Hello, everyone. Thank you for joining us today. It will be the Incoterms for Retailers: A Buyer's and Seller's Perspective webinar. My name is Gina Suriano. I am the Customer Retention and Development Manager in Pittsburgh, and before we get started, we're just going to run through some quick ground rules. All attendees are anonymous and are placed on mute. We will be recording the session today as well, and if you have any questions at any time, please feel free to ask them in the Q&A box. All the questions will be answered at the end of the presentation. You will also receive an email in the next few days containing a link to the materials as well as a survey. Your feedback is valuable to us, and we ask that you complete our survey following this webinar. Today's speakers will be Diane Grand and Rui Salgado.
They are both regional risk and insurance managers. And if you needed to reach out to them, you will have their information once you receive the information at the end of the webinar. But that being said, I'm going to pass it off to our first speaker.
Thank you, Gina. Thank you, everyone, for joining. Like Gina said, my name is Diane Grand. I'm with Expeditors. I'm here with my colleague, Rui Salgado, and I appreciate your time this morning and happy holidays to you. So the agenda today is going to be naturally introductions. We're going to talk a little bit about international freight movement, which will bring us into carrier liability. And you might say, well, why are we talking about carrier liability when this is an Incoterms class? I feel like there's just a few slides on there. So it really takes us nicely into the things that happen out there on the supply chain and who's responsible for what. So it plays nicely into the Incoterms. And then we're going to go into the Incoterms 2020.
And again, if you have any questions, please feel free to put them right in the chat box, and Rui's going to be monitoring that chat box. So here we go. Our first slide is, how does most international freight move? A lot of you out there are probably very seasoned supply chain logistics folks, right? So we know that freight starts off in a factory where things are made. So you'll see here on this diagram, it starts off in the factory. A trucker picks it up, and they might bring it to a consolidator, or they might bring it to your freight forwarder. And then from there, what happens is a drayman, which is a fancy name for a trucker, is going to pick up the cargo, and they're going to take it either to the airport or the seaport.
Once it gets on a ship and heads to the final destination and it arrives, then you have maybe customs formalities that might take place. Maybe Fish and Wildlife want to look at your shipment, right? They have other organizations, FDA, etc. Or maybe it's released, and then a drayman picks it up and then brings it to a deconsolidator where they might separate the shipments, and then it goes on to several trucks, and maybe it goes directly to your stores or to your customers, or it could go to your pool point or your consignee or maybe even your warehouse. And all along the way, there is risk involved. Every time this freight stops, and this is a very vanilla supply chain where there's only 11 touch points.
If you went to Starbucks this morning and picked up a breakfast sandwich, right, and you looked at everything in that sandwich and how it got there, there may be over 100 touch points. So in this situation, not only is risk involved, where does that risk transfer, right? And who owns the payment of the terminal charges, the loading charges, right? And this is where Incoterms comes in because every step of the way in the supply chain, right, Incoterms is going to tell you who's paying for what, right, and where the risk transfers from the seller to the buyer. So I have just two pictures. They're sort of my favorite pictures. This one is of the MOL Comfort. It was a vessel in June of 2013, and it was moving from Singapore to Jeddah, and it was carrying about 4,500 containers.
At the time, right, in 2013, 11 years ago, this was considered a large vessel. You'll see that it's split in half. This vessel hit a very bad storm off the coast of Yemen. They had huge 20-foot swells, and the vessel actually cracked in half. About two weeks later, the back of the vessel sank, and the front of the vessel was still floating around. We actually had a customer in New Jersey who had freight on the MOL Comfort, and they were trying to get the front of the vessel to a port. Naturally, no ports want to have a half vessel come in. Almost a month later, there was an explosion in the front of the vessel, and the front of the vessel sank. So there was nothing left of the containers.
In this situation, you know, the vessel was only five years old, so it was very unusual for a five-year-old vessel to split in half. My second picture is a little different. This took place in November of 2020, right in the middle of COVID, and we had many, many vessels that had problems due to the very bad weather. So this was called the ONE Apus. It was going from Yantian, in China, to the port of Long Beach, in California, and it was carrying over 18,000 containers. So you could see that just in that short seven-year period that the MOL Comfort was carrying 4,500 containers, and that was considered a large ship. And here we are, seven years later, the ONE Apus is now carrying 18,000 vessels. So a huge concentration of risk.
