Transcript Document

Global Selling & Sourcing
Jack Cameron
Global Selling & Sourcing
• Today’s world is flatter than ever
• Major manufacturers have shifted to
lower-cost off shore production
• Many North American companies are
now focused globally for sales growth
• Distributors are also looking off-shore
• Slow boat from China replaced by ships
larger and faster than aircraft carriers
Global Selling & Sourcing
Global Selling & Sourcing
Global Selling & Sourcing
Global Selling & Sourcing
• Facilitators:
Jeff Brekke, The Gates Corporation
President – North America Automotive Aftermarket
Jeff Stauffer, Affinia Group Inc.
Senior Vice President, Global Group Marketing
Global Selling
Jeff Brekke
CAN WE GROW BY SELLING
OUR PRODUTS GLOBALLY?
•
IS GROWTH OUT THERE?
•
RISKS/CHALLENGES
•
EDUCATE/RESEARCH
•
WHERE DO YOU NEED HELP?
Dubai
Shanghai
Vehicles on the Road
2007
North America
283.0M
West Europe
219.3M
East Europe
59.1M
Africa/Middle East
40.3M
Far East/Pacific
179.3M
Latin America
42.0M
2007
= 823.0M
2012 est = 910.0M
Source: Freedonia Group
Worldwide
Auto Aftermarket Demand
North America
$38.1B
West Europe
$49.7B
East Europe
$4.3B
Africa/Middle East
$7.3B
Far East/Pacific
$36.2B
Latin America
$8.4B
2007
= $144.0B
2012 est = $182.3B
$175 Aftermarket/Vehicle
Source: Freedonia Group
Global Aftermarket Development
Embryonic
Early Growth
High Growth
Mature
Japan
Singapore
Hong Kong
Korea
Taiwan
India
Philippines
Indonesia
Malaysia
CHINA
Source: ©2004 Technomic International
China’s Automotive Aftermarket April 2004
Australia
Global Selling Risks/Challenges
Political
• Stable Government
• Economic Reform Actions
• Trust of Foreign Investment
• Member of World Trade Organization (WTO)
Sydney
Economic
• Infrastructure
• Over Reliance on Certain Sectors
• Stream of Investment
• Social Spending
Hong Kong
Global Selling Risks/Challenges
Operational Security
• Level of Government Bureaucracy
• Skilled Labor Force
• Corruption
• Terrorist Activity
Legal/Tax/Banking
• Intellectual Property/Branding
• Tax and Tariff Considerations
• Foreign Exchange
• Development of Banking System
Moscow
Bangkok
Worldwide Risk Summary
CIS
Middle East & North Africa
Asia Pacific
Latin American & Caribbean
Europe
North America
Source: 2-1-08
Worldwide Risk Summary
Brazil
China
India
Russia
Source: 2-1-08
Research/Education
Cultural Awareness
• Social Norms and Practices
• Language Barriers/Communication Styles
• Perceptions and Understanding of
Americans
• History of the People and their Government
Research/Education
Understanding the Market
• Professional Service Provider Versus
Do-It-Yourself
• Level of Used Vehicle Market
• Car Parc Breakdown
• Marketing and Buying Groups
• Heavy Duty, Agricultural and Adjacent
Market Opportunities
Haoqing 6360E1
Palio 1.3EDX
Source: ©2004 Technomic International
Siena 15 EDX
Saima
Baili HFJ6330A
China’s Automotive Aftermarket April 2004
Zhongxing (Chiye)
Help/Resources
Export Sales
Opportunities and
Challenges
Norman Young
Overview
1.
2.
3.
4.
5.
