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Westhaven Worldwide Logistics. Delivering Service Westhaven Worldwide Logistics
Exporting - The Basics - Part 2 I N C O T E R M S + Responsibilities + Risks + Liability Before concluding a deal for the sale of goods for exportation, it’s absolutely vital that you understand and agree with the buyer the relevant INCOTERM which will apply to the supply of the goods. INCOTERMS is a set of terms which defines the responsibilities of buyers and sellers. The terms were established by the International Chamber of Commerce (ICC) in order to promote order and to avoid disagreements in international trade. They are now used and accepted on a global basis. The current set of terms is as follows:
Terms for any mode of transport
EXW – EX WORKS FCA – FREE CARRIER CPT – CARRIAGE PAID TO CIP – CARRIAGE & INSURANCE PAID TO DAT – DELIVERED AT TERMINAL DAP – DELIVERED AT PLACE DDP – DELIVERED DUTY PAID Terms for Sea and Inland Waterway transport
FAS – FREE ALONGSIDE SHIP FOB – FREE ON BOARD CFR – COST & FREIGHT CIF – COST INSURANCE & FREIGHT A more complete explanation can be seen at: http://www.iccwbo.org/incoterms/ If the journey of goods from point of origin to final destination is thought of as a single line, the terms define which sections along that line the buyer or seller is responsible for, in terms of transport costs and risks, with EX-WORKS being at one end of the line and DDP being at the other end.
Delivering Service Tel: Web:
+44(0)121 713 7250 www.westhavenww.co.uk
| Fax: +44(0)121 713 7250 | Email: info@westhavenww.co.uk
Westhaven Worldwide Logistics. Delivering Service Westhaven Worldwide Responsibilities & Risks Logistics Examples of INCOTERMS
- if you sell goods on EX-WORKS terms, it means that the buyer is responsible for all transport costs and risks from the moment the goods leave your premises
- if you sell goods on DDP terms, it means that the seller is responsible for all transport costs and risks up until the goods arrive at the nominated place, including any costs for Customs clearance (if required in the country of destination).
The remaining terms are all points along the same line, between EX-WORKS and DDP, where the responsibility changes from seller to buyer. Depending on the INCOTERM you decide upon when selling your goods, you may be responsible for transport costs and risks. If you are, then you need not only to find out what transport costs will be, but also consider what risks you may be responsible for. The risk factor is very import because ACCIDENTS CAN HAPPEN‌.as can be seen below
Delivering Service Tel: Web:
+44(0)121 713 7250 www.westhavenww.co.uk
| Fax: +44(0)121 713 7250 | Email: info@westhavenww.co.uk
Westhaven Worldwide Logistics. Delivering Service Westhaven Worldwide Liability and Insurance Logistics All carriers limit their liability for loss or damage. This means that, if a carrier accepts and processes a claim, any reimbursement will be in accordance with the limits the carrier sets out in their Standard Trading Conditions. The limit of liability is usually set at a certain amount per kilogram and, as liability is usually set at quite a low level, this may well mean that your goods are not ‘covered’ for their full value. Although carriers limit their liability, international conventions (such as CMR, the Warsaw Convention and the Hague Visby rules) have been put in place and these define the responsibilities of carriers and the minimum liability they must accept. Nevertheless, it’s a very good idea to think about insuring your goods for the full value + freight costs + a 10% contingency. Insurance is relatively cheap and provides peace of mind, but you should check the risks that the insurer is prepared to cover – some risks are frequently excluded, like breakage, scratching, twisting, bending, oxidisation, mechanical, electrical and electronic derangement. Don’t skimp on packaging or protecting your goods, as carriers will (quite reasonably) deny responsibility for damage or loss caused due to poor packaging.