I can never remember them all, so don’t worry about that.Short guide in the appendix of my handout to each oneObligation to pay follows responsibility in most cases, possible exception be FCA where the seller organises the carrier but the buyer pays
C example – CFR used to be C & F. Here seller organises and pays for the freight to a specified point in the transit. Buyer organises and pays for the insurance of the whole transit.D example – Very common terms are DAP. Seller pays for everything to defined delivery point except cost of clearance. DDP – covers everything, and seller is responsible for everything, including the cost of clearance and duties paid. Often used by multi nationals shipping between sites.Ex – works – once you have bought the goods from your supplier you are responsible for everything…Rover example…F example – FOB or free on board. Shipper’s forwarder to point of origin/export. Buyer’s forwarder rest of the way. Really Ocean freight term. Delivery complete when handed over.
Right partner for any particular jobJust because the badge and colours are the same as those you are used to doesn’t mean that the standards and service are the same…although it should.Every network has its weak spots. Some are very surprising. USA for TNT, France and Italy for just about everyone.Big co’s have rigid systems, if you fit, great. If you don’t it won’t work all that well.
Tennis balls!!ASIA - Pallet - £100 Sea 3 to 4 weeks, maybe longer. Airfreight - £100’s 4-7 days, Charter 10,000’s 1-2 daysEurope - Pallet - £100 Road freight 2-5 days, Airfreight 1-2 days 3-400, Dedicated vehicle 12-36 hours £ 1k+, Charter 2- 8 hours £ ‘000’sSecurity regime aimed at stopping terrorists, not necessarily securing your freight from pilferage.
Who’s had arguments with Insurance companies over claims?Newsflash – most transport co’s will try not to pay…don’t make it easy by packing poorly!If you value your product pack it properly.In a lot of the developing world the roads are poor, and I’m including the US in that statement…Your freight could be unsecured on an open truck on roads full of pot holes. When it falls off the back it needs to be safe!Marken delivery for cold chain.
Hands up who has tried to cut the cost by under declaring the value of the goods?Hands up those who have then struggled to get full value when something gets damaged?
Just be careful…It’s worth taking time to make sure that transport won’t cause a problem.
If I had a £1 for every customer that has tried to deliver in a country on a public holiday…can be done in most cases but costs.San Francisco is quite different to JFK…Processes can be very different…manual vs automated (China vs US). Open vs Restrictive (EU vs JP or US). It pays to understand these things as much as possible.Get paperwork right…or as right as can be. If you are shipping same material all the time should only have to do this once.Local buyers will try to use descriptions that save them money…if authorities unsure goods get held…LC’s – Temp control.
Anything with lactose or bovine origin material in it going to US needs permit. Weapons or things that are potentially part of a system.
Corrupt… what does that mean? Well paying a surcharge can get things moved along. Not uncommon…problem for Western co’s with anti bribery laws and Sarbanes Oxley.Don’t ask!China – common practice until they executed the Head of Customs a few years ago.
Big spenders can achieve this more easily.Need to be a massive spender to get big co’s to do this.Doesn’t mean to say that you shouldn’t adopt the principleGenerally find small specialists are strong in this area
An SME's guide to shipping internationally
Key things you should be thinking about
A presentation for UKTI
Monmouth Ventures Ltd
Major areas for consideration
Choosing the right logistics partner
Modes of Transport
Transit times and lead times
English is THE international business language but
understanding can vary
Keep it simple and clear, don’t use difficult or
Check for understanding
Confirm everything in writing
International trade is covered by 11 shipping or
Differences boil down to who is responsible at
different stages of the journey
Obligation to pay follows responsibility
Terms that begin with “C” mean that the seller of
the goods has responsibility for the shipping
Terms that begin with “D” mean that the seller’s
responsibility ends at a defined point
Terms that begin with “E” seller’s responsibility
ends when the goods leave
Terms that begin with “F” means that the seller has
limited responsibility for the shipping
Choosing the right partner
Horses for courses
Big is not necessarily best, but are usually the
cheapest and easiest to use
Small specialists will give a better service but will
Tend to find out how good your partners are when
something goes wrong
Mode of transport
Which mode should you use? Depends on a number of
Size, weight, nature of items being shipped, collection
time, destination, desired delivery date
Lead time + material (nature, value) + location + size =
Quick = expensive, Big = expensive, Q + B = very
The shorter the transit, the more secure the shipment
• International more demanding than
• Quality and suitability of packaging is a key factor
• Nature of destination and local capabilities
• Nature of goods impacts choice of packaging
o Hazards – rules
o Temperature control
o Delicate or breakable
Have some…you never know when you will need it
Don’t try to cut your cost of trade by underdeclaring the value of your goods
Insurance claims will only be paid to the value
declared on your invoices
Customs authorities have a pretty good idea of
what most items are worth
• Logistics can play a big part in making sure you get
• Agreements often have clauses and penalties for
• Finance in the form of Letters of Credit (LC’s) often
have specific terms relating to the transport and
delivery of goods
o Make sure you understand them
o Follow them precisely…or else!
