Competitive Analysis Report – Exporting PPE from Canada to Colombia
This Competitive Analysis Report has been prepared in response to the RfP dated August 10, 2020, and includes our proposal to Global Exporting Ltd. in regard to managing the export of the Personal Protective Equipment Sets from Canada to Colombia. This report identifies the exporting product, key transaction partners and their roles, export documentation needed for this export, and the respective steps to be taken. We understand that these sets are vital for the buyer, Doctors Without Borders in Colombia, in the fight against Covid-19. As of the date of this report, there are 327,850 confirmed cases, and 11,017 deaths in Colombia due to coronavirus pandemic.
Key Parties & Roles
Doctors Without Borders, Colombia
Transversal 18a Bis #3741
Telephone No.: +57-310-231-9264
Their role involves ensuring that all goods are imported accurately into Colombia and reporting all imports to the National Directorate of Taxes and Customs. Doctors without Borders will declare the true value of the PPE sets for the purpose of customs duties, nature of the products, description of the correct quantity. In addition, to provide the ten-digit tariff classification number (HS code) to ascertain the appropriate tax rate and trade-specific purposes. As a licenced operator in Colombia, they are responsible to find a company that can supply them with the required amount protective equipment of the PPE sets that are greatly needed by hospitals treating COVID-19.
For the importer’s duty to be successfully executed, the following documents and information will be needed; starting with placing the order to having the product delivered. The required documents include:
1. Request for quotation from the supplier/exporter
2. Commercial Invoice including sales terms
3. Application of Letter of Credit from a bank
4. Quotation from a reputable Freight Forwarder that will be used
5. Country of origin certificate which will be used to determine the applicable tariff treatment
The company currently manufactures, packages, and sells medical equipment used by hospitals around the globe. The company has the capabilities to manufacture and distribute the needed 50,000 PPE sets. The exporter would need to have an export license or declaration. Canada requires that the export of medical equipment or supplies requires an export declaration. The license is issued by Global Affairs Canada and must meet before any of their goods leave the country (Government of Canada, 2020). This document is needed to clear customs in Colombia.
Before the merchandise can be exported, as per the requirements stipulated by Global Affairs Canada, it will be inspected to ensure goods are satisfactory. Colombian customs require that an exporter should have certain documents to facilitate the clearance of the goods. These include customs declaration, import registration form, or import license, packing list, and inspection certificate which would be filed electronically (International Trade Association, 2019). International Trade Association (2019) also stated that the import license must be filed form with Ministry of Commerce, Industry and Tourism.
- Freight Forwarder
Our company is a registered member of CIFFA (CIFFA, n.d) with a business licence no X698023NSD. The Freight forwarder is responsible for organizing and ensuring that the merchandise transacted internationally from the exporting region to the right place of destination arrives on time, in good condition and for the most affordable cost (CIFFA, n.d.). CIFFA (2016) stated that a freight forwarder must prepare the required import documents, advices clients, calculate the best route and to protect the supply chain from any dangerous goods not declared.
Documents that will be required by the importer includes the Airway Bill, Bill of Lading or multimodal transport, Ex W Quotation, and the insurance certificate. You can find a copy of such documents in Appendixes. Additionally, we have attached all the costing calculations which can be seen in Appendixes. It is very important to understand that many carriers are hesitant to do business with businesses that has no insurance. A Contingent Cargo Insurance would be recommended as it insures against theft or damage during transportation whether by air, ship, or truck (Charpentier, 2017). A copy of the insurance certificate is included in the Appendixes to this report.
- Customs Broker
Cargo Global Trading Corp.
Address: 8 No. 13A – 15 Floor 35-36
Tel: +57 4 4484126
Email: [email protected]
Customer Brokers are licensed individuals used by importers to put information in order, guarantees compliance with the necessary laws and assist in the clearing of the merchandise through customs (Canada Society of Customs Broker, 2020). Services performed by custom brokers include evaluation and clearance of customs, Tariff classification, providing consolidation services for international trade, assist in freight management and requesting an HS Code ruling from the government of the importing country (PF Collins, 2020). According to Roy (2020), custom brokers are paid a percentage of the value of the merchandise being imported in exchange for their services.
- Export Agency
Export Agency: EDC Canada
Export Development Canada
150 Slater Street
Ottawa, ON K1A 1K3
Email: [email protected]
Export agencies are responsible for preparing the packing list, certificate of origin, and import contracts after receiving the commercial invoices and quotations. These documents are required to process the airfreight shipment. A copy of these documents is located in the appendices.
Address: AK. 19 #97-5,
Tel: +57- 44484126
Email: [email protected]
The one million masks and nitrile gloves will be transported by truck from the airport to a private warehouse owned and controlled by the Doctors without Border. A private warehouse is used as it is more economical and cost efficient.
