3 INCOTERMS 2020 Grupo F

Analysis of Incoterms 2020: Group F

Overview of Group F Incoterms

• The Group F Incoterms includes FCA (Free Carrier), FAS (Free Alongside Ship), and FOB (Free On Board) as key terms.

• Among these, the most recognized term is FOB, which will be discussed in detail later.

Detailed Examination of FCA (Free Carrier)

• The session begins with a focus on FCA, explaining its significance in international shipping processes.

• An example is provided involving a Peruvian buyer purchasing goods from a Chinese manufacturer to illustrate the application of FCA.

Process Flow for FCA

• The Chinese manufacturer receives an order, prepares the merchandise, and loads it into a container on a truck for transport to a temporary storage facility.

• This temporary storage facility is referred to as "depósito temporal" in local customs terminology and serves as the location for customs clearance procedures.

Customs Clearance Procedures

• A customs agent must be hired to handle export procedures at this terminal before the goods can be shipped internationally.

• Once customs clearance is completed, the container receives "levante aduanero," indicating that it has been authorized for exportation. This authorization is crucial for proceeding with international transport.

Responsibilities Under FCA

• Under FCA terms, the exporter’s responsibilities include preparing goods for international transit and ensuring they are available for pickup by an international carrier after completing local customs formalities.

• After obtaining clearance, the container is handed over to the international transporter who then takes it to be loaded onto a vessel for shipment abroad. The responsibility shifts from exporter to transporter at this point.

Transitioning from Exporter to Transporter

• The process continues with loading the container onto a ship at port; this marks the end of responsibilities under FCA for the seller/exporter once they have fulfilled their obligations up until delivery at port side ready for loading onto a vessel.

Importation Process Overview

Importation Procedures: SADA vs. Exceptional Process

• The importation process can be conducted in two ways: before the arrival of the ship (SADA) or after its arrival (Exceptional Process).

• SADA allows for a quicker process as it is completed prior to the ship's arrival, while the Exceptional Process requires mandatory use of a temporary deposit.

• Obtaining permission for importation (levante) allows the container to be transported from the temporary deposit to the importer’s warehouse.

• After unloading, empty containers must be returned to their respective shipping line's empty container depot.

Responsibilities of Exporters and Incoterms

• Under FCA terms, exporters are not responsible for any processes post-delivery at the international carrier's loading terminal; this responsibility shifts to the buyer.

• The next discussed Incoterm is FAS (Free Alongside Ship), where delivery occurs alongside the vessel before loading onto it. This marks a critical risk transfer point from seller to buyer.

Understanding Delivery Points in Incoterms

Key Delivery Locations in Different Incoterms

• In FAS, delivery occurs at the side of the ship, contrasting with FCA where delivery happens at an international carrier's terminal. Risk is transferred once goods are placed alongside the vessel.

• For FOB (Free On Board), goods are delivered into the hold of the ship, marking another significant risk transfer moment when they are loaded aboard. If something happens post-loading, liability falls on the buyer immediately after loading completes.

Review and Verification of Concepts

• A review session will follow to ensure all discussed points align with presentation slides covering FCA, FAS, and FOB terms comprehensively. This includes confirming key details about each term’s responsibilities and delivery locations as outlined previously in discussions.

International Transport and Delivery Terms

Understanding FCA (Free Carrier) Variants

• The international carrier named by the buyer is discussed, specifically focusing on the delivery at the buyer's cargo terminal.

• If the agreed place of delivery is at the seller's premises, delivery occurs when goods are loaded onto the receiving vehicle.

• FCA can be any point in the exporter's country; typically, it is logical to deliver at a cargo terminal for ease of transfer to the carrier.

• If an alternative location like a warehouse is chosen for delivery, it must be specified that goods are loaded onto the receiving vehicle to differentiate from other terms.

• The importance of clearly defining locations and responsibilities in FCA agreements is emphasized to avoid confusion.

Responsibilities and Costs Under FCA

• The seller must ensure that goods are loaded onto the receiving vehicle if delivered at their premises; this includes managing export documentation.

• Sellers may choose specific locations for delivery based on mutual agreement with buyers, such as delivering directly from their factory.

• In cases where sellers handle loading, they assume responsibility for ensuring proper loading within containers and managing export procedures.

• Regardless of where goods are delivered (terminal or warehouse), all export clearance costs remain with the exporter.

• A clear understanding of risks associated with different delivery points under FCA terms is crucial for both parties involved.

Key Seller Responsibilities in International Shipping

• Sellers are responsible for preparing cargo appropriately for international transport, including packaging and internal transportation costs up to the agreed delivery point.

• Once export procedures are completed, goods become available to international carriers for further transport; this applies across various modes of transport including multimodal options.

• The discussion transitions into FAS (Free Alongside Ship), indicating a shift towards understanding another Incoterm related to shipping logistics.

Delivery Terms and Responsibilities in Shipping

Understanding Free Alongside Ship (FAS) Delivery

• The seller is responsible for all costs up to the delivery point, which is alongside the ship. This includes verifying that the delivery location is correct.

• According to the slides, the seller completes delivery when goods are placed next to the vessel, transferring risk at this point as designated by the buyer.

• The seller must prepare cargo with appropriate packaging for international transport and handle loading onto the receiving vehicle.

• Transportation and handling responsibilities include moving goods from the loading terminal to alongside the ship, marking a critical phase in shipping logistics.

Special Considerations for Inland Waterways

• In cases of inland waterways, such as rivers, if water levels drop preventing ships from reaching ports, sellers must hire smaller vessels (barges) to transport containers to larger ships.

• The cost and risk associated with using a barge fall on the exporter until goods are placed next to the main vessel in transit.

Transitioning Between FAS and Other Incoterms

• The discussion transitions into other shipping terms like Free On Board (FOB), where delivery occurs once goods are loaded onto a designated ship at an agreed port.

• Under FOB terms, sellers incur costs related to preparing cargo, internal transportation within their country, export clearance, and handling until goods are aboard the vessel.