CFR Trade Term in Business Practice

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CFR stands for Cost and Freight. This is one of trade terms can seller or buyer use on their international trade. This trade term means seller arranges the carriage, and the risk transfer when the goods were loaded onto the ship. The cost from seller to port destination under seller's responsibility.

So that buyer has to arrange the Insurance. But, it depends on buyer definitely, if they do not worry about the risk of the goods during the shipment, maybe they will not think the insurance.

Both CIF and CFR are well know in business nature, means when a seller or buyer talk about CIF or CFR they usually know the term and condition.

So that don't worry to take CFR term.

If you ask me about "which one is popular between CFR and C&F ?" My answer is C&F is the word most common in business practice. My boss also knows about C&F well, and doesn't for CFR instead.

On billing from a courier company stated C&F instead of CFR. So that I think the C&F is more famous than CFR here. But, in fact both C&F and CFR have the same term and condition.

Which one you will use on your business, CFR or C&F?

They Forgot CIF Term

CIF, or Cost, Insurance, Freight, is one of trade terms, both buyer and seller should understand correctly from the beginning when they issue a sales contract.

Sometimes sellers don't fulfill their obligation if consignee or buyer doesn't reminds them. For example, especially for trade that doesn't cover by L/C, let say the payment is T/T before shipment, they sometimes forget to provide an Insurance Certificate to cover the goods until port destination. Whereas the shipment term is CIF, means shipper or exporter should provide Insurance Certificate.

We have to remind shipper each time they make a booking for shipment to the forwarder. If we, buyers forget to remind them, they only give or send Invoice, Packing list, Bill of Lading. In Indonesia, then consignees have to issue the Insurance Certificate as one of required documents for customs process. Yes, it happened, or maybe a lot cases happened such.

CIF is one of trade terms where all the costs including Insurance and Freight cost from port of loading until port of discharge are for seller or shipper obligation. I don't understand well why they commonly forget the Insurance Certificate.

For you maybe as a seller, I hope you can keep in mind all the trade terms meaning and condition. For especially CIF, if you will not issue an Insurance Certificate, please take the C&F trade term to sales contract instead.    

  

If You Bring Clothes to Indonesia During Your Holiday

If you are one of who want to visit to Indonesia, to Bali, for instance, or to another place in Indonesia. May be you want bringing some clothes as a gift. I would like to inform you that there is certain rule for clothes that is brought by passenger. Trade Ministry of Indonesia has launched a regulation related to.

This regulation has been applied since early November 2015 and will be ended on end of 2018. On these rule they mentioned the list product that should takes special treatment when shipper will ship it to Indonesia, bring by visitor. The regulation is under no. 18/M-DAG/10/2015

They called these product list Certain Product.

One of the goods is clothes, such as sweater. Like I have posted Export Clothes to Indonesia Free License?, this is using the same regulation with. I want to inform you regarding the exception for the clothes that you bring during your traveling to Indonesia. I meant, if you want to take some apparels to Indonesia and avoiding the certain treatment, then the maximum value of  all the apparels you bring is $1000.

It doesn't matter to the quantity you want to bring. You have to concern to the total value of the clothes.

Basically, clothes is needed inspection at origin prior to ship to Indonesia.
 
Be aware! Many rules updated in Indonesia, you have to check your shipment or your package before sending or bring to Indonesia.

The next posting, I want to tell about "how to ship or bring an electronic goods to Indonesia".  

Export Paper to Indonesia, Provide Those Data Prior to Shipment

Since April, this year, Indonesia has implemented a regulation for forest product. Importer should has the license of any product that is made from wood, such as paper. I have informed on previous porting, Import Permit For Goods That Made From Paper or Wood.

And now, I want to inform you all data need to provide by shipper and manufacturer who want to send or export a product that is made from wood or paper. I publish this posting especially for shipper or manufacturer from the overseas.

Herewith I mention all the data needs:

Shipper
Name :
Address:
City:
Telephone No.:
Fax No.:
Email Address:
Company Registry No., date, and the copy document
Country:
Port of Loading:

Manufacturer.
Name :
Address:
City:
Telephone No.:
Fax No.:
Email Address:
Company Registry no., date, and the copy document.
Country:


Raw Material Details:
1. Species, Name and Scientific Name.White Pine, for instance.
2. Originally Harvest or Country of Origin.
3. Certificate from certificate organization, concerning forest. Chose one of the four. Between FSC, PEF, CSA, or SFI. Those certificates should be in valid condition in both number and date. Please send to importer the copy of the certificate.

All those data are a must to provide to get the import permit license in Indonesia.

Export Clothes to Indonesia Free License?

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Clothes is one of a commodities that needs a certain license when it's sent or exported to Indonesia. You have to be careful. Because there is an obligation to inspect the goods prior to shipment by a certain inspector company. The inspection result is one of supporting documents must the importer has.

If the consignee or importer doesn't has the inspection report when the clothes came already in Indonesian port or airport, the two choices way has consignee decide. The first choice is return the clothes to the origin or shipper. The process will takes one month to spends, so that do not hope the goods can be returned as soon as possible. The returning charge will be invoiced to shipper or importer based on agreement.

