Incoterms Presenter: Host: Laurie Turnbull, CCLP Catherine Viglas, - - PowerPoint PPT Presentation

Incoterms

CITT Webinar Series

Presenter: Host:

Laurie Turnbull, CCLP

Supply Chain Consultant Cole International

Catherine Viglas, CAE

President & CEO CITT

Incoterms

CITT Webinar Series

Disclaimer

This material has been prepared for discussion purposes only and is not intended as professional advice regarding selection of Incoterms or other issues affecting liability, obligations or responsibilities, of buyers and sellers regarding the international sale of goods.

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Incoterms

CITT Webinar Series

International Trade is Confusing!

Who pays charges for? Who bears risk of loss or damage?

$ $ $ $ $ $ $ $ $ $

Seller Buyer

$ $ $ $ $ $ $ $ $ $

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Incoterms

CITT Webinar Series FOB Contracts Of Sale Marine

Insurance

CISG

Incoterms

and International Trade

Transfer

• f cost

and risk Choice of jurisdiction (law) and venue Transfer

• f title

Protection from loss or damage Domestic freight term

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Incoterms

CITT Webinar Series

Shipping Terms of Sale

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FOB 1700s Marine Payment Term AFTD 1919-1985 (Including ‘FOB’ Terms) INCOTERMS 1936 – 2010 (Current Version) UCC 1952-2004 (Including ‘FOB’ Terms)

Incoterms

CITT Webinar Series

Incoterms were developed by the International Chamber of Commerce (ICC) in 1936 to:

• Provide a set of standardized rules for

interpreting commonly used terms in international trade

• Eliminate misunderstandings, disputes,

and litigation that can occur when buyers and sellers are unaware of different trading practices in foreign countries

• What are They?

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Incoterms

CITT Webinar Series

Incoterms provide information to the Buyer and Seller regarding:

• The carriage of goods from Seller to Buyer
• Export and import Customs clearance
• The division of costs and risks
• The obligations to give notice
• The obligations to provide documentation

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• What Do They Do?

Incoterms

CITT Webinar Series

• Three words that often cause confusion

under Incoterms:

• These issues should be clarified in the

Buyer and Seller’s “contract of sale”

• “Delivery” can
• ccur in a

foreign Port

Delivery

• Incoterms

exclude

• wnership

Ownership

• Risk of ownership

(i.e. the need for cargo insurance)

Risk

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Incoterms

CITT Webinar Series

Incoterm Ownership Payment Conditions

• f the sale

Condition

• f the goods

Buyer/Seller Contract of Sale

Breach of contract Jurisdiction / Venue May not all be covered in Purchase Order terms and conditions

Which is why carriers should never recommend an Incoterm!

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Incoterms

CITT Webinar Series

• Incoterms are terms of the international

contract of sale, not the contract of carriage

• Incoterms were developed by the

International Chamber of Commerce to assist Buyers and Sellers in international trade, they are not “law”

• Incoterms 2010 consists of eleven terms for

use in international trade…

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Incoterms

CITT Webinar Series

EXW DAT FCA DAP CPT DDP CIP FAS CFR FOB CIF

Multimodal Terms Ocean Terms

Incoterms 2010 can be sorted into two groups:

• 1. Those designed for

multimodal shipping (i.e. any mode:

• cean, truck, rail, air)

and…

• 2. Those designed only

for marine (ocean) shipping

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M O

Incoterms

CITT Webinar Series

Incoterms 2010

“E” Terms (Buyer bears all costs & risks)

• EXW - Ex Works (named place of delivery)

“F” Terms (Buyer pays “main freight”)

• FCA - Free Carrier (named place of delivery)
• FAS - Free Alongside Ship (named port of

shipment)

• FOB - Free On Board (named port of

shipment)

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O M M O

Incoterms

CITT Webinar Series

Incoterms 2010

“C” Terms (Seller pays “main freight”)

• CPT - Carriage Paid To (named place of

destination)

• CIP - Carriage and Insurance Paid To (named place
• f destination)
• CFR - Cost and Freight (named port of destination)
• CIF - Cost, Insurance and Freight (named port of

destination)

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M M O O

Incoterms

CITT Webinar Series

Incoterms 2010

“D” Terms (Seller bears all costs & risks):

