Fernando Jimenez

Distressed cargo is a term used more in bulk trades. A cargo is termed distressed cargo for a few reasons:
A buyer defaults on a contract due to a drop in commodity prices. When a seller or buyer has left it too late for execution of the trade under normal vessel and product scheduling time frames. A ship is unable to offload a cargo at a specified port due to bad weather and have to sail from that port within a specified time frame to honour their other employments which means they have to classify the cargo as distressed cargo and try to get rid of it before they reach their next port.

When a company uses the weighted-average method and prices are rising, its cost of goods sold is less than that obtained under LIFO, but more than that obtained under FIFO. Inventory is not as badly understated as under LIFO, but it is not as up-to-date as under FIFO. Weighted-average costing takes a middle-of-the-road approach. A company can manipulate income under the weighted-average costing method by buying or failing to buy goods near year-end. However, the averaging process reduces the effects of buying or not buying.

The four inventory costing methods, specific identification, FIFO, LIFO, and weighted-average, involve assumptions about how costs flow through a business. In some instances, assumed cost flows may correspond with the actual physical flow of goods. For example, fresh meats and dairy products must flow in a FIFO manner to avoid spoilage losses. In contrast, firms use coal stacked in a pile in a LIFO manner because the newest units purchased are unloaded on top of the pile and sold first. Gasoline held in a tank is a good example of an inventory that has an average physical flow. As the tank is refilled, the new gasoline mixes with the old. Thus, any amount used is a blend of the old gas with the new.

A Bill of Lading (BOL) is a legal document used to detail all the particulars of the cargo – the buyer, description of goods, container number, port of origin, and port of destination. The BOL is usually produced in triplicate so there is one for the shipper, one for the consignee, and one for the broker or third party but there may be more than three copies. The exporter must send the Bill of Lading to the importer/buyer for them to collect the goods.

An Express Release Bill of Lading means an electronic copy is sufficient for the carrier at the final destination to release the cargo to the final consignee stated in the Bill of Lading. If the BOL isn’t Express Release then the original documents must be mailed/couriered to the buyer so they can present at the time of collection. Using Express Release saves time and money. After import custom clearance, the buyer shows the necessary identification and the cargo is provided to them.

A Bill of Lading may be used for any kind of carriage, not just sea. It may be called an Airway Bill when goods are sent by air.

The export declaration can be lodged in Finland, i.e. the country of departure, if the value of the goods does not exceed 3 000 euros and the goods are not subject to prohibitions or restrictions. If the value of the goods exceeds 3 000 euros, the export declaration can be lodged in Finland if the goods have been manufactured or purchased in Finland or if they are in consignment stock in Finland.

A consignment stock is, in the context of the export procedure, any warehouse that has an address and receives goods meant for export, and from where such goods depart. In addition to an export declaration being lodged, the transfer to Finland of goods meant for export must be entered in the EU VAT Information Exchange System (VIES) as a transfer of own goods. Due to this, the goods must be registered as received either by the exporter or an authorised party. The registration must be done using the VAT number received from the Finnish Tax Administration (number beginning with “FI”).

When an export licence is required for the goods, the export declaration must be lodged in accordance with the licence requirements, usually only to the country of export. The exporter has to be established in the Union. An agreement party established in the Union is regarded as the exporter even when the right of ownership of the goods has been transferred to a buyer established outside the Union in accordance with a term of sale (for example Ex Works) or some other agreement.

The declarant status indicates the type of representation for a customs declaration. It shows if a business is acting on its own behalf, or if a direct or indirect representative is completing the customs declaration.