Sheeh Autos Supplies (SAS) is an automotive dealer specifically for importing German made motors from Germany to America. The company has put in place strict regulations to ensure its day to day activities meets all standards of international laws. SAS has grown through the years to become one of the leading auto dealers in the America. It imports the cars from Daimler AG which is among the leading car manufacturing companies based in Germany, distributes the cars and spare parts to the different sub-dealers within the country. Its head offices are located in New York.
SAS is a trusted company globally by most car auto dealers and the brand users due to its strict adherence to quality and contractual agreements and its ideal location of several warehouses within America. The company works with the various USA companies through contracts that meet international trade regulations in all international business laws that include the banking system, careers and the insurance policies governing the goods being shipped (Moon 2018). SAS annual report basically highlighted the pertinent risk and opportunities that can significantly affect the company’s cash flow, profitability and the financial position in general.
Consignment folio
Brand |
Particular |
Model |
Quantity |
Prices |
Mercedes-Benz |
Car |
AMG- C43 coupe AMG Glee 43 Sprinter 3500 |
10 white & 8 red 15 white 9 black & 10 white |
Each $35,800 Each $47,200 Each $48,350 |
Truck |
X class E class |
8 white 8 white |
Each $98,000 Each $103,500 |
Shipping details
Transportation to take utmost 10 days before reaching the bonded warehouse at the entry port, imports to be in relation to the US Anti-dumping Laws (ADL) which states that there should be a ratio between the domestic pricing and the country of origin’s pricing, (Filippo 2015). In relation to this act evaluators in the mechanical departments deployed ensure that all the autos has the stickers with details of the autos i.e. model, pricing, age, spare parts and VIN number (Vehicle Identification Number).
The company being a registered auto entity must have certification document of each car fixed by the manufacture right from the country of origin, no certification, no entry. According to US National Highway Traffic Safety Administration (NHTSA 2015), except motorbikes, all other vehicles must have their respective certification tag and form HS-7 signed for declaration in accordance to Federal Motor Vehicle Safety Standards (FMVSS).
Country of Origin
Even though Germany and United States enjoys the international trade privileges related with the European Union, Germany through their export regulatory acts and custom tariff, (Germany 2018, p.23), the goods exported should not be in the prohibited export category, such category often require licensing before leaving the country.
Per the German’s export protocols, article 161 of the exportations should be in accordance with the community monitoring of the European Union and also limited to the domestic regulatory. The German Federal Office of Economics and Export control acts ensures in issuing of authorization of the goods to be exported. German trade regulatory law charges a tax turnover.
Actual products
Each of the imported auto should include a label with details of the product. Specific to the autos, the car/truck model number and name, manufacturing company, VIN, price quotations, date of manufacturing. The price quotations are generally to determine the taxation rate by the country of destination and based on EU regulatory, the manufacturing dates are used to estimate the age the limitation acts of the imported autos to minimise dumping, (Filippo 2015). The following show the label tag fixed in an imported auto.
Sea Route
The shipping process uses the closest and most affordable sea route mostly with an intent to reduce the transportation duration. The geographical view below indicates the most preferable routes used by SES. The preferred option is the direct big ship route:
Alternatively, the Atlantic pacific express route can be used, this passes via the Dutch harbour. Company evaluation and shipping
Since SAS is adamantly interested in complete transportation without any incur loss, the company is categorical in deciding the best and most reliable shipping agency. During packaging, the company have two alternatives i.e. Containerisation or by use of Ro/Ro vessel. Due to affordability of the roll on/roll of (Ro/Ro) channel since it, the company opts to use it compared to Containerisation. Via the Ro/Ro channel, thousands of cars and trucks are safely fastened and transported at once (UNDP practice series 2008).Based on the reliability, efficiency, insurances offered, transportations cost and loading off-loading services, the company identified the following shipping agencies as the most preferred:
The Laeisz logistics group founded in 1824 is among the leading transportation companies in German in the logistics and maritime sector with approximately over 1500 ship crew. According to Reinnard 2013, the company offers several services ranging from Ro/Ro ferry services, containerisation, car and truck transit, bulk transit, research, and gas tanker channels. Their operational activities serve the Europe side, Canada port, North and South America, Italy, France and Africa etc. In 2008, the company was accredited with certificate of excellence in Germany thus relating to their continuity in service delivery in the marine sector, (F. Laeisz 2012).
Perhaps in relation to their certified excellence in performance, the company is considered ideal in terms of safety, service quality, adherence to the environmental regulation and policies as well as security issuing. They have underlying principles that guides their operation, (Reinnard, 2013). The cost estimation with this company have been approximated to be 12,720 Euros inclusive of road inland transportation to the warehousing destination off the destination port. This might take a working days of up to 9 days from documentations, port of departure to arrival port.
