Researching local infrastructure

What is infrastructure?

For trade purposes, important elements of local infrastructure include:

• port and airport handling facilities
• customs procedures
• onward transport – road and rail
• warehousing
• communications, such as internet access

You should do in-depth research on these features to reduce risk, avoid delays and keep freight movement under your control as much as possible. Many businesses use the advice and expertise of their freight forwarders, especially in countries where infrastructure can be complex ( for example, China) or less well developed (for example, some African markets). You can also use the expertise of local agents or distributors.

You’ll also need to look at the regulations for your target market, and how this works with infrastructure to affect your exports.

Research port capability and handling

Whatever you export, make sure local carriers and ports are equipped to handle it. This could apply to:

• foodstuffs (shelf life and temperature)
• loading limitations due to volume or weight
• bonded cargo (alcohol and tobacco)
• hazchem (hazardous chemicals)

Check the political situation

Wars, coups and strikes can all impact your ability to export into a market, so keep up to date with political events there.

For example, in the 1990s the Russian banking system collapsed, affecting the security of payment channels and the ease of getting hard currency.

Be aware of weather conditions and time of year

Examples of weather that could affect you include:

• severe cold that affects docking and port handling – for example, ice blocking the port of Saint Petersburg
• cyclones in far eastern countries
• severe weather at US ports
• severe fires in Australia

You will even need to plan for the possibility of earthquakes in certain regions, so if needed you can divert cargo while it's on the move.

Assess the security situation

Security is now a constant feature in managing consignments as they move between factory, port and final destination. This can add a regulatory cost to your freight.

Following the 9/11 terror attack, for example, the US imposed stricter controls on freight, with the result that many countries now ask that the exporter has Approved Economic Operator (AEO) status. This shows that the exporter:

• understands customs rules and declarations
• operates secure systems when handling its consignments

Factor in insurance costs

Infrastructure standards and political risk in the export country have a direct impact on insurance premiums, so take these into account.

If you’re asked to manage onward transport inland, look at road or rail standards, and check with insurers that the cargo will be covered.

You’ll also need to understand at what point risk and liability moves from you to the buyer. This is determined by shipping terms at the time of quotation and contract signing. These International Commercial Terms (Incoterms) are set by the International Chamber of Commerce (ICC).

Check local regulations and standards

Be aware of import and packing regulations that can cause unexpected snags or slow down the process.

Look at the onward transportation from port to destination. Check that the dimensions of the pallets you use match the dimensions for container or trailer configuration, stacking requirements and local warehousing.