When it hit this storm, what happened was you'll see that the containers collapsed on top of each other. About 1,816 containers fell overboard, and there was over $90 million of value that was lost on this particular shipment, let alone when it finally got to port. It took months and months to get your freight off of this vessel because, as you could see, right, a lot of the cargo was falling on top of each other. They had to have welders, right, go one by one to take this off. So it was an enormous task and very, very risky, so why do I bring these two pictures up? What are the freight carriers liable for in a situation like this? What are they on the hook for, so this leads us into legal liability, and what is legal liability?
It's the dollar amount that the freight carriers are responsible if one, they're proven liable for the loss and damage of your cargo and while it's in their possession, right? So that's very important. Was it in their possession when the loss or damage happened? Legal liability is always governed by treaties or conventions. In the event of the steamship lines, they're governed by what we call the Carriage of Goods by Sea Act, right? That is a treaty from 1936. In 1936, they didn't have containers, right? Containerization did not happen until the late 1950s. When freight was put on a vessel, it was really a skid, maybe, that had a couple of cartons on it that were shrink-wrapped at that time. Keep in mind that in 1936, the value that you were putting on a vessel was not nearly what it is today, right?
So for ocean, it's Carriage of Goods by Sea Act. It's governed by and Hague-Visby. The air, it's governed by the Warsaw Convention or the Montreal Protocol. And we're going to go into that a little bit more. So for ocean carrier liability, it states on the back of the bill of lading, if you ever printed out the back of the bill of lading in like a size 10 font, it would take 12 pages. I don't know if anybody ever reads the back of the bill of lading. I know when I was on the freight side of the house many years ago, I never flipped over the other side. But if you do, it states the ocean carrier liability, right, will not exceed $500 per currency of the United States and Canada per package or per customary shipping unit. So what is a shipping unit?
A customary shipping unit is the smallest unit that you tender to the steamship line. It could be a 20-foot container, a 40-foot container. It could be 20 pallets. It could be 1,000 pallets. How you write up the bill of lading will determine somewhat what the carrier's liability is. If you write up the bill of lading as one 40-foot container containing wearing apparel and the carrier is negligent, then they will pay you the $500 for that container. If you write up the bill of lading as one 40-foot container said to contain 20 pallets, they may, right, pay you $500 per pallet, which is $10,000, right? Again, it depends on how you write it up. And the per package customary shipping unit is very different.
If the steamship line decides not to pay you and you sue them and go to court, it all depends which circuit court you go to. For Circuit Court 5, downtown Manhattan, is very different than 13 in Seattle, Washington, right? So that per package varies, right? It's not set in stone. And I know that because I actually went to federal court as a witness for Expeditors. I didn't have to say anything, but it took like 10 hours to figure out per package, right, and the discussion on it. So something to take away here is don't depend on legal liability to get paid. It's very, very limited, right? And it has exclusions. The back of the airway bill of lading for ocean carriers has 17 exclusions. I highlighted just a few of them.
The first one is act, neglect or default of the master, the mariner, pilot, and the servants of the carrier in the navigation or in the management of the ship. Some of you might not have been alive when this happened, but back in March of 1989, an oil tanker hit a reef in Alaska's Prince William Sound, and it created the largest environmental disaster in U.S. history, right? It claims that the captain of the ship had too much to drink, left the navigation of the ship up to the second mate, and they hit this reef, and what happened was this was in court for 35 years, and it was finally settled after 35 years for $900 million, so the owner of the Exxon Valdez, Exxon, used COGSA and this exclusion, right, not to pay on that disaster. Another one is act of God.
You saw those two ships, right, that hit bad weather. The steamship line could say, "Hey, I ran into a storm. It was an act of God. Your container fell overboard. I don't owe you any money." Now, an attorney might say, "Well, you knew the storm was there. Why didn't you go around the storm?" Those are the defenses that an attorney would use. Then, of course, saving or attempting to save life at sea. That's a General Average concept. I'm not going to go into it today because we're not talking about General Average, but if a General Average is called on a vessel, and we've had a few this past month, the steamship line doesn't have to pay. Then number 17, I'm not going to read it to you because it's very, very long.
It basically says, "Well, if I don't have to pay you for the first 16 reasons, I'm not going to pay you because of this." And you might say, "Well, when do they pay us that minimal $500 per customary shipping unit?" If the seal is broken, if you open the container and there's water inside the container due to a hole or however it got in there, and it's seawater because they will test if it's freshwater or seawater where that actual water came in from, then they will pay you. But keep in mind that liability is not like an insured claim. It takes 60, 90, 120 days to collect that little bit of money. So for air carrier liability, right now, the limit of liability is 22 SDRs per kilo if the airlines lose or damage your cargo while it's in their possession.