Multiple considerations when
approaching a global selling strategy
Leadership Complexities
Organizational Design
Corporate Strategy
Line of Business
Technology
Written
Word
A
Values
Leadership Complexity
Localized
A
Cust
Needs
Geography
A
Diversity
N. America
Complexity
Intersections
•“Mechanical”
Car
Parc
Culture
Foot
Print
Target
Market
Technology
Language
•Car Parc
•Foot-Print
•Product
•Support
•Leadership:
•Values
•Diversity
•Customers
A
Leadership Complexity
Multi Regional
Written
Word
Values
B
Global
Complexity
Intersections
Cust
Needs
Geography
Diversity
A
Car
Parc
B
Culture
Foot
Print
Target
Market
B
Technology
Language
B
B
•“Mechanical”
•Car Parc
•Markets
•Footprint
•Geography
•Written Word
•Leadership:
•Culture
•Language
Organizational Complexity
• Added Complexity:
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Matrixed Organizations
Multiple Bosses
Legal Subsidiaries
Legacy Mergers
Regulatory Issues
Financial Models
Standards
Behavior
Externally or Internally
Sourced Sales Team
• Considerations:
– Relationships with
Customers
– Metric Control
– Delineation of Activities
• Level 1 to Level 4
– Value to the Company
– Difficulty of the
business Value
Proposition
– Management Alignment
Corporate Strategy
Analyzing the Corporate Strategy
5 Tests of Corporate Strategy
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Vision

Goals & Objectives
Role of corporate office Structure,
Systems, and Procedures
Source: “Corporate Strategy: A Conceptual Framework”, Collis
& Montgomery, HBS, 1991

Vision
 As sense of purpose
 Sustainable
Internal Consistency
 Goals & objective that support strategy
 Structure, systems and procedures that fit
External Environment
 Barrier to entry
 Global competition
 Scale of market and competitors
Builds and Exploits Corporate Advantage
 Understand what the corporate advantage is an invests
Feasibility
 Does the market appear favorable
 Share holders & stakeholders commitment
 Reasonable?
Line of Business
PRIMARY NEED
REQUIRED NEEDS
Comply with
Government
Regulations
Competitive
Price
II, VI
VII
Reliability
I, II, II, IV, V
I. Creative &
Customized
Products
6, 11, 12, 22, 37
Dependent
Relationship
Fast Response
I, II, III, IV, V
IV, VI, VII
SECONDARY NEED
JIT
Delivery
III, IV, VI, VII
One-Stop
Shopping
I, III, IV, V
Quality
ACTIVITY FITS
II, IV
II. High Quality
Products
1, 6, 7, 12, 15, 18,
24, 25, 26, 27, 28,
29, 31, 32, 33, 34,
37, 39
III.Wide
Geographic
Manufacturing
Coverage
IV. Superior
Customer
Satisfaction
3, 5, 8, 13, 14,
22, 23
2, 3, 4, 10, 16, 21,
35, 36, 38
ACTIVITIES
V. Printing
Expertise
VI. Effective
Business
Information
System
12,15, 17, 18,
24, 25, 26, 27,
28, 29, 31, 32,
33, 34
4, 10, 16,
19, 20, 21,
30, 35, 36,
38
VII. Centralized
Back-office
Operations
3, 9, 11, 40,
41, 42, 43,
44
1. ISO 9002 Certification 2. Delivery Options 3. Customer Service Representatives 4. Computerized Phone System 5. Regional Sales Teams
6. Computer Label Design 7. Supplier Alliances 8. Regional Manufacturing Plants
9. Sourcing 10. Quote Processing 11. Web Design
12. Computer Graphics Sample Design 13. Local Pricing Grids 14. Regional Pricing Grids 15. Multiple Option Print Machines 16. Web Site
17. Low Cost Manufacturing
18. Skilled Tradespeople 19. Home-grown Software 20. Integrated Off-the-Shelf Software 21. Web
Ordering
22. Marketing Promotions 23. Marketing Programs 24. Computerized Color Control 25. Digital Proofs 26. UV / Flexo Printing
27. Films 28. Embossing 29. Hot Foil Stamping 30. On-line UPC Verification 31. Electron Beam Printing 32. Waterless Offset 33. Prepress Design & Fit 34. Digital Plate-making Technology 35. Computerized Job Tracking 36. Web Tracking Availability 37. Art Development
38. CRM System 39. Quality Inspection
40. Estimating 41. Project Management 42. Materials Management 43. Accounting 44.
Cost Management
Tools of Leadership
Technology
Communication – Communication - Communication
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Remote Meetings (With Video)
Sharing and Collaboration Tools
“Webinar” Sessions
Management Tools
Organizing Globally
• “Every company has two organizational
structures: the formal one is written on
the charts, the other is the everyday
relationships of the men and women in
the organization”
• Harold Green
Global Sourcing
Jeff Stauffer
Global Sourcing
EVERYBODY’S DOIN’ IT!
