Ship companies that aren’t connected to a conference are called outsiders. However they sail often by regular schedules, they offer the exporter still less assurance about travel schedules and travel expenses. It can also come that an outsider disappears out of nothing, because of financial problems. In that case it is also possible that the cargo disappears. But some of those outsiders have build up a good reputation.
Calculation of cargo are based on the volume, weight and the value of the goods. If the volume is 1000 kg goods bigger than 1 cbm (cubic metre), than will the transport costs calculated to the measure, if the volume of 1000 kg smaller is than 1 cbm, than will the price be calculated by weight.
On basis of cargo measure counts:
1 shipping ton = 1 cbm = 40 cbft (cubic feet). International they mostly use the cbm.
On basis of cargo weight counts:
1 freight ton = 1000 kg
1 long ton = 2240 LBS = 1016 kg
1 short ton = 2200 LBS = 907,10 kg
Freight calculation can also be by piece, this happens for example by transportation of cars or cattle or to the value of the goods.
Above the established freight price on basis of the volume, weight and value can also come some increments. The 3 most important increments are:
- CAF (currency adjustment factor) this increment covers the currency fluctuations compared to the American dollar. The most tariffs are calculated in American dollars, while the costs in currency of the different countries are expressed.
- BAF (bunker adjustment factor) this increment covers the eventual extra costs that the ship company has through fluctuations in the oil prices.
- Congestion charge, if the capacity of a harbour isn’t big enough for the amount of ships that applies, there will be a delay. The congestion charge covers the extra costs that this delay takes with him.
Air transport
By air transport there can be goods transported with scheduled flights and charter flights. The difference is that a charter plane special and actually only once will be used, while a scheduled flight op fixed times and on a regular route flies. The exporter will, when he can making use of a charter, but it also need to determine if he needs a split charter or a full charter. By reservation of a split charter he charters a part of the plane, by a reservation of a full charter he charters the whole plane.
Planes are mostly used for transport of goods with high added value. For bulk goods is a plane not proper, the transport costs will be way too high.
Advantage of air transport is as follows:
- Quick way to transport goods to afar destination.
Disadvantages of air transport are as follows:
- Relative expensive.
- By small airports is the infrastructure often not accessible for the for and after transportation.
The plane is also a transportation middle by par excellence for couriers, they ensure that for example a shipment important documents will be delivered straight to the consignee. The buyer will be informed on the time of delivery. Given the high costs will the couriers service be informed if the purpose of the delivery is very big and the value of the goods are high, that it makes the costs responsible.
Combined transport
Combined or intermodal transport methods have an advantage that the goods are arriving on their destination a lot faster and that the costs are way lower. When there are just 2 transport methods combined, for example the road and rail transport it will be called bimodal transport (bi means 2).
Road – Rail transport
Combines road-rail transport isn’t only faster and cheaper, but it’s also relatively environmentally friendly. The transporter has an extra advantage that he can bypass the toll boots and the night drive bans.
The most primitive and even the most expensive form of combined road-rail transport is the one where trucks are transshipped into train wagons. Another bimodal system is the huckepack-system, whereby the trailer or containers with the help of a crane are placed on wagons. The disadvantage of the huckepack is that there are special trailers or containers, special wagons and transfer stations with cranes are required.
One the most modern forms of combined road-rail transport is the Coda-E-system (Combination of a trailer and bogie, Alpha engineering). With this system will the trailer be hanged between 2 bogies. On each bogie comes the front of the first trailer and the back of another trailer, so it becomes a train.
Combines road-rail transport fits well to the policy of the Dutch government and that of the EU to take back the road transport in favor of the rail transport. Rail transport limits the wear and tear to the road-system. A heavy truck with trailer delivers the same wear and tear to a road than 1000 auto’s.
Kangaroo transport
Many companies use the kangaroo transport. Whereby the trailers or whole trucks are driven in a train wagon or in the cargo hull of the ship, so that they can drive further when they arrive at the place of destination also called the roll-on/ roll-off system. A very special form of transport is the so-called float-in/ float-off system. Whereby a complete inland watery vessel enters a big sea ship and so with the cargo and all be sailed to a foreign harbor. All forms of the kangaroo transport combine different transport methods. The advantage of that is that the costs of trans-shipment are limited.
Container transport and consolidation of cargo
Container transport is also a form of combined transport. A container is transported often by truck and after by train, or first over land and then on water. Container transport is cheap because over here are also the trans-shipment can stay low. Another advantage is that the container in front of the door from the receiver can be delivered. Containers are used a lot for general cargo. Groupage means that little consignments are combining the goods till one big container load. The advantage for this is that the transportation costs are falling out lower.
Groupage begins from Oudsher all by road and rail transports. But since the arrival of the containers in the 60 years was the sea transport applied.
A full container load is called FCL (full container load), when there is an insufficient goods to fill a container, then the y talk about an LCL (less than container load). In that case the goods are stored in collection containers with goods that all have the same destination. Until there are enough goods to give the shipping company a FCL-container.
It speaks for his own that the combination of the goods are stored in a proper way so that not everything is throwing to a pile of clothes or something else that doesn’t fit or isn’t properly. But the risk exists that a LCL container on the spoken transportation date isn’t full at all. It can be occurred by choosing a smaller container, the cargo cant immerse be left behind till a next opportunity.
The containers purposed for general cargo are called general purpose containers. All other kind of containers are falling under the special equipment area and are therefore mostly more expensive.
Today the day are containers steal freight containers with standardized dimensions. Thanks to these standard sizes it is possible to build special after matched trucks, train wagons, ship and cranes. Hereby is the trans-shipment of the loaded containers much more labor-intensive, with as a result time profit and lower transport costs.
- Specify the transport document that is issued by the carrier for each mode of transport.
Container transport and consolidation of cargo
- FIATA
- FIATA-FCR
Air transport
- Airway bill
Sea transport
- Bill of lading
Inland waters transport
- Bill of lading
Rail transport
- CIM document
Road transport
- CMR document
- Describe these documents, including examples of them, and discuss important points regarding these documents.
- FIATA-FCR: (Certificate of Receipt) is a statement of the transport company that the goods have arrived and are ready for transport.
- Airway bill: A bill of lading specifically designed for air carriers. When issued by an air carrier, the bill verifies that the carrier is in receipt of the cargo and sets the terms and conditions for carrying that cargo.
- Bill of lading: A document that a transport company possesses acknowledging that it has received goods, and serves as title for the purpose of transportation.
- CIM document: The CIM document stands for Convention Internationale concernant le Transport des Marchandises par Chemin de Fer. The CIM handles the proportion between the railroads that have signed the treaty.
- CMR document: CMR stands for Convention Relative au Contrat de Transport International de Marchandises par la Route. The CMR is a document that states national agreements that the rules of road transport hold. The CMR for instance states who is responsible in a case of damage. The CMR document isn’t tradable.
- Suggest a possible transport trajectory for companies A and B, divide in pre-, main- and post carriage, whereby the main carriage will be by ship. Depict this as a line, indicating pre-, main- and post carriage, the mode of transport to be used for these sections of the voyage, the departure and arrival harbour, and the transport document(s) that will be issued by the carriers, or multi-modal operator.
Company A:
Pre carriage: The goods have to be transported to the harbour by lorry first. So from the exporter in Holland to the harbour at which the transport company is located.
Main carriage: As mentioned in the assignment handed out the main carriage is going to be by sea. So the transporter gets the goods from the exporter, and transports them by sea to its location in Norway.
Post carriage: I don’t think that the actual company in question is located in the harbour at which the goods have to be delivered. So the post carriage is again by road using a lorry to the company in Oslo.
Company B:
Pre carriage: The goods have to be transported to the harbour by lorry first. So from the exporter in Holland to the harbour at which the transport company is located.
Main carriage: As mentioned in the assignment handed out the main carriage is going to be by sea. So the transporter gets the goods from the exporter, and transports them by sea to its location in Spain.
Post carriage: I don’t think that the actual company in question is located in the harbour at which the goods have to be delivered. So the post carriage is again by road using a lorry to the company in St. Sebastian.
1 Contract → M.M.O.
Carriage
Pre Main Post
Truck Sea Truck
A |-----------------------|----------------------------------|--------------------| B ← D.D.P and D.D.U.
A.V.C. B/L C.M.R.
C.M.R.
Rotterdam R’dam Oslo Norway
Harbour Harbour
- Which packing materials are needed for the goods, considering the type of goods to be transported (bikes) and the modes of transport that will be used, as you have suggested in your answer to task 1 d)?
In your answer you need to:
- Discuss the purpose of packaging
If a company transport goods, it is the meaning that they are delivered:
- In the right quality.
- On the right place.
- In the right quantity.
- On the desired time.
- Without damaging the environment.
- Against as low possible costs.
