K. Vanheusden Belgian Foreign Trade Agency HO(1).pdf · 1 K. Vanheusden Belgian Foreign Trade...

1

K. Vanheusden Belgian Foreign Trade Agency

[email protected]

Zagreb, October 22, 2014

mailto:[email protected]



2

THE IMPORTANCE

OF ‘DELIVERY’ IN

CONTRACTS OF

PURCHASE

Place and date

of delivery

Calculation budget

Availability goods start use

Shipping instructions

Packaging requirements

Revenue recognition

Taxable transaction

Delivery & payment

documents

Insurance

Applicable product

regulations

Checking & protesting conformity

…

Customs value

Origin calculation Agency

commission

Transport document

Need for insurance

VAT registration

Customs registration

Invoicing obligations

Transport packaging

Consumer packaging

Sarbanes Oxley IAS

18.14

Corporation

R&D

Production

Logistics

Finance

Accounting

Customer services

Legal

… Forwarder

Insurance

Customs agent

...

Bank

SO WHAT ARE THE

OPTIONS?

5

EXW (… named place)

6

Ex Works – à l’Usine

Delivery & risk

Cost


The seller supplies the goods by making them available to the

buyer at his business premises (workshop, storage facility, depot, factory, etc.).

arranges goods with an invoice (or EDI message) and minimum packaging.

The buyer is liable for the loading and export and import clearance

(the procedures with Customs).

assumes all costs and risks of the goods from the sellers business premises to the final destination

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8

FCA (… named place) Free Carrier – Franco Transporteur

Cost Booking of the freight (collect)

Delivery & risk

Delivery & risk

Cost

FCA (… named place)

The seller

arranges goods with invoice, packaging, export licence

arranges customs formalities when exporting

assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to the carrier or freight forwarder contracted by (on behalf of) the buyer at the agreed place of departure.

The buyer

organizes carriage from the agreed point of departure

assumes all costs and risks of the goods from the moment they have been transferred to ‘his’ carrier

assumes customs and security formalities with respect to transit and import

9

CPT (… named place of destination)

10

Carriage Paid To – Port payé jusqu’à

Delivery & risk

Cost


The seller arranges goods with invoice, packaging, export licence and way bill


contracts for carriage and includes the freight rate for the transport of the goods to the designated destination in his invoice

assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to his carrier or freight forwarder at the place of departure.

The buyer assumes all costs (except for the freight) and risks of the goods from

the moment they have been transferred to the ‘first’ carrier


receives the goods from the carrier at the agreed place of destination

11

CIP (… named place of destination)

12

Carriage and Insurance Paid to – Port payé, assurance comprise jusqu’à

Cost

Delivery & risk

Insurance


The seller

arranges goods with invoice, packaging, export licence, way bill and insurance certificate


contracts for carriage and insurance and includes the freight rate and insurance premium for the transport of the goods to the designated destination in his invoice

assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to his carrier or freight forwarder at the place of departure.

The buyer

assumes all costs (except for the freight and insurance) and risks of the goods from the moment they have been transferred to the ‘first’ carrier


receives the goods from the carrier at the agreed place of destination

13

Limitations of liability declaration of interest/declared value

Liability carrier CMR COTIF/CIM HAGUE

VISBY

HAMBURG ROTTERDAM

RULES

MONTREAL

Convention

Limits loss &

damages

8.33 SDR/kg 17 SDR/kg 666.67

SDR/unit or 2

SDR/kg

835 SDR/

unit or 2.5

SDR/kg

875 SDR/unit

or 3 SDR/kg

19 SDR/kg

Delay freight freight x 3 - freight x 2.5 freight x 2,5 19 SDR/kg

Notification loss –

damages

- visible

- hidden

immediately

- 7 days

immediately

- 7 days

immediately

- 3 days

- 1 day

- 15 days

immediately

- 7 days

- 14 days

- 14 days

Notification delay 21 days 60 days - 60 days 21 days 21 days

prescription 1 year 1 year 1 year 1 year 2 year 2 year

http://www.imf.org/external/np/fin/rates/rms_five.cfm

1.00 SDR = 1.211770€ (08/06/2012)

DAT (named terminal at port or place of

destination)

