UNIVERSITI TEKNOLOGI MARA (UiTM) CAWANGAN MELAKA

KAMPUS BANDARAYA MELAKA

SESI 2021/2022

INTERNATIONAL TRADE FRAMEWORK

(IBM554)

INDIVIDUAL ASSIGNMENT 1
HANDLING EXPORT PROCESS AND EXPORT DOCUMENTATION

PREPARED BY:

NAME STUDENT ID

ANDRIEYANY NURNABIHA NATASHA BINTI AMZAN 2021114455

MUHAMMAD AFIQ SHAKIR BIN ABDUL SHUKOR 2021125521

MUHAMMAD SYAHERU FIKRY MUNIR BIN KUSNAN 2021100109

NIK NUR ARESSA BINTI NIK HEZRIN 2021112325

NUR AQILAH BINTI AHMAD PEIRUZ 2021118397

SAIDATUL IFFAH BINTI SAIUN 2021554517

GROUP: BA2463D

PREPARED FOR MADAM NURUL AZRIN BINTI ARIFFIN

TABLE OF CONTENT

CONTENT PAGE

Introduction 3

Chapter 1: Foreign Trade - Institutional Framework and Basics 4

Chapter 2: Export Import Documentation and Steps 8

Chapter 3: Methods and Instruments of Payment 14

Chapter 4: Methods Financing Exporters 18

Chapter 5: Business Risk Management and Coverage 22

Chapter 6: Cargo Packaging, Stowage, Marking and Dangerous

Cargo Shipments 26

Chapter 7: Containerization and Leasing Practices 29

Chapter 8: Logistic and Characteristic of Modes of Transportation 30

Chapter 9: International Commercial Terms (INCOTERMS) 32

Chapter 10: Customs Clearance of Import and Export Cargo 34

Conclusion 36

References 37

Appendix 39

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Introduction

Fruitopia is a well-known business company in Malaysia that is famous for selling

a variety of fruits either local or exotic. Fruitopia has handled the fruit industry since
2015 which was 7 years ago and was based in Selangor, where we started selling at a
small store. Years later, Fruitopia’s business grew successfully and now our store has
changed to a big vendor that can fit more customers to purchase our products. Not only
that, Fruitopia also has many franchises all around Malaysia including Sabah and
Sarawak. What makes ours different from others is the fruits we sell are different from
other sellers. We happen to grow these fruits on our own and we specifically only use
organic substances in order to keep the quality and freshness of the fruits.

In order to grow our business internationally, Fruitopia intends to enter into the
export market. As we know, exports are manufactured items and services that are sold
to purchasers in another nation. International commerce consists of exports and
imports. Exporting is a good way to grow any business internationally and this is
because exports may boost sales and profits if the items generate new markets or
extend old ones, and they may even provide a potential to grab a sizable portion of the
worldwide market. Exporting businesses mitigate risk by spreading into numerous
markets. Then, by expanding operations to meet rising demand, exporting to overseas
markets may often cut per-unit costs. Finally, businesses that export receive fresh
information and expertise, which may result in the development of novel technology,
marketing strategies and insights into international rivals. Therefore, it is a great
strategy and decision making from the company itself in order to create an international
level of business. With that being said, we will explain in detail about the export activity
of Fruitopia. We export durian, mangosteen, rambutan, jackfruit and papaya to the
importer in the United States of America. The United States of America is a good
location to export these fruits since Malaysian fruits are unique and rare to find in the
US. Due to that, the demand for the fruits is high in that country. Fruitopia will then
export these goods from Port Klang and will ship them to the importer at America’s port.

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Chapter 1: Foreign Trade - Institutional Framework and Basics

Our group has decided to trade local fruits like durian, mangosteen, rambutan,
jackfruit and papaya to the United State of America' neighborhood grocery store in New
York. Our organization as of now has had local fruits in worldwide business for around 5
years. We have picked this business to grow the local fruits in Malaysia to another
nation like the US. As an exporter organization, we are needed to give the fantastic
nature of products of the soil away from any commodity interaction troubles.

In this era, it is appropriate for exporters to know about the product business as a
piece of their business procedure. In international trade or business, there are a few
stages an exporter ought to follow to turn into a fruitful exporter. Hence, we as an
incredible organization ought to understand the significance of these means in our
organization. The steps are:

Step 1: Selecting The Right Name

7 years previously, our group chose to open up our organization with fruitopia's name.
We agree to pick this name in light of the fact that to connect with people groups that we
associated with the commodity business of local fruits like durian, mangosteen,
rambutan, jackfruit and papaya, predominantly to the central area of the USA. In
worldwide exchange, terms like 'global', 'worldwide', 'around the world' or 'abroad' allude
to the organization that does an import or product business.

Step 2: Registration

The following strategies are needed for the organization to remember them as either a
sole ownership or partnership. We are a sole ownership, an unincorporated
organization claimed by the Chief Executive Officer, Mr. Muhamad Syaheru Fikry Munir.
This technique is viewed as a critical strategy as the organization needs to be enrolled
under its common law. In Malaysia, all organizations and organizations should follow
the application made under segment 562(1) of the Companies Act 2016. Suruhanjaya

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Syarikat Malaysia (SSM) implements the Companies Act of 2016. In 2022, our
organization's set up year was authoritatively 7 years of age.

Step 3: Opening a Bank Account

In managing foreign trade and global trade, an organization needs to open a bank
account with an assigned branches' bank. Subsequently, we pick Public Bank as our
major financial balance for any conditional. Despite the fact that Malaysia and the US
have an international alliance, it straightforwardly supports exchange between these two
nations. It's a good idea to open a record with a branch which straightforwardly attempts
commodity and import reports and unfamiliar money trade.

