Every 10 years the INCOTERMS or international trade agreements are modified by the International Chamber of Commerce (ICC), improve relations between exporters and importers around the world, published for the first time in 1936 and modified every 10 years since 1980, they have been an important factor in any international logistics process, providing essential support.
The objective is: to regulate and mediate by establishing control, correct management of procedures and balancing costs between the participants in the buying and selling process. As well as avoiding a series of potential conflicts in commercial matters. Which generally result in certain interpretations, application of customs and commercial perspectives of each region. In general, these international agreements can be considered legal obligations as long as they are contemplated within the purchase-sale contract and in turn said document has certain legal force.
The version of INCOTERMS 2020 was presented a few months ago and in it we can see some specific changes such as, for example, the migration from “DAT” (Delivered At Terminal) to “DPU” (Delivered at Place Unloaded), since according to experts this particular agreement was used to a lesser extent and the substitution seeks to improve processes by facilitating delivery and although some other commercial agreements As CFR (Cost and Freight) and FOB (free on board) remain the same, without a doubt those importers or exporters will have to consider all the changes to achieve successful international logistics, which is why we have taken on the task of presenting some of the main modifications and a diagram that helps exemplify these measures.
INCOTERMS For transportation in general and for maritime cargo.
- EXW: EX Works – Under the same parameters.
- FCA: Free Carrier –It is possible to use as evidence of delivery a document that shows the price or total cost of transportation
- FAS: Free Alongside Ship – Under the same parameters
- FOB: Free On Board – Under the same parameters.
- CFR: Cost and Freight – Under the same parameters.
- CIF: Cos, Insurance and Freight – Cost, insurance and freight. The seller must add Type C minimum coverage insurance to the sales price.
- CPT: Carriage Paid To – Under the same parameters.
- CIP: Carriage and Insurance Paid To - the exporter must integrate full or very broad coverage insurance in addition to the value of the merchandise and transportation freight
- DAT: Delivered at Terminal has been replaced by DPU: Delivered at Place Unloaded, which stipulates that the product will be transferred and unloaded only at the agreed place. Previously, only the terminal or port where the merchandise was delivered was determined.
- DAP: Delivered at Place – Under the same parameters.
- DDP: Delivered Duty Paid – The items will be delivered duty paid
8 keys to success in international trade
In addition to full knowledge of the most recent changes in these agreements, it is important that you or your company as an importer or exporter take into account the following 8 points before carrying out any international trade operation, in order to optimize resources and time as well as avoid possible extra costs.
1.Place and date of departure of the goods
2. Place and date of receipt of the merchandise
3. Quantities to transport
4. Amount of goods
5. What type of transport will be used to ship the merchandise
6. What appropriate packaging and labeling measures, as well as safety measures, must be taken into account so that the merchandise arrives in perfect condition at its final destination
7. Which party must bear the different fees to be paid (customs) and insurance
8. Which party must be responsible for each of the necessary stages from when the merchandise leaves the place of origin until it reaches its final destination
Naturally at APR Cargo we have a team made up of specialists in different branches that international logistics demands, so we can gladly advise you on this or any other issue that your company requires; You just have to contact one of our representatives.