Description provided is insufficient to classify commodity fedex

http://www.fiatadiploma.org/ProjectSelf/FiataDiplomainChina.asp#orgnizer

international federation of forwarding agents’ associations 国际货运行协会联合会

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Logeam of Nanjing University of Finance & Economics

2007．9．18

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录入与编撰人员：

Chapter 4：时杰 梁华 刘秋燕

Chapter 6、8：曾海金 刘静 戴振华 强正军

Chapter 9：陈靖 方瑞峰 刘尧琦 汪海洋 薛培浩 钟永让

Chapter 12：陈旭 韩一阳 张浩威 赵捷喑

Chapter 13：崔媛媛 方昉 陈彤华 贾琴 吴梓源

Chapter 14：钱莉莉 李佳 韩善涛 江伟 金鑫 沈斌 苏真斌

Logeam协助：李小艳 颜天宝 叶平 刘晓明

总体指导：吴志华

content

17 Chapter 4

17 Outline

18 Key Terms：

18 4-1 Introduction

20 4-2 Understanding Incoterms

21 4-3 Incoterm Strategy

23 4-4 Ex-Works (EXW)

25 4-4a Delivery under EXW

25 4-4b Exporter’s and Importer’s Responsibilities under EXW

26 4-5 Free Carrier (FCA)

27 4-5a Delivery under FCA

28 4-5b Exporter’s and Importer’s Responsibilities under FCA

28 4-6 Free Alongside Ship (FAS)

29 4-6a Delivery under FAS

29 4-6b Exporter’s and Importer’s Responsibilities under FAS

30 4-7 Free on Board (FOB) Port of Departure

31 4-7a Delivery under FOB

31 4-7b Exporter’s and Importer’s Responsibilities under FOB

32 4-8 Cost and Freight(CFR)

33 4-8a Delivery under CFR

34 4-8b Exporter’s and Importer’s Responsibilities under CFR

34 4-9 Cost, Insurance, and Freight (CIF)

35 4-9a Delivery under CIF

37 4-9b Export’s and Importer’s Responsibilities under CIF

38 4-10 Carriage Paid To(CPT)

38 4-10a Delivery under CPT

38 4-10b Exporter’s and Importers’ Responsibilities under CPT

39 4-11 Carriage and Insurance Paid To(CIP)

40 4-11a Delivery under CIP

40 4-11b Exporter’s and Importer’s Responsibilities under CIP

40 4-12 Delivered Ex-Ship(DES)

41 4-12a Delivery under DES

42 4-12b Exporter’s and Importer’s Responsibilities under DES

42 4-13 Delivered Ex-Quay(DEQ)

43 4-13a Delivery under DEQ

43 4-13b Exporter’s and Importer’s Responsibilities under DEQ

43 4-14 Dlivered at Frontier(DAF)

44 4-14a Delivery under DAF

44 4-14b Exporter’s and Importer’s Responsibilities under DAF

45 4-15 Dlivered Duty Unpaid(DDU)

46 4-15a Delivery under DDU

46 4-15b Exporter’s and Importer’s Responsibilities under DDU

47 4-16 Delivered Duty Paid (DDP)

48 4-16a Delivery under DDP

48 4-16b Exporter’s and Importer’s Responsibilities under DDP

49 4-17 Electronic Data Interchange

49 End-of-Chapter Questions

51 Endnotes

53 Chapter 5

53 Outline

54 Key Terms

55 5-1 Introduction

58 5-2 Alternative Terms of Payment

59 5-2a Country Risk

61 5-2b Commercial Risk

62 5-2c Exposure

62 5-3 Cash in Advance

62 5-3a Definition

63 5-3b Applicability

63 5-4 Open Account

64 5-4a Definition

64 5-4b Applicability

65 5-4c Commercial Insurance

65 5-4d Factoring

66 5-5 Letter of Credit

66 5-5a Definition

67 5-5b Process

69 5-5c Additional Information

74 5-5d Stand-By Letters of Credit

74 5-5e Applicability

75 5-5f URR 525

75 5-6 Documentary Collection

75 5-6a Definition

76 5-6b Sight Draft

76 5-6c Time Draft

77 5-6d Date Draft

78 5-6e Instruction Letter

79 5-6f Trade Acceptance

79 5-6g Banker's Acceptance and Aval

80 5-6h URC 522

81 5-6i Applicability

81 5-6j Forfaiting

82 5-7 Purchasing Cards--Procurement Cards

83 5-8 TradeCard

84 5-9 Bank Guarantees

84 5-9a Definition

84 5-9b Guarantee Payable on First Demand (at First Request)

