IMPORT EXPORT TRADE

WITH EU
Introduction Logistics & Incoterms 2020 in the extra and intra EU Trade
Planning
• Why study Incoterms & logistics ?
• Basic sequence in international logistic operations
• Incoterms 2020
• INCOTERM’s 2010 versus 2020
• Can Incoterm 2020 rules be altered?
• How to use them in contracts?
• How to choose an Incoterm 2020 ?
• Incoterm choice and pricing

• Exercises
Why study Incoterms and logistics?
• Buyer and Seller are not in the same place, the sale requires
substantial logistical operations to take place
• Incoterms = daily language in Import/Export business
• Incoterms are present in many documents in particular in the sales
contract. They are a key part of the sales contract.
• Understanding Incoterms and logistics is vital in merchandise export.
You can understand the risk and cost implications of transport for
your company. Update your pricing.
• Incoterms are vital for customs to calculate the customs value of the
goods.
Basic logistical operations
• Seller: Country 1 ( in EU)
• Buyer: Country 2 (in third country outside EU)
• Merchandise : Champaign bottles
• Valuable (risk of theft)
• Heavy
• Special packaging
• Special transport
• Transport cost significant part of price
Basic logistical sequence Export Operation
from EU with third country.
• Packaging
• Pre-transport
• Export Customs (leaving EU)
• Material handling in preparation for main transport
• Main transport ( Air, land, Sea)
• Insurance for transport
• Material handling at destination of main transport
• Post-transport
• Unloading of post-transport
• Import customs (arriving in third country)
Incoterms 2020
• Incoterms simplify international trade as they clearly state the
responsibilities of buyer and seller concerning transport/logistics
• Incoterms 2020 simplify Incoterms 2010
• ICC is the creator of Incoterms
• Incoterms are used and accepted as standard in all countries in the
world
Incoterms 2020
• 11 Incoterms 2020

• 4 Groups: E,F,C,D

• All mode Incoterms : 7

• EXW, FCA, CPT, CIP, DAP, DPU, DDP

• Maritime only Incoterms :4

• FAS, FOB, CFR, CIF
Incoterms 2020
• What do the INCOTERMS 2020 do?
• Describe obligations of seller and buyer in terms of
• Risk
• Who is in charge of export customs?
• Costs
• Who organizes and pays for main transport?
• Who pays for insurance?
• Documents
• Who obtains the import licenses?

• Incoterms can be used for all type of products and all destination even if it is not an
international sale.
Incoterms 2020
• What the INCOTERMS 2020 do not do?
• They are not a sales contract
• They do not define payment methods
• They do not transfer title = ownership of the goods
Incoterms 2020
• INCOTERM’s 2010 versus 2020 ? Main changes ?
• FCA in a maritime sale : Buyer can instruct carrier to provide B/L document to
seller

• DAT has been changed to DPU ( Delivered at place unloaded)

• Place does not have to be a terminal
• The unloading provides a higher level of service than DAP

• Different levels of minimum insurance cover in CIF and CIP .

• CIF= Coverage “ Institute Cargo Clauses “C”- limited cover
• CIP = Coverage “ Institute Cargo Clauses “A” – extended cover
Incoterms 2020
• Can INCOTERMS rules be altered by the parties?
• Yes, but it requires acceptance by the two parties and clear writing
• Old Incoterm rules such as INCOTERM 2000 or INCOTERMS 2010 can still be used if buyer
and seller agree. ( DAT, DDU….)
Incoterms 2020
• How to incorporate the Incoterms rules in the contract /price offer?
• Write in the contract under trade terms
• FCA “ Named place” INCOTERMS 2020
• The “Named place” describes the place where in most cases risks & costs are transferred

• Ex: FCA CLERMONT-FERRAND 80 Avenue Charles de Gaulle, France INCOTERMS 2020

Mistakes to avoid:

• FCA PARIS FRANCE INCOTERMS 2020

• FCA INCOTERMS 2020
• FCA CLERMONT-FERRAND 80 Avenue Charles de Gaulle
• FAS CLERMONT-FERRAND
Incoterms 2020
• INCOTERMS TABLE: SEE THE EXCEL SHEET
Incoterms 2020 and EU
• How to choose an INCOTERM 2020
• Adapted to type of transport
• For ground and air transport avoid maritime incoterms
• Adapted to destination country
• Inside EU trade ( Mainly all mode Incoterms)
• Outside EU (Maritime+ all mode Incoterms)
• Adapted on the logistical experience of the seller or buyer
• If outside EU trade and Seller has no experience preference for F class Incoterms
• If experience C or D class Incoterms can be added
• In any case avoid DDP Incoterms for the seller
• For the buyer avoid EXW Incoterm
Incoterms 2020
• How to choose an INCOTERM 2020
• Adapted to the requirements of your buyer
• If buyer requires a full-service sale than choose C or D INCOTERM’s
• Seller: Avoid DDP
• Container shipping
• The maritime Incoterms are not recommended for container shipping for the seller.
Choose FCA, CIP, CPT instead of FOB, FAS or CIF or CFR.
• The reason is that the risk transfer to the buyer in the all mode Incoterms is earlier.
Exercise INCOTERM choice and pricing
• The EXW sales price of ap product of a company in France is 500 EUR. A Japanese client based
at OSAKA would like to know the sales prices in EUR for the following INCOTERMS:

• FOB LE HAVRE
• DPU OSAKA JAPAN
• CFR KOBE PORT JAPAN
• DDP OSAKA JAPAN
• CIF KOBE PORT JAPAN

• Use the following logistical cost element to calculate the prices:

• Export custom fees 5 EUR
• Post- transport Kobe- Osaka including unloading 7 EUR
• Transport Insurance 8 EUR (For CIF or CIP insurance is paid by seller, otherwise insurance is payed by buyer)
• Import custom fees 55 EUR
• Pre-transport to Le Havre Port incl. unloading 30 EUR
• Maritime transport Le Havre – Kobe 120 EUR
• Material handling in Le Havre at port and loading on ship 10 EUR
• Material handling in KOBE Port 10 EUR
Exercise INCOTERM risks
• The seller and buyer does not know it, but the ship transporting the goods
will sink. Who will take the risks and absorb the losses in this case for the
following INCOTERMS:

• FOB LE HAVRE
• DPU OSAKA JAPAN
• CFR KOBE PORT JAPAN
• DDP OSAKA JAPAN
• CIF KOBE PORT JAPAN