Export Essentials: Export Pricing, Quoting & Terms of Sale

(1)

“

Export Essentials: Export Pricing,

Quoting & Terms of Sale

”

Food Export Association of the Midwest USA® & Food Export USA®_-Northeast

Food Export Marketing Forum September 29th_{, 2010}

(2)

Agenda

Pricing Products for Export

Markets

Building Quotes for Trade Leads

Trade Terms & Terms of Sale

Integrated Export Transaction:

(3)

Part One:

Pricing Products for Export

Markets

(4)

Export Pricing

Variety of methods

Important to determine all components

which make up the final cost of your

goods and who is responsible to pay them

(5)

Costs of Exporting

Product modifications Product modifications

Export documentationExport documentation

PackingPacking

Drayage Drayage

Inland freight Inland freight

Terminal handling Terminal handling

Port to port freightPort to port freight

InsuranceInsurance

Customs clearance Customs clearance

(6)

The List Could Go On

An understanding of

Terms of Sale, or

Incoterms

, helps assess responsibility for

all costs and how they are incorporated

into your cost structure

Costs may vary from country to country

(7)

Control Export Price Escalation

Difference between product price and

landed cost

Build your internal export price and

information on in

-

market costs, you can

develop a

“

landed cost

”

Cost to importer to put the goods in their

(8)

Landed Cost Variables

Nature and size of the product

Destination, mode of transportation

Financing, tariff and non

-

tariff barriers

Service provider fees, handling

Documentation and other factors

(9)

Costs Add to Invoice Value

In most countries tariffs (and taxes) are

applied to the cost of the goods as well as

the cost of freight and insurance to get it

to port

Suppliers who work at controlling price

escalation often benefit from increased

(10)

Expense

Expense DomesticDomestic Example

Example ExampleExampleExport Export

Manufacturing net Manufacturing net Transport (CIF) Transport (CIF)

Tariff (20% CIF Value) Tariff (20% CIF Value) Wholesaler landed cost Wholesaler landed cost Wholesale margin (33%) Wholesale margin (33%) Retailer pays Retailer pays Retailer Margin (50%) Retailer Margin (50%) Retail price Retail price $3.25 $3.25 NA NA NA NA $3.25 $3.25 $1.08 $1.08 $4.33 $4.33 $2.17 $2.17 $6.50 $6.50 $3.25 $3.25 $1.10 $1.10 $0.87 $0.87 $5.22 $5.22 $1.73 $1.73 $6.95 $6.95 $3.48 $3.48 $10.43 $10.43

Example of Export Price

Escalation

(11)

Cost Plus Pricing

Appropriate component of your domestic price Appropriate component of your domestic price

and includes any export related costs

Depends on the agreed terms of sale Depends on the agreed terms of sale

Basic approach without consideration of ultimate Basic approach without consideration of ultimate

selling price in the export market

Some products may not be successful in the Some products may not be successful in the

export market

Price structure is not competitive with local Price structure is not competitive with local

market prices

(12)

Top Down Pricing

Top Down pricing turns the Cost Plus approach Top Down pricing turns the Cost Plus approach

on its head

Starts with pricing of competitive products in the Starts with pricing of competitive products in the

export market

Begins with retail pricing, removes distributor Begins with retail pricing, removes distributor

and importer margins, duties, freight, insurance

etc,

Determine desired price points across different Determine desired price points across different

terms of sale

(13)

Top Down Pricing (cont.)

The Top Down approach helps determine the The Top Down approach helps determine the

margin levels in different markets

Some markets may require reduced margins to Some markets may require reduced margins to

be competitive, other markets may present

opportunities for higher margins

Work with importer or distributor to set the Work with importer or distributor to set the

pricing at a level in which your product will have

the most success

(14)

Differential or Marginal Pricing

Looks at fixed and variable costs in a

business, how firms determine domestic

pricing

Factoring an allowance for increased

export sales, the fixed costs are effectively

(15)

Domestic Differential/Marginal

Pricing

100,000 units sold per year

Fixed Costs: $200,000 per year

Variable Costs: $5 per unit

Total Costs: $700,000

(16)

Domestic + Export

Differential/Marginal Pricing

150,000 units sold per year

Fixed Costs: $200,000 per year

Variable Costs: $5 per unit

Total Costs: $950,000

(17)

Result?