These are the minimum conditions that the physical distribution suggests to packaging. A packaging has to contribute that the product is in the right quality, on the right place, etc will be delivered. Which transport packaging will be chosen, depends on the goods and the form of transport.
Functions of a packaging could be:
- It protects the people that the takes care of the transport and other products against the quantity. For example, at dangerous substances.
- It protects the product against influence of outside.
- It makes a product manageable and stackable.
- It makes the product and the producer noticeable.
- It shapes the combination between product and documents of data processing.
- It gives place for complementary information about the goods, often in the form of symbols.
- It forms sometimes a physiological safety barrier against theft.
- Describe the packaging that will be used by companies A and B to pack their bikes.
Thinking of space it is important to pack the bikes as economically as possible. I think that a good concealed box would be the most important part. If all the bikes are separate from each other without protective boxes (like the picture below) and foam, it could happen that the bikes clash into each other and you will end up with damage on the bikes. And as I said, I think that foam inside the boxes is the best way to keep the bikes from any harm that could happen to them. The bikes will then be transported using a container on a container vessel to the locations in Norway and Spain. But also in a 40 ft container, as the picture below. Also, the packaging of the goods is very important thinking about conditions in which they are transported. The goods to Oslo for instance could be on their way for couple of weeks, and probably not in the best weather conditions. And it helps protecting it against theft, if the seal of the package is broken, the companies will know something is stolen and are sure that the seller has not forgotten anything.
Remember that (export) packaging is always the responsibility of the seller, whichever Incoterm is used, and that an insurer, when damage has been reported and claimed, will first check if the damage was not due to insufficient packaging.
When such is the case the insurer will not pay out.
- In order to insure the goods during transport there are some different transport insurances that can be used by the companies involved. There is a choice between Specific voyage policies and various Contract policies, like the (in Dutch called):
- Declaratiepolis
- Pauschalpolis
- Aflaadpolis
Discuss the insurance options that the companies involved can consider.
In your answer you need to:
- Discuss the available types of insurance policies, distinguishing between single (specific voyage) and contract policies
- Contractpolis
- Declaratiepolis
- Pauschalpolis
- Afkooppolis
- Omzetpolis
- Naverekeningspolis
- Discuss specifically each of the above mentioned Dutch contract policies, describing the way they work and explaining what consequences this has for companies taking such an insurance, in the way of premium payments and administrative work load.
The Delaratiepolis is an open contract where the insurer has to cover all the shipments till a certain maximum amount per transport method. The transport has to have a place in a certain area and against previously agreed premises and conditions. Each shipment has to be declared separately. This can be a proper polis for companies that from time to time export.
For the Pauschalpolis are somewhere the same rules, but they only don’t have to declare the different shipments. Companies that structural export, make often use of this polis. Above all there will be an premium payment from upfront. At the end of the agreed period will the too much or too little paid premium be settled.
In a aflaadpolis are all the transports for a certain period till a maximum insured, while at the end of every month or every quarter of a year till the total of the unloading is calculated and the premium over this is paid.
Customs
- For this task you will have to research the subject of trade restrictions that countries impose, the customs documents that are needed by the customs authorities as evidence, and the payment of the consumer tax, known as V.A.T., paid in the country of consumption. You will have to find out how the destination of the goods and therefore the applicable customs regulations of those countries, affect companies A and B for:
- The import duties to be paid
- The customs documents to be generated
- The V.A.T. to be paid
In your answer you will need to answer the following questions:
Trade questions
One of the measures that a country can take to restrict the import of specific goods into the country is the imposition of import duties.
- What are import duties? In your discussion you must also include how they are levied and how the system works.
When importing goods into the EU, you normally have to pay import duties. You pay the import duties on a basis of assessment. This amount is the same for all EU countries. Therefore it makes no difference whether you import a good into the Netherlands or into another company in the EU, in both cases you pay the same amount in import duties. The other import taxes (such as VAT or excise duties) differ from one Member State to another.
Ad valorem duties
The import duties can be calculated on the customs value. In that case, you pay a percentage of the customs value as import duties. The level of that percentage depends on the kind of product you are importing. The Gebruikstarief (only available in Dutch) lists all the percentages.
If the import duties are calculated, they are called 'ad valorem duties'. The customs value is the price paid for the export of the goods to the EU.
Specific duties
In a number of situations, the Gebruikstarief provides for specific duties. In that case, the level of the import duties is calculated on the basis of, for example:
* the quantity (expressed in kilograms, litres, etc.)