The second choice is damage the clothes by customs. Of course, the clothes will be missing, as if no shipment of the clothes.

The Quantity To be Allowed Without Inspection.

The maximum quantity will be allowed by customs is only 10 pieces each shipment or each Air Waybill. If we have some clothes which is the quantity more than 10, then we have to split into several times of shipment.

May be this way will fits to sample of the clothes. For bulk production, the best way is inspect the goods before shipment to Indonesia.

This kind of inspection has to be arranged by consignee or importer and the process is fully of system.

So that please communicate with your consignee.    

      

Indonesia Continuing Safeguard for Cotton Yarn

As my posting regarding safeguard for cotton other than sewing thread, Indonesia has applied a safeguard regulation since June 11, 2011 until three years later or on June 5, 2014. Now, this year is the last year for this safeguard rule.

However, in fact, according to investigation from government during applying the rule, the importation of cotton yarn other than sewing thread still in increasing trend, which taking detrimental impact to the companies in Indonesia. If the additional duty of safeguard to be removed, the disadvantages impact will be more increased.

Because of that reason, Government necessary to take the rule to be continued. The last result Government issued the new rule of safeguard for cotton yarn other than sewing thread. This rule has been issued on May 28, 2014.

The new amount of additional duty excluding the common duty is different from the last rule. Here the difference of additional duty between the old and new regulation:

On  2011 to 2014:

The first year: IDR 40,687/KGM.

The second year: IDR 38,144/KGM.

The third year: IDR 35,601/KGM.

On  2014 to 2017:

The first year: IDR 28,065/KGM.

The second year: IDR 25,522/KGM.

The third year: IDR 22,979/KGM.

This continuing of this new regulation actually pushed by many companies from Indonesia, which having the yarn cotton product. They worry to competitor from abroad, after they watched even though the additional duty has been applied to importation of cotton yarn, but the increase importation volume still can't be avoided. 

For us, this new regulation, of course, will effect to our price offer to buyer, and buyer will always search on finding the lowest price they can.

Export to Japan : Outword Manifest 24 Hours Before Vessel Depature

This article I create for those who are starting export any goods to Japan. According to the mandatory implementation of Japan 24 Hours Rule, all shipper must send the actual shipping details or final data of shipping booking in advance to forwarder. In previous time before this rule implemented, we, shipper in Indonesia could provided the final data of our shipment to Japan on Friday for vessel departure on Sunday or Monday, but after the mandatory date of this rule, we can't do that.

Because of this rule, of course, shippers should provide the final data of their shipment to Japan in advance.

Here are some cut-off times for data  manifest I got from forwarder for direct shipment to Japanese port: 

Shipping line OOCL for destination Tokyo, Nagoya, Yokkaichi, and Kobe, which the shipment date on Wednesday, the cut-off final data of shipment is on Saturday or three days before sailing date.

Shipping line Wan Hai, for the same destination with OOCL, the cut-off for final data of shipment is on Monday at ten o'clock in the morning or two days before departure.

Shipping line MOL, the cut-off almost same with Wan Hai, this only two hours later then Wan Hai.

K'Line has two times departures in a week, one on Sunday and the second on Friday. For vessel departure on Sunday, the final data can be received until Wednesday at twelve o'clock in the morning. And for the Friday's vessel departure, the cut-off will be on Monday at twelve o'clock.

The last, for NYK shipping line has also two vessel departures in a week, Sunday and Friday. For the vessel departure on Monday, the final data for outward manifest limited until Thursday at fourteen o'clock. And for the vessel departure on Friday, the closing of final data for manifest is on Monday at twelve o'clock.  

This condition will brings to the higher cost production in our factory. To meet this new rule, production in a factory must add the production times or might be taking overtime, or a factory will open the additional worker.

Export to Japan Using IJEPA

When this posting I created, Japan was becoming the major destination of our export. Formerly , our buyer in France is the biggest amount of our export. But after the economic crisis happened in Europe Union, their orders was being dropped to the lowest that have ever happened. Moreover some buyers had been gone away and putted their order to some companies in another countries with the lower price given to them. I hope Japan will be better in amount and the price.

Fortunately, our government and Japan have an agreement to make both parties getting the benefits in trade international from each other. This agreement form is EPA or Economic Partnership Agreement between Japan and Indonesia. For import from Indonesia importer has to provide a document with the name is IJEPA ( Indonesia - Japan Economic Partnership ) and for Import from from Japan the document should be provide is JIEPA ( Japan - Indonesia Economic Partnership Agreement). This agreement will gives the reduction to any duties. To get those opportunities or facility both parties have to comply to some rules of origin as agreed. But not all goods will be covered by this agreement.   

Using this facility both importers Japan and Indonesia will get the reduction for duty till zero. Of course this will makes both parties to get this opportunity for their exports and imports. This will naturally push importer to increase their orders, because the price that will be offered to their customer will be lower and lower. For exporter will get more orders from their buyer and of course with the better in price offer.