By allowing for increased production to

cater for an export market, your total

costs per unit are reduced

Allowing you to potentially sell in an

export market at a lower price level with

(18)

Part Two:

Building Quotes for Trade

Leads

(19)

“

Charlie Bueno

”

Sauces is in the

Market to Export

Illinois based manufacturer of gourmet Illinois based manufacturer of gourmet

Barbeque sauces in 18oz (510gr) sizes

Involved in promotional activities which have Involved in promotional activities which have

generated some interest from overseas

markets, including requests for quotes

Export prices are Export prices are ““net netnet net”” void of any void of any

domestic overhead

(20)

A Typical Request for

Quotation

Source: Barbeque Sauces (Brazil)

Posted: 06/22/10 | 0610 | 062210 | PD0610| PD062210 Title: Barbeque Sauces (Brazil)

HS Codes: 2103900000 | HS2103900000 | 210390 | HS210390 | 2103 | HS2103 Commod: American Style BBQ Sauces (molho picante)

Quantity: 3000-4000 bottles – Large Size 500 grams minimum Quality: High quality

Package: Standard Delivery: Monthly

Quote: CIF Port of Santos

Contact: Francis Hutt, Import Manager, Churrasco Paradise Tel: +55 (47) 2333-2171

Fax: +55 (47) 2333-8995

E-mail: [email protected]

(21)

Brazilian Churrasco

(22)

Using a Proforma Invoice on

This Quote

The requirements are clearThe requirements are clear

The volume is present The volume is present

The port of destination is availableThe port of destination is available

The port of export needs to be determined The port of export needs to be determined

The load to meet the requirement needs to be The load to meet the requirement needs to be

determined and will lead to the CIF price as well

(23)

Identifying Costs Included in the

Trade Term Selected

Product packed for Product packed for export

export

Loading, blocking Loading, blocking bracing bracing Certifications or Certifications or inspections inspections

Cartage or drayageCartage or drayage

Inland transport Inland transport

Pier delivery Pier delivery

Loading the goods onto Loading the goods onto vessels vessels International International transportation (main transportation (main carriage) carriage)

Freight forwarder fees Freight forwarder fees

Documentation Documentation preparation

preparation

Marine insurance Marine insurance

(24)

Charlie Bueno Needs Some Help

They need the service of an international They need the service of an international

freight forwarding company

They need to get an They need to get an ““LCLLCL”” or less than or less than

container load freight quote

They need to build a CIF price for the buyerThey need to build a CIF price for the buyer

This includes the product, freight, handling This includes the product, freight, handling

and marine cargo insurance

(25)

Freight Forwarders and Export

Pricing

Involved in over 80% of transactions

in international trade

Help with most of the costs for a pro

forma invoice

What pricing is needed based upon

the trade term, the mode of transport,

the destination and service level

(26)

Less

-

_-

than

_than

-

_-

Container

_Container

-

_-

Load

_Load

(LCL) Cargo

When volume and weight are below the When volume and weight are below the

capacity of a container

Generally Generally ““consolidatedconsolidated”” with other smaller with other smaller

shipments into a single container by a freight

forwarder or a Non

forwarder or a Non--VesselVessel--Operating Common Operating Common Carrier (NVOCC)

Carrier (NVOCC)

Forms a FullForms a Full--ContainerContainer--Load (FCL)Load (FCL)

Charges by weight (metric ton) or measure Charges by weight (metric ton) or measure

(cubic meter) whichever is greater

(27)

Palletizing Ocean Cargo

A Unitized, Shrink

A Unitized, Shrink--wrapped Pallet with its Fourwrapped Pallet with its Four Corners Protected

(28)

Container Consolidation

(29)

A Typical Container Ship

(30)

This Shipment

Less than container (LCL) load

Will be consolidated

Origin of shipment is Union IL.

