Question

In: Operations Management

What risk and perils are present in global transportation? Briefly describe the four group of Incoterms

What risk and perils are present in global transportation? Briefly describe the four group of Incoterms

Solutions

Expert Solution

There are numerous risks that any transporter takes on. Exporters and importers face additional risks such as legal requirements for import of goods and the same for exporting. Exporters and importers can spend a lot of time researching the legal requirements for transportation and the most efficient methods of transport.

In global transportation, importers and exporters are confronted with financial risks, transportation perils, managing risks, and insurable interest. In financial risks, the importer and exporter have to determine their insurable interest and be able to prove the carrier was at fault. In managing, risks importers and exporters take risk retention, risk transfer, or take a mixed approach.

Incoterms standardize the terms of negotiations between countries as it applies to business. They clarify and attempt to remove uncertainties that might result from differing interpretations of trade terms.

.●E term: Importer takes responsibility at departure

●F term: Importer pays to ship when it is delivered to the carrier of choice

●C term: Exporter pays to ship for the main carriage

●D term: Exporter pays all costs for delivery


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