Least Likely People to Quote
“Globalization is not something we can hold
off or turn off…it is the economic equivalent
of a force of nature -- like wind or water.”
-Bill Clinton
“It has been said that arguing against
globalization is like arguing against the laws
of gravity.”
-Kofi Annan
Global Sourcing
“The Good, The Bad, And The Ugly”
Global Sourcing
“BEEN THERE, DONE THAT”
Global Sourcing Topics
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Sourcing/Relationship Selection Process
Intellectual Property Protection
Quality Control Logistics
Labeling and Country of Origin Issues
Customs Compliance and Currency
Valuations
• “Customer Acceptance” of LCC Products
• Data and Communication Exchange
Global Sourcing
It’s a REALITY!!
Global Sourcing
DISTINGUISHED PANEL
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Terry Shively: Affinia Group
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Bob Moore: Bob Moore & Partners
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VP Strategic Market Development
“Skunk Works Captain”
Owner
“Chief Cook, Bottle Washer, etc.
Jim Ryan: Gates Corporation
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Manager International Logistics Compliance and Supply Chain
Security
“I Think You Get the Picture….”
Global Sourcing
Affinia Group Inc.
Agenda:
The Lure of Easy Money
China’s Automotive Exports
“Bumps” in the Road
“Guanxi”
Do the Math
Needs – Wants – Must Haves
The Lure of Easy Money
•Mexico
•China
•Turkey
•India
•Taiwan
•Indonesia
•Vietnam
•Poland
•Ukraine
•Thailand
How Quickly Things Can Change!
• Dog Food
• Tooth Paste
• Children’s
Toys
• Tires
• Baby Bibs
• Seafood
• Lawn Trimmers
• Remote-Control
Airplanes
• Tower Fans
What Do Customers Think Now?
The World Really is Flat!
• Technology
• Communication
• Process
• Capabilities
• Data
• Engineering
“Think Globally - Act Locally”
“Bumps” in the Road
• Supplier Selection Process & SQA
• Product Quality and Consistency
• Intellectual Property Protection
• Liability
Finding a Reliable Supplier
• U.S. – China Business Council
• American Chambers of Commerce “In Country”
• Dept. of Commerce Foreign Commercial
Service
• “Qualifying an Off Shore Supplier Should Be
No Different Than Doing So in North America”
Product Quality
& Consistency
Hire a Qualified Inspection Service to Do
“On-Site” Inspections….Before Exporting
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How Do They Help?
Quality Issues
Intellectual Property Protection
Alertness to Potential Problems
Production/Process Documentation
Liability
• Liability Insurance Not Always
Available
• “You” Can Be Held Responsible
• “Importer of Record”
• Know the Laws and Protect
Yourself
Quanxi
• It’s All About Relationships
• Involves Interaction at All Levels
• Develops “Some” Trust
• Leads to a Firm Agreement
LCC Sourcing
LCC Sourcing
Consider:
• Freight / Container / Losses
• Handling / Forwarding
• Duties / Taxes / Draw Backs
• Increased Inventory Investment
• Manufacturing Technology
“Cheaper Isn’t Always Cheaper”
Successful LCC Sourcing
• 35% Savings
• Alternative Approved “Global”
Sources
• Create “Global Sourcing Experts”
• Do your Homework!