* the content (such as the alcoholic strength by volume or the fat content)
* the number of square metres
Combinations of ad valorem duties and specific duties are also possible.
Customs Documents.
- Find out, for companies A and B:
- Which customs documents are needed
- Why they are needed.
Road transport
- CMR document
The CMR is a document that states national agreements that the rules of road transport hold. The CMR for instance states who is responsible in a case of damage. The CMR document isn’t tradable.
Sea transport
- Bill of lading
This document has 3 functions:
- The evidence of the shipping company that the goods have been received before transport to its destination. And that the goods will be given to the receiver.
- It represents the goods. So unlike the CMR document the B/L can be traded. And whoever has his hands on these documents is the owner of the goods at that point.
- It is the evidence of the buyer that he has the right over the goods. Without a B/L he doesn’t get the goods.
V.A.T.
e) Research this topic, and explain what it is and how it is calculated.
Value added tax (VAT) is a consumption tax levied on value added. VAT is neutral with respect to the number of passages that there are between the producer and the customer. A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.
Personal end-consumers of products and services cannot recover VAT on purchases, but businesses are able to recover VAT on the materials and services that they buy to make further supplies or services directly or indirectly sold to end-users. The total tax levied at each stage in the economic chain of supply is a constant fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business rather than by the state. VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling.
Rate of Exchange
-
What does “rate of exchange” mean? Describe this term accurately and give two examples, as applied to your companies to illustrate your answer.
Rate of exchange is actually the rate at which one currency can be traded for another currency. For example Euro’s for US Dollars. The rate of exchange is determined by the demand and the supply of the particular currency on the foreign exchange market. If for example we from Holland want to buy some goods out of America, than America would demand US Dollars and not Euro’s. They can buy US Dollars by selling their own currency in this case the Euro. The rate of exchange determines how many US Dollars they will receive for the given Euro’s. If for example the exchange rate of the US Dollars $1,00 = €0.71 Euro’s then we would need to pay €0.71 Euro’s for every US Dollar $1,00 purchased.
But if we are in America and we want to purchase imports or invest overseas, we would need to supply US Dollars to the market. If there is an excess supply of the US Dollar, the exchange rate would drop, but if there is an excess demand, the exchange rate rises.
The advantages of a high exchange rate are:
- It keeps import prices low as we get more foreign goods for every $.
- High prices for American export force the American business to be more competitive and more efficient in order to trade overseas.
The disadvantages of a high exchange rate are:
- The balance of payments moves into deficit.
- American goods and services becomes less competitive. Some organisations may be forced out of business which could lead to rising unemployment in the long-term. Like what happens now.
The advantages of a low exchange rate are:
- Increased competitiveness abroad could stimulate business investments and expansion in the domestic economy.
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The rate of exchange can be “floating” or “fixed”.
- Explain what is meant by “floating” or fixed”.
Floating exchange rates
Exchange rates affect not only businesses trading abroad, but also individuals travelling abroad and the prices of goods imported. s are determined by the private market through supply and demand. A floating exchange rate is constantly changing. There is a system for Floating exchange rates. It actually means that the value of any currency is determined by the forces of the supply and demand. When the demand for any currency is equal to the supply of that same currency, the equilibrium exchange rate is reached. The Floating exchange rate can change quickly. For example if there was demand for Dutch goods by the US citizens, it would increase the demand for the Euro. The US citizens would need more Euro in exchange for the Dollar to pay for the Dutch goods.
- increased demand for the Euro:
The implications of a Floating exchange rate for businesses
The problem with an floating exchange rate is that it can fluctuate either up or down. Businesses who enter a contract with overseas buyers for goods with future delivery dates are uncertain as to what the exchange rate will be. This has led multiple businesses to buy ahead on the forward exchange market in order to safeguard their interests. Businesses most likely prefer stability, they do not like uncertainty of the Floating exchange system.
Changes in the exchange rate affect their business. For example, a fall in the value of the Euro will:
- Raise the price of imports and hence the firm’s raw materials costs
- Reduce the price of exports and hence benefit businesses involved in exporting.
An increasing in the value of the Euro will:
- Reduce the price of imports and hence reduce the firm’s costs if it imports raw materials from abroad.
- Raise the price of exports which will adversely affect businesses trading abroad.
- Floating exchange rate:
Semi-Fixed exchange rates
Some countries are interested in a high rate of exchange, it only has a negative influence on exporting business. Therefore, it is decided, within the European Union, to create a system of fixed exchange rates. The monetary authorities of these countries are bound to keep the rates between a certain band in relation to a central rate of exchange. This system is called the EMS (European Monetary System).