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Delivered at Terminal – Rendu au Terminal

Delivery & risk

Cost

DAT (named terminal at port or

place of destination)

The seller

arranges goods with invoice, packaging, export licence and way bill (Delivery Order)

arranges export, transit and security formalities up to the agreed terminal

assumes all costs and risks till delivery in the agreed terminal in said port or place of destination, ready for collection by the buyer

The buyer

assumes all costs and risks of the goods from the moment they are at his disposal in the agreed terminal of destination

assumes import formalities

collects the goods at the agreed terminal of destination

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DAP (named place of destination)

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Delivered at Place – Rendu au Lieu de Destination

Delivery & risk

Cost

DAP (named place of destination)

The seller

arranges goods with invoice, packaging, export licence and way bill

arranges export, transit and security formalities up to the agreed place of destination

assumes all costs and risks till delivery in the agreed place of destination, ready for unloading from the arriving vehicle

The buyer

assumes import formalities

unloads the goods from the arriving vehicle at the agreed place of destination

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19

DDP (… named place of

destination)

Delivered Duty Paid – Rendu Droits Acquittés

Delivery & risk

Cost

The seller

arranges goods with invoice, packaging, import licence and way bill

arranges export, transit, import and security formalities up to the agreed place of destination

includes all duties upon importation in the invoice (including VAT)

assumes all costs and risks till delivery in the agreed place of destination, ready for unloading from the arriving vehicle

The buyer

unloads the goods from the arriving vehicle at the agreed place of destination

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DDP (… named place of

destination)

FAS (… named port of shipment)

Port customs

21

Free Alongside Ship – franco le long du navire

Delivery & risk

Cost

Booking of the freight

(collect)

FAS (… named port of shipment)

Who is the sender (‘shipper’) – who is loader?

Which document of delivery?

Who pays heavy lift charges?

Who pays storage in the port of departure?

Who establishes the Dangerous Goods Declaration?

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FOB (… named port of shipment)

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Free On Board – franco bord

Delivery & risk

Cost

FOB (… named port of shipment)

The seller

arranges goods with invoice, packaging, export licence

arranges customs export formalities

assumes all costs and risks of the goods up to delivery the cleared goods by placing them on the ship booked by (on behalf of) the buyer in the agreed port of departure (port customs).

The buyer

organizes carriage from the agreed port of departure

assumes all costs and risks of the goods from the moment they have been placed on his ship


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CFR (… named port of destination)

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Cost and Freight – Coût et Fret

Delivery & risk

Cost freight

CFR (… named port of destination)

The seller arranges goods with invoice, packaging, export licence and B/L


contracts for carriage and includes the freight rate for the transport of the goods to the designated port in his invoice

assumes all costs and risks of the goods up to delivery of the cleared goods upon placing them on board of his ship in the port of departure.


the moment they have been placed on board of a ship booked for the agreed port of destination


receives/discharges the goods from the ship at the agreed port of destination

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CIF (… named port of destination)

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CIF Landed – CIF outturn weights – CIF maximum cover

Cost, Insurance Freight – Coût, Assurance et Fret

Insurance

Delivery & risk

Cost freight

CIF (… named port of destination)

The seller arranges goods with invoice, packaging, export licence, B/L and

insurance policy


contracts for carriage and insurance and includes the freight rate to the designated port and insurance premium in his invoice

assumes all costs and risks of the goods up to delivery of the cleared goods upon placing them on board of his ship in the port of departure.


the moment they have been placed on board of a ship booked for the agreed port of destination


receives/discharges the goods from the ship at the agreed port of destination

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Legislation – customs – contractual

facultative – complementary law – variants

can not be abolished

Recommendation n°5 of the United Nations Centre for Trade

Facilitation and Electronic Business (ECE/TRADE/C/CEFACT/2011/5)

UNCITRAL Endorsement (45th Session – 25/06 – 06/07/2012)

art. 7,2 CISG international contracts of sale are to be interpreted according to transnational general principles Unidroit Principles

Incoterms

Intrastat – antidumping (CIF) – customs value (CIF – FOB) – single administrative document (case 20) – origin definition (EXW)

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Legal status of the Incoterms® Rules?