Needs – Wants – Must Haves
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Alibaba.com
Guanxi
QOS/Testing/Engineering
Certifications
Agreement
Contract & Contract Review
Take Aways……
• Establish Relationships
• Do the Math
• Have Alternative Sources
• Have, Hire or Develop the
Expertise
Global Sourcing & Selling
Bob Moore
President
Bob Moore & Partners
Globalization - Lessons Learned
• Globalization is here, now & having a
significant impact
• Globalization is much more than just
“cheap Chinese imports” (LCC products)
• It is altering aftermarket roles & attitudes
• Brand marketers must react
Technicians Accept
• The Old Paradigm
– “Made in America” mattered
• The New Paradigm
– Country of origin doesn’t matter
– Auto Aftermarket is a global business
– Quality parts can & do come from anywhere
– Driven by the attitudes of customers
Techs On “Country of Origin”
• Understand automotive OE business is global &
the aftermarket parts industry is following suit
• Believe that where a product is made is of no
consequence
• See no inferred links between domestically
manufactured product & quality; quality can
come from ANY nation
• Techs consider themselves “good Americans” &
prefer to buy domestic, but…
Expanding Disorigination
How Globalization is Altering
Aftermarket Roles
Market Influence – 1970’s
Manufacturers created
product/brand value and
chose distribution
Installers
had preferred
High
brands & sought out suppliers
who carried them
Moderate
Low
Installer
Reseller
Manufacturer
Market Influence– 2000’s
High
Moderate
Low
Resellers assert their control on the
buying relationship with installers &
dictate what brands are offered
Installer
Reseller
Manufacturer
The Triple Threat to Manufacturers
• Intellectual Property Hijackers
– LCC “pirating” part numbers, UPC, images & more
– Channel partners “borrowing” manufacturers data
• Proprietary eCats
– Take “ownership” of manufacturer data
– Marginally protect data – Accept data from pirates
• Erosion of National Brands
– Reseller increasing their ability to disoriginate
– Marginalizing manufacturers brand relationships with
service technicians
What is “Disorigination?”
• Derived from the 1990’s internet term,
“disintermediate” meaning to take steps out of
the middle of the supply chain
• Disoriginate refers to the WD going around the
traditional originator (the manufacturer) and
purchasing directly from an LCC source
• In the “disorigination” model, the WD must
assume some of the services traditionally
provided by the supplier
Altered Roles – Branding
• OPP Private Brands:
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NAPA
CARQUEST
Advance
O’Reilly
Autozone
CSK
Alliance
Everyone Else
• Premium Private Brands:
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NAPA
CARQUEST
Advance
Autozone
Altered Roles – Ancillary
Services
• National Redistribution:
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NAPA
CARQUEST
Advance
Autozone
Federated
ADN
Pronto
• Training/Shop Systems
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NAPA
CARQUEST
Advance
O’Reilly
Autozone
Pronto
Altered Roles – Data Services
• Cataloging:
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NAPA
CARQUEST
Advance
Autozone
CSK
• PIM Solutions:
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NAPA
CARQUEST
Advance
Autozone
O’Reilly
If Resellers Are Able To:
– LCC Source
– Have Viable Brands (both OPP& premium)
– Manage Product Information
– Operate their own Electronic Catalog
– Package & Distribute Products
– Conduct Training & Marketing Programs
What exactly do they need with you?
Manufacturers Must React to
Protect their Brands in this
New Global Reality
Four Levels of Adaptation
1.
2.
3.
4.
Denial
Coping
Adapting
Creating
Not at Level 3 or above?
You’re not in the game.
Adapting
• Get Global – there is no alternative
• Leverage what you have that LCC’s don’t:
– Application engineering, R&D, Quality
Assurance, SAE testing, etc.