Step 4: Quoting the Permanent Account Number

From opening a bank account to applying for various venture benefits, it is compulsory
to cite your super durable record number (PAN). To guarantee charge exclusions and
derivations, our organization needs to apply for the shipper exporter code (IEC) under
Income Tax Act 1961. Consequently, Fruitopia should statement the organization the
long-lasting record number to apply for the IEC.

Step 5: Registering with the Sales Tax Office

In export procurements, the exporter does not really settle the sales tax. Our
organization has enrolled with the Sales Tax Office to help the advantage. We really
want to give the vendor Form-H (given in the index) and a duplicate of the import letter
of credit or the product request.

Step 6: Obtaining the IEC number

The IEC number is the most significant enlistment necessity for an exporter or importer.
No export or import for business purposes can be made by any individual without an
IEC number. An IEC number can be obtained through an application to significant
power. In this way, there is no expiry date for the IEC number. In Malaysia, IEC
numbers can be applied through the web-based stage, from the DGFT site, with a few
methods to be followed.
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Step 7: Registration with Export Promotion Councils

The place of government forms would influence the economy's export effectiveness.
Thus, an association can help the government agencies that have been endorsed. We
enlisted with the public authority supported ones called the Export Promotion Councils
from our past experience. The essential goal of EPC is to support and assist with
sending out organizations by offering innovative and market experiences to develop
their abroad trade and presence. EPCs advance government programs, fill in as a store
of information, and perform visits and concentrates abroad. They likewise go about as
go-betweens between the public authority and the commodity business and are
fundamental in planning its international strategies.

Step 8: Registration with the Export Credit Guarantee Corporation.

This progression is prescribed for our organization to enroll with the Export Credit
Guarantee Corporation (ECGC). ECGC is a commodity advancement association that
can cover and get the items' credit hazard protection. ECGC additionally limits the
dangers related and guarantees the product interaction's smooth working.

Step 9: Central excise

One of the critical strategies under the commodity cycle is focal extract freedom.
Additionally, our organization need to pay the extract obligation and clear the items
freely without the Central Excise Officer being explored. Consequently, we additionally
need to set up the Form ARE-1 subsequent to eliminating products.

Step 10: Registration with Chambers of Commerce, Productivity Councils, etc.

Regardless of whether your organization is new or has been in the local community
area for quite a long time, your discernment actually develops as you partake in
compelling associations inside your association. It is shrewd for an association to join
the business chamber in their state. What is a part of business? Nearby rooms are
associations perceived by the Ministry of Commerce, which tackle current local area
issues and offer help administrations. It was additionally assisting with cultivating and
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lifting the advancement of independent ventures. Your enrollment will offer you
admission to chances to make associations, meet possible new clients, and gain
openness to your image, from standard systems administration and intentional
occasions to advancement and promoting bundles.

Step 11: Registration for Business Identification Number

For each business, it is obligatory to acquire a PAN. One of the advantages is for
customs leeway of export goods. In Malaysia, the Companies Commission of Malaysia,
known as SSM, is necessary for each business' organization. Our business enrollment
number is obtained once the SSM's application has been supported.

Step 12: Export Licensed, if required

In the last step, you really want to distinguish the necessary products for a commodity
permit. Accordingly, it is urgent to consult the Commerce Control List (CCL) regardless
of whether the products to trade need permit necessities. In Malaysia, a product permit
can be applied for from the Ministry of International Trade and Industry (MITI). We want
a commodity authorized for our organization as we trade farming items.

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Chapter 2: Export-Import Documentation and Steps

Basically, the business of export goods into and outside the state should make
specific traditions obstacles set up from the government. The documentation required
for the traditions approval are normally characterized by the kind of provisions being
sent. It very well may be distinctive in light of the beginning and objective nations of the
products. To smooth the export cycle, an exporter needs to impeccable the product
documentation to keep away from any deferrals. Here is the rundown Fruitopia utilized
in the global business of sending out new natural products to United States:

1. Packing List

Typically, a packing list is used as a shipment document in international

commerce. Its name infers that it contains data regarding the contents of the
exported items. The contents of the export packing list arrangement are critical.
Details of the exporter or consignor, details of the consignee, invoice number,
purchase order number, any other reference number, country of origin, country of
destination, name of the vessel or flight, pre-carriage mode, place of receipt, port
of loading, port of discharge, place of delivery, terms of delivery and terms of
payment, marking and numbering, number and kind of packages, description of
goods, physical information of the shipment, a declaration, other remarks and

8
 authorized signatory. In addition, the dealer gave the packing list and submitted it
to where the fruits are located. Subsequently, when the organic products are
counted and bundled, the packing list is transported to the nation's destination
alongside the fruits. For export fruits, we utilized this report to depict the sort of
bundling utilized, regardless of whether boxes, or pallets and incorporated the
heaviness of the goods, volume, and unit aspects.

2. Commercial Invoice

A commercial invoice is significant on the grounds that it contains data on the

freight that is shipped off the client, cargo forwarder, customs merchant, C&F
office, and put in the bank. Every marine freight, air freight, just as incoterms
shipments should utilize it. Thusly, every time an exporter utilizes FedEx or DHL
to convey airship cargo, they are needed to make a FedEx or DHL business
receipt. It is needed for each abroad freight with a business worth to consent to
all tradition’s laws in the product country and have a business receipt. When the
exporter is ready to convey the items, the administrative work ought to be
finished. International business solicitations may not be responsible to nearby
charges since they don't reflect charge as a worldwide exchange.

