2 INCOTERMS 2020 Grupo E

Analysis of Incoterms 2020

Introduction to Incoterms

• Adolfo Acarreño introduces the analysis of the 5 Incoterms, starting with a focus on "Incor" and outlining that the analysis will follow a specific concept throughout.

Responsibilities in Incoterms

• As the discussion progresses through different Incoterms, it is noted that seller responsibilities increase while buyer responsibilities decrease.

• The first term discussed is "Incoterm XW," where seller responsibility is minimal; they only prepare goods for international transport while the buyer assumes most control and risk.

Gradation of Seller Responsibility

• The speaker emphasizes that as they move from one Incoterm to another, seller responsibilities will escalate from minimal (as seen in XW) to significantly higher levels.

• The transition from low to high seller responsibility illustrates how sellers take on more operations within international sales transactions.

Practical Example: Exporting Goods

• In an example involving a Chinese manufacturer selling to a retail company in Peru, the speaker explains how logistics are managed under different terms.

• The example highlights that under "Incoterm DDP," sellers handle extensive logistics compared to their limited role under "XW."

Detailed Breakdown of Responsibilities

• A detailed breakdown of responsibilities includes aspects like delivery location, costs assumed by sellers, and transportation methods used.

• The context involves shipping via maritime transport for a container filled with polo shirts, emphasizing maritime's dominance in international trade.

Step-by-Step Process Overview

• The process begins with the manufacturer receiving an order for goods and preparing them for shipment.

• It is explained that buyers must arrange transportation logistics such as sending containers via truck to pick up goods at the manufacturer's facility.

This structured overview captures key insights into how responsibilities shift between buyers and sellers across various Incoterms while providing practical examples for clarity.

International Transportation and Customs Operations

Responsibilities of the Buyer in International Shipping

• The buyer is responsible for all aspects of the cargo once it is loaded into the container, including any loss or damage during loading.

• If items are lost or damaged during loading, such as falling boxes, the financial responsibility falls on the buyer.

• After loading, the buyer must send the container to a temporary storage facility before executing customs operations for importation.

Importation Process and Customs Operations

• The buyer may need information from the seller (manufacturer) to facilitate customs operations in an unfamiliar country. This includes product details and necessary documentation.

• A customs agent hired by the buyer will liaise with the manufacturer to complete export documentation required for customs clearance in China.

• The manufacturer must monitor this export process closely to ensure compliance with regulations and successful shipment.

Export Authorization and Shipment

• Once export procedures are completed, authorization (referred to as "levante") is granted for shipping out of China. This allows for transport to ports like Callao in Peru.

• Upon arrival at Callao, cranes will unload containers from ships using port equipment designed for this purpose. The container then moves to a temporary storage area for further processing.

Import Procedures Upon Arrival

• In Peru, import procedures can be initiated either while goods are still in transit or after they arrive at port; this is known as "despacho anticipado" (advanced clearance) versus "despacho excepcional" (exceptional clearance).

• Advanced clearance allows processing while goods are en route; exceptional clearance occurs post-arrival but may incur additional costs due to handling fees at temporary storage facilities.

Cost Implications of Clearance Methods

• Choosing exceptional clearance can lead to higher costs due to extra handling steps before goods reach their final destination compared to advanced clearance methods that might allow direct delivery if cleared efficiently.

Importation and Customs Procedures

Overview of Customs Operations

• The process begins similarly to operations in China, involving contact with a customs agent who facilitates the customs procedure in the country.

• The local customs authority, referred to as SUNAT, plays a crucial role in import operations; however, detailed procedures are complex and require specialized courses on foreign trade.

Understanding Import and Export Operations

• Courses on foreign trade cover various customs operations across different countries, including 13 distinct types of customs operations available in the country.

• Among these operations, importation and exportation are two key components within a broader framework of customs activities.

Flow of Importation Process

• Once the import operation is approved, an authorization known as "levante aduanero" is issued for importing goods.

• After receiving authorization, goods are loaded into a container which is then transported to a warehouse for unloading.

Container Management Post-Import

• After unloading at the warehouse (e.g., Replay's facility), the empty container must be returned to its owner, typically a shipping line that has designated terminals for empty containers.

Responsibilities in Import/Export Transactions

• The flow of goods highlights where responsibilities lie; specifically, the exporter has minimal responsibility until delivery at their factory or agreed location.

• The buyer assumes most logistical costs and responsibilities once they take possession of the goods from the exporter’s premises.

Incoterms Explained

• Under Incoterms like XW, sellers prepare merchandise for international transport but do not dispatch it for export or load it onto vehicles.

• This term emphasizes that sellers only handle preparation costs while buyers manage transportation logistics thereafter.