– Data services, Cataloging, Product
Management, Category Management
– Long Grey Tail & New Numbers
Adapting
• Must Defend your Intellectual Property
– Part numbers
– UPCs
– Digitally watermarked images
– Traplines
– Aggressive legal responses with violators
– Address issue of eCats taking “ownership” of
your data
Creating
• Look for Collaboration Opportunities
– Supply Chain – both up & down
• Compete in “Time”
– Technology tools - faster, smarter, better
• CPFR, Data Sync, Category Management, VMI
• Requires accurate, standardized data
– Speed to market
• New parts for new apps
• Catalog and product data
Creating
• Look past “channel partners” & develop
branding relationships with “customers”
– Installer “apps”
• New pricing initiatives
– Scalable, saleable services
Let’s Talk About It
Bob Moore
President
Bob Moore & Partners
Trade Compliance and
Security in Global Sourcing
Jim Ryan, Gates Corporation
Overview of topics
• Customs Compliance and Reasonable Care
• Security Issues (“9-11”)
• Country of Origin Marking
• Labeling – To be “Made in.. or Assembled in..”
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Customs Valuation
Tariff Classification
Special Programs and Free Trade Agreements
Recordkeeping
INCOTERMS not UCC Terms
Customs Compliance
Reasonable Care - Pre- Customs “Mod Act”
• Importer was responsible for providing
accurate information to Customs
– Commercial description of goods
– Price paid plus add-ons and deductions
• Customs was responsible for
classification and appraisement (valuation)
of merchandise
Customs Compliance
Reasonable
Care - Post-Customs “MOD ACT”
• Importer is now responsible for the
classification and valuation of merchandise
and providing other information needed by
Customs
• Importer must use “reasonable care” in
carrying out these responsibilities
Reasonable Care
• Sources of information and guidance
– Importer (internal communications)
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Purchase orders (description and terms)
Legal department (royalties)
Shipping (freight terms)
Accounting (insurance, payments, adjustments,
rebates)
• Advertising (samples, “free” materials)
• Research and development (assists)
Reasonable Care
• Sources of information and guidance
– Manufacturer or supplier
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Invoice
Credits or adjustments
Substitution of goods or sources
Lab analysis
– Experts
• Attorney
• Customs broker/consultant
• Documented advice
Reasonable Care
• Sources of information - U.S. Government
– Customs rulings
– Publications
– Official websites
– Customs offices and attachés
Reasonable Care
Important Sources of Information
U.S. Customs and Boarder Protection
- www.cbp.gov
Bureau of Alcohol, Tobacco & Firearms - www.atf.treas.gov
U.S. International Trade Commission
- www.usitc.gov
U.S. Trade Representative
- www.ustr.gov
U.S. Patent & Trademark Office
- www.uspto.gov
Department of Commerce
- www.doc.gov
Bureau of Industry and Security
- www.bis.gov
Reasonable Care
• General Rule
– ALL merchandise brought into the U.S., regardless
of the method of importation (mail, baggage,
courier, cargo) AND whether dutiable or not,
whether for personal use, repair, sample, gift or
sale, MUST be declared to Customs.
• ie – samples in your suitcase
– The type of declaration will vary with the type of
importation and may involve an oral or written
“declaration” or a formal or informal “entry.”
Penalties and Enforcement
• Civil Penalties
– 19 U.S.C. § 1497 – Failure to declare
• Forfeiture of undeclared item PLUS penalty equal to its value
– 19 U.S.C. § 1592 – Fraud & Negligence
• Entry with false data
– 19 U.S.C. § 1509(g) Recordkeeping violations
• If the failure to produce a required entry record was willful, a
penalty up to $100,000 or 75% of the value, whichever is less
may be imposed.
– 18 U.S.C. § 545
• Knowing and willful violations with intent to defraud the U.S.
