<blockquote id=""><em id="">There is still a lot of work to be done by the policy makers to achieve the inflation target of 2-4 percent.</em></blockquote>
<p id="">The Indian economy is among the few bright spots in the world. The policy makers in the government and decision makers at businesses base their decisions and forward-looking statements after analysing relevant data.</p>
<p id="">Inflation may have peaked after continuous rise over the past few months. As a result, the government has gained some liberty for its budget calculations. Merchandise exports in October 2022 were U.S. dollars 29.78 billion, as compared to U.S. dollars 35.73 billion in October 2021.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a id="" href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=indian_economy_october_2022" target="_blank" rel="noopener">
<div id=""><img id="" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png" width="auto" height="auto" loading="lazy"></div>
</a></figure>
<p id="">Merchandise imports in October 2022 were USD 56.69 Billion, as compared to USD 53.64 Billion in October 2021.</p>
<p id="">In the following paragraphs, let us try to understand the state of Indian economy with help from data released by government agencies, industry associations, and financial analytics firms.</p>
<h3 id=""><strong id="">Goods and Services Tax</strong></h3>
<p id="">October 2022 recorded the second highest goods and services tax (GST) collection ever. If we were to list out the factors that led to the bumper growth in domestic consumption, then festive season optimism will be on top of every other factor. As per a press release by the Ministry of Finance, the GST collection for the month of October was ₹1,51,718 crore and it has crossed the ₹1.4 lakh crore for eight months in a row.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div id=""><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/637732d7ef68a6516e7f4f4f_GST_Oct-22.png" alt="GST Collection October 2022" width="auto" height="auto" loading="lazy"></div>
</figure>
<h3 id=""><strong id="">State of Manufacturing and Services</strong></h3>
<p id="">The monthly manufacturing and services data for the month of October indicates that the Indian economy is in expansion mode and price pressures have been contained. Employment in the manufacturing sector has shown healthy gains and input material purchases are at multi-month highs. October data indicated an expansion in new work with Indian service providers. Domestic market was the primary source of new business.</p>
<h3 id=""><strong id="">Auto Retail Sales </strong></h3>
<p id="">In aggregate, the auto sector reported a 48% increase in sales in October 2022 when compared to a similar period last year. The Federation of Automobile Dealers&rsquo; Association (FADA) informed sales have touched pre-covid levels. Except for three-wheelers, all other categories ended the month in green. The commercial vehicle (CV) segment has grown 25% year-on-year and 13% compared to 2019. Mining and infrastructure projects in all parts of the country, opening of educational institutions and revival in travel have contributed to higher CV sales.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a id="" href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=indian_economy_october_2022" target="_blank" rel="noopener">
<div id=""><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png" width="auto" height="auto" loading="lazy"></div>
</a></figure>
<h3 id=""><strong id="">India&rsquo;s Foreign Exchange Reserves</strong></h3>
<p id="">On 4<sup id="">th</sup> November 2022, the Reserve Bank of India (RBI) released foreign exchange reserve data for the half-year ended September 2022. The RBI reported that reserves decreased from U.S. dollars 607.31 billion in March 2022 to U.S. dollars 532.66 billion at the end of September 2022. India maintains foreign currency assets in major currencies, while reserves are reported in U.S. dollar terms.</p>
<h3 id=""><strong id="">Inflation Data</strong></h3>
<p id="">After multiple rate increases by the RBI over the past several months, the consumer price index (CPI) has climbed below 7 percent in the month of October. The CPI for the month of October was 6.77 percent while the food inflation was recorded at 7.01 percent &ndash; both these rates were substantially lower from the corresponding figures in the month of September.</p>
<p id="">Compared to prices last year, egg and oils &amp; fats registered reduction in October, while the prices of footwear, cereals and spices registered double-digit increases in the similar period.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div id=""><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/6377331e36ca12205f132f5f_Inflation_Oct%2022.png" alt="India Inflation Chart October 2022" width="auto" height="auto" loading="lazy"></div>
</figure>
<h3 id=""><strong id="">Conclusion</strong></h3>
<p id="">The deliberations for union budget 2023 have begun and there are more positives than negatives for the Indian economy. Direct and indirect tax collections in the current fiscal are above budgeted estimates. Imports have been rising at a much faster pace than exports, and this has adversely affected the balance of trade.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a id="" href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=indian_economy_october_2022" target="_blank" rel="noopener">
<div id=""><img id="" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png" width="auto" height="auto" loading="lazy"></div>
</a></figure>
<p id="">The Russia-Ukraine war has taken energy prices beyond tolerable limits and a lot of surprises may still be in store. If you want to win the high stakes economic bonanza, staying ahead of the curve matters more than anything else.</p>

