For many of our international customers, Letters of Credit (L\/C\u2019s) can be a useful tool when financing their equipment project and provide many protections for the buyer and the seller. \u00a0In some cases, this payment tool is the only way to send US Dollars out of the initiating country. \u00a0Insta-Pro is pro-active in ensuring that our customers can navigate the process as simply as possible.<\/p>\n
For every Letter of Credit shipment, Insta-Pro will send order-specific instructions for the customer to provide to their bank prior to issuing the L\/C.\u00a0 Some of the key pieces information included in these instructions are the following:<\/p>\n
Latest Ship Date:<\/u>\u00a0 Banks often charge fees based on how long an L\/C is going to be open so a customer may look at the date on our instructions and ask that it be shortened.\u00a0 However, there are a number of items that factor in the calculation of this date.\u00a0 The first is based on the Dispatch Date that was indicated on the Insta-Pro Purchase Agreement.\u00a0 If we quoted 6-10 weeks, we would start the calculation at 10 weeks.\u00a0 We then add 3 weeks to allow the container shipment to make its way from our factory in Iowa to the US or Canadian port.\u00a0 Iowa is centrally located in the United States and the containers typically travel to the coasts via rail.\u00a0 This transportation method is slower, but definitely more economical and results in lower freight costs for our customers. Finally, we add 2-4 weeks to give the customer time to work with their bank to open the L\/C.<\/p>\n
Confirmation<\/u>: We ask for a confirmed Letter of Credit so that the US bank agrees to pay the LC amount in case the foreign bank defaults.\u00a0 Many country changes can occur in the 3-4 months that an L\/C is typically open for and we want to be able to supply the order without any disruptions.<\/p>\n
Partial Shipments<\/u>: We always ask that partial shipment be \u201cAllowed\u201d.\u00a0 However, be assured we plan on sending out complete orders and in the rare case where that is not possible, we would contact the customer so they can decide whether to delay the shipment or send a partial shipment.\u00a0 The main reason we ask for the \u201cAllowed\u201d partial shipment is when the order requires more than one container.\u00a0 This allows the containers to travel on different vessels if necessary.\u00a0 It is possible for us to load containers within a day of each other, but they then arrive at the port a week apart due to weather or rail delays that are out of our control.<\/p>\n
Transshipment:<\/u> We also ask that transshipment be \u201cAllowed\u201d.\u00a0 With all the ocean carrier mergers in recent years, it is common practice for carriers to stop at a hub port and have the vessel\u2019s containers re-distributed to other vessels traveling in multiple directions.<\/p>\n