85 5-9c Guarantees Based Upon Documents-Cautions

85 5-9d Stand-By Letters of Credit

85 5-9e Types of Bank Guarantees

86 End-of-Chapter Question

87 Endnotes

90 Chapter 6

90 Outline

91 Key Terms

92 6-1 Sales Contracts" Currency of Quote

95 6-1a Exporter's Currency

95 6-1b Importer's Currency

95 6-1c Third Country's Currency

96 6-1d The Special Status of the Euro

96 6-2 The System of Currency Exchange Rates

97 6-2a Types of Exchange Rates

105 6-3 Theories of Exchange Rate Determinations

107 6-3a Purchasing Power Parity

108 6-3b Fisher Effect

109 6-3c International Fisher Effect

110 6-3d Interest Rate Parity

111 6-3e Forward Rate as Unbiased Predictor of Spot Rate

112 6-3f Entire Predictive Model

112 6-4 Exchange Rate Forecasting

113 6-4a Technical Forecasting

114 6-4b Fundamental Forecasting

114 6-4c Market-Based Forecasting

115 6-5 Managing Transaction Exposure

116 6-5a Risk Retention

116 6-5b Forward Market Hedges

118 6-5c Money Market Hedges

119 6-5d Options Market Hedges

120 6-6 International Banking Institutions

121 6-6a Central National Banks

121 6-6b International Monetary Fund

122 6-6c Bank for International Settlements

122 6-6d International Bank for Reconstruction and Development--World Bank

122 6-6e Ex-lm Bank

123 6-6f Society for Worldwide Interbank Financial

123 End – of – Chapter Questions

124 Endnotes

127 Chapter 8

127 Outline

128 Key Terms:

129 8-1 Introduction

129 8-2 Insurance Glossary

130 8-3 Perils of the Sea

131 8-3a Cargo Movements

132 8-3b Water Damage

133 8-3c Overboard Losses

133 8-3d Jettison

134 8-3e Fire

135 8-3f Sinking

135 8-3g Stranding

137 8-3h General Average

139 8-3i Theft

140 8-3j Piracy

140 8-3k Other Risks

144 8-4 Perils Associated with Air Shipments

146 8-5 Insurable Interest

148 8-6 Risk Management

148 8-6a Risk Retention

149 8-6b Risk Transfer

150 8-6c Mixed Approach

150 8-7 Marine Insurance Policies

151 8-7a Marine Cargo Insurance

152 8-7b Hull Insurance

153 8-7c Protection and Indemnity

155 8-8a Institute Marine Cargo Clauses---Coverage A

156 8-8b All Risks Coverage

156 8-8c Institute Marine Cargo Clauses--Coverage B

157 8-8d Institute Marine Cargo Clauses---Coverage C

158 8-8e With Average Coverage

159 8-8f Free of Particular Average Coverage

160 8-8g Strikes Coverage

161 8-8h War and Seizure Coverage

161 8-8i Warehouse-to-Warehouse Coverage

162 8-8j Difference in Conditions

162 8-8k Other Clauses of a Marine Insurance Policy

163 8-9 Elements of an Airfreight Policy

164 8-10 Lloyd's

164 8-10a Principles

166 8-10b Current Status

167 8-11 Commercial Credit Insurance

168 8-1 la Risks Involved

169 8-11c Insurance Policies Available

171 End – of – Chapter Questions

172 Endnotes

178 Chapter 9

178 Outline

178 KEY Terms

180 9-1 Types of Service

181 9-2 Size of Vessels

181 9-2a Dead-Weight Tonnage

181 9-2b Registered tonnage

182 9-2c Displacement

182 9-2d Plimsoll lines

183 9-2e Size Categories

184 9-3 Types of Vessels

184 9-3a Containerships

186 9-3b Roll-On/Roll-Off Ships

188 9-3h Gas Carriers

190 9-4 Flag

196 9-6 Liability Conventions

198 9-7 Non-Vessel-Operating Common Carriers

199 End – of – Chapter Questions

199 Endnotes

203 Chapter12

203 Outline

203 Key terms

204 12-1 introduction

205 12-2 packaging objective

207 12-3 Ocean Cargo

207 12-3a Full-Container-Load Cargo

210 12-3b less-than-container-load(LCL) cargo

211 12-3c break-bulk cargo

214 12-3d Markings

215 12-4 Air Transport

215 12-4a Containers

216 12-4b Packaging Materials

216 12-4c Markings

217 12-5 Road and Rail Transport

217 12-6 Security

219 12-7 Hazardous Cargo

220 12-8 Refrigerated Goods

223 12-9 Domestics Packaging Issues

226 End-of-chapter questions

226 Endnotes

229 Chapter13

229 Outline

229 Key Terms

230 13-1 Introduction

230 13-2 Duty

231 13-2a Classification

235 13-2b Valuation

237 13-2c Rules of Origin

239 13-2d Tariffs

243 13-2e Dumping

245 13-2f Other Taxes

246 13-2g value Added Tax

247 13-3 Non-Tariff Barriers

247 13-3a Quotas

249 13-3b Adherence to National Standards

251 13-3c Other Non-Tariff Barriers

252 13-3d Pre –Shipment Inspections

254 13-4 Customs Clearing Process

254 13-4a general process

258 13-4b Customs Brokers

258 13-4c Customs Bonds

259 13-4d Reasonable Care

260 13-4e Required Documentation

261 13-4f Required Markings

262 13-4g Merchandise Visas

263 13-4h Duty Drawbacks

264 13-5 Foreign Trade Zones

266 End-of-Chapter question

267 Endnotes

273 Chapter14

273 Outline

274 14-1 Definitions

275 14-2a Port Infrastructure

278 14-2b Canals and Waterways Infrastructure

281 14-2c Airport Infrastructure

283 14-2d Rail Infrastructure

286 14-2e Road Infrastructure

290 14-2f Warehousing Infrastructure

291 14-3 Communication Infrastructure

292 14-3a Mail Services

293 14-3b Telecommunications Services

295 14-4 Utilities Infrastructure

295 14-4a Electricity

296 14-4b Water and Sewer

297 14-4c Energy Pipelines

297 End-of-Chapter Questions

298 Endnotes

Chapter 4

Terms of Trade or Incoterms

Outline

4-1 Introduction

4-2 Understanding Incoterms

4-3 Incoterm Strategy

4-4 Ex-Works (EXW)

4-4a Delivery under EXW

4-4b Exporter’s and Importer’s

Responsibilities under EXW

4-5 Free Carrier (FCA)