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 3. Certificate of Origin

This certificate proves the way that the wares being traded were fabricated in the
expressed country. The exporter sends this endorsement to the shipper. It helps
with the freedom of wares from the customs authorities to the importers. The
Certificate of Origin ought to be kept separate from packing list or sales invoice,
according to customs authorities. In these nations, it ought to likewise be
supported by the exporter, legally approved and afterward marked and stepped
by a division of business, as per customs officials. Offices of trade regularly
affirm just certain data.

4. Shipping Bill

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 The Shipping bill is an essential prerequisite for looking for authorization from
customs specialists to trade products. This was just legitimate for ocean and air
transport as it were. For Fruitopia to export the local fruits, we used sea transport
as our method of transportation. Hence, it is important to give this record. This
report incorporates the subtleties of the merchandise being traded, the country's
5 appearance, conveyance date, exporter's name and address, the port of
loading, data about the vessel, consignee’s details, name of port's appearance
and some more.

5. Inspection Certificate

This document approves an item's good condition (mostly perishable products) in

assessment or investigation before transportation. Cargo is analyzed when it is
traded or given in alternate ways to different countries, particularly creating ones.
Prior to shipment, a few import nations, including the United States necessitated
that the traded merchandise be examined by the specific association, particularly
for the foods grown from the ground-based items. This archive is given to affirm
the points of interest of the items moved. After the assessment and confirmations
are performed and productive, the product can be conveyed in target countries.

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 6. Mate’s Receipt

Because of freight's utilization to send out the local fruits to the US, Mate's
Receipt is ordinarily associated with the transportation cycle by marine transport.
The chief of the ship gives this report. Commonly, it incorporates the name of the
vessel, the shipment path, the loading point, the release port, the imprints and
quantities of the shipment, the subtleties of the case, the 6 portrayals of the
products, the gross weight, the quantity of the compartment and the quantity of
the seal.

7. Bill of Lading

Bill of Lading is perhaps the main record utilized in the product by the freight in
the holder or marine transport. To start with, our company alluded to a specialist

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 to ship the item to the transporter's concurrency area and spot an unfilled
compartment at the transporter's premises to be ready and book space on the
following boat to US's destination port. Bill of Lading is shipped off the delivery
line to create this record. This is the point at which the transportation line will be
told by the specialist what kind of Bill of Lading to utilize. At the point when the
delivery has cruised, the specialist will send a Bill of Lading, a receipt, and any
going with documentation to the objective port's outsider specialist. The delivery
line will give the outsider specialist an appearance note. The outsider delegate at
the objective port will deal with the transportation and customs and set up for the
shipment to be delivered to the shipper.

Exporters ought to firmly consider making the cargo forwarder adapt to the
gigantic amount of required commodity documentation. The above reports are
generally utilized in export, which depend on both our administration's conditions
and the public authority of the trading country. The documents are utilized in
every circumstance. With respect to documentation, an exporter ought to
definitively enquire prior to doing trade. In the wake of enquiring, the exporter
ought to create a favored receipt to the purchaser, for example, a proforma
receipt and business receipt. The request is then made a situation and
acknowledgment by giving a particular timetable of the conveyance submitted.
From that point forward, an exporter ought to plan required records like a packing
list, central excise, shipping bill, certificate of origin, and bill of lading. Assuming
those archives are ready and settled by the traditions, the merchandise will be
viewed as protected to the objective concurred by both importer and exporter.

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Chapter 3: Methods and Instruments of Payment

Cash is the fundamental source of funding for any firm, both locally and
worldwide. Assuming the company has lost its capital, the organisation may face major
problems, causing the company to fail. As a result, the inflow of transactions into the
firm plays a more important role than any other position in the organisation. Many
exporters who are new to sending out imports may face difficulties in determining the
best terms of instalment for their firm. This is because, when management sends out
import exercises, various assemblages involved are dwelling a great number of miles
from their country of origin, which may result in extra vulnerabilities emerging. Because
of diverse documents, money, and rules, controlling the worldwide market is more
difficult than managing the domestic market.

Furthermore, when managing our merchant or exporter, we may have no idea

regarding their organization's monetary position or financial soundness. Furthermore,
we may not engage with the exporter and merchant by meeting by and by at the
underlying stage, so we may not be educated about the host country's specific
exchange strategy, political condition, or other technique necessary.

3.1 METHOD OF PAYMENT

A major component of a commercial contract is the tactics and tools used in

implementation. The term of instalment of our organization's product and import
operations plays an important role in global commerce. Despite the fact that our
organisation can select various methods for the merchant to make an instalment for our
merchandise, we have chosen letter of credit as our authority strategy in sending out
our Fruitopia products to the United States of America after considering the advantages
and disadvantages of using that technique. Letters of credit were chosen as our
payment strategy since they are more secure than other methods such as open
account, payment in advance, and Bill of Exchange. We can reduce the risk of payment.
Using the letter of credit approach, we may reduce the risk of payment loss.

14
 Regardless of the fact that instalments ahead of time is more safe for our
company because we obtain an amount of deals ahead of time before getting it done, it
communicates risks from the standpoint of shippers. When our firm gets paid in
advance for the product, it suggests that the shipper has faith in our ability to deliver.
Furthermore, the shipper may request that our organisation back up the letter of credit
as exhibition security, so that they may receive their discount if our organisation fails to
achieve the performance standards. Aside from that, our current importer is not another
client of ours, and it is a solid firm from whom we do not need to request payment in
advance due to the possibility of misrepresentation.

