EXW, FOB OR FCA? CHOOSING THE RIGHT INCOTERM AND WHY IT MATTERS TO MARITIME SHIPPERS

In the latest revision of INCOTERMS, the International Chamber of Commerce (ICC) makes it abundantly clear which international commercial terms ("INCOTERMS") are intended for maritime intermodal usage and which are not. Nonetheless, many shippers continually misuse INCOTERMS in their shipp...

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Bibliographic Details
Published in:Journal of transportation law, logistics, and policy logistics, and policy, 2014-07, Vol.81 (3), p.227
Main Authors: Stapleton, Drew M, Pande, Vivek, O'Brien, Dennis
Format: Article
Language:English
Subjects:
Chambers of commerce
Commercial law
Costs
Intermodal transportation
International trade
Ports
Risk management
Studies
Supply chains
Terms of sale
Uniform Commercial Code-US
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Summary:In the latest revision of INCOTERMS, the International Chamber of Commerce (ICC) makes it abundantly clear which international commercial terms ("INCOTERMS") are intended for maritime intermodal usage and which are not. Nonetheless, many shippers continually misuse INCOTERMS in their shipping transactions, leaving themselves vulnerable and lacking control in their supply chains. After a brief historical background on shipping terms, we elucidate some key changes from INCOTERMS 2000 to INCOTERMS 2010, and pay particular attention to the oft-misunderstood and misused term FOB. We express how using EXW or FCA might close this vulnerability gap and give the buyer greater visibility, control, and command of their international shipping transactions. We also proffer an explanation for the continued misuse of INCOTERMS by reviewing some of the conflicting demands and expectations banking institutions incorporate into guarantees and letters of credit that are incongruent with the latest version of INCOTERMS. Lastly, we proffer new research avenues borne from our analysis of the intricacies of international trade and banking practices vis-à-vis INCOTERMS and risk management.
ISSN:1078-5906