Shipping Solutions News
  December 2004
1.888.890.7447 | www.shipsolutions.com  

In This Month's Newsletter:

Shipping Solutions Introduces New Version of its Classic Software

Terms of Trade: Uniform Commercial Codes and Incoterms 2000—Part 2

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Shipping Solutions Introduces New Version of its Classic Software

Shipping Solutions has released version 6.1 of its Shipping Solutions Classic export documentation software. This new version of the software includes the revised NAFTA Certificate of Origin form that reflects the creation of the Department of Homeland Security and the new U.S.-Chile Free Trade Agreement Certificate of Origin.

Shipping Solutions Classic version 6.10 is the company's entry-level version of their top-selling export software and features nearly two dozen standard export forms and the ability to file an exporter's Shipper's Export Declaration (SED) information electronically through the Automated Export System (AES). (The U.S. Census Bureau has announced plans to eliminate the paper version of the SED during the second half of 2005 and require all exporters to file that information electronically through AES.)

Shipping Solutions Classic version 6.1 is only $499 for a single-user version and $1,299 for a network version that allows companies to install the program on up to four PCs. Current users of Shipping Solutions Classic version 4.x or 6.0 can contact Shipping Solutions at 888-890-7447 or sales@shipsolutions.com to get a special upgrade price for the new software.

In addition to the new and revised certificates of origin, Shipping Solutions Classic version 6.1 includes a number of other enhancements designed to make completing your export forms even faster and easier:

  • An updated interface with the U.S. Census Department’s Automated Export System (AES) to let you enter an email address if you want the AES response emailed to an address different than the account administrator’s email address.
  • A new link to download and install updated lists of U.S. and foreign ports, carrier codes, and country codes into the appropriate databases in Shipping Solutions.
  • The ability to display the ExWorks value of your shipments directly on the EZ Start’s Commercial Invoice and Proforma Invoice screens.
  • The ability to print your company logo on the packing list in addition to the commercial and proforma invoices.
  • An improved Copy Shipment feature that copies more data from the designated shipment to a new shipment record.
  • Additional contact names and phone numbers on various export forms that didn’t previously include this information.

In addition to the new version of Classic, the company introduced a new Shipping Solutions Professional version 7.1 last month that provides additional forms and features not found in the Classic version:

  • Additional export forms such as an Air Waybill, CARICOM Invoice, a Spanish-language Commercial Invoice, the IATA and IMO Dangerous Goods forms, French- and Spanish-language NAFTA Certificates of Origin, and a Non-Dangerous Goods form.
  • The ability to display multiple currencies on your proforma and commercial invoices and a currency converter that automatically converts dollars into the appropriate foreign currency.
  • The ability to send any of your export forms in a pdf format via email to your customers, customs brokers and/or freight forwarders.
  • An Integration Utility that makes it easy to link Shipping Solutions Professional with your company’s accounting, order-entry or ERP system. By linking Shipping Solutions with your accounting system you can import an entire order or set of orders and eliminate almost all data entry.
  • A one-year subscription to the Annual Maintenance Program that includes access to our new Export Compliance Module, which makes it easy to determine what documents are required for the country to which you are exporting, help determine whether or not you need to apply for an export license, and screen the parties in your transaction against the various government restricted parties lists.

Current Shipping Solutions Classic users can also get a special upgrade price to the new Shipping Solutions Professional version 7.1. For a comparison of features between the two versions, visit the Shipping Solutions website.


Terms of Trade: Uniform Commercial Codes and INCOTERMS 2000—Part 2

By Catherine J. Petersen email | bio


This article was adapted from U.S. Domestic Terms of Sale and INCOTERMS 2000 by Catherine J. Petersen of CJ Petersen & Associates and Brent WM. Primus, J.D., Primus Law Office, P.A.

This is the second in a series of articles on the Uniform Commercial Code, Article 2 (see www.law.cornell.edu/ucc/2/overview.html) and INCOTERMS 2000 (see www.iccwbo.org/incoterms/preambles.asp).

The goal of this series of articles is to provide a basic understanding and working knowledge of what are known as terms of sale for international transactions. The Uniform Commercial Code, Article 2 defines the terms that have been adopted for use in the USA. INCOTERMS 2000 defines for the seller and the buyer:

  • When RISK Transfers?
  • Who Pays which COSTS?
  • Who is RESPONSIBLE for forwarder & carrier selection?
  • Who Prepares DOCUMENTS?

Before you can calculate a sales price and negotiate a sales contract, you must determine what responsibilities and expenses are assigned to the seller and the buyer. This includes transporting and insuring merchandise from the time it leaves your plant or warehouse to the time it arrives at your purchaser's premises.

There is a generally accepted, readily understandable nomenclature called INCOTERMS 2000 that relates the trade term to the various transportation options. The trade terms do not identify where the transfer of title or ownership will occur. A separate statement regarding transfer of title should be made in the body of the contract, the quote, pro forma invoice, and commercial invoice.

Domestic and international trade terms are governed by two separate sets of rules. As explained in my first article of this series, the domestic terms are defined by the Uniform Commercial Code Article 2 as adopted by each state, the National Motor Freight Classification, and industry practice.

The international terms are defined and published by the International Chamber of Commerce (ICC). In order to implement the use of the international terms, it is necessary to have in your sales and purchase contracts language such as “the terms of sale herein are INCOTERMS 2000” or “governed by INCOTERMS 2000”.

INCOTERMS 2000 provide a common reference to establish the point at which risk of loss due to loss or damage transfers from the buyer to the seller and the attendant transportation costs for which each party has responsibility. Knowledge of INCOTERMS 2000 is essential for exporters and importers to prepare contracts with terms appropriate for their customers and to make sure those contractual terms are properly fulfilled.