Origin of Bill of lading is Chicago

Port of Export is New York

Destination is Santos Brazil

(31)

Part Three:

Trade Terms & Terms of Sale

(32)

Standardized Trade Terms

Series of abbreviations or acronyms such as Series of abbreviations or acronyms such as

“

“FOBFOB”” which, when followed by a named which, when followed by a named

location, infers the transfer of risk and costs

and the terms of delivery of the shipment

Two sets of terms of sale are used and Two sets of terms of sale are used and

some variants:

The American Foreign Trade Definitions of 1941 The American Foreign Trade Definitions of 1941

International Commercial Terms of Sale, or International Commercial Terms of Sale, or “

(33)

Trade Terms and Cargo

Movement

Cost;Cost; responsibility for the various costs responsibility for the various costs

involved whether prepaid or collect

Control;Control; possesses control (documentary possesses control (documentary

or title) of the goods at any point in the

shipment

Liability;Liability; exposure with an insurable exposure with an insurable

interest if the goods are lost or damaged

Documentation;Documentation; responsibility for responsibility for

arranging specific documentation

(34)

Trade Terms & Transfer of

Title

Don’t address when transfer of title takes

place

Takes place when the parties have agreed

upon it

Number of problems may occur if the

contract does not specify

Include in the contract, the quote and/or

(35)

Which Terms to Use?

Still some confusion about which set should Still some confusion about which set should

be or is being used on a given transaction

Many still using the American Definitions, as Many still using the American Definitions, as

well as older Incoterms, although trade

experts advise against it

Many unaware of the changes in Many unaware of the changes in

international trade terms that took place in

the year 2000

The Incoterms have been updated again in The Incoterms have been updated again in

2010, which could further complicate

matters

(36)

American Foreign Trade

Definitions

–

Nine in Total

EX (Point of Origin) The seller agrees

to quote a price at the point of origin

““FOB Union IllinoisFOB Union Illinois””

FOB Named Inland Carrier Point

•

• ““FOB Container Freight Station, Chicago FOB Container Freight Station, Chicago

Illinois, dock receipt signed by carrier

(37)

American Foreign Trade

Definitions (Cont.)

•

FOB Named Inland Carrier at Port of

Export

•

• ““FOB Chicago OFOB Chicago O’’Hare AirportHare Airport” ” would be would be

an example, with the origin actually

having been Union IL.

•

Free Along Side at Port of Export

•

(38)

American Foreign Trade

Definitions (Cont.)

•

FOB Vessel Named Port of Export

•

• ““FOB Vessel Port of new YorkFOB Vessel Port of new York””

•

• Most buyers use this when they request Most buyers use this when they request

“

“FOBFOB” ” but unless they name a port after but unless they name a port after it and you are working on container size

it and you are working on container size

shipments you would need clarification

shipments you would need clarification •

• This also matches the only Incoterm to This also matches the only Incoterm to

use

(39)

American Foreign Trade

Definitions (Cont.)

•

FOB Named Inland Point at

Destination

•

• ““FOB TorontoFOB Toronto” ” would be an example of would be an example of

this term, and is commonly used by

buyers there (easier than most)

•

Ex Dock at Named Port of Import

•

• ““Ex Dock Port of SantosEx Dock Port of Santos””

•

(40)

American Foreign Trade

Definitions (Cont.)

Cost & Freight Port of DestinationCost & Freight Port of Destination

““C&F Port of Santos BrazilC&F Port of Santos Brazil””

Some importers use the older term Some importers use the older term ““CNFCNF”” for for this as well

this as well

Cost Insurance & Freight Port of Destination Cost Insurance & Freight Port of Destination

““CIF Port of Santos BrazilCIF Port of Santos Brazil””

(41)

Incoterms 2000

Published by the International Chamber of Published by the International Chamber of

Commerce

Incoterms 2010 has just been released Incoterms 2010 has just been released

earlier in September

earlier in September www.iccwbo.orgwww.iccwbo.org

In effect January 1In effect January 1stst 2011 2011

Designed to create more certainty between Designed to create more certainty between

parties regarding the transfer of costs and

assumption of loss and risk

(42)

Incoterms 2000

Incoterms are divided into four main

components

Origin terms or Origin terms or ““EE”” terms terms

Pre main carriage terms or Pre main carriage terms or ““FF”” terms terms

Main carriage terms or Main carriage terms or ““CC”” terms terms

Post main carriage terms or Post main carriage terms or ““DD”” terms terms

(43)

Origin Terms:

“

_“

E

_E

”

_”

Terms

_Terms

Ex works (fob factory, mill etc.)Ex works (fob factory, mill etc.)

