International Trade Techniques ITT - 1

1.

International Trade Techniques
ITT - 1
BUT BIAV – S4
B. AGERON

2. International Trade Techniques ITT - 1

Teaching Modalities
◦ Lectures
◦ Applications
Evaluation
◦ Applications
◦ QCM
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3. Objective and skills

Main objective
◦ Preparation and management of import-export
operations / International logistics
◦ Understand the rules of import-export
◦ Know the basics of export negotiation
Skills
◦ The student must be able to :
Select the mode of transport, the INCOTERM, the
insurance and the terms of payment in a logic of cost
optimisation
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4. Course outlines

INCOTERMS
Transport and international logistics
Carrier liability and transport insurance
Risks related to international operations
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5. INCOTERMS

6. INCOTERMS 2020

Course Objective
◦ Preparation and management of import-export
operations / International logistics
Identify the INCOTERMS ICC2020 to better use them
Know how to include them in a commercial negotiation
Use them to establish sales or purchase prices
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7. Course outlines

Introduction
INCOTERMS used for all modes of
transport
INCOTERMS used for sea and inland
waterway transport
To go further ... To deepen your
knowledge
Applications
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8. Sources

◦ https://www.acteinternational.com/web/aw_29270/fr/reglesincoterms-2020
◦ https://www.douane.gouv.fr/les-nouvellesregles-incotermsr-2020-et-la-valeur-en-douane
◦ https://formation-achats.fr/incoterm2020/incoterms-2020/
◦ http://www.icc-france.fr/chambre-decommerce-internationale-actualite-7-577_10_septembre_2019_:_lancement_officiel_des_n
ouvelles_regles_Incoterms_2020_.html
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9. What is an international SC

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10. INCOTERMS ICC2020

INternational COmmercial TERMS :
established by the International Chamber of Commerce (“ICC”)
INCOTERMS are an internationally recognized set of terms that define the
responsibilities and obligations of the parties involved in the transport of
goods. Incoterms are used to clearly communicate the division of the cost of
carriage and risks associated with the international transportation and delivery
of goods between the seller to the buyer.
INCOTERMS have been created to avoid misunderstandings and confusion
between companies and represent international trade terms what defines and
states the framework in which the buyer and seller perform their role in the
transport of goods, ownership of goods and goods insurance.
INCOTERMS are not mandatory rules – for them to receive legal effect, they
must be explicitly incorporated by the parties into their contract.
INCOTERMS for sale or purchasing pertain only to the delivery terms
(carriage freight costs) and insurability of the product.
INCOTERMS define the respective obligations, costs and risks involved in the
delivery of goods.
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11. The INCOTERMS rules

Organisation
and payment
• Which party – buyer or seller – is responsible
for organizing and paying for transportation
(and associated activities such as loading or
unloading), import and export procedures,
goods insurance, etc.
Responsabilites
and risks
• In which point of the transportation is
happening the transfer of responsibility from
seller to buyer? This becomes important if
the goods are lost or damaged during
transport.
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12. Obligations of each parties

Each Incoterm contains a set of rules of
interpretation for the obligations of both the seller
and the buyer covering the following issues:
General Obligations,
Delivery,
Transfer of risks,
Carriage,
Insurance,
Delivery/transport document,
Export/import clearance,
Checking/packaging/marking,
Allocation of costs,
Notices.
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13. The use of INCOTERM for what ?

INCOTERM should meet all the expectations and needs of the
seller and the buyer regarding the following issues:
Is transport to be made by sea/inland waterway means or not?
Who should bear the majority of the risk of loss/damage to the
goods – the seller or the buyer? At what point in time in the
delivery to the place of destination should risk be shifted from the
seller onto the buyer?
Is there a need to use the services of a carrier? If so, who should
have an obligation to conclude a contract of carriage – the seller
or the buyer?
Should the seller be responsible for the unloading of the goods?
Is there a need to subscribe an insurance contract?
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14. INCOTERMS DO NOT…

determine ownership or transfer title to the goods,
nor evoke payment terms.
apply to service contracts, nor define contractual
rights or obligations (except for delivery) or breach
of contract remedies.
protect parties from their own risk or loss, nor
cover the goods before or after delivery.
specify details of the transfer, transport, and
delivery of the goods. Container loading is NOT
considered packaging, and must be addressed in
the sales contract.
represent a law, and there is NO default Incoterm!
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15. INCOTERMS 2020 Categories

