INCOTERMS 2000
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Transcript of INCOTERMS 2000
DOCUMENTATION & SHIPPING DOCUMENTATION & SHIPPING TERMSTERMS
INCOTERMS 2000INCOTERMS 2000
WHAT IS EXPORT IS EXPORT DOCUMENTATION?DOCUMENTATION?
The paperwork that is required for an export The paperwork that is required for an export sales transactionsales transaction
The means by which the shipping process is The means by which the shipping process is facilitated and performed.facilitated and performed.
Documentation is essential for moving goods Documentation is essential for moving goods through the channels of distribution, transferring through the channels of distribution, transferring responsibility or possession, clearing goods responsibility or possession, clearing goods through customs, and effect payment according through customs, and effect payment according to the agreed contractual obligations.to the agreed contractual obligations.
WHAT IS THE PURPOSE OF WHAT IS THE PURPOSE OF EXPORT EXPORT
DOCUMENTATION?? Export documentation provides evidence Export documentation provides evidence
that the negotiated terms between the that the negotiated terms between the buyer and the seller have been complied buyer and the seller have been complied with.with.
Export documentation provides important Export documentation provides important information that is used by the seller, the information that is used by the seller, the freight companies, governments, and the freight companies, governments, and the buyer.buyer.
This is essential if the seller wishes to get paidThis is essential if the seller wishes to get paid
THE KEY INFORMATION THE KEY INFORMATION CONTAINED IN EXPORT IN EXPORT
DOCUMENTSDOCUMENTS
Description of the goodsDescription of the goods Mode of transportationMode of transportation
rail, air, oceanrail, air, ocean
Terms of saleTerms of sale Who pays for what?Who pays for what?
Origin of the goodsOrigin of the goods
Identity of the Identity of the seller/shipperseller/shipper
Identity of the buyerIdentity of the buyer Terms of paymentTerms of payment Shipping instructionsShipping instructions Evidence of Evidence of
shipmentshipment
COMMON COMMON EXPORT DOCUMENTS DOCUMENTS
Pro forma invoicePro forma invoice Bill of LadingBill of Lading Certificate of OriginCertificate of Origin Packing ListPacking List Commercial InvoiceCommercial Invoice Shipper’s export declShipper’s export decl
aration aration Consular InvoiceConsular Invoice
Inspection certificateInspection certificate Insurance certificateInsurance certificate Dock/warehouse recDock/warehouse rec
eipteipt Letter of creditLetter of credit DraftDraft
A GUIDE A GUIDE FOR DOCUMENT DOCUMENT
PREPARATIONPREPARATION To ensure accurate document preparation, To ensure accurate document preparation,
the services of a the services of a freight forwarder should be sought.
However, the exporter should understand However, the exporter should understand the essentials of document preparation and the essentials of document preparation and at least review the prepared documents.at least review the prepared documents.
Seek explanation and instruction from the Seek explanation and instruction from the freight forwarder.freight forwarder.
A GUIDE FOR A GUIDE FOR DOCUMENT DOCUMENT
PREPARATION...PREPARATION... To determine the required documents for a given To determine the required documents for a given
country and transaction, an exporter can:country and transaction, an exporter can: solicit the services of a freight forwardersolicit the services of a freight forwarder consult the “Exporter’s Encyclopedia” or the National consult the “Exporter’s Encyclopedia” or the National
Trade Data Office Trade Data Office
contact commercial attaches in the target marketscontact commercial attaches in the target marketsINTERNATIONAL CHAMBER OF COMMERCE PARIS INTERNATIONAL CHAMBER OF COMMERCE PARIS
http://www.iccwbo.org/iccdbibc/index.htmlhttp://www.iccwbo.org/iccdbibc/index.html
STEPS IN THE STEPS IN THE DOCUMENTATION
PROCESSPROCESS Receive the order under accepted terms & Receive the order under accepted terms &
consult with a banker or a freight forwarder.consult with a banker or a freight forwarder. Begin organizing information for required Begin organizing information for required
export documents and export license export documents and export license applications.applications.
Evaluate modes of transportation, Evaluate modes of transportation, requirements for perishable products, and cost requirements for perishable products, and cost of various alternative modes.of various alternative modes.
Prepare goods for shipping (marking/labeling, Prepare goods for shipping (marking/labeling, packing, consolidating/containerizing, insuring)packing, consolidating/containerizing, insuring)
STEPS IN THE STEPS IN THE DOCUMENTATION DOCUMENTATION
PROCESS...... Transport goods to a port of export.Transport goods to a port of export. Transfer goods to carrier.Transfer goods to carrier. Ship goods and forward appropriate export Ship goods and forward appropriate export
documents .documents . Unload goods at foreign port.Unload goods at foreign port. Clear customs.Clear customs. Transport goods from foreign port to Transport goods from foreign port to
intermediate and/or ultimate consignee.intermediate and/or ultimate consignee.