In getting this facility the rule of origin has to be followed. The rule of origin involves origin criterion, direct consignment, and documentary evidence.

Origin criterion has product specific rules, those are change in HS code which has three change segmentation , value added in 40 percent or more, specific process, and basic principle or 40 percent value added.  

Change in HS code consists change in chapter ( CC ) , this change in the first two number from the raw material. The second is change in tariff heading ( CTH ), this change is in the first four number of the raw material. And the last is change in tariff sub heading ( CTSH ) or in the first six number from the row material. For instance as follow :

Change in chapter ( CC ) : 
Material : 2603 is HS code for Copper ores.
Goods : 7401 Cooper mattes.

Change in tariff heading ( CTH ) :  
Material : 7402 is HS code for Unrefined copper.
Goods : 7403 Refined copper.

Change in tariff sub heading ( CTSH ) :  
Material : 7403.11. is HS code for Cathodes and section of cathodes .
Goods : 7403.12 Wire - bars.

The requirement for getting IJEPA preference:

• The goods is under cover IJEPA agreement.
• Comply to preference criterion.
• Comply to transport criterion.

Criterion preference of IJEPA:

1. The goods has not an import contents. The letter "A" is written on IJEPA form.
2. The goods is produced by one of the two parties which the materials are got from one of Indonesia or Japan. The letter "B" will be given to the IJEPA form.
3. The goods can fulfill the requirements of PSR or product specific rule. The letter "C" will be stated on IJEPA form.

Safeguard Measures for Cotton Yarn Importation.

In Indonesia, safeguard measures for cotton yarn other than sewing thread do by giving additional duty to the yarn imported from another country beside commonly duty applied to. This regulations release after the importation value and quantity highly increase in big amount and this taking effect to the industries in Indonesia were disturbed in the market share. In the other hand the yarn industries report to Trade Ministry concerning this condition and ask them to apply the additional duty for safeguard measures.

This condition is dilemma. The additional duty of the safeguard is a benefit for yarn industries, of course, this will taking effect to the market share for another country will decrease and the opportunity will comes to local yarn industries. Contrary, for manufacturer industry that its row material is decided by importing from another country, this is will be an additional production charges that will inflict to the higher price to offer to buyer. In the other hand buyer will reconsider to compare with others suppliers in different countries if the price is too higher for their customers.  

The rule has been applied since 6^Th in June 2011 and the validity of this rule will apply for three years onward since this rule is stated. Indonesia's government stated IDR 40,687 for each one kilogram to be an additional duty beside the common one on the first year. For the second year they stated IDR 38,144 for each kilogram, and the last year IDR 35.601 per kilogram to be going applied. I think those additional charges are big enough to limit the importation of the cotton yarn.

However, the additional duty of the safeguard didn't apply to all country in the word. There are 105 counties stated to be exception from this additional duty, those are Albania, Angola, Antigua and Barbuda,  Argentina, Armenia, Bahrain, Bangladesh, Barbados, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Egypt, El Salvador, Fiji, Former Yugoslav Republic of Macedonia, Gabon, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti, Honduras, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Chile, Colombia, Congo, Costa Rica, Cote d'Ivoire, Croatia, Cuba, Democratic Republic of Congo, Djibouti, Dominica, Dominican Republic, Ecuador, Jamaica, Jordan, Kenya, Korea - Republic of, Kuwait, Kirghiz Republic, Lesotho, Macao - China, Madagascar, Malawi, Maldives, Mali, Mauritania, Mauritius, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, Niger, Solomon Islands, South Africa, Sri Lanka, Suriname, Swaziland, Nigeria, Oman, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Rwanda, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saudi Arabia, Sierra Leone, Tanzania, The Gambia, Togo, Tonga, Trinidad and Tobago, Tunisia, Uganda, Ukraine, United Arab Emirates, Uruguay, Venezuela, Vietnam, Zambia, and Zimbabwe.

The HS codes of the goods that are applied additional duty of safeguard measures consisting from number 5205.11.0000 till 5206.45.0000. When the goods came to Indonesia and importer submitted the importation data then the customs will automatically checked by their system according to data submitted by importer to customs system. System will check the HS code of the goods whether there are any regulations to be applied to or not. The goods under HS code range number from 5205.11.0000 to 5206.45.0000 will be checked by customs according to status given by system, the status system of the goods usually in yellow line or red line. In case yellow line is given to an importation the customs are checking the shipping documents only, then finally after additional duty paid up the customs will approve the goods to be shipped out to shipper and the customs process was finished. In order to the customs given the red line, this means that the goods should be checked in both checking documents and physically checking, then finally the goods are allowed to be picked up based on customs approval.

For especially manufacturer in Indonesia that has an order which is the materials would be imported from another country has to check the HS code and the rules to be applied to, for example this additional duty for safeguard measures rule. So that all charges of the importation can be added to the price offer to their buyer, this way will protects their benefits to be lost. 

Additional duty for safeguard is not only apply to the cotton yarn other than sewing thread, this is also has applied to some commodities for instance cotton fabric, so that the importer should consults or check with customs regarding any goods will be imported, or at least they have to check to the web provided by customs.