k. vanheusden belgian foreign trade agency ho(1).pdf · 1 k. vanheusden belgian foreign trade...
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K. Vanheusden Belgian Foreign Trade Agency
Zagreb, October 22, 2014
Place and date
of delivery
Calculation budget
Availability goods start use
Shipping instructions
Packaging requirements
Revenue recognition
Taxable transaction
Delivery & payment
documents
Insurance
Applicable product
regulations
Checking & protesting conformity
…
Customs value
Origin calculation Agency
commission
Transport document
Need for insurance
VAT registration
Customs registration
Invoicing obligations
Transport packaging
Consumer packaging
Sarbanes Oxley IAS
18.14
Corporation
R&D
Production
Logistics
Finance
Accounting
Customer services
Legal
… Forwarder
Insurance
Customs agent
...
Bank
EXW (… named place)
The seller supplies the goods by making them available to the
buyer at his business premises (workshop, storage facility, depot, factory, etc.).
arranges goods with an invoice (or EDI message) and minimum packaging.
The buyer is liable for the loading and export and import clearance
(the procedures with Customs).
assumes all costs and risks of the goods from the sellers business premises to the final destination
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FCA (… named place) Free Carrier – Franco Transporteur
Cost Booking of the freight (collect)
Delivery & risk
Delivery & risk
Cost
FCA (… named place)
The seller
arranges goods with invoice, packaging, export licence
arranges customs formalities when exporting
assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to the carrier or freight forwarder contracted by (on behalf of) the buyer at the agreed place of departure.
The buyer
organizes carriage from the agreed point of departure
assumes all costs and risks of the goods from the moment they have been transferred to ‘his’ carrier
assumes customs and security formalities with respect to transit and import
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CPT (… named place of destination)
The seller arranges goods with invoice, packaging, export licence and way bill
arranges customs formalities when exporting
contracts for carriage and includes the freight rate for the transport of the goods to the designated destination in his invoice
assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to his carrier or freight forwarder at the place of departure.
The buyer assumes all costs (except for the freight) and risks of the goods from
the moment they have been transferred to the ‘first’ carrier
assumes customs and security formalities with respect to transit and import
receives the goods from the carrier at the agreed place of destination
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CIP (… named place of destination)
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Carriage and Insurance Paid to – Port payé, assurance comprise jusqu’à
Cost
Delivery & risk
Insurance
CIP (… named place of destination)
The seller
arranges goods with invoice, packaging, export licence, way bill and insurance certificate
arranges customs formalities when exporting
contracts for carriage and insurance and includes the freight rate and insurance premium for the transport of the goods to the designated destination in his invoice
assumes all costs and risks of the goods up to delivery of the cleared goods upon transfer to his carrier or freight forwarder at the place of departure.
The buyer
assumes all costs (except for the freight and insurance) and risks of the goods from the moment they have been transferred to the ‘first’ carrier
assumes customs and security formalities with respect to transit and import
receives the goods from the carrier at the agreed place of destination
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Limitations of liability declaration of interest/declared value
Liability carrier CMR COTIF/CIM HAGUE
VISBY
HAMBURG ROTTERDAM
RULES
MONTREAL
Convention
Limits loss &
damages
8.33 SDR/kg 17 SDR/kg 666.67
SDR/unit or 2
SDR/kg
835 SDR/
unit or 2.5
SDR/kg
875 SDR/unit
or 3 SDR/kg
19 SDR/kg
Delay freight freight x 3 - freight x 2.5 freight x 2,5 19 SDR/kg
Notification loss –
damages
- visible
- hidden
immediately
- 7 days
immediately
- 7 days
immediately
- 3 days
- 1 day
- 15 days
immediately
- 7 days
- 14 days
- 14 days
Notification delay 21 days 60 days - 60 days 21 days 21 days
prescription 1 year 1 year 1 year 1 year 2 year 2 year
http://www.imf.org/external/np/fin/rates/rms_five.cfm
1.00 SDR = 1.211770€ (08/06/2012)
DAT (named terminal at port or place of
destination)
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Delivered at Terminal – Rendu au Terminal
Delivery & risk
Cost
DAT (named terminal at port or
place of destination)
The seller
arranges goods with invoice, packaging, export licence and way bill (Delivery Order)
arranges export, transit and security formalities up to the agreed terminal
assumes all costs and risks till delivery in the agreed terminal in said port or place of destination, ready for collection by the buyer
The buyer
