The main modes of transport can be roughly divided into surface and air modalities. Sea, rail, road (ship, train, and truck, respectively, generally speaking) make up the surface modalities. Aircraft (fixed-wing and rotor) are the air modalities.
In the United Kingdom and the European Union, road transport is the principal method for national and international freight movement. The convenience of road transport is so great that it outweighs most cost factors. Road transport enables point-to-point collection delivery. Large vehicles can carry bulk to warehouses or central distribution centres, where bulk is broken and smaller orders can be delivered by smaller trucks or vans to commercial or private addresses. In many cases however, it is possible for large trucks to deliver goods directly to the customer without need for distribution centres. Is this flexibility that makes road transport cost and time effective.
The following sums up the advantages and disadvantages of freight by road. ...continue reading
As might be obvious from the previous posts on incorterms, several Incoterms are applicable to waterway transportation only: FAS, FOB, CFR, CIF, DEQ, and DES.
The following Incoterms apply to all modalities, including Intermodal: EXW, FCA, CPT, CIP, DAF, DDU, and DDP.
In some cases, it is advisable to attach wording to Incoterms that clarifies the responsibilities of the buyer, seller, and carrier. For example, use of the term “DDP VAT unpaid” indicates unambiguously that the seller does not bear responsibility for the payment of VAT.
While undeniably useful, Incoterms also have their limitations: ...continue reading
The International Chamber of Commerce created Incoterms to codify and standardise the clarification of cost, risk, and the various obligations of buyers and sellers performing international commercial transactions. Incoterms are internationally accepted trading codes defining the responsibilities of both importers and exporters concerning the arrangement of shipments and the transfer of liability entailed at various phases in the journey of freight. Practically every foreign purchase or sale references Incoterms. The definitions of Incoterms have been established since 1936, but modifications have occurred frequently ever since. The ubiquity and standardisation represented Incoterms affords several advantages:
- Agreement on respective shipping responsibilities can be rapidly established between parties who are familiar with Incoterms. Incoterms abbreviate the shipping negotiation process so can be used as a form of shorthand.
- The convenience of using standardised trading terms simplifies international business.
- Most internationally experienced companies have at least a functional knowledge of the Incoterms that are relevant to them and preferred.
- Incoterms and the conventions they represent embody the orthodoxy of practical international shipping.
Currently, there are 13 Incoterms, and these are divisible into four categories (E, F, C, and D).
This collection of documents concerns the transportation element of the goods’ journey. The following documents are required:
This is usually international transportation, particularly in overland European shipping. A carnet is issued when a container is sealed at origin for opening only on arrival at its declared final destination.
- Certificate of Origin
This is required when preferential tariff treatment exist between countries. The certificate proves the country of origin. The inclusion of the certificate is intended to prevent shippers receiving favourable import duties by falsely declaring the country of the goods’ origin.
- Bill of Lading
An export bill of lading (B/L) covers the whole journey of a shipment. Bills that combine sea, air, and land are commonplace. ...continue reading
The inclusion of a comprehensive export sales contract reduces time and cost. Such a document will clearly describe the nature of the commodity, the price paid, the terms of payment, the transportation mode, the nature of the insurance and the identity of the insurer, the carrier, and any other details of special arrangements required. Sales documentation typically consists of invoices.
- The seller uses the commercial invoice to identify the goods value less freight and other charges. The commercial invoice also acts as the invoice for the goods’ sale. An invoice is a requirement of the letter of credit. Companies and agents use invoices to determine the value of goods for insurance and import duty purposes.
Customs regulations protect domestic industry by the levying of import duties on incoming products. Charges are usually imposed on the importing party. Customs checks the following:
- the declared value of the goods matches the value stated on the shipment documentation,
- the goods are correctly marked labelled according to the law of the country of sale,
- the goods are legal and meet local standards and the laws of the country into which they are being imported,
- the quantities reported on the shipping documents are true,
- the invoice is correct and true, and
- the shipment does not breach quota amounts (these will be set by the government of the importing country to prevent dumping and maintain the competitiveness of domestic industry).
Goods will not be released until customs are satisfied with the documentation. Any errors or oversights result in costly delays and charges. Firms often use customs brokers to help with customs processing and resultant transactions. ...continue reading