Cost Factors of Export-Import Goods

   

                                                                           
COST FACTORS OF EXPORT-IMPORT GOODS

  1    Materials, labour and

overhead
 Custom packaging
 Inspection fees
 Licensing fees
 Royalties 8  Insurance premiums
 Ocean freight
2  Buying agent's  Lighter age
commissions
 Trader's mark-ups

3  Bank charges and 9  Uninsured damages (e.g.

commissions war and acts of God)
 Overseas agent's  Pilferages
commissions
 Freight forwarder's 10  Lighter age
charges
 Documentation charges 11  Theft and pilferages
 Insurance premiums  Quarantine charges
 Export license fees  Overtime charges
 Certification fees  Handling charges
 Consular fees  Unloading fees
 Advertising  Warehousing
 Demurrage
4  Road freight (cartage,  Wharf age
drayage) and/or rail freight
 Routing costs (canal and
inland waterway links)
 Uninsured damages 12  Import duties and taxes
 Theft and pilferages  Bank charges and
 Handling charges commissions
 Demurrage  Import license fees
 Brokerage fees
5  Brokerage fees
 Export levies

6  Insurance premiums 13  Road freight (cartage,

 Air freight drayage) and/or rail freight
 Routing costs (canal and
7  Theft and pilferages inland waterway links)
 Overtime charges  Theft and pilferages
 Handling charges  Uninsured damages
 Warehousing  Handling charges
 Loading fees  Demurrage
 Demurrage
 Wharf age 14  Warehousing
 Interest charges
  Advertising

EXW   {+ the named place}

Ex Works

Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW
applies to goods available only at the seller's premises. Buyer is responsible for loading the
goods on truck or container at the seller's premises, and for the subsequent costs and risks.

In practice, it is not uncommon that the seller loads the goods on truck or
container at the seller's premises without charging loading fee.

In the quotation, indicate the named place (seller's premises) after the acronym
EXW, for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and export-
trader (buyer), and the export-trader resells on other trade terms to the foreign buyers.
Some manufacturers may use the term Ex Factory, which means the same as Ex
Works.

FCA   {+ the named point of departure}

Free Carrier

The delivery of goods on truck, rail car or container at the specified point (depot) of
departure, which is usually the seller's premises, or a named railroad station or a named
cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at
origin may or may not be a customs clearance center. Buyer is responsible for the main
carriage/freight, cargo insurance and other costs and risks.

In the air shipment, technically speaking, goods placed in the custody of an air
carrier is considered as delivery on board the plane. In practice, many importers and
exporters still use the term FOB in the air shipment.

The term FCA is also used in the RO/RO (roll on/roll off) services.

In the export quotation, indicate the point of departure (loading) after the
acronym FCA, for example FCA Hong Kong and FCA Seattle.

Some manufacturers may use the former terms FOT (Free On Truck) and FOR
(Free On Rail) in selling to export-traders.
FAS   {+ the named port of origin}
Free Alongside Ship

Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within
reach of its loading equipment so that they can be loaded aboard the ship, at seller's
expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and
other costs and risks.

In the export quotation, indicate the port of origin (loading) after the acronym
FAS, for example FAS New York and FAS Bremen.

The FAS term is popular in the break-bulk shipments and with the importing
countries using their own vessels.

FOB   {+ the named port of origin}

Free On Board

The delivery of goods on board the vessel at the named port of origin (loading), at seller's
expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs
and risks.

In the export quotation, indicate the port of origin (loading) after the acronym
FOB, for example FOB Vancouver and FOB Shanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used for ocean
freight only. However, in practice, many importers and exporters still use the term
FOB in the air freight.

In North America, the term FOB has other applications. Many buyers and sellers
in Canada and the U.S.A. dealing on the open account and consignment basis are
accustomed to using the shipping terms FOB Origin and FOB Destination.