assumes all costs and risks of the goods from the moment they are at his disposal in the agreed terminal of destination
assumes import formalities
collects the goods at the agreed terminal of destination
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DAP (named place of destination)
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Delivered at Place – Rendu au Lieu de Destination
Delivery & risk
Cost
DAP (named place of destination)
The seller
arranges goods with invoice, packaging, export licence and way bill
arranges export, transit and security formalities up to the agreed place of destination
assumes all costs and risks till delivery in the agreed place of destination, ready for unloading from the arriving vehicle
The buyer
assumes import formalities
unloads the goods from the arriving vehicle at the agreed place of destination
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DDP (… named place of
destination)
Delivered Duty Paid – Rendu Droits Acquittés
Delivery & risk
Cost
The seller
arranges goods with invoice, packaging, import licence and way bill
arranges export, transit, import and security formalities up to the agreed place of destination
includes all duties upon importation in the invoice (including VAT)
assumes all costs and risks till delivery in the agreed place of destination, ready for unloading from the arriving vehicle
The buyer
unloads the goods from the arriving vehicle at the agreed place of destination
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DDP (… named place of
destination)
FAS (… named port of shipment)
Port customs
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Free Alongside Ship – franco le long du navire
Delivery & risk
Cost
Booking of the freight
(collect)
FAS (… named port of shipment)
Who is the sender (‘shipper’) – who is loader?
Which document of delivery?
Who pays heavy lift charges?
Who pays storage in the port of departure?
Who establishes the Dangerous Goods Declaration?
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FOB (… named port of shipment)
The seller
arranges goods with invoice, packaging, export licence
arranges customs export formalities
assumes all costs and risks of the goods up to delivery the cleared goods by placing them on the ship booked by (on behalf of) the buyer in the agreed port of departure (port customs).
The buyer
organizes carriage from the agreed port of departure
assumes all costs and risks of the goods from the moment they have been placed on his ship
assumes customs and security formalities with respect to transit and import
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CFR (… named port of destination)
The seller arranges goods with invoice, packaging, export licence and B/L
arranges customs formalities when exporting
contracts for carriage and includes the freight rate for the transport of the goods to the designated port in his invoice
assumes all costs and risks of the goods up to delivery of the cleared goods upon placing them on board of his ship in the port of departure.
The buyer assumes all costs (except for the freight) and risks of the goods from
the moment they have been placed on board of a ship booked for the agreed port of destination
assumes customs and security formalities with respect to transit and import
receives/discharges the goods from the ship at the agreed port of destination
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CIF (… named port of destination)
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CIF Landed – CIF outturn weights – CIF maximum cover
Cost, Insurance Freight – Coût, Assurance et Fret
Insurance
Delivery & risk
Cost freight
CIF (… named port of destination)
The seller arranges goods with invoice, packaging, export licence, B/L and
insurance policy
arranges customs formalities when exporting
contracts for carriage and insurance and includes the freight rate to the designated port and insurance premium in his invoice
assumes all costs and risks of the goods up to delivery of the cleared goods upon placing them on board of his ship in the port of departure.
The buyer assumes all costs (except for the freight) and risks of the goods from
the moment they have been placed on board of a ship booked for the agreed port of destination
assumes customs and security formalities with respect to transit and import
receives/discharges the goods from the ship at the agreed port of destination
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Legislation – customs – contractual
facultative – complementary law – variants
can not be abolished
Recommendation n°5 of the United Nations Centre for Trade
Facilitation and Electronic Business (ECE/TRADE/C/CEFACT/2011/5)
UNCITRAL Endorsement (45th Session – 25/06 – 06/07/2012)
art. 7,2 CISG international contracts of sale are to be interpreted according to transnational general principles Unidroit Principles
Incoterms
Intrastat – antidumping (CIF) – customs value (CIF – FOB) – single administrative document (case 20) – origin definition (EXW)
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Legal status of the Incoterms® Rules?
