C1—Export-Import Transaction Fundamentals; Using Incoterms (2020)

Subscriber price: $246.00, Non-subscriber price: $320.00
Estimated total study time: 19 hours 16 minutes

This course addresses the basic steps, and the key players, involved in concluding and fulfilling an export-import transaction. Addressed in detail are the role of trade terms (Incoterms) in defining the responsibilities of the seller (exporter) and buyer (importer) for respective shipping arrangements, the division of costs and point in the shipment process when risk of cargo loss and damage passed from seller to buyer.

This course also addresses the role of the freight forwarder in properly arranging shipments based on the applicable trade term.

Access to a copy of the ICC publication Incoterms 2020 is strongly encouraged but not necessary for course completion. This publication may be purchased through numerous commercial book stores and directly from (https://www.iccbooks.com/).

Note that GISTnet has other courses about Incoterms that may be more suitable to your needs. For example, if you simply want a short update concerning latest changes in Incoterms, there is course C1.1—Overview of Incoterms with 2020 Changes. Freight forwarders should consider either C1.2—Introduction to Incoterms for Forwarders & Customs Brokers (2020) for junior personnel, or C1.3—Working with Incoterms, Including Practical Concerns & Forwarder Issues at Time of Shipment (2020) for forwarder managers and supervisors.

1. Introduction - Benefits and Basic Elements of Exporting

We introduce our course topic by pointing out the benefits of exporting and importing, and what the requirements which make such transactions more complex than domestic sale/purchase/delivery transactions. We also begin to address the various parties, in addition to the seller and buyer, who facilitate international trade.

(Estimated study time: 59 minutes)

Introduction
Buyers, Sellers and Physical Exchange of Goods
- Cash and Carry
- The Practical World of Commerce—Transportation Carriers, Intermediaries, Government
Why Export/Import?
- The Question
- Trade Economics
Anatomy of Commercial Export-Import Transactions—Arriving at a Deal
- Essential Facts for an Export-Import Transaction
- The Transaction Cycle and Intermediaries
- Functional Components vs. Integrated Process
- Seller-Buyer Negotiation, Allocating Transaction Risk

2. Anatomy of Commercial Export-Import Transactions, cont.

(Estimated study time: 50 minutes)

Introduction
Price and Trade Terms (Delivery Terms)
Seller-Buyer Negotiation and Transaction Commitment (Purchase/Sale Contract)
The Forwarder's Role in Export/Import Competition
- Creating Value
- Helping Shippers Compete for Business
- Shipping Outcomes, Repeat Business

3. Transaction Time Schedule vs. Risks

An export-import transaction typically takes longer to negotiate and fulfill than a domestic sale. There is more information to gather, issues to decide, tasks to accomplish, impediments which can arise. This lesson addresses the relationship between time needed to accomplish the transaction and associated risks such as shipping costs, currency fluctuation and payment.

(Estimated study time: 1 hour 4 minutes)

Introduction
Transaction Time Schedule vs. Risk
- Time vs. Risk Elements
  - General—The Marketing Cycle
  - Payment Schedule & Associated Types of Risk
  - Production/Availability Schedule
  - License/Permit Schedule
  - Shipment Schedule & Shipping Costs
  - Post-Delivery Risks (Installation/Use/Consumption)
- Payment/Financial Risk
  - General; Competing Objectives
  - Financial Risk Reduction
  - Financial Cost Reduction
- Physical Risks to Cargo During Shipping

4. Additional Export/Import Transaction Negotiation Concerns

(Estimated study time: 1 hour 18 minutes)

Identity of Actual Supplier
Origin Country Export Requirements
Destination Country Import Requirements
Responsibility for Arranging and Paying for Needed Transportation and Services; Preview of Incoterms "Trade Terms"
Risk Reduction through Cargo Insurance

5. Trade Facilitation through Standards; Intro to Incoterms

(Estimated study time: 51 minutes)

A Contract = "A Meeting of the Minds"
The Need for Standards
- The Challenge of Communication
- Universal Issues/Needs
- Language-Independent Symbols/Codes
- Adopted Language/Terminology
- "Standards," Trade and Global Development
"Trade Terms"
- General
- Delivery and Passage of Risk vs. Passage of Title
- Summary—Key Trade Terms Issues
INCOTERMS
- Why Incoterms?
- What Incoterms Do NOT Address
- History

6. Summary of Incoterms (2020)

(Estimated study time: 1 hour 9 minutes)

Summary of Incoterms
- Direct Reference to Incoterms Publication
- "E" Term (EXW)
- "F" Terms
- "C" (Cost Paid to) Terms
- "D" (Delivered) Terms
- Summary Chart of Seller and Buyer Responsibilities Under Each Trade Term

7. Seller and Buyer Responsibilities Under All Incoterms; Passage of Risk

(Estimated study time: 56 minutes)

Seller and Buyer Obligations Under All Incoterms
- SELLER's Obligations Under All Incoterms
- BUYER's Obligations under All Terms
Delivery & Passage of Risk
- General Passage of Risk

8. Passage of Risk if Buyer Fails to Take Delivery; Arranging Transport; Required Notices

(Estimated study time: 1 hour 8 minutes)

