Incoterms:Framework for SuccessJanuary 27, 2011Presenter: Steve RubinsonLicensed US Customs Broker By PresenterMedia.com
Who is the InternationalChamber of Commerce (ICC)? http://www.iccwbo.org/
Why are we here?Goals for this session:1. ASK QUESTIONS!2. PARTICIPATE In The Discussion!3. Learn more about using Incoterms rules as a tool to effectively perform international business4. Equip ourselves to become more effective international business-people
IntroductionCritical Success Factors Senior-Level Informationfor International BusinessTransactions Commitment Flows• Senior management commitment– doing business internationally ismore demanding, and requiresdifferent resources, skills and Successfulexperience than domestictransactions. International• Effective and accurate Businessinformation flows protect yourability to do business Transactionsinternationally.• Service providers can make orbreak your international sales. Incoterms ServiceChoose them well. Rules Providers• Using clear Incoterms rulesreduces uncertainty between theinternational buyer and seller.
INCOTERMS Rules Five Questions To AnswerWho? Who uses Incoterms rules?What? What are Incoterms rules?Where? Where are Incoterms rules used?When? When are Incoterms rules used?Why? Why are Incoterms rules useful for international business?
Who? • Business owners • Customer service • Finance • Senior executives • SalesMany people involved • Logisticsin your business can benefit from understanding • Trade Compliance Incoterms rules
What?Incoterms rules are a set of internationally recognized ways to describe business transactions
Incoterms® – International Commercial Terms The Incoterms® rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods. First published in 1936, Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms. The rules have been developed and maintained by experts and practitioners brought together by ICC and have become the standard in international business rules setting. They help traders avoid costly misunderstandings by clarifying the tasks, costs and risks involved in thedelivery of goods from sellers to buyers. Incoterms® rules are recognized byUNCITRAL as the global standard for the interpretation of the most common terms in foreign trade.Please note that all contracts made under INCOTERMS® 2000 remain valid even after 2011. Moreover, although we recommend using Incoterms® 2010 after 2011, parties to a contract for the sale of goods can agree tochoose any version of the Incoterms rules after 2011. It is important howeverto clearly specify the chosen version INCOTERMS® 2010, INCOTERMS® 2000 or any earlier version. Source: http://www.iccwbo.org/incoterms
Incoterms 2000 Rules Chart 2 TERM CIP DAF DES DEQ DDU DDP Carriage & Insurance Paid To Delivery At Frontier Delivered Ex-Ship Delivered Ex-Quay, Duty Unpaid Delivered Duty Unpaid Delivered Duty PaidSERVICE WhoPays WhoPays WhoPays WhoPays WhoPays WhoPaysWarehouse storage at point of origin Seller Seller Seller Seller Seller SellerWarehouse labor at point of origin Seller Seller Seller Seller Seller SellerExport packing Seller Seller Seller Seller Seller SellerLoading at point of origin Seller Seller Seller Seller Seller SellerInland freight Seller Seller Seller Seller Seller SellerPort receiving charges Seller Seller Seller Seller Seller SellerForwarders fee Seller Seller Seller Seller Seller SellerLoading on ocean carrier Seller Seller Seller Seller Seller SellerOcean/Air freight charges Seller Seller Seller Seller Seller SellerCharges at foreign Port/Airport Seller Seller Buyer Seller Seller SellerCustoms, Duties & Taxes abroad Buyer Buyer Buyer Buyer Buyer SellerDelivery charges to final destination Buyer Buyer Buyer Buyer Seller Seller
Incoterms 2010 Rules Part 1RULES FOR ANY MODE OR MODES OF TRANSPORTEXW EX WORKSFCA FREE CARRIERCPT CARRIAGE PAID TOCIP CARRIAGE AND INSURANCE PAID TODAT DELIVERED AT TERMINALDAP DELIVERED AT PLACEDDP DELIVERED DUTY PAID
Incoterms 2010 Rules Part 2RULES FOR SEA AND INLAND WATERWAY TRANSPORTFAS FREE ALONGSIDE SHIPFOB FREE ON BOARDCFR COST AND FREIGHTCIF COST INSURANCE AND FREIGHT
INCOTERMS Rules ComparisonIncoterms 2010 rules• For both domestic and international Incoterms 2000 rulestransactions• 11 rules in 2 categories • Primarily for international transactions• Eliminates “Ship’s Rail” term • 13 rules in 4 categories• Addition of guidance notes for eachIncoterms rule • “Ship’s Rail” terminology used
• The International ChamberWhere? of Commerce has the support of a global membership • Incoterms rules are recognized and used on agreement by ICC members and non-members alikeAnywhere you do business! • No membership fees or costs to use Incoterms rules
• There is no time like the When? present! • Consider adopting Incoterms rules as a matter of company policy • Global implementation is not required. Incoterms rules may be implemented regionally, locally or even in selected shipping lanesUse Incoterms ruleswhen you buy or sell • Many companies use anything – Incoterms rules only to ship domestically or internationally internationally
Benefits of using Incoterms rules: Why? 1. Standardize how you do business 2. Strengthen internal controls 3. Avoid delays caused by problems with documentation 4. Prevent disputes over “who pays for what” 5. Protect your ability to do business internationally Incoterms rules can 6. Declare the correct value for make the difference imports and exports – the first time!between success and failure.