Furthermore, the advance payment method may be a difficult interaction for our
shippers in the United States since the unusual transaction must be approved by SAFE
(State Administration for Foreign Exchange). This engagement will be lengthy, and our
importer may seek a letter of credit as a certification or guarantee. Fruitopia, our firm,
and the importer will now be able to use a letter of credit.

By employing the letter of credit, Fruitopia and the importer will be putting our
trust in our respective banks to meet the promises under this instalment mechanism.
The letter of credit will provide the monetary foundation's obligation records in order for
them to make the payment to our firm. Our mediator will be the naming banks. Our
importer might reduce his risk by obtaining confirmation from a letter of credit. While,
from our perspective, the risk of not being paid or having a request dropped by our
importer is mitigated since the importer's respective bank has an irrevocable promise to
pay the items when the appropriate narrative proof is presented by our firm.
Furthermore, we have chosen the letter of credit for trading with US countries since the
country has widely used the letter of credit and has favoured that technique in the

15
majority of their trades. In the United States, there are several solid banks, such as
JPMorgan Chase Bank, Bank of America, U.S. Bancorp, and Citigroup Bank.

We chose an irrevocable letter of credit from our importer's responsible bank,

Bank of America. This is the most common type of letter credit in international trade.
This letter of credit cannot be withdrawn or dropped unless both the exporter and
importer agree. When our importer has confirmed his purchase deal, he will apply for
LC through his bank. Because our choosing bank is HSBC Bank Malaysia Ltd, the
importer's LC will be forwarded to HSBC. The HSBC will then validate the authenticity of
the LC and notify us of the coming LC, which is Export LC Advising. Our Fruitopia's
fruits will be the boat to the importer, and we will present exchange documents to the
HSBC, including the Bill of Lading receipt, draught, and a protection plan, which is the
insurance policy. The HSBC examines and presents the exchange data to the
importer's bank, Bank of America. The export LC charges handling for affirmation at
such time. The exchange records sent by our bank are received and checked by the
importer's bank. They will pay the instalment to our confirming bank, HSBC, after they
have acknowledged the trade documents. The importer will get transportation
documents to substantiate the things he purchased. HSBC Bank will provide us our
instalment.

3.2 INSTRUMENT OF PAYMENT

Credit transfers are the instalment mechanism that we are now implementing in
our organisation. The importer's bank will pay a predetermined sum to our
organization's bank on a mutually agreed-upon date. His bank will make the payment
when all of the stated requirements have been completed by both of us, Fruitopia and
the importer, and the items have been sent by our firm.

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 To summarise, we use Letters of Credit as our form of instalment when shipping
fruits to the United States. We considered all of our options and concluded that a letter
of credit is the best instrument for our transaction with a US importer. It is because the
irrevocable letter of credit from the importer's bank provides us with a guaranteed and
simple instalment, which protects the two parties from exiting the global exchange
arrangement. As a result, this instalment method is the most secure way to assure us
since the exporter and importer from the US, as we may acquire the instalment as
indicated by the date and are less vulnerable to instalment misfortune.

Figure Letter of Credit

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Chapter 4: Methods Financing Exporters

Financing is also one of the most important roles for every firm in global trade.
Before we may trade items across the border, we as exporters must meticulously plan
our finance strategy. For our company, trade finance is similar to an income solution. It
enables our firm, which is based in the United States, to market our products globally. It
is because, after we have decided on the letter of credit plan from the US importer, an
income issue will arise. Furthermore, when we transfer our items to the United States,
we will get the instalment later. As a result, sending out finance is critical for our
organisation. The export finance allows our organisation to get operating capital to
transport items to the United States before our importer pays for the things purchased.

4.1 PRE-SHIPMENT FINANCE

Pre-shipment is the stage at which our firm has been granted credit from the
bank, HSBC Bank Malaysia, to finance the processing and packing of the fruits prior to
shipping in the United States. This interaction is also known as packing credit. After the
irrevocable letter of credit for trading the items from Malaysia to the US is confirmed, the
packaging credit is granted.

As specified by Fruitopia, our firm uses HSBC Bank Malaysia Ltd's Export
Packing Credit (PC) as our pre-shipment working capital loan. While our items are being
packaged and ready for transportation, the HSBC facilitates our company's income. We
received a packaging credit in Ringgit currency, which may be taken against a legal
product Documentary Credit (DC) from HSBC Bank Malaysia. Our company's financing
charge for the packaging credit is determined by the subsidised cost of the crucial cash
for US money advances, which is established in the particular term at the time of usage.
The advantages of packaging credit to our business include aiding with satisfying the
importer's needs and enabling us to give additional significant terms to the importer. Our

18
firm should refund everything in advance in accordance with the returns trade
Documentary Credit transactions, which may include interest paid prior to the
development date.

Figure Packing Credit

4.2 POST-SHIPMENT FINANCE

Post-shipment financing will be secured by receivables generated by our transportation

reports to the importer. Because our company already has an IEC number, every shipment of
items to the United States is accompanied by a GR and SDF Form, on which the worth of our
products will be declared and confirmed by a Malaysian tradition expert. We submit the shipping
data, along with the GR structure, to the HSBC Malaysia bank within 21 days of the shipment
date.

Post shipment finance is a loan provided by a financial institution, HSBC, to our firm in
exchange for a shipment of already manufactured items. It denotes the money sent out
transactions receivable after the date of the products supplied to the date of the commodity's
returns. In this case, it is difficult for our organisation to fund receivables against our provider.