The buyer picks us the goods at the sellerThe buyer picks us the goods at the seller’’s facility s facility and delivery and risk transfers there

and delivery and risk transfers there

All charges are All charges are ““collectcollect””

Used for all modes of transport Used for all modes of transport

AES/EEI should be a buyer responsibility as this is AES/EEI should be a buyer responsibility as this is “

“routedrouted””

This term should not be used when the buyer cannot This term should not be used when the buyer cannot carrier out the export formalities directly or indirectly

(44)

Pre Main Carriage Terms:

“

F

”

Terms

FCA FCA -- ““Free CarrierFree Carrier””

Oriented toward ocean containerization or air Oriented toward ocean containerization or air

freight

freight –– ““FCA ORDFCA ORD””

Exporter delivers goods to carrier that importer Exporter delivers goods to carrier that importer

selects,

Responsibility shifts from exporter when goods Responsibility shifts from exporter when goods

are delivered to carrier

are delivered to carrier’’s vehicle, either at s vehicle, either at exporter

(45)

Pre

-

_-

Main Carriage Ocean

_{Main Carriage Ocean}

Incoterms

FAS: FAS: ““Free Along ShipFree Along Ship””

Exporter brings goods to portExporter brings goods to port

At port, importer takes responsibility for At port, importer takes responsibility for

goods

FOB: FOB: ““Free on BoardFree on Board”” Port of DeparturePort of Departure

Exporter responsible for goods until they Exporter responsible for goods until they

are on the ship, then importer is

responsible

(46)

Main Carriage Terms

CFRCFR-- ““cost & freightcost & freight”” port of destination*port of destination*

CPTCPT-- ““carriage paid tocarriage paid to”” port of destinationport of destination

CIFCIF-- ““cost, insurance & freightcost, insurance & freight”” port of port of

destination*

CIPCIP-- ““carriage & insurance paidcarriage & insurance paid”” named named

place

*Designed for non*Designed for non--containerized maritime and containerized maritime and inland waterway only (bulk)

(47)

Post Main Carriage Terms:

“

D

”

Terms

Bulk Ocean Term:

Bulk Ocean Term: DES

DES ““Delivered ex ShipDelivered ex Ship””

Exporter responsible for Exporter responsible for

goods (usually bulk goods (usually bulk

commodities) until importer commodities) until importer gets them at port of

gets them at port of destination

destination DEQ

DEQ ““Delivered ex QuayDelivered ex Quay””

Usually bulk commodities Usually bulk commodities

for which exporter pays for for which exporter pays for ship unloading

ship unloading

Non

Non--Bulk Ocean & OtherBulk Ocean & Other Term:

Term:

DDU DDU ““Delivered Duty UnpaidDelivered Duty Unpaid””

Exporter performs most Exporter performs most

tasks in shipment except

unloading costs

DDP DDP ““Delivered Duty PaidDelivered Duty Paid””

Exporter pays for Exporter pays for

everything in the shipment

–

(48)

Land Incoterm:

DAF

Main Carriage is

“

domestic

”

“

Delivered at Frontier

”

Most exports to Mexico from the USA

Transfer of responsibility from exporter to

importer is at city named in Incoterm

(49)

Incoterms 2010

Implementation for January 2011 Implementation for January 2011

Clarifications on transport mode Clarifications on transport mode

Fewer in number Fewer in number

Domestic use (no more Domestic use (no more ““FOBFOB””))

UCC eliminated shipping terms in 2004 UCC eliminated shipping terms in 2004

Includes new cargo security and marine cargo Includes new cargo security and marine cargo

insurance clauses

Now officially called Now officially called ““RulesRules””

(50)

RULES FOR ANY MODE OR MODES

OF TRANSPORT

EXW

Ex works

FCA

Free carrier

CPT

Carriage paid to

CIP

Carriage and insurance paid to

DAT

Delivered at terminal

DAP

Delivered at

place

(51)

RULES FOR SEA AND INLAND

WATERWAY TRANSPORT

FAS

Free alongside ship

FOB

Free on board

CFR

Cost and freight

(52)

