The International Chamber of Commerce has released the ICC Incoterms 2020 update of their international trade terms for the sale of goods on September 10, 2019. Incoterms defines the responsibilities of sellers (exporters) and buyers (importers) engaged in cross-border trade regarding the delivery of tradable goods. These are the standards regarding the delivery methods created by the International Chamber of Commerce “ICC”.

There are 11 delivery terms available under the Incoterms 2020 rules. Who will organize the shipment? Who will pay for the costs incurred in the various stages of the shipment? Who owns the insurance liability? Who will do the customs clearance? You will find answers to all these questions and in our article. But first, we’ll talk about the changes.

What are the key changes in Incoterms?

We have listed the main differences between incoterms® 2020 and incoterms 2010 under basic headings:

Free Carrier (FCA) Key Changes & Updates:

The most crucial change in Incoterms 2020 rules relates to FCA. FCA delivery term is divided into two subgroups for sea and road freight. The reason for this was the problems experienced in ship loading, especially in sales with letters of credit, although there were no problems in truck loading. The seller’s responsibility ended when the freight was delivered at the port, but banks request a bill of lading with an on-board notation.

The seller does not control shipments under the FCA term, so the carrier has no obligation to the seller. With Incoterms 2020, the buyer company will be able to add a condition to a contract with the seller that “the shipping company will deliver the bill of lading to the seller company. Shipment charges and all risks belong to the buyer, but the bill of lading will be given to the buyer. Finally, the buyer sends the BL with the document set to the bank by the buyer.

In Incoterms 2010 and earlier versions, the main problem with FCA was that, in multi-shipments and especially in maritime transport, before loading the export cargo on the ship, for example, the delivery obligation of the seller was completed at the port entrance. For example, if a letter of credit was made, the bank requested the bill of lading from the exporter and held responsible for the details that should be written on the bill of lading.

However, the seller was liable for the document that he was not responsible for when his relationship with the shipping company was completed. This problem was resolved with the revision made in Incoterms 2020. FCA has changed to allow the buyer and seller to agree that the seller will get an on-board bill of lading.

Changes Regarding CIF and CIP

In Incoterms 2010, insurance policies on CIF and CIP shipments were prepared with a minimum level of coverage. Within the scope of Incoterms 2020, it has been decided that the “Clauses (C) of the LMA / IUA Institute Cargo Clauses” which is currently valid for CIF will be insured at the minimum insurance level.

For CIP shipments, “Clauses (A) of the Institute Cargo Clauses”, ie insurance including all risks, is mandatory. Therefore, the degree of insurance liability in CIF and CIP shipments, which we can separate as port delivery in the importer’s country and delivery to the importer’s address, has changed.

DAT changed to DPU

The rule is known as DAT (Delivered At Terminal) under Incoterms 2010 has been renamed DPU. DAT was renamed DPU (Delivered at Place Unloaded) to emphasize that the address to which the goods will be delivered can be anywhere, not just a terminal. At this point, if the delivery address is not a terminal, i.e. a customs point, it should be a suitable place to unload the goods.

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Arranging For Carriage With Seller’s Or Buyer’s Own Truck

Incoterms 2010 was created assuming that international transportation will be carried out by a third company other than the buyer and seller company, namely a shipping company. With Incoterms 2020, it is stated that the exporter or importer company can now carry out international transportation with its own vehicle. We see that its effect the delivery terms FCA, DAP, DPU and DDP.

The obligation of the Insurance Declaration in DAP, DDP, DPU

The DPU has begun to replace the DAT delivery term. In Incoterms 2020, for DAP and DPU delivery methods, it was not clearly stated whether the insurance belongs to the exporter or the importer, this was not clear in previous versions. Unless specified by a special clause in the sales contract or proforma invoice between the parties, the exporter company organizes the shipment without insurance. In this case, the importer company must take out insurance for the safety of the cargo and compensation for possible damage.

Incoterms 2020 more clearly reveals the costs incurred in the export and import stages. Clearer listing of costs: All costs associated with relevant Incoterms® are now listed under A9 / B9 “Allocation of Costs” to provide a single list of costs.

In Terms of Customs Transactions: Export, Import & Transit Trade

Incoterms 2020 more clearly classifies the responsibilities of exporters and importers at the customs clearance stage. The problems experienced so far have been studied, and the role of the seller and the buyer in customs transactions has been clarified, taking into account the costs and risks for exporters and importers, taking into account these experiences. In addition, the transactions included in transit goods were mentioned in Incoterms 2020.

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Incoterms 2020 Basic Classification

In the previous versions of Incoterms, we see that a distinction is made according to the delivery types starting with the letter E, F, C and D, or classification has been made according to sea freight and multimodal transport types. While organizing Incoterms 2020, mainly the responsibilities and risks of the companies were taken into consideration, and the decisive point was the stages of the shipment and the determination of the parties undertaking the transportation risk.

8 incoterms consisting of EXW, FCA, FAS, FOB, CPT, CFR, CIP and CIP are delivery methods in which the shipping responsibility belongs to the buyer wholly or partially. DAP, DPU and DDP, where the responsibility and risk of transportation are on the seller, were accepted as the second category.

Classification of Incoterms by Transport Type
Category Incoterms
Multimodal (air / sea / road / railway) EXW,  FCA,  CPT, CIP, DPU, DAP, DDP
Sea and River  FAS,   FOB,  CFR,  CIF

 

Sydney International Freight

Choosing the optimal freight services according to various delivery terms requires to analyze and understanding of liabilities and costs. , Our freight shipping experts, will guide you to help you determine the best freight shipping options according to your needs and budget.

Sydney International Freight offer options between Australia and all ports, airports and customs points on all over the world. Every year, thousands of companies deliver their cargo to us without any questions about the shipment process. We specialize in the international transportation of cargo. We provide both “FCL” & “LCL” overseas services plus export & import cargo services with 40 years experience.

What is a Container:

Containers are structures in the form of a steel box, manufactured to deliver your cargo to the delivery address in an efficient, safe and undamaged manner within the transportation system with international standards.

Different modes of transportation make it possible transport containers by transferring from vehicle to vehicle without unloading the materials inside. Multimodal transportation enables containers to be transported over thousands of kilometres by being loaded on different vehicles such as trucks, ships and trains.

Container transportation, as a safe and fast transportation option, enables the transport of many different products, from household goods to commercial goods, from food products to natural gas. Container transportation provides this flexibility, with varying types of containers for different products. We are talking about a dry container, flat container, reefer (refrigerated) container, tank container and many more container types. As of 2020, approximately 17 million containers are used worldwide.

Approximately 2.5 tons of steel is used in the construction of a 40 ‘container. Each corner of the container is designed to handle a load of 96 tons. The floor to carry a load of 24.5 kg per cm². It is the most preferred transportation method for tons of heavy construction equipment, automobiles, metal equipment and thousands of different products.

DRY CONTAINER – STANDARD CONTAINER

The most frequently used container types in export and import shipments are 20’DC and 40’DC containers. The acronym DC stands for “Dry container”. This type of container does not require any special transportation method.

Although these types of containers are referred to as “dry van” or “standard” in some business correspondence, often the term “general purpose” is more appropriate. It is named with the acronym DC. While widths of DC containers are fixed, they are available in different lengths and heights. When choosing the container, you have to decide on the quantity and dimensions of the product to be transported.

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The most common types of DC Container
20 ‘DC CONTAINER

The outer length of the 20′ container is 6.058 mm. The width is 2.438 mm. The height is 2.591 mm.

Internal dimensions: We need to know the interior dimensions of the container to calculate how much space the cargo to be transported will take up in the container. The interior dimensions of the 20′ container have been determined as 5.710 mm (length), 2.352 mm (width), 2.385 mm (height). The 20′ container volume is 33 m3.

When planning Dry Container loading, door dimensions should be considered. The door opening is 2,343 mm wide and 2,280 mm high.

The empty weight of a 20′ container is 2,200 kg. Maximum 28.250 kg can be loaded. But the upload limit varies from country to country. Therefore, we recommend that you find out the maximum weight that can be transported in the ports and roads in the destination country before shipping.

40 ‘DC CONTAINER

The 40′ container has a length of 12.192 mm. Its width and height are the same as 20′ container. The width is 2.438 mm. The height is 2.591 mm.

Internal Dimensions: 40 ‘container only changes as length 12.032 mm. Internal dimensions are the same in width and height. It is 2.352 mm in width and 2.385 mm in height. The capacity of a 40′ container in cubic meters is 67 m3.

The width and height of the 40 “container door are almost the same as the 20′ container. The door width is 2.343 mm, and the height is 2.2580 mm.

The empty weight of 40′ container is 3.750 kg. Up to 30 tons can be loaded in 40’ containers. But our recommendation for a 20 “container applies in this case. Before planning the shipment, we recommend checking the shipping limits in the delivery port and the country of delivery.

40 High Cube / 45 High Cube

This type of container is used for the transportation of relatively light but high volume goods. Their height is 30 cm more than a normal 40′ container. The internal volume of High Cube containers is more than 40 “containers due to their height, but their weight carrying capacity is the same.

20 Open Top / 40 Open Top

It has the same dimensions as a typical dry container, except that it doesn’t have a “fixed-top”. It is used when loads that are too long or too wide to fit into the container from the door can only be placed from the top by crane or similar tools. It is mostly used to transport products such as machinery, marble plates, aluminium profiles. Open top containers are often used for overflow loads.

The top of the container is tightly covered with a tarpaulin after loading. The base is slightly thicker than the other containers, as it carries heavy loads. Since Open Top containers are classified as special equipment, the surcharge is usually added to the freight.

20 Flat Rack / 40 Flat Rack / 40 Closable Flat Rack

Sometimes its referred to simply as “flat”. This type of container has no four sides and no top. Sometimes both heads can be dislodged. The flat container is suitable for loading goods with both sides and overflow. The surcharge is added to the transportation fee for the loads exceeding the container dimensions.

40 Reefer / 40 High Cube Reefer / 45 High Cube Reefer

It has a cooling unit attached to the container and driven by an electric or diesel engine. The cooling system makes it possible to transport food products, medicines and similar medical products with these containers.

20′ Tank Container

It is a container type, which consists of a container, which is a carrier element, and a profile frame, in which liquid or gaseous substances are generally carried. It is a safe and low-cost transportation vehicle in terms of transporting liquid and gaseous substances.

From Australia to all over the World

If you are going to export from Australia to any country in the world. For FCL and LCL shipments, it is important to get an offer from a company experienced in sea shipping for the right container selection.

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Sea shipping is the world’s most common shipping method as an economical and safe method of transportation. According to the data of 2020, approximately 100,000 ships worldwide carry around 2 million tons of cargo for a year. Container shipping from Australia to Europe, America, Africa and Asia is a global supply chain that enables the transfer of commercial and private goods between thousands of ports in hundreds of countries.

Shipping companies: Shipowners vs Freight Forwarders

Ship-owner companies such as Maersk, MSC, Cosco, as the world’s largest shipping companies, form the infrastructure of maritime transportation with the ships and containers they own. However, the main actors of the sector are freight forwarder companies, which generally provide local services.

The main reason for this is that customers who want to move their cargo from one country to another want to receive local service. What we mean by local service is that operations are carried out accurately and safely and that you can find an authorized and relevant company representative when you have a question or a problem.

For example, suppose you are planning an FCL or LCL shipment from Sydney to New York. In that case, the content of the service that a global shipper will provide to you consists of providing a website link where you can track the movements of your cargo. These companies using a random customer service, So each time different customer representative answer your calls with limited authority and knowledge.

Which Type Of Cargo Is Suitable For Sea Transportation?

Maritime transport is not suitable for small diameter loads. For a package which is less than 100 kg, or less than 1 or 2 parcels, the airline shipping price offered by express courier services is more favourable.

Another issue; Anything that can fit in a container can be transported, except for goods added to the restricted list by countries. There are far fewer restrictions on what can be transported using sea transport compared to air transport.

The “width * length * height” dimensions of the goods to be transported must be appropriate for loading those items into the container and unloading them at the destination port. Please review the container size chart below.

Dimensions-of-containers

Freight forwarders: Strengths & Advantages

What makes a Freight Forwarder advantageous, especially if it is a company that is deep-rooted and following innovations, will serve you with a combination of traditional methods and current practices to provide you with the best service.

“Sydney International Freight” is one of the leading freight forwarder companies in Australia with almost 40 years of experience. A Company specialized in the shipping of commercial goods, private cars, household goods & personal effects worldwide. As a freight forwarder, it stands out among Australia and all ports of the world with the best price, fastest and most reliable information flow, professional solution to all your questions and questions about transportation.

How to Get a Sea Freight Quote

For shipping companies to determine the transportation costs of your freight and offer you a price quote, you must have the following information.

  • Origin and destination of the shipment
  • Total number of parcels
  • Boxes or pallet dimensions & weight (width * length * height)
  • The type of product to be shipped. (to determine the conditions of carriage)
  • Mention your expected delivery time. If there is a deadline, specify it.

Sea Freight How Long Shipment Process Take?

The shipment process that will take place between the port where the goods will be loaded and unloaded, that is, the time the ship will spend at sea determines the duration of the shipment. This time varies according to the physical distance between the two ports. However, when calculating the time, the time required for customs procedures to be performed at both the loading and unloading ports should also be taken into account. You should get information from shipping companies for up-to-date shipments.

 

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How Does Sea Shipping Work?

It is important to work with freight forwarders for the shipment of commercial goods or personal effects abroad. Customs procedures, including export and import procedures, will be carried out at the beginning and end of an international shipment. Therefore, we recommend that you work with a freight forwarder to avoid errors that can result in costly costs and penalties.

The general steps you should take to organize a sea shipment are:

  • Choose a freight forwarding company that is specialized in its field and works actively in the region you will be shipping to and get a price quote for the service you need.
  • The shipping company will collect the goods from you or from your supplier if you have asked to pick them up from a supplier abroad.
  • Your shipment is transported to the port.
  • Goods are loaded in a container (FCL) or a shared container (LCL)
  • Registration is done in the port regarding the sample process A draft Bill of Lading is prepared. Your customs brooker frim handles customs clearance.
  • The ship leaves and the journey begins to the destination port.
  • When the ship reaches the destination port, the shipping company will send you an arrival notice.
  • At the destination port, the container is unloaded to the customs area.
  • Customs procedures are carried out
  • Port exit permit is taken for the container whose customs procedures are completed. If you have an address delivery agreement, the container is transferred to the address you want by an intermediate transport vehicle organized by your carrier.