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Overview of former Incoterms rules

Equivalent Incoterms® 2000 rule

Equivalent Incoterms® 2010 rule

ex factory, ex mill, ex plantation, ex warehouse, ex store, etc.

EXW EXW

Free Carrier (FRC) FOR (Free On Rail) - FOT (Free On Truck) - Franco Wagon FOB Airport (FOA) FOQ (Free on Quay) FOW (Free on Wheels)

FCA

FCA

C.And F. C&F C+F CF

CFR

CFR

CAF CIF CIF

Freight or Carriage Paid to (FCP) CPT CPT

Freight or Carriage and Insurance Paid to CIP CIP

DAF

DAP

Ex Ship (EXS) DES

DDU

Ex Quay (EXQ) DEQ DAT

Alternative trade terms

Free House – Frei Haus - DIS - Door-to-door – FIS

Warehouse Gogo – FOA – FOR/FOT – FOB Border – C&F – FOB+I – PAF – FOBs – FOB+ – CAF – CIF landed – CIF Outturn Weights – EXF - C&I (CNI) …

RAFTD 1941 Ex / FOB (6) / FAS / C&F / CIF / Ex Dock

UCC FOB (3) / FAS / C&F / CIF / Ex Ship

How to use the Incoterms® 2010 rules ?

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Introduction

5 headings:

1. How to use the Incoterms® 2010 rules?

2. Main features of the Incoterms® 2010 rules difference with the Incoterms

2000 rules;

3. Variants of Incoterms rules health

warning;

4. Status of this introduction;

5. Terminology

1. How to use the Incoterms®

Rules?

1. Contractual reference ‘through such words as’

2. Read the ‘guidance notes’

3. Specify the agreed place of delivery and/or of destination as precisely as possible

4. Incoterms rules only deal with the delivery they do not replace the

contract of sale

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Incoterms® rules don’t deal with

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projects – consignment deliveries – sofware …

relationship with the forwarder – carrier

relationship with the insurance cy

relationship with the bank

price

conditions/place of payment

transfer of title

sanctions in case of breach

applicable law !! Regulation 44/2001 Incoterms (ECJ 25 February 2010, Case

C-381/08, Car Trim); Electrosteel (ECJ 07.03.2011, C-87-10)

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2. Main features what’s new?

1. DAF – DES – DDU DAP

2. DEQ DAT

3. New layout – classification – graphics

4. FCA FAS + FOB additional service (‘freight collect’)

5. FAS – FOB – CFR – CIF: delivery (A4) = passing of risk (A5).

6. Chain transactions

7. Domestic and international

8. Security clearances linked to A2/B2 and not to A3/B3

4. Binding force

Health warning: if you modify an Incoterms® rule, be precise.

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3. Variants

5. Terminology

The ‘black letter text’ has priority over the Guidance notes and the introduction.

Compromise between a tendancy that didn’t a separate set of definitions and one that desired a full glossary.

CLASSIFICATION OF

THE

INCOTERMS ® RULES

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With the seller’s carrier

With the buyer’s carrier

39

Goods are at disposal

Goods to leave from

Goods to leave for

Goods to be delivered at

Inland terminal - LCL

Why this classification?

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Container - FCL

Port terminal - LCL

Ship’s rail On board

2010

Risk transfer FCA – CPT - CIP

FOB – CFR - CIF

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Did

the s

eller

‘export

’ th

e g

oods?

Is th

e d

ocum

ent o

f deliv

ery

a tra

nsport

docum

ent

L/C

?

FCA Seller’s premises

FOB

FCA freight forwarders terminal

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Under all Incoterms® 2010 rules the respective obligations of the parties have been grouped under 10 articles (‘headings’) where each article on the

seller’s side “mirrors” the position of the buyer with respect to the same subject matter.

Using the Incoterms® rules

Structure of the Incoterms® 2010 rules: 10 articles

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A THE SELLER’S OBLIGATIONS

General obligations of the seller

Licences, authorizations, security clearances and other formalities

Contracts of carriage and insurance

Delivery

Transfer of risks

Division of costs

Notice to the buyer

Delivery document

Checking – packaging – marking

Assistance with information and related costs

B THE BUYER’S OBLIGATIONS

General obligations of the buyer

Licences, authorizations, security clearances and other formalities


Taking delivery

Transfer of risks

Division of costs

Notice to the seller

Proof of delivery

Inspection of goods


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EXW

FCA seller’s premises

FCA forwarder’s terminal

DAT Southampton

DAP London

DDP London

CPT CIP

‘dispatch notice’?

