Hell, everyone, this is Gary, I am the international trade manager from Extripod. Welcome to “Extripod Academy”, This is “International Trade Basic Knowledge” Series, in this series, we will discuss the international trade rules, payment, transporation, organization, certification and country situation, i hope those knowledges can help your doing success in the international trade business.if you have any question realted those issue, you can leave comment or go to our website www.extripod.com to contact us. Our more connect as follow. If you like our channel, please also subscribe our channel. Thank!
Incoterms 2020 CIF
Ok welcome back Incoterm 2020 part again. Incoterms are known as International Trade Rules. They determine the conditions for the worldwide exchange of goods. It regulates the allocation of responsibility and costs between the buyer and the seller. CIF Incoterms is one of the longest-established formulas. However, Incoterms are updated every ten years, which means that some changes are expected in 2020. So let see what’s changes.
As usual, we also discuss from cost, obligation, delivery, insurance and conclusion to understand this term
Incoterms 2020 CIF Cost-sharing
The seller must pay the costs:
1. The seller pay the cost of export clearance;
2. The seller pay the cost of delivering the goods to the ship;
3. The seller pay the costs of issuing and sending the commercial invoice;
4.The seller pay thecosts of obtaining an export license or other authorizations;
5. The seller pay the cost of concluding the contract of carriage;
6. The seller pay the cost of insurance;
7. The seller pay the cost of packaging and marking the products;
8. The seller pay the cost of giving information to the buyer (e.g., the goods have been delivered to the ship);
9.The seller pay the costs of quality control (measurement, weighing, counting).
So much cost need pay from seller, let see the buyer
The buyer pay the costs:
1. The buyer pay the costs of informing the seller of the date of dispatch of the goods and the port of destination;
2. The buyer pay the costs of import license and others authorizations;
3. The buyer pay thecost of import clearance;
4. The buyer pay the costs of obtaining documents which are necessary for the buyer to import or transit the goods;
5. The buyer pay the costs of pre-shipment checks on the products ;
6. The buyer pay the all costs not covered by the contract or not being freight but relating to the goods during transport from the port of loading;
7. The buyer pay the additional charges are resulting from the failure to notify the seller of the time of dispatch or destination.
Incoterms 2020 CIF Obligations
What are the obligations of the seller?
1. The seller is obliged to conclude a contract of carriage to a designated port of shipment at his own expense.
2. Conclude and pay the freight contract costs.
3. The seller is responsible for the loading the goods on the vessel.
4. The seller is obliged to conclude an insurance agreement and deliver it to the buyer.
5. The seller is responsible for the export clearance and related costs.
What are the obligations of the buyer?
1. The buyer is responsible for any damage or theft of the goods after the goods have been loaded to the vessel.
2. The buyer is obliged to bear all the costs required to obtain the certificate of origin, consular documents and import rates of duty.
3. The buyer has to inform the seller of the designated port, the name of the vessel and the delivery date.
4. The buyer organizes the import clearance and bears all related costs.
5. The buyer has to obtain all documents necessary for import or transit.
The seller pay all costs until the goods are delivered to the port of loading. Besides, the seller takes the risk until the goods have been loaded. He has to bear the insurance costs until the products have passed the side of the vessel at the port of loading.
Incoterms 2020 CIF Delivery of goods, Insurance and Transport
According to this rule, the products are delivered by the seller at the moment when the goods pass the ship’s side at the port of loading. From now on, the seller is no longer liable for damage or loss of goods. These responsibilities are transferred to the buyer.
Insurance of the goods on Incoterms 2020 CIF
The seller has to conclude the insurance contract. The buyer has to note that the seller is obliged only to insurance with a minimum of coverage.
Incoterms 2020 CIF in transport
CIF rules are used only in maritime or inland waterway transport. Apart from the FOB rule, the most frequently used in bulk cargo transport by sea is the CIF rule. However, it is not allowed to use CIF Incoterms using more than one mode of transportation. The CIP formula is used for this purpose. CIF is not recommended for the transport of containers. In this case, the FCA and CIP formulas are recommended.
Transport may be carried out by several carriers in maritime transport. For example, first by a carrier operating a feeder ship from Hong Kong to Shanghai and then to an ocean-going ship from Shanghai to Unite States. In this case, the seller is no longer responsible for the goods in Hong Kong.
Incoterms 2020 CIF Conclusion
CIF and other Incoterms rules
The rule is very often misapplied because it cannot be applied to container transport. In this case, FCA or CIP are recommended.
It is also worth to notice that Incoterms CIF transfers the obligation to pay sea freight to the seller. (The opposite is FOB rule.)
The CIF formula is very similar to the CFR. But using CIF Incoterms, the seller additionally pays basic insurance of the goods during transport. When applying the CFR rule, the exporter is obliged to find the carrier, negotiate appropriate terms of the contract, and bear the transport costs.
