Looking at export terminology can sometimes feel like your staring at a bowl of alphabet soup. We get that, and as experts in this industry, we want to break it all down for you so you can connect the puzzle pieces. If you haven’t yet read our article on what a USPPI is, make sure to head there immediately after! The FPPI, or Foreign Principal Party in Interest, is the party who is receiving the goods being exported from the United States. In other words, the FPPI is the destination point of a U.S. export. Generally speaking, this party will be listed as the consignee on the House Bill of Lading.
What is an FPPI?
In a routed export transaction, the FPPI is responsible for controlling the movement of the goods out of the U.S., assigning a freight forwarder or NVOCC to move the cargo and file the AES, and providing the Power of Attorney (or written authorization) to the FF or NVOCC (or USPPI) to file through AES. The reason that the FPPI is so important has to do with issues of compliance. Since it is required by law that a U.S. residing party file the AES, the FPPI is excluded. Thus, the FPPI must have their U.S. agent or USPPI Power of Attorney file their EEI (Electronic Export Information) through AES on their behalf in order to comply by U.S. Customs law.
Responsibilities of the FPPI
A routed export transaction is one in which a foreign party controls the movement of the cargo (via the stated incoterms). In a routed export shipment, the Foreign Principal Party of Interest (FPPI) is responsible for a few things:
Controlling the Movement of the Goods Out of the U.S.
The party who controls the cargo is dictated by the incoterm listed on the House Bill of Lading (HBL) for the project. If the shipment is being moved under EXW (Ex Works) incoterms, the control is granted to the buyer of the cargo – in other words, the FPPI. However, if the project is being done under DDP incoterms, the buyer or FPPI has no control over movement of the cargo.
Designating and Hiring a Forwarder to File AES
The FPPI is responsible for hiring a U.S. agent (freight forwarder or NVOCC) to facilitate movement of the goods and file AES. Since AES must be filed by a U.S. residing party, and in the case of an export routed transaction conducted by a foreign party, the FPPI is unable to satisfy the requirement by themselves and is thus required to appoint a U.S. agent to arrange for movement of the goods and filing of AES.
Providing the Power Of Attorney or U.S. Forwarder Authorization to File AES
The FPPI is responsible for providing written authorization to the U.S. forwarder or USPPI Power Of Attorney – whom the FPPI hires – to file EEI through AES. Since both the U.S. forwarder/NVOCC, or the USPPI Power Of Attorney are both U.S. residing parties, they are capable of filing AES on behalf of the FPPI.
Electronic Export Information
In the past, all necessary export information used to be collected as Shipper’s Export Declaration (SED) information. Now days, AES has mandated that this data be reported electronically in the form of EEI – electronic export information. This filing contains information such as the: Ultimate Consignee, Transportation Reference, Parties to Transaction, Country of Ultimate Destination, Schedule B Number, Value of the Goods, License Number/Authorization, and ECCN (Export Control Classification Number.) All of this data will be submitted by the U.S. forwarder or USPPI Power Of Attorney on behalf of the FPPI.
It’s the responsibility of the USPPI to provide the buyer’s forwarder with the all necessary export information, including their EIN (Employer Identification Number) to file through AES. The forwarder will supply the transportation information. For the sake of clarification, the buyer is the FPPI, and the buyer’s forwarder is the U.S. residing forwarder or NVOCC they have chosen to appoint.
The definitions can get easily jumbled, and with the complexity of shipping processes these days, understanding what each of these export/import terms means is crucial. If you want to understand the flip side of this export process, read our article on what responsibilities the USPPI has.