Maritime export: how it works and what are the benefits?

If you pause for a thought, the maritime export of goods is of huge importance for the development of humankind. It is the engine that moves foreign affairs and stimulates the development of the entire production chain of the exporting countries, and companies well understand its importance. 

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Would you like to learn more about when exporting cargos by sea is more convenient, and the benefits of this transport system? For this purpose, we invited Paulo Lello, a Consultant and Commercial Agent of Interoceânica Logistcs & Solutions to thoroughly discuss this subject. Enjoy reading!

Historical Context 

Since the early days of history, maritime navigation is in constant evolution, and has been directly responsible for the viability of commercial interchange between countries, as well as for the export and import operations, though much has changed since the age of the caravels until the present days.

Globalization, a process that has deepened the international economic, political, cultural and social integration, would not have been possible without the export of goods by seas. Maritime navigation allowed the expansion of local production chain to other countries in the efforts of achieving profits on a scale. Doubtless, the trade of goods between countries has been considerably boosted by this worldwide phenomena. 

Export maritime concept and how it works

The preliminary concept for this discussion is simple and objective: “Maritime export is a process consisting of the transport of goods from one country to another by means of various logistic operations, documentation processes and maritime transport of cargo”. 

However, there are many particulars one has to take into account in this process. As explained by Paulo, “a layman may be led to believe that the shippers are the ones who choose the shipping company they will use in maritime export, simply because of its proximity to the port, or affinity to this type of transport modal. But, in fact, it is not shippers’ choice to export their goods by sea. Instead, it is the maritime modal that actually elects which cargoes they will carry”, says Paulo.

The reason is that the operation will require a deep logistic study to determine the costs and operational feasibility of the whole process. This study comprehends since the origin of the cargo at the plant, the domestic transport to the port of loading, wharehousing, containers stuffing, handling at the port area, the international transport itself, and, if it is the case, the inland transport in the country of destination until its final delivery to the consignee.

This study is usually done by experts, and the international transport must have a shipping agent as an intermediary, as it involves many details, such as the type of cargo, quantity and product specification, packing, services available and frequency of ships and calls, transit time and, most importantly, costs to conclude the operation.

The owners usually offer freights according to the following categories:

• Liner service, with a fixed route and ports of call;
• Tramp service (non regular), with freights agreed case by case, according to the opportunities at each port;
• Charterting of a full ship for a dedicated use by one sole client.

Paulo lists some examples of cargo that can be exported by sea, only, because of its characteristics and quantities, such as dry products in bulk (ore, grains, for example), liquids (petroleum) or gas in bulk (LPG). He also cites as example steel products and other dry cargos loaded on breakbulk ships (general cargo ships), and all kinds of industrial products that are usually shipped on full container ships. Besides, there is a specialized ship that offers an exclusive service for cargo units of large dimensions and massive weight (heavy lift & over dimension cargoes).

The maritime export is of fundamental importance to Brazil, once it represents as much as 95% of the tonnage and 70% of the FOB value of all cargoes moved, according to MINFRA (Ministry of Infrastructure). These numbers confirm how vital the necessity to invest and develop this sector is, whether by the Government’s initiative or by private enterprise.

Benefits of maritime export

The predominance of maritime exports in Brasil and in the world is not casual. The companies that adopt this type of modal are seeking specific benefits when compared with other modal systems, i.e.:

Freight rates – lower than air freight rates. Paulo points out some exceptions, such as the type of product. Fresh fruit, for instance, are perishable cargo that may deteriorate quickly, which compels shippers to use the air transport and makes the transport by air more expensive. 

Quantity of cargo shipped – larger capacity of transport. The maritime modal offers another advantage specially when it refers to big quantity of cargoes, as it permits that large volumes are shipped per vessel, reducing the number of voyages and total costs, if compared to the road or air transport; 

Flexibility – fit for any type of cargo. Except for perishable cargoes that deteriorate quickly, a vessel can carry cargoes of different kinds and quantities, since a pallet in a LCL container to thousands of tons of bulk commodities, as well as project cargoes of large dimensions and massive weight on specialized ships.