Indian Economy Outlook – October 2022

<blockquote id=""><em id="">Nations have thrived due to the concept of comparative advantage. The resultant efficiency and specialisation have helped them to achieve higher real incomes.</em></blockquote>
<p id="">Foreign Trade Agreement (FTA) is an arrangement between nations or trading blocs that have agreed to eliminate or reduce customs duties in international trade. FTAs cover everything from goods, services, investment, and intellectual property rights.</p>
<h3 id=""><strong id="">Importance of Free Trade Agreements</strong></h3>
<p>&nbsp;</p>
<p id="">Trade agreements play an important role in development of commerce between nations by facilitating cooperation and providing access to each other&rsquo;s industries. Free flow of goods and services enables countries to specialize in products it can produce efficiently and cheaply as compared to other countries.</p>
<p id="">As per the Ministry of Commerce, India has signed 13 FTAs with its trading partners. The economic impact assessment of FTAs has shown that there has been progress in both exports and imports with FTA partners.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a id="" href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=FTA" target="_blank" rel="noopener">
<div id=""><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png" width="auto" height="auto" loading="lazy"></div>
</a></figure>
<p id="">The Association of Southeast Asian Nations (ASEAN) charge 20% custom duty on leather shoes but under the FTA with India the duty was reduced to zero. If other costs are equal, the Indian exporter will be more competitive than an exporter from a non-FTA member country.</p>
<h3 id=""><strong id="">Free Trade Agreements: Key Steps</strong></h3>
<p id="">Exporters and importers can the use FTAs to their advantage by following the four steps mentioned below:</p>
<p id="">1. Determination of tariff classification<br>2. Compliance with rules of origin<br>3. Claiming preferential access<br>4. Requesting advance rulings and export</p>
<h3 id=""><strong id="">Advantages of Trade Agreements</strong></h3>
<p id="">Benefits of FTA to exporters and importers are as follow:</p>
<p id=""><strong id="">1. Reduction in tariff:</strong> FTAs allow exporters access to international market at low customs duties and other incidental taxes. For example, India signed an FTA with South American trade bloc MERCOSUR, and it resulted in tariff reduction ranging from 10% to 100% on 450 listed products.</p>
<p id=""><strong id="">2. Diversification of trade risk:</strong> When countries have a diverse trade basket, they are in a better position to face the consequences of an international recession or adverse geopolitical event.</p>
<p id=""><strong id="">3. Competition and innovation:</strong> Integration with international markets leads to adoption of best practices in manufacturing and subsequently improves the competitiveness of products.</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=FTA" target="_blank" rel="noopener">
<div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy"></div>
</a></figure>
<h3 id=""><strong id="">Implementation of Free Trade Agreements</strong></h3>
<p id="">The tariff concessions in an FTA are implemented through customs notifications. When the concessions are implemented in a phased manner the Central Board of Excise and Customs issues annual notifications on its website.</p>
<p id="">Some of the Indian products for which ASEAN countries have eliminated their tariffs are:</p>
<ul id="">
<li id="">Thailand: Textile and clothing, footwear, organic chemicals, pharmaceuticals, automobiles, etc.</li>
<li id="">Indonesia: Fruits and vegetables, textiles, machinery, processed food, organic chemicals, marine products, etc.</li>
<li id="">Malaysia: Footwear, processed food, vegetables and fruits, clothing and textiles, organic chemicals, etc.</li>
</ul>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a id="" href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=FTA" target="_blank" rel="noopener">
<div id=""><img id="" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png" width="auto" height="auto" loading="lazy"></div>
</a></figure>
<h3 id=""><strong id="">Government&rsquo;s Trade Promotion Measure</strong></h3>
<p id="">India&rsquo;s Foreign Trade Policy (FTP) 2015-20 contains measures for export promotion for micro, small and medium enterprises (MSMEs). The policy has been extended up to 31<sup id="">st</sup> March 2023. The government encourages MSMEs to participate in training programmes on exports packaging, trade fairs, and international exhibitions.</p>
<p id="">The government promotes small and medium enterprises (SMEs) to get export orders by schemes such as rupee export credit, electronic filing, preferential certificates of origin, etc.</p>

Free Trade Agreements – Importance and Advantages

<blockquote id=""><em id="">Tax benefits and delinking of net positive foreign exchange are two of the most important proposals in the DESH Bill.</em><br></blockquote><p id="">The Development of Enterprise and Service Hubs (DESH) Bill is aimed to revive relevance of existing Special Economic Zone (SEZ) in India. The new law to manage special economic zones is likely to recommend a single-window clearance mechanism. </p><p id="">The dispute settlement panel of the World Trade Organization (WTO) has pointed out that India’s SEZ law and rules are not compliant with WTO rules. The DESH Bill targets to increase the scope of SEZs from export advancement to infrastructure development. India needs to create and operationalise manufacturing hubs that can increase export competitiveness. In a major development, the SEZs will now also be able to supply to domestic tariff area at lower duties.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=desh_bill_sez" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png" style="width: 900px; height: 131px;"></div></a></figure><h3 id=""><strong id="">Necessity of SEZs</strong></h3><p id="">Most countries have passed laws to create industrial clusters that are built to cater exports. In India, the SEZ Act 2005 was passed to achieve the following objectives: </p><p id="">a) Promotion of exports of goods<br>b) Generating additional economic activity<br>c) Promoting investment from foreign and domestic entities<br>d) Development of infrastructure<br>e) Employment creation</p><p id="">To promote the concept of SEZ among investors, the government gave incentives to developers and income tax exemptions to the units when they earned foreign exchange in five years since starting operations.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=desh_bill_sez" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy" alt="638f224556fe413902d3d886_Blog-Creative-2.png" style="width: 900px; height: 131px;"></div></a></figure><h3 id=""><strong id="">Current Status of SEZs in India</strong></h3><p id="">As per data available, on June 30, 2022, there were 425 approved SEZs, in which 268 were operational. Exports from these SEZs have fallen to $102.3 billion in FY21, from $112.3 billion in FY20 and account for less than 20% of exports now.</p><p id="">SEZs have lost their shine due to the obligation of minimum alternate tax and sunset clause to remove tax incentives.</p><p id="">The dispute resolution board of WTO in its 2019 report, ruled that India’s export-related schemes (including SEZ Scheme) were forbidden grants under the Agreement on Subsidies and Countervailing Measures and were inconsistent with WTO norms.</p><h3 id=""><strong id="">Proposals in the DESH Bill</strong></h3><p id="">India has set a target of US$ 1 trillion exports each of goods and services by 2030. Among other schemes, the DESH Bill aims to position India among the top five exporting countries.</p><p id="">The improvements expected in the DESH Bill are summarised below: </p><p id="">a) Single-window clearance: Even after multiple policy changes at the central and state levels, the ease of doing business in India is not at expected levels. By ensuring coordination between all the levels of governments to procure necessary approvals, DESH Bill may improve the speed and efficiency of governance. <br></p><p id="">b) Receive money in Indian rupee: Under the current foreign exchange rules, the units in a SEZ are prohibited to make payment in Indian rupee. With the introduction of DESH Bill, units will be allowed to receive payment in Indian rupee and shall serve domestic tariff area after payment of applicable customs duty.<br></p><p id="">c) Removal of NFE criteria: As per the prevailing rules, units in a SEZ shall become net foreign exchange (NFE). The units are required to achieve positive net foreign exchange, to be calculated cumulatively, for a period of five years from the commencement of production.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=desh_bill_sez" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></div></a></figure><h3 id=""><strong id="">SEZ: The Way Forward</strong></h3><p id="">On one hand the DESH Bill recommends several non-fiscal measures like allowing reverse job work for units in the SEZs, it falls short on giving a clear roadmap on the financial incentives.</p><p id="">Various fiscal incentives such as Remission of Duties and Taxes on Export Products (RoDTEP) and those under the Production Linked Incentives (PLI) Scheme, units may like to have clarity under the DESH Bill. </p><p id="">To avoid any further adverse action from the WTO, India’s export and manufacturing policies need to be compliant with Agreement on Subsidies and Countervailing Measures (ASCM).</p><h3 id=""><strong id="">Development Hubs Under DESH Bill</strong></h3><p id="">The DESH Bill has set two classifications for developmental hubs - enterprise and services. The service hubs shall be allowed only for service activities and have built-up area requirements, while enterprise hubs will have land-based area requirements and be permitted for both service and manufacturing activities.</p>