• DAT - Delivered at Terminal (named terminal at

port or place of destination)

• DAP - Delivered at Place (named place of

destination)

• DDP - Delivered Duty Paid (named place of

destination)

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M M M

EXW FCA CPT CIP DAT DAP DDP FAS FOB CFR CIF

Services

Ex Works Free Carrier Carriage Paid To Carriage, Insurance Paid To Delivered at Terminal Delivered at Place Delivered Duty Paid Free Alongside Ship Free On Board Vessel Cost & Freight Cost, Insurance & Freight Warehouse storage Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Warehouse labour Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Export packing Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading charges Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Inland freight Buyer Buyer/ Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Terminal charges Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Forwarder’s fees Buyer Buyer Seller Seller Seller Seller Seller Buyer Seller Seller Seller Loading on vessel Buyer Buyer Seller Seller Seller Seller Seller Buyer Seller Seller Seller Ocean/air freight Buyer Buyer Seller Seller Seller Seller Seller Buyer Buyer Seller Seller Charges on arrival at destination Buyer Buyer Seller Seller Seller Buyer Seller Buyer Buyer Buyer Buyer Duty, taxes & customs clearance Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer Inland delivery to destination Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer

Incoterms 2010: Transfer of Costs (to the Buyer)

C = Recommended for containerized shipments

[ Multimodal Terms ] [ Ocean Terms ]

Multimodal C / Multimodal C / Multimodal C / Multimodal C / Multimodal C / Multimodal C / Multimodal

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Incoterms

CITT Webinar Series

Incoterms 2010

7 Incoterms for Multimodal Shipments…

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Incoterms

CITT Webinar Series

Export/Import Customs: Buyer’s obligation for export and import Freight Charges Buyer (from Seller’s dock) Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: At Seller’s dock (Consider cargo insurance!)

Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”) Multimodal Term

• This term should not be used if the Buyer is unable to arrange export customs clearance
• Buyer’s obligation to load the goods (i.e. this term is intended for bulk shipments)
• Not recommended for containerized shipments (use FCA)

EXW: Ex Works (named place of delivery)

Mississauga Berlin Port of Bremerhaven

Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

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Incoterms

CITT Webinar Series Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”)

FORWARDER

Export/Import Customs: Seller’s obligation for export/Buyer’s obligation for import Freight Charges: Buyer from the “named place” Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery to the first carrier (Consider cargo insurance!)

Multimodal Term

Recommended for containerized shipments

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FCA: Free Carrier (named place of delivery)

Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series Transfer of Risk to Buyer

Export/Import Customs: Seller’s obligation for export /Buyer’s obligation for import Freight Charges: Seller to named place of destination Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery to the first carrier (Consider cargo insurance!)

FORWARDER

Multimodal Term

CPT: Carriage Paid To (named place of destination)

(i.e. Seller “delivers”)

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Recommended for containerized shipments

Transfer of Cost to Buyer Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series

Export/Import Customs: Seller’s obligation for export/Buyer’s obligation for import Freight Charges: Seller to named place of destination Insurance: Seller procures insurance for the Buyer (on “minimum cover”) Transfer of Risk: Upon delivery to the first carrier (Consider exclusions in the Seller-procured insurance policy!)

FORWARDER

Multimodal Term

CIP: Carriage and Insurance Paid To (named place of destination)

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Transfer of Risk to Buyer Transfer of Cost to Buyer (i.e. Seller “delivers”)

Recommended for containerized shipments

Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”)

Export/Import Customs: Seller’s obligation for export/Buyer’s obligation for import Freight Charges: Seller to named terminal at place of destination Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery, unloaded, at a named terminal at the named port or place of destination (Consider cargo insurance!)

Multimodal Term

DAT Delivered at Terminal (named terminal at port or place of destination)

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Recommended for containerized shipments

Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series

Export/Import Customs: Seller’s obligation for export/Buyer’s obligation for import Freight Charges: Seller to named place of destination Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery, not unloaded, at a named place of destination (Consider cargo insurance!)

