3. international commercial terms 3.1 free on board (fob) 3.2 cost and freight(cfr) 3.3 cost,...

3. International Commercial Terms 3.1 Free on Board (FOB) 3.2 Cost and freight(CFR) 3.3 Cost, insurance and freight(CIF) 3.4 Delivered at Place (DAP) 3.5 Free Alongside Ship (FAS) 3.6 Free Carrier(FCA) 3.7 Ex Works(EXW) 3.8 Delivered at Terminal (DAT) 3.9 Delivered Duty Paid (DDP) 3.10 Cost Insurance Paid to (CIP) 3.11 Carriage Paid to (CPT)

What INCOTERMS Are? INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. First published in 1936, INCOTERMS provide internationally accepted definitions and rules of interpretation for most common commercial terms. In the US, INCOTERMS are increasingly used in domestic sales contracts rather than UCC (Uniform Commercial Code) shipment and delivery terms.

WHAT INCOTERMS DO? INCOTERMS inform the sales contract by defining the respective obligations, costs and risks involved in the delivery of goods from the Seller to the Buyer.

WHAT INCOTERMS DO NOT DO? INCOTERMS by themselves DO NOT: Constitute a contract; Supersede the law governing the contract; Define where title transfers; nor, Address the price payable, currency or credit terms. These items are defined by the express terms in the sales contract and by the governing law.

What is the importance of Incoterms? The purpose of Incoterms is to precisely define three aspects for international trade: The allocation of logistics costs between sellers and buyers. The transmission of risks in transporting the goods. The documents and customs formalities necessary for export and import operations. The importance of Incoterms is because of its widespread use that makes them internationally known. Therefore, all professionals involved in foreign trade should understand Incoterms: exporters and importers, carriers and freight forwarders, customs brokers, insurers, international credit professionals, sales and purchasing managers, consultants, etc.

Why Incoterms Incoterms define risk, cost and responsibility for both the seller and the buyer during the transportation of the cargo from the exporter to the importer Incoterms are universal and can be recognised and understood internationally. The International Commercial Terms were drawn up by the ICC (International Chamber of Commerce)in 1936 These rules for international trade are used internationally to settle trade disputes between sellers and buyers

Incoterms are Legally binding Incoterms are legally binding and the following must be given consideration: Which party will pay the costs to move the goods from the seller to the buyer? Which documents will be required and at whose expense? At what point will the risk, to which the goods may be subjected to, transfer from the seller to the buyer? Which party, the exporter or importer, will be responsible for the creation of the contract of carriage?

Named port or place There are 13 Incoterms and they range from the least amount of risk, cost and responsibility for the seller, to the most. In keeping with this an Incoterm must always be followed by a named port or place. This must be quoted on the quotation, defining the port or place of receipt and or final destination. Example: FCA OR TAMBO SOUTH AFRICA USD 150 000.

Important changes for 2010: 11 terms of delivery instead of 13 DAF, DES, DDU and DEQ have been removed DAP and DAT are new and have been added Container arrival costs are not expressed (ex: THC terminal Handling charges and other destination charges) Exact cost transfer points need to be addressed elsewhere in the contract DAT is the only term that specifically tasks the seller with unloading FOB changed to on board vessel (ships rail reference removed)

PRACTICE POINTS BE SPECIFIC: If you use INCOTERMS in the Sales Contract or Purchase Order, you should identify the appropriate INCOTERM Rule [e.g. FCA, CPT, etc.], state INCOTERMS 2010 and specify the place or port as precisely as possible. RECOGNIZE WHERE THE RISK OF LOSS TRANSFERS: A common misconception when the Seller pays the freight is that the Seller has the risk of loss until the goods are delivered to the place or port specified on the bill of lading or airway bill. Actually, when using INCOTERMS CPT, CIP, CFR or CIF, risk transfers to the Buyer when the Seller hands the goods over to the carrier at origin, not when the goods reach the place or port of destination. Understand that under CIP and CIF, the Seller is only obliged to obtain insurance on minimum cover.

