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Every time you trade goods, you may use Incoterms to set an agreement as a seller or buyer. This will help both parties negotiate the terms in which an agrement or contract is done. So, if you have been trading or want to trade internationally you may have heard about Incoterms. These are globally-accepted commercial terms to define the roles of buyers and sellers in the agreement of transportation, risk and other responsabilities fixed under sales contracts for domestic and international trade.
The latest and current revision of the terms, came into effect on 2011, these are the Inconterms 2010 and consists of 11 Incoterms categorized by modes of transport.
Incoterms for any mode of transport
EXW - Ex Works
This is the most convenient incoterm for the seller – who simply makes the goods available for collection at a named place, usually at the seller’s premises.The costs for the entire transport, (including loading and unloading) and customs entries are for the buyer’s account. The risk and liability is also on the buyer from the point of loading.
FCA - Free Carrier
The seller must pay for the goods to be moved by their own agents and handed to the custody of the named carrier – nominated by the buyer. The term is most appropriate for multimodal transport, where it can be used in place of FOB. FCA is also appropriate for shipments on board container vessels where there is no ships rail.
CPT - Carriage Paid To
The seller is responsible for and pays for transport to a named place in the destination country. The seller’s liability however diminishes as soon as the goods are loaded to the first carrier in the origin country. The term is most appropriate for multimodal transport and should be used in place of CFR. CPT is also appropriate for shipments on board container shipments where there is no ships rail.
CIP - Carriage & Insurance Paid
As CPT but the seller also buys insurance up to the point of delivery. In the event of damage or loss, the buyer is able to claim on the insurance purchased by the seller. The term is most appropriate for multimodal transport and should be used in place of CIF. CIP is also appropriate for shipments on board container shipments where there is no ship rail.
DAT - Delivered At Terminal
The seller arranges and pays for the goods to be released to the buyer at a named destination terminal, normally in the destination country or at a frontier. Risk and liability is transferred to the buyer at the delivery point. The buyer pays for import clearances and also for the goods to be unloaded or transferred.
DAP - Delivered At Place
The seller pays and its liable for transport up to a named place in the destination country, be that a quay, terminal, frontier, or warehouse. The buyer is responsible for the unloading of the transport and also the customs clearances. Risk and liability is transferred at the same time as delivery of the goods.
DDP - Delivered Duty Paid
The seller shoulders the entire cost and risk of the journey from their premises right to the buyer’s door, including all duties and customs clearances but excluding the unloading cost at the receiver’s premises. There is no obligation to insure the goods but the seller will normally do so. This term poses the highest risk to the seller because they are liable for all costs in case of any problems during shipment.
Incoterms for Sea and Inland Waterway Transport only:
FAS - Free Alongside Ship
The seller must pay for the goods to be moved alongside the ship. This term is usually used for shipments where a vessel is berthed in such a way that a lighter or feeder is required to deliver the goods. This is normally associated with bulk goods or heavy lift cargo.
FOB - Free On Board
The seller is responsible and pays for the transport of the goods from their premises to the port, including the loading of the buyer’s nominated vessel. Responsibility and risk for the goods passes to the buyer at the ship’s rail.
CFR - Cost and Freight
The seller is responsible and pays for transport to the port of destination but their liability diminishes as soon as the goods pass the ship’s rail in the origin part. The liability is transferred to the buyer by providing evidence of carriage – a clean ocean bill of loading. Responsibility for the onward carriage and costs after arrival in destination port passes to the buyer at the ship’s rail.
CIF - Cost, Insurance and Freight
As CFR, but where the seller pays for insurance of the goods up to the arrival in destination port. As CFR the seller is responsible, but not liable for the deep sea transit. In the event of damage or loss, however the buyer is able to claim on the insurance purchased by the seller.
Cold Treatment is a cold treatment to which certain fruits, mainly citrus and stone fruit, are subjected in order to control and exterminate the fruit fly pest, during the journey of the goods and until they reach their destination in the container.
Processing begins once the goods have been loaded into reefer containers in specialised warehouses, never in the exporter’s own warehouse. From Smart Logistics Group From Smart Logistics Group we advise and inform the exporter from the very beginning, since he is the only responsible for the treatment to be complied with, as the importer must only demand and warn the exporter of the regulations in his country to introduce the fruit. (Thinking of exporting or importing your crop? Contact us)
The duration of the treatment and the required temperature are defined according to the protocols established by the Phytosanitary Import Authorities of each country (USA, CHINA, KOREA, TAIWAN, etc.). Therefore, it is up to the importer to find out about the restrictions and legislation that exists in his country before importing the fruit.
Therefore, the main objectives of the Cold Treatment are:
- Protect the agricultural industry from pests and fruit flies and prevent their spread.
- Provide continuous reporting de la temperatura de la carga sin romper la cadena de frío.
- It allows export of the cargo without fumigation with pesticides that are banned in many countries.
- Allowing perishable products to get to market much faster and in optimal conditions.
How cold treatment works?
Following the protocol of each country of destination, for the treatment to be effective, the fruit must maintain the required temperature throughout the treatment, so it is extremely important to carefully control it before and during shipment. The procedure to follow is as follows:
1. Once the booking has been confirmed, the exporter must deliver the fruit to one of our trusted warehouses to be pre-cooled, following the destination protocol, a minimum of 48 hours before loading.
2. At its own expense, the shipping company must submit the empty reefer container to a so-called pre-trip inspection, where it is inspected:
i. It must be ensured that the container is working properly, that the temperature of the container is checked and that the measuring/data collection devices are calibrated,
ii. Check its cleanliness,
iii. Prepare the setting at least 24 hours before loading, adjusting the temperature, humidity and ventilation requested at the time of booking.
3. On the day of loading, a Plant Health inspector from the Ministry of Agriculture travels to the warehouse to verify the correct installation of 3 USDA sensors on the fruit, which will measure the temperature of the fruit at 3 specific points of the container, points specified according to the destination protocol.
4. Before fitting the sensors, they must be calibrated to ensure correct operation. To do this, they are immersed in a bucket of ice so that they reach 0°C, allowed to warm up, and this process is repeated several times to ensure that everything is correct, taking readings at each moment. These readings must always be 0.0°C, with a time lag of 0.1°C from sensor to sensor and within a temperature range of +/-0.3°C.
5. Once the sensors have been calibrated, the fruit is loaded into the reefer container, and the sensors will be pricked in the fruit until they reach the pulp, since the important thing is the temperature of the fruit, not of the container.
6. Once the 3 sensors have been installed, the shipping company’s technicians, the warehouse and the inspector certify that the appropriate requirements have been met and attach them to the phytosanitary certificate.
During the ship’s transit time, both the shipping company and Smart Logistics Group have a specialised person available 24 hours a day in case there is any change in the temperature of the fruit during the trip. If the treatment were to break down because the established margins were not respected, the process would have to be started again and go back to day 1. Therefore, the container would have to adjust its temperature, always making sure that it did not reach freezing point.
For control during the voyage, the shipping company has a computer on board that records, stores and remotely monitors the setting established in the container, so that once at the destination, it is unloaded having completed the Cold Treatment treatment correctly, regardless of how many times the process has had to be started during the voyage.
Once the container has been unloaded at destination, if the process has not been completed, the goods cannot be unloaded from the container.
For more information download this PDF we have prepared!