Hello, everyone. Thank you. [audio distortion] o'clock, and we will start the webinar. Thank you for taking time out of your day today to join our Incoterms Level Up webinar. We're very excited for this one since we took your questions and scenarios and built the content around that for today's presentation. My name is Sarah Maas, and I am the Midwest Regional Sales and Operations and Marketing Contact based in Minneapolis, and I will be your host for today. Before we begin, please review our short webinar disclaimer.
If you have joined any of our previous webinars before, I'm sure you're familiar with this. We want you to make note that all the information that will be presented today is accurate as of this moment. I did want to cover a couple of housekeeping items before we get started. Today's webinar will be around an hour in length. There'll be about 45 minutes of information presented, with 10-15 minutes at the end for additional Q&A. All attendees will be on mute, and we ask that if you do have a question, please type it into the Q&A window only, because we have disabled the chat.
We will address as many questions at the end of the webinar as possible. But if we don't get to your question, we will follow up to make sure that it's answered. Today's webinar will be recorded, and you will receive a pop-up notification alerting you that the recording has started in just a moment. After the webinar concludes, you will receive an email, which includes a short survey that we would like you to fill out for feedback.
After you complete the survey, there will be a landing page link that will take you to the presentation materials and the recording from today. I will start the recording. Okay. I'd like to introduce our speakers for today. Jamie Childress is our Regional Risk and Insurance Manager for the North Central and is based in Cleveland. Dave Engel is our Regional Risk and Insurance Manager for the Midwest. Over the summer, he moved from Minneapolis to St. Louis, and he is now based in our St. Louis office. One last reminder, all questions should go into the Q&A window. With that, I'll turn it over to Jamie and Dave.
Thanks, Sarah. Looking forward to going through these questions today with everybody that we received. But prior to digging into that level up, we're going to do a little bit of knowledge just on Expeditors at a glance. We'll talk about ECIB, Expeditors Cargo Insurance Brokers, briefly. Expeditors, for those of you not familiar, we were founded in 1979, and we are headquartered in Bellevue, Washington. Our global headquarters is Bellevue. We have regional headquarters, London, Dubai, Singapore and Shanghai.
We have more than 335 locations in 100 countries, supported by more than 20,000 employees worldwide. We have a global presence, local market expertise, and the ability to connect services across regions. We're also traded on the New York Stock Exchange under EXPD. For Expeditors Cargo Insurance Brokers, under Expeditors, we have a wholly-owned subsidiary called ECIB, Expeditors Cargo Insurance Brokers, a specialty insurance broker. We are a niche broker only operating in that marine cargo space.
We do not work with any other lines of insurance, such as workers' comp, property and casualty. We are only operating in that marine cargo space. What we leverage there is our relationships with the carriers. With our parent company being Expeditors, we leverage that relationship with our suppliers when working with that marine cargo insurance. We have our first poll question. If an Incoterm puts risk on your organization and you need to understand the insurance coverage in place, who do you turn to? I will give you a couple of minutes to provide your answers. Risk management, accounting/finance, purchasing, logistics, or I would have to figure out who to ask. Okay.
Where did everybody come in? Okay. Okay, pretty good spread. Risk management, logistics look like to be the top contenders, which totally falls in line. Accounting/finance coming in third there. Okay. Very good. It is definitely something to understand who to go to if something happens, right? You want to understand how that insurance coverage works or is it in place or who to go to. Definitely good. Okay. We will get started. We are leveling up this time. We always have done the Incoterms 101, kind of introducing Incoterms, breaking them down.
Now we wanted to reach out to the field, to our clients and say, "Okay, what questions are keeping you up at night?" Or, "How can we make sure that our supply chain is in the right here?" One of the questions that we received, with the Enforce and Protect Act, will there be a change to any Incoterms, especially foreign IORs, in parentheses DDP? We have dug in and using our resources, working to help answer that question, right? With the Enforce and Protect Act, there will not be a change, right? EAPA governs CBP investigations into AD/CVD evasion, not related to those Incoterms.