UNDERSTAND WHO HAS RESPONSIBILITY FOR LOADING AND UNLOADING CHARGES. FOR EXAMPLE: DAT obliges the Seller to place the goods at the Buyers disposal after unloading at the named terminal at port or place of destination. DAP and DDP oblige the Seller to place the goods at the Buyers disposal on the delivering carrier ready for unloading at the named place of destination. CPT, CIP, CFR or CIF on the other hand, require the parties to identify as precisely as possible the point at the agreed port of destination because the costs up to that point are for the account of the Seller. Under FCA terms, the seller satisfies his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. The buyer is responsible for inland freight, unloading at port of embarkation and loading on ocean carrier/airline.

UNDERSTAND WHO HAS RESPONSIBILITY FOR U.S. CUSTOMS ENTRY DECLARATIONS: DDP is the only INCOTERM where the Seller has responsibility for U.S. Customs entry declarations. IMPORTANT NOTE: An important factor to be considered when asking the Seller to be responsible for international carriage, is if the goods ship by Ocean Freight, an Importer Security Filing (ISF) must be electronically submitted to Customs 24 hours before the cargo is laden on the vessel bringing the cargo to the U.S. The Buyer should specify in the contract either (a) the shipper is responsible for the ISF or (b) the Seller is responsible for providing the required data in a timely manner (i.e. 72 hrs before lading) to the Buyers appointed agent (e.g. Customs Broker). In practice, when the broker and the international forwarder are unrelated parties, this requirement is honored more in the breach than in the observance. The Buyer responsible for customs entry should indemnify against the penalties (US$5,000) for filing a late, inaccurate or incomplete ISF. The ISF does not apply at this time to airfreight shipments DETERMINE THE IMPORTANCE OF SUPPLY CHAIN VISIBILITY When CPT, CIP, CFR or CIF are used the Seller fulfills its obligation to deliver when it hands the goods over to the carrier, not when the goods reach the place of destination. DAT, DAP and DDP the Seller fulfills its obligation to deliver at the named destination. The Seller has no obligation to provide transit status updates.

EXWORKS VENDORBUYER FREE CARRIER FAS FOB CFR CIF (Maritime only) Group E: EXW Ex Works: at vendors plant Group F: FCA Free Carrier: Land carrier FAS Free Alongside Ship: At the shipping port FOB Free On Board: On the Vessel. Maritime only. Group C: CFR Cost and Freight: At the arrival port (On board). Doesnt include insurance. Maritime CIF Cost Insurance and Freight: At the arrival port (On board). Includes insurance. Maritime CPT Carriage Paid To: Same as CFR but used for land/air freight CIP Carriage and Insurance Paid To: Same as CIF but used for land/air freight Group D: DAP Delivered at Place: Multimodal / Land carrier DAT Delivered at Terminal: Same as DAP but the shipper is responsible for the load. The buyer is responsible for the load. DDP Delivered Duty Paid: At the buyers plant (Insurance, cost and freight included (Door to Door). DAPDATDDP Tax Control Warehouse (Almacn Fiscal) Buyer Plant INCOTERMS Vendor Plant (Maritime only)

The Categories Incoterms Code Ex worksEXW Free carrierFCA Free alongside shipFAS Free on boardFOB Cost & freightCFR Cost, insurance & freightCIF Carriage paid toCPT Carriage and insurance paid toCIP Delivered at frontierDAF Delivered ex shipDES Delivered ex quayDEQ Delivered duty unpaidDDU Delivered duty paidDDP E Terms F Terms C Terms D Terms

DAF DELIVERED AT FRONTIER means the seller fulfils its obligation to deliver when the goods have been made available, cleared for export, at the named point and place at the frontier, but before the customs border of the adjoining country. The term "frontier" may be any frontier, not just the country of export. For this reason it is important to precisely define the point and place it in the term. DELIVERED AT FRONTIER requires the seller to clear the goods for export. DELIVERED AT FRONTIER is intended to be used when goods are to be carried by road or rail, but it may be used for any mode of transport.

DES DELIVERED EX SHIP means the seller fulfills its obligation to deliver when the goods have been made available to the buyer on board the ship uncleared for import at the named port of destination. If the parties wish the seller to bear the costs and risks of discharging the goods, then use the term DEQ - DELIVERED EX QUAY. DELIVERED EX SHIP can only be used for sea or inland waterway transport.

