Incoterms®

A question from a reader about an issue with a certification agency which lead to the reader's containers being stopped by customs in China.. Comments welcome..

Cargo insurance is a type of insurance that protects a buyer or seller of goods against damages or loss of cargo..

Despite insurance having been around for centuries, there is still a feeling that any form of insurance is a “grudge purchase” and in the case of cargo shipments, many people ask the question "Do I need cargo insurance for my shipment"..??

In anything that we do in life, the first time is a scary thought - first time on a bike, first time driving a car, first time swimming, first date, first kiss .................... etc..

So why should shipping your first container be any different..??

It could be a scary thought if you are a first-time exporter or importing for the first time, but like everything else, if done and handled correctly, shipping your first container can be a good experience as well..

Here are some tips to assist you in shipping your first container..

Carrier refuses to show commercial and sales information relating to the cargo on the bill of lading.. Are they being pedantic or are they right..??

For the past 84 years, Incoterms® has been the cornerstone of global commercial trade, for robust trade negotiations directly or indirectly between parties and the rules have become the standard in international business rules.. BUT, THERE IS A BIG PROBLEM..

As per Emily O’Connor, Director of Trade and Investment for the International Chamber of Commerce (ICC), “people will frequently choose the wrong Incoterms® rule for their transaction”..

O'Connor has emphasised the importance for anyone who uses the Incoterms® rules to learn or re-learn them – even if you consider yourself an expert – in order to avoid costly mistakes in the process of shipping their goods..

There are several consequences of using the incorrect Incoterms® and users need to fully comprehend what it means when they put a three-letter Incoterms® rule into their sales contract..

But no worries, credible and reliable guidance is at hand for you now..

If you are in the business of trade and shipping, you would have surely heard of/dealt with freight quotations along the way..

A freight quotation is a document that outlines the charges involved in the movement of cargo from Point A to Point B..

Many customers have lost $$$ on their transactions because of unclear, incomplete or incorrect freight quotations or they do not understand what a freight quotation entails and what it covers..

Here are some tips on how to understand a freight quotation and how to ensure that you get an accurate one..

The Incoterms® rules are a globally-recognised set of standards, used worldwide in international and domestic contracts for trade transactions..

Following its introduction in Incoterms® in 1936, these international commercial trade terms were revised in 1957, 1967, 1976, 1980, 1990, 2000, 2010 and most recently in 2019 (Incoterms® 2020) to accommodate changes as global trade developed and evolved..

As per the International Chamber of Commerce, the recently released Incoterms® 2020 rules seeks to “offer a simpler and clearer presentation of all the rules, featuring revised language, an expanded introduction, explanatory notes, and articles reordered to better reflect the logic of a sale transaction“ and traders are encouraged to use the latest version..

A question that has come up in terms of Incoterms® is whether “a shipment can have multiple Incoterms rules”..

In any trade transaction, there are two parties - the buyer and the seller.. When it comes to a sea freight shipment, either one or both of them may end up paying different sets of charges to different entities..

Not just for newcomers to the business of exporting and importing, this question sometimes perplexes many already in the business..

In this article I dissect this process to explain who pays what charges in sea freight shipment..

So who pays what charges in a sea freight shipment..??

In an ICC podcast to mark the launch of the Incoterms® 2020 rules in September, Emily O’Connor, Director of Trade and Investment for the International Chamber of Commerce (ICC), said that “people will frequently choose the wrong Incoterms® rule for their transaction”.

O’Connor went on to emphasise the importance for anyone who uses the Incoterms® rules to learn or re-learn them – even if you consider yourself an expert – in order to avoid costly mistakes in the future. “Learn now, ahead of time to avoid problems down the road.” she said.

One of the initiatives designed to help users avoid mistakes is a new online training course - the Incoterms® 2020 Certificate - developed by the educational arm of the ICC, the ICC Academy. This course is the world’s only ICC-endorsed online training on the Incoterms® 2020 rules and is available for purchase here.

Ever since its introduction in 1936, Incoterms® has been a paradox to many many buyers, sellers, traders, freight forwarders, shipping lines and other service providers involved in the business of global trade..

There are several consequences of using the incorrect Incoterms® and users need to fully comprehend what it means when they put a three letter Incoterms® rule into their sales contract..

if you are struggling to learn and understand the rules and how to apply them, don't worry, help is at hand..

ICC Academy, the educational arm of the ICC has created a new online training course - the Incoterms® 2020 Certificate which is designed to help users both experienced and inexperienced, a comprehensive and up-to-date understanding of the rules, avoid mistakes and save costs.. This course is the world’s only ICC-endorsed online training on the Incoterms® 2020 rules..

No other online training on the new rules can offer the same level of expertise and this course can be purchased online here..

So do yourself a favour and take this highly recommended course which will greatly enhance your knowledge on this crucial trade related subject..

Incoterms 2020, the 9th version of the Incoterms® rules has been in the making for a while now.. Following its introduction in Incoterms® in 1936, these international commercial (Inco) trade terms were revised in 1957, 1967, 1976, 1980, 1990, 2000 and 2010 to accommodate changes as global trade developed and evolved..