Hapang-Lloyd is among the historical maritime companies initiated in the mid 19C century in Germany and today they are among the renowned global shipping companies and most reliable maritime services. Averagely, it provides approximately over 120 global liner networks across all the continents with fixed modern ship at the ports (Hapag-Lloyd AG 2009). Due to the reliability, commitment to serve and their compliance, it received more than 5 awards in 2017 with different awarding organization with FCL global carrier of the year 2017 being the latest award, (Hapag-Lloyd).
Its latest improvement on the Hapag-Llyod, Atlantic Loop 5 (AL5) schedule to increase reliability greatly influenced SAS Company to consider doing business with them. The AL5 schedule specifically targeted improvement of the direct shipping within North Europe to North America, extension of the Europe port harbour and extension of coverage to Seattle & Vancouver. The cost evaluation with Hapag-Lloyd is approximately 8,582 Euros exclusive of inland transportation services with a span of 10 working days
Horizon line Auto started in 1992 based in Houston. They provide the seller-buyer interface in relation to maritime services at affordable charging rates across the globe, their maritime agents are located at every port oversees to ensure service delivery to the potential clients. Among their trustable service include the tracking mechanism by any client but only through their consent, clients details have to be included while in the tracking system otherwise there no access. Other services they offers include the general cargo, vehicle and household goods, governmental cargo projects and hazardous materials etc.
Destinations include Canada, Europe, Middle East, Australia, japan etc. Estimated evaluation cost is approximately 10, 875 Euros thus cheaper to SAS company, inland transportations are also available however exclusive on the cost. A total of 9 working days are set up for the cargo delivery to the country.
Matson Company Inc. initiated in 1882 with its current head location in Hawaii with general merchandising as its initial start-up. Today, Matson is among the recognised companies in the maritime sector mostly in the innovation of Automatic Equipment Identification (AEI) during transportation and GPS tracker, (Jeff Hull/Matson 2010). For better delivery, the company has partnered with Matson integrated logistics, Matson global distribution services Inc. and Matson terminal Inc.
In the report according to (Deloitte and Touche 2012), services offered include ocean freight, containerization and vessel information i.e. Ro/Ro service. The three partner are assigned to deal with international services, intermediary services and destination point services respectively. Estimated evaluation is approximately 12,780 Euros inclusive of all the three services within a duration of utmost 8 working days.
This cost evaluation puts Hapag Lloyd Rotterdam as the most appropriate company to partner with SAS during shipping. Despite the company taking longer days compared to other competitors examined, its charging rates are more favourable thus the days indifferences seems to be negligible.
Actual export Process.
Documentation being an integral part of any importation, it must be in relation to the US custom boarder and protection (CBP) Upon successful passage of the documentations, the buyer is thus expected to make prior arrangements to inform about his or her importation concerning the exact dates of arrivals. On the arrival day, the pro-forma invoice should be issued to the CBP official. The documents includes all the details of the product and not limited to the charges, taxes and payment details involved during the process. The exporter need to be affirmed that the goods are accepted by the importing country through the invoice, (Edgar Pagaza 2013).Documentations and international trade
1). Bill of Lading (B/L) or Shipping document
This the document issued by the shipping company upon the completion of cargo loading. It entails the consignee (receiver) name and details, shipper name, country of origin, product weight, both port of loading & port of receiving, product description and measurements, (Hapag-Llyod). This document is further only issued to the consignee upon settlement of payment otherwise to be held by the agent. The document serve as the contract evidence between the involved parties and signed upon full agreement.Fig 5. B/L
2). Commercial Invoice
Often issued by the seller indicating the details of the car, The VIN number, incoterms, loading port, estimated car value, and the weight in tonnes. The invoice must be include the stamp by the country of origin. The Custom export declaration document will not be used since it’s only for countries outside the European Union according the German government, (Custom union, 2010). In case there are some changes in the Pro-forma invoice, the commercial invoice should be updated to match them. When SPC accepts the terms in Pro-forma, it confirms that the conditions in the commercial invoice are the same before taking the order (Jansson 2012).
3). Certificate of origin
Indicates the country of Origin as well as the destination country (Gozde 2013). It is essential mostly in cases where duty rates and treaty arrangements are crucial factors. For instance, the duty rates charged on cargo from Germany is different from the rates charged on load originating from on the Arab Emirates.
4). Packing List:
The packing list is a document which mainly determines the count on each piece at the customs entry. The list gives the weight. Quantity and descriptions of goods. This document helps the customs broker of SAS Company to have precise information that he can be used to determine if the products packed are of correct weight, quantity, and description as provided in the commercial invoice (Martincus, Carballo and Graziano 2015).
5). Freight Invoice:
Freight invoice is a document stating clearly the Cost incurred in transportation of goods, and it is of two types. It can either be collected in the destination or prepaid in the place of origin before shipping the products. Whereas the collect kind of cargo, payment is formed at the destination after the shipment is shipped. SAS majorly use collect freight invoice (Gozde 2013).
