Inglese Rainey modulo 3 – shipping and transport a) Ports The first question is: what is a port?

We have some definition of port: 1) It’s a place where ships call; 2) It’s a market for port related services; 3) It’s a fundamental source of Country’s/region’s GDP (=PIL). The first definition is a physical, geographical, natural definition; the second identifies the fact that it is an access of different services around the port itself; the third means that a port is a gateway: goods leaving a region or a country and goods coming in. The efficiency of port is important for a region. Famous world port is for example Rotterdam, Marseille, Singapore, Hong Kong. Ports are fundamental economic centers. There are different type of ships. Ships differ according to what they carry. We have passengers ships and/or goods ships. There are different type of goods. One distinction in types of goods is between bulk ad containerized goods. Goods which you cannot put into a container and goods that you can. There are also two types of bulk: dry bulk (=rinfuse secche: metals, grain, coal) and liquid bulk (petrol, oil, crude oil). Then there are three type of ships: passenger ships, cargo ships and container ships. Ports differs according to what they handle, not all ports are the same. b) Shipping the goods Some contracts related to port. Contract of sale (sale=compravendita). A contract of sale has a definition: it is an agreement between two parties. One part the seller, and another the buyer. One part, the seller, transfers or agrees (=s’impegna) to transfer the property in the goods to another part, the buyer, against the payment of a money consideration called price. One part pay and another receive money. The buyer is the part who buys, the seller is the part who sells. If the transfer of property does not foresee the payment of money consideration is donation; in case of exchange of goods (=permuta), this can be a contract. The transfer of property in goods. The buyer and the seller have responsibilities and rights. The contract should protect these rights. Fundamental rights are property rights (=diritti di proprietà), you cannot sell something which is not yours. One way I can sell your property: if you appoint me as your agent. This contract is a private law; a contract including typical information: -the object of sale, what is being sold (quantity, quality, characteristic of the goods) -the price -where and when the payment will be made -the definition of where and when the goods will be delivered (the most important point). Seller and buyer have conflicting interests. These interests are increased if you increases the physical distances between the parts. For example, if I are a buyer and my seller lives here, I have some advantages: a reduction in transport costs, we are regulated by the same law and we don’t have problem of

There are 4 possible delivery points. there are additional problems: -physical distances between the seller and the buyer -language -the price (=inteso come moneta che si usa per pagare) -law (which law will govern the transaction? Seller’s law or buyer’s law?) The interest of the buyer is pay as little as possible. give as less as possible). Exporter and importer have some choices: -exporter’s premises: costly and big responsibility for the importer. The relationship between people needs laws. in his currency where by eliminating exchange risk and exchange costs. the interest of the seller is obviously the opposite (want to paid as much as possible. Because the majority of goods in the world is transported by sea. They are simply terms. depending on the relationship between the buyer and seller. another risks is the damage of the goods. the seller doesn’t get paid. codes. Typical risks of the buyer is not to get the goods on time. or were the goods damaged in transit. transfer. etc. The time and place and methods of the payment depend on the relationship between the exporter and importer. The buyer can pay: -before the delivery -on delivery -after the delivery (better condition for the buyer). as soon as possible. dramatic scenario for the buyer is not delivery of the goods in time. the delivery of the goods coincides with the transfer of property. problem of liquidity. Conventional terms which are accepted all over the world. we will focus on sea transport. Another fundamental condition is that contract specifies where and when good will be delivered. the exporter delivers the goods directly at his customer’s premises. the responsibility and obligations of both parties. deliver. as late as possible. -terminal entrance. some of these advantages disappear. The latest two point are two compromises. These risks must be limited through the contract of sale. The problem here is: did the exporter/the seller send the goods already in damaged conditions. the seller get paid late. to reduce his costs. -importer’s premises: costly and big responsibility for the exporter. Payment is not related to the transfer of property. which specifies in as much detailed as possible. who is responsible? The seller’s risks fundamentally is one. In English law. We introduced a set of internationally accepted Conventions which try and make the export transaction easier and clearer for all the parties involved. The price includes only the goods. when and where risks and obligations are transferred from on party to another. problem of bank. -terminal exit. packing and warehousing (=magazzinaggio). credit risk. and receive as much as possible. to helps the parties understand what is included into the contract. late delivery. often it refers “door to door”. big advantage for the seller who has no additional costs/risks. And if they were damaged in transit. .communication. The buyer prefers to pay in his country through his bank. exposure to payment. All the other costs are at buyer’s expense. If the transaction includes different countries. The seller probably would like to pay in his country. non payment. and want to send. If the distances between the buyer and the seller increases.