Within the European Union it is decided in the “Maastricht treaty”, to set up the EMU, (European Monetary Union). This means,
- One currency, the Euro.
- One central bank.
- One monetary policy with regard to interest and inflation rates.
- Fixed exchange rate:
Fixed exchange rates
A fixed exchange rate is sometimes called a pegged exchange rate. This is a type of exchange rate where a currency’s value us matched to the value of the other single currency or to a lot of other currencies. But they can also be to measure the value, such as gold.
A fixed exchange rate is mostly used to stabilize the value of a currency. It facilitates trade and investment between two countries and it is especially useful for small economies where the external trade forms a large part of their Gross Domestic Product. It is also used as a means to control the inflation. But as the reference value rises and falls, so does the currency pegged to it.
A fixed exchange rate prevents a government from using domestic monetary policy in order to achieve economic stability.
- Which one applies to the consignment for Norway?
The floating exchange rate is the one that applies to the consignment of the Norwegian importing country.
- Why? Present evidence.
The floating exchange rate is for the Norwegian importing country because they have a different value. The Netherlands the exporting country has the Euro and the importing Country Norway has the Norwegian crown. The Norwegian crown and the Euro are constantly changing from value, that’s why it is a floating exchange. For example if Norway would buy some goods out of Europe and would like to pay in a few months, the value of the Euro could raise, that could have an impact on the price of the goods. It could be much more expensive than when they ordered the goods. For now it would be not 900.000 EUR, but it would change into 8.064.000,- Norwegian crowns. Like the currency right now is:
But it could change in the future. The Euro could raise and the currency could be:
Then the price would be not 8.064.000,- Norwegian crowns, but it would change into 8.962.200,- Norwegian crowns.
It could also change that the Norwegian crown rises. Then it would be like this.
Than the price would be not 8.962.200,- Norwegian crowns, but it would change into 7.162.200,- Norwegian crowns.
- currency growth of 12 months for euro to 1 NOK
- Currency growth of 12 months for 1 NOK to Euro
I used for the currency graphs.
- The rate of exchange depends on whether you are buying or selling from/to the bank. Find the rate of exchange (buying and selling rate) for Norway.
Include the date of the exchange rate and mention the source.
I used the calculation of the ABN AMRO. If you follow this link you will reach the currency of the buying and selling rate.
If you want to buy 1 NOK you will have to pay 0,12 Euro to get the 1 NOK. This is the buying rate for the Norwegian crown.
If you want to sell 1 NOK for the Euro you will receive 0,10 Euro for 1 NOK. This is the selling rate of the Norwegian crown.
The date of the exchange rates are from 19-06-2009.
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Monetary systems within the European Union.
- What do the abbreviations E.U., E.M.S., and E.M.U. stand for?
E.U. (European Union)
The European Union is an union that exists of 27 states. Most of those states are in Europe. It was established by the on 1 November 1993. The population of the European Union is almost 500 million.
The common currency the has been adopted by sixteen member states. The EU has developed a limited role in the foreign policy.
E.M.S. (European Monetary System)
The exchange rate between the currencies of the EMU countries that aren’t participating to the Euro, must be arranged. These not participating countries are called derogation countries. Derogation is actually an handicap or disability, in this case it’s an disability of the legislation of the monetary union. By the shaping of an European Monetary System they can occur exchange rate of the Euro and the currency of the not participating countries relative to each other to fluctuate. That could disturb the competitive relationship. If for example the Norwegian crown will drop in value pertaining the value of the Euro, the Norwegian products would be much cheaper than the same products out of the Euro area. The internal market would be in danger if that persists, services, goods, personnel and capital.
E.M.U. (European Monetary Union)
Most of the countries aren’t even having any importance in the currency that can change constantly. It could have major down effects for companies that export to foreign countries.
For example A Dutch exporter receives an order for the delivery of goods for USD 199.500,-. The payment by the importer or client will take place in 6 months. Outgoing from the course of today (€1,- is 1.41 US Dollars) you will expect to receive €141.489. (USD 199.500,- : 1,41). But the course of the American dollar pertaining to the Euro to be dropped to USD 1.45. You will receive only just €137.586 (USD 199.500,- : 1,45). An exchange rate loss of €3.903.
A monetary union means that within the joined countries:
- One currency the Euro
- With one European system of the Central Banks (ESCB) and one Central bank (The European Central Bank)
- And one monetary policy regarding of for example the interest, limit inflation etc.