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 Figure Post-Shipment Export

The risk of instalment for our organisation is reduced by using a letter of credit, in
which the importer's bank guarantees product instalment. When the bank guarantees
the instalment through the letter of credit affirmation, it reduces the risk. Our bank,
HSBC, will be constantly prepared to enlarge the money against bills under the letter of
credit due to the security available in this strategy.

20
 Furthermore, in order to receive the asset as soon as possible, we will present
the Document against Payment to the bank and receive the cash before the importer's
bank makes the instalment to our chosen bank. However, whenever our organization's
bank, HSBC, receives the cash from the importer's bank, they will deduct the cash for
our loans as well as the interest paid.

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Chapter 5: Business Risk Management and Coverage

Risks are one of the variables that should be considered by each organization
particularly when including commodity and import business. In this manner, hazarding
the board is imperative as recognizing, evaluating, and controlling dangers to the
organization's capital and profit. Risks connected with unfamiliar activities may contrast
from the nearby activity since it includes two various nations exchanging for one
another's items. A few dangers looked by our business are a business hazard, freight
hazard, hazard emerging out of unfamiliar laws and unfamiliar trade hazard.

Business hazard is characterized by potential misfortunes emerging from the

exchanging accomplices or the market that can be capable of by an organization. There
are not many reasons for business hazard, however contest would be our primary and
significant danger to send out our items as nearby organic products will have numerous
providers among Malaysians since it is not difficult to get to and dealt with. In addition,
with enhancements in innovation, it is more straightforward for different retailers or
providers to deliver high volume items inside a brief time frame. Accordingly, we need to
distinguish which neighborhood organic products are effectively developing and reaping
just as the remarkable and required interest in the USA.

Then, freight hazard additionally is our anxiety as items are relied upon to show
up on time which is expressed or expected time is given to the purchaser or shipper. As
we use sea transport, freight delay generally wakes up in thinking about practicality just
as the wellbeing of natural products. We straightforwardly transported our organic
products to the USA as we accept new organic products ought to be conveyed quickly.
Besides, marine hazards like seismic tremors, tempests, and lighting would be a few
purposes behind postponing freight to the USA yet, we chose to cover freight hazard by
accepting a protection strategy as it is feasible to move the monetary misfortunes
because of marine risks. The protection strategy additionally covered burglary or

22
capture transportation's mix-up like unseemly dealing with, and mishap to conveying the
tank, for example, vessel sinking.

Aside from that, various laws working in home-grown nations and costly and
complex cases will cause hazards emerging out of unfamiliar laws. Because of various
unfamiliar laws applied, now and again we may cause problems as certain subtleties or
records given by our organization are not the same as the shipper's country. In any
case, on the off chance that any of these dangers emerged, it tends to be stayed away
from by the arrangement of a referee at the hour of the agreement.

In conclusion, confronting unfamiliar trade hazards is one of the difficulties that

we looked at within ten years of business. At the point when we first sent out our natural
products to the USA, we had no thoughts regarding the unfamiliar trade hazard that we
may look at right now where we incidentally pre-arranged the receipt in unfamiliar cash
that caused us misfortunes as we got the lesser sum as we anticipated. Unfamiliar trade
hazards can happen when the receipt is ready in unfamiliar cash which might make the
exporter organization. We gained from botches as we painstakingly pre-arranged
solicitations with our subtleties and Malaysia's cash in keeping away from misfortunes to
occur in the future just as keeping up with the benefits that ought to be acquired by us.
Invoicing in the Indian rupee likewise helps in staying away from unfamiliar trade
hazards.

5.1 Method of quality control Pre-Shipment Inspection

Any commodity exercises will be checked with a benchmark of explicit quality

control and assessed the quantity of items following interest from shipper or purchaser.
There are multiple ways of giving quality control and assessment upon items prior to
being sent out, for example, transfer astute investigation, in-process quality control, and

23
self-accreditation. Concerning our business, we applied a transfer shrewd assessment
as we conveyed organic products in mass yet as considered as broad items which will
be checked in arbitrarily. Our natural products will go through a few methods during the
examination. Send out review offices will investigate our organic products each time
before we are permitted to deliver our organic products to the USA. Every transfer will
be inspected, advertisement tried by the organizations and authentications will be
granted subsequent to passing the quality checks as it were. It implies that the item is
sorted as a commodity commendable that meets explicit components when tried by the
offices. Typically, our natural products will be examined and tried to meet the
benchmark needed by the commodity assessment offices and there are not many
occasions we needed to drop our request because of disappointment in gathering the
commodity commendable item. Subsequently, we further develop our creation to deliver
a top notch item that will prevail during the investigation. Any commodity exercises will
be checked with a benchmark of explicit quality control and assessed the quantity of
items following interest from shipper or purchaser. There are multiple ways of giving
quality control and assessment upon items prior to being traded, for example, transfer
savvy investigation, in-process quality control, and self-confirmation.

When utilizing the transfer savvy examination, scarcely any strategies should be
followed. We should apply for endorsed 'Hint for review' ahead of time to keep away
from delays, alongside these records which are a duplicate of the product contract,
duplicate of the letter of credit, subtleties of pressing particulars, business receipt giving
proof of Free Ready (Coxcomb) worth of the commodity transfer, crossed check/DD for
EIA towards examination expenses and revelation in regards to shipper's specialized
determination.