4-5a Delivery under FCA

4-5b Exporter’s and Importer’s

Responsibilities under FCA

4-6 Free Alongside Ship (FAS)

4-6a Delivery under FAS

4-6b Exporter’s and Importer’s

Responsibilities under FAS

4-7 Free on board (FOB) Port of Departure

4-7a Delivery under FOB

4-7b Exporter’s and Importer’s

Responsibilities under FOB

4-8 Cost and Freight (CFR)

4-8a Delivery under CFR

4-8b Exporter’s and Importer’s

Responsibilities under CFR

4-9 Cost, Insurance, and Freight (CIF)

4-9a Delivery under CIF

4-9b Exporter’s and Importer’s

Responsibilities under CIF

4-10 Carriage Paid To (CPT)

4-10a Delivery under CPT

4-10b Exporter’s and Importer’s

Responsibilities under CPT

4-11 Carriage and Insurance Paid To (CIP)

4-11a Delivery under CIP

4-11b Exporter’s and Importer’s

Responsibilities under CIP

4-12 Delivered Ex-Ship (DES)

4-12a Delivery under DES

4-12b Exporter’s and Importer’s

Responsibilities under DES

4-13 Delivered Ex-Quay (DEQ)

4-13a Delivery under DEQ

4-13b Exporter’s and Importer’s

Responsibilities under DEQ

4-14 Delivered at Frontier (D AF)

4-14a Delivery under DAF

4-14b Exporter’s and Importer’s

Responsibilities under DAF

4-15 Delivered Duty Unpaid (DDU)

4-15a Delivery under DDU

4-15b Exporter’s and Importer’s

Responsibilities under DDU

4-16 Delivered Duty Paid (DDP)

4-16a Delivery under DDP

4-16b Exporter’s and Importer’s

Responsibilities under DDP

4-17 Electronic Data Interchange

End-of-Chapter Questions

Endnotes

Key Terms：

Incoterm

ship’s rail

Stevedoring

variant

4-1 Introduction
Whenever an exporter to sells goods to a foreign company, whether through an intermediary such as an agent or a distributor, or directory to an importer, there are a large number of steps involved in getting the goods to the customer:

· clearing the goods for export

· organizing the transport of the goods between the exporter and the importer, often using several means of transportation

· clearing Customs the importing country

The Terms of Trade used in the contract of sale determines which of these steps the responsibilities of the substantial are, and specifically dividing all of these tasks between the exporter and the importer for each shipment would be a daunting task. In addition, it would be virtually impossible to anticipate everything that could go “wrong” during transit and determine at the time of the contract在契约的时候 which of the parties should be responsible for each incident.

Fortunately, a set of standardized Terms of Trade was created in 1936 by the International Chamber of Commerce: they have evolved into thirteen International Commerce Terms, from which the acronym Incoterms( is derived. These Incoterms were revised in 1953,1967,1976,1980, and most recently in 1990 and 2000, the latter revision bringing only moderate changes to a few terms. It is of significant benefit to both parties to use one of these Incoterms ,since ample information is available to add, after the three-letter acronym by which all Incoterms are known, “Incoterms 2000” to remove any doubt regarding the adoption of the specific meaning defined by the International Chamber of Commerce in its 2000 version of these terms. For example, a pro-forma invoice would read: “FCA Milwaukee, Wisconsin, USA, Incoterms 2000” to indicate which would remain the responsibility of the importer. If a standard contract is used, the same clarification should be made especially since the 2000 Incoterms have only been in existence for a short time.

4-2 Understanding Incoterms
The Terms of Trade of Incoterm that the exporter and the importer agree to use in a given transaction defines several aspects of an international sale:

· Which tasks will be performed by the exporter

· Which tasks will be performed by the importer

· Which activities will be paid by the exporter

· Which activities will be paid by the importer

· When the transfer of responsibility will take place

This last point is complicated: it is conceptually difficult to make the distinction between (1) the transfer of responsibility between the exporter and the importer and (2) the transfer of title between the exporter and the importer. The transfer of responsibility (transfer of risk) is dictated by the choice of the Incoterms. The transfer of title (transfer of ownership) is usually done when the importer has either paid the exporter (and obtained the original bill of lading) accepted to sign a draft (see Chapter 5), or performed some other event specifically outlined in the contract of sale between both parties. The transfer of responsibility happens at the delivery of the goods, a point which is clearly outlined in each of the Incoterms, and in most cases, a point that occurs chronologically much earlier than the transfer of title.

The transfer of responsibility of the exporter never extends beyond the services for which that company has paid. There are several Incoterms, however, where the exporter is obligated to pre-pay a portion of the transportation costs, even though it is no longer responsible for the goods. Such is the case for the so-called C-terms, the ones whose acronyms start with the letter C.

4-3 Incoterm Strategy
The proper choice of an Incoterm is therefore contingent upon the strategy followed by the exporting firm, but is also somewhat constrained by the following parameters:

· The type of product sold: several industries (commodities in particular) prefer using some specific terms of trade rather than others

· The method of shipment: goods shipped by ocean or barge will be sold under different Incoterms than containerized goods using several transportation modes

· The ability of either of the parties to perform the tasks involves in the shipment

· The amount of trust placed by either of the parties toward the other

Nevertheless, the greatest criterion to be used is the willingness of both parties to perform and pay for some of the tasks involved in the shipment. In some cases, a strategic advantage can be gained by an exporter who is willing to facilitate the sale of its products by assisting the importer in the shipment. In others, a price advantage may be obtained by an importer who is willing to perform all or most of the tasks involved in the shipment. A company generally does not determine Which Incoterm to use on a case-by-case basis, but will determine which strategy it would like to pursue and determine which Term of Trade should be used regularly, given its product line, its customers’ expectations, and its trade volume.