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Overview of former Incoterms rules
Equivalent Incoterms® 2000 rule
Equivalent Incoterms® 2010 rule
ex factory, ex mill, ex plantation, ex warehouse, ex store, etc.
EXW EXW
Free Carrier (FRC) FOR (Free On Rail) - FOT (Free On Truck) - Franco Wagon FOB Airport (FOA) FOQ (Free on Quay) FOW (Free on Wheels)
FCA
FCA
C.And F. C&F C+F CF
CFR
CFR
CAF CIF CIF
Freight or Carriage Paid to (FCP) CPT CPT
Freight or Carriage and Insurance Paid to CIP CIP
DAF
DAP
Ex Ship (EXS) DES
DDU
Ex Quay (EXQ) DEQ DAT
Alternative trade terms
Free House – Frei Haus - DIS - Door-to-door – FIS
Warehouse Gogo – FOA – FOR/FOT – FOB Border – C&F – FOB+I – PAF – FOBs – FOB+ – CAF – CIF landed – CIF Outturn Weights – EXF - C&I (CNI) …
RAFTD 1941 Ex / FOB (6) / FAS / C&F / CIF / Ex Dock
UCC FOB (3) / FAS / C&F / CIF / Ex Ship
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Introduction
5 headings:
1. How to use the Incoterms® 2010 rules?
2. Main features of the Incoterms® 2010 rules difference with the Incoterms
2000 rules;
3. Variants of Incoterms rules health
warning;
4. Status of this introduction;
5. Terminology
1. How to use the Incoterms®
Rules?
1. Contractual reference ‘through such words as’
2. Read the ‘guidance notes’
3. Specify the agreed place of delivery and/or of destination as precisely as possible
4. Incoterms rules only deal with the delivery they do not replace the
contract of sale
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Incoterms® rules don’t deal with
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projects – consignment deliveries – sofware …
relationship with the forwarder – carrier
relationship with the insurance cy
relationship with the bank
price
conditions/place of payment
transfer of title
sanctions in case of breach
applicable law !! Regulation 44/2001 Incoterms (ECJ 25 February 2010, Case
C-381/08, Car Trim); Electrosteel (ECJ 07.03.2011, C-87-10)
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2. Main features what’s new?
1. DAF – DES – DDU DAP
2. DEQ DAT
3. New layout – classification – graphics
4. FCA FAS + FOB additional service (‘freight collect’)
5. FAS – FOB – CFR – CIF: delivery (A4) = passing of risk (A5).
6. Chain transactions
7. Domestic and international
8. Security clearances linked to A2/B2 and not to A3/B3
4. Binding force
Health warning: if you modify an Incoterms® rule, be precise.
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3. Variants
5. Terminology
The ‘black letter text’ has priority over the Guidance notes and the introduction.
Compromise between a tendancy that didn’t a separate set of definitions and one that desired a full glossary.
With the seller’s carrier
With the buyer’s carrier
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Goods are at disposal
Goods to leave from
Goods to leave for
Goods to be delivered at
Inland terminal - LCL
Why this classification?
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Container - FCL
Port terminal - LCL
Ship’s rail On board
2010
Risk transfer FCA – CPT - CIP
FOB – CFR - CIF
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Did
the s
eller
‘export
’ th
e g
oods?
Is th
e d
ocum
ent o
f deliv
ery
a tra
nsport
docum
ent
L/C
?
FCA Seller’s premises
FOB
FCA freight forwarders terminal
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Under all Incoterms® 2010 rules the respective obligations of the parties have been grouped under 10 articles (‘headings’) where each article on the
seller’s side “mirrors” the position of the buyer with respect to the same subject matter.