- What is their present aim and role in the European Union?
The EMU has changed a lot in the European Union. They have changed the currency to one currency called the EURO, 16 states are using this currency, the advantage of the same currency is, you don’t have any problems with the exchange rate, you can pay the same currency. There are no drops or rises in the value of the different currencies that can affect each other. Think about the trading barriers for example, It completes the effect of tariffs and other barriers in shutting them out of a market in which they would otherwise have a comparative advantage. For example, the EU spends 2.7 billion Euro each year on subsidizing European farmers to grow sugar beet, while it maintains high tariff barriers against sugar imports from the developing world. It can also generates immense surpluses of foodstuffs that cannot be sold within the EU at the prevailing intervention prices. Much of these surpluses are exported at very low prices that undercut those charged by the unsubsidized producers of the developing world. A prime case of this is sugar sales in the Middle East. Countries like Sudan are crowded out of the sugar market in Egypt and Saudi Arabia and some of the surpluses are exported at subsidized prices to developing countries, thereby crowding out domestic producers. In Jamaica, some 3,000 dairy farmers are being driven out of business by imported milk powder from the EU. 5,500 metric tons are sent there each year at a cost to the European taxpayers of $3m.
- Exchange rate risk.
- Which company runs an exchange risk?
The company that runs an exchange rate is Norway, Oslo. Company A.
- Why?
Company A runs an exchange rate because the currency is much more different between the countries. The payment can take place in the currency of the Norwegian crown. But the Euro is way stronger than the Norwegian crown, and it can go even higher. The Norwegian crown could drop in value what could have a deep impact on the payment. If they would pay the 900.000,- EUR in the Norwegian crowns it would be 8.064.000,- Norwegian crowns. Because the currency is now:
But it could change before the transfer of the money and the goods are done. The Norwegian crown could drop in value and it would be much more expensive to pay for them the goods. But the Euro could also raise and that would also be much more expensive for the Norwegian customers.
- There are some options in order to prevent or minimize exchange rate risks.
- Name two of these options for the companies concerned.
- Netting and clearing
- Insert a “currency” –clause into the agreement
- Matching
- Leading and lagging
- Exchange rate risk insurance
- Explain how they are used.
- Netting and clearing
Netting and clearing is a settlement of payments between the offices of a company that is trading internationally. For example when a company in the Netherlands has a debt with the company in Norway, Oslo and vice versa, the invoices that are received will be cancel each other out.
- Insert a “currency” –clause into the agreement
The buyer and the seller are agreeing with each other that the changes in the rate of exchange will be settled. For example when the invoice to a Norwegian company amounts to 900.000,- EUR, than the seller will be sure to receive the exact amount in Euros, even if there are any currency changes.
- Matching
They try to pay the outstanding balance with the incoming payments in foreign currency. There’s only a risk attached and that is that it remains over the difference between the two different amounts in currency.
- Leading and lagging
This is a technique where you held up the payments when you expect that there is a depreciation in the exchange rates and when you expect the appreciation in the exchange rate, you can better pay as fast as possible.
- Exchange rate risk insurance
Options and forward exchange contracts are having a limited duration of 12 to 24 months. This could lead to a problem, when you as an exporting company have a longer period of delivery. In that case will the NCM insure the risk of currency depreciation. If the rate drops the NCM will pay out the loss, but of the rate increases the profit will go to the NCM.
- Suppose company A receives a cheque in Norwegian crowns. What will this amount be? Show the calculation and mention the source of the information you needed to use.
First you check which rate you can use, this will be the buying rate.
So the calculation will be 900.000,- EUR * 9,53 NOK = 8.577.000,- NOK.
So company A would receive a check of 8.577.000,- NOK for the goods that they have ordered.
The currency comes from the ABN AMRO Bank.
Conclusion
In this assignment I found out that the European Union with the two monetary systems has a great advantage for the business in the EU. I also learned the all the important transport documents, what the transportation methods are and how they work. But that’s not all, I also found out how to find the exchange rates of companies, what the meaning is of that exchange rate and that the bank hands in some of the money to convert currencies. I know the package that is used for transporting bikes to another country and what they look for when transporting products. And I have learned what the trade barriers are, what has changed about them by the EMU and EMS and where they are for.
Bibliography
Some of the information has been explained by the teacher.
Besides the information of the teacher I also used the books.
- DK 317
- Reader
- And the extra copy of the reader with other information in it.
Besides those books I also used the Internet.