OK, until now, the CIF main content is finished. C Group we are also finished, Till today,only three rule DAP, DPU and DDP leave. We will learn them start at DAP and end of DDP.
At the end, i aslo must to say, if you have any suggestion or questions, or whats you wants watch in international trade business, please leave your comments please subscript our channel, move your finger to support us, let us do more useful video to help you growth in international trade business. All text content you can find in our website. Thanks for your watch and see your next time! Do not forget subscribe.
A1 GENERAL OBLIGATIONS
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
B1 GENERAL OBLIGATIONS
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
The seller must deliver the goods either by placing them on board the vessel or by procuring the goods so delivered. In either case, the seller must deliver the goods on the agreed date or within the agreed period and in the manner customary at the port.
B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2 and receive them from the carrier at the named port of destination.
A3 TRANSFER OF RISKS
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2,with the exception of loss or damage in the circumstance described in B3.
B3 TRANSFER OF RISKS
The buyer bears all risks of loss of or damage to the good from the time they have been delivered under A2.
If the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.
The seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at the place of delivery to the named port of destination or, if agreed, any point at that port. The contract of carriage must be made on usual terms at the seller´s cost and provide for carriage by the usual route in a vessel of the type normally used for the transport of the type of goods sold.
The seller must comply with any transport-related security requirements for transport to the destination.
The buyer has no obligation to the seller to make a contract of carriage.
Unless otherwise agreed or customary in the particular trade, the seller must obtain, at its own cost, cargo insurance complying with the cover provided by Clauses(C)of the Institute Cargo Clauses(LMA/IUA) or any similar clauses. The insurance shall be contracted with underwriters or an insurance company of good repute and entitle the buyer, or any other person having an insurable interest in the goods, to claim directly from the insurer.
When required by the buyer, the seller must, subject to the buyer providing any necessary information requested by the seller, provide at the buyer´s cost any additional cover, if procurable, such as cover complying with the Institute War Clauses and/or Institute Strikes Clauses (LMA/IUA) or any similar clauses (unless such cover is already included with the cargo insurance described in the preceding paragraph).
The insurance shall cover, at a minimum, the price provided in the contract plus 10%(i.e. 110%)and shall be in the currency of the contract.
The insurance shall cover the goods from the point of delivery set out in A2 to at least the named port of destination.
The seller must provide the buyer with the insurance policy or certificate or any other evidence of insurance cover.
Moreover, the seller must provide the buyer, at the buyer´s request, risk and cost, with information that the buyer needs to procure any additional insurance.
The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, upon request, with any information necessary for the seller to procure any additional insurance requested by the buyer under A5.
A6 DELIVERY/TRANSPORT DOCUMENT
The seller must, at its own cost, provide the buyer with the usual transport document for the agreed port of destination.This transport document must cover the contract goods, be dated within the period agreed for shipment, enable the buyer to claim the goods from the carrier at the port of destination and, unless otherwise agreed, enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier.
When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.
B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must accept the transport document provided under A6 if it is in conformity with the contract.
A7 EXPORT/IMPORT CLEARANCE
Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:
•security clearance for export
•pre-shipment inspection; and
•any other official authorisation
b) Assistance with import clearance
Where applicable, the seller must assist the buyer at the buyer´s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.
B7 EXPORT/IMPORT CLEARANCE
a) Assistance with export clearance
Where applicable, the buyer must assist the seller at the seller´s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.
Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:
• import licence and any licence required for transit;
• security clearance for import and any transit;
• pre-shipment inspection; and
• any other official authorisation.
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the good in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.
The buyer has no obligation to the seller.
A9 ALLOCATION OF COSTS
The seller must pay:
a) all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
b) the freight and all other costs resulting from A4, including the costs of loading the goods on board and transport related security costs;
c) any charges for unloading at the agreed port of discharge that were for the seller´s account under the contract of carriage;
d) the costs of transit that were for the seller´s account under the contract of carriage;
e) the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;
f)the costs of insurance resulting from A5;
g) where applicable, duties, taxes and any other costs related to export clearance under A7(a); and
h) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).
B9 ALLOCATION OF COSTS
The buyer must pay:
a) all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
b) the costs of transit, unless such costs were for the seller´s account under the contract of carriage;
c)unloading costs including lighterage and wharfage charges, unless such costs and charges were for the seller´s account under the contract of carriage;
d) the costs of any additional insurance procured at the buyer’s request under A5 and B5;
e)the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A5 and A7(b).
f)where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and
g)any additional costs incurred if it fails to give notice in accordance with B10, from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.
The seller must notify the buyer that the goods have been delivered in accordance with A2.
The seller must give the buyer any notice required to enable the buyer to receive the goods.
The buyer must, whenever it is agreed that the buyer is entitled to determine the time for shipping the goods and/or the point of receiving the goods within the named port of destination, give the seller sufficient notice.