THE TERMS OF SALE…… INCOTERMSTHE TERMS OF SALE…… INCOTERMS
Understanding the Understanding the INCOTERMSINCOTERMS, also called , also called the terms of sale, is the first step in the terms of sale, is the first step in responding to a trade lead or starting to responding to a trade lead or starting to prepare a quote.prepare a quote.
Definition: An international rule for pricing : An international rule for pricing terms which represent different levels of terms which represent different levels of financial responsibility for the buyer and seller financial responsibility for the buyer and seller in an export transaction.in an export transaction.
INCOTERMS
The INCOTERMS establish :The INCOTERMS establish :
the geographical location where the buyer the geographical location where the buyer becomes responsible for the goodsbecomes responsible for the goods
payment of shipping, handling, insurance, payment of shipping, handling, insurance, inland freight, etc.inland freight, etc.
the point where ownership of the goods or the point where ownership of the goods or the title for the goods changes ownershipthe title for the goods changes ownership
THE THE THIRTEEN INCOTERMSINCOTERMS
EXWEXW- EX WORKS- EX WORKS FCAFCA- FREE CARRIER- FREE CARRIER FASFAS- FREE - FREE
ALONGSIDE SHIPALONGSIDE SHIP FOBFOB- FREE ON BOARD- FREE ON BOARD CFRCFR- COST AND - COST AND
FREIGHTFREIGHT CIFCIF- COST, - COST,
INSURANCE, FREIGHTINSURANCE, FREIGHT
CPTCPT- CARRIAGE PAID TO- CARRIAGE PAID TO DAFDAF- DELIVERY AT - DELIVERY AT
FRONTIERFRONTIER DESDES- DELIVERED EX - DELIVERED EX
SHIPSHIP DEQDEQ- DELIVERED EX - DELIVERED EX
QUAYQUAY DDUDDU- DELIVERED DUTY - DELIVERED DUTY
UNPAIDUNPAID DDPDDP- DELIVERED DUTY - DELIVERED DUTY
PAIDPAID
EXW: EX-WORKSEXW: EX-WORKS EXW (geographical location)EXW (geographical location) EXW signifies a precise location where the EXW signifies a precise location where the
product is made ready to the buyer.product is made ready to the buyer. When offering a When offering a EXWEXW quotation: the price quotation: the price
includes only those costs involved up to an includes only those costs involved up to an agreed point of origin, usually the shipper’s agreed point of origin, usually the shipper’s factory. The shipper/seller places the product factory. The shipper/seller places the product at the control of the buyer at a concurred place, at the control of the buyer at a concurred place, date, time, etc.date, time, etc.
EXW: EXW: EX-WORKS...... EXW COSTS CAN INCLUDE:EXW COSTS CAN INCLUDE:
Raw or processed productRaw or processed product Standard packagingStandard packaging Pallets, banding, shrink-wrap, slip sheets, slings, one-ton-Pallets, banding, shrink-wrap, slip sheets, slings, one-ton-
big-bagsbig-bags Special labelingSpecial labeling Translation and printingTranslation and printing Inspection certificates (Phytosanitary, Health, Quality, or Inspection certificates (Phytosanitary, Health, Quality, or
Export License)Export License) Bracing or inspecting a containerBracing or inspecting a container Export packagingExport packaging
FCA: FREE FCA: FREE CARRIER FCA (geographical location) FCA (geographical location) FCA signifies a precise location where the FCA signifies a precise location where the
product is turned over to a carrier or person product is turned over to a carrier or person who will ensure carriage, and the goods are who will ensure carriage, and the goods are cleared for export.cleared for export.
When offering a When offering a FCAFCA quotation: the price quotation: the price includes those costs involved up to that includes those costs involved up to that agreed point, including transportation and agreed point, including transportation and loading if required.loading if required.
FCA: FCA: FREE CARRIER... CARRIER...