Passage of Risk If Buyer Fails to Take or Accept Delivery
Responsibility for Arranging Primary Transportation and Contract of Carriage
Required Notices Between the Parties
- Summary of Required Notifications
- Notices Vary For Each Trade Term
- Notices Must Be Timely
- Consequences of Missed Notices

9. Trade Term Citation Particulars Required

(Estimated study time: 1 hour 1 minute)

Required Trade Term Citation Particulars
- General—Specify Current Terms
- Four Basic Items of Information Required
- Place Specification
- Incoterms Date/Time Specification
- Further Specification of Incoterms Particulars

10. EXW—Additional Requirements and Concerns

(Estimated study time: 1 hour 9 minutes)

EXW—Additional Requirements and Concerns
- General
- Passage of Risk under EXW
- Loading Conveyance under EXW
  - Buyer Responsible for Loading
  - "EXW Loaded"
  - Transportation Mode Considerations
  - Intermodal Containers
  - Practical Considerations—MHE Assistance
- Export Formalities
- Incoterms 2020 Discourages Use of EXW Terms for International Shipments.

11. "F" Terms—In General; FCA Delivery Concerns

(Estimated study time: 52 minutes)

"F" Terms—General
Passage of Risk
FCA Delivery Concerns
- Usage
- "FCA Origin" (Named FCA Point is Seller's Facility; Seller Loads Buyer's Carrier)
- FCA (Named Place other than Seller's Premises; Buyer Unloads Seller's Carrier)
- Arranging Transportation and Contract of Carriage under FCA

12. FAS and FOB Issues & Concerns

(Estimated study time: 1 hour 9 minutes)

FAS Delivery Concerns
- Usage
- Operational Concerns
FOB Delivery Concerns
- Usage
- Responsibility to Load, Contract and Pay for Vessel
- Operational Concerns
  - Cargo Receipt
  - Coordinating the Loading Process
- Allocation of Loading, Stowage and Terminal Charges

13. "C" Terms Issues & Concerns

(Estimated study time: 44 minutes)

"C" Terms—Additional Requirements and Concerns
- "C" Terms Usage
- Passage of Risk
- Shipping Insurance under CIF and CIP

14. "D" Terms Issues and Concerns

(Estimated study time: 53 minutes)

"D" Terms—Additional Requirements and Concerns
- Distinguishing Among "D" Terms
- Pros and Cons of "D" Terms
  - Buyer's Benefit
  - Seller's Benefit
  - Seller's Concerns
- Passage of Risk
- Import Formalities

15. Division of Incoterms Responsibilities and Costs (Matrices)

(Estimated study time: 1 hour 15 minutes)

Division of Incoterms Responsibilities and Costs (Matrices)
- Responsibilities and Costs Matrix, Primary Transportation via Vessel (Ocean or Inland Waterway)
- Responsibilities and Costs Matrix, Primary Transportation Via Aircraft (Air Freight)
- Responsibilities and Costs Matrix, Primary Transportation via Truck, Rail (Ground Transport)

16. Use of Trade Terms in Negotiating a Sales Contract

(Estimated study time: 53 minutes)

Delivery Arrangements Intrinsic to an International Sales Contract
- General
- When to Negotiate Trade Terms
- Use of Incoterms in a Sales Contract; Limitations
Introducing Trade Terms into the Sales Negotiation Process
- With Initial Quotation/Offer
- Before Concluding a Sale-Purchase Contract
- Before Fulfillment of Sales Contract
  - General
  - Trade Terms under Letters of Credit
- Immediately Prior to Shipment
- Upon Shipment

17. Which Incoterm to Offer; Interpretation and Special Situations

(Estimated study time: 52 minutes)

Which INCOTERM to Offer?
- Seller Expediency
- Buyer Preferences & Delivered Terms
Recognizing and Dealing with Obsolete Terms
- Interpreting Obsolete Terms
- Risks of Using Obsolete Terms
Special Situations; Turn-Key Projects & Installation

18. Export Quotation Problems Involving Use of Trade Terms

(Estimated study time: 1 hour 11 minutes)

Export Quotation Problems Involving Use of Trade Terms
- Trade Term Ignorance—General
  - "Domestic" Mentality
  - Inadequate Employee Training
- Confusion Between Trade Terms and Payment Terms
- Confusion Between Standards, Versions
- Shipping Requirements/Cost Naiveté; "Average" Costs
- Changed ("Snuck In") Terms
- Vague, Inconsistent, Incomplete Shipping Quotation Requests and Instructions to Forwarder
- Drop Shipments
- Risk to Seller Due Failure by Buyer to Insure Shipment

19. Responsibility for Cargo Insurance; Typical Incoterms Interpretation Issues

(Estimated study time: 1 hour 3 minutes)

Cargo Insurance Concerns When Negotiating a Sales Contract
- Proper Insurance of Cargo
- Additional Incoterms-Related Cargo Insurance Issues
Typical INCOTERMS Interpretation Issues and Problems
- Incomplete Terms; Failure to Name a Specific Delivery Location
- What Does "FOB" Mean?
- Seller Cooperation with Buyer's Freight Forwarder
  - General
  - Export Declaration and Export License Requirements
    - Trade Terms Determine Responsibility
    - Export Declaration by Buyer's Forwarder
  - EXW and "F" Terms under an L/C
    - The Problem
    - Buyer's Forwarder and Routed Shipments Under a Letter of Credit
Appplying what you have learned