What the heck is T/T in Advance?
June 29, 2010 7:45 PM   Subscribe

I am trying to order a couple of fans for a CNC machine which I have only been able to find at a company in South Korea. Their price quotation states the following: WE ARE PLEASED TO QUOTE YOU THE UNDERMENTIONED GOODS ON THE TERMS AND CONDITIONS DESCRIBED AS FOLLOWS : PRICE TERMS : FOB INCHON AIRPORT (BY DHL) DELIVERY : 7 days upon receipt of a official order. Buyer selects Carrier & method of delivery at Buyer's cost. Applicable Duties & Taxes to be paid by Buyer. PAYMENT : 100% T/T IN ADVANCED PACKINGS : EXPORT STANDARD PACKING VALIDITY : July 15, 2010

How does one select the carrier and method of delivery? Or figure the applicable duties & taxes? I gather the T/T in Advance refers to a bank wire transfer. Is there any scamming potential there? I am located in the US. Any help here is appreciated.
posted by digsrus to Shopping (13 answers total)
If that doesn't work out, try MSC Industrial Supply, call the machinery department, they are the premier supplier of parts like that. When dealing ouside the US you've got to use a broker I think.
posted by ~Sushma~ at 7:52 PM on June 29, 2010

FOB is a legal term which means "Free on Board" - the actually legal definition varies from country to country - but generally, it means, they will get it on board some sort of craft in in their country for free, then you pay from there.

Basically, it sounds to me like they are saying, they will get it to the airport, and put it on the DHL plane for free. But you have to pay for the shipping flight, and you have to pay any customs and taxes.

I have no idea what shipping, custom, and taxes could cost.
and I am not a lawyer, so i am not 100% sure of all the implications in the term FOB
posted by Flood at 8:00 PM on June 29, 2010

Yes, T/T means a wire transfer, or more specifically a Telegraphic Transfer. There is risk in paying upfront, but their terms are their terms. It's just a matter of whether you trust them and how badly you need the fans.

Your best bet might be to contact DHL and let them take care of it. They can handle the customs entry, and of course they can take care of the shipping. Otherwise you could book a cargo shipment on any airline you choose, and the seller would deliver it there (FOB = Free On Board -- the seller's responsibility ends when it is delivered to the airline of your choosing). Once it arrives, depending on specific commodity and the value of the shipment you could either clear the shipment through Customs yourself (if there is a Customs office at your airport and the shipment is such that Customs will accept an informal entry), or hire a customs broker to do a formal entry. You can get an idea of the applicable duty by determining the HTS# here, but that's an enormous database and it can be difficult to figure out exactly where your product would be classified.
posted by Balonious Assault at 8:13 PM on June 29, 2010 [2 favorites]

Basically what Balonious Assault said, but yeah, enlist the courier's assistance as the shipping and customs agent for whatever fees they charge to do that. Customs is a very tricky specialty in its own right, and you need a local agent to ensure that things don't get fouled up.

But didn't DHL exit the stateside delivery market? UPS has a very well developed international shipping and customs business - you might look into that. I would think that the shipper would be just as willing to ship it for you that way, and then you'd have one party (UPS) responsible for getting it from their door, through customs, and to yours.

Your delivery/customs agent could give you an fairly precise shipping cost if the package size, weight, and both addresses (theirs and yours) are given to them, but duties and customs can probably only be estimated.

Just to be clear, your payment by wire transfer to the vendor will only cover the product, and you'll pay the delivery/customs agent the shipping, customs, etc. - if you have an account, they'll bill you, if not, I'd expect they'd get a credit card.

Usually the customs charges are similar to sales or VAT tax, with a bit of extra fee charged by the broker itself. But if you're not familiar with international shipping, be prepared for the shipping to be enormously expensive compared with what you're used to. The same package I ship every day anywhere in the 48 states for $8-12 costs $50-90 when sent overseas, and UPS gives me discounted rates.
posted by randomkeystrike at 8:33 PM on June 29, 2010 [2 favorites]

I'm working for a company in Seoul that exports a huge range of stuff. Your question is pretty much what I deal with every day. Nonetheless, I am not your lawyer and this is not legal advice.

FOB means that the price you are quoted includes the seller's putting it on board. In international settings, FOB is almost certainly going to be understood as using the INCOTERMS 2000 definitions. You can ask them to confirm that.

More inclusive INCOTERMS will include the cost of freight (i.e., transport), insurance, unloading upon arrival, duties upon arrival, and more. FOB is pretty bare-bones, the only thing less inclusive is EXW or "ex-works" meaning that seller will pop it out of the factory and let you come pick it up yourself. Here, seller's at least getting it to the airport. Anyway, import duties in the US (or whatever the destination) are the responsibility of the consignee (the person to whom the shipment is supposed to be delivered).

T/T is risky since you are paying up front. But Sellers would always prefer that since there's no risk that the Buyer will flake out on payment. Buyers would, of course, prefer to buy on credit-- don't pay the Seller until you get the stuff in your hands.