In the wake of getting the 'Hint for investigation', an examination will be led in our
distribution center by an overseer coordinated by EIA. Generally, a gathering of the
monitor will assess our interaction of delivering items in our processing plant. Later on,

24
assessment on an arbitrary premise will be led concerning the concurred particulars
which ought not be second rate compared to the told details. A few examples will be
attracted and shipped off the labs whenever required. Pressing and fixing of products
additionally will be examined after they are happy with the nature of merchandise. The
pressing will be checked and fixed with the authority mark of the EIA. The Appointee
Chief, sent out to the review office will give the investigation Testament to us in three-
fold which will be submitted to the traditions for the first duplicate, the copy duplicate will
be dispatched to the shipper and the last one is for our record exchanges. Other than
that, a 'Dismissal Note' will be given assuming the assessor isn't happy with the
previous outcomes examinations.

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Chapter 6: Cargo Packaging, Stowage, Marking and Dangerous Cargo Shipments

If we are not able to get the best items to where they need to go, it is pointless.
Logistics packaging is important to the delivery process for making transportation viable
and securing our goods during transit. Fruitopia's success as an exporter is dependent
on the safe delivery of goods to the client. If the damage happened during shipping, we
may be accountable for refunds and arrangement for the damaged products to be
retrieved, which involves cost. The purchaser could also choose to repurchase from a
rival and warn others about their bad experience with Fruitopia, all of which could affect
our brand’s name and ability to attract new clients.

The design of the package used is determined by the structure and perishability
of the product itself. Wooden boxes and plastic crates seem to be the most ideal
packaging for Fruitopia’s own exotic fruits. We prefer this packaging since it is more
practical for produce and can be used on several trips. It can also endure a wide range
of seasonal changes including (sea) water. Natural wood and industrially made wood-
based sheet materials are used to build wooden boxes. To avoid future cracks and mold
growth, all wood included in the packaging's manufacturing is thoroughly dried. Fruitopia
benefits greatly from the use of these boxes since they are made of a stronger and
more durable material that can withstand high levels of tension that occurs during
shipment and storage. Cost-effectiveness is a plus considering it is less expensive than
other shipping materials.

26
 As for plastic crates, it is commonly made of HDPE or polypropylene and these
crates are durable to degradation, as well as pressure impact. The products are placed
in a crate, with or without a cover and then stacked or set into a pallet, which is then
loaded onto a transportation vehicle and delivered to its location. Plastic crates
safeguard delivered and stored products from damage or breakage while also
simplifying their handling. These crates are sturdy and weather-proof and their water
resistance allows them to be used in humid environments and during hydro-cooling. Not
only that, but they are also simple to clean and disinfect. It can also be used for several
journeys, lowering the cost each journey.

27
 When arranging a package for shipment, marking is a vital measure. Labels often
indicate the package's risks and markings guarantee that the shipment is dealt properly
to avoid mishaps, accidents and contamination. As a result, they must be used
correctly, convey the right information and stick to regulations. Accurate and detailed
marking is required. Its color should contrast sharply with that of the package, which is
often black. It can also be used on labels that are adhered to the surface. Black symbols
on a white background should be used whenever possible. Fruitopia needs to confirm
that boxes are correctly tagged with important information to assist the operational
movements in the shipping and storage of the items to enable handlers to ensure that
they know what products are in which boxes and the protocols they should follow in
handling these goods. As a result, the handling procedure is safer and time is saved,
which can contribute to cost savings.

When the fruits’ skin is bruised, the handle with care symbol prevents the fruit
nutrients from being exposed, allowing germs on the fruits’ surface to colonize the area.
As a result, there is a greater chance of infection. Other than that, the symbol meaning
maintain in a cool, dry area is used to prevent the risk of mold growth and other sorts of
deterioration. This side up indication, on the other hand, is for items that should never
be carried upside-down or sideways since they could cause damage. If this is not done,
the contents will be vulnerable to damage. It also shows our customers on where they
should open the package to avoid harming the produce and themselves while doing so.

28
29
Chapter 7: Containerization and Leasing Practices

Containerization is the method of transporting goods in precisely sized containers

for shipping. Containers may hold almost anything but they are especially useful for
transporting produced items. It is a container-based way of distributing commodities.
The usage of containers has aided in many transportation of products.

Malaysia's tropical fruit exports have been going up in price, a development the
country intends to continue as it strives to become a major tropical fruit producer. The
average value of Malaysia's tropical fruit exports climbed by 12.29 percent per year from
2015 to 2018, according to Malaysia's deputy minister of agriculture and food industry.
"Malaysian fruits including durian, jackfruit, papaya, watermelon, banana, mangosteen
and rambutan have a lot of export potential, particularly to China, Taiwan, Korea,
Singapore, Australia, the Middle East, Europe and the United States."

Fruits are imported in large quantities in the United States and since there are
temperature-controlled shipping containers that can maintain a consistent low
temperature, Refrigerated ISO containers are the ultimate choice for Fruitopia's export
goods. They are exclusively used to transport perishable commodities across long
distances. Additionally, this form of container is suited for our fresh produce since it can
be adjusted to hold low-temperature goods that require a specific temperature to keep
the fruits inside safe. The way these carriers operate is by distributing cold air from the
floor through the decking, which is designed to provide a steady air flow throughout the
shipment. To keep the fruits fresh, an optimal air exchange is maintained during the trip.
Most importantly, these reefer containers are not designed to freeze or chill Fruitopia’s
cargo but instead, they aid in keeping the items pre-cooled or frozen. It can not only
retain a cool temperature but they can also "warm up" things that require it to 30
degrees Celsius, regardless of the outside temperature.