DEQ DELIVERED EX QUAY means the seller fulfils its obligation to deliver when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination. The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf). The buyer clears the goods for import and pays for all formalities, duties, taxes and other charges upon import. This is the opposite of the previous version of Incoterms. If the parties wish to include in the sellers obligations all or part of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale. If the parties wish to include in the sellers obligations the risks and costs of the handling of the goods from the quay to another place (warehouse, terminal, etc.) in or outside the port, then one of the following terms should be used: DDU - DELIVERED DUTY UNPAID (... named place of destination) DDP - DELIVERED DUTY PAID (... named place of destination) DELIVERED EX QUAY can only be used for: Sea or inland waterway transport Multimodal transport Discharging from a vessel onto the quay (wharf) in the port of destination.

DDU DELIVERED DUTY UNPAID means the seller fulfills its obligation when the goods arrive by any means of transportation to the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. The buyer pays the duty. The buyer has to pay any additional costs and to bear any risks caused by its failure to clear the goods for import in time. If the parties wish the seller to carry out customs formalities and bear the costs and risks, or pay any taxes, this has to be made clear by adding words to this effect. DELIVERED DUTY UNPAID can be used for all modes of transport.

DDP DELIVERED DUTY PAID means the seller fulfills its obligation when the goods arrive by any means of transportation to the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto (including duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. The seller pays the duty. DELIVERED DUTY PAID represents the seller's maximum obligation. The buyer has to pay any additional costs and to bear any risks caused by its failure to clear the goods for import in time. DELIVERED DUTY PAID should not be used if the seller is unable to obtain an import license. If the parties wish the seller not to carry out customs formalities and bear the costs and risks, or not pay any taxes, this has to be made clear by adding words to this effect. DELIVERED DUTY PAID can be used for all modes of transport.

The Steps of Global Logistics Main International Transportation 4 Handling Inbound Customs Clearance Duties Final Transportation Unloading Packing Loading Preliminary Transportation Customs Clearance for Export Handling Outbound Insurance 1 2 3 5 6 7 8 9 10 11

Acronym (named location) Goods Sellers Risk Sellers Cost PRE -CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance Acronym dictates mode and where the lines are drawn

3.1 Free on Board (FOB) "Free on Board" means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ships rail, the FCA term should be used.

FOB: Free on Board Port of Departure. Exporter responsible for goods until they are on the ship, then importer is responsible. Dividing point is ships rail. The rail around the deck that prevents you from falling off the deck. Meaning, the 'edge' of the ship, or to refer when goods are said to be on board the ship.

FOB - Free on Board Under this term, the seller is responsible for delivering the goods on board the ship at the named port of loading. The responsibility for, and risk of damage to or loss of, the goods pass from the seller to the buyer when the goods pass a ships rail.

FOB (named port of shipment) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance Buyer nominates carrier, contracts carriage pays freight Seller clears export customs, delivers and loads goods on ship evidence of delivery

FOB Example FOB, New Orleans for 3 ice makers. You as the exporter are responsible for all costs in delivering the goods to New Orleans and loading the icemakers on board a vessel named by the German firm. You are responsible for arranging any export clearances (licenses, taxed, fees). The German firm is responsible for booking space for cargo and pays for the ocean freight.

3.2 CFR - Cost and Freight The seller is responsible for paying the costs and freight to bring the goods to the named port of destination. The risk of loss or damage to the goods is transferred from the seller to the buyer when the goods pass the ships rail at the port of loading.

CFR (named port of destination) Goods Sellers Risk PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance Sellers Cost

3.3 CIF - Cost, Insurance & Freight This term is the same as CFR, except the seller has to procure, and pay for, marine insurance for the goods during their carriage.

CIF (named port of destination) Goods Sellers Risk PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance Sellers Cost + Insurance

3.4 Delivered at Place (DAP) (named place) Named place on buyers side Seller arranges export clearance, delivers export packed goods to the named place of destination and pays all transportation costs thereto Buyer arranges import clearance and on carriage Neither party is required to insure Transport mode: All Modes

3.5 FAS - Free Alongside Ship Under this term, it is the sellers responsibility to deliver the goods alongside the ship on the quay in the port of loading, having cleared the goods through Customs in the country of export. The buyer must bear all the costs and risks from that point onwards

FAS (named port of shipment) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE BUYER Export Clearance Import Clearance SELLER Buyer export documents nominates carrier, contracts carriage pays freight Seller delivers goods alongside ship evidence of delivery

3.6 FCA - Free Carrier at The seller is responsible for delivering the goods into the custody of the transport carrier at the named point, having cleared the goods through Customs in the country of export. The responsibility for, and the risks of damage to or loss to the goods is transferred from the seller to the buyer at this point. It is based on the same principle as FOB except that the seller fulfils his obligations when s/he delivers the goods into the custody of the carrier at the named point.