DESH Bill to Infuse Life in SEZs

<blockquote id=""><em id="">Close monitoring of carriers, warehouses, distribution centres, and all other moving parts in the supply chain can help to identify patterns that are currently affecting, or may affect, the OTIF ratings in the future.</em><br></blockquote><p id="">On-time In-full (OTIF) is the system which measures a supplier’s ability to deliver shipments according to quantity and schedule expectations. It is a key performance indicator (KPI) in trade and is applicable to all industries, especially in manufacturing.</p><p id="">The concept of OTIF was adopted at scale by Walmart. As the concept improved operational and financial efficiency at Walmart, other companies, and logistics industry adopted it in one way or the other. Walmart started penalising suppliers for both late and early delivery.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&utm_medium=blog&utm_campaign=OTIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy"></div></a></figure><h3 id=""><strong id="">Origins of OTIF</strong> </h3><p id="">The term OTIF has been around for the past 20 years. In 2017, Walmart introduced the concept of OTIF as a KPI for its suppliers, vendors, and logistics service providers. It was done to improve customer satisfaction, track supplier performance, and drive store improvements.</p><p id="">Enterprises that are enforcing the OTIF parameters have good reason to do so; they are under pressure to cut prices and raise wages from consumers and employees, respectively.</p><h3 id=""><strong id="">How is OTIF Calculated?</strong></h3><p id="">Calculation of OTIF is straightforward. It has two components which are On-time and In-full. </p><p id="">On-time In-full = Total deliveries made on time and in full / Total deliveries made X 100</p><p id="">So, let’s say out of 500 orders, 472 were delivered on time and complete. That means your OTIF rate = 472/500 X 100 = 94.40%</p><h3 id=""><strong id="">Importance of OTIF</strong></h3><p id="">A few delayed consignments can send ripple effects through the supply chain. If the disruptions happen often, the result can be destructive for all the stakeholders. Retail stores cannot afford empty shelves and e-commerce companies cannot afford delays or cancelation of orders. </p><p id="">If you are supplier who takes little-to-no action to improve OTIF, it may adversely affect your competitiveness in the market and relationship with customers.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&utm_medium=blog&utm_campaign=OTIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy"></div></a></figure><h3 id=""><strong id="">What is a Good OTIF Benchmark?</strong></h3><p id="">Ideally companies should strive for 100% OTIF across their operations but in the real world, however, a decent OTF benchmark to aim for is high 80% or even 90% range. </p><p id="">In an ideal world, companies would strive for 100% compliance with on-time in-full across their customer base. Since this is the real world, however, a solid OTIF benchmark to shoot for is the high 80% or even 90% range.</p><h3 id=""><strong id="">Ways to Improve OTIF Rating</strong></h3><p id="">A higher OTIF rating can help suppliers expand the scale and scope of their operations. ways to improve the OTIF ratings are given below:</p><p id="">1. Single point of information: By establishing one point of communication suppliers can notify buyers about any possible or actual delay in shipments. </p><p id="">2. Understand appointment scheduling</p><p id="">3. Increasing familiarity with vendor requirements</p><p id="">4. Aligning production and transport schedules</p><p id="">5. Requesting due dates that are suited to your production schedules</p><p id="">6. Getting access to real-time tracking of shipments</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&utm_medium=blog&utm_campaign=OTIF" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy"></div></a></figure><h3 id=""><strong id="">Conclusion: OTIF Improves Collaboration</strong></h3><p id="">Strong OTIF strategies lay the foundation for better cooperation among all the supply chain participants. If everyone is on the same page with the rules and regulations for delivery of shipments, they can work together in an efficient system avoid late penalty disputes.</p><p id="">Customers are likely to support enterprises that offer clear data about what to expect and apply methods to prevent delays in consignments. Carriers gain access to regular stream of revenue if they earn the trust of their customers.</p>

On-time In-full: An Essential Supply Chain Metric

<blockquote><em>The International Chamber of Commerce has divided Incoterms&reg; under 11 heads. In this blog post you will get to know about the Incoterm&reg; </em><strong><em>Ex Works.</em></strong></blockquote>
<p>International Commercial Terms &ndash; commonly known as Incoterms&reg; - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1<sup>st</sup> January 2020. The ICC first published the Incoterms&reg; in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.</p>
<p>International trade involves transactions between territories that have different rules and regulations. Incoterms&reg; are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms&reg; to decide who bears the cost and when the risk gets transferred from seller to buyer.</p>
<p>&nbsp;</p>
<p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=EXW" target="_blank" rel="noopener noreferrer"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a></p>
<h3><strong>Ex Works (Place): Overview</strong></h3>
<p>The buyer bears all the costs and risks in an Ex Works arrangement. The seller must only make the goods available for the buyer at their warehouse/factory. As soon as the goods are collected, buyer undertakes all other obligations. Ex Works can be used for any means of transportation.</p>
<p>Ex Works is an Incoterm&reg; used for all methods of shipping, irrespective of the mode, or legs of the transport. Under Ex Works, the buyer undertakes all obligations of the shipment once the cargo is packed in export packaging and collected. Here, the buyer must arrange all transport, export documentation, cover all freight charges, and fulfil the importation and delivery process.</p>
<p>&nbsp;</p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638db74198d5bbc95b2ed509_Ex%20Works%20V2.jpg" alt="638db74198d5bbc95b2ed509_Ex%20Works%20V2.jpg"></p>
<p>Some exporters insist on Ex Works as they desire to recognize the revenue for the sale instantly. As a matter of fact, the ICC&rsquo;s Incoterms&reg; 2020 manual clearly states that recognition of revenue is independent of any Incoterm&reg; rule. The parties involved in global trade shall make and agree upon specific provisions in the sale contract.</p>
<p>&nbsp;</p>
<h3><strong>Ex Works: Safeguards for Seller</strong></h3>
<p>When using Ex Works, the seller may want to consider slight changes to the terms and conditions. For example: "The supplier has the right to impose duties or move the goods to a public warehouse at the buyer's expense if the buyer does not pick up the shipment within "x" days of being informed of their availability. Without this change to the agreement, the seller is at risk of being exploited as free storage or of the buyer postponing the payment cycle.</p>
<p>The seller is only required to make the items available, appropriately packaged, at the designated location, which is typically the seller's factory or depot. Although the seller may be more qualified to do so, the buyer is responsible for putting the items onto a vehicle, for all export procedures, for onward transportation, and for any expenditures incurred after the products have been collected.</p>
<p>To be more specific, it may still be necessary for the exporter to participate in the export reporting and clearance processes and cannot practically delegate them to the buyer.</p>
<p>&nbsp;</p>
<p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=EXW" target="_blank" rel="noopener noreferrer"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a></p>
<h3><strong>Ex Works: Advantage to the Buyer</strong></h3>
<p>Certain manufacturers are too focussed on the domestic market or may not have requisite licenses that may be required to export goods to the outside world. Some countries have good quality and inexpensive goods, which make it attractive for buyers to arrange all other things on their own.</p>
<p>If a buyer routinely sources goods from a particular country, it makes sense to consolidate different products and import it on their expense.</p>
<p>&nbsp;</p>
<h3><strong>Ex Works: Disadvantage to the Buyer</strong></h3>
<p>In Ex Works shipment, the buyer gets lower per unit cost than other Incoterms&reg;, while there are some significant disadvantages as well. If, for some reason, the goods cannot be exported from the origin country, the buyer bears the risk, because the transfer of ownership has already taken place.</p>
<p>&nbsp;</p>
<h3><strong>Ex Works: Seller&rsquo;s Responsibilities</strong></h3>
<p>The obligations of the seller are quite minimal under the Ex Works Incoterms&reg;. In essence, their only need is to make sure the cargo is prepared for export and that it can be picked up at their location. This indicates that the goods are already contained in export boxes for most shipments. When the cargo is prepared, it must be in a location where the buyer and seller may pick it up.</p>
<p>&nbsp;</p>
<p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=EXW" target="_blank" rel="noopener noreferrer"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a></p>
<h3><strong>Ex Works: Buyer&rsquo;s Responsibilities</strong></h3>
<p>Once the buyer picks up the products from the seller, they take on all responsibility and risk. These obligations consist of the following:</p>
<p>1) Charges for loading the cargo at the pickup point so that it can be transported to the port for export.</p>
<p>2) Transporting the products to the port of origin to start the export procedure is known as delivery to port or place.</p>
<p>3) Export papers must be completed, and all taxes and duties associated with exporting the goods must be paid. The buyer is forced to rely on independent export strategies.</p>
<p>4) Charges at the origin terminal: All charges at the terminal are the buyer's responsibility.</p>
<p>5) Putting goods on carriage: The duty involved in putting the cargo on the carriage.</p>
<p>6) Carriage fees: All freight expenses related to transporting the cargo from one port to another.</p>
<p>7) Charges related with fees levied by the destination port and terminal are referred to as destination terminal charges. When the cargo reaches the port of destination, the terminal charges a fee to convey the consignment throughout the harbour and unload the shipment from the ship.</p>
<p>8) Delivery to destination: The price of moving the cargo from the port of destination to the ultimate location.</p>
<p>9) When the items have reached their destination, the costs involved with unloading the cargo from the final carrier are incurred.</p>
<p>10) Import duty, taxes, and customs clearance: All fees and charges related to bringing the goods into the country of destination.</p>
<p>&nbsp;</p>
<h3><strong>When to Use Ex Works Incoterm&reg;</strong></h3>
<p>Established importers set up offices in their export country for ease of handling their shipments. The buyer may opt for Ex Works if they are shipping via air express couriers. In most cases, express couriers collect goods from seller&rsquo;s location.</p>

Incoterms®: Ex Works - Cogoport

<blockquote id=""><em id="">The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® </em><strong id=""><em id="">Free Carrier.</em></strong><br></blockquote><p id="">International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1<sup id="">st</sup> January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.</p><p id="">International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FCA" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png" style="width: 886px; height: 129px;"></div></a></figure><h3 id=""><strong id="">Free Carrier (Place): Overview</strong></h3><p id="">The seller is responsible for export clearance and delivering the goods to the carrier at the designated point of delivery in accordance with the Free Carrier (FCA) shipping terms. Any individual or business that conducts the carrying is referred to as a carrier, including a shipping line, airline, trucking company, railroad, or freight forwarder.</p><figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div id=""><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dbda5ac558a3fa980505c_FCA_IMAGE.jpg" loading="lazy" alt="Incoterm - Free Free Carrier (FCA)" id="" width="auto" height="auto"></div></figure><h3 id=""><strong id="">FCA in Shipping Terms</strong></h3><p id="">Once the cargo is prepared to be put onto the carrier, the buyer takes responsibility for it. FCA is applicable to all modes of transportation, including road, rail, sea, and air freight. The buyer may arrange carriage at a lower cost than what their seller may offer. FCA enables the buyer to step in and take over after the cargo has been exported, which can be a risky and time-consuming operation for certain products. Once the commodities reach the point of export, however, the buyer takes all risks and liabilities. </p><h3 id=""><strong id="">Free Carrier: Seller’s Responsibilities</strong></h3><p id="">According to FCA Incoterms®, the seller is responsible for managing the entire export procedure for the goods they are selling. The buyer is responsible for the cargo after it is prepared to be loaded into the vessel. The full list of the seller's obligations can be found below.</p><p id="">1) Export Packaging: For export, the cargo needs to be packaged. Some nations have certain rules governing how goods must be exported. This may involve product markings or packaging design. The person in charge of this aspect must make sure the packaging complies with export laws.</p><p id="">2) Loading Fees: These are any expenses related to loading the cargo onto the first carrier to move the products to the export point as it leaves the seller's location. </p><p id="">3) Delivery to Port/Place: These are the costs related to moving the products from the seller's location to the specified port or location where the cargo will be shipped once they are loaded onto the truck. The port or location would typically be a seaport, an airport, or a rail port.</p><p id="">4) Customs Clearance: The expenses and obligations related to formally exporting the goods from the country of origin. This may involve pre-shipment inspections, customs checks, or any other special clearances needed to export the cargo.</p><p id="">The cargo can be given to the buyer once these obligations are fulfilled. The buyer is solely responsible for any risks connected to the subsequent phases of the logistical process.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FCA" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy" alt="638f224556fe413902d3d886_Blog-Creative-2.png" style="width: 886px; height: 129px;"></div></a></figure><h3 id=""><strong id="">Free Carrier: Buyer’s Responsibilities</strong></h3><p id="">The risk passes to the buyer when the goods clear customs and arrives at the Named Place. The buyer then has the obligations listed below to complete the logistical process.</p><p id="">1) Terminal charges at origin: Any fees or requirements related to the shipping facility where the cargo is loaded for the primary transportation phase onto the chosen vessel. </p><p id="">2) Loading on carriage: The shipping company charges a loading fee for the cargo to be loaded onto the carriage.</p><p id="">3) Carriage fees: These are the freight costs associated with transporting cargo from one port to another.</p><p id="">4) Terminal fees at destination port: Once the cargo has reached the port of destination, any terminal fees related to unloading, moving, and keeping the load while it waits for the official import procedure.</p><p id="">5) Delivery to destination: Moving the goods to the address specified by the buyer after it has left the port of origin.</p><p id="">6) Unloading at destination: Costs related to unloading the cargo at the designated delivery location specified by the buyer.</p><p id="">7) Customs clearance: The purchaser is responsible for all expenses and liabilities related to importing the items. Duty, taxes, and any other requirements from customs authorities must be complied with or paid for by the buyer in the event of any inspections.</p><h3 id=""><strong id="">Free Carrier: Advantages to the Buyer</strong></h3><p id="">After the item has been lawfully exported from the nation of origin, FCA enables the buyer to have complete control over the transportation of their goods. Due to their ability to manage all moving parts of the logistics chain, some buyers believe they may profit from this Incoterm.</p><p id="">FCA can be a useful Incoterm® for purchasers who frequently acquire containerized goods and who have a reputable third-party logistics provider or freight forwarder they can trust.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FCA" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png" style="width: 886px; height: 129px;"></div></a></figure><h3 id=""><strong id="">Free Carrier: Disadvantages to the Buyer</strong></h3><p id="">There is a reason why FOB not as popular for maritime shipments than FCA. The buyer must take additional procedures at the port of origin under FCA, and as a result, the buyer is responsible for terminal and loading expenses. The best party to handle a problem that arises during shipping depends on whether the cargo is in the country of the seller or the buyer.</p><p id="">Therefore, even though FCA is not significantly different, employing it may have a disadvantage because sellers may not be as comfortable with the procedure. The ideal Incoterm® for exporting goods from any nation is typically one where both the buyer and seller have the most expertise.</p><h3 id=""><strong id="">When to Use Free Carrier Incoterm® </strong></h3><p id="">A buyer would only wish to take FCA into account if most of the following criteria can be satisfied:</p><p id="">• They are shipping containerized cargo.</p><p id="">• Their seller prefers FCA over FAS or FOB.</p><p id="">• The cargo is being transported straight to the terminal for export and not to the shipping service provider's warehouse</p><p id="">• They are familiar with the logistics procedure and requirements in the seller's nation, or they are employing a shipping service. </p><p id="">If the four criteria mentioned above can be satisfied, FCA is a sensible alternative to take into account as an Incoterm®.</p>