30
Chapter 8: Logistics and Characteristics of Modes of Transportation

In light of this section, strategy interaction is extremely muddled as the greatest

to continue moving starting with one point onto the next point. The goal of a calculated
situation is that the right items arrive at the ideal locations in the perfect amount and at
the ideal opportunity to fulfill client interest. There are three cycles associated with
setting up a successful strategies framework which is arranging, carrying out and
controlling. The principal cycle is arranging where the geological areas, the amount
requested of fruits, the compartment use and method of transportation has been
recognized and gotten ready for our organization in Malaysia to send out in the USA.

Executing is the second step in a successful coordinated operations framework.

The request cycle is just through the web as it is a lot more straightforward and quicker
to deliver. At the point when the request got from the USA to trade nearby organic
products in Malaysia, we intend to guarantee that the request is precise, then at that
point, the freight is required for Fruitopia to be prepared to send out. It will be shipped
off the port when the freight has been stuffed into the holder, where the client will do an
investigation inside the compartment. The freight begins the excursion from Malaysian
port to the last objective to the port of USA. In this cycle, it requires exact guidance,
speedy correspondence and shared comprehension since it is the key element of the
effective execution of an operations plan. When the objective port has been reached,
experts can empty the freight when the cargo has been paid. At that point, it is moved to
the purchaser's hand at the port. After all products show up at the port in the USA, the
purchaser needs to generally orchestrate merchandise without anyone else to the
grocery store. That is the way the import and product methodology exchange occurs
among Malaysia and USA when we send out our neighborhood organic products in the
USA. Thus, any businesses that have proficient operations intend to begin the
excursion by trading items to purchasers. It is on the grounds that the coordinated

31
factors are vital to guarantee the merchandise show up securely all through the outing
so purchasers are fulfilled and no danger is forced on them.

32
Critical elements of a logistics system

The main component of a strategic framework is the idea of the item. We use sea
transport for the item to be shipped to the USA. As an exporter, the choice of the
method of transport is vital to stay away from harm to the products which our
organization trades nearby organic products. In any case, the wellbeing of the products
is vital despite the fact that the item is low worth however high volume. The subsequent
component is the area of the assembling plant. The assembling plant in Malaysia
situated close to the port would make the development of merchandise simple. Thirdly,
the accessibility of the framework. Huge endeavors and significant speculations have
been made by the Malaysian government to foster its thruways, railways, seaports and
air terminals. Along these lines, the foundation in Malaysia is fantastic and will help the
development of commodities and imports. Great ocean courses conditions in Malaysia
help the expedient development of freight without wastage of time when sending out the
products.

It is difficult for each operations supervisor to conclude the most reasonable

method of transportation; we have picked sea transportation for our method of transport
to convey neighborhood natural products in the USA. We use ocean courses for
conveying the mass of foods grown from the ground of the global exchange is led via
ocean courses. It is on the grounds that natural products in Malaysia comprise of
merchandise with high volume and low worth and are appropriate for sea transport. In
any case, the greatest benefit of this mode is the capacity of a boat to convey an
extremely enormous volume of freight. The expense of misfortune and harm from ocean
transport is low when contrasted with different methods of transport. Taking everything
into account, harm and postponements are not kidding worries for the transporters. At
long last, the expense of bundling of ocean freight is high because of the chance of
harms during stacking and dumping activity at the port.

33
Chapter 9: International Commercial Terms (INCOTERMS)

Traders must utilize International Commercial Terms or Incoterms, when

scheduling import and export trips. When it comes to international product sales,
Incoterms, The International Chamber of Commerce (ICC) has produced a set of 11
rules that outline the obligations of both vendors and purchasers. The International
Chamber of Commerce (ICC) was the first to use the word in 1936. Traders, resellers,
and purchasers are also responsible for things like packaging, labeling, shipping,
logistics and insurance. Each Incoterms law is important because it outlines the
responsibilities, costs and risks that buyers and sellers must face while doing business.
Getting acquainted with Incoterms may help your transactions go more smoothly since
they clearly define who is responsible for what at each stage of the transaction.

Cost insurance and freight (enter the port of destination) is a term we have
picked for our business and the exportation of our products to the United States since
it's appropriate. Cost Insurance and Freight (CIF) requires us to cover the transportation
costs from Klang port to Los Angeles, USA. Not only that, but since we are a provider of
perishable items, we have also paid the expense of the insurance. We picked Cost
Insurance and Freight (CIF) because we found these Incoterms to be extremely handy
and saved the money on our manufacturing expenses and the cost of production. We
are only responsible for the cost of shipping and insurance.

Moreover, we can compete with any other fruit seller on the market by offering
our products at a lower price. In addition, we chose cost insurance and freight since it is
the fastest and most efficient way to get our items to our customers and buyers. We
were able to shorten the delivery time in this way. Because we went with Cost
Insurance and Freight, we had professional and friendly service (CIF), because of the
low cost and rapid service, our clients will be delighted. This may help us build a
following of long-term clients. More customers and a better reputation for our

34
organization are two additional benefits. It is very important to strengthen or in the same
sense, to further increase the name of our company and the reputation of our company,
because in the world of trade, we need our best efforts to gain the trust of foreigners.

During this whole cost insurance and freight (CIF) procedure, in order to
transport our items from the factory to Klang port, we employed container truck
transport. First, customs officers at the port of Klang must ensure that all of our fruit is
safe to eat, clean and satisfy the requirements listed on our invoices. Furthermore, only
products that have passed inspection are permitted to be loaded onto the ship. Fruits
that are rotten or do not meet quality standards will not be permitted to enter the cargo.
This indicates that we exclusively ship high-quality fruits. It needs to be done because
we want to maintain the quality of our product. We don’t want to give bad quality fruit to
our users as it will disappoint them.

