Transporting goods for overseas trade
If you’re doing business abroad, you’ll have a whole new set of challenges to deal with, not least of which will concern issues of transportation of goods. How can you make sure that you protect your business interests in the course of getting your products from A to B? Will you do this on your own or rely on a partner organisation with knowledge of the local conditions to help you reach your targets?
Transit and Incoterms rules
The International Commercial Terms (Incoterms) are a series of pre-defined commercial terms that are widely used in international commercial transactions or procurement processes, drawn up by the International Chamber of Commerce (ICC). They are primarily designed to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. Although they were first published in 1936, Incoterms rules have been periodically updated and the current version was published in 2020. It contains the following 11 terms:
EXW - Ex Works
FCA - Free Carrier
CPT Carriage Paid To
CIP - Carriage And Insurance Paid To
DPU - Delivered At Place Unloaded
DAP - Delivered At Place
DDP - Delivered Duty Paid
FAS - Free Alongside Ship
FOB - Free On Board
CFR - Cost and Freight
CIF - Cost, Insurance and Freight
For descriptions of each of these terms, see the Incoterms page by clicking on this link to the ICC's Incoterms Website
Partnering with locals
When you’re initially testing international waters you may decide to appoint a third party, who is familiar with the local territory, to act on your behalf as an agent and use their knowledge of languages, customs and regulations to market and sell your products and services. You may even wish to take this a step further and create a relationship with a distributor who essentially buys your products and sells them on to their own customers. Using an agent or distributor can be an effective way of getting your product to market abroad but you should always make sure you agree to the terms of your business relationship at the outset.
If you’re doing business abroad, Terms and Conditions of Export can help the legal relationship between buyer and seller and should include the Incoterm rules. Agency and Distribution Agreements will serve to protect your business interests if working with a third party to expand overseas. Click on the relevant links below for further information.