Using the Incoterms® rules
Structure of the Incoterms® 2010 rules: 10 articles
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A THE SELLER’S OBLIGATIONS
General obligations of the seller
Licences, authorizations, security clearances and other formalities
Contracts of carriage and insurance
Delivery
Transfer of risks
Division of costs
Notice to the buyer
Delivery document
Checking – packaging – marking
Assistance with information and related costs
B THE BUYER’S OBLIGATIONS
General obligations of the buyer
Licences, authorizations, security clearances and other formalities
Contracts of carriage and insurance
Taking delivery
Transfer of risks
Division of costs
Notice to the seller
Proof of delivery
Inspection of goods
Assistance with information and related costs
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EXW
FCA seller’s premises
FCA forwarder’s terminal
DAT Southampton
DAP London
DDP London
CPT CIP
‘dispatch notice’?
PSI - CRF
CMR freight collect
Dispatch advice House B/L
CMR arrival freight prepaid
FCR – EIR – AWB - …
D/O Release notice
Transport document signed for reception, freight prepaid
Transport document (CMR – AWB – CIM – B/L – HB/L) freight prepaid
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FAS Gdansk CFR – CIF
Southampton
?
Mate’s receipt received for shipment B/L, …
B/L?
B/L port-to-port full set freight prepaid
FOB Gdansk
Incoterms® rules an cost supplements
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+ loading (80€) + export formalities
(35-75€) + EXS (23-25€)
+ precarriage (250-300€)
+ THC/CSC (200€) + scancosts
(200-300€)
+ port passage (PLTC)
+ freight +
insurance
(0,24% - 0,17%)
+ discharging + ECS (45€)
+ T1 (30€) + warehousing
(THC) + D/O (50€) +
scancosts (200-300€)
+ T1 (55€)
+ oncarriage (250-300€)
+ import (35-
75€) + duties
EXW FCA A4b FAS FOB CFR/CPT
CIF/CIP
DAP
DAP DDP
€
net sales
price
+ transport
packaging
FCA A4a
+ loading + B/L (45€) (port customs !)
DAT
Incoterms® rules and risk transfer
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loaded in
container, on
truck
Not discharged
from truck
On quay (barge,..)
alongside ship On board –
not
discharged
Discharged
on quay – in
terminal –
ready for
collection
Not discharged
at destination
EXW FCA A4b FAS FOB
CFR CIF
CPT CIP
DAP DAT DAP
DDP
packed, not
loaded
FCA A4a
CPT - CIP
‘on board’;
(port customs)
Incoterms® rules and revenue recognition
CIP CPT
Purpose of the Incoterms® rules
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costs (freight, customs, assistance, insurance)
risks (transfer)
tasks (documents, formalities, notices)
delivery
in the relationship seller - buyer
6 4, 3, 2
5 4
2, 9, 10
4 7, 8
How to analyse an Incoterms question
1. Identify the issue Who asks the question (sales, finance, logistics, carrier, bank, …)?
What is the ‘magic word’ in the question? Cost? Risk? Import clearance? Etc.
2. Figure out which Article addresses the issue, for example: Delivery? A4/B4
Costs? A6/B6
Risks? A5/B5
3. Apply the Article to the situation
For example, issue is risk. Article is A5/B5. A5 says risk passes at delivery as set out in A4. According to A4, delivery [has/has not] happened yet, so risk [has/has not] yet passed from seller to buyer.
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Name of Speaker, Position
OBLIGATIONS OF SELLER OBLIGATIONS OF BUYER
A1
General obligations of the seller
B1
General obligations of the buyer
A2
Licenses, authorizations security clearances and other formalities
B2
Licenses, authorizations security clearances and other formalities
A3
Contracts of carriage and insurance
A3
Contracts of carriage and insurance
A4
Delivery
B4
Taking delivery
A5
Transfer of risks
B5
Transfer of risks
A6
Allocation of costs
B6
Allocation of costs
A7
Notices to the buyer
B7
Notices to the seller
A8
Delivery document
B8
Proof of delivery
A9
Checking-packaging-marking
B9
Checking-packaging-marking
A10
Assistance with information and related costs
B10
Assistance with information and related costs
In addition, the text of the rules in A1-A10 and B1-B10 is supplemented by a short Introduction, setting out important features of the new Incoterms®
2010 rules generally, and Guidance Notes at the beginning of each rule, giving guidance on use and application of the rule.