Another issue to understand clearly in this decision is that, regardless of the Incoterm chosen, the importer is always paying for the transportation and other costs of shipping internationally. The fact that the exporter is pre-paying and arranging for certain aspects of the shipment is reflected in the invoice price; therefore, the importer ends up paying for it.

Nevertheless, the choice of Incoterm is almost always the exporter’s decision: it is difficult for an exporter to “adapt” its Incoterm strategy to accommodate the requirements of an importer, as it may require the exporter to be responsible for tasks that it has decided it would rather not perform. Should the importer feel that the exporter is not providing a service that is adequate, it can always “vote with its feet” and purchase from another source. However, should the importer want to perform more tasks than what the exporter prefers, it is certainly possible for the exporter to do less than what it expected, and use a different Incoterm on that transaction, one for which it is responsible for less.

Finally, the choice of the proper Incoterm is a critical decision for a firm, as it is an integral part of its export strategy and linked to the level of customer service it is aiming to provide. The thirteen Incoterms are reviewed in a progressive order of service provided by the exporter (see Table 4-1).

TABLE 4-1 Incoterms Summary

The responsibilities of the exporter are denoted with an “X”, those of the importer with an “1”. Whenever there is no obligation on either party, or whenever there is ambiguity as to whether the activity is responsibility of the exporter or the importer, the spot is left blank. Please refer back to the appropriate section for further details.

Task

EXW

FCA

FAS

FOB

CFR

CIF

CPT

CIP

DES

DEQ

DAF

DDU

DDP

Export packing

X

X

X

X

X

X

X

X

X

X

X

X

X

Inland Freight

1

X

X

X

X

X

X

X

X

X

X

X

Export Clearance

1

X

X

X

X

X

X

X

X

X

X

X

X

Arrange Carrier

1

1

1

1

X

X

X

X

X

X

X

X

X

Load onto Carrier

1

1

1

X

X

X

X

X

X

X

X

X

X

Pay Carrier

1

1

1

1

X

X

X

X

X

X

X

X

X

Unload Carrier

1

1

1

1

1

X

X

X

Pay Insurance

X

X

Import Clearance

1

1

1

1

1

1

1

1

1

1

1

X

X

Pay Duty

1

1

1

1

1

1

1

1

1

1

1

1

X

Pay Inland Freight

1

1

1

1

1

1

1

1

1

1

1

X

X

The possible alternative Incoterms for a given means of transportation are marked with an “X”. Those that would be improper or likely to likely to present problems are clearly marked as such.

Mode of Transport

EXW

FCA

FAS

FOB

CFR

CIF

CPT

CIP

DES

DEQ

DAF

DDU

DDP

Break-Bulk Ocean Cargo

X

NO

X

X

X

X

NO

NO

X

X

NO

X

X

Bulk Ocean Cargo

X

NO

X

X

X

X

NO

NO

X

X

NO

X

X

Roll-On/Roll-Off

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

Multi-modal (FCL)

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

Multi-modal(LCL)

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

Rail

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

Road

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

Air

X

X

NO

NO

NO

NO

X

X

NO

NO

X

X

X

4-4 Ex-Works (EXW)
The EXW Incoterm can be used for any merchandise and for any means of transportation. It should be used with the following syntax:

EXW Poughkeepsie, New York, USA, Incoterms 2000

where Poughkeepsie is the town in which the exporter will hold the merchandise available to the importer. It is usually located in the exporting country.

Ex-Works is the “easiest” of the Incoterms for the exporter, and the most difficult for the importer. In an Ex-Works transaction, the exporter only has the obligation to “place the goods at the disposal of the buyer” and “render every assistance (┄) in obtaining (┄) any export license or other official authorization necessary for the export of the goods.” In addition, the exporter has to package the goods for export, but the exporter does not even have to load the goods into the importer’s prearranged vehicle. It should be evident that this is not an advantageous Incoterm from the importer’s perspective: arranging to pick up goods in a foreign country is not easy, and neither are providing domestic transportation nor clearing goods for export in a foreign country.

In the case where the exporter and the importer agree that the expense and responsibility of loading the goods should fall on the exporter, it is possible to amend the Incoterm to include this condition, usually by what ICC refers to as variant of an Incoterm. This is usually accomplished by including “EXW loaded” to the pro-forma invoice. Since variants( of Incoterms are not defined by the International Chamber of Commerce, the correct syntax for such a modification should be:

EXW Poughkeepsie, New York, USA, Incoterms 2000, loaded

The choice of an EXW Incoterm should only be made when the exporter knows that the importer is extremely savvy; otherwise, there is a strong possibility that the quote will not be turned into a sale, as the exporter’s competitors are likely to offer better (more importer-friendly) Terms of Trade.

4-4a Delivery under EXW
There is nothing specified in this Incoterm regarding delivery. It occurs at the time that the importer (or the importer’s agent) picks up the goods at the exporter’s plant. This delivery has to take place at a mutually convenient time. The exporter has the obligation to notify the importer that the goods are available for pick-up and the importer has the obligation to notify the exporter of the time at which the goods will be picked up.

There is no specific transportation document corresponding to the delivery of the goods under this Incoterm, although, if a transportation company is picking up the goods, the exporter will generally be given a copy of the bill of lading or some form of receipt for the goods.