Now Based on Departure and

Arrival

Group E: Departure

EXW EXW

Group F: Main Carriage Unpaid

FCA, FAS, FOB FCA, FAS, FOB

Group C: Main Carriage Paid

CPT, CIP, CFR, CIF CPT, CIP, CFR, CIF

Group D: Arrival

(53)

Part Four:

Integrated Export Transaction For

“

(54)

Product Details

1260 ct 1260 ct –– Charlie Bueno Original BBQ Sauce Charlie Bueno Original BBQ Sauce

1260 ct 1260 ct –– Charlie Bueno Sweet Wine Sauce Charlie Bueno Sweet Wine Sauce

1260 ct 1260 ct –– Charlie Bueno Ring of Fire SauceCharlie Bueno Ring of Fire Sauce

EXW export packed EXW export packed -- $2.38 per bottle $2.38 per bottle

12 bottle per case 12 bottle per case -- $28.56 per case $28.56 per case

105 cases per pallet 105 cases per pallet -- $2998.80 per pallet$2998.80 per pallet

(55)

Charlie Bueno BBQ Sauce @ $2.38 per

bottle from Union IL. to Santos Brazil

315 cases on 3 heat treated pallets w/certificate315 cases on 3 heat treated pallets w/certificate

Gross weight 7249 lbs. Gross weight 7249 lbs.

Chargeable weight 3288.12 kgsChargeable weight 3288.12 kgs

Pallets total 193.33 cubic feet Pallets total 193.33 cubic feet

5.4745 cubic meters: 5.4745 cubic meters: ““W/MW/M’’ pricing pricing

(56)

Formulas to Know for

Containers

Dry

’

20 = 1172 Cubic Feet/33.18 Cubic

Meters

This shipment is 193 cuft/5.47m

(57)

Export Quotation from Freight

Forwarder

Service

Service DescriptionDescription Rate Rate Total Total

Ocean

Freight

Freight New York to Santos 5.4745m (based on measure not weight) New York to Santos 5.4745m (based on measure not weight) $123.00 $123.00 $673.39 $673.39

Inland

Drayage

Drayage Transport from Union IL. Via Chicago to New York Transport from Union IL. Via Chicago to New York $465.00$465.00 $465.00$465.00

Inland

Fuel

Fuel “Inland Drayage (BAF) “Inland Drayage (BAF) Bunker FuelBunker Fuel” ” surcharge for surcharge for 15% 15% $69.75 $69.75

Export

Handling

Handling Bill of lading preparation and assembly of export documents Bill of lading preparation and assembly of export documents $95.00$95.00 $95.00$95.00

Courier

Service

(58)

Export Quotation from Freight

Forwarder (cont.)

Service

Service DescriptionDescription Rate Rate Total Total AES

AES Exporter Electronic Information Exporter Electronic Information (EEI) filed in Automated Export (EEI) filed in Automated Export System (AES) System (AES) $25.00 $25.00 $25.00 $25.00 Security Security Fee

Fee Cfee per B/L Cfee per B/L --TPAT and warehouse security TPAT and warehouse security $12.50$12.50 $12.50 $12.50

Certificate

of Origin

of Origin Chamber of Commerce seal on general use form required for Chamber of Commerce seal on general use form required for Brazil Brazil $25.00 $25.00 $25.00 $25.00 Total CFR Total CFR Santos

Santos Cost & Freight value for insurance to be applied for CIF price Cost & Freight value for insurance to be applied for CIF price Add all Add all costs costs $1410.64$1410.64

Total CIF

Santos

(59)

Determining the Value to Be Insured

EXW Invoice value EXW Invoice value $ 8996.40$ 8996.40

Ocean Freight Ocean Freight $ 673.39 $ 673.39

Inland drayage/fuel Inland drayage/fuel $ 534.75 $ 534.75

Handling/DocumentationHandling/Documentation $ 202.50 $ 202.50

Total CFR/CPT SantosTotal CFR/CPT Santos $ 10,407.04 $ 10,407.04

Add 10% Add 10% $ 11,447.74 $ 11,447.74

Insurance rate Insurance rate $ 0.56 per $100$ 0.56 per $100

Insurance value Insurance value $ 11,447.74 x .0056$ 11,447.74 x .0056

Insurance premium Insurance premium $ 64.10$ 64.10

(60)

