1、Chapter 6International Terms of TradeInternational Terms of TradeIncoterms RulesnInternational Commerce TermsnUnderstanding Incoterms RulesnOverview of all 11 Incoterms RulesnCommon Errors in Incoterms Rules UsagenIncoterms Rules as a Marketing ToolInternational Terms of TradeFor each international
2、sale,it is important to determine,who of the exporter or the importer is responsible for:nPre-carriage,the domestic transportation in the exporting countrynMain carriage,the international transportation between the exporting country and the importing countrynOn-carriage,the domestic transportation i
3、n the importing countrynThe risks involved in international transportationnCustoms clearance in the exporting and importing countryInternational Commerce Terms Incoterms RulesIn 1936,the International Chamber of Commerce developed International Commerce Terms rules(or Incoterms rules)that formalized
4、 these responsibilities.Incoterms rules were revised in 1953,1967,1980,1990,and 2000.The latest version of Incoterms rules is dated 2010,and was implemented 01/01/2011.Incoterms rules follow international trade practices and are always reflecting the way shipping is conducted.The changes implemented
5、 in 2010 were significant,but were designed to facilitate the division of responsibilities between the exporter and the importer.Understanding Incoterms RulesIncoterms rules formally define the following aspects of an international sale:nWhich tasks will be performed by the exporternWhich tasks will
6、 be performed by the importernWhich activities will be paid by the exporternWhich activities will be paid by the importernThe exact point at which the responsibility for the goods transfers from the exporter to the importerThere are 11 different Incoterms rules,all abbreviated with a 3-letter acrony
7、m,such as EXW,DAP,FOB,and so on.Choice of an Incoterms RuleChoosing the correct Incoterms rule depends on which export strategy a company is following.The following factors are particularly important:nThe type of product being sold(weight,volume,value,sensitivity to temperature changes,and so on)nTh
8、e method of shipmentnThe ability and willingness of either of the exporter and importer to perform the tasks involvednThe amount of trust placed by either of the parties in the other partyIncoterms RulesThe International Chamber of Commerce specifies that there are two groups of Incoterms rules:nSev
9、en Incoterms rules that can be used for any means of transportation(ocean,road,air,train).nFour Incoterms rules that can only be used for ocean transportation(these are the oldest terms of trade).Incoterms RulesEx-WorksFree CarrierEXWCarriage Paid ToFCACarriage and Insurance Paid ToCPTDelivered At T
10、erminalCIPDelivered At PlaceDATDelivered Duty PaidDAPFree Alongside ShipDDPFree On BoardFASCost and FreightFOBCost,Insurance and FreightCFRCIFAny mode of TransportationOcean TransportationIncoterms RulesEach Incoterms rule has:nA scope The type of products for which it can be usednA modality The mod
11、e of transport for which it can be usednA syntax The way it has to be stated on invoices and paperworkEach Incoterms rule defines:nThe responsibilities of the exporternThe responsibilities of the importernA specific transfer point at which the responsibilities for the goods shifts from the exporter
12、to the importerEx-Works(EXW)nScopeEx-Works can be used for any type of goods.However,in the Incoterms rules 2010,the International Chamber of Commerce clearly wants EXW to be used for small packages that are picked up by express packages services,such as FedEx or DHL.nModalityEx-Works can be used fo
13、r any mode of transportation.nSyntaxEXW Address in the City of Departure where goods are made available,Incoterms 2010.EXW 2400 Progress Drive,Poughkeepsie,New York 12601,USA,Incoterms 2010.Ex-Works(EXW)nResponsibilities of the ExporterThe exporter must package the goods for the international voyage
14、 and provide the importer with the documents necessary to clear the goods for export in the exporting country and to clear Customs in the importing country.nResponsibilities of the Importer The importer must do everything else.nPoint at which the responsibility for the good shifts from exporter to i
15、mporterWhen the exporter makes the goods available to the importer.Free Carrier(FCA)nScopeFree Carrier can be used for any type of goods.nModalityFree Carrier can be used for any mode of transportation.nSyntaxFCA Address in the City of Departure where goods are delivered to carrier,Incoterms 2010.FC
16、A Btiment B,46 Alle Corbire,F-81000 Castres,France,Incoterms 2010Free Carrier(FCA)Under the FCA Incoterms rule,there are two choices regarding the delivery of the goods.The exporter and importer can agree on:nFCA Exporters PremisesThe exporter loads the goods at its place of business on a truck(means of conveyance)provided by the importer.nFCA Carriers PremisesThe exporter loads the goods on its own truck and delivers them to the carriers place of business,still loaded on the truck.It is the res