4-4b Exporter’s and Importer’s Responsibilities under EXW
The exporter’s responsibilities are limited to the most basic functions; make the goods available to the buyer, package the goods for export shipment, assist in the export clearance procedures, and provide information to the importer so that the goods can clear Customs in the importing country or insured. That’s it.

In the United States, a change was recently made in the Shipper’s Export Declaration (SED) (see Chapter 7, specifically to record correctly who the exporter was in the case of a sale under an EXW Incoterm: until very recently, the exporter of record was the importer (or the importer’s freight forwarder). Under revised rules put in place on July 10,2000, the importer is no longer listed as the exporter of record, and the seller-exporter is listed as the “U.S. Census to record who was the exporter of specific merchandise under an EXW sale, rather than record the importer of the goods: the term “exporter” has been stricken from the SED.

Because of this requirement, the United States government has placed the responsibility of providing the correct Export Commodity Classification Number (ECCN) and any information that could affect an export license on the exporter in the case of an EXW transaction.

The importer is responsible for all aspects of the shipment in an EXW transaction; it has to clear the goods for exports, arrange for transportation, clear Customs in the importing country, purchase insurance, and provide domestic transportation in the importing country.

4-5 Free Carrier (FCA)
The FCA Incoterm can be used for any merchandise and for any means of transportation, but it was specifically created for goods shipped though multi-modal transportation (i.e., merchandise that is shipped though multiple means of transportation without being “handled” because it is containerized). This Incoterm can be used for shipments of either full-container loads (FCL) or less-than-container loads (LCL). FCA is expected to become one of the most popular Incoterms as the number of multi-modal shipments increases. This Incoterm should be used with the following syntax:

FCA Castres, France, Incoterms 2000

where Castres is the city in which delivery takes place. It is usually located in the exporting country or in a neighboring country.

In an FCA transaction, the exporter delivers the goods to a carrier selected by the importer. Since FCA is a recent Incoterm-it was created in 1990-great care has been taken to define specifically what responsibilities are borne by the exporter, and which are borne by the importer. There are generally no variants to this Incoterm.

The FCA Incoterm replaced three other Incoterms, which were abandoned in 1990: Free on Rail (FOR), Free on Truck (FOT), and Free on Board-Airport (FOB-Airport).

4-5a Delivery under FCA
Under FCA, the delivery takes place when either of two conditions are met:

· If the named point in the Incoterm refers to the exporter’s plant, then delivery takes place when the goods are loaded, by the exporter and at its expense, onto the carrier’s truck.

· If the named point in the Incoterm refers to the carrier’s premises, then delivery takes place when the goods are made available to the carrier (i.e., when the goods have arrived at the carrier’s dock). The goods are unloaded from the exporter’s truck by the carrier and at the carrier’s expense (i.e., at the importer’s expense).

The document that corresponds clearly to the transfer of responsibility for an FCA shipment is the receipt given by the carrier to the exporter; it can be a bill of lading, a sea waybill, an air waybill, or a multi-modal bill of lading (see Chapter 7 for an explanation of each of these terms).

4-5b Exporter’s and Importer’s Responsibilities under FCA
The exporter is still in charge of packing the merchandise for export. However, its responsibilities can increase to include loading the merchandise into a container provided by the carrier, loading the container on the carrier’s truck, or delivering the merchandise for export, and has to provide whatever information is needed by the importer to clear Customs in the importing country and to obtain insurance. In the United States, the exporter fills out the Shipper’s Export Declaration and is the “U.S. principal party in interest.” In countries where export authorities require a Pre-Shipment Inspection (see Chapter 13), the exporter has to pay for it.

The importer is responsible for arranging the contract of carriage (I.e., finding a carrier between the exporter’s town and the final destination) and communication to the exporter which carrier it is. The importer is also responsible for arranging for insurance and for clearing Customs in the importing country. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-6 Free Alongside Ship (FAS)
Although the FAS Incoterm can be used for any merchandise, it is specifically designed for ocean transportation, and is not meant for any other means of transportation or for merchandise that is not destined to be handed to an ocean shipping line at the port of departure. This Incoterm should be used with the following syntax:

FAS Santos, Brazil, Incoterms 2000

Where Santos is the port in which the delivery takes place. This port is usually located in the exporting country or a neighboring country.

In a Free Alongside Ship transaction, the exporter is responsible to bring the goods to the port, “alongside” a ship designated by the importer, at which time the responsibility shifts to the importer. One major change was made in the 2000 version of the FAS Incoterm; the exporter is now responsible to clear the merchandise for export, leaving EXW as the only Incoterm for which the importer has to perform this task.

4-6a Delivery under FAS
The delivery officially takes place when the exporter has delivered the goods “alongside” a ship designated by the importer. The problem with this Incoterm is that ports rarely keep merchandise “alongside” a ship, or keep merchandise on a quay waiting for s ship. There is always delivery to a holding area, then cartage (transportation within the port area) from the holding area to the ship before the stevedoring( (loading onto the ship) takes place. When and where the delivery does take palace is sometimes difficult to determine.

Compounding this difficulty is the fact that there is no transport document that clearly corresponds to a delivery to a holding area or to the quay alongside the ship. The suggestion by the ICC that the exporter must obtain “a transport document (for example, a negotiable bill of lading, a non-negotiable sea waybill)” is contradicted by the fact that no ocean carrier will issue a bill of lading until the goods have been received in good condition on board the vessel. ICC further comments that the seller “may not always receive a receipt or a transport document from the carrier” and adds that the exporter must then “provide some other document to prove that the goods have been delivered” but does not suggest what it may be. A dock receipt from the port authorities may be sufficient; however, this lack of clear evidence of delivery should be a substantial deterrent to the use of the FAS Incoterm.