FCA (named place) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance Buyer nominates carrier, contracts carriage pays freight Seller clears export customs, delivers goods to carrier evidence of delivery

3.7 EXW - Ex Works The seller makes the goods available, packed and ready for collection at the place of receipt (factory). The buyer must bear all the risks and charges in taking the goods to the required destination. This term carries the minimum obligation for the seller.

E Terms: Departure z EXW (named place) Under E-terms, the seller minimizes his risk by only making the goods available at his own premises. Goods Sellers Risk Sellers Cost PRE -CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLERBUYER Export Clearance Import Clearance

EXW = Ex Works zThe seller fulfills his obligation to deliver when he has made the goods available at his premises to the buyer. zThe seller is not responsible for loading the goods on the vehicle provided by the buyer zThe seller is not responsible for clearing the goods for export, unless agreed. zThe buyer bears all costs and risks involved in taking the goods from the sellers premises to the desired destination.

E Terms: EX WORKS...NAMED PLACE (usually the sellers premises) Abbreviation: EXW Transport mode: all Minimum requirements for the seller Sellers cost and risk end when seller places the goods at the disposal of the buyer at sellers premises or another named place Loading is buyers responsibility Pre-carriage is buyers responsibility Main-carriage is buyers responsibility

Sellers cost & risk end when goods are at the disposal of the Buyer at the Sellers premises or named place. EXW = ExWorks (Named Place)

DAF (named place) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLER BUYER Export Clearance Import Clearance

DES (named port of destination) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLER BUYER Export Clearance Import Clearance

DEQ (named port of destination) Goods Sellers Risk Sellers Cost PRE-CARRIAGE MAIN CARRIAGEON-CARRIAGE SELLER BUYER Export Clearance Import Clearance

3.8 Delivered at Terminal (DAT) (named place) Named place at terminal on buyers side (a terminal at the destination port or a terminal not far beyond the destination port where its yet to be cleared by Customs) Seller arranges export clearance and delivers goods export packed to the named destination terminal, pays all transport costs thereto and unloads Buyer arranges import clearance and on carriage Neither party is required to insure Transport Mode: All Modes

3.9 DDP- Delivered Duty Paid The seller is responsible for delivering the goods to the named place of destination having cleared them for import into the country of destination. This term represents the maximum obligation for the seller.

3.10 CIP - Carriage & Insurance Paid This term is the same as CPT but the seller also has to procure, and pay for, marine insurance for the goods. Similar to CIF, CIP is suitable for multimodal transportation.

3.11 CPT - Carriage Paid to.. The seller is responsible for arranging the carriage and paying the freight to the named destination, but the risk of loss of, and damage to, the goods, passes from the seller to the buyer when the goods have been delivered into the charge of the carrier in the country of export

What are Incoterms 2011? There is no such version as Incoterms 2011. The most recent revision is called as Incoterms 2010, which came into force on 1 st January 2011. The Revisions of the rules take place around every ten years or so.

What is Incoterms 2010's connection with transfer of title to the goods? The Incoterms rules are silent on the issue of when title in the goods passes from seller to buyer. This should be dealt with elsewhere in the commercial agreement. The issue of title to the goods is related to that of revenue recognition, which matters to those organizations who want the best figures in their financial reports.

What Incoterms rules work best with letters of credit? Where possible use CIF, CIP, CFR or CPT. For all these rules, delivery takes place before the main carriage. The carrier gives the seller a transport document which (usually) serves as a mechanism for control of the goods it will be presented to the bank under the letter of credit, and then passed on to the buyer so that the goods can be claimed.

