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InternationalTradePracticesChapter5
InternationalTermsofTrade5.1InternationalTermsofTrade
IncotermsTheIncotermsrulesorInternationalCommercialTermsareaseriesofpre-definedcommercialtermspublishedbytheInternationalChamberofCommerce(ICC)relatingtointernationalcommerciallaw.5.1InternationalTermsofTradeGroupEDepartureEXW-ExWorksExWorks
specifiesthatthesellerofgoodsisresponsibletomaketheproductsreadilyavailablefor
pickup
atthelocationwheresheconductsbusinessforthebuyer.However,thesellerisnotresponsibleforthetransportationcostsandrisks;thebuyerisresponsibleforthetransportationarrangements.5.1InternationalTermsofTradeGroupFMainCarriageUnpaidFCA-FreeCarrierThesellerisresponsibleforarrangingtransportation,butheisactingattheriskandtheexpenseofthebuyer.WhereinFOBthefreightforwarderorcarrieristhechoiceofthebuyer,inFCAthesellerchoosesandworkswiththefreightforwarderorthecarrier.“Delivery”isaccomplishedatapredeterminedportordestinationpointandthebuyerisresponsibleforInsurance.5.1InternationalTermsofTradeGroupFMainCarriageUnpaidFAS-FreeAlongShipThebuyerbearsallthetransportationcostsandtheriskoflossofgoods.FASrequirestheshipper/sellertocleargoodsforexport,whichisareversalfrompastpractices.Companiessellingonthesetermswillordinarilyusetheirfreightforwardertoclearthegoodsforexport.“Delivery”isaccomplishedwhenthegoodsareturnedovertotheBuyersForwarderforinsuranceandtransportation.5.1InternationalTermsofTradeGroupFMainCarriageUnpaidFOB-FreeOnBoardFOBmeansthattheshipper/selleruseshisfreightforwardertomovethemerchandisetotheportordesignatedpointoforigin.Thoughfrequentlyusedtodescribeinlandmovementofcargo,FOBspecificallyreferstooceanorinlandwaterwaytransportationofgoods.“Delivery”isaccomplishedwhentheshipper/sellerreleasesthegoodstothebuyer’sforwarder.Thebuyer’sresponsibilityforinsuranceandtransportationbeginsatthesamemoment.5.1InternationalTermsofTradeGroupCMainCarriagePaidCFR-CostandFreightThistermformerlyknownasCNF(C&F)definestwodistinctandseparateresponsibilities-oneisdealingwiththeactualcostofmerchandise“C”andtheother“F”referstothefreightchargestoapredetermineddestinationpoint.Itistheshipper/seller’sresponsibilitytogetgoodsfromtheirdoortotheportofdestination.“Delivery”isaccomplishedatthistime.Itisthebuyer’sresponsibilitytocoverinsurancefromtheportoforiginorportofshipmenttobuyer’sdoor.Giventhattheshipperisresponsiblefortransportation,theshipperalsochoosestheforwarder.5.1InternationalTermsofTradeGroupCMainCarriagePaidCIF(Cost,InsuranceandFreight)ThisarrangementsimilartoCFR,butinsteadofthebuyerinsuringthegoodsforthemaritimephaseofthevoyage,theshipper/sellerwillinsurethemerchandise.Inthisarrangement,thesellerusuallychoosestheforwarder.“Delivery”asabove,isaccomplishedattheportofdestination.5.1InternationalTermsofTradeGroupCMainCarriagePaidCPT(CarriagePaidTo)InCPTtransactionstheshipper/sellerhasthesameobligationsfoundwithCIF,withtheadditionthatthesellerhastobuycargoinsurance,namingthebuyerastheinsuredwhilethegoodsareintransit.CIP(CarriageandInsurancePaidTo)Thistermisprimarilyusedformultimodaltransport.Becauseitreliesonthecarrier’sinsurance,theshipper/sellerisonlyrequiredtopurchaseminimumcoverage.Whenthisparticularagreementisinforce,FreightForwardersoftenactineffect,ascarriers.Thebuyer’sinsuranceiseffectivewhenthegoodsareturnedovertotheForwarder.5.1InternationalTermsofTradeGroupDArrivalDAF(DeliveredAtFrontier)Heretheseller’sresponsibilityistohireaforwardertotakegoodstoanamedfrontier,whichusuallyabordercrossingpoint,andclearthemforexport.“Delivery”occursatthistime.Thebuyer’sresponsibilityistoarrangewiththeirforwarderforthepickupofthegoodsaftertheyareclearedforexport,carrythemacrosstheborder,clearthemforimportationandeffectdelivery.Inmostcases,thebuyer’sforwarderhandlesthetaskofacceptingthegoodsattheborderacrosstheforeignsoil.5.1InternationalTermsofTradeGroupDArrivalDES(DeliveredExShip)Inthistypeoftransaction,itistheseller’sresponsibilitytogetthegoodstotheportofdestinationortoengagetheforwardertothemovecargototheportofdestinationuncleared.“Delivery”occursatthistime.Anydestinationchargesthatoccuraftertheshipisdockedarethebuyer’sresponsibility.5.1InternationalTermsofTradeGroupDArrivalDEQ(DeliveredExQuay)*Inthisarrangement,thebuyer/consigneeisresponsiblefordutiesandchargesandthesellerisresponsiblefordeliveringthegoodstothequay,wharforportofdestination.Inareversalofpreviouspractice,thebuyermustalsoarrangeforcustomsclearance.DDP(DeliveredDutyPaid)DDPtermstendtobeusedinintermodalorcourier-typeshipments.Whereby,theshipper/sellerisresponsiblefordealingwithallthetasksinvolvedinmovinggoodsfromthemanufacturingplanttothebuyer/consignee’sdoor.Itistheshipper/seller’sresponsibilitytoinsurethegoodsandabsorballcostsandrisksincludingthepaymentofdutyandfees.5.1InternationalTermsofTradeGroupDArrivalDDU(DeliveredDutyUnpaid)ThisarrangementisbasicallythesameaswithDDP,exceptforthefactthatthebuyerisresponsiblefortheduty,feesandtaxes.5.1InternationalTermsofTrade5.1InternationalTermsofTradeAllocationsofriskstobuyer/selleraccordingtoIncoterms2010