The International Chamber of Commerce (ICC) chose its centenary year 2019, to launch the 9th version of the Incoterms®, the Incoterms® 2020..

The Incoterms® rules were developed by the International Chamber of Commerce to facilitate international trade and for the interpretation of the trade terms that the parties to a contract of sale could agree to apply..

Incoterms® were first introduced in 1936 and were revised in 1957, 1967, 1976, 1980, 1990, 2000 and 2010 to accommodate changes as global trade developed and evolved..

Currently, in its 8th version (Incoterms® 2010), the Incoterms® rules have become an internationally recognized and accepted standard and are used worldwide in international and domestic contracts for the sale of goods and have become an essential part of the day-to-day international trade and domestic trade..

The ICC which is celebrating its centenary year recently announced the release date for the latest version of these rules which is the Incoterms® 2020..

China, often termed as "the world's factory" is unavoidable when it comes to global trade. As of 2017, China accounted for 15% of the world's GDP. China's GDP is 64% of that of USA thereby making it the second largest economy in the world.

For majority of the countries around the world, when importing Chinese products, international freight movement is required and you will definitely deal with a variety of freight forwarding companies.

Unverified statistics indicate that in the city of Shanghai China alone, there are more than 10,000 freight forwarders registered. It is conceivable that the total number in China is even more astronomical.

Chinese freight forwarders have also had a bad rap due to a few of them perpetuating fraud and other illegal activities which are affecting many of the legitimate Chinese freight forwarders.

"How can I choose a qualified freight forwarder in China from such a large number?" is a question that might be on the minds of many people.

David Fan gives you some guidance through different perspectives based on many years of industry experience.

For the past 80 years, Incoterms® by ICC has been the cornerstone of global commercial trade, creating the basis for robust trade negotiations directly or indirectly involving sellers, buyers, shipping lines, truckers, forwarders, clearing agents, chambers of commerce, legal firms, courts, etc etc..

The rules have been developed and maintained by experts and practitioners brought together by the ICC.. Launched in mid-September 2010, Incoterms® 2010 came into effect on 1 January 2011 and is the latest version till it will be replaced by Incoterms 2020 in 2019..

Naturally and as with any legitimate business or undertaking there are always scrupulous elements trying to take advantage in the market.. In this case, although the Incoterms 2020 will be launched later on in 2019, information or training sessions claiming to explain Incoterms® 2020 has already begun to emerge on a number of websites from non- ICC affiliated providers..

Misuse of the Incoterms® rules can lead to costly mistakes, making it essential to learn about the renowned terms –such as Delivered at Place (DAP), Free Carrier (FCA) and Free on Board (FOB) – from a trusted and credible source like the ICC..

In order to assist the trade in avoiding inaccurate or misleading information on Incoterms® 2020, the ICC has issued a notification containing 3 ways to spot fake Incoterms® rules Information..

Cargo insurance is a type of insurance that covers/compensates a buyer or seller of goods against cargo damage or loss of cargo..

Despite insurance having been around for centuries, there is still a feeling that any form of insurance is a “grudge purchase”..

By its nature, insurance is an intangible benefit, one that can only be tested under adverse circumstances and there is nothing more adverse than cargo damage..

From a

• Local (Street to Street, City to City, Town to Town) shipment;
• to Provincial shipment within the same province/state;
• to National shipment within the country;
• to Regional trade within regional trade blocs like EU, BRICS;
• to Global trade between countries

there are several modes and types of trade/shipments around the world..

Although it may seem obvious, it is shocking to see how many customers still do not take the right Cargo Insurance to cover their cargo comprehensively..

I don’t think this lack of proper insurance cover is intentional, but may be due to ignorance or lack of knowledge on the part of the client as far as Cargo Insurance goes..

So when I read an article from Tom O'Malley of TJO Cargo, I felt I had to share it with my readers for a better understanding of Why cargo insurance and insurers matter..

I can visualise a few raised eyebrows to the question "Will the container industry ever forget FOB"..

Especially since FOB has been and still seems to be an integral part of container shipping industry on many fronts..

It has been an industry standard, part of the furniture, sort of a boilerplate, an established term in the industry..

So what changed and why this question..??

To the casual onlooker, signing a bill of lading may be a routine, day to day mundane job done by many people across the world.. But the fact is that there are several technicalities to be considered before signing a bill of lading..

It is important to understand that the person signing the bill of lading acknowledges the details recorded on the bill of lading.. Any bill of lading signed with the knowledge of misrepresented facts may be considered to be a fraudulent document and may result in legal consequences for the signatory..

If you are a bill of lading signatory, here are 8 points that you need to consider before signing a bill of lading.. It may be a bit of a long read, but worth it.. 🙂

I would like to know your opinion on a question regarding supplier selling on FOB to help answer a question by a reader.. 🙂

For the past 80 years, Incoterms® has been the cornerstone of commercial trade globally setting the basis for robust trade negotiations which involves directly or indirectly, sellers, buyers, shipping lines, truckers, forwarders, clearing agents, chambers of commerce, legal firms, courts, etc etc.. Read its history here..

An interesting question from a reader about who will get the claim amount in a CIF shipment where the cargo is damaged in transit.. The seller or the buyer..?? Read comments from an expert..