DISTRIBUCION

FISICA
INTERNACIONAL
2104634
 SISTEMAS DE DISTRIBUCIÓN DE ACUERDO CON
LOS CANALES, MODOS Y MEDIOS DE TRANSPORTE ESTABLECIDOS POR
LA ORGANIZACIÓN

EDNA KARINA ORTEGA CARVAJAL

DISTRIBUCION FISICA INTERNACIONAL

BARRANQUILLA
2021
EVIDENCE 3: WORKSHOP “UNDERSTANDING HOW TO BECOME A SMART
EXPLORER”

1. Why did some of the lecturers say that understanding the way Incoterms work could be a
quite confusing area?
2. How are Incoterms useful to avoid misunderstanding when talking bot international trade?
3. Why do many people see the incoterm ex-works (EXW) as the simplest way to understand
how the incoterms work?
4. Why could you use a wrong incoterm for your business if there is not right or wrong when
using an Incoterm?
5. How many Incoterms should you use to stablish a good contract for your international
trade?
6. What are some of the operations that generate costs and must be paid either by the buyer
or the seller?
7. What are the three basic elements that Incoterms cover? Briefly explain how they work all
together in a contract of sale.
8. Why is it important to do a market research before establishing what the best incoterm(s)
should be taken into account for your sales contract or agreement?
9. What aspects should be taken into account to establish the best incoterm(s) to define the
shipment of services?
10. Why would it be necessary to add extra words or explanation in your sales contract when
using incoterms?
 DEVELOPMENT OF THE ACTIVITY

1. Some of the speakers, make a reference, that the use of the incoterms may be

counterproductive or confusing, without having a practical and detailed

knowledge when starting a business model, since it would be difficult to

understand the impact of a commercial transaction, because it must define

markets to conquer and foresee risks.

2. The INCOTERMS (International Trade Terms) establish international rules that

are intended to facilitate the conduct of global trade and thus be able to avoid

uncertainties derived from the different interpretations in different countries,

they help in the identification of the obligations between the parties (Buyer /

Seller ) and reduces the risk of legal complications. As well as determining the

exact point of the transfer, the risk of damage and the responsibility of delivery

of the merchandise between those involved, however these are not considered

as Law, they are Recommendations recognized as International Uniform Trade

Practice.

3. The Incoterm Ex Works is that it is for intermodal use, although due to its

characteristics it is usually terrestrial. The most recommended is its use for sales

within the national territory and its use is expressly discouraged for international
 operations. The benefit of its use is for the seller, who should not carry

responsibilities for transport or carry out logistics operations. As buyers, this

Incoterm is advisable only if there is a lot of experience.

4. Making a bad Incoterm choice

It is common to use the wrong Incoterm when exporting goods and this can

expose unnecessary risks such as being liable in case of damage to the goods,

instead of the carrier assuming responsibility.

In maritime transport, for example, the CIP Incoterm (Carriage and Insurance

Paid To or Porte and insurance paid up to) or the CIF (Cost and Insurance and

Freight or cost, freight and insurance) could be used instead of using the FOB

Incoterm (Free On Board or delivered on board), as the buyer would be

responsible for the merchandise in the event of any damage.

A dramatic example was the Japanese tsunami in March 2011, which destroyed

the Sendai container terminal. Hundreds of shipments awaiting clearance were

damaged and exporters using the wrong rule had to be held accountable for losses

that could have been avoided.

5. Incoterms define thirteen types of contracts, which can be partially modified for

each negotiation, through the use of additional clauses. They are periodically

reviewed to adapt to changes in commercial uses, techniques and technological

advances. They are classified according to the characteristics of the international

sales transaction; Within the characteristics of each type of contract, the

fundamental element is the limitation of the responsibilities of both the buyer

and the seller, and the determination of the property, costs and risk throughout
 the purchase and sale process until the final point in which the delivery to the

buyer is executed, and the commercial operation ends. Example

CIF - Cost, Insurance and Freight

In this type of contract, the seller delivers the merchandise when it exceeds the

ship's rail at the port of shipment agreed between the parties, and is in charge of

paying the costs and freight necessary to drive the merchandise to the port of

destination.