Documents and procedures needed in maritime exports

As you can see, given the complexity of its process, a successful maritime export depends on carefully planned procedures and efficient routines at ports and on board the ships.

Thus, maritime export demands a series of documents and accurate system inputs to ensure that everything runs smoothly. Let’s enumerate them!

Accreditation from SISCOMEX

Companies must be legally permitted to export goods to other countries. “The company’s constitution or incorporation must foresee export and import activities, and the company must arrange its accreditation from SISCOMEX (Foreign Trade Integrated System), a computerized system that integrates all registration activities, monitoring and control of the foreign trade, and also and nominate legal representatives and attorneys at that system”, explains Paulo. 

Product Classification 

Before deciding which product export, shippers must verify the corresponding product classification number at the “NOMENCLATURA COMUM DO MERCOSUL list (NCM)”, i.e., Common nomenclature for the MERCOSUL Economic Bloc). This verification will give them the guidelines regarding the Government departments involved and the respective taxes the product is subject to, besides the bilateral and international agreements that must be respected and other relevant details.

SALES TERMS 

The negotiations with the seller and definition of sales terms in exports follows the conditions of the ICC (International Chamber of Commerce). These are the so called INCOTERMS that must be clearly stipulated in the sales contract.

These clauses stipulate the point where the responsibility of the seller ceases, and the moment the buyer’s responsibility commences, and the up-to-date terms are expressed in 11 abbreviations: EXW, FCA, FAS, FOB, CPT, CIP, CFR, CIF, DAP, DPU e DDP – as per INCOTERMS 2020.

PROFORMA INVOICE

Issued by the seller/shipper, the proforma invoice is the first document elaborated in the process of exportation. It allows the buyer to start the legal and logistics procedures in the country of destination – such as the preliminary license to import.

Paulo further explains that the proforma invoice has another purpose: “if the importer confirms its acceptance, the sale is officially concluded and this document will also function as contract between both parties”.

“Nota Fiscal” (fiscal/tax invoice) of sale for export

“Nota Fiscal”, that is a fiscal invoice issued by the seller/exporter, is the base for the issuance of the next internal documents. Once the “Chave da NF” (fiscal invoice key) is input into SISCOMEX, all the data contained in the invoice will be made available in the system.

Once logged in the SISCOMEX system, the legal representative of the shipper can, based on the invoice data, generates the DU-E (Unified Export Declaration), and will be able to follow up the digital process. At bonded facilities, the port operator generates the “presença de carga” (literal translation, “cargo presence”), which is an official Customs confirmation of the arrival of the cargo at the bonded area in good order. Once cargo is loaded, the freight forwarder takes the steps to get the ‘cargo fully exported’ status.

Currency Exchange contract 

This is an important document issued by the Currency Exchange office. It states the conversion operation of foreign currency into local currency, Real, for the payment of the exported goods.

International documents related to the exports

Depending on the country of destination and negotiations involving the maritime export, at least the 3 basic international documents below will have to be sent by the shipper to the consignee of the cargo:

• Commercial invoice;
• Packing list;
• Bill of Lading (or simply B/L).

If the country of destination has a commercial agreement with Brazil for tax exemptions/reductions, the importer will need to prove the origin of the Brazilian product, by presenting the Certificate of Origin. 

Furthermore, depending on the nature and classification of the product in the NCM list, there may be formalities/demands from some of the 15 other Government Departments involved in the exit or entry of products to Brazil. In these cases, the shipper will have to obtain the corresponding “additional documents”.

The shippers cannot abstain from arranging the “international cargo transport insurance”, if the INCOTERM agreed stipulates that they are accountable for it.”

As you can see, this is a complex process, and demands many documents. Therefore, relying on specialized companies is essential for the conformity and efficiency of the process, which makes the maritime export a workable solution to conquer new markets. The future of your company may be far away from the Brazilian Coast.

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