Shipping on the Right Terms
(Business Without Borders – Paul Gallant)
The latest iteration of ‘Incoterms’ will help you avoid costly misunderstandings when sending your products
“When was the last time you saw a truck floating?” asks Joy Nott, the president of the Canadian Association of Importers and Exporters. “I don’t think you have.”
But when Canadian companies import or export goods internationally, Nott estimates that 90% of them use the shipping code FOB – short for “Free On Board” or “Freight On Board.” The vast majority of Canadian international trade is by truck; international guidelines state that cargo sent FOB must be carried by a sea vessel. For international land and air transportation, shipping cargo FOB invites only confusion and possible legal headaches. Yet Canadian companies can’t seem to part with the term. Understanding shipping, and the terms that define it, is crucial for any business sending goods abroad.
Nott hopes an update of the International Commercial Sales Terms, known as Incoterms, could persuade Canadian businesses to look more carefully at what they’re agreeing to when they draw up shipping contracts with international suppliers and customers. The 11 revised Incoterms, which come into effect January 1, 2011, are aimed at making the responsibility of buyer and seller even more clear in an era where multimodal transportation has become the rule, not the exception. Read more here (membership required).
Related: Incoterms® 2010 Overview
Date: January 6, 2011