Warrant Group provides some insight for first time exporters.
Know your international market
You know what the price of your product is in the UK but what’s it worth overseas? Make sure you thoroughly research your market from its geography to price points. For example, UK food and drink is very marketable at the moment and attracts a high value especially in the Far East and East Asia.
Also, are you selling into a country where the population is very port centric like Australia or do you have long inward transits to consider?
The UK Trade & Industry and the International Chamber of Commerce are great sources of data for assessing whether a product is suitable for a specific market.
Costs: understanding incoterms
Incoterms are all about establishing with the buyer who is responsible for the transit costs. Getting your incoterms agreed is very important because these costs need to be covered within your unit cost.
While no one wants to pay the transit costs, everyone wants to be in control of them. If you, as the supplier, is in control of your supply chain and become a savvy exporter, then you can negotiate better prices which increases competitiveness, profits and the prospect of future orders.
What is the best way of getting the cargo to the customer? There’s a lot to consider here and it’s not just based on cost. Firstly consider your destination, how quickly the customer needs it and cash flow. If paying higher transportation costs means getting paid quicker then that might be important. Alternatively, don’t think that slow transit is negative; it actually offers a period of free storage which could be useful. And of course, think smartly and use a blend of the two.
Clearly establishing how and when you are paid is important – is it 50 per cent up front and 50 per cent on arrival? A Letter of Credit is a safe way of getting paid, enabling payment to be released through a third party once delivery has taken place.
Seek professional expertise to ensure all the correct documentation is in place to avoid delays. As a new exporter, the chances of your consignment being checked is high.
It is the supplier’s responsibility to ensure goods are packed correctly and if not, they are likely to be returned. Many countries have special packing requirements, for example in Australia all pallets have to be heat treated and certified.
Hazardous goods need to be pre-approved by the carrier so they can be stored safely in transit.