According to Mullins (2108), the benefit of using a private warehouse include:
1. Having unlimited control space or facility
2. The ability to track the flow of inventory or materials more carefully.
3. The use of automatic and modern tools
4. More affordable
A private warehouse would be necessary based on the products that will be stored
Negotiable Warehouse Receipt will be used as it can be recognized as a document of title for the merchandise itself and as document used to collect such merchandise. This would ensure that the products will only be released when a properly signed receipt is presented. (Canadian International Freight Forwarders Association, 2014). 50,000 products will be stored in the warehouse as has been depicted on the packing slip and warehouse receipt in the Appendixes.
Canadian Imperial Bank of Commerce – CIBC
Sheppard And Markham Banking Centre
5074 Sheppard Ave E, Scarborough,
Telephone No.:(416) 291-8323
This is quite effective as they have branches in both Canada and Colombia. Doctors without Border will be using a confirmed letter of credit as payment method for the merchandise. The purpose of an irrevocable letter of credit is to ensure that the products are received before payment is made to Global Exporting Limited (shipper).
We will not be using a documentary collection as it would be the first-time shipping products to Doctors without Border in Colombia and the relationship has not yet developed. Using a letter of credit from TD securities are the importer (Doctors without Border) has the ability to negotiate the terms with the supplier (Global Exporting Limited), that all items in the contract must be fulfilled before payments are made, very efficient regarding processing time and reduces any payment risks (T.D. Securities, 2020).
There are other benefits to using a letter of credit as it demonstrates that the importer is capable of making payments, eliminates foreign exchange risks, reduces any possibility of non-payment and has specific information that must be complied with such as the exact payment and shipping (CIFFA, 2016). A copy of the letter of credit can be found in Appendixes.
- Importer Regulator
The National Directorate of Taxes and Customs
Carrera 8 # 6-64, Edificio San Agustín,
Telephone No.: +57 (1) 3556922
According to the International Trade Administration (2020), the importer (Doctors without Border) would need to submit an import declaration to the National Directorate of Taxes and Customs (DIAN). This import declaration should reflect the information stated the import registration form, sales tax paid, and the financial institution where the imported paid such taxes. The importer would need to submit 15 days before the product to Colombia and two (2) months after the product arrives. After submitting the import declaration and duties paid, customs will then permit the products to be delivered.
|Description||PPE Medical Supplies set -N-95 respirator -Fluid-resistant gown -Single-use gloves – Disposable Hair Cover – Protective safety Goggle|
|Product Dimensions||25cm x 10cm x 11cm Box with 10 pieces|
|Item Model Number||TCVJP-1320|
|Item package quantity||10|
|Usage||Personal Health & Safety – COVID 19|
First and foremost, an exporter would need an export license. Canada requires that exporters fulfil certain requirements prior to the merchandise leaving the country. A requirement that exporters would need an export certificate which is issued by Global Affairs Canada. According to Government of Canada (2020). Before exporting goods, an accurate and complete description of the goods must be provided which would be used to decide if any of the products are prohibited. The exporter needs to classify the PPE sets once they have determined that the goods will be exported and would need to present an export declaration. The exporter would also need to report the exports to the Canada Border Services Agency (CBSA) within a minimum timeframe of 2 hours before loading the goods as they goods will be transported by air.
The merchandise will be examined to ensure that the exporter is complying CBSA and other government regulations and requirements. That is ensuring that the merchandise is in good condition. The Colombian customs require the exporter to provide certain documents in order for the goods to be cleared such as Packing or Invoice list, Customs or import declaration, commodity inspection and sales tax receipt.
We recommend Global Exporting to use Airfreight and Inland trucking as modes of transportation. As the products are urgently needed to fight Covid-19, it is recommended that Airfreight should be chosen over Ocean freight for time and reliability reasons. For example, when it comes to long-distance shipment, air freight is usually much faster than other means of transportation. Since time is one of the most important factors, it could make up for the higher cost of air transport.
In terms of the payment method, it is advised that a Letter of Credits should be chosen to minimize risks of non-payment. This method can ensure that Global Exporting would be paid in full as soon as the bill of lading received by the advising bank, CIBC.
Lastly, we suggest using the EXW incoterm 2020. It is the best available Incoterm for Global Exporting. In this Incoterm, Global Exporting’s risks will end once the packages are available to pick up outside of its warehouse. Global Exporting needs to formally notice Doctor Without Borders which are needed to take delivery of the good. The notice should be included in the contract.
In conclusion, this is a feasible project to do for the Global Exporting Ltd. in partnership with our company. Successful completion of the export will be a good foundation to establish long-lasting business relationships with Doctors Without Borders.
We have found the best the carrier, calculated the most economic freight rates, arranged insurance and the most efficient HS Tariff classification that will allow the exporter to assume the minimum risk and charges.