5.1InternationalTermsofTrade
Allocationsofriskstobuyer/selleraccordingtoIncoterms20105.2CustomsClearanceThedocumentedpermissiontopassthatanationalcustomsauthoritygrantstoimportedgoodssothattheycanenterthecountryortoexportedgoodssothattheycanleavethecountry.Thecustomclearanceistypicallygiventoashippingagenttoprovethatallapplicablecustomsdutieshavebeenpaidandtheshipmenthasbeenapproved.5.2CustomsClearance5.3FreightShippingTermsAccessorialAnyadditionalservicesrequiredoutsideofthestandardshippingprocedurerequireadditionalfeesfromthecarriercalledaccessorials.Theseincludeextraservicessuchas:LiftGateservice FuelSurchargeInsidePickup InsideDeliveryResidentialservice ArrivalNotificationCOD Insurance5.3FreightShippingTermsArrivalNotificationWhenthecarriernotifiestheconsignee(receiver)ofascheduleddeliverydateandtime.Arrivalnotificationisanaccessorialserviceprovidedforanadditionalfee.5.3FreightShippingTermsBOL(BillofLading)Adocumentthatestablishesthetermsandconditionsofacontractbetweenashipperandatransportationcompany.Itservesasacontractofcarriageandareceiptforgoods.TheBolisprovidedbytheshippingcompanytotheshipperandshouldbegiventothedriveruponfreightpickup.5.3FreightShippingTermsCarrierAnothernameforthetruckingcompanywhotransportsfreight.ConsigneeThepersonorcompanyreceivingtheshipment.ConsignorThepersonorcompanyshippingtheshipment.5.3FreightShippingTermsBlindShipmentWhenthecustomerhascontractedwiththecarriersothattheshipperorconsigneeinformationisnotgiven.ThiskeepstheoriginlocationandreceivingdestinationunawareofeachotherandprovidestwoseparateBillsofLadinginwhichbothshowthecarrier'sterminalastheshipperandthereceiver.5.3FreightShippingTermsFlatbedAsemitrailerwithnosidesandwiththeflooroftheunitastandardheightfromtheground.FreightClassReferstotheNationalMotorFreightClassification(NMFC)anditisthecategoryofyourfreightasdefinedbytheNationalMotorFreightTrafficAssociation(NMFTA).Yourshipment'sfreightclassdeterminesthecarrier'sshippingcharges.Itidentifiesthesize,valueanddifficultyoftransportingyourfreight.5.3FreightShippingTermsFTLFTLstandsforFullTruckLoadandreferstoanyshipmentthattakesupalloralmostallofthetruck'sspace.AFTLshipmentcanrangefrom5000lbsandup,althoughsomeFTLcarriershaveaminimumweightrequirementof10,000lbsormore.Thereare2typesofFTLshipments:FullLoads,whichcompletelyfilltheentiretruckandPartialLoads,whichalmostfilltheentiretruck.5.3FreightShippingTermsFuelSurchargeAnextrachargeimposedbythecarriersduetotheexcessivecostsfordieselgas.Thechargeisa%basedupontheU.S.NationalAverageDieselFuelIndex.ThefuelsurchargewillremainineffectaslongastheU.S.NationalAverageDieselFuelindexremainsatorabove$1.10pergallon.5.3FreightShippingTermsInsidePickupandInsideDeliveryIfthedriverisrequiredtogoinside(beyondthefrontdoororloadingdock),topickupordeliveryourshipment,insteadofremainingatthedockortruck,additionalfeeswillbecharged.Whenobtainingquotesthroughoursystem,checkoffinsidepickupandorinsidedeliveryandthecarrier'sfeewillbeincludedinyourquotes.5.3FreightShippingTermsLiftgateserviceWhentheshippingorreceivingaddressdoesnothavealoadingdock,manualloadingorunloadingisnecessary.Aliftgateisaplatformatthebackofcertaintrucksthatcanraiseandlowerashipmentfromthegroundtothetruck.Additionalfeesapplyforthisservice.LTLLTLstandsforLessThanTruckload,whichmeanstheshipmentdoesnotcompletelyfillanentiretruck.ALTLshipmenttypicallyrangesanywherefrom150lbsto10,000lbs.LargeShipmentsover10,000lbsareusuallymovedbyFulltruckload(FTL).5.3FreightShippingTermsNMFCNumberThisistheitemnumberthatspecificallyidentifieseachtypeofproductthatcanbeshippedbyaLTLcarrier.TheNationalMotorFreightTrafficAssociation(NMFTA)assignsNMFCitem#'stoallproductsalongwithafreightclass.TheNMFC#identifieswhatyouareshippingandit'sfreightclass.PRONumberAnumberassignedbythecarriertoreferenceyourshipment.Itisalsousedfortrackingyourshipment.
5.3FreightShippingTerms
RedeliveryorReconsignmentFeeAfterafaileddeliveryattempt,thecarrierwilla
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