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Sales management. Delivery terms. Case study.

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Sales management

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Sales management l.jpg

Sales management

Delivery terms


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Case study

You are selling for the first time to a new customer in Eastern Europe. The business was brought to you by a broker in London, to whom you send the invoice. The goods have to be shipped to Rumania through the port of Genua. Italy. The broker wants you to deliver DDP (Delivered Duty Paid) Bucarest.

What are the issues in terms of risk management ?


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DDP Bucarest

CIF Genua


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Sales – delivery terms

  • Transport: who pays what ?

    • Costs: who has the lowest ?

  • Documents: who produces which

    • Exporter: who is the exporter?

  • Risk control: until when/where ?

    • Problems: can you handle them?


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“Incoterms 2000”

  • Agreement between buyer and seller

  • No agreement between seller - transporter

  • Does not substitute sales contracts

  • Incoterms deal with three issues :

    • costs of transport

    • transfer of risks

    • obligations of seller and buyer


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  • Available at

  • ICC, Paris

  • ICC office country

  • Local Chambers

  • Approx € 50,=


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Incoterms

EXWEx works FCAFree carrier FAS Free alongside ship FOBFree on board CFRCost and freight CIFCost, freight, insurance CPT Carriage paid to CIP Carriage, insurance paid

DAFDelivered at frontier DESDelivered ex ship DEQ Delivered ex quay DDUDelivered duty unpaid DDP Delivered duty paid

DEPARTURE CONTRACTS

ARRIVAL CONTRACTS


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Case study

You have sold goods to a customer in Europe. Delivery terms are FOB Honduras. Payment terms are “documentary collection 30 days after b/l”. Just after transshipment in Miami a hurricane sweeps some containers overboard, including yours.

What are the obligations of seller/buyer ?

Same situation, but this time the goods are sold CIF Rotterdam.


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Incoterms - specifics

From seller

to buyer


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DEPARTURE CONTRACTS

EXW FCA FAS FOB CFR/CIF

DES DEQ DDU DDP

CUSTOMS

CUSTOMS

ARRIVAL CONTRACTS


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EXW – ex works

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Loading costs of truck for account of buyer

This is not an export transaction, but a local sale


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FCA – free carrier

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Loading costs of airplane for account of buyer


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CPT – carriage paid to …..

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Costs of transport to ………. for account of seller

CPT most common; CIP includes insurance


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FAS – free alongside ship

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Loading costs of ship for account of buyer


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FOB – free on board

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Loading costs of ship for account of seller


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CIF – cost, insurance, freight

CUSTOMS

CUSTOMS

RISK

COST

DOCS

Loading costs of ship for account of seller Unloading costs ship for account of buyer

CFR for countries where local insurance is mandatory


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