– Smuggling and Clandestine importation
• 5 years and/or $250,000 for individuals, $500,000 for companies
and organizations
Planning Ahead - Security Issues
“9-11” Issues
– Secure supply chain
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C-TPAT participation
• Canada has PIP
• Mexico – BASC or C-TPAT
• Europe has AEO
Benefits
• Prevents disasters
• Helps companies develop better practices
Other security elements - Advance cargo information
• CSI
• 24 Hour rule
Country of Origin Marking
• U.S. Customs Marking Requirements
– How do we mark and declare goods
– Unless Customs grants an exception, all
foreign-origin merchandise imported into the
U.S. must be marked with its country of origin
– Marking must be conspicuous, legible and
permanent so that the consumer can make
informed decisions
Country of Origin Marking
• How to determine origin
– Traditional “Substantial Transformation” Test
• Simple assembly usually does not change origin
• In order for further processing to affect the origin of
the article it must result in an article with a new name,
character or use
• In other words, assembly in the US does not
guarantee a US origin
– FTA origin rules and NAFTA Marking Rules
Labeling
• FTC Origin Marking Requirements – post import
restrictions for goods sold in the U.S.
– “Made in USA”
• Unqualified Claims
– “All or Virtually All” U.S. content standard
– California statutes can take precedent over federal rules
• Qualified Claims
– “Made in USA with U.S. and Foreign Parts” or “Assembled in
USA”
Why is Marking and Labeling Important?
A MAJOR CAMERA EQUIPMENT
MANUFACTURER AGREED TO PAY
$20 MILLION
FOR VIOLATING COUNTRY OF ORIGIN
MARKING LAW!!
www.usdoj.gov/opa/1999/November/537civ.htm
One Part of Valuation - Assists
• An “assist” is any of the following if supplied directly
or indirectly, and free or at reduced cost, by the buyer
for use in connection with the production or sale for
export to the U.S.:
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Materials incorporated in the imported product
Tools, dies, molds, etc. used in production
Merchandise consumed in production
Engineering, development, artwork, design work, and
plans and sketches that are undertaken outside the U.S.
that are necessary for the production of the imported
merchandise
Assists
“Court Fines Ford Motor Company Over $20
million For Failure To Declare Assists And
Supplemental Payments”
Newsletter from the Law Offices Of George R. Tuttle
August 1, 2005
http://www.tuttlelaw.com/newsletters/court_fines_ford_motor_co.html
Classification
• Harmonized Commodity Description and Coding
System (the “Harmonized System” or the “HS”)
• Intended to be a modern structure for product
classification common to all participating
countries
• Developed in the early 1970’s by the major
trading countries
Special Programs and
Free Trade Agreements
• NAFTA
• Generalized System of Preferences (“GSP”)
– renewed in the Trade Act of 2002 until
December 31, 2006, and subsequently
renewed again
• Caribbean Basin Initiative (“CBI”)
• Andean Trade Preference Act (“ATPA”)
– Renewed in the Trade Act of 2002 until
December 31, 2006 with some extended
benefits under the “Andean Trade Promotion
and Drug Eradication Act.”
Special Programs and
Free Trade Agreements
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U.S.-Israel Free Trade Agreement
U.S.-Jordan Free Trade Agreement
Other FTAs
Compact of Free Association
– Marshall Is., F.S. of Micronesia, Palau
• Caribbean Basin Trade Partnership Act
“CBTPA”
• African Growth and Opportunity Act
“AGOA”
Recordkeeping
• “Mod Act” expands importers recordkeeping
responsibilities
• Establishes list of records that must be kept -“the (a)(1)(A) list” -- and produced when
demanded by U.S. Customs
– If the failure to produce an (a)(1)(A) record was willful,
a penalty up to $100,000 or 75% of the value,
whichever is less may be imposed.
– If the failure was negligent, a penalty of $10,000 or
40% of value, whichever is less may be imposed.
Recordkeeping
• In addition to those documents identified on
the (a)(1)(A) list are those documents held in
the ordinary course of business.
• Offices which typically produce and maintain such
documents include accounting, purchasing,
manufacturing, engineering, research and
development, shipping and receiving, and
logistics
• Standard time frame is 5 years – can be 10 years
INCOTERMS not UCC Terms
Know your trading terms
• Who is paying for origin fees
• Is the shipper making money on freight terms
• Does your company need marine insurance
• Know the terms
• EXW, FCA, FOB, CFR, CPT, DDU, DDP, etc
• Know when title passes
– INCOTERMS do not specify title passing
Q&A
Discussion