Sometimes things do go

Wrong

(61)

Total Door to Port Charges

““All InAll In”” @ $1474.74@ $1474.74

Divide by 3780 = .39 per bottle Divide by 3780 = .39 per bottle

$2.38 add .39 = $2.77 per bottle $2.38 add .39 = $2.77 per bottle

Excludes duties, taxes, customs clearance Excludes duties, taxes, customs clearance

and brokerage, port fees, delivery and

margins

(62)

Shipper: Charlie Bueno BBQ Sauces Shipper: Charlie Bueno BBQ Sauces Baker Drum Way

Baker Drum Way Union IL. 60118 Union IL. 60118

Consignee: Churrasco Paradise Consignee: Churrasco Paradise Francis Hutt Import Manager Francis Hutt Import Manager Rua Santa Justina, 352

Rua Santa Justina, 352--80 andar80 andar Sao Paulo, 04545

Sao Paulo, 04545--041 BRAZIL041 BRAZIL BILL TO: CONSIGNEE

BILL TO: CONSIGNEE

FORWARDING AGENT: EXPORT TECH FORWARDING AGENT: EXPORT TECH’’S S VIA: OCEAN FREIGHT

VIA: OCEAN FREIGHT

COUNTRY OF ORIGIN: USA COUNTRY OF ORIGIN: USA

PRO FORMA

P.O. DATE: June 29 2010

P.O. NO.: 062910

INVOICE DATE: June 30 2010

INVOICE NO.: Pro Forma

063010

TERMS OF SHIPMENT: TERMS OF SHIPMENT: CIF SANTOS BRAZIL CIF SANTOS BRAZIL

ALL DOOR TO PORT FEES ALL DOOR TO PORT FEES PREPAID BY SHIPPER PREPAID BY SHIPPER MARKS: CHURRSASCO MARKS: CHURRSASCO - 1 - 1 Charlie Bueno BBQ Sauces

(63)

PRO FORMA (Cont.)

QUANTITY

QUANTITY UNIT UNIT PRICE

PRICE DESCRIPTION OF GOODSDESCRIPTION OF GOODS TOTAL TOTAL PRICEPRICE

105 Cases 105 Cases 105 Cases 105 Cases 105 Cases 105 Cases $28.56 $28.56 $28.56 $28.56 $28.56 $28.56 Bueno

Bueno’’s Original BBQ Sauce 12 ct. per case s Original BBQ Sauce 12 ct. per case Bueno

Bueno’’s Sweet Wine Sauce 12 ct. per case s Sweet Wine Sauce 12 ct. per case Bueno

Bueno’’s Ring of Fire Sauce 12 ct. per case s Ring of Fire Sauce 12 ct. per case

Total Dimensions: 3 pallets each 193.33 Cu. Ft.

(5.4745 Cu. Meters.) Total Gross Weight: 7249 Lbs

(3288.12kg)

Total EXW Union IL. w/packing

Inland Drayage/Bunker (IL./NY.)

Documentation and Forwarding Fees

Ocean Freight via New York Port

Total CFR Port of Santos

Insurance @ CFR + 10% @.0056 per $100

Total CIF Port of Santos

$2,998.80 $2,998.80 $2998.80 $2998.80 $2998.80 $2998.80 $8996.40 $8996.40 $534.75 $534.75 $202.50 $202.50 $673.39 $673.39 $10407.04 $10407.04 $64.10 $64.10 $10471.14 $10471.14

Thank You for Your Interest in Bueno

(64)

Landed Cost Estimate for Importer

Value

Value DescriptionDescription Rate Rate Total Total

EXW EXW Origin Origin Price Price

315 cases of BBQ sauces packed 315 cases of BBQ sauces packed for export from Union Illinois

for export from Union Illinois $28.56 $28.56 $8996.40 $8996.40

Freight &

Handling

Handling Inland drayage, bunker, ocean freight documentation & handling Inland drayage, bunker, ocean freight documentation & handling Total Total $1410.64$1410.64

Insurance

Insurance CFR +10% = $11,447.74 @ CFR +10% = $11,447.74 @ .0056 per $100

.0056 per $100 .56 per .56 per $100$100 $64.10 $64.10

CIF Price

of Product

of Product Cost Insurance & Freight Santos Cost Insurance & Freight Santos Total Total $10,471.14$10,471.14

Import

Tax (Duty)

(65)

Landed Cost Estimate for Importer

(cont.)