INCOTERMS 2000 continue the tradition of establishing a relationship between the seller and buyer regarding the location where the seller will deliver the goods into the hands of the buyer for export. Each term is followed by the appropriate location. For example, the contract for goods sold Ex Works would state “EXW [seller’s facility, city, state, country],” while the contract for goods sold Free Alongside Ship would state “FAS [named port of shipment, state, country]”.

The 13 three-letter abbreviations would be used in place of domestic terms for sales outside of the United States. These 13 terms do not require the addition of a statement such as “Prepaid & Add” or “Freight Allowed” or “Freight Collect.”

As soon as a seller places the phrase “ExW Plant, Houston, TX USA - INCOTERMS 2000” on their quote, pro forma and commercial invoice, both parties know that the inland or air or ocean freight are collect and freight forwarding fees and customs clearance at destination are for the account of the buyer. It is international shorthand defined by the ICC and updated every ten years.

INCOTERMS are informally separated into four different groups (E, F, C and D), which increasingly shift the level of responsibility for transportation from the buyer to the seller.

Under Group E, the seller is required to make the goods available at its own facilities to the buyer. Once the seller has done this, the buyer is then responsible for the shipment.

The Group F terms require the seller to deliver the merchandise to the next carrier at the named facility, airport or port, where the buyer assumes responsibility for “main” or transnational carriage.

Group C places the responsibility for main carriage on the seller, while under Group D the seller is responsible for transporting the goods to the country of importation and incurring risk to destination.

These relative responsibilities divide the costs of arranging transportation, and in some cases insurance between the parties. It also divides the risk of loss between them. INCOTERMS are not shipping terms, instead they are part of the sales contract and help the seller and buyer define the roles and the costs that each will have in the transaction.

The choice of terms appropriate to your transaction will depend on a number of factors, such as:

  1. Does your buyer have facilities in the United States to take possession of the goods and arrange transportation? If so, Group E or Group F may be appropriate, because then the buyer can readily arrange carriage.
  2. Does your company regularly ship under Group F, and receive inland freight rate discounts for truck or rail transportation to the port of loading? In that case, you probably could arrange transportation from your facility to the port more cheaply than the buyer and thereby lower the overall cost of the transaction.
  3. Is your buyer new to international trade, without knowledge of how to arrange transportation? In that case, Group C or, perhaps, Group D would be appropriate, because your customer has neither the experience nor the contacts to arrange export clearance and transportation.
It often depends on the volume of shipments that the buyer or seller controls in a year that will determine who is able to obtain a cost advantage when negotiating with air or ocean carriers or consolidators. There may not be any cost advantage for one or the other, but by utilizing a quote prepared with costs itemized by INCOTERMS, the seller and the buyer are able to make that determination.

The following table provides a thumbnail sketch of the terms. It is critical to the complete understanding of INCOTERMS to refer back to the ICC’s publications.

GROUP
TERM
RISK
CODE
MODE OF TRANSPORT
Group E
Main Carriage: "Freight Collect"
Ex Works
Risk transfers when shipper makes goods available to buyer at seller's facility.
EXW
Any mode:
Air, Ocean, Surface such as Rail or Motor Carrier
         
Group F
Main Carriage: "Freight Collect"
Free Alongside Ship
Risk transfers to buyer upon delivery alongside vessel.
FAS
Vessel:
Ocean port to port
Free On Board
Risk transfers to buyer upon crossing ship’s rail.
FOB
Vessel:
Ocean port to port
Free Carrier At
Risk Transfers to Buyer upon Delivery as agreed by seller & buyer.
FCA
Any mode:
Air, Ocean, Surface
         
Group C
Main Carriage: "Freight Prepaid" or "Freight Paid"
Cost & Freight
Risk transfers to buyer upon crossing ship’s rail.
CFR
Vessel:
Ocean port to port
Cost, Insurance & Freight
Risk transfers to buyer upon crossing ship’s rail.
CIF
Vessel:
Ocean port to port
Carriage Paid To
Risk transfers to buyer upon delivery to the first carrier.
CPT
Any mode:
Air, Ocean, Surface
Carriage & Insurance Paid To
Risk transfers to buyer upon delivery to the first carrier.
CIP
Any mode:
Air, Ocean, Surface
         
Group D
Main Carriage: "Freight Prepaid" or "Freight Paid" & Exporter Promises a Delivery Date
Delivered at Frontier
Risk transfers on arrival at the named place at the frontier on the date or in the timeframe agreed, consistent with delivering carrier practice and buyer/seller agreement.
DAF
Any mode:
As long as delivery will be made at a land port, mainly truck or rail
Delivered Ex Ship
Risk transfers at named destination onboard vessel.
DES
Vessel:
Ocean port to port
Delivered Ex Quay
Risk transfers at named destination on the pier.
DEQ
Vessel:
Ocean port to port
Delivered Duty Unpaid
Risk transfers at named destination consistent with delivering carrier practices and buyer/seller agreement.
DDU
Any mode:
Air, Ocean, Surface
Delivered Duty Paid
Risk transfers at named destination consistent with delivering carrier practices and buyer/seller agreement.
DDP
Any mode:
Air, Ocean, Surface

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We'll take you step-by-step through the process of completing your export forms, filing your SEDs electronically through AES, and checking your exports against the various government restricted parties lists and export regulations to make sure your shipments are in compliance, and you—and your company—stay out of trouble.

These free online demos are available on Tuesday's at 1:00 Central Time. All you need is an Internet connection to watch the demo and a phone to listen in and ask questions about the software. It's the perfect opportunity to get your first view of Shipping Solutions or to convince your coworkers and your boss that Shipping Solutions is the perfect solution for your company.

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