Unit 7 Transportation and shipping

Text 1 Incoterms

Every international trade transaction is required to define certain specific responsibilities:

- arrangements and payment for the carriage (freight costs)

- where the risk lies if delivery is not effected

- where the risk lies if loss or damage occurs

In order to overcome problems arising from variations and different interpretations of transport costs and risks, the International Chamber of Commerce (ICC) has developed uniform codifications or rules for application to the most widely used terms of delivery, known as “Incoterms”. These were first published in 1936, and revised since to keep abreast of commercial and transport practices.

Incoterms (international commercial terms) are thirteen internationally accepted expressions for foreign trade contracts. These abbreviations indicate which price is being quoted to the customer. They show the responsibilities of the buyers (importers) and sellers (exporters). They define who is responsible for “freight” or “carriage” (transportation), insurance against risks, “duty” (import taxes) and “clearance” (import and export documentation). The main incoterms are in four groups, which are named after the first letter in the term.

Group C. The seller covers only the costs listed to get the goods to a named destination, e.g. freight and import duties, but not insurance.

Group  D. The seller carries all the costs and risks to get the goods to a named destination.

Group E. The buyer pays all costs once the goods have left the seller’s premises.

Group F. The seller delivers the goods to a carrier who is appointed by the buyer.

NOТЕ: The most common means of transportation used for delivery of the goods are: