INCOTERMS (current version 2000) are a set of internationally
recognised trade terms which determine the delivery responsibilities
of the seller and the acceptance obligations of the buyer.
The most commonly used are:- Ex Works, FOB (Free on Board), FCA
(Free Carrier Agent), CFR (Carriage and Freight), CPT (Carriage Paid
To (named point), CIF (Cost, Insurance and Freight), CIP (Carriage
and Insurance Paid to (named point)).
Correct use of incoterms is essential to avoid misunderstandings and
they will afford good protection in the event of disputes.
No! Most Freight Forwarders, unless they specifically advise you
otherwise, trade under limited liability conditions. This is the
case with most other elements in the Supply Chain, e.g. hauliers,
warehouses, ports, terminals, airlines, shipping lines etc. These
limits will seldom come anywhere near the value of your goods,
unless exceptional agreements are made.
Therefore, it is the responsibility of the owner of the goods to
ensure Cargo Insurance Cover is in place to protect your specific
consignments as they journey from A to B.
This will cover such risks as loss, damage, pilferage, strikes and
riots, etc., until your cargo reaches a defined destination. Certain
cargoes may attract exclusion clauses.
Therefore, you must not assume a Forwarder gives you full protection
and most will need to be instructed in writing to effect cover on
your behalf. You will be charged a premium for doing so.
It is important that you identify who is responsible for Insuring
and you should refer to the Incoterm being used for your transaction.
Even if your buyer is responsible for effecting cover, you may wish
to have in place a low cost Seller Risk Policy, for additional
protection should you find your buyer is in default and the goods
still remain your property.
Since January 2005, Forwarders can no longer offer direct policy
cover unless they are registered and controlled by the Governments
Financial Services Agency. Oast Agencies is so registered - No:
315342. Guidance is available on this subject - please contact us.
Packing is expensive and generally necessary. You have to consider
both the value and the fragility of your product and then look at
the stresses of the journey your goods will undertake.
For goods travelling as full loads in a Steel shipping container or
on a trailer, packing can be much lighter – providing they will not
be transhipped en-route (i.e. being discharged from one unit and
reloaded to another).
For goods travelling by Air, cardboard and plywood protection will
probably be adequate and will save both on materials and shipping
weight. Making outer packages a closer fit will also save on
shipping costs, which are almost always based on weight or
measurement, and will also mean less risk of movement of contents in
transit, which will reduce damage or loss.
However, if your goods are going to be shipped with other peoples’
cargoes, packing must be adequate to withstand the rigours of
handling and contact with other goods.
You also need to consider heat, cold, humidity and what will happen
on discharge at destination. Oast Agencies is happy to give advice
or refer you to packing specialists.
Two more tips;
1) Make sure your Insurers are satisfied with your packing standards
as this can affect claims.
2) Remember to include packing costs in your product pricing.