The middle ground is a letter of credit, somewhat like an escrow transaction. Your bank opens a letter of credit to Seller, saying that he can get his payment if he submits certain documents evidencing that he has indeed shipped the goods. Buyers like this because they know payment won't be made until Seller ships. Sellers like this because they know the money is there. Typically, LC's (letters of credit) use negotiable bills of lading which are documents of title. You can't pick up the goods until you can present a bill of lading to the carrier. But air freight is a little different. Goods shipped by air are done under an air waybill, which is NOT a document of title. The carrier just has to release the goods to the consignee named on the air waybill and doesn't need any documentation from the buyer. I suspect air freight works like this because bank processing of the documents in an LC transaction can take several days before you get the bill of lading...by which time your cargo has already arrived and is accruing storage charges.

You don't have to use DHL. It's up to you to arrange shipment, so choose whomever is flying out of Incheon. Hell, you don't have to use air freight at all here. If the size of the shipment and the flexibility of transportation time permit, you could negotiate totally different shipment terms. LCs, which are safest for buyer and seller, are designed to work with ocean freight. You haven't signed anything yet, so make an alternative proposal if you want. Get in touch with a freight forwarder to handle this stuff.

The freight forwarder may or may not offer customs broker services. In the US, getting stuff through customs is not for the faint of heart, and it is usually best to hire a licensed customs broker to get your stuff through customs. Find a freight forwarder who does offer these services (i.e., has customs brokers on staff) or can recommend a customs broker for you.
posted by holterbarbour at 9:52 PM on June 29, 2010 [2 favorites]

just out of curiousity, what cnc machine? would you be interested in trading machine time for hi rez 3d scans of nude women?
posted by kimyo at 10:57 PM on June 29, 2010

Surely some more easily obtained fans may fit? Try asking on www.cnczone.com for advice.
posted by aeschenkarnos at 4:30 AM on June 30, 2010 [1 favorite]

Response by poster: I have contacted DHL who indicated that they may be able to handle the job. We shall see. The fans in question are identical to a five inch square fan you may find in a tower PC, except they are 220 volts. As a last resort I may try to kluge a solution with a lower voltage fan, but I would really like to make an exact replacement.

This is an older machine which we purchased used about ten years ago. Over that time period, we have bought many replacement parts from the original manufacturer. However, now it seems some genius at the factory decided that it would be a good idea if they charged a registration fee before you can buy spare parts from them. The scoundrel figured $750 sounded about right. It will be a cold day in hell before I pay $750 to have the honor of buying parts from them.
posted by digsrus at 5:39 AM on June 30, 2010

Response by poster: DHL has quoted me a price of $525! These fans list for $65 each.

I created a post on CNCZone to see if there are any ideas over there.
posted by digsrus at 6:15 AM on June 30, 2010

Mouser.com has a bunch of 220V fans. You're looking for a 119mm or 120mm fan, likely. Select Thermal Management -> Fans and Blowers. Choose 220 V, 220 V / 230 V, and 230 V. Then highlight all the fans from 119 mm x 25 mm to 120 mm x 38 mm. You can measure your fans to find a matching thickness, too. Prices start at $10.71.

Direct link to my search (although I don't know if this link will stay valid).
posted by 6550 at 6:28 AM on June 30, 2010 [1 favorite]

Of course make sure to check the product page or data sheet to confirm the fan type. Some of those might be mounted in round housing, not square, for example.
posted by 6550 at 6:39 AM on June 30, 2010

With DHL, UPS, etc. you pay for the convenience of only having to deal with one party, but they do charge a lot for their services and you can save money by doing more of the legwork yourself. Here are a few more suggestions:

I take it from your profile that you're in New Jersey. You might try contacting one of the customs brokers/forwarders listed here. Call them up, let them know what you're bringing in, tell them it's an FOB Inchon (Korea) shipment, and ask if they can help with the customs entry and if they can also help arrange the shipment from Inchon. Some of them will have agents overseas who can help with that, or will be able to recommend someone. You may need to call several brokers before you find one willing and able to help. You might also check with DHL and UPS to see what they will charge just for the shipping, and you'll handle the customs entry yourself (above). Also check if the seller will ship it directly to you via DHL or UPS. Maybe see if they can quote you a FCA price instead of FOB, meaning your agent (DHL or UPS, for example) will pick it up at the seller's location and take it from there. They might be willing to knock off the amount in their FOB price that's for delivering it to the airport.

Without knowing enough about the fans to say for sure, it seems likely to me that they'd be classified under subheading 8414.59.60, which has a duty rate of 2.3%.

If all goes well I'd guess you might be able to get it shipped for around $100, and find a customs broker who will handle the entry & duty payment for another $100-$200.

Another option might be to see if you can find out which U.S. companies do business with that seller, and see if they can order the parts for you. Your best bet will definitely be to find the fans domestically if at all possible.

Good luck!
posted by Balonious Assault at 7:05 AM on June 30, 2010 [1 favorite]

Response by poster: Since my last post, someone at CNCZone also suggested a local supplier. I was able to match up a similar replacement at Digikey. Price? $24 ea! AskMefi FTW!

Thanks to everyone for your help.
posted by digsrus at 7:43 AM on June 30, 2010

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