An SDR is a special drawing right, which is a basket of currencies: the euro, the yen, the pound, the dollar, and the yuan. Right now, it's about $31 a kilo. But come December 28th, like in two and a half weeks, 2024, the liability is going to be increased to 26 SDRs. So that's about $35 a kilo. The reason why that happens is about every five years, it increases due to inflation. Again, air carriers have exclusions on the back of the airway bills. They're not going to pay for act of war if the plane is hijacked, act of God, right? If it's sitting out on the tarmac, let's say in India, you have some freight coming in from India and there's a typhoon and it's soaking wet, they're not going to pay for it. Terrorism, naturally, is not covered.
Consequential damage. Consequential damage could be an example that I usually use if you're bringing in, let's say, bananas from South America, and somehow they get stuck at the airport and they spoil, right? You didn't lose the bananas, right? But because of the delay, it's a consequential damage, and the airline is not going to pay for that type of loss. Our last slide on liability is trucking and warehousing. In the United States, the U.S. trucking standard liability is 50 cents a pound. Unless your company negotiates with your truckers for extended liability or increased liability, right, then it defaults to the 50 cents a pound. Same with warehousing. Warehousing is 50 cents a pound or $50 per lot.
So if you have cargo, let's say that's sitting at a consolidator or is in a warehouse at a freight forwarder, right, and it's not moving, it's just being stored there, right? The legal liability is 50 cents a pound. So let's say, you know, there's a sprinkler system goes off in that warehouse, right? And your freight is damaged, and you have a $500,000 damage, and you're like, "Oh, I've got this certificate of insurance here that says, Mr. Freight Forwarder or Ms. Freight Forwarder, you've got $5 million worth of cargo legal liability." That's not for you. That's for the freight forwarder or the consolidator to pay you the 50 cents a pound. So if you do have freight and warehousing, I'm sure that your risk management people have that covered under their property program, right? Something that you just might want to think about.
That's basically the liability. Again, it takes a very long time to get paid on liability coverage. How do we determine which party is at risk? Incoterms. Now we're going to get into the Incoterms. What are Incoterms? It's short for the International Commercial Terms. It's a three-letter internationally accepted commercial term. And what does it do? It defines the role of the buyer and the seller in contracts involving the sale of your goods. It basically details who's paying for the transportation and the cost associated with it. All the different services, who's paying for export clearance, for origin terminal charges, for the main carriage. And in the event, right, if there's a damage or a loss, who's responsible? Is it the seller or the buyer? A little bit of history on Incoterms. They started by the International Chamber of Commerce in 1936.
They really were developed to make common interpretation of international trade terms. If I decided, "Hey, I'm going to sell you, right, on Ex Works terms, my factory," we have a pretty good idea who's paying for what and who owns the risk, right? About every 10 years, revisions are made to Incoterms. The first revision was in 1953, and the last revision was January 1st, 2020. Why did they make revisions? Just to bring in the rules, right, with the current international trade practices. We can expect new rules in 2030. Incoterms are not. They're not law. Whenever you're shipping, your Incoterms should always be specified in your contract of sale. It should always be on your commercial invoice. It's a three-letter code followed by a place, a port, or a destination.
You want to be as specific as possible because when something goes wrong, the first thing the insurance company will ask is, "I want a copy of the commercial invoice," and you want to make sure that your Incoterms are on that commercial invoice. Incoterms are not all-inclusive. They don't address the customary operation of the carriers, the steamship lines, the ports, governmental regulations. Incoterms says they do not address passage of title, right? Title from buyer, seller to buyer is in your contract of sale. Although there are a couple of Incoterms that talk about GAAP principles, the generally accepted accounting practices on your D terms, right, which some importers say, "Well, that does address passage of title." But Incoterms, no. You can pick up any book. It'll tell you it doesn't address passage of title. It doesn't address recognition of revenue as well.
So if you are a publicly traded company, right, it doesn't address recognition of revenue. However, Incoterms are all about the delivery. And once you deliver and you satisfy your Incoterm, then you can recognize your revenue if you're publicly traded. It does not address more than one contract in transit. If product is sold in transit, those are called string sales. And it doesn't address those sanctions. We have a lot of sanctioned countries these days. It does not address that. And it does not address payment terms. We always say payment terms and Incoterms should go hand in hand, but sometimes that doesn't happen. So let's talk about Incoterms 2020. It replaced Incoterms 2010. We thought there'd be a lot more changes in 2020, but there were very few changes. In 2020, the insurance on the two Incoterms changed. So there are 11 Incoterms in 2020.
