Answers to previous week’s “Who's who” questions: Shipper The owner of commodities exporting them overseas Consignee A person or company to whom commodities are shipped Freight Forwarder A person who acts as an agent for the exporter in moving cargo to the overseas destination Carrier A person or company engaged in transporting goods People-to-people relationships are primary components in successfully doing business internationally. But how can you really get to know the people you’re doing business with when they live thousands of miles away from you? How can you know they’ll pay you for the product you ship to them or that they’ll ship the product when they say they will? Take a look below at an example of how you can protect yourself when doing business internationally.   Shipper (Seller of Goods: Ms. Dalton) I’ve never met Mr. Yee, so I don’t know whether he will pay me as promised, or will even still be in business by the time the cloth gets to Hong Kong. I’d like to get paid for the cloth as soon as I deliver it to APL to be shipped. I don’t want to go to the trouble and expense of manufacturing the cloth unless I can be sure that Mr. Yee will pay me on time. If something should go wrong, I may end up with my cloth and a lawsuit in a foreign country.   Consignee (Buyer of Goods: Mr. Yee) I’ve never met Ms. Dalton, so I don’t know how reliable a manufacturer or a businesswoman she is. I can’t inspect the cloth myself. I don’t want to pay unless I have some assurance that Ms. Dalton is sending me exactly what I ordered, the cloth is in good condition and I’ll get it when I need it. I’d prefer to wait to pay until I actually get the cloth.   Buyers (consignees) and Sellers (shippers) usually have certain basic objectives in mind when they select a method of payment:   1 Buyers (consignees) want to receive the goods they order, and 1 Sellers (shippers) want to be paid the agreed upon price in a timely manner   The most common form of payment method is the Letter of Credit, or L/C. What is a Letter of Credit? It is similar to a credit card in that it is a promise to pay. It is a letter addressed by a bank on behalf of a buyer of goods to a seller of goods, authorizing payment up to the agreed upon amount under certain specified terms. Letters of Credit also can be viewed as a form of contract between the buyer and seller. The contract basically says that if the seller (shipper) has provided the correct goods shipped on time to the right location at the agreed price, then the bank will pay him/her in some fashion.   Review Questions:   A shipper is also the ________ of goods. A consignee is also the _________ of goods. A letter of credit is similar to paying for goods with a ____________.   Using the Letter of Credit payment method, a seller has to do what three things in order to get paid by the bank:   1   2   3   Home Journey Log Trade Topics People Profiles Index Ask the Eagle