4-6b Exporter’s and Importer’s Responsibilities under FAS
The exporter is responsible for packing the goods for export, transporting them to the port, and unloading them onto the quay or holding area in the port. With the advent of Incoterms 2000, another duty was added to the responsibilities of the exporter under an FAS transaction. The exporter is responsible for clearing the goods for export, providing whatever documents and assistance the importer may need to clear Customs in the importing country, and to obtain insurance. In the United States, the exporter fills out the Shipper’s Export Declaration and is the “U.S. principal party in interest” or the exporter of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer is responsible for the shipment starting from the point of delivery. Therefore the importer is responsible for port handling charges, stevedoring (loading the goods in the vessel), and for ocean transportation costs as well as insurance, unloading in the port of arrival, and Customs duties in the importing country. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-7 Free on Board (FOB) Port of Departure
Although the FOB Incoterm can be used for any merchandise, it is specifically designed for ocean transportation, and is not meant for any other means of transportation or for merchandise that is not destined to then be handed to an ocean shipping line at the port of departure. This Incoterm should be used with the following syntax:

FOB Cape Town, South Africa, Incoterms 2000

where Cape Town is the port in which the delivery takes place. This port is generally located in the exporting country or a neighboring country.

The Free On Board term, sometimes called Freight On Board , is one of the oldest maritime Terms of Trade. The exporter is responsible for the goods until they are placed on the ship. The importer is responsible for them after that.

Unfortunately, because FOB is such an old Term of Trade, its meaning is somewhat dependent on the practices of the port in which the goods are loaded. These differences matter specifically in the way the loading costs are billed: some ports have the tradition to include loading, stowing, and securing the goods in the hold of the ship as part of the stevedoring costs. Some other ports will customarily bill for these services as part of the ocean cargo costs. The shipping line contracted by the importer obviously would be able to communicate what the practice is at a given port of departure. However, these differences in practices have triggered the need for a variant to the FOB Incoterm to reflect which of the trade partners is responsible for handing costs on the ship; either “FOB stowed” or “FOB stowed, trimmed and secured” can be used to denote that the exporter is responsible for those specific costs. Here again, since the International Chamber of Commerce does not regulate Incoterm variants, the correct syntax should be:

FOB Cape Town, South Africa, Incoterms 2000, stowed

4-7a Delivery under FOB
In an FOB transaction, the point of delivery is extremely clear and has been governed by centuries of maritime tradition. The” FOB point,” the point at which the responsibility shifts from the exporter to the importer, is the Ship’s Rail.( Until the merchandise has cleared the ship’s rail, it is the responsibility of the exporter. After that, it is the responsibility of the importer. What happens if the merchandise falls and is damaged as it crosses the ship’s rail depends on whether it remains on the ship or falls back toward the quay.

The document associated with the FOB term is also quite clear: the proof of delivery is an ocean bill of lading or a sea waybill. Only after receiving the goods will the shipping line issue this document, giving a copy to the exporter.

4-7b Exporter’s and Importer’s Responsibilities under FOB
The exporter is responsible for packaging the goods for export, shipping them to the port of departure, and loading them onto the ship. The exporter is responsible for clearing the goods for export, and has the obligation of providing whatever documents and assistance the importer may need to clear Customs in the importing country and to obtain insurance. In the United States, the export fills out the Shipper’s Export Declaration and is the “U.S principal party in interest” or the exporter of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer is responsible for arranging and paying for ocean transportation from the port of departure to the goods’ destination, Customs’ clearance in the importing country, and eventually arranging and paying for insurance. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

Figure 4-1 Incoterms

EXW

Ex-Works

FCA

Free Carrier

FAS

Free Alongside Ship

FOB

Free on Board

ANY

MULTI-MODAL

OCEAN

OCEAN

The exporter only has the obligation to place the goods at the disposal of the buyer.

The exporter delivers the goods to a carrier selected by the importer.

The exporter is responsible for bringing the goods to the port, ”alongside” a ship designated by the importer, at which time the responsibility shifts to the importer.

The exporter is responsible for the goods until they are placed on the ship. The importer is responsible for then after that.

4-8 Cost and Freight(CFR)
Although the CFR Incoterm can be used for any merchandise, it is specifically designed for ocean transportation, and is not mean for any other means of transportation or for merchandise that is not destined to then be handed to an ocean shipping line at the port of departure. This Incoterm should be used with the following syntax:

CFR Lagos, Nigeria, Incoterms 2000

where Lagos is the port of destination in which the importer takes physical control of the goods. This port usually located in the importing country or in a neighboring country. In a CFR transaction, the delivery (the transfer or responsibility or the transfer of risk)does not take place in the port of destination, but in the port of departure.

The Cost and Freight term is also one of the oldest maritime Terms of Trade, and it was known until the 1990 Incoterms as C&F or C+F, which is now obsolete. The exporter is responsible for the goods until they are placed on the ship and the importer for the them that, but the exporter pre-pays the ocean freight.