Les incoterms multimodaux
Les incoterms maritimes
EXW
Ex Works
A l’usine
E
FAS
Free Alongside Ship
F
Franco le long du navire
FCA
Free Carrier
Franco transporteur
F
FOB Free On board
Franco à Bord
F
CPT
Carriage paid to
Port payé jusqu’à
C
CFR Cost and Freight
Coût et fret
C
CIP
Carriage, Insurance
paid to
Port payé, assurance
comprise jusqu’à
C
CIF
C
DAP
D
DPU
D
DDP
D
Category E - Departure
Category F - Main Carriage Unpaid
Category C - Main Carriage Paid
Category D - Arrival
Cost, Insurance and
Freight
Coût, assurance et fret
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16. INCOTERMS used for all modes of transport

17. EXW Ex Works (named place of delivery)

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18. FCA Free Carrier … (named place of delivery)

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19. CPT Carriage paid to … (named place to destination)

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20. CIP Carriage insurance paid to... (named place to destination)

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21. DAP Delivered At Place... (named place to destination)

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22. DPU Delivered At Place Unloaded... (named place to destination)

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23. DDP Delivered Duty Paid... (named place to destination)

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24. To establish a DDP contract

Tariffs and formalities
The Market Access Data Base
http://mkaccdb.eu.int
Applied tariffs data base
Exporter’s guide for import formalities
For Europe
http://pro.douane.gouv.fr
http://helpdesk.europa.eu/index_fr.html
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25. Incoterms used for sea and inland waterway transport

26. FAS Free alongside ship... (named port of shipment)

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27. FOB Free on board... (named port of shipment)

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28. CFR Cost and freight... (named port of shipment)

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29. CIF  Cost, insurance and freight... (named port of shipment)

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30. To synthesis

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31. Some videos in french

Video 1 – Formation INCOTERMS 2020 – Les INCOTERMS 2020 pour les
acheteurs et les SC managers
https://www.youtube.com/watch?v=JUZaeE2KdsA&feature=youtu.be
Video 2 – Les INCOTERMS 2020 : Quoi de Neuf – Ce qui change dans les
INCOTERMS 2020
https://www.youtube.com/watch?time_continue=2&v=sXPTKgi1QlM&feature=e
mb_logo
Video 3 – In english https://www.youtube.com/watch?v=iMdF7hEIHhU
Video 4
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32. Am I ready to use INCOTERMS

My Russian customer wants to take care of the end-to-end transport. Should I sell to him EXW
‘factory Metz’ ?
Yes
No
I want to offer him something else. What should I choose?
FCA Metz
DDP Metz
My customer in Brussels wants door-to-door delivery. What should I offer him?
CPT - CIP - DAP - DPU - DDP
I deliver by DPU port terminal n°1225 in Shanghai. Do I have to subscribe to a transport
insurance?
Yes
No
Pallets arrive at the terminal damaged. Who should take care of the carrier and/or the
insurance?
The seller
The buyer
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33. …

I buy FCA ‘Los Angeles Airport’. Who has to provide security data to French Customs?
The seller
The buyer
I buy CIP ‘Antwerp’. I notice a damage. Do I have to report it to the insurance company?
Yes
No
I buy Titanium from the USA to be delivered to DAP ‘Le Havre’. What are the supplier's
obligations?
………
I import goods from South Africa. I want to collect the goods unloaded at Paris airport before
customs. Which Incoterm should I choose?
………
I import goods from Mexique. I want to collect the goods at Mexico airport. Which Incoterm
should I choose?
………
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34. Still ready…

You have to deliver a 30 T DAP machine to the port of Marseille. Do you have to clear it
through customs?
Yes
No
What happens next? Who takes over the risks of the goods in the port after delivery on the
quay?
The seller
The buyer
You sell CFR ‘Dakar’, which is obliged to take out insurance for the goods
The seller
The buyer
Nobody
You export by ship to Vietnam. You are responsible for the freight and insurance, but you do
not want to take the risks. You have chosen the DPU Hanoi Incoterm. Are you right?
Yes
No
You have sold CIF ‘Kobe’. The freight includes unloading but you did not notify your
customer. Can he refuse to pay?
Yes
No
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35. Finally …

You have bought CIF ‘Le Havre’ and your forwarding agent noticed a damage. What should
you do?
……..
You want that your supplier to take care of his export customs and pre-carriage to the port you
choose. Which Incoterm will you choose?
……..
You sell CFR ‘Dakar’, which is obliged to subscribe to transport insurance
……..
You want that you supplier to take care of his export customs, pre-carriage and unloading at his
port. Which Incoterm will he choose?
……..
You import goods to a trader. You want them to be delivered unloaded to his warehouse in
Rotterdam. Which Incoterm should you choose?
……..
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36. To go further on INCOTERMS

