Below is my final project that I did in Import/Export Regulations my junior year. I was importing a hydrogen fuel cell powered car from Japan.
Export-Import Term Project
Importing Honda FCX Clarity
Brandon Chapman
Tra. 405
Commodity
The item that I will be importing into the United States will be a fuel cell powered car made in Japan by Honda.
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Model type |
Honda fuel cell vehicle |
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Name |
FCX Clarity |
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Overall length (inches) |
190.3 |
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Overall width (inches) |
72.7 |
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Overall height (inches) |
57.8 |
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Wheelbase (inches) |
110.2 |
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Tread (front/rear, inches) |
62.2/62.8 |
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Vehicle weight (kg/pounds) |
1,625/3,582 |
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Number of occupants |
4 |
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Performance |
0-60 km/hr (apprx 37 mph): 4.8 seconds |
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Maximum speed (mph) |
100 |
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Vehicle range, new EPA-combined label value (miles)* |
68 mpg |
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Powertrain |
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Drive method |
Front-wheel drive |
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Motor |
Type |
AC synchronous electric motor (permanent magnet) |
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Max. output (kW/hp) |
100 [134] |
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Max. torque (N·m/lb.-ft.) |
256 [189] |
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Fuel cell stack |
Type |
PEMFC (Proton Exchange Membrane Fuel Cell) |
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Max. output (kW)* |
100 |
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Lithium ion battery Voltage (V)* |
288 |
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Fuel |
Type |
Compressed hydrogen gas |
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Storage |
High-pressure hydrogen tank |
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Tank capacity (liters) |
171 |
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Max. pressure when full (psi) |
5,000 |
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The hydrogen fuel cell car will be built and manufactured in Japan and will have to be imported into the United States. The way to do this will be by Ocean Carrier since it is the cheapest and overall best way to get it to the United States. Once here I will move it from the port of arrival to storage facilities. Then from there they will be shipped by truck to various auto dealerships in the country.
Market Demand
The demand for fuel cell automobiles in the United States continues to grow as long as price of oil continues to grow. With oil hitting the one hundred dollar a barrel mark many people would make the switch to cars that use less or even no oil. The United States government could be the ones who start the program if they offer incentives. “Tax credits for fuel cell production could stimulate economies of scale to drive down costs. Additional incentives for so-called early adopters could motivate further investment” (Roberts). If the government does do some sort of a program then even more people would want to buy fuel cell cars, thus increasing demand even more. It is a way to stimulate demand in the market.
Not only is there demand for the fuel cell car by people who are tired of paying too much, but also those concerned about the environment would buy one as well. Going green is very popular these days and people are buying it. Fuel cell cars do not produce carbon dioxide like a normal car does. Instead it produces water vapor, which is completely harmless to the environment. In terms of marketing this is gold to the car manufacturer, because not only will it be oil independent but also harmless to the earth. This will crate even more of demand for the fuel cell car. So there is a lot of demand for a fuel cell car in the United States.
Trade Transaction
· Name of Proposed Supplier
The supplier will be the Honda Motor Corporation, located in Tokyo, Japan. Honda will build the FCX Clarity in their auto plants in Japan using supplies and materials from across the globe.
· Type of Contract
The type of contract to be used in this transaction will be the CIF contract. C.I.F. stands for “Cost Insurance and Freight” In fact; this contract imposes a variety of duties to the seller. In general this contract is known as a contract for sale and shipment of goods to the agreed destination. As far as the payment is regarded, it must be made against the production of the appropriate documents according to the contract. So, in case of CIF contract the seller undertakes more obligation than the buyer.
· Quantity Purchased
Honda will be competing directly with Toyota in the whole “green” car category with the FCX Clarity. Toyota sold 181,221 of their Pries, which is their hybrid car. So with the Honda FCX Clarity after much market study and marketing the fuel cell car will be in demand. For the first year there will be 19,800 Honda FCX Clarity’s shipped to the United States. This number can of course increase if there is a greater demand for them. Much like what Toyota did with the Prius.
· Price
With this being the first fuel cell car being offered to the United States public prices will be high for several reasons. First Honda had to develop the technology for the car, which includes the engine that runs off a fuel cell hydrogen battery. Toyota offers their current Prius for a beginning price of $20,592. The Honda FCX Clarity will be offered for a MSRP of $30,600 a car.
