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YOUR LEADING INTERNATIONAL FREIGHT FORWARDER

Terms of Trade and Your Sales Contract

As supply chain professionals your job is overwhelmingly busy and covers a great many aspects within a business unit.  It is not so much the process of purchasing that is an issue, rather it is hard to manage real time information that makes sense in order to make “good” or  “appropriate” business decisions. 

The less risk you take in arranging international freight, will mean the less information you will have but the more additional charges you will take on board.  Depending on your risk liability or term of trade you either know where your goods are or you are dealing with several freight forwarders, several transport companies and several brokers. 

Whilst having less risk means logistics costs remain at origin and are presented as the costs of your product on the commercial invoice, this in and unto itself creates other issues, not for discussion in this blog, however.

So, if you are fully aware of your import/export terms of trade risks and the liabilities and limitations that exist within those term; then you would have aligned any possible loopholes covering the gaps into your sales contract terms of conditions. 

Whilst the term of trade covers risk transfer from one party to another for the movement of the cargo, it does not cover gaps in manufacture flaws, payment issues, insurance coverage, safety and weight of cargo or additional costs that occur once it arrives at destination based on shipper delays or incorrect named contract places or any other number of things that can happen under certain terms of trade.  These need to be covered in the contract of sale. 

These would now include CoR (Chain of Responsibility) issues for packing and safety as once the goods get to AU it seems you as the consignee can now be held liable for any issues that result from poor or unsafe packing of a container, packing to one end or side of a container and mis declared weights etc.  Especially if the overseas shipper is responsible for the SOLAS (safety of life at sea) weights and are using CIV (commercial invoice) rates instead of WIM (real time weigh in motion).

It is best to cover all of this on terms and conditions set on either your Purchase Order or your Commercial Invoice if there is not a permanent contract in place.   If it becomes a part of your purchase order and CIV it covers every single individual shipment.

If you need more advice on this please contact [email protected]

Director of Sales and Marketing – Angela Gambell

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