37. Some precisions

The selling price differs according to the
Incoterm
Each Incoterm has a specific location. Otherwise
the seller can choose the place that suits him
best.
On all commercial documents (offer, contract,
order, invoice, instructions to forwarders)
◦ Always refer to the ICC 2020 Incoterms
◦ If possible, indicate the place of transfer of costs and
risks
◦ Indicate whether the goods are packed or not
◦ Indicate who is responsible for unloading the goods
(except for Incoterm DPU)
◦ Apart from CIP and CIF, no obligation for the parties to
insure the goods ad valorem
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38. The insurance

Do not confuse transport insurance
transport and the insurance of the goods
transported.
Fault insurance =
Contractual liability of the
carrier
Goods insurance =
facultative insurance - Ad
Valorem insurance
Systematic but beware of
reimbursement limits
defined by transport
agreements
Via an insurance policy (per
trip or annual on turnover)
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39. Major limits of INCOTERMS

Incoterms are not intended to regulate everything. They are just one
condition of sale among many others...
◦ Commercial dispute: customer not picking up the goods at the port (DAP) or at the
factory (EXW).
◦ Technical dispute: goods not in conformity with the contract
◦ Transfer of ownership, stowage of the goods in the containers,
◦ ... to be specified and dealt with in the contract
They bow to
◦ Before the practices of professionals
◦ The law of the shareholders involved (elements of the contract, variants).
Any variant is possible but must be clearly notified.
◦ Port and shipping company practices
Liners terms tend to be abolished and replaced by freely negotiated loading/unloading
Ask what is included in the basic freight (board to board, board to quay, quay to quay, terminal in-terminal
out)
◦ If loading charges have not been announced and accepted by the buyer, the seller
cannot pass them on.
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40. Which INCOTERM ?

For a better realisation of the operation
downstream, remember to organise the
transport well beforehand!
Who want
to manage
transport
Who want
to control
transport
Who has an
interest in
controlling
transport
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41. The arguments to choose

Is my partner regular, occasional? Is it a subsidiary, a direct
customer? Do I want to do him/her a favour?
Who is best placed to negotiate with transport service
providers? Are they already selected by me?
Who has an interest in controlling the logistics chain?
Who has a global insurance policy?
Are there any logistical, technical, regulatory or customs
constraints that are best left to the partner?
What is the political and social climate in the client's country?
What is the transport infrastructure?
- The instability of international freight rates
- Changes in Incoterms during the execution of the order
- Government policies
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42. Let’s go for a quotation (1)

You need to send a shipment to Luxor in Egypt.
The value of the goods on departure from the
factory is 80,000 euros. Here are the elements
provided by your usual forwarder. What a mess!
You need to quote the price of the exportation
according to the following ICC 2020 Incoterms:
◦ EXW Factory ‘Pau’,
◦ FCA Harbour ‘Marseille’,
◦ FOB ‘Marseille’
◦ CFR Port ‘Alexandria’
◦ CIF Port ‘Alexandria’
◦ DPU Warehouse Port ‘Alexandria’,
◦ DDP Factory ‘Louxor’.
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43. Let’s go for a quotation (2)

Positioning and Pre-routing of the container from the factory in Pau
to the Port of Marseille 1100 €.
2. International freight 700 €.
3. Delivery Luxor 780 €.
4. Loading Harbour of Marseille 180 €.
5. Unloading in Alexandria and placing in warehouse at port 300 €.
6. Export formalities 50 €.
7. Port security taxes in Marseille 14 €.
8. Fuel surcharge (BAF): 150 € (to be paid with freight)
9. Dollar fluctuation surcharge (CAF): 60 € (to be paid with the freight)
10. Bill of lading fee: 30 € (to be paid with the freight)
11. Cargo insurance 0,5% on 110% of the CIF Alexandria value
12. Customs duty in Egypt 5% of CIF value
1.
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44. Applications

☺

45. What you learnt

Are INCOTERMS legally binding in international
sales contracts?
Does INCOTERM influence the selling price to the
customer?
Do INCOTERMS define the
point of transfer of ownership?
Are INCOTERMS an element of the commercial
contract, not the transport contract?
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46. Which result ?

Sales price CPT Valparaiso unloaded ?
Export of a 20' container to Santiago de Chile
EXW ‘Grenoble’ : 150 000 euros
Container positioning in the port of Le Havre : 1000 euros
Export customs: 80 euros
Port handling Le Havre: 200 euros
International freight: 1500 euros
CAF: 60 euros (to be paid with international freight)
Port handling Valparaiso: 150 euros
Ad-Valorem cargo insurance: 0.5% on 110% of CIP value:
846.10 euros
Customs duty in Chile: 8% of CIP value
Post-carriage from Valparaiso to Santiago: 500 euros
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47. Which INCOTERMS ?

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48. Which INCOTERMS ?

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49. Applications

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