PSI - CRF

CMR freight collect

Dispatch advice House B/L

CMR arrival freight prepaid

FCR – EIR – AWB - …

D/O Release notice

Transport document signed for reception, freight prepaid

Transport document (CMR – AWB – CIM – B/L – HB/L) freight prepaid

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FAS Gdansk CFR – CIF

Southampton

?

Mate’s receipt received for shipment B/L, …

B/L?

B/L port-to-port full set freight prepaid

FOB Gdansk

Incoterms® rules an cost supplements

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+ loading (80€) + export formalities

(35-75€) + EXS (23-25€)

+ precarriage (250-300€)

+ THC/CSC (200€) + scancosts

(200-300€)

+ port passage (PLTC)

+ freight +

insurance

(0,24% - 0,17%)

+ discharging + ECS (45€)

+ T1 (30€) + warehousing

(THC) + D/O (50€) +

scancosts (200-300€)

+ T1 (55€)

+ oncarriage (250-300€)

+ import (35-

75€) + duties

EXW FCA A4b FAS FOB CFR/CPT

CIF/CIP

DAP

DAP DDP

€

net sales

price

+ transport

packaging

FCA A4a

+ loading + B/L (45€) (port customs !)

DAT

Incoterms® rules and risk transfer

48

loaded in

container, on

truck

Not discharged

from truck

On quay (barge,..)

alongside ship On board –

not

discharged

Discharged

on quay – in

terminal –

ready for

collection

Not discharged

at destination

EXW FCA A4b FAS FOB

CFR CIF

CPT CIP

DAP DAT DAP

DDP

packed, not

loaded

FCA A4a

CPT - CIP

‘on board’;

(port customs)

Incoterms® rules and revenue recognition

CIP CPT

Purpose of the Incoterms® rules

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costs (freight, customs, assistance, insurance)

risks (transfer)

tasks (documents, formalities, notices)

delivery

in the relationship seller - buyer

6 4, 3, 2

5 4

2, 9, 10

4 7, 8

INCOTERMS ® 2010

Q&A

50

How to analyse an Incoterms question

1. Identify the issue Who asks the question (sales, finance, logistics, carrier, bank, …)?

What is the ‘magic word’ in the question? Cost? Risk? Import clearance? Etc.

2. Figure out which Article addresses the issue, for example: Delivery? A4/B4

Costs? A6/B6

Risks? A5/B5

3. Apply the Article to the situation

For example, issue is risk. Article is A5/B5. A5 says risk passes at delivery as set out in A4. According to A4, delivery [has/has not] happened yet, so risk [has/has not] yet passed from seller to buyer.

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Name of Speaker, Position

OBLIGATIONS OF SELLER OBLIGATIONS OF BUYER

A1

General obligations of the seller

B1

General obligations of the buyer

A2

Licenses, authorizations security clearances and other formalities

B2

Licenses, authorizations security clearances and other formalities

A3


A3


A4

Delivery

B4

Taking delivery

A5

Transfer of risks

B5

Transfer of risks

A6

Allocation of costs

B6

Allocation of costs

A7

Notices to the buyer

B7

Notices to the seller

A8

Delivery document

B8

Proof of delivery

A9

Checking-packaging-marking

B9

Checking-packaging-marking

A10


B10


In addition, the text of the rules in A1-A10 and B1-B10 is supplemented by a short Introduction, setting out important features of the new Incoterms®

2010 rules generally, and Guidance Notes at the beginning of each rule, giving guidance on use and application of the rule.

The Seller’s obligations are set out in articles A1-A10, and the Buyer’s obligations in mirror fashion in B1-B10,

as follows:

Structure of the Incoterms® 2010 Rules

52



You sell goods EXW (Zagreb) Incoterms 2010.

The goods are shipped in a container.

Who has to load the container?

Who is the shipper on the B/L ?

Who is the exporter on the EXA?



