Procedures for material deliveries (Incoterms ) depend on the type of transport used, and may vary from one market to another, and according to the agreements between the managers of the Iveco Marketing department and those of the licensee.
Incoterms also depend on the type of shipment used and may vary depending whether it is a CKD lot, material for a claim or Extraseries – Kit or without origin.
These four types OF Incoterms are currently used in the Iveco CKD world:
(e.g. in Russia Ex Works is used while CFR or CIF is used in Morocco, and so on.)
Definition of Incoterms:
Incoterms (or "delivery terms") are a coding system created by the International Chamber of Commerce of Paris, universally understood and recognised, whose purpose is to establish the precise meaning of thirteen commercial delivery terms used in international trade, which break down into four groups, E, F, C and D (see detailed table 5.2.7.1 )
The first rules were published in 1936 as the "Incoterms 1936".
Subsequent changes were introduced in 1953, 1967, 1976, 1980 and 1990.
The 2000 edition, which came into force on January 1, 2000, became necessary to maintain these rules in line with the current practices in force in International Trade.
Incoterms clearly indicate the obligations and risks for the seller and the buyer, and fix the time and place in which said risks are transferred, the accessory operations and related obligations very precisely, providing uniform rules to interpret the commercial delivery terms for goods to be included in trading agreements.
Incoterms
are applied to the Sale contract and
NOT to the transport contract, as erroneously thought at times.
Incoterms DO NOT regulate all the obligations that the parties may want to include in a sale contract.
The fundamental purpose of the Incoterms is to regulate the delivery of goods in contracts that imply the passage of a national border.
It is important that the means of payment envisaged in the sale contract comply with the envisaged delivery terms and in any case compatible with them. Any divergence would generate consequences that are extremely prejudicial to the selling party.
EXW - EX WORKS (….named place)
Under the term "EX WORKS” the seller meets his delivery obligation by making the goods available to the buyer in his own premises (e.g. a plant, factory, store or areas belonging to Logistic Operartor etc.).
Unless other agreements are reached and included in an explicit pact between the parties, the seller is not responsible for clearing the goods through customs for export, nor for loading them on the means of transport provided by the buyer. The buyer must therefore meet all the expenses and risks to take the goods from the seller’s premises to the chosen destination.
This Incoterm represents the lowest level of obligation for the seller.
FOB(Free On Board) (…named port of embarkation)
Under the term "FREE ON BOARD" the seller meets his delivery obligation when the goods have passed the ship’s rail in the named port of shipment.
From that moment, all expenses and the risks or loss or damage to the goods are the buyer’s responsibility. The seller must deal with customs clearance of the goods for export.
This clause does not envisage obligations regarding the stipulation of an insurance policy.
The term FOB is used exclusively for transport by sea or by navigable inland waterway.
It should never be used for air transport although this occasionally happens in error.
When the ship’s rail is not used as the cut-off line, the term FCA (Free on Carrier) would be more appropriate.
CFR Cost and Freight) (…named port of destination)
Under the term "COST AND FREIGHT" the seller meets his delivery obligation, as in the previous clause FOB, when the goods have passed the ship’s rail in the named port of shipment.
The seller must meet all the expenses necessary to transport the goods to the agreed port of destination, but the risk of loss or damage to the goods, and any additional expense due to facts that occur after the goods have been delivered on board the ship, are transferred from the seller to the buyer at the moment the goods pass the ship’s rail in the port of shipment.
Under the term CFR, customs clearance of the goods for export is the seller’s responsibility.
This term can only be used for transport by sea or by navigable inland waterway.
When the ship’s rail is not used as the cut-off line (for example with containerised transport), the term CPT (Carriage paid to) would be more appropriate.
CIF (Cost, Insurance, Freight) (…named port of destination )
Under the term "COST, INSURANCE, FREIGHT" the seller meets his delivery obligation, as in the clause CFR, when the goods have passed the ship’s rail in the named port of shipment.
However, he is obliged not only to meet the costs to transport the goods to the named port of destination, and those for customs clearance of the goods for export, but is also obliged to provide minimal insurance cover against the buyer’s risk of loss or damage to the goods during transport. The seller is therefore obliged to stipulate an insurance policy and pay the related premium.
With regard to the risks of loss or damage to the goods and any additional expenses due to facts that occur after the goods have passed the ship’s rail, these pass from the seller to the buyer.
To conclude, under the term CIF the seller has the same obligations envisaged under the term CFR, with the added obligation of stipulating and paying the costs of maritime insurance (with minimal cover) against the risks of loss or damage to the goods during transport.
The clause CIF can be used exclusively for transport by sea or by navigable inland waterway.
When the ship’s rail is not used as the cut-off line, the term CIP (Carriage and insurance paid to… named destination) would be more appropriate.