Unfortunately, because CFR is such an old Term of Trade, its meaning is somewhat dependent on the practices of the port in which the goods are unloaded. These differences matter specifically in the way the unloading costs are billed: some ports have the tradition to bill separately for the unloading of the goods as stevedoring costs. Some other ports will ask shipping lines to bill for these services as part of the ocean cargo costs. The shipping line contracted by the port of discharge. Nevertheless, in order to account for these differences in practices, variants to the CFR Incoterm were created to reflect which of the trade partners was responsible for unloading costs.” CFR landed” explicitly states that the costs of unloading are borne by the exporter, and “CFR undischarged” notes unloading costs are borne by the importer. In these cases, the correct syntax should be:

CFR Lagos, Nigeria, Incoterms 2000,landed

4-8a Delivery under CFR
In a CFR transaction, the point of delivery is the” FOB point,” the point at which the responsibility shifts from the exporter to the importer, the ship’s rail. Until the merchandise has cleared the ship’s rail, it is the responsibility of the exporter; after that, the responsibility shifts to the importer.

The document associated with the CFR term is also quite clear: the proof of delivery is an ocean bill of lading or lading or a sea waybill. Only after receiving the originals to the exporter.

4-8b Exporter’s and Importer’s Responsibilities under CFR
The exporter is responsible to package the goods, ship them to the port of departure, load them onto a ship” of the type normally used for the transport of goods of the contract description,” and pre-paid for the shipment. Depending on the practices at the port of destination, this pre-paid contract of carriage may include the costs of unloading the goods. If it does not, then the importer has to pay for unloading the ship. The exporter is also responsible to clear the goods for export, assist the importer in providing the documentation necessary to clear Customs in the importing country, and obtain insurance. In the United States, the exporter fills out the Shipper’s Export Declaration and is the” U.S principal party in interest” or the exporter of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer takes responsibility for the goods at the delivery point (i.e., at the ship’s rail in the port of departure), even though the exporter is the one who contracts for the ocean shipping of the goods. Depending on the practice at the port of destination, and the possible Incoterm variant used, the importer may also have to pay for the unloading costs. It is also responsible for clearing Customs in the importing country and for inland transportation after that. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-9 Cost, Insurance, and Freight (CIF)
Although the CIF Incoterm can be used for any merchandise, it is specifically designed for ocean transportation, and is not meant for any other means of transportation or for merchandise that is not destined to then be handed to an ocean shipping line at the port of departure. This Incoterm should be used with the following syntax:

CIF Kobe, Japan, Incoterms 2000

where Kobe is the port of destination in the importing country in which the importer takes control of the goods. In a Cost, Insurance, and Freight transaction, the delivery does not take place in the port of destination, but in the port of departure.

The CIF Incoterm is quite similar to the CFR term, with the exception that the exporter has the additional responsibility to pre-pay for Marine Cargo Insurance until the port of destination. Unfortunately, the mandate of the International Chamber of Commerce is for “minimum cover,” that is, the so-called Coverage C of the Institute Cargo Clauses (see Chapter 8), resulting in yet another Incoterm variant. CIF maximum cover—mandating Coverage A of the Institute Cargo Clauses—exists in addition to the predictable CIF undischarged and CIF landed, which are mirrors of their CFR equivalents. The syntax again must accommodate the fact that that Incoterm variants are not regulated by the International Chamber of Commerce and should read:

CIF Kobe, Japan, Incoterms 2000, maximum cover, landed

Finally, under the CIF Incoterm, the amount insure must be at least 110 percent of the value of the goods, a custom that dates back to 1906,when Great Britain instituted the Marine Insurance Act.

One aspect of CIF is also unusual: certain countries(see Table 4-2) do not allow their importers to purchase insurance abroad, and therefore prevent any import on a CIF basis. This restriction is in place to conserve foreign currency—it obligates importers to purchase insurance locally in local currency—and to subsidize the national insurance industry; all of the countries practicing this restriction are quite small traders.

4-9a Delivery under CIF
In a CIF transaction, the point of delivery is the ”FOB point,” the point at which the responsibility shifts from the exporter to the importer, the ship’s rail. Until the merchandise has cleared the ship’s rail, it is the responsibility of the exporter; after that, the responsibility shifts to the importer.

The document associated with the CIF term is also quite clear: the proof of delivery is an ocean bill of lading or a sea waybill. Only after receiving the goods will the shipping line issue this document, giving one of the original to the exporter.

TABLE4-2 Countries’ Restriction on Incoterms

The following countries place restrictions on the Incoterms that can be used by their exporters or importers: these restrictions are current as of October 2000:

Country

A

B

C

Country

A

B

C

Country

A

B

C

Albania

X

X

Ecuador

X

Nigeria

X

X

Algeria

X

X

Ethiopia

X

X

Oman

X

X

Angola

X

Gabon

X

Pakistan

X

Bangladesh

X

X

Ghana

X

X

Poland

X

X

Barbados

X

Guinea

X

X

Romania

X

X

Benin

X

Haiti

X

X

Pwanda

X

X

Bolivia

X

X

India

X

X

Senegal

X

X

Brazil

X

Indonesia

X

X

Seychelles

X

X

Bulgaria

X

X

Iran

X

X

Sierra Leone

X

Burkina Faso

X

Ivory Coast

X

Slovenia

X

X

Burundi

X

X

Jordan

X

X

Solomon Islands

X

X

Cambodia

X

X

Kenya

X

Somalia

X

X

Cameroon

X

North Korea

X

Sudan

X

Cape Verde

X

X

Liberia

X

X

Syria

X

Central African Republic

X

Libya

X

X

Tanzania

X

Chad

X

Madagascar

X

X

Togo

X

Colombia

X

X

Mali

X

X

Tunisia

X

X

Congo(Brazzavile)

X

X

Mauritania

X

X

Uganda

X

X

Congo(Kinshasa)

X

X

Morocco

X

Venezuela

X

Cuba

X

X

Nicaragua

X

X

Yemen

X

X

Dominican Republic

X

Niger

X

Zambia

X

X

The definitions of these restrictions are summarized as follows:

Restriction A An exporter is not allowed to purchase insurance abroad(it is therefore possibly more difficult for an exporter from that country to offer CIP, CIF, and DDP terms)

Restriction B An importer is not allowed to purchase insurance abroad(it is therefore presumably impossible to sell to an importer in that country on CIP, CIF, DDU, or DDP terms)

Restriction C An importer is not allowed to import on a CIF basis(it is therefore presumably illegal to offer CIP, DDU, and DDP terms to an importer in that country as well).