Incoterms®: Free Carrier (Place) - Cogoport

<blockquote id=""><em id="">The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® </em><strong id=""><em id="">Free Alongside Ship.</em></strong><br></blockquote><p id="">International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1<sup id="">st</sup> January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.</p><p id="">International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FAS" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" loading="lazy" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></div></a></figure><h3 id=""><strong id="">Free Alongside Ship (Port): Overview</strong></h3><p id="">According to the Free Alongside Ship (FAS) Incoterm® guidelines, the seller clears the cargo for export and puts them next to the ship at the designated port of departure. The specified port of departure shall be either a loading dock or a barge, but not a container terminal.</p><p id="">The buyer oversees local transport, discharge, import formalities and duties, and onward carriage to the final destination in addition to handling the loading of the freight aboard the vessel. Nowadays, FAS is mainly reserved for interior canal cargo and sea freight.</p><p id="">Bulk freight, like grain or oil, is a common use for it. The seller is in charge of getting the items to the chosen port, or the spot where the ship is. The buyer is responsible for loading the cargo onto the vessel at the scheduled port.</p><figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div id=""><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dc138ac558a328c809c1d_FAS_IMAGE.jpg" loading="lazy" alt="Incoterm - Free Alongside Ship (FAS)" width="auto" height="auto" style="width: auto; height: auto;"></div></figure><h3 id=""><strong id="">Free Alongside Ship: Seller’s Responsibilities</strong></h3><p id="">When transacting using FAS Incoterms®, the seller is accountable for the following:</p><p id="">1) Export packaging: The goods must be packaged by the vendor for shipping.</p><p id="">2) Charges for loading: The seller is liable for any charges involved in loading the cargo onto the initial carrier. </p><p id="">3) Delivery to place/port: The cost of transportation to the port or place of origin is the buyer's responsibility.</p><p id="">4) Export Duty, Taxes &amp; Customs Clearance: In the event, the cargo is being exported, any costs associated are the responsibility of the seller. </p><p id="">5) Origin Terminal Handling Charges (OTHC) are another expense that falls under the seller's responsibility.</p><p id="">The seller often only oversees operations up until the designated vessel, although he is still responsible for the export customs procedures. The seller will create all necessary customs clearance paperwork, which he will then deliver to the buyer at the designated port.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FAS" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" loading="lazy" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></div></a></figure><h3 id=""><strong id="">Free Alongside Ship: Buyer’s Responsibilities</strong></h3><p id="">In FAS, the buyer is responsible for paying all business expenses as soon as the supplier delivers the items to the designated vessel location. The buyer is accountable for the following:</p><p id="">1) After the shipment reaches the destination port, the buyer is responsible for paying all DTHC.</p><p id="">2) Delivery to destination: After the cargo reaches the port, the buyer's obligations continue; they are now responsible for any expenses related the final delivery.</p><p id="">3) Unloading at destination: The buyer is also responsible for the unloading costs.</p><p id="">4) If the cargo transported under the FAS Incoterm® is imported into the nation, the buyer is responsible for paying all import duty, taxes, and customs clearance fees. It is always advised that buyers choose a customs broker to help them import their freight.</p><h3 id=""><strong id="">Transfer of Risk in Free Alongside Ship</strong></h3><p id="">The buyer will be responsible for the risk factors up until the place of destination since the risk is transferred at the designated vessel. Additionally, he will be held responsible for the entire loss if he doesn't give the seller clear instructions regarding the location and place of the vessel. Since the buyer completes the entire freight and transportation process after the designated port, the risk and damage element of the products persists until they reach their final location.</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FAS" target="_blank"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" loading="lazy" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></div></a></figure><h3 id=""><strong id="">Insurance in Free Alongside Ship</strong></h3><p id="">Since the buyer is in charge of the entire freight process, he is also in charge of the insurance. Since he bears the responsibility for the danger and harm to the goods, everything that goes wrong during the procedure will be his fault. Given that the items will be transported by sea and inland waterways, he will need to have maritime insurance and ocean freight insurance. </p><h3 id=""><strong id="">When to Use Free Alongside Ship Incoterm® </strong> </h3><p id="">FAS has its roots in the era of sail-powered shipping. Nowadays, FAS is solely utilised for inland canal shipments and sea freight. &nbsp;</p><p id="">FAS is still frequently used when buying large pieces of machinery that are loaded onto a barge and transported further along a canal before being positioned alongside another vessel, when the buyers take over the shipping procedure.</p>

Incoterms®: Free Alongside Ship (Port)