So DDP would remain a valid contractual choice. What could change is the risk exposure, right? A foreign importer of record carries the duty, the AD/CVD and penalty liability, and has limited recourse against the non-resident. Practical step, we kind of laid it out here. You would want to review those DDP terms using a foreign IOR, confirm that they have the bond sufficiency, and consider DAP with a U.S. IOR. It is definitely important to review those DDP terms when using a foreign IOR, to make sure that you understand the exposure that is out there.
Okay. But we do not foresee any changes at this time to Incoterms as a result of the Enforce and Protect Act. Okay. Next question, and this is one that we get all the time. It is definitely very, very common. So when and why should we use Ex Works, EXW, and FCA, Free Carrier, and what is the better term to use? Okay. My opinion, I would prefer to use FCA over Ex Works, and we will get into that explanation. Again, for Ex Works, it is the seller's minimum obligation. They just have to have the goods ready to be loaded into a container.
The actual loading of the goods, export clearance, and all transport risk is going to be on the buyer. It is up to them to have all the export documentation ready and load the goods at the seller's facility. FCA is going to deliver those goods export cleared, so the seller will have already taken care of that. They will have taken care of the loading and the export clearance and the transport risk when using FCA. That will already be handled on the seller side. FCA is going to deliver those goods export cleared to the carrier at the seller's premises or another named place, depending on how you have that named place listed with the Incoterm.
It could be FCA seller's premises, or it could be FCA to the port. That is going to be handled, that previous to that named place, is going to be handled by the seller. FCA is the better term for international moves. The seller can file the EEI, the loading responsibility is clear, and that proof of delivery supports letters of credit. Again, just a couple items there to share why we prefer FCA is better versus Ex Works. Okay.
All right. The next question we have, who is responsible under FCA term of any storage costs arising from random inspections, taking care at the port if vessel cutoff is missed? Is it the vendor or the consignee? Okay, so under FCA, risk and cost transfer the moment goods are handed to the buyer's nominated carrier. Okay? If an inspection occurs that pushes you past that cutoff, and the demurrage and storage that could follow sit with the consignee, not the vendor. That is going to fall to the buyer, not the seller.
Okay. The seller still pays any export country inspection, but if it is after that named place, the turnover spot, yes, the storage inspection costs that have to happen after that would be on the consignee, so the buyer. Okay. Again, to point number three, a way to control it in the PO, you can define that named place, the cutoff expectation and who absorbs the storage caused by vendor documentation? The Incoterms will definitely help guide that, but it will boil down to what is stated in the contract, in the PO, the SO. Okay.
Our next question, I will take on the next few here. We have, how are Incoterms applied when the shipment ownership, also known as the title of the merchandise, changes during transit? There was some context given here that it was agreed terms during the first leg are FOB Rotterdam. During transit, the goods are resold by the consignee to a third party under Incoterm DAP. We have a pretty specific example that was given here, and we will build on that. The question ultimately is how are the Incoterms applied when the title changes mid-transit?
First thing we can consider here is that sale goes with the contract. Contract is the terms of the sale. Each sale is a separate contract with its own term. For example, FOB Rotterdam governs the seller to the consignee, and then the DAP Incoterms rule governs the consignee to the third party. They are running in parallel. To get into that in a little more detail, because there is separate contracts of sale here, Incoterms, if we go back to our 101 course, kind of some of the basics, Incoterms do not dictate the transfer of the title. The contract is what dictates that.
What we are looking at is, since the Incoterms do allocate the risk and the cost, but they do not control the title, the mid-transit resale does not alter the original FOB terms. Risk is passed when the cargo is loaded on board with an FOB Incoterm. The middle party becomes the DAP seller while remaining the FOB buyer. The key here is if you are going to bring in a third party into the mix in any of this, the documents have to be aligned. The bill of lading needs to reflect that. The insurance needs to be confirmed by any parties that are requiring it or that are buying it.
Also the destination needs to be named precisely. In a situation like this, while we are not trade attorneys, and we are offering you a 201 opinion of this, I would say when you have something like this where there is a title transfer while the shipment is in transit, you want to make sure that everything is very precise and clearly defined and labeled. That brings us to our next poll question. The question is, when your company is responsible for risk of loss under the Incoterm, how is cargo typically insured?
