety make airfreight a very attractive alternative to
ocean freight, which often involves time-consuming piggyback transport modes.

Containerized ocean freight shipments are commonly used today when airfreight
is not an option. Slower than airfreight, they offer the advantage of warehouse-to-
warehouse transport under a single freight bill. In addition, many containerization
companies have their own in-house customs brokers and freight forwarders,
which eliminates the need to deal separately with such parties.

Angel Fei I. Garduque

Jessica Rhein E. Salvador
 DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy

8. Insurance

In-transit insurance is rarely legally required, but it makes good business sense
to have goods insured against loss and/or damage while moving from one
country to another. Further, many letters of credit specify that marine insurance
must be obtained and that a certificate of insurance must be furnished along with
other required documents before payment can be made.

The general practice is to insure a shipment from the seller's warehouse to the
buyer's warehouse. Either the exporter or the importer should cover the goods
with adequate insurance. This critical issue is generally resolved during the
negotiation stage of a sale.

Angel Fei I. Garduque

Jessica Rhein E. Salvador