Can we still use Incoterms 2000 in our agreements? Yes. Many companies have complex agreements with their counterparties and service providers, which will be timeconsuming to redraft. Therefore parties are free to continue to refer to Incoterms 2000 (or any other revision!)Provided that this is specified unambiguously In their agreements

Can I still use the Incoterms 2000? According to the International Chamber of Commerce, all contracts made under Incoterms 2000 remain valid even after 2011. In addition, although the ICC recommends using Incoterms 2010 from January 2011 onward, parties to a sales contract can agree to use any version of Incoterms after 2011. It is important, however, to clearly specify the chosen version of Incoterms being used (i.e. Incoterms 2010, Incoterms 2000, or any earlier version).

Discover The key to getting along with others How to build relationships with other people continued

Discover The part self-esteem plays in relationships How to deal with conflicts between people

Why Its Important Getting along with others will help you at home, at school, and on the job.

Key Terms relationships respect empathize self-esteem conflict prejudice continued

Key Terms mediator compromise conflict resolution

Building Relationships Think about all your relationshipsyour connections or dealings with other people.

Building Relationships The key to getting along with people is respect, or consideration for others.

Respect Is the Key Employers take social skills seriously. They know that employees who have social skills have the key to good relationships in the workplace.

Getting Along With Others When you get along with coworkers and others at work, you will do a better job. You will also enjoy your work more.

Ways to Build Relationships continued Graphic Organizer Treat people as you would like to be treated. Be thoughtful and considerate. Try to understand the other persons side. EmpathizeTry to see things from the other persons point of view and understand his or her situation. Speak carefully. Think of the way others will feel when they hear what you have to say.

Ways to Build Relationships Graphic Organizer Listen when others talk. Let other people know youre interested in them. Help others. Lend a hand if you see someone having trouble doing something. Be friendly. Be pleasant and smile. Have a sense of humor. Find ways to see the light side of a situation.

Getting Along With Yourself How you feel about yourselfyour self-esteemaffects how you get along with others. Self-esteem is your recognition and regard for yourself and your abilities.

Dealing With Conflict Even when people do their best to get along, conflicts can arise. A conflict is a strong disagreement.

Causes of Conflicts Conflicts have a variety of causes. Some are based on misunderstandings.

Causes of Conflicts Other conflicts come about because people have different beliefs or opinions, or because of gossip and teasing, or jealousy.

Causes of Conflicts Prejudice is another cause of conflict. Prejudice is a negative attitude toward a person or group that is not based on facts or reason.

Resolving Conflicts No matter what its cause, a conflict is like any other problem. To deal with a conflict, you need good problem-solving skills.

Resolving Conflicts If you cant agree, you may need to ask someone to act as a mediator. A mediator is someone who helps opposing people or groups compromise, or reach an agreement.

Resolving Conflicts At work, a step-by-step process called conflict resolution may be used to settle disagreements.

Steps in Conflict Resolution Graphic Organizer Take turns describing the problem from different points of view. 1. Define the problem. Offer solutions to the problem. 2. Suggest possible solutions. Discuss the suggested solutions. 3. Evaluate possible solutions. Brainstorm possible compromises. Then try to agree to a compromise solution. 4. Come to a compromise. Invite a third person to listen and make suggestions for a solution. 5. Get another point of view. Ask a mediator to make the final decision. 6. Ask someone else to decide.

Preventing Conflicts When you feel yourself getting angry, try these ways of cooling off: Take a deep breath and count to 10. Go for a walk or do something else that is physical. continued

Preventing Conflicts Laugh it off and walk away. Take a few minutes to have a talk with yourself. Remind yourself of the reasons you dont want to get angry.

Can you have good relationships with other people if you have low self-esteem? Explain. If you are not positive and respectful to yourself, you will have a much more difficult time being positive and respectful toward other people. Can you have good relationships with other people if you have low self-esteem? Explain. If you are not positive and respectful to yourself, you will have a much more difficult time being positive and respectful toward other people. Critical Thinking Review Critical Thinking Q Q A A continued

How does learning to do something new help increase your self-esteem? When you learn to do something new, you realize what you are capable of doing, and the experience gives you confidence in yourself. How does learning to do something new help increase your self-esteem? When you learn to do something new, you realize what you are capable of doing, and the experience gives you confidence in yourself. Critical Thinking Review Critical Thinking Q Q A A

3. international commercial terms 3.1 free on board (fob) 3.2 cost and freight(cfr) 3.3 cost,...

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