Review of Incoterms and Related Global Trade Issues Presenter: Neil Lenok American River • Overview • Global Trade and Incoterms • Primary Incoterms • Related Issues • Review, Questions and Summary The World Academy 2014 Topics for Today 2 Sales Supplier Exporter Agree to product specifics & pricing/terms Purchasing Buyer Importer Supplier’s warehouse Goods arrive at destination port Delivery to Warehouse Customs Clearance Process Delivery to Distributor The World Academy 2014 Port of Export 3 Incoterms Point in Time Transfer Seller <-> Buyer Importer <-> Exporter The World Academy 2014 Responsibility Liability Costs & Risks – That’s it! 4           Sale …Incoterms Freight Title Payment Revenue Recognition Insurance Contractual Disputes Compliance Responsibilities Packing, Marking, Labeling Security Filing Requirements Term of Sale vs. Term of Payment The World Academy 2014 In an International Transaction 5 Incoterms  Use in contracts for sales and purchases  Written to reflect rather than dictate trade practice … legal standing versus contractual obligation  Assign costs and responsibilities between buyers and sellers The World Academy 2014  Country neutral 6  Not law, they must be specified in order to apply  Are not all inclusive, they do not address government regulations, local customs operations of ports, carriers, trades  Do not address passage of title  Do not address revenue recognition  Do not address many issues that may arise in international business The World Academy 2014 Incoterms 7      Responsibility & Liability Landed Cost Mitigates Problems Incorporate into Operating Procedures Bring into Compliance Management  due diligence  reasonable care  supervision & control The World Academy 2014 Incoterms 8 Any mode/modes of transport Ex-works FCA: Free carrier CPT: Carriage paid to CIP: Carriage and insurance paid to DAT: Delivered at terminal DAP: Delivered at place DDP: Delivered duty paid The World Academy 2014 Incoterms 9 Incoterms • FAS: Free alongside ship • FOB: Free on board • CFR: Cost and freight • CIF: Cost, insurance and freight The World Academy 2014 Rules for Sea and Inland Waterway Transport 10 Incoterms Changes Replaced by DAT: goods at buyer’s disposal unloaded from arriving vehicle (DEQ) DAP: goods at buyer’s disposal not unloaded (similar DAF, DES, DDU) The World Academy 2014 4 Incoterms were eliminated … DES, DEQ, DAF, DDU “Simpler and more reflective of actual global trade practice” 11 Two new additions: DAT – goods at buyer’s disposal unloaded from arriving vehicle (DEQ) DAP - goods at buyer’s disposal not unloaded (similar DAF, DES, DDU) The World Academy 2014 2010 Changes/Additions/Clarifications 12        Minimal responsibility of Exporter Who loads? Use FCA for International USPPI Denied Party Screening Export Compliance Payment terms The World Academy 2014 Ex-Works 13 FOB (Free On Board) • 2011 change “on board” • Transfer of Risk • Payment terms The World Academy 2014 • Delivery 14 • Delivery • Transfer of Risks • Checking-packaging-marking • Delivery Document The World Academy 2014 DAT (Delivered at Terminal) 15 DAP (Delivered at Place) • Delivery • Cost of unloading • Checking-packaging-marking The World Academy 2014 • Transfer of Risks • Delivery Document 16 DDP (Delivered Duty Paid) • Greatest obligation for exporter • Duties and taxes • Transfer of Risks • Importer of Record The World Academy 2014 • Delivery 17 • Sales • Contracts • Operations • Finance Procedures // Training Functional // Utilized The World Academy 2014 Connectivity in a Corporation 18 • Foundation of global trade • Makes for better customer service • Expedites the supply chain • Sets up clear lines of responsibility and accountability • Tool for bettering corporate compliance • When managed with payment, title, etc., makes for more competitive trade and a more secure supply chain The World Academy 2014 Summary 19 Office - 732-947-5484 Mobile – 201-415-9093 Email – [email protected] The World Academy 2014 Neil Lenok American River Group of Companies 20