Multimodal Term

DAP Delivered at Place (named place of destination)

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Recommended for containerized shipments

Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”) Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”)

Export/Import Customs: Seller’s obligation for export and import Freight Charges: Seller to named place of destination Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery to the named place of destination

Multimodal Term

• This term should not be used if the Seller is unable to arrange import customs clearance
• Recommended for containerized shipments

DDP Delivered Duty Paid (named place of destination)

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Multimodal Terms: EXW FCA CPT CIP DAT DAP DDP

Incoterms

CITT Webinar Series

Incoterms 2010

4 Incoterms for Marine (Ocean) Shipments…

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Incoterms

CITT Webinar Series Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”)

Export/Import Customs: Seller’s obligation for export/Buyer’s obligation for import Freight Charges: Buyer from the named port of shipment Insurance: Seller has no obligation to the Buyer to provide insurance Transfer of Risk: Upon delivery alongside named vessel (Consider cargo insurance!)

Ocean Term

FAS Free Alongside Ship (named port of shipment)

Not recommended for containerized shipments (use FCA)

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Ocean Terms: FAS FOB CFR CIF

Incoterms

CITT Webinar Series

Export/Import Customs: Seller obligated to clear goods for export Freight Charges: Buyer from the named port of shipment Insurance: Seller has no obligation to the buyer to provide insurance Transfer of Risk: When the goods are loaded on board the vessel (Consider cargo insurance!)

Ocean Term

FOB Free On Board* (named port of shipment)

*Not recommended for containerized shipments (use FCA)

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Transfer of Cost and Risk to Buyer (i.e. Seller “delivers”) Ocean Terms: FAS FOB CFR CIF

Incoterms

CITT Webinar Series Transfer of Risk to Buyer

Export/Import Customs: Seller obligated to clear goods for export Freight Charges: Seller to named port of destination Insurance: Seller has no obligation to the buyer to provide insurance Transfer of Risk: When the goods are loaded on board the vessel (Consider cargo insurance!)

Ocean Term

CFR Cost and Freight (named port of destination)

(i.e. Seller “delivers”)

Not recommended for containerized shipments (use CPT)

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Transfer of Cost to Buyer Ocean Terms: FAS FOB CFR CIF

Incoterms

CITT Webinar Series Transfer of Risk to Buyer

Export/Import Customs: Seller obligated to clear goods for export Freight Charges: Seller to named port of destination Insurance: Seller arranges insurance for the Buyer (on “minimum cover”) Transfer of Risk: When the goods are loaded on board the vessel (Consider exclusions in the Seller-procured insurance policy!)

Ocean Term

CIF Cost, Insurance and Freight (named port of destination)

(i.e. Seller “delivers”)

Not recommended for containerized shipments (use CIP)

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Transfer of Cost to Buyer Ocean Terms: FAS FOB CFR CIF

Incoterms

CITT Webinar Series

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Air Freight Road Freight Rail Freight Ocean Freight* *Ocean Containers EXW Yes Yes Yes Yes No FCA Yes Yes Yes Yes Yes FAS No No No Yes No FOB No No No Yes No CFR No No No Yes No CIF No No No Yes No CPT Yes Yes Yes Yes Yes CIP Yes Yes Yes Yes Yes DAT Yes Yes Yes Yes Yes DAP Yes Yes Yes Yes Yes DDP Yes Yes Yes Yes Yes

& Appropriate Modes of Transport

Chart provided for illustrative purposes only - Adapted from "UNDP Shipping and Incoterms Practice Guide" http://www.undp.org/content/dam/undp/documents/procurement/documents/UNDP-Shipping-Guide.pdf

Incoterms

CITT Webinar Series

“Which Incoterm Should I Use?”

Comprehensive risk management policies regarding international trade include review

• f:
• Incoterms 2010
• Contracts of sale
• Cargo insurance

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www.iccwbo.org Buyers and Sellers should pick their Incoterm, not carriers, freight forwarders or Customs brokers.

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Incoterms

CITT Webinar Series

Webinar Series

Presents:

FOB vs Incoterms

Why Are They Different in North America?

Presented by:

Laurie Turnbull MSc, CCLP Supply Chain Consultant Cole International Inc. March 16, 2017 12:00-1:00 pm EST

Incoterms

CITT Webinar Series

Canada and the EU are entering a new trade era with CETA, but our largest trading partner, the U.S., may be taking a trade approach based on domestic manufacturing. More than ever, shippers in Canada need to have a clear understanding of the benefits, and drawbacks, of the North American UCC FOB terms, and how they differ from Incoterms.