not replace the distinct categories of E-C-D. These category are still in force today: 1) Incoterm called E-terms. Incoterms D: D stands for delivery in the importer’s premises. Incoterm 2000 concentrated exclusively in a question: where does delivery take place? This question remains in 2010. the contract to sale specify where risks and charges are transferred from the seller to the buyer. that means free (=libero). The letter stands for the first word of Incoterms. at terminal exit). Incoterms E: EX WORKS: if I deliver ex works I know exactly what is included in the price. They have been some changes in Incoterms 2010. With the delivery of the goods.One of this convention is a convention which regulate delivery. The latest Incoterms in force are Incoterms 2010. delivery at the importer’s/buyer’s premises). when the seller delivers the goods. Delivery coincides not only with the physical delivery of the goods. The transfer of title and ownerships coincide with the transfer or risks and charges. maritime transport. Incoterms 2010 don’t represent a radical change in Incoterms 2000 but there are some significant changes. These 4 places were given categories which we can identify with a letter. only the price of the goods. by road. that came into force on 1st January 2010 replacing Incoterms 2000. International Trade Convention Terms. Incoterms are synthetic terms used to clarify what is included in the seller’s price. the oldest. What does the contract of sale specify? Where and when the goods are delivered. There are 4 modes of transport: by sea (sea transport. airport. Incoterms 2000 made the distinction we see above: the identify 4 delivery places. Perhaps the price of packing. Incoterms are international set of terms which summarize which costs are included in the seller’s price. which is understandable for everybody. by rail. perhaps the price of storage. The transport of goods from one country to another generally involves multimodal transport. This convention is called INCOTERMS. by air. Incoterms are international delivery terms updates generally every 10 years. Incoterms C: C stands for cost. but zero transport (like Ikea or Unieuro for example). Incoterms clarify in a synthetic form. Incoterms 2000 identify a set of additional costs in addition to the costs of the goods themselves. the place of delivery or consignment. where and when responsibilities and risks of ownership pass from the seller to the buyer. One is the partial maintenance of this framework. the first form for long distances). but there is another question: how does delivery take place? What form of transport is used. Incoterm 2010 introduce a second question: how these transport take place? We have an extra category which completes. If we look at a table of Incoterms 2000 we probably see the benefits and costs to decrease to one party and increase to the other. but also with the legal transfer of property. 4) Incoterm called D terms (door to door. railway of destination). heavy goods over length. 2) Incoterm called F terms (delivery at port of loading. . 3) Incoterm called C terms (delivery at the port. Sea transport is without doubt cost effective transport for bulks. These terms tell me exactly where and when the goods are delivered. two in the exporter’s country and two the importer’s country. but the addition of another aspect. Incoterms F: F stands for Franco.

the costs are arranged (=disposti) by the exporter until the port of destination. particularly belonging to the category D. where the costs of sea transport are paid by the seller CIF: cost. All costs are paid by the buyer exclusive the package. and two C terms (CFR and CIF).The big innovation was 1) the categorization of sea transport specific Incoterms. Summary of Incoterms: -Incoterm EX WORKS: when delivery takes place in exporter’s port. where the costs of the transports and the insurance are paid by the seller (only incoterm where the risk and cost are in different places). MANCA INCOTERM D . insurance and freight. included the custom’s exportation and the documentation. there are 3 options: FAS: free alongside ship. The cost is transferred in the port of origin CPT: carriage paid to. which the seller must pay all costs to transport the cargo until the quayside (=banchina) FOB+named port of shipment: free on board (=franco a bordo). delivery at the port of origin (loading). -Incoterm C: when the delivery takes place in port of destination there are 4 options: CFR: cost and freight. Costs and risks are transferred from seller to buyer when the seller load the cargo into the ship. which the seller must pay all costs of transport until the cargo is into the ship. CIP: carriage and insurance paid to. cost of insurance is paid by the seller. delivery at the port of destination. Incoterms 2010 extracted 4 terms to be used exclusively for sea transport: two F terms (FAS and FOB). 2) the elimination of some previous Incoterm. When the delivery takes place in importer’s premises all cost are paid by the seller. -Incoterm F: when delivery takes place in port of origin. The importer arranged all other cost to the discharge and internal transport.