Value

Import

License

License License fee required of imports, obtained by importer License fee required of imports, obtained by importer $75.00 $75.00 75.00 75.00

AFRRM

AFRRM Merchant Marine Tax based on Merchant Marine Tax based on freight and handling charges

freight and handling charges 25% 25% $352.66$352.66

Port

Handling

Handling Port Authority, Customs Agent Syndicate and Port Tariff Port Authority, Customs Agent Syndicate and Port Tariff surcharge fees surcharge fees Varies Varies $487.73 $487.73 Customs Customs Broker Fee

Broker Fee Customs clearance and filing of entry for importer paying fees Customs clearance and filing of entry for importer paying fees $275.00 $275.00 $275.00 $275.00

Delivery

Delivery Local transport from Santos to Local transport from Santos to Sao Paulo

(66)

Landed Cost Estimate for Importer

(cont.)

Value

Container

Unloading

Unloading Devanning, demurrage, container positioning $500 per 20Devanning, demurrage, container positioning $500 per 20’’ 16.4% 16.4% 82.00 82.00

Local

Insurance

Insurance Insurance from arrival to final destination Insurance from arrival to final destination $180.00$180.00 $180.00$180.00

Labeling

adhesives

adhesives Original labeling not required, applying stickers to bottles Original labeling not required, applying stickers to bottles $50.00 $50.00 $50.00$50.00

PIS/Pasep

Tax

Tax Formation of Public Workers Wealth Programs on CIF + Duty Formation of Public Workers Wealth Programs on CIF + Duty 1.65% 1.65% $246.52 $246.52

COFINS

Tax

Tax Contribution for the Financing of Social Security on Duty + Import Contribution for the Financing of Social Security on Duty + Import License Fee

License Fee

7.6%

(67)

Landed Cost Estimate for Importer

(cont.)

Value

Added Tax

Added Tax Tax on CIF + Duty + PIS + COFINS Taxes Tax on CIF + Duty + PIS + COFINS Taxes 18% 18% $2781.15 $2781.15

Landed

Cost

Cost CIF price plus all additional duties, taxes and fees CIF price plus all additional duties, taxes and fees VariesVaries $17,453.23$17,453.23

Importers

Margin

Margin Averages 30% + VAT of 18% (on margins only not turnover tax)Averages 30% + VAT of 18% (on margins only not turnover tax) Varies Varies $24,888.61$24,888.61

Selling

Price

Price Averages 30% + VAT of 18%Averages 30% + VAT of 18% Varies Varies $33,116.55 $33,116.55

Exchange

Rate

(68)

Unit Price in Stages

Value

Value DescriptionDescription Percent Percent Over Over EXW EXW Amount Amount EXW EXW Origin

Origin $2.38 each packed for export $2.38 each packed for export N/A N/A $8996.40 $8996.40

CIF Santos

CIF Santos $2.77 each CIF Santos $2.77 each CIF Santos 16.4%16.4% $10,471.14$10,471.14

Landed

Sao Paulo

Sao Paulo $4.62 each Landed in Sao Paulo $4.62 each Landed in Sao Paulo 94% 94% $17,453.23 $17,453.23

Importer

Margin

Margin $6.58 each with 30% + VAT of 18% $6.58 each with 30% + VAT of 18% 176.7% 176.7% $24,888.61$24,888.61

Selling

Price

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Unit Price Retail Pricing Summary

EXW Origin = $2.38 or R$4.06

CIF Santos = $2.77 or R$4.73

Landed Sao Paulo = $4.62 or R$7.90

Import/VAT = $6.58 or R$11.25

Selling Price/VAT = $8.76 or R$14.97

Average U.S. Price = $6.95 or R$11.88

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Export Essentials: Export Pricing,

Quoting & Terms of Sale

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