· Delivery, Packing, Shipping
Honda will ship the FCX Clarity the way they do any other automobile to the United States. They use ro/ro ships that they have contracts with in the shipping industry. Ro/ro means roll on roll off so the cars can be driven onboard the ship, lashed down for the voyage, and rolled off when they reach their destination port. The FCX Clarity will be shipped 6,600 at a time on ships that can accommodate this load. This way there will be only three voyages from Japan to the United States, which cuts down on costs of transportation for Honda. Honda will truck their cars from their auto plants in Japan to the seaport of Nagoya where the cars will be driven onboard the ships. There is no real packing since the cars are just lashed down to the decks of the ship. The ships will be sent to offload their cargo at the port of Richmond, California. Richmond is Hondas main port on entry on the west coats of the United States. The cars will then be offload the ship be being driven off and stored at the port until auto carrying trucks will take the cars to their final destinations of dealerships.
· Insurance
With the CIF contract Honda takes full responsibility of the car until it actually reaches the dealership in the United States. If anything happens to the automobile at any point Honda is fully responsible, and will take the cost of the insurance.
· Payment Terms
Honda takes on all costs of transportation and everything else with the CIF contract. Like said before Honda will do all of the transportation on their own. The dealerships will be responsible for the sale of the car. Honda Corporation will do advertising and marketing of the car. The dealerships will have to pay for their own advertising and promotions. The dealerships will also have to pay Honda royalties and other fees in order to sell their cars. As well as be certified and approved by the Honda Corporation
· Documentation
All the standard documents will be created for each automobile being imported to the United States and set forty by the CIF contract. There will be an invoice, bill of lading, letter of credit, contract of sale, and policy of insurance. These documents will be part of the agreement of the CIF contract and will be approved by all parties involved of the import.
· Customs Duties
All customs duties and regulations are listed in the above paper entitled Government Regulations and Tariffs.
· Inland Freight
Once the cars are imported here to the United States and are in the port of entry, they need to be sent to their final destination. This will be down by inland freight, by shipping the cars one final time by truck. Honda owns their own trucks to ship their cars so no outside company needs to come in for this aspect, it is part of Hondas supply chain. So Honda pays for its own fuel, drivers, maintenance, and other costs associated with shipping the cars. Also the CIF contract still is in play here all the way until they reach the dealerships. The trucks will take the cars to the final destinations of the dealerships across the country.
· Warehousing
As the cars are being offloaded in the port of entry here in the United States they need to be stored for a period of time. At the port of Richmond, Honda rents the dock and accompanying space. So the cars will be parked in the open lots of the storage spaces right off the docks. There is no extra fee for this since Honda rents the docks, and runs the process of storage. While being stored the cars will be checked for any damages during passage and will receive a certificate of inspection from the U.S. Customs and Border Protect, if they pass and have all the proper forms and comply with all tariffs and regulations. Once the cars are ready to be trucked, the trucks will come into the port and load the automobiles and then will be shipped to the dealerships.
· Name of Customer
The Honda Motor Corporation is ultimately the customer as well as their approved dealerships in the United States. Since they make the automobile and also sell it they are the customer of the import.
· Cost Calculation
Costs are as follows:
Production: $17,000
Total Shipping including CIF: $10,000
Customs & Tariffs: $2000
Other: $ 1600
Recommendation for Transaction Implementation
I would highly recommend that Honda goes forty and imports the FCX Clarity for sells in the United States. Next year Honda is actually leasing the FCX Clarity for about 30 people in Southern California only. This is that Honda wants to test to see how feasible the automobile will be. Also Southern California has more hydrogen refueling stations than any other places in the country. But when the rest of the country see how popular the automobile will be the number of hydrogen refueling stations will increase.
A reasonable time frame for all of this would be about two months total, after Honda gets to more automated production of the FCX Clarity. Right now they are all handmade, but when they will be processed like the rest of their cars then two months is a reasonable estimate.
References
1. (http://corporate.honda.com/environment/fuel_cells.aspx?id=fuel_cells_fcx)
Honda motor corporation, fact sheet for the Honda FCX
2. (http://209.85.173.104/search?q=cache:8GDNn2ZtvhEJ:www.earth-policy.org/Updates/Update19.htm+market+demand+for+fuel+cell+cars&hl=en&ct=clnk&cd=3&gl=us)
by Bernie Fischlowitz-Roberts, an article on the demand for fuel cell cars.
3. (http://wiki.answers.com/Q/How_many_toyota_prius_are_sold)
Article on how many Toyota Prius’ are sold in the U.S.
4. (http://www.edmunds.com/toyota/prius/review.html)
The official preview of the Honda FCX Clarity
5. (http://www.edmunds.com/insideline/do/Drives/FirstDrives/articleId=123662)
The first drive of the Honda FCX Clarity
6. Export-Import Theory, Practices, and Procedures, Belay Seyoum, International Business Press, 2000
