Trade Risks of International Finance

The import and export sector

The import and export sector is confronted with many threats, liabilities, and costs which international traders have to meet. The goal is to provide traders with an insight into international trade.


In foreign shipping, the exporter can comply with packaging requests. Markings often include the use of particular labeling and markings by merchants. Also, traders are expected to have a further duty in relation to documents such as commercial invoices, lading letters, certificates of origin, insurance certificates, export licenses, and export bundling list (Katzman & United States., 2011). Insurance to protect against loss and damage in case adverse weather and poor handling by the carrier is also another important obligation to be fulfilled.


There are various risks faced by exporters and importers in international transactions. During handling of goods, there is the danger of rough handling by carriers. Adverse weather conditions, loss or damage from acts of war, deterioration from delay, strikes, civil commotions, and riots are also other risks that international traders face (Katzman & United States., 2011). The exporter should also use seals and straps to protect goods.


Costs include domestic manufacturing costs, administration, freight forwarding, research and development, port handling fees, ocean freight and insurance, local freight, importer duty and customs charges (Katzman & United States., 2011).

Specific Delivery Terms

CIF (cost, insurance, and freight) – The seller makes a quotation of the price, transport costs, and other miscellaneous costs to the point of arrival of the vessel.

CFR is the cost and freight to an identified overseas port.

EXW (ex-works) – refers to a certain point of origin.

FAS (free alongside ship) – refers to the price quote for goods by the seller (Katzman & United States., 2011).

FCA (Free carrier) – refers to an identified place in the country of origin.

FOB (free on board)- refers to a certain identified port in the country of origin.

CIP (carriage and insurance paid to) and CPT (carriage paid to) apply to a certain destination and are used in place of CIF and CFR for all transportation modes (Katzman & United States., 2011).


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Katzman, J., & United States. (2011). A basic guide to exporting: The official government resource for small- and medium-sized businesses. New York: Skyhorse Pub.

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