FOB Origin means the buyer is responsible for the freight and other costs and
risks. FOB Destination means the seller is responsible for the freight and other costs
and risks until the goods are delivered to the buyer's premises, which may include the
import customs clearance and payment of import customs duties and taxes at the
buyer's country, depending on the agreement between the buyer and seller.

In international trade, avoid using the shipping terms FOB Origin and FOB
Destination, which are not part of the INCOTERMS (International Commercial
Terms).

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CFR   {+ the named port of destination}
Cost and Freight

The delivery of goods to the named port of destination (discharge) at the seller's expense.
Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was
formerly written as C&F. Many importers and exporters worldwide still use the term C&F.

In the export quotation, indicate the port of destination (discharge) after the
acronym CFR, for example CFR Karachi and CFR Alexandria.

Under the rules of the INCOTERMS 1990, the term Cost and Freight is used
for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still
commonly used in the air freight.

CIF   {+ the named port of destination}

Cost, Insurance and Freight

The cargo insurance and delivery of goods to the named port of destination (discharge) at
the seller's expense. Buyer is responsible for the import customs clearance and other costs
and risks.

In the export quotation, indicate the port of destination (discharge) after the
acronym CIF, for example CIF Pusan and CIF Singapore.

Under the rules of the INCOTERMS 1990, the term CIF is used for ocean
freight only. However, in practice, many importers and exporters still use the term
CIF in the air freight.

CPT   {+ the named place of destination}

Carriage Paid To

The delivery of goods to the named place of destination (discharge) at seller's expense.
Buyer assumes the cargo insurance, import customs clearance, payment of customs duties
and taxes, and other costs and risks.

In the export quotation, indicate the place of destination (discharge) after the
acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP   {+ the named place of destination}

Carriage and Insurance Paid To

The delivery of goods and the cargo insurance to the named place of destination (discharge)
at seller's expense. Buyer assumes the import customs clearance, payment of customs
duties and taxes, and other costs and risks.

In the export quotation, indicate the place of destination (discharge) after the
acronym CIP, for example CIP Paris and CIP Athens.
DAF   {+ the named point at frontier}
Delivered At Frontier

The delivery of goods to the specified point at the frontier at seller's expense. Buyer is
responsible for the import customs clearance, payment of customs duties and taxes, and
other costs and risks.

In the export quotation, indicate the point at frontier (discharge) after the
acronym DAF, for example DAF Buffalo and DAF Welland.

DES   {+ the named port of destination}

Delivered Ex Ship

The delivery of goods on board the vessel at the named port of destination (discharge), at
seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of
customs duties and taxes, cargo insurance, and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the
acronym DES, for example DES Helsinki and DES Stockholm.

DEQ   {+ the named port of destination}

Delivered Ex Quay

The delivery of goods to the quay (the port) at destination at seller's expense. Seller is
responsible for the import customs clearance and payment of customs duties and taxes at
the buyer's end. Buyer assumes the cargo insurance and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the
acronym DEQ, for example DEQ Libreville and DEQ Maputo.

DDU   {+ the named point of destination}

Delivered Duty Unpaid

The delivery of goods and the cargo insurance to the final point at destination, which is often
the project site or buyer's premises, at seller's expense. Buyer assumes the import customs
clearance and payment of customs duties and taxes. The seller may opt not to insure the
goods at his/her own risks.

In the export quotation, indicate the point of destination (discharge) after the
acronym DDU, for example DDU La Paz and DDU Ndjamena.

DDP   {+ the named point of destination}

Delivered Duty Paid

The seller is responsible for most of the expenses, which include the cargo insurance, import
customs clearance, and payment of customs duties and taxes at the buyer's end, and the
delivery of goods to the final point at destination, which is often the project site or buyer's
premises. The seller may opt not to insure the goods at his/her own risks.

In the export quotation, indicate the point of destination (discharge) after the
acronym DDP, for example DDP Bujumbura and DDP Mbabane.