With so many different players and languages spoken, how is it possible for everyone involved to communicate, understand and accept their individual responsibilities in the seafood export chain? The answer is, Incoterms.
The International Chamber of Commerce (ICC) first published an official list of Incoterms (International Commercial Terms) in 1936 with the intention “to alleviate or reduce confusion over interpretations of freight terms, by outlining exactly who is obligated to take control of and/or insure goods at a particular point in the freight process.”
Basically, from the exporter perspective, Incoterms are used to make sure that you don’t incur any unnecessary costs.
The most up to date list of Incoterms was published in 2010 by the ICC and consists of 11 basic terms (see below for a quick reference) - though each is more complex than first meets the eye.
Some examples of common Incoterms include:
• DDP (Delivery Duty Paid)
• DAT (Delivered At Terminal)
• DAP (Delivered At Place)
For example, DAT means that the seller/exporter covers all of the costs of bringing goods to the customer, including:
• Export fees,
• Destination port charges, and
Now, imagine if you mark an export contract with DAT, then neglect to understand that insurance needs to be organised and agree on a sale price that doesn’t account for this cost.
Your business will be left liable and any damage to products in transit will come at a financial loss, as your selling price could be lower than the overall cost of exporting the goods - not to mention the hit your reputation will take from a dissatisfied buyer.
The best way to learn the ins and outs of Incoterms is to arrange e-training through the ICC website and then order your own complete set of Incoterms from the same site.