The Seller’s obligations are set out in articles A1-A10, and the Buyer’s obligations in mirror fashion in B1-B10,
as follows:
Structure of the Incoterms® 2010 Rules
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Name of Speaker, Position
EXW (… named place)
You sell goods EXW (Zagreb) Incoterms 2010.
The goods are shipped in a container.
Who has to load the container?
Who is the shipper on the B/L ?
Who is the exporter on the EXA?
Name of Speaker, Position
CPT (… named place of destination)
Goods are sold CPT Yokohama. Danzas comes to
collect the goods at the seller’s factory in
Osijek on 05/10. The goods go to the airport
(Transmarcom Zagreb) where they arrive at
06/10, are shipped to Frankfurt on 08/10 and in
Frankfurt are put on a plane to Yokohama on
12/10 where they arrive on 14/10. The buyer
can collect the goods at the terminal on 15/10.
What is the date of delivery?
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Name of Speaker, Position
CIP (… named place of destination)
You have sold chemicals to Turkey, CIP Istanbul.
The goods arrive but in order to pass through
customs in time, the trucker only unloads half
the shipment. The buyer claims the other half
with me. What do you do?
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Name of Speaker, Position
DAP (Moscow)
You sell goods “DAP Moscow”. Customs
block the goods at the border upon entry
in the RF and
1. ‘demurrage’ is charged who has to pay?
2. the goods arrive too late can the buyer
claim penalties for late delivery?
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Name of Speaker, Position 57
CFR/CIF
Antwerp
• BAF – CAF
• Congestion surcharge
• Winter surcharge
• Mist surcharge
• Demurrage
• Detention
• …
A buyer doesn’t care about the selling price …
Indeed: regardless of the choice of the Incoterms® rule, in the end the buyer/importer always pays:
- a seller assuming costs/risks because of the chosen solution will include these costs (plus a markup for administration and risk) in his final selling price.
- a buyer assuming costs/risks will include these costs in the ‘budget’ required to obtain the goods.
Thus it is in both parties’ interest to allocate costs and risks with the party that can manage them most efficiently (at the lowest cost), reducing the ‘total cost of purchase’.
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all he cares about is the ‘landed cost’ his budget
Considerations:
Capacity
Access to (cheap) carriage – warehousing – transhipment - …
Experience and expertise in international trade
Cost efficiency
Possibility to consolidate
Advantages of scale (experience – efficiency)
Logistical reality - facilities
Type of goods (container / bulk / breakbulk / …)
Multimodal vs. maritime only
FCL (door-to-door) – LCL (port-to-port)
Value
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Considerations:
Urgency
Securing the supply chain
Insurance
Global insurance policy, national insurance, …
Administrative facilities
Preferential status (Tax exemptions, green line status, …)
Registrations & authorizations
Contractual reality
Tendering (price comparison, …) vs. negotiations
Conditions of payment
HQ instructions
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In an ‘ideal’ world
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1. fill the gap between buyer and seller payment
(buyer’s obligation) should coincide with delivery (seller’s obligation),
2. actual delivery is replaced with the ‘proof of delivery’, initiating the (guarantee of) payment,
3. this proof being established by a third party assuming a liability for issuing this proof
4. … and if this proof were to be used as a collateral, this would even be better.
Documentary Collections:
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Remitting
Bank
Presenting/
Collecting Bank
3
4
Exporter/
Drawer
Importer/
Drawee Documents
6
5
GOODS
Documents + instructions 1
Docum
ents
+ instr
uctions
Notification receipt documents or presentation B/E for acceptance 2
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Letter of credit: issuance
1
Importer applies for a
letter of credit.
3 Request of notification &
possibly confirmation of the
letter of credit
Notification
/Confirmation of the
letter of credit Advising /
confirming bank
Issuing bank 2
4 Exporter/
Beneficiary
Importer/ applicant
Contract
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Letter of credit
Issuing bank
2
4
Exporter/
Beneficiary
Importer/
Applicant
Documents
5
Do
cum
ents
3
Confirming bank
1 GOODS
Documents 7
6
http://incoterms.abh-ace.be
file:///C:/Users/Koen/Documents/incoterms/App/2013/Incoterms_20131004/en/index.html
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Incoterms app.