Goods are sold CPT Yokohama. Danzas comes to

collect the goods at the seller’s factory in

Osijek on 05/10. The goods go to the airport

(Transmarcom Zagreb) where they arrive at

06/10, are shipped to Frankfurt on 08/10 and in

Frankfurt are put on a plane to Yokohama on

12/10 where they arrive on 14/10. The buyer

can collect the goods at the terminal on 15/10.

What is the date of delivery?

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You have sold chemicals to Turkey, CIP Istanbul.

The goods arrive but in order to pass through

customs in time, the trucker only unloads half

the shipment. The buyer claims the other half

with me. What do you do?

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DAP (Moscow)

You sell goods “DAP Moscow”. Customs

block the goods at the border upon entry

in the RF and

1. ‘demurrage’ is charged who has to pay?

2. the goods arrive too late can the buyer

claim penalties for late delivery?

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Name of Speaker, Position 57

CFR/CIF

Antwerp

• BAF – CAF

• Congestion surcharge

• Winter surcharge

• Mist surcharge

• Demurrage

• Detention

• …

CHOOSING THE ‘RIGHT’

LOGISTICAL SOLUTION

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A buyer doesn’t care about the selling price …

Indeed: regardless of the choice of the Incoterms® rule, in the end the buyer/importer always pays:

- a seller assuming costs/risks because of the chosen solution will include these costs (plus a markup for administration and risk) in his final selling price.

- a buyer assuming costs/risks will include these costs in the ‘budget’ required to obtain the goods.

Thus it is in both parties’ interest to allocate costs and risks with the party that can manage them most efficiently (at the lowest cost), reducing the ‘total cost of purchase’.

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all he cares about is the ‘landed cost’ his budget

Considerations:

Capacity

Access to (cheap) carriage – warehousing – transhipment - …

Experience and expertise in international trade

Cost efficiency

Possibility to consolidate

Advantages of scale (experience – efficiency)

Logistical reality - facilities

Type of goods (container / bulk / breakbulk / …)

Multimodal vs. maritime only

FCL (door-to-door) – LCL (port-to-port)

Value

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Considerations:

Urgency

Securing the supply chain

Insurance

Global insurance policy, national insurance, …

Administrative facilities

Preferential status (Tax exemptions, green line status, …)

Registrations & authorizations

Contractual reality

Tendering (price comparison, …) vs. negotiations

Conditions of payment

HQ instructions

61

How finance

afterwards may alter

the contractual

Incoterms rule

In an ‘ideal’ world

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1. fill the gap between buyer and seller payment

(buyer’s obligation) should coincide with delivery (seller’s obligation),

2. actual delivery is replaced with the ‘proof of delivery’, initiating the (guarantee of) payment,

3. this proof being established by a third party assuming a liability for issuing this proof

4. … and if this proof were to be used as a collateral, this would even be better.

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Exporter

Importer

2

GOODS

1

PAYMENT

Exporter

GOODS PAYMENT

1 2

Importer

Documentary Collections:

65

Remitting

Bank

Presenting/

Collecting Bank

3

4

Exporter/

Drawer

Importer/

Drawee Documents

6

5

GOODS

Documents + instructions 1

Docum

ents

+ instr

uctions

Notification receipt documents or presentation B/E for acceptance 2

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Letter of credit: issuance

1

Importer applies for a

letter of credit.

3 Request of notification &

possibly confirmation of the

letter of credit

Notification

/Confirmation of the

letter of credit Advising /

confirming bank

Issuing bank 2

4 Exporter/

Beneficiary

Importer/ applicant

Contract

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Letter of credit

Issuing bank

2

4

Exporter/

Beneficiary

Importer/

Applicant

Documents

5

Do

cum

ents

3

Confirming bank

1 GOODS

Documents 7

6

http://incoterms.abh-ace.be

file:///C:/Users/Koen/Documents/incoterms/App/2013/Incoterms_20131004/en/index.html

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Incoterms app.

http://incoterms.abh-ace.be/



C:/Users/Koen/Documents/incoterms/App/2013/Incoterms_20131004/en/index.html



New projects

Combined/container transport

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Forwarder

K. Vanheusden Belgian Foreign Trade Agency HO(1).pdf · 1 K. Vanheusden Belgian Foreign Trade...

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