International commercial terms (Incoterms)
Free on Board (FOB). It is the mandate and responsibility of the seller to deliver, load to the port and customs clearance based on country of originality after which other associated risks are upon the importer inclusive of transportation.
Cost & Freight (CFR). Goods clearance at the port of country of origin are done by the seller after which across the ship rails the buyer takes over other responsibility and risks including custom duty and offloading etc.
ExWorks (EXW). The seller delivers the goods up to the door step (Country) of the buyer but the buyer is mandated to all the charges and risk associated, these charges are exclusive of loadings.
Cost, Insurance & Freight (CIF). Here, the exporter is responsible of all the duties and payments including both at the port of export and port of import. However, this Incoterms is based on insurance and in case of any complain the experienced by the buyer after delivery he/she has to contact the seller.
Letter of Credit (LOC)
Are assurance by a commercial bank in the place of a buyer that expense will be fully paid to the manufacturer as long as the terms and conditions agreed on by the two parties have been met (Menuka 2017). SAS pays a bank to offer this service. LOC is a useful tool because it makes it possible for SPC to work with global auto manufacturers who may not be in a position to its credit information. In relation to this, SAS collaborates with Barclays bank, and it issues the LOC per the USA exporting company considering the request of the applicant of the letter of credit. According to UCP 600, a Letter of Credit can be made available through Payments, acceptance by a Drawee bank, Usance credit and negotiation.
Marine insurance
The insurance cover for the freight during shipping. In truck /car transportation, the insurance full cover is often approximated to be 1.5% in relation to the car/truck value. However, the insurance is not liable to petty damages caused on the trucks/cars during transportation. On the Ro/Ro cover, the marine insurance only compensate upon the occurrence of the total loose, minor damages are out of their compensation schedules. The SAS Company considers the ferry insurance cover as the most appropriate.
Disputes and Resolution
Basically in most international trades, there are chances of a breach to the terms and condition. In case of such scenario, both the importing country and exporting country often uphold to equality as per the terms and condition. In an attempt to restore international trade peace, the two parties, through the international financial settlement under the European commission proposes the best ways of restoring equality and dispute settlement.
Negotiation being among the dispute resolution criteria, chances of rejecting the negotiator’s panel outcomes are very high despite it being an ideal resolution aspect. In case where either of the parties are unsatisfied, trade barriers and other restriction might be the consequences. Secondly, the court through the enacted international laws might be used, in 2015 there was proposal by the EU (EU 2015) to formulate investment court system (ICS) responsible for dispute settlement. The SAS Company prefers the use of international court in case of disputes.
Conclusion
In conclusion, SAS company being a an auto dealer with an intent of reaching the international standards, is passionately striving towards maintaining and adhering to the terms of trade of the latter so as not to fall a victim of trade law ignorance. The availability of EU have been quite significant due to its underlying mechanism of reducing trade barriers which has been associated with positive impact within Europe. Consequently the good market relation between the Germany and US nations has been boosted inclusive of the availability of maritime services and insurances.
References
Custom union. (2010). Customs code committee import /export formalities section. European Commission directorate-general taxation and customs union, pp.1-44. Available at https://ec.europa.eu/ecip/documents/procedures/export_exit_guidelines_en.pdf
Deloitte, & Touche. (2012). Annual report
Drobetz, W., Gounopoulos, D., Merikas, A. and Schröder, H., 2013. Capital structure decisions of globally-listed shipping companies. Transportation Research Part E: Logistics and Transportation Review, 52, pp.49-76
Edgar Pagaza. (2013). Customs and Border Protection Applicant Guide.
European Commission. (2015). Dispute settlement – Trade – European Commission Laeisz, G. M. (2012). Corporate information of the Laeisz group. Fleet News, (15th), pp.
Filippo, C. D. (2015). Antidumping and Countervailing Duty Handbook (4th Ed.). Washington DC.
Germany. (2018). Part 4: Export prohibitions and restrictions. In Custom tariffs (pp. 21-46).
Hapag-Lloyd AG. (2009). the history of the Hapag-Lloyd AG
Hapag-Lloyd. (n.d.). Our Awards – Hapag-Lloyd
Hapag-Llyod. (n.d.). Bill of Lading.
Hornok, C. and Koren, M., 2015. Per-shipment costs and the lumpiness of international trade. Review of Economics and Statistics, 97(2), pp.525-530.
Jansson, J., 2012. Liner shipping economics. Springer Science & Business Media.
Jeff Hull/Matson. (2010). Matson Navigation Company, Inc. Alexender & Baldwin Inc,
Menuka, B., 2017. Business Management Ideas. [Online]
Moon, B.E., 2018. Dilemmas of international trade. Routledge
NHTSA. (2018). Vehicle Importation Guidance. [Online].
Reinnard, T. (2013). F. Laeisz Group.
UNDP practice series. (2008). Shipping and incoterms.
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