INTERNATIONAL

TRANSPORT AND
INSURANCE

Members:
● Yaelita Acosta Chavarri
● Kimberly Diaz Huaman
● Jesus Hernandez Tena
● Ryuji Aiso Acuna

International Trade Finance I

Documents
● Provides outstanding information:
Instructions to the carrier.
Amount of goods.
Specific cares about the goods.

● Export-Import risk management is based on documentary systems that translate

the right, costs and responsibilities of the export process into documentary
equivalents.

The complementary
documents The shipment of
exchanges physical goods

● Documentary system developed through transactions referred to as

“documentary sales”, and it is just as importance for the exporter to provide the
correct documents as it is for it to provide the correct goods.
 International
trade contract
● Administrative document
between the exporter and the

●
importer
Specific details about an
Bill of Lading
international sale
○ Place of delivery ● Contract between the exporter
○ Total value and the shipping company
○ Agreed Incoterm ● Objective: verify that the carrier
○ Payment mode
has receive the goods
○ Mode of transport
● Elaborated by the shipping
company
 Insurance policy
● Allows to cover the potential risk Payment-related
occurring to the good during
transportation
documents
● Indicates the type and amount of This documents are based according to
insurance coverage for a particular the Incoterms that the parties have
selected.
shipment of goods. The most common documents are:
● Contains detailed listing of the - Documentary credit:
Most secure payment method
insured objects, mode of transport,
Offer to the export a conditional
origin, destination and the warranty payment guarantee from the
conditions provided by insurers. importer’s bank
- Bill of exchange
Binding agreement by one part to
“It is better to have an insurance and not pay a fixed amount of cash to
need it, than to need it and not have it” another party
 Packing List
● Detailed version of the Commercial
Invoice (without prices).
● Includes:
- The invoice number Customs
- Quantity
goods.
and description of
documentation
- Weight and number of packages ● Some products need specific
(shipping marks). certificates in origin or
● Elaborated: by the exporter and is destination that parties have to
addressed to: cumply to send or receive goods.
- The importer ● Helps to work out the right
- The carrier duties and taxes.
- the customs (origin and ● E.g.: Origin certificate,
destination) Phytosanitary certificate
Costs
Risks
Dangers of the sea: Social and political dangers:

● Sinking ● Political violence (wars,

terrorism, civil strife, etc.)
● Collision
● Malicious damage
● Shipwreck ● Government restrictions
● Fire and interference
● Explosions

Hazards by human interference:

● Robbery
● People’s negligence
RISK IN INTERNATIONAL TRADE
 The different types of events and factors during an
international trade that might make the transactions more
complicated than normal. These risks can not be completely
foreseen by the companies because they are the result of
external events around the world that are out of the
companies control.
Even though international risks are similar to the domestic
ones, it can cause a greater loss in comparison to the domestic
markets.

1. Commercial Risks
● Buyer’s not being able to pay due to financial
limitations.
● Seller’s inability to provide the required quantity of
the goods.
● Lack of knowledge about the foreign market.
2. Transport Risks

In most cases, it is not enough to only use one type of

transport. For example, for deliveries within a country, often
enough to transport the material by road. Now, if it is necessary
to cross the borders of some country and, also, so that it arrives
before, the most normal thing is that different means are
necessary.

● Inherent in the means of transport

● Hazards arising from the nature of the merchandise
● Hazards caused by human interference.

3. Quality Risks
It is the risk to the importer that can go from the absence of total
delivery (which may include receiving boxes filled with anything,
except expected), to receive goods that are not of the quality or in
the specified amount, when many times at least one part has
already been paid.
4. Exchange rate risks
Exchange risk is given when transactions occur in currencies
other than foreign currencies, either in the country itself or
abroad, in such a way that the profitability of the transaction
depends not only on the economic amount received, but also of
the value of the same with respect to the national currency
during a specific time. There are some mechanisms to prevent
this risks
● Close the commercial operation in local currency.
● Use a currency exchange insurance

5. Unforeseen events risks

Unexpected events may also dramatically alter the cost of transport
by raising the price of shipping fuel or by closing off the most
economical routes. For that we can:
● Well drafted contract force majeure provisions can help to
protect the parties.
6. Legal risks
When maintaining commercial relations with the exterior,
it is necessary to analyze the differences in the legal
system and its possible repercussion in the success of the
operation.
For that may be necessary:
● Contractually stipulate that dispute resolution will be by
International commercial arbitration (ICC)

7. Investments risks
The normal commercial risks involved in marketing any product
become magnified in the export context because of the
additional investments required by an export programme.
 EDELSA CASE
RISKS IN AN EXPORT OF CONSUMER PRODUCTS

Edesal is a company specialized in the edition of books and

didactic materials for the learning of Spanish as a foreign
language.
Thanks to its high degree of specialization and quality of its
materials, the company has experienced a high degree of
growth.
However, due to its rapid international expansion, Edesal has
had several collection problems, some supplier defaults, library
delays and training centers.

https://www.globalnegotiator.com/files/casos-practicos-de-financiacion-internacional.pdf
 Investment risk

https://www.financial-ombudsman.org.uk/publications/ombudsman-news/110/110-investment.html