Only two of the 11 Incoterms, CIP and CIF, address insurance, right? And only the seller has to procure insurance on those two Incoterms, never the buyer. They added a new term called DPU, delivered at place unloaded, and they removed delivered at terminal, DAT. And then they simplified it into rules for any mode. It used to be called multimodal, and then rules for sea and inland waterway. So those are split out. So these are your categories. These are two distinct categories. These are your rules for any mode of transportation, whether it's air, ocean, rail, truck, right? You can use these seven Incoterms. Highlighted in red is your new Incoterm, DPU. And then you'll see at the bottom, DAT was replaced. And then these are your Incoterms for sea and inland waterway. Now, these are your most commonly used Incoterms, right?
They are commonly used by you. So thank you very much for attending today and also for letting us know what are the most commonly used Incoterms used by your company. And in the order, right, I mean, FOB, I think we had close to 40, right, that said FOB was high on their list. So these are in order by you. These are your most, our audience's most commonly used Incoterms: FOB, free on board; FCA, free carrier; Ex Works; DAP, delivered at place; and DDP, delivered duty paid, right? And it's not surprising. My colleague and I spoke about it, that retailers, fashion, right, that they're using these types of Incoterms. So these are the Incoterms that we're going to focus on today. So we're going to go into those rules.
In the order that you gave us, the most common Incoterm was FOB, free on board, named port of shipment. It is an ocean term only. Sometimes we do see air shipments come in with commercial invoices that read FOB. No, FOB is only an ocean term. What it's saying is the seller delivers the good on board the vessel at the named port of shipment. This means that the buyer bears all costs and risks once the goods are loaded on board the vessel. Now, FOB is one of our oldest Incoterms. It actually predates Incoterms. It's part of the. I have a slide on UCC codes, the old Uniform Commercial Code, which we'll talk about at the very end. FOB, basically, you'll see that the cost of goods and the risk all transfer at the same point.
What happens? Your seller, whether they be in China, India, Vietnam, right, they pack up the goods. They load it into a container. They do all the export formalities that's required in country. They deliver it to the terminal, right? And at that point, it stops, right? It's not like they're delivering it alongside the ship and you're going to watch it load it. It gets delivered to the terminal. Once it gets delivered to the terminal, the seller has satisfied the delivery. And at that point, the risk transfers from your seller to you, the buyer. And then you pick up, right, all of the charges from that point on. You pick up the main carriage. You do all the customs formalities in country, the United States or wherever. And then it gets delivered to the named point at that point. It's a very easy Incoterm.
Everything transfers at the same point. The good part about FOB, if you're a buyer, you are getting to control the cost of the carriage, and you have visibility of your cargo as to when it's coming in, and you're not doing any of the export formalities in country, right? You're leaving that up to the seller, so that's your FOB term. Okay. FCA, free carrier, named place of delivery. This is a multimodal term. You can use it for air, ocean, rail, or truck, so on this particular term, the seller packages up the goods. They load it up, and either the buyer could pick it up at the seller's facility or the seller delivers it, right, to a carrier, right, that was nominated by the buyer.
The buyer might say, "Just deliver it to my freight forwarder or deliver it to my carrier." What happens with FCA, again, they're doing the export formality. They might deliver it to the first carrier, or you might pick it up as a buyer at their premises. But if they deliver it to the first carrier, that is where the risk is transferring to you, the buyer. Then at that point, you pick up all of the charges, right? You could pick up, as far as the export formality—not the export formality, but you could pick up the delivery to the steamship line, right? At that point, you would be paying for the origin terminal charges, the vessel loading charges, the main carriage, and then all of the import charges on the destination side. That's your FCA term. Ex Works term.
This is a very popular term as well, right? This was number three out of five that you selected. Multimodal term. This has the least amount of risk for the seller. They basically package it up, right, and they call you, "Come and get it. The freight is ready." At that point, you, the buyer, have to do all the export formalities. You have to do the carriage to the steamship line or to the airline, right? And you're paying for all of the charges all the way to the destination, plus all the destination charges. One odd thing with Ex Works, if you are the buyer, if you go to the seller's facility and pick up the cargo, I mean, if I'm selling it to you and you come to my warehouse, I'm not going to let you on my forklift.