o Make sure your partner has experience of
dealing with LC’s
Transit times…True or false?
There are lies, damned lies and then there are transit
• Leave as much time as possible
• What can go wrong, will go wrong
o Ash Cloud
o SARS / Flu
o Bad weather
o Fuel crisis
o Traffic – accidents, busy routes/days
The more you know, the more you will save
Everywhere is different, even within a country
Understand the clearance process, especially in
developing nations, and the USA
There is a minimum requirement depending on
mode of transport
Invoice and packing list
Does your product need a licence or a permit?
Import and/or export
Lots of good information on Government website
Logistics partner can add value here
Voted the biggest pain issue
Huge variation in rules and application
China – poor process, corrupt?
Russia – constant rule changes, corrupt?
USA – protectionist, lots of rules, very officious
India – bureaucratic, slow but can be speeded up
Latin America – chaotic, corrupt?
Africa – Corrupt?
Middle East – Restrictions, embargo
Lean on your partner, experience counts for a lot
It is a process
Specify what you expect and need
Consider a few alternatives
Check that reality matches claims
Review with supplier
Demand corrective action
Working in partnership will consistently deliver the best results
HMRC Import/Export helpline
Link to useful Government information about
Link to the AICES (Air express Association) website
Link to the FTA website
Link to the RHA website
Link to guide for Incoterms
Link to the BIFA website
Incoterms – “E & F”
FOB (Free On Board)
One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight
forwarder to move the merchandise to the port or designated point of origin. Though frequently used to
describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of
goods. "Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The
buyer's responsibility for insurance and transportation begins at the same moment.
FCA (Free Carrier)
One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller
with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for
pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is
released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their
forwarder for insurance, export clearance and handling all other paperwork.
In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk
and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in
FCA the seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a
predetermined port or destination point and the buyer is responsible for Insurance.
FAS (Free Alongside Ship)*
In these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires
the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on
these terms will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is
accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation.
Incoterms – “C”
CFR (Cost and Freight)
CIF (Cost, Insurance and Freight)
This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the
voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the
forwarder. "Delivery" as above, is accomplished at the port of destination.
CPT (Carriage Paid To)
This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing
with the actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined
destination point. It is the shipper/seller's responsibility to get goods from their door to the port of destination.
"Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of
origin or port of shipment to buyer's door. Given that the shipper is responsible for transportation, the
shipper also chooses the forwarder.
In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the
seller has to buy cargo insurance, naming the buyer as the insured while the goods are in transit.
CIP (Carriage and Insurance Paid To)
This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the
shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force,
Freight Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are
turned over to the Forwarder.
Incoterms – “D”
DAT (Delivered At Terminal)
DAP (Delivered At Place)
This term is used for any type of shipments. The shipper/seller pays for carriage to the terminal, except for
costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the
DAP term is used for any type of shipments. The shipper/seller pays for carriage to the named place, except
for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for
unloading by the buyer.
DDP (Delivered Duty Paid)
DDP term tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is
responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the
buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and
risks including the payment of duty and fees.
Monmouth Ventures Ltd
P: + 44 7946 596 546