Specify precisely the place of delivery
The first function of the Incoterms is to define exactly the place of delivery of the goods. To do so, following the Incoterm should be included as accurately as possible the place of delivery (seller´s or buyer´s premises, transportation hub, port, airport, etc.), the city, province and country where goods are delivered. It is important to mention the city and country where delivery takes place as the world's geography is vast and is not always easy to locate a city in a country.
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CIP Tianjin Airport, China, Incoterms 2020 |
Avoid using EXW
EXW really does not reflect the conditions of surrender of an international operation and that all steps, except the packaging, are borne by the buyer, which sends a transport vehicle (usually truck) to collect the goods from the seller's premises.
FCA when goods are delivered in the country of origin
The Incoterm FCA is very flexible and has many advantages if the seller and buyer agree to deliver the goods at the seller's country. Among others: different places of delivery, different types of cargo, adaptation to the multimodal transport, documents justifying the export and compatibility with letters of credit.
With containers use only Incoterms for any mode of transport
The rules of the Incoterms 2010 clearly specifies that when the goods travel in containers should not be used sea Incoterms because containers are not delivered loaded on ships but in port terminals, in these cases in instead of using FOB, CFR or CIF should use FCA, CPT or CIP, respectively.
Control international transport: export in "C" and import en "F"
The most experienced companies in international trade, as a rule, try to control international transport. They have developed logistics expertise or use the services of forwarding agents from different geographical areas that allow them to manage international logistics, placing the goods exported to the countries of their customers and buying goods imported from the countries of their suppliers; i.e. this companies export in terms of "C" and import in terms of "F".
Use Incoterms in "D" only for countries of low risk
Incoterms of delivery in the country of destination (Incoterms in "D") should only be used in low-risk countries in which the seller has the means to control logistics. The concept of risk is broad and covers both the political risk (war, social conflicts), commercial (customer default), logistic (deficiencies in transport infrastructure) or administrative (complex customs procedures). Any of these risks can jeopardize international sale when seller and buyer agree to deliver the goods in the country of destination, under "D" terms.
Reference to Incoterms 2020 version
As mentioned at the beginning of this publication, the importance of Incoterms is based on a widespread use made of them in international trade. Therefore, whenever Incoterms are used in certain documents -offers, purchase orders, sales contracts, proforma invoices, etc.- it is worth mentioning that it refers to the latest version of Incoterms published by International Chamber of Commerce. For that, it is sufficient to include after the three acronym letters of the Incoterm and the place of delivery the expression "Incoterms 2020".
