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How Do We Ship Your Cotton?

By Taylor Word

The Traffic and Invoicing Department at Plains Cotton Cooperative Association is a dedicated team full of experienced individuals who work

Invoicing Department

The Traffic and Invoicing Department employees, from left to right: Jackie Lynn, MacKenzie Fletcher, Toby Teichelman, Kristen Tasker, Zac Hurley, Tammi Chock, Rick Sheperd and Karri Pruser.

together to achieve the goal of being the world’s cotton supplier of choice. With 90 years of combined experience among seven employees, the Traffic and Invoicing staff successfully ships and invoices cotton quickly and efficiently.

PCCA’s Sales Department carefully markets cotton in order to maximize the value to PCCA members. These marketing outlets include sales to merchants, foreign textile mills and domestic mills. Once the cotton is sold, the Traffic and Invoicing Department prepares the invoices for each sale in accordance with the terms for each transaction.

Export sales require the most extensive work as the team must carefully coordinate scheduling with cotton warehouses, inland truckers, rail lines, ocean carriers, freight forwarders, port warehouses, the United States Department of Agriculture, the Chamber of Commerce, and international trade banks in order to ship the cotton and prepare the invoices for payment in a timely and accurate manner, according to Rick Shepherd, Traffic and Invoicing Manager. He says PCCA exports cotton to approximately 10 to 15 different countries each season, and the busiest time for department personnel is from November through April when the majority of PCCA cotton is exported.

The department works closely with PCCA sales and shipping departments each season. During the active selling and shipping period, Toby Teichelman, Export Supervisor, contacts cotton warehouses to determine the next available ready dates for loading cotton at each location. This information is summarized and sent to the sales department several times each week to keep them informed as to when cotton can be readied for shipment at each warehouse location.

The Sales Department corresponds with commissioned sales agents in the various cotton consuming countries around the world, and export sales are made through these foreign agents. Once an export sale is confirmed, Teichelman and Kristen Tasker, Logistics Manager in Traffic and Invoicing, review the transaction and prepare a quantity summary report of the bales and weights that have been sold. This information is used to prepare the contract for the export sale which is sent to the foreign sales agent for the buyer to complete. As part of this process, the Traffic and Invoicing Department works with the shipping department to ensure the cotton is applied in a manner to minimize the number of locations per truck/container load and to be sure the weights per truck/container do not exceed limits.

After the completion of the quantity summary report, Tammi Chock, Documentation Manager, completes a proforma invoice for the sale. The completed proforma invoice is sent to the sales agent which summarizes the export sales to foreign buyers including the number of bales, weights, and invoice value for the transaction. The foreign buyers use the invoice to make financial arrangements for opening letters of credit or submitting down payments depending on the destination and sales terms.

After the cotton is applied to the sale, Tasker creates an Early Shipping Order (ESO) that is sent to the warehouse, securing a ready date at the cotton warehouse. The ESO also allows PCCA to leave the cotton in the CCC loan program. The cotton is later redeemed from the loan prior to the ready dates which enables PCCA to take advantage of more favorable Adjusted World Price levels that may be available prior to shipment.

Tasker then schedules a reservation, also called a booking, with an ocean carrier on a vessel sailing to the destination of the export sale. She makes the booking based on a shipping schedule with the ocean carrier that corresponds to the ready dates at the interior cotton warehouses. An inland carrier is then selected to move the cotton in “over-the-road” trucks to port warehouses or in containers to be returned to the rail line for movement to the West Coast for export.

After these shipping arrangements have been finalized, Tasker sends the foreign sales agent a sailing schedule which indicates the ocean carrier that will transport the cotton, the sailing date and the arrival date. This establishes the time frame in which the foreign buyer must open any letters of credit or send down payments prior to the shipment schedule.

A letter of credit is an instrument of financing that deals with paperwork used for international transactions guaranteeing payment to PCCA for the shipment. On letter of credit transactions, the foreign buyer makes arrangements at an international trade bank in their country and then it is transferred to PCCA’s selected bank. Chock and Teichelman audit the letter of credit for accuracy and compliance with the sales contract. If any changes in the letter of credit are required, the revisions are sent to PCCA’s foreign sales agent for the buyer to amend.

Upon finalization of financial arrangements by the foreign buyer, the shipment is released to inland truckers for loading and movement to the ocean carriers for export. A “booking packet” is then created and distributed to Karri Pruser and/or MacKenzie Fletcher, Export Documentation Specialists in the Traffic and Invoicing Department. The booking packet contains a complete history of the sale as well as the documentation requirements necessary for preparing the invoice for payment. Pruser and Fletcher prepare required shipment documents and are responsible for communicating with the foreign sales agent regarding the status of the shipment. Documents issued by third parties require extra precautions to ensure they are issued in a timely and accurate manner.

According to Shepherd, PCCA must comply with advance manifest requirements from various countries prior to departure from the United States. These regulations require PCCA to transmit shipment details which include up to 16 data elements about the shipment. These data elements include the name and address of the shipper and foreign buyer,sailing details, complete description of the commodity being shipped, as well as container and seal numbers. All the data elements must be transmitted to the U.S. Census Bureau and the ocean carrier prior to the containers being loaded on the vessel. Shepherd says these requirements narrow the window for returning the loaded containers and decrease the number of containers loaded onto a single vessel due to time constraints.

Cost accruals for each shipment give details regarding fees billed to PCCA from various vendors involved in shipping cotton. Freight Audit and Domestic Invoicing Coordinator Jackie Lynn and Tasker carefully audit each invoice sent to PCCA from the vendors for services performed, and then they are sent to PCCA’s Accounting Department for timely payment to the vendors.

Other issues facing the department this season are truck driver shortages, West Coast labor negotiations and congestion in the Los Angeles/ Long Beach, California ports, Shepherd adds. Shepherd explains there are financial consequences if all requirements are not met, and PCCA’s Information Systems (IS) Department will send them alerts to help prevent any issues with the shipments. He is quick to praise the systems that have been written by the IS Department.

“PCCA has one of the most knowledgeable IS staffs in the cotton industry,” Shepherd says. “The programs they have written enable us to ship and invoice our sales efficiently, accurately, and timely so that PCCA can be paid as soon as possible after the cotton has been shipped.”

Shepherd says the main focus in the Traffic and Invoicing Department is to add value to PCCA members’ cotton by ensuring the cotton is shipped by the most cost effective methods and the cotton is invoiced accurately and timely.

“We take pride in the work we do and will do whatever it takes to get the job done,” Shepherd says.