I'm not going to say, "Yep, jump on the forklift, load your own truck." As a courtesy under Ex Works, if you're picking up at my facility, I will load the truck. If something should happen to your cargo while I'm loading it, one of the boxes falls off and falls off the dock and drops six feet and it gets damaged, right? That's not my responsibility. I'm loading it as a favor for you. So Ex Works, as the seller, I have the least amount of risk, and you as the buyer have the most amount of risk. So that's number one. Number two, if you're buying under Ex Works term, you should always let the seller know, "Hey, if it's going ocean versus air, right, how is this moving?" Because they might want to package it differently. So that's a little caveat on Ex Works, right?
It depends where. Usually, like I say, you pick it up at the seller's premises. But it could be that you ask them, right, to deliver to your freight forwarder. And then at that point, you're going to pay for the transportation part of it. Now we have a D term, delivered at place, right? Multimodal, again. This is a little different because if you are buying on DAP terms, then your seller loads up your freight in cartons, puts it in containers, pays all the export formalities, gets it over to the airline or the steamship line. They pay all the main carriage, and they deliver it to the named place, right, on the buyer's side. And then at that point, the seller bears all the risk in bringing goods to the final destination.
If you're an exporter on DAP terms, basically, you are controlling all the freight costs, right? You are nominating the freight forwarder, and you have control of that shipment, right? As a seller under DAP terms, you have control, right? You get to pick the freight forwarder. So that's a very popular term that's used, maybe both import and export. And then lastly, the last Incoterm that you chose was DDP, delivered duty paid. If you're an importer and you're buying on DDP terms, I mean, basically, you don't have any risk, right? Depending upon where you name that place of destination, the seller could package it up, do the export formalities, pay for the main carriage, do all of the import formalities, pay the duties, the taxes, and deliver it all the way to your warehouse. But on an import side, there's no control.
You're paying a whole lot more, probably for transportation at that point, right? But if you're selling on DDP terms and you're selling to a country in Turkey, right, you want to make sure that the import broker that is doing the formalities in Turkey is a reputable broker, right? That they're not going to go afoul of any OFAC, Office of Foreign Assets Control, and do anything odd that's going to put you in jeopardy. So when you're exporting under DDP terms, right, all of those charges in country get billed back to you. And whenever they get billed back to you, there's always a little buffer that's added, like a currency adjustment factor, right? So you always ultimately pay a little bit more on the DDP terms. So those are the five Incoterms, basically, that you wanted us to address in this Incoterms class.
I just want to do a quick recap of Incoterms rules, right? Incoterms are always about the delivery conditions. They're never about payment terms. A buyer is never obligated to insure. The seller is obligated to insure only when using CIF and CIP Incoterms. If there's a letter of credit involved in your shipment and the letter of credit contradicts the Incoterms that you are using, the letter of credit will always prevail. When you are using Incoterms, be as specific as possible with the destination place port. Very important. Incoterms, again, they simply define which party is going to bear the cost of transportation and who's going to own the risk of loss or damage on that particular shipment. Incoterms do not address when transfer of title happens.
That should always take place in your contract of sale because Incoterms do not carry any force of law unless you put it in your contract of sale. And then this very last slide I just wanted to put up here, and we'll send you a copy of the presentation, is the UCC codes, the Uniform Commercial Code. These are very confusing. And the reason why I put them up here is a lot of times when we do the Incoterm classes, there are logistics people out there who always talk about the UCC codes. There are six of them. They were drafted in 1942, released in 1952. And you have FOB destination freight prepaid, FOB destination freight collect. And to me, they're all very confusing. So we put a little slide together, and it tells you who bears the risk of the freight cost, right?
If claims happen, who's supposed to file the claim? I'm not going to go through each one of them, but it's on there if you need them. And then lastly, these are our presentations that are coming up in the future. So if you're interested, you can just highlight those QR codes, right? And it'll take you to the invitation, and you can join. And naturally, there's our biweekly newsletter if you want to subscribe to that. So it's a little shorter. This presentation is a little shorter than our normal presentation, which runs about an hour. But we wanted to address the main Incoterms that you were concerned about, that the fashion retail industry was concerned. So I hope this was informative. And, Rui, I'm not sure if we had any questions.
Yes, Diane, actually, we have two questions, so I'll go ahead and read those off. The first one is, who determines the Incoterms? What department?