<blockquote id=""><em id="">The International Chamber of Commerce has divided Incoterms&reg; under 11 heads. In this blog post you will get to know about the Incoterm&reg; </em><strong id=""><em id="">Free on Board.</em></strong></blockquote>
<p id="">International Commercial Terms &ndash; commonly known as Incoterms&reg; - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1<sup id="">st</sup> January 2020. The ICC first published the Incoterms&reg; in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.</p>
<p id="">International trade involves transactions between territories that have different rules and regulations. Incoterms&reg; are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms&reg; to decide who bears the cost and when the risk gets transferred from seller to buyer.</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><img style="width: 886px; height: 129px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="book shipment" loading="lazy"></figure>
<h3 id=""><strong id="">Free on Board (Port): Overview</strong></h3>
<p id="">Free on Board (FOB) is an Incoterm&reg; that specifies that the seller is responsible for all costs involved with loading the cargo onto the ship. When the goods are secured on board the ship, the risk is transferred to the buyer, who is then in charge of the remaining portions of the shipment.</p>
<p id="">The buyer is responsible for processing after the delivery point. Based on what the two parties have decided, responsibility for risk and insurance is defined. Only transport by sea or interior waterways is covered by FOB. As a result, the location is always a port. If the principal conveyance is by air, ground, or rail, it does not apply.</p>
<p id="">Since the seller is in charge of the items up until they are loaded onto the vessel, he must make sure goods get there. FOB is typically only used in a few situations with containers at minor ports because most products are now delivered to container yards rather than directly to a single vessel. Both sides agree on the location of the products' delivery before shipment.</p>
<figure id="" class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div id=""><img id="" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dc3d775c3ef72f39fd69f_Free%20on%20Board%20V2%5B45%5D.jpg" alt="Incoterm - Free On Board (FOB)" width="auto" height="auto" loading="lazy"></div>
</figure>
<h3 id=""><strong id="">Free on Board: Seller&rsquo;s Responsibilities</strong></h3>
<p id="">The full list of the seller's obligations can be found below:</p>
<p id="">1) Warehouse: The seller's warehouse, as used in the FOB Incoterm&reg; , refers to the location where the seller keeps his or her products to complete the export process. In this case, the seller is responsible for paying for product maintenance. In the process, the warehouse is also referred to as the location of origin, where both parties decided to enter a contract.</p>
<p id="">2) Transportation: Inland transportation from the warehouse to the arrival port is part of the trade transit for the seller.</p>
<p id="">3) Documents: The following documentation must be provided by the seller to the buyer:</p>
<ul id="">
<li id="">Commercial invoice</li>
<li id="">Bill of Lading</li>
<li id="">Packing list</li>
<li id="">Insurance certificate</li>
<li id="">Export licence</li>
<li id="">Custom clearance</li>
</ul>
<p id="">4) &nbsp; In a FOB agreement, the seller is responsible for exporting goods from the point of origin to the port of delivery. Additionally, since the seller's obligation extends solely to the port, their focus is on the export customs. Seller will be responsible for handling all export customs processes and associated fees.</p>
<p id="">5) &nbsp; Freight:</p>
<ul id="">
<li id="">Seller is responsible for expenses of storing the goods in the warehouse.</li>
<li id="">Payment to the freight forwarding agent.</li>
<li id="">Charges to be paid at the terminal</li>
<li id="">Fees associated with loading goods at the port</li>
<li id="">Freight payment from FOB origin, or the location agreed upon by the parties, till the port</li>
</ul>
<p id="">Basically, all fees paid FOB from the point of origin until the goods are loaded at the port.</p>
<p id="">6) Insurance: Normally, the seller is not obligated to provide insurance to the buyer. However, it can be decided as a matter of concern for the seller up until the terminal as a matter of discipline. Moreover, at the buyer's request, the seller may offer to help the buyer with insurance and customs arrangements.</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FOB" target="_blank" rel="noopener">
<div><img style="width: 886px; height: 129px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="international freight" loading="lazy"></div>
</a></figure>
<h3 id=""><strong id="">Free on Board: Buyer&rsquo;s Responsibilities</strong></h3>
<p id="">The buyer has the obligations listed below to complete the logistical process:</p>
<p id="">1) Warehouse: For a buyer, a warehouse is the location where the items will be kept following the entire import-export transaction. Since the buyer will transport the products from the port in his country to the warehouse, it is his job to unload the cargo there.</p>
<p id="">2) Transportation: The buyer is responsible for all transportation costs after the seller loads the goods at the port. The seller therefore handles the ocean freight transit, the unloading of products, and the inland transfer from the buyer's port to his location.</p>
<p id="">3) Documents: The buyer will need those documents in order to import goods into the port of his country because the seller will show verification of all export clearance procedures to the buyer.</p>
<p id="">4) Custom Clearance: Since the seller will have already handled the export processes, the buyer will be responsible for FOB import customs. Even then, the buyer will still need the seller to provide proof of export customs to complete the shipment process.</p>
<p id="">5) Freight: The buyer will be responsible for paying marine freight, transportation from the port of arrival to the final destination, the cost of goods insurance, as well as any charges associated with loading and unloading the products from the port of arrival to the final destination.</p>
<h3 id=""><strong id="">Free on Board: Advantages for the Buyer</strong></h3>
<p id="">Since each party's responsibilities provide them the most control while the shipment is in their jurisdiction, FOB shipping is quite popular among buyers and sellers. When using FOB Incoterms&reg;, the buyer benefits from having the most control over logistics and shipping costs, which gives them the freedom to select the shipping options.</p>
<p id="">With FOB, the purchaser can choose the freight forwarder for the complete cargo, instead of depending on the supplier to handle some or all of the freighting. To reduce back and forth and the possibility of confusion between two shipping companies, the buyer only needs to rely on one company for the duration of the transportation process.</p>
<p id="">FOB Incoterm&reg; is also the most economical choice because it provides the buyer the freedom to compare shipping costs. The risk is transferred when the items are safely put onto the shipping vessel, however the buyer's forwarder is in charge of all aspects of the transportation process. Once the package has left the seller's warehouse, the buyer is in charge of the goods and has better control over the delivery's success.</p>
<p id="">Sellers value FOB Incoterms&reg; because they can consider the sale closed as soon as the consignment leaves their factory.</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=FOB" target="_blank" rel="noopener">
<div><img style="width: 886px; height: 129px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="signup" loading="lazy"></div>
</a></figure>
<h3 id=""><strong id="">Free on Board: Disadvantages for the Buyer </strong></h3>
<p id="">For most buyers, FOB has minimal to no drawbacks. The process may appear more difficult for newer importers or importers who have always made purchases under Incoterms&reg;, where the seller arranges the freight expenses. However, the management and considerable cost reductions quickly surpass this drawback.</p>
<h3 id=""><strong id="">When to Use FOB Incoterm&reg; </strong></h3>
<p id="">Most bulk goods that will be transported by sea qualify as valid FOB agreements. Assuming that the shipment can be sent by any method of transportation, as is frequently the case with buyers and sellers, FOB is misunderstood. Only exports by sea and inland waterways are feasible by FOB, according to the ICC. FCA is an Incoterm&reg; that can be used for all modes of transportation when shipping by land rather than sea, therefore buyers and sellers may want to use it.</p>
<p id="">Even if the buyer acquires ownership of the cargo once it is put onto a truck at the seller's warehouse, the seller is still in charge of making sure the consignment sails safely beyond the ship's rails.</p>

Explore the benefits of incoterm free on board. Enhance your shipping process with efficient logistics solutions.

Incoterms® FOB: Free on Board Simplified

<blockquote><em>The International Chamber of Commerce has divided Incoterms® under 11 heads. In this blog post you will get to know about the Incoterm® </em><strong><em>Cost and Freight.</em></strong></blockquote><p>International Commercial Terms – commonly known as Incoterms® - are published by the International Chamber of Commerce (ICC). The latest version was adopted on 1<sup>st</sup> January 2020. The ICC first published the Incoterms® in 1936 and has since updated it at regular intervals to reflect the changes in global trade ecosystem.</p><p>International trade involves transactions between territories that have different rules and regulations. Incoterms® are accepted by governments and regulatory authorities around the world. Parties involved in trade use Incoterms® to decide who bears the cost and when the risk gets transferred from seller to buyer.</p><p><br></p><p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f221ea0a3531379525477_Blog-Creative-1.png" alt="638f221ea0a3531379525477_Blog-Creative-1.png"></a></p><h3><strong>Cost and Freight (Port): Overview</strong></h3><p>Cost and Freight (CFR) means the seller has fulfilled its obligation when the goods are delivered and loaded on the vessel they’ve nominated at the named port of shipment.</p><p>Only inland and sea transport should make use of CFR under Incoterms® 2020. As soon as the items are loaded onto the vessel before carriage begins, risk or liability for the goods passes from the seller to the buyer, and the buyer is then responsible for any further expenditures.</p><p><br></p><p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638dc975c52f545ff652f28c_Cost%20And%20Freight%20V2%5B73%5D.jpg" alt="638dc975c52f545ff652f28c_Cost%20And%20Freight%20V2%5B73%5D.jpg"></p><h3><strong>Cost and Freight: Transportation Options</strong></h3><p>Although buyers and less experienced exporters might choose an F-group term, more experienced exporters prefer C-group terms since they allow direct communication with the carrier and provide all the information required for letters of credit in one location. Additionally, if you book a lot of freight, selecting C-group terms gives you more negotiation power.</p><p>Like the other four Incoterms® 2020 rules for shipping by sea and inland waterways, CFR is best used when the seller has direct access to the vessel for loading, such as when shipping bulk freight or non-containerized commodities. Carriage Paid to (CPT), however, might be a superior Incoterms® option for most exports. Any freight destination may be the named destination under CPT.</p><p>The risk of the products is transferred to the buyer after they are carried onboard, or before to the freight continuing, under CFR shipping terms, even though the seller is responsible up till the designated point of port. All payments after the scheduled port, including goods insurance, are the buyer's responsibility. Additionally, in CFR, the seller is not bound by any mandatory obligations, in contrast to the CIF Incoterm®, which calls for the provision of insurance coverage.</p><p><br></p><p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f224556fe413902d3d886_Blog-Creative-2.png" alt="638f224556fe413902d3d886_Blog-Creative-2.png"></a></p><h3><strong>Cost and Freight: Seller’s Responsibilities</strong></h3><p>When transacting using CFR Incoterm®, the seller is accountable for the following:</p><p>1) The seller shall make the following expenses:</p><p><br></p><ul><li>Warehouse charges</li><li>Inland charges for loading and carrying goods till the designated port</li><li>Depot and duty charges for terminal proceedings</li><li>Charges for documentation</li><li>Custom charges</li><li>Charges for shipping freight</li></ul><p>CFR freight charges are paid by the seller. He continues to be responsible for the carriage going from the warehouse to the first port, which is the port of the exporting country, and then for the carriage going from the first port to the second port, which is the port of the importing country.</p><p>2) Insurance: In general, the seller is not required to have insurance. Although he is in charge of delivery, he is not in charge of insurance. However, he may extend his services to insurance or even carry out the coverage process at the risk and expense of the client</p><p>3) Duty and customs clearance: The export customs procedures are the seller's responsibility. He is responsible for maintaining the packing list, commercial invoice, bill of lading, and other export-related paperwork. He will pay for things like terminal fees and freight forwarding costs. Additionally, he will give the buyer that paperwork to complete the freight procedures after the procedure.</p><p>4) Risk transfer: The risk of the goods after the first port is not the seller's responsibility, even though he is responsible for delivery of the goods up to the designated port. As soon as the seller loads the goods onto the vessel, the buyer assumes the risk of the commodities. Therefore, the importer is responsible for paying any additional fees or levies placed on the products because of carelessness or delays, such as shipping demurrage fees, unexpected taxes, etc.</p><p><br></p><p><a href="https://cogoport.com/signup/?utm_source=web&amp;utm_medium=incoterm&amp;utm_campaign=CFR" rel="noopener noreferrer" target="_blank"><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/638f226681a8e6b413a2e2fa_Blog-Creative-3.png" alt="638f226681a8e6b413a2e2fa_Blog-Creative-3.png"></a></p><h3><strong>Cost and Freight: Buyer’s Responsibilities</strong></h3><p>Under the CFR Incoterm®, the buyer is accountable for the following:</p><p>1) Cost:</p><p><br></p><ul><li>Costs associated with insurance since he bears the entire burden of covering and the risk involved with the goods.</li><li>Processes for import customs, including payment of all fees and taxes at the designated port.</li><li>Transportation costs for inland travel between the designated port and the final destination.</li></ul><p>2) Freight: In this process, the buyer is just barely involved. As soon as the seller delivers the goods, the buyer must unload them at the dock and load them for interior transit to the final destination.</p><p>3) Risk Transfer: As soon as the seller loads the items onto the vessel at the first port, the risk of the commodities passes to the buyer. Additionally, the buyer bears the insurance risk from the beginning of the trade procedure. The loss will be the duty of the buyer if he neglects to direct the seller to the delivery port.</p><p>4) Insurance: As soon as the seller loads the items onto the vessel at the first port, the risk of the commodities passes to the buyer. Additionally, the buyer bears the insurance risk from the beginning of the trade procedure. The loss will be the duty of the buyer if he neglects to direct the seller to the delivery port.</p><p>5) Duty and customs clearance: The buyer is responsible for paying any import duties included in the CFR. The buyer is liable for unloading the items when the seller drops them off at the agreed port. All import taxes and charges are his responsibility at the dock port. Additionally, he will be responsible for paying any local and depot fees.</p><p>Even while the seller is responsible for delivery of the products up to the designated port, he is not responsible for the risk of the items after the first port. The risk of the commodities shifts to the purchaser as soon as the seller loads them onto the ship.</p><p>Therefore, any additional charges or levies imposed on the goods because of negligence or delays, such as shipping demurrage fees, additional taxes, etc., are the responsibility of the importer.</p><p><br></p><h3><strong>When to Use Cost and Freight Incoterm® </strong></h3><p>The best applications for CFR Incoterms® are in inland waterway and ocean freight. It is generally utilised for bulk cargo and non-containerized commodities when the seller has direct access to the vessel and the goods are put straight onboard rather than in a container terminal. If the items must be delivered to a container terminal, CFR will not be applicable.</p>

Aprenda e descubra com a Cogoport

Últimas postagens