Most of the countries in this list tend to be fairy small trade partner: if further information is specifically necessary for any of them, the commercial attache of any embassy to this country would be the best source of information on the exact implementations of these restrictions.

4-9b Export’s and Importer’s Responsibilities under CIF
The exporter has to package the goods for export, and has to pay for shipping costs and minimum insurance costs to the port of destination. It is also responsible for clearing the goods for export. In the United States, the exporter fills out the Shipper’s Export Declaration and is the” U.S. principal party in interest” or the export of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer is taking responsibility for the goods at the ship’s rail in the port of departure, even though the contract of carriage is between the seller and the importing country and for inland transportation after that. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-10 Carriage Paid To(CPT)
Conceptually, the CPF Incoterm is the same as the CFR Incoterm, except that it applies to goods shipped by means other than ocean transport, or shipped by sea without being handed over the ship’s rail (i.e., in the case of roll-on/roll-off cargo),or containerized cargo using multiple modes of transportation, including ocean transport as one of the modes. This Incoterm should be used with the following syntax:

CPT Koln, Germany, Incoterms 2000

where Koln is the city of destination in which the importer takes control of the goods. This city is generally located in the importing country or a neighboring country.

In a Carriage Paid To transaction, the delivery does not take place in the city of destination, but in the city where the exporter delivers the goods to the carrier. The exporter pre-pays shipping charges do not include the unloading of the merchandise in the destination city

4-10a Delivery under CPT
Delivery takes place when the exporter hands over the goods to the carrier and the exporter is given a bill of lading or equivalent document (air waybill, sea waybill, multi-modal bill of lading),which acts as the proof of delivery.

4-10b Exporter’s and Importers’ Responsibilities under CPT
The exporter is responsible for packaging the goods for export, shipping them to the carrier, and pre-paying the shipping costs to the city of destination. In the United States, the exporter fills out the Shipper’s Export Declaration and is the” U.S. principal party in interest” or the exporter of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer assumes responsibility for the goods at the time the seller delivers them to the carrier. The importer is responsible for unloading the goods from the carrier’s truck, clearing Customs, and for paying inland transportation (if any)beyond the city of destination. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-11 Carriage and Insurance Paid To(CIP)
Conceptually, the CIP Inconterm is the same as the CIF Incoterm, except it applied to goods shipped by means other than ocean transport, or shipped by sea without being handed over the ship’s rail (i.e., in the case of roll-on/roll-off cargo),or containerized cargo using multiple modes of transportation, including ocean transport as one of the modes. This Incoterm should be used with the following syntax:

CIP Sofia, Bulgaria, Incoterms 2000

where Sofia is the city of destination in which the importer takes control of the goods. This city is located in the importing country or a neighboring country.

In a Carriage and Insurance Paid To transaction, the delivery does not take place in the city of destination, but in the city where the exporter delivers the goods to the carrier. Unlike the CPT Incoterm, the exporter has the added responsibility of pre-paying for minimum-cover insurance (coverage C of Institute Cargo Clauses) until the city of destination. Therefore, an additional variant of the CIP Incoterm has emerged, CIP maximum cover, to request that the exporter take on the responsibility to provide coverage A of the Institute Cargo Clauses. The syntax again must accommodate the fact that Incoterm variants are not regulated by the International Chamber of Commerce and should read:

CIP Sofia, Bulgaria, Incoterm 2000,maximum cover

Finally, under the CIP Incoterm, the amount insured must be at least 110 percent of the value of the goods, a custom that dates back to 1906,when Great Britain instituted the Marine Insurance Act.

4-11a Delivery under CIP
Delivery takes place when the exporter hands over the goods to the carrier and the exporter is given a bill of lading or equivalent document(air waybill, sea bill, multi-modal bill of lading),which acts as the proof of delivery.

4-11b Exporter’s and Importer’s Responsibilities under CIP
The exporter is responsible for export packing ,transportation costs to the city of destination, and for minimum insurance costs. In addition, the exporter is responsible for clearing the goods for export. In the United States, the exporter, fills out the Shipper’s Export Declaration and is the ”U.S principal party in interest” or the exporter of record. In countries where export authorities require a Pre-Shipment Inspection, the exporter has to pay for it.

The importer’s responsibility starts when the exporter delivers the goods to the carrier, even though the exporter is the party that contracted with the carrier’s truck, clearing Customs in the importing country ,and for transportation costs beyond the city of destination. If the importing country requires a Pre-Shipment Inspection, the importer has to pay for it.

4-12 Delivered Ex-Ship(DES)
Although the DES Incoterm can be used for any merchandise, it is specifically designed for ocean transportation, and is not meant for any other means of transportation or for merchandise that is not destine to be delivered by an ocean shipping line at the port of destination. In practice, the DES Incoterm is mostly used for bulk shipments of commodities where the parties wish to have the importer pay for the unloading of the ship. This Incoterm should be used with the following syntax: