About International Procurement: Freight Prepaid and related incoterms

Introduction:

Transportation is one of the Drivers of Supply Chain. The term Freight denotes transportation charges. The International Commercial terms or INCOTERMS refers to whether the shipper/consignee responsible to pay the freight or transportation charges.

The Incoterms:

Freight Collect” & “Freight Prepaid” are two shipping terms, which indicate whether consignee has the primary liability to the carrier for the shipping charges in a procurement process.
 If it is a “Freight Prepaid” shipment, then the carrier is supposed to invoice to shipper for the transportation charges. Conversely, if it is a “Freight Collect” shipment, the carrier is supposed to invoice the consignee.
 The Incoterms CFR, CIF, CPT, CIP, DAT, DAP, DDP require repayment of cost of the main carriage or shipping cost by seller/shipper.
EXW, FCA, FOB, FAS etc Incoterms are used for “Freight Collect” shipment.
 Now, we would like to discuss about incoterms which can be used for different types of “Freight Prepaid” shipments based on Incoterms 2010 published by ICC:

“Main Carriage paid by Supplier” group of incoterms:

CFR: Cost and Freight (Named Port of destination)
Sellers arrange transport and pay all the freight charges, so that the goods may be brought to a named destination port. Point of delivery of goods and transfer of risk is when the respective goods pass ship’s rail at the destination port. Previously, it was called CNF or C&F. This incoterm is used for sea bound shipments.
 CIF: Cost, Insurance and Freight (Named Port of Destination)
This incoterm is exactly same as CFR, except seller need to pay insurance also. It’s only applicable for Maritime and inland waterway
shipments.
CPT: Carriage Paid to (Name place of destination)
All kind of shipments (general/multimodal/containerization) are included for CPT. Not only sea shipments. Point of transfer of risk happens upon delivery of goods at the country of export.
CIP: Carriage and Insurance paid to (Named place of destination)
This incoterm is exactly same as CPT, except seller need to pay insurance also.

“Arrival”  group of incoterms:

DAT: Delivered at Terminal (Named terminal at Port or Place of Destination)
Delivery takes place once the goods unloaded at the terminal .Except import clearance cost carriage to terminal cost and all risk is to be paid by seller .Previously DEQ was used for similar purpose.
 DAP: Delivered at Place (Named Place of Destination)
Delivery takes place once the seller sends the cargoto the Named Place and pays freight for it. Seller assumes risks until buyer is ready to unload it at the terminal DAP should be used in place of previous incoterms DAF, DES, DDU.
 DDP: Delivery duty paid (Named place of destination)
It is seller’s duty to deliver the goods to the named place in buyer’s country. Including duty and taxes all cost need to bear by the seller. So, the term is giving maximum responsibility to seller and minimum responsibility to buyer. The goods are delivered at the named place, which may be buyer’s premises, but not unloaded.
 Above mentioned incoterms are applied for different type of transportations. CFR and CIF are used for Maritime and inland waterway. CPT, CIP, DAT, DAP, DDP are used for air freight, road freight, Railway freight, Maritime and Inland waterway freight.
A Usage of Incoterms by Banks in Bangladesh:
Bangladesh Bank (Central Bank of Bangladesh) has given a rule binding to its entire Banks that the EXP Form shall be negotiated / accepted only when these are drawn on CFR/CIF/CPT/CIP basis and not on FOB/FCA/FAS/EXW/DAS basis.

Conclusion:

At conclusion stage, we can say one thing is that suppliers and buyers can also invent or modify incoterms for their particular situation. But ICC incoterms are widely used by world business community for its familiarity and wide acceptance.
Bengali Version:
If required, please see the Bengali Version of  the article in the below mentioned link :
http://www.slideshare.net/ikramhridinuha/international-procurement-and-freight-prepaid-incoterms-bengali-version-24328690

Comments 23

  • Hello Dear, are you really visiting this website on a regular basis,
    if so afterward you will definitely take fastidious experience.

    Here is my blog … single phase UPS

  • you're in point of fact a just right webmaster. The website loading velocity is incredible.

    It kind of feels that you're doing any unique trick.
    Also, The contents are masterwork. you have done
    a wonderful job on this matter!

    my web site: great site ()

  • The bosses will always be the same, not only a ton of characters to chose
    from, but expansions will add to this particular.
    Despite going for a serious stance regarding the issue of cheating in 'Black Ops 2',
    there are many cheats and hack positioned
    on all platforms from the sport. To find out more about 'Smite' along
    with the recent patch keep reading.

    my page … smite game (https://www.facebook.com/smitegemshackgenerator)

  • It's an amazing post in support of all the web people; they will get advantage from it I am
    sure.

    Feel free to visit my blog – domain

  • May I simply just say what a comfort to uncover somebody who actually understands what they're
    discussing online. You certainly know how to bring a problem to
    light and make it important. More people need to read this and
    understand this side of the story. I was surprised that you are not more popular since you most certainly have the gift.

    Feel free to surf to my weblog Perception sport (youtube.com)

  • Hi Anonymous,
    The comments are so encouraging.
    With regards,

  • Cet аrticle est plein dee vérité

    Also νisit mmy page Defonce Hard

  • Hi there, You have done a great job. I will certainly digg it and personally recommend to my friends.

    I'm confident they'll be benefited from this site.

    Also visit my web blog Kayak Trailer (http://Www.Youtube.Com)

  • Excellent website you have here but I was curious about if you knew of any discussion boards that cover the same topics discussed in this article?

    I'd really like to be a part of online community where I can get suggestions
    from other experienced individuals that share the same interest.
    If you have any suggestions, please let me know. Cheers!

    Feel free to surf to my blog: cheap kayaks

  • Hi! I have been poking about your blog site for some time now.

    My wife and me really love your content. If you get the opportunity come see what we've been working on at our YouTube Channel.

    We focus on social websites along with advertising. Hope to see you there some time!

    Cheers!

    Feel free to visit my weblog – facebook marketing for dummies

  • It stands to reason – The more shirts you order, the lower the price per shirt.

    Because lighter ink was screened twice on the garment.
    To get the best effect, you should wear a slightly loose
    Abercrombie & Fitch shirt.

    my webpage t shirt printing

  • I simply want to say I am beginner to weblog and definitely enjoyed you’re website. Likely I’m likely to bookmark your website . You absolutely have fantastic articles. Bless you for sharing your web page.

    • Thanks for comment. Will send you an welcome email with a free ebook and send you email after publish new article from now on.

  • Hello there! This post couldn’t be written a lot better!
    Experiencing this article reminds me of my previous roommate!

    He continually kept referring to this. I undoubtedly will send
    this article to him. Fairly certain he’ll have a very good read.
    I appreciate you for sharing!

  • Hello.This article was extremely remarkable, especially since I was browsing for thoughts on this topic last Friday.

  • If some one wants expert view about blogging and site-building afterward i suggest him/her to pay a visit this website,
    Keep up the good work.

  • Asking questions are truly nice thing if you are not understanding something fully, however this post
    gives fastidious understanding even.

  • I have read so many posts on the topic of the blogger lovers but this paragraph is really a nice article, keep it
    up.

  • I precisely wished to appreciate you once more. I am not sure what I might have gone through without those concepts revealed by you over that topic. It was an absolute distressing setting in my view, but seeing a professional approach you treated it forced me to jump over joy. Now i’m happy for the service and then hope you really know what an amazing job you happen to be accomplishing teaching the mediocre ones with the aid of your webpage. I know that you haven’t encountered any of us.

Leave a Reply

Your email address will not be published. Required fields are marked *