Shipped products will be delivered to a Los Angeles port when they arrive.
Because we have insurance, if our fruits are damaged by severe waves while the ship is
sailing, we will be reimbursed. It can obviously simplify our work as well as help us trade
more smoothly. The buyer is responsible for arranging for the delivery of all products to
the market when products arrive at the port.

35
Chapter 10: Clearance Customs

Clearance of goods is required of all importers and exporters to ensure that the items
brought into the nation conform with applicable regulations. Apart from that, it aims to
deter criminal activities. Every country has its own set of rules, and exporters and
importers must be cautious of the country's legislation governing the entrance of
commodities.

Firstly, during the process customs must check our items during shipment. Due
to the fact that we travelled by sea freight, we were inspected at the customs place.
Before advancing to the next phase of verification, we must first register. Prior to
submitting the shipping bill for clearance of export products, we must obtain a PAN-
based Business Identification Number (BIN) from the Directorate General of Foreign
Trade. We have given a variety of different sorts of documentation, including originals
and photocopies. The documents that we are required to implement is an invoice, a
guaranteed remittance form (GR), a packing list, a country of origin certificate, a
shipping bill, a pre-shipment inspection certificate, an Application for Removal of
Excisable Goods (ARE), a letter of credit, and a Certification of Origin (COO). Fruitopia
employed the standardl procedure throughout the Malaysian customs investigation
process.

After that, customs has verified the amount of our merchandise and the
applicable export tax rate. Additionally, they matched our items to the DEEC book using
our invoices and Duty Exemption Entitlement Certificate (DEEC) shipping bill.
Additionally, they will undertake a physical inspection of our things after a review of the
shipping bill. The organization will verify to sure that our goods are the same quantity
and weight as those indicated at the documentation. After finish the physical inspection,
customs dissimenated us a 'Order Let,' to indicate that we may continue bringing a
cargo of the products on board.

Then, the importer must conduct a customs examination prior to releasing the
goods into the market. With that, we find out that importers used the EDI technique
which is the usage of IT systems. The importers are not required to bring any

36
documentation with them while claiming their belongings. They must submit a cargo
declaration with all relevant information about the goods. The importer must submit a
cargo declaration with all relevant information about the goods. By that, they
automatically created a B/E. After that, the officer would review the consignment's data
using an electronic system. The customs will verify duty rates, applicable currency
rates, and other relatable during the computer examinations. After the checking is
complete, they will print the B/E on which the products were inspected.

37
Conclusion

To sum up, our business is very focused on the whole export procedure, from the
beginning to the end. We make certain that all processes are carried out under the
proper circumstances. Due to this, our products will be readily exported, and all the
export processes went well. As a bonus from the hard work of every staff member, this
may help us retain the high quality of our products and the reputation of our business,
increasing customer confidence in our business and products. It can also give us a
good perspective on the world around us. We have discovered that we've acquired a lot
of clients via our export company, and they are also happy with our service and
products. People are choosing us because we are good in every way because we want
to satisfy them, as seen by this.

Furthermore, we are hopeful that we will be able to produce more high-quality

fruit in the future, allowing us to further enter the western market and even wider. We
also hope that we can build our brand in Asian countries like China, Japan and others
because we see a good opportunity there. By investing in cutting-edge research and
development, we want to improve the quality of our products by creating superior
fertilizers and crops. We will also continue to strive to improve the methods of treating,
caring for and even handling our products because we believe that every day, we are all
exposed to technology and new ideas. Therefore, we hope that we will be able to create
and adapt new methods and technologies to ensure that the quality of our products will
improve from time to time. Besides that, Malaysian enterprises may help us grow more
fresh fruit if the Malaysian government helps them with funding or other means. It might
also help Malaysia lessen its dependence on imports from other countries. We need to
produce more quality fruit for Malaysians and outside Malaysians and it will help our
economy in hopes to become a more competitive and well-known firm across the globe.

38
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gdv.de/tis_e/verpack/markier/markier-htm/

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Watson, K. (2015, November 24). The Importance of Packaging in Transport and

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packaging-in-transport-and-logistics

What is a Packing List? (2020). FREIGHT RIGHT.

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%20a,the%20outside%20of%20the%20boxes.

Bill of Lading. (2021, September 3). Investopedia.

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Certificates of Origin. (2020, November 25). ICC - International Chamber of Commerce.

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Mate Receipt. (2019). How To Export Import. https://howtoexportimport.com/Mate-

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%20in%20the%20vessel.&text=Bill%20of%20lading%20is%20prepared,document

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https://www.cogoport.com/shipping-terms/shipping-bill-45

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What Is An Inspection Certificate | Types, Purpose & More | Drip Capital. (2021).

Dripcapital. https://www.dripcapital.com/en-us/resources/blog/inspection-certificate

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fruit processing | Definition, Industry, Method, & Products. (n.d.). Encyclopedia

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The Seller Pays Cost, Insurance, and Freight (CIF) to Protect Shipments. (2021, July

28). Investopedia. https://www.investopedia.com/terms/c/cif.asp

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APPENDIX

Figure 1: Packing List

Figure 2: Commercial Invoice

41
 Figure 3: Certificate of Origin

Figure 4: Shipping Bill

Figure 5: Inspection Certificate

42
 Figure 6: Mate’s Receipt

Figure 7: Bill of Lading

43
 Figure 7: Letter of Credit

Figure 8: Packing Credit

44
 Figure 9: Post-Shipment Export

Figure 10: Export Documentary Credit

45
 Figure 11

Figure 12

Figure 13

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47