That's a great, great question. We're on the insurance side of the house, so we deal with a lot of risk managers. And those are the questions that we ask the director of risk management or if we deal with finance in certain companies. And it's a combination. They tell us it could be compliance along with logistics, right? Depending upon if you are a publicly traded company, it depends on finance. I'll give you an example. If you look at Apple, right, they use a DDP Incoterm. They buy a lot of their product, all of their product, probably, from a vendor called Foxconn in Taiwan. And because they buy all their product from Foxconn, Foxconn gives them a 90-day payment.
Recording stopped.
Right? They don't have to pay for 90 days. Once the goods hit their stores, so they're buying on DDP, right? So it gets delivered here to all the Apple stores over DC. And their days to sale, Apple's days to sale are seven days. So they have 90-day payment, and their days to sale like, "Hey, I got my iPhone in today, but in seven days, it's sold." They have 83 days of free cash. So it's pretty amazing how they used the DDP Incoterm coupled with a 90-day payment to the supplier, right? And now they got that 83 days of free money. So that's pretty amazing. So it all depends, right? And it varies, right? It could be finance. It could be compliance coupled with the heads of logistics. I would love to know, honestly, the real answer, right? So it all depends. That's a great question.
Thank you.
Thank you, Diane. There's one more question. How does the import value of goods differ depending on the chosen Incoterm, such as FOB versus DDP?
Oh, can you read that again? That's a good one.
How does the import value of goods differ depending on the chosen Incoterm, such as FOB versus DDP?
I don't think that comes into play because if it's an FOB term, right? Well, if it's an FOB term and it's the first sale, let me go to my insurance first. It differs FOB and DDP. It differs because in the event of a claim, what you're going to claim against the insurance company is going to be your cost versus your selling price. But how does it differ as far as tariffs are concerned?
Yeah. Hey, Diane?
Yeah. Can you help me out?
Yeah, absolutely. It wouldn't differ at all. So regardless of the import value, it's $1 million, $500,000, or $3 million. You can choose whatever Incoterm you want. Now, if you just want to back up a little bit and kind of take it probably way above our pay scale, is when finance and sales are determining the Incoterms on a certain product that they're going to be buying, maybe then they would choose what best fits their risk. So if they don't want to be at risk for a million-dollar value, should anything happen, they may want to buy on a DDP terms, or they may want to sell on DDP terms and put I'm sorry, buy on a DDP terms and put all that risk and valuation on the seller's side.
That's really the only time that a valuation may come into play. But it has absolutely zero determination on the Incoterm you choose or can choose. Again, whether you're buying, whether your Incoterm is Ex Works, you're going to own the risk if it's $10 or $1 million. The buyer is going to own the risk. Where if the Incoterm is now DDP, you're not at a risk financially. So I think it becomes a threshold of the risk you want to take as a company on shipping goods would probably determine what Incoterm you would want to choose. But again, that all scales up to finance folks or the risk manager, someone in the C-suite of a company.
Yeah. Thank you, Rui. That's great. And also, like Rui said, if your finance guy wants to buy on DDP terms, that you don't have any, you don't own that while it's on the water, right? So, I mean, that's a great thing.
Yeah.
Thank you, Rui. Good questions.
Those are all the questions that were there.
Okay. Thank you, Diane. Thank you, Rui. And thank you, everyone, for your time and for the questions. Please be on the lookout for the email that we'll send with the materials as well as the survey, and thank you again. Have a wonderful day.
Thank you, Gina. We have one more question that just popped in.
Okay. I'm sorry.
No worries.
Okay. So the question that we have is, should the freight value be included on commercial invoice if the terms are DDP for entry purposes? I'll read it again. Should the freight value be included on the commercial invoice if the terms are DDP for entry purposes?
I'm going to say no from my freight days that they would not be, but I am going to write that down, and we're going to get back to you. Unless, Rui, do you feel the same?
Right. It shouldn't have to. The party that's doing the entry is the one that should be worried about the freight value. So if you're buying on DDP, obviously, you're not going to be performing any of the customs clearance. Although if you're selling on DDP, you would have to instruct your customs broker what part of those freight values are, right? Because as a seller, you're selling an all-inclusive price of the goods to your client, the buyer. That buyer is not going to be involved in the customs clearance. That buyer is not going to be involved in anything on the destination side. So when it comes to freight value, even the actual value of the goods, it doesn't have to be on a commercial invoice. These days, there's really nothing that needs to be entered on the customs side on a physical document. Everything's usually done electronically.
If it's done in any other certain way, that's acceptable as well.