In addition, the seller must also take out insurance and pay the corresponding

premium, in order to cover the risks of loss or damage that the merchandise may

suffer during transport.

6. Under the CIF incoterm, the seller is responsible for the cost and contracting of

maritime transport to the destination port specified by the buyer. The transfer of

risk under CIF conditions takes place when the merchandise is loaded on board

the ship. Therefore, it is recommended when the seller has direct access to the

ship, as in the case of bulk cargo shipments.

7. Incoterms regulate four basic aspects of the international sales contract: the

delivery of goods, the transfer of risks, the distribution of expenses and the

processing of customs documents.

The delivery of the goods: it is the first of the seller's obligations.

Delivery can be direct, when the incoterm defines that the merchandise

is delivered to the buyer, they are the “E” terms and the “D” terms; or

indirect, when the merchandise is delivered to an intermediary of the

terms.

The transfer of risks: this is an essential aspect of Incoterms and should

not be confused with the transfer of property, which is regulated by the

law that governs the contract. The fundamental concept is based on the

fact that the risks, and in most cases, also the expenses, are transmitted

at the geographical point and at the chronological moment defined by the

contract and the established Incoterms rule. The geographical point can

be the factory, the dock, the interior of the ship, etc.; while the

chronological moment is defined by the delivery period of the

merchandise. The superposition of both requirements automatically

produces the transfer of risks and expenses.

The distribution of expenses: the usual thing is that the seller bears the

strictly precise expenses to put the merchandise in delivery conditions

and that the buyer bears the other expenses. There are four cases, the “C”

terms, in which the seller assumes the payment of transport costs (and

insurance, if applicable) to the destination, despite the fact that the risk

is transferred at origin; This is due to traditional uses of maritime

transport that allow the sale of goods while the ship is sailing, since the

cargo changes ownership with the transfer of the bill of lading.

Customs document procedures: in general, export is the responsibility of

the seller; There is only one incoterm without export customs clearance:

EXW (Ex Works, ex works), where the buyer is responsible for the
 export and usually hires the services of a freight forwarder or a customs

agent in the country of dispatch of the merchandise, who manage the

export. The remaining incoterms are "with dispatch"; In other words, the

export is the responsibility of the seller, who sometimes also deals with

the importation in the country of destination.

8. The development of Incoterms has brought a series of important changes to the

way of doing business in the international arena. In certain aspects they have

managed to simplify these commercial processes, however there are some

negative results of the application of these commercial terms.

Regarding the benefits that Incoterms have generated, the following can

be mentioned: The simplification of the contractual terms of trade, the

homologation of concepts, a clear definition of responsibility between

the parties and the response to legislative differences. One of the main

benefits is the simplification of contractual terms. As Incoterms exist,

they are often used in commercial contracts, ensuring a single way of

interpreting the terms, saving time and money that was previously often

wasted by misinterpretation of the contractual terms. In this way,

Incoterms have been an important tool for the development of

international trade. Second, the homologation of concepts also makes it

possible to eliminate misunderstandings beyond the contractual terms

that also meant large monetary losses, and even important barriers to

trade.
 9. It is important to know the Incoterms well to choose the most appropriate one

depending on whether the company is buying or selling. As the interests of the

seller are not the same as those of the buyer, before deciding which Incoterm we

are going to use in one we must take into account certain aspects.

For example, knowing if we are interested in controlling part of the costs or

contracting the main transport to be more competitive, reduce risks or have

greater security in the logistics chain.

Another factor that must be taken into account is the degree of mutual

knowledge between the parties and the trust we have with the seller if we are

importers and with the buyer if we are exporters. It is also essential to know the

characteristics of the country of origin / destination so as not to take unnecessary

risks in aspects such as internal transport or customs procedures.

10. In any contract there are always a lot of legal terms and conditions which, regardless of

the purpose of the contract, are included unchanged and often without control by the

contracting parties. These terms and conditions are often referred to as "contract format"

language. Most people don't think twice about these sections, and it is generally a non-

testable topic. That is, until there is a dispute and the contract is used as evidence in court.

Since these terms can influence the outcome of a lawsuit, it is worth knowing at least their

general meaning, and whether they can be negotiated in your favor.