Question

Please study Incoterms so you are knowledgeable.

you will submit a critical appraisal of the answers you received. The critical appraisal must cover at the very least the following:

What is the depth of knowledge of Incoterms in the company?

Are the most appropriate parties choosing the Incoterms?

Does the company use the Incoterms to give the greatest competitive advantage to the company bearing mind their Logistics capability?

Is all this done to maximize the value to the customer and in what way does the choice help to improve the customer value?

Answer 1

INCOTERMS :

To know about the incoterms regarding company dealings is very important. The term incoterms ( International Commercial Terms) are published by International chammber of commerce related to predefined commercial terms which is also related to International commercial law.

This is considered to be the key elements of international contracts of sale. These incoterms explains about the terms related with whar the buyer or seller / Exporter or Importer should do with respect to carriage of goods. These terms also explains about the risks involved in transaction and division of cost involved in it.

The company who are dealing international trade must have depth knowledge of Incoterms inorder to get femilier with all formalities, costs involved and risks to be beared in carriage and different transaction.

The following are the important 13 incotterms published by Internationa Chammber of Commerce

(1) C&F (Cost And Freight),

(2) CIF (Cost, insurance, And Freight),

(3) Delivered At Frontier,

(4) Delivered Duty Paid,

(5) Ex quay,

(6) Ex ship,

(7) Ex works,

(8) FAS (Free Alongside Ship),

(9) FOB (Free On Board),

(10) FOB Airport,

(11) FOR/FOT (Free On Rail/Free On Truck),

(12) Free carrier,

(13) Free Carriage Paid To and Free Carriage Paid To And insurance.

In 2000 - 2010 term it has reduced from 13 to 11.

DAF, DES, DEQ, DDU are replace by two new incoterms DAT & DAP.

Are the most appropriate parties choosing the Incoterms?

Seller, Buyer 0r Exporter, Importer are the most appropriate parties choosing the Incoterms.

Does the company use the Incoterms to give the greatest competitive advantage to the company bearing mind their Logistics capability?

Yes, the company use the incoterms to give the greatest competitive advantage to the company bearing mind their Logistic capability.

FCA ( Free Carrier 2000 and 2010 ), CIP ( Carriage and Insurance Paid 2000 and 2010 ), CFR ( Cost & Frieght), CIR (Cost, Insurance & Frieght ) , DDP (Delevered Duty Paid), DAP ( Delivered At Place) , FOB ( Frieght On Board) , EXW ( EXWORKS) are the terms which gives most competitive advantage for sellers and Exporters in International transactions.

Is all this done to maximize the value to the customer and in what way does the choice help to improve the customer value?

Using incoterms are not essentailly done to maximise the value to the customer, it also helps to improve the customer value by bearing such transation risks in international trade. The more the company is control over the cost of transportation then it will be the most competitive in the international trade. The shipping cost will affect the product price hence the company should also keep in mind to control cost to be a competitive company. Hence it will help to improve the customer value.