During a recent webcast hosted by Integration Point, Jenae Ciecko, President of Copper Hill Inc., discussed the pros and cons of each Incoterm, risks associated with Delivered Duty Paid (DDP) and uncertainties involving Ex Works (EXW).

Now, she answers your most pressing questions from the webcast:

Q: ­EXW does not require the seller to load the goods onto a collecting vehicle.  Most of the time it is not practical for a buyer’s carrier to load. Do you recommend specifying who will load the goods under EXW terms? ­

A: By definition, the term EXW does not require the seller to load. If you have experienced confusion or problems with having the buyer’s carrier loading, it cannot hurt to specify to ensure that the buyer arranges for their carrier to load.

Q: ­For a Free Carrier (FCA) does the buyer determine the carrier? If they do, how can you ensure safe transport if it’s not a carrier that the seller has a relationship with? That puts the seller at risk.­

A: For a FCA the buyer does nominate named place or carrier location to be delivered to. With a FCA, it is important for both parties to clearly define the place. Once the goods arrive at that named place the responsibility shifts from the seller to the buyer.  

Q: ­How is Delivered at Terminal (DAT) different from Carriage Paid To (CPT) to an airport? ­

A: If the CPT named place is the terminal they could be considered to have the same responsibility. 

Q: ­What 'F' terms are most appropriate for a containerized shipment?  We are often asked to quote FOB [Port]; however, Incoterms 2010 suggests FCA is the most appropriate term for containerized shipments.­

A: FCA is the most commonly used term for all modes of transportation. It is flexible in that once the named place is identified it clearly shows where responsibility moves from the seller to the buyer and it can be used for all modes of transportation, which allows simplicity in streamlining your processes.

Q: ­What terms should be used for truck shipments: Collect or Prepaid? ­

A: FCA is the most commonly used term for all modes of transportation. It is flexible in that once the named place is identified it clearly shows where responsibility moves from the seller to the buyer and it can be used for all modes of transportation that allows simplicity in streamlining your processes.

Q: ­We work with many EXW orders. Since Incoterms do not define recognition of revenue, should that then be defined in the sales order contract with reference to the Incoterms? ­

A: Yes, Incoterms do not recognize revenue so that must be defined elsewhere. If it works for your company, the sales order contract is a good place to do this.

Q: ­What exactly does transfer of "title" mean? ­

A: Transfer of ownership.

Q: ­Can you recommend the best Incoterm to use for international transactions between related parties? Logistics always pushes for EXW, not realizing the compliance risks involved.­

A: FCA is the most commonly used term for all modes of transportation. It can be used for both related party and non-related party shipments. It is flexible in that once named place is identified it clearly shows where responsibility moves from the seller to the buyer and it can be used for all modes of transportation allowing simplicity in streamlining your processes.

Q: ­What terms would you use for a shipment from a U.S. plant to the U.S. side of the Mexico border for on-carriage by the customer into Mexico? I've seen Delivered at Place (DAP) used. I thought it should be EXW or FCA (depending on who's filing the Electronic Export Information (EEI)).

A: FCA is the most commonly used term for all modes of transportation. It is flexible in that once the named place is identified it clearly shows where responsibility moves from the seller to the buyer and it can be used for all modes of transportation that allow simplicity in streamlining your processes.

Q: ­Can CPT (with named point = port) serve as an all modes replacement for Cost and Freight (CFR)? 

A: Yes, it can.  The named point can be any point with CPT. Another commonly used term to use as a company standard is FCA--the most commonly used term for all modes of transportation. It is flexible in that once named place is identified it clearly shows where responsibility moves from the seller to the buyer and it can be used for all modes of transportation which allows simplicity in streamlining your processes.

Q: ­Can the name place of delivery for "C" Incoterms be any foreign location including the customer's dock? On the other hand, is it only used with an interim location like a port or terminal? ­

A: For C Incoterms the named place is typically the port or vessel.

Q: ­In the Cost and Insurance Paid To (CIP) term, how do you define the minimum insurance required? Who files the claim? ­

A: The minimum insurance required would be determined between the carrier and whoever is paying the carrier. The insurance holder files the claim.

Q: ­If sales terms dictate ownership of goods occurs at the shipper’s dock and the Incoterms are DDP and the plane goes down, who is responsible for the loss of the goods?­

A: It is not advisable to have Incoterms inconsistent with change of ownership for this reason. This would be detailed in the terms and conditions with the carrier but is not an advisable position to be in.

Q: ­Who should show as the shipper on documents for EXW and FCA shipments, since the buyer is the exporter? ­

A: The shipper to be indicated on the paperwork is always the shipper and should not change based on Incoterms. The paperwork should clearly state incoterm so it is clear who is responsible for freight and customs.

Q: ­In Free Along Ship (FAS) who pays for surcharges incurred while container sits idle at port of loading in case the vessel gets delayed or skips a port call etc.?­

A: The seller is responsible to the point where the goods are alongside ship and are responsible for all costs to that point.