FCA COSTS CAN INCLUDE ( IN FCA COSTS CAN INCLUDE ( IN ADDITION TO THE EXW COSTS):ADDITION TO THE EXW COSTS): Loading on board carrierLoading on board carrier Transportation to the carrierTransportation to the carrier Insurance coverage to carrier (optional)Insurance coverage to carrier (optional)
FAS: FREE ALONGSIDE FAS: FREE ALONGSIDE SHIPSHIP
FAS (port of exit)FAS (port of exit) FAS signifies a precise ocean port FAS signifies a precise ocean port
location where the product is turned over location where the product is turned over to a carrier, and the goods are cleared for to a carrier, and the goods are cleared for exportexport
When offering an FAS quotation: the When offering an FAS quotation: the shipper/seller places the product shipper/seller places the product alongside the vesselalongside the vessel
FAS: FREE ALONGSIDE : FREE ALONGSIDE SHIPSHIP
FAS COSTS CAN INCLUDE (IN FAS COSTS CAN INCLUDE (IN ADDITION TO FCA COSTS):ADDITION TO FCA COSTS): inland transportation (from your plant to the inland transportation (from your plant to the
port)port) port charges (including Terminal Handling or port charges (including Terminal Handling or
Receiving Charges, or stevedore, forklift, off-Receiving Charges, or stevedore, forklift, off-load, etc.)load, etc.)
FOB: FREE ON BOARDFOB: FREE ON BOARD
FOB (OCEAN SHIP AT PORT OF FOB (OCEAN SHIP AT PORT OF EXIT)EXIT)
When offering an FOB quotation: the When offering an FOB quotation: the shipper/seller places the product over shipper/seller places the product over the ship’s rail. FOB only applies to sea the ship’s rail. FOB only applies to sea or water transportationor water transportation
FOB: FREE ON BOARDFOB: FREE ON BOARD The costs associated with FOB include:The costs associated with FOB include:
loading on board shiploading on board ship heavy lift chargesheavy lift charges
These costs are correct in theory, but actually These costs are correct in theory, but actually the loading and heavy lift charges will be the loading and heavy lift charges will be included in the shipping cost from the port to included in the shipping cost from the port to the final destination which the buyer will pay.the final destination which the buyer will pay.
CFR: CFR: COST AND AND FREIGHTFREIGHT
CFR (FOREIGN PORT OF ENTRY)CFR (FOREIGN PORT OF ENTRY)(CFR PORT OF ENTRY, COUNTRY)(CFR PORT OF ENTRY, COUNTRY)
CFR signifies that the seller loads the product on CFR signifies that the seller loads the product on board a carrier, clears the goods for export, board a carrier, clears the goods for export, arranges and pays the ocean freight and other arranges and pays the ocean freight and other charges. charges.
The risk during carriage is transferred to the The risk during carriage is transferred to the buyer, and the goods change hands when they buyer, and the goods change hands when they pass the ship’s rail at the port of shipment. (the pass the ship’s rail at the port of shipment. (the final destination) final destination)
CFR: COST AND FREIGHTCFR: COST AND FREIGHT
The charges associated with CFR The charges associated with CFR include (in addition to the FOB costs):include (in addition to the FOB costs): Ocean FreightOcean Freight Fuel Adjustment FactorFuel Adjustment Factor Currency Adjustment FactorCurrency Adjustment Factor Destination Delivery Charges or Container Destination Delivery Charges or Container
Service ChargesService Charges
CIF: CIF: COST, INSURANCE, , INSURANCE, AND FRIEGHTAND FRIEGHT
CIF (FOREIGN PORT OF ENTRY)CIF (FOREIGN PORT OF ENTRY) (CIF PORT OF ENTRY, COUNTRY)(CIF PORT OF ENTRY, COUNTRY)
CIF signifies that the seller loads the product CIF signifies that the seller loads the product on board a carrier, clears the goods for on board a carrier, clears the goods for export, arranges and pays the ocean freight export, arranges and pays the ocean freight and other charges. and other charges.
The seller insures the shipment, and the The seller insures the shipment, and the goods change hands when they pass the goods change hands when they pass the ship’s rail at the port of shipment.ship’s rail at the port of shipment.
CIF: COST, INSURANCE, CIF: COST, INSURANCE, AND FRIEGHTAND FRIEGHT
COSTS ASSOCIATED WITH CIF COSTS ASSOCIATED WITH CIF INCLUDE (IN ADDITION TO CFR);INCLUDE (IN ADDITION TO CFR); marine cargo insurancemarine cargo insurance
DISCLAIMER:: The previous definitions and list of costs The previous definitions and list of costs
are general. These definitions, terms, are general. These definitions, terms, shipping regulations, legal framework shipping regulations, legal framework often change.often change.
For these reasons, it is highly For these reasons, it is highly recommended that the services of a recommended that the services of a freight forwarder are enlisted, as freight freight forwarder are enlisted, as freight forwarders are aware of any changes.forwarders are aware of any changes.