Thinking again here, just to reiterate that question, we will give you another couple of minutes like Jamie did. When your company is responsible for risk of loss, how is the cargo typically insured? The choices here are through your own cargo insurance program, coverage is purchased shipment by shipment, we rely on coverage that is arranged by another party, it varies depending on the shipment, or I am not sure. All right, so our results are here. Thank you to the 183 of you that submitted your vote. When your company is responsible for risk of loss under the Incoterm, how is it typically insured?
It looks like over half are using a cargo insurance program. With some others in the group here purchasing it on a shipment-by-shipment basis. Then it looked like another large response group there was that it varies depending on the shipment. We see that a lot. Sometimes it is a value thing. Sometimes it is a, this machine is custom-made and the other one is not, or whatever the case may be. Maybe this sale matters a lot more to our company than another sale does.
We do see that. Great. Thanks, everyone. All right. We will roll into our next question, which is, where does the seller's risk begin when using CPT Incoterms, and who is responsible if damage occurs? Okay, so when we are looking at CPT Incoterms, we will examine this a little bit closer and kind of break it down slower, because in most of our Incoterms 101 courses, we do break that down in terms of cost, carriage, and risk. We will start by talking about the risk.
Under CPT Incoterms, seller risk ends when the goods are handed to the first carrier it contracts with, though the seller still pays carriage to the named destination. In this case, just looking at number one a little more closely, if the seller chooses the freight carrier and the goods are trucked to the port, the cargo is handed over to the ocean carrier, then something happens on the ocean conveyance, maybe some water damage or something like that, the Incoterms rule of CPT has dictated that the risk has already transferred over to the buyer.
For CPT, even though the carriage and the cost is arranged by the seller, the risk transfers once it is handed over to the original carrier. Damage any point after the handover to the ocean carrier is the buyer's risk. Okay? If it is before that, at the seller's facility or maybe some pre-carriage to the port that is controlled by the seller, then it is the seller's risk. But other than that, once it is handed over, the risk begins for the buyer. Okay? Looking at our third bullet point there, CPT has no insurance obligation attached to it.
In order to protect the goods, the buyer should insure their goods or use CIP or have some other mechanism of financial protection for any losses or damages that would occur to those goods in transit. Both places should definitely be named precisely. Okay? If you just go, could you just toggle back one real quick? I just one other comment to add here. There is no requirement here for the goods to be insured, so the buyer could be at risk when we are talking about CPT.
It just points out the need for the buyer to have some sort of financial protection, whether that be cargo insurance or another financial mechanism to cover any losses. Just wanted to add that in. Thank you. All right, our next question, which is, how can different Incoterms change dutiable costs? For example, adds for freight, insurance, et c. What we have here is four points on it. We tried to keep these to three, but we do have four things to go over on this slide here. It is kind of a customs-related question, so I am probably going to approach this at a little bit of a surface level for some of the people in the group here.
Ultimately, I would say good research on how this is handled in whichever country you are importing into is going to be a key consideration here. Basically, in the United States, freight and insurance are not dutiable in terms of a transaction value. The Incoterm's rule decided on is what decides what sits inside the invoice price. That can drive the additions and deductions needed to reach the correct customs value. In the United States, the value is appraised on an FOB or an FCA basis, means deduct the freight and insurance under CIF, CIP, DAP, or DDP. Most other countries use an appraisal using CIF, so you can add in dutiable costs such as freight and insurance when calculating the value in those countries.
Again, we say, do the research on the countries that you are importing into. Let us say that you have goods coming in to the United States, and you have an imported landed cost of $125,000, but $25,000 of that is duties and freight. In the U.S., the goods would be valued at $100,000 for customs valuation. But let's say, switch it up, and you have an FOB shipment that's being imported into a country where CIF valuation is used.
You may actually be able to add in the freight and the insurance to get to that value. Just encourage you to do your research on that. The fourth point on here is DP invoices include duty, brokerage, and delivery. You can back those out. Make sure you state the Incoterms rule, break out the freight and the insurance separately.
Thanks, Dave. All right. I will take it over from here. Another question that came in, once a contract sets an Incoterm such as DDP, can it vary shipment by shipment? Again, this is a common question we get, but we'll dig into it here. To answer the question, yes, it can vary, but only by mutual agreement. Again, going back to that contract, that contract Incoterm is the default, not a permanent lock on that Incoterm. A given shipment can move on a different term as long as both parties agree, and it's documented on the PO, SO, booking or invoice.
