Section C

Question 1

function like “travel agents for cargo,” arranging for transport but not operating their own carriers.

Answer 1

Freight Forwarders

Question 2

FTZ is a geographic area in a country where

Answer 2

duties, tariffs and quotas are delayed and/or avoided and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments. One of the many advantages for importers and manufacturers is that imports can be processed, remarked, and repackaged in an FTZ before going through customs. Therefore, a shipment with potential compliance problems can be brought into compliance in the FTZ before going through customs. No retail trade of any sort is allowed in a free trade zone.

Question 3

Hofstede’s dimensions of culture: long-term orientation

Answer 3

thrift and perseverance, relationships ordered by status and values. Traditions may change and adjust to the times.

Question 4

Hofstede’s dimensions of culture: feminine dimension

Answer 4

balance between work and family life, especially in time

Question 5

Hofstede’s dimensions of culture: short-term orientation

Answer 5

values social traditions and fulfilling social obligations, being respected; expects reciprocation of greetings, favors, gifts - tradiions should be honored and not changed

Question 6

Hofstede’s dimensions of culture: masculine dimension

Answer 6

ambitious, tendency to polarize, preference for speed and size; oreinted toward work and achievement

Question 7

the document that states the value of commodities in a shipment. (It does not include other amounts, such as freight.) It may be required for the letter or credit and by other entities that need to know the value of the goods for insurance or assessment of duties.

Answer 7

Commercial Invoice - a banker consult for information about the value of export-import cargo in connection with a letter of credit

Question 8

When a firm exports a product at a price lower than what it normally sells for in the country where it operates

Answer 8

Dumping

Question 9

includes the product cost plus the cost of logistics, such as warehousing, transportation, and handling fees.

Answer 9

Landed cost

Question 10

companies exporting from the U.S. must file electronic export information online through the Automatic Export System Direct

Answer 10

For exports valued at US$2,500 or more; shipments to Canada are exempt

Question 11

Import duties are generally assessed as a percentage

Answer 11

either the CIF (Cost, Insurance, Freight) or FOB (Free on Board) value.

Question 12

issues a dock certificate to signify that the steamship company has received cargo brought to port by the inland carrier

Answer 12

Ship Agent

Question 13

may be sent to a potential buyer in advance of the actual sale. It may contain the same information as a regular commercial invoice and serve as both a price quote and documentation for the potential buyer to use in securing a letter of credit to finance the purchase. Carefully documenting all costs in the pro forma invoice can help the exporter properly price the product by including hidden costs, such as unforeseen costs arising from risks and human errors.

Answer 13

Pro Forma Commercial Invoice

Question 14

Used in the export-import business than in domestic supply chains. There are simply many more issues to contemplate when you send a product across borders into countries with different rules, different currency, and a different language. And so it can be very cost-effective for a company sending, or receiving, an international shipment to pay out considerable sums in fees or commissions to acquire these services.

Answer 14

intermediary logistics specialists

Question 15

developing innovative new products that meet specific needs and budgets of customers in particular markets using a decentralized, local-market focus.

Answer 15

Reverse innovation …focus of multinational organizations rather than glocalization

Question 16

the interdependence of economies globally that results from the growing volume and variety of international transactions in goods, services, and capital, and also from the spread of new technology

Answer 16

Globalization

Question 17

states that the cargo originated in the exporter’s country and is therefore eligible for the favorable import duty granted to goods originating in that country

Answer 17

Certificate of Origin

Question 18

accompanies goods that are intended to travel in sealed containers across borders, including goods intended only to be admitted temporarily for use in events such as tradeshows?

Answer 18

ATA Carnet

Question 19

Smaller exporters band together in THESE in an effort to qualify for the rate discounts that carriers offer to larger shippers. Before deregulation ocean liners were required to publish their rates. Smaller shippers, seeing the rate schedules, could ask for similar deals. Since deregulation, carriers and the larger shippers have been able to sign confidential rate agreements. In response smaller shippers have formed shipping associations—usually nonprofit organizations—to negotiate with carriers on the same terms as larger shipping firms

Answer 19

Shipping Associations

Question 20

clarify interpretations of shipping terms by outlining exactly who is obligated to take control of, assume the risk, and/or insure goods at a particular point in the shipping process. Although Incoterms are not legally binding, exporters and importers around the world recognize and accept them as the standard terms to use in contracts of carriage (not in contracts of sale).

Answer 20

Incoterms

Question 21

combines small shipments into larger ones to qualify for full-vehicle discounts. Generally this service is provided to fill containers for intermodal shipment, such as turnarounds carrying cargo between an inland warehouse and a port.

Answer 21

Consolidator

Question 22

a standardized form used for all air shipments. Use of one uniform document has reduced processing costs for air shipping and facilitated faster clearing through customs.

Answer 22

air waybill, or airway bill of lading

Question 23

applies to both sea and inland waterway shipments. The other terms listed apply to any mode or combination of modes (not via water) of transport

Answer 23

FOB

Question 24

FTZ attributes

Answer 24

Duties and federal excise taxes are usually deferred, not eliminated, on imports while they are in the FTZ. They will go through customs on the way out of the zone into customs territory. However, technically, if you import goods into an FTZ and then export them, you never pay duties to the country where the FTZ is located. For example, you could import from Mexico into a US-based FTZ. Then you could export those goods to China and not pay duties to the US.

Question 25

buys cargo space on inland carriers to resell to shippers.

Answer 25

An NVOCC (non-vessel operating common carrier)

Question 26

WTO attributes

Answer 26

The WTO pays special attention to providing less-developed nations with better access to world markets for their exportable products. Disputes and complaints by one member nation against another may be submitted for arbitration. Membership in the WTO also means that businesses headquartered in one member nation should be able to open branches in another member nation and be subject to the same rules applying to domestic businesses in that nation, thus gaining access to their markets directly rather than through imports.

Question 27

NVOCCs can be distinguished from forwarders in three ways:

Answer 27

they actually buy and resell space on carriers; they perform the physical work of consolidating, loading, and unloading cargo (using nonunion labor to undercut the rates charged by carriers); and they can handle the freight door to door in many cases. Freight forwarders do not do these tasks, nor provide the labor to do them.

Question 28

perform quite a number of different functions in the course of shepherding goods across international borders: arrange charters or book vessel space; handle payments; quote carrier rates. They also prepare and present documents; obtain insurance; provide translation; trace and expedite shipments; and arrange inland transportation.

Answer 28

Freight Forwarders

Question 29

looks for companies making goods that it wants to buy and resell in a foreign market. Such firms are especially significant in Japan, where they may own steamship lines, warehouses, insurance services, a communications network and a sales force

Answer 29

Export Trading Company (ETC)

Question 30

All shipments intended to cross a border are initiated by

Answer 30

bill of lading (B/L). The B/L constitutes the carrier’s contract and receipt for the goods to be transported.

Question 31

Which of the following firms generally acts as a shipper’s long-term consulting partner, smoothing the way through foreign customs and politics but not buying or selling cargo

Answer 31

Export Trading Company: A common reason to hire an EMC is to acquire representation in a particular market where the EMC has special knowledge and connections. By working with an EMC as a consulting partner, the exporter gains access to current information about the preferences of consumers in that market and about local customs and government regulations.