What you cannot do is unilaterally flipping DDP to FOB or CIP moves duty liability, importer of record status, insurance increased costs. It's going to move all of that from one party to the other, and usually not without the other side realizing that. Those changes are difficult and should not be done. But there is a best practice that we would suggest, and that's build a change clause into the contract, and confirm those deviations in writing before the booking. Show the actual term on the commercial invoice. But again, yes, it can vary, a contract Incoterm. That can be changed, but it has to be mutually agreed between the buyer and the seller and listed in the contract. That is something that can vary. Okay?
Right. Another question. FOB prepaid collect in the UCC, right? When should we use FOB prepaid versus FOB collect, and how do the UCC definition of FOB differ? This, again, is a question that we receive quite often. FOB prepaid collect, we hear that all the time from a domestic standpoint. But it's not the same as the FOB that we see on the Incoterm side, the International Commercial Terms. That's separate. These are separate systems. Prepaid versus collect is a freight payment term, not an Incoterm. When the seller controls the routing, that's going to be your prepaid.
And when the buyer has its own carrier rates and selects their carrier, that's going to be collect. Says who pays for the freight, not where risk transfers. Okay? Under Incoterms 2020, FOB is sea inland waterway only. We definitely dig into this on the Incoterms 101. More so, what does that ocean only mean? Under Incoterms 2020, the FOB is ocean only. That means that the goods need to be loaded on board the vessel.
Think of when you're loading bulk grain or roll on, roll off. It's not moving through a trucker who's taking it to the port, who's then loading and unloading directly on board the vessel. We also highly recommend using FCA for container multi-modal moves, which is what we see in the industry as well today. When you're having the goods ready at your facility, a trucker is picking them up, when you have multiple touchpoints leading up to that freight being on board the vessel, FCA is going to be preferred over FOB because the FOB is when you are loading the freight directly onto the vessel. Okay?
Onto point three, the UCC adds an FOB place of destination option. It keeps the risk with the seller until delivery. Never mix the systems. UCC is separate from the Incoterms. These Incoterms are for international use, where the UCC is on the domestic side. State the rule, CIP plus the payment term. This is one that's been coming up a lot lately with that FOB on the domestic side and the international side. Any other questions outside of that, we'd be happy to help with. Okay. Okay.
Okay. Thank you, Jamie and Dave, for going over some of those questions that were submitted by the attendees. That did go a little bit faster than we had initially planned for, so maybe that gives us a little bit more time to open it up for Q&A. We do have quite a few questions in the Q&A window. For those of you attending, please don't be shy in putting your questions into the Q&A chat, and we can get started on answering some of them.
I saw one question that I can handle, if that's all right.
Yeah.
I saw in the Q&A section, Ping had asked, "What if the buyers are chronically delayed completing their export clearance? Is CIP better than FCA?" Our answer to that, I guess I would say that if you think there would be losses that may be incurred that would be covered by cargo insurance, you may consider CIP as a better option, because if there's delays due to your supplier, your seller, completing their export declaration, that might be advantageous. I'll type that in. I had it typed in, but I'll submit that, too.
Thanks, Dave. All right. One of the questions that was submitted are, could you describe the potential savings that could be possible by shifting from Ex Works to CIP?
I'm looking for that question. Potential cost savings switch. Can you read that again?
Yep. What are potential savings by shifting from Ex Works to CIP?
Savings for the buyer? Let's see. Hold on one second. I can take this one. Might need to take that one offline because we can break it down by seller and buyer and what those different cost savings would be. We definitely will reach out following the—
Okay.
—the webinar.
Thanks, Jamie. All right. Our next question is, if there's a random inspection at origin, is the shipper responsible under FCA terms?
Yes. From— W hen the FCA prior to that named location, if there is an export-related inspection, that would fall on the seller.
When using FCA for the named place portion, can you designate a foreign import port? For example, FCA Port of Brazil when shipping from the U.S.
Sure. Let me— Using FCA, the named place portion, can you designate a foreign importer? We would need to understand where the seller is actually delivering the goods. The named place should be the point where the risk transfers from seller to buyer.
I'm trying to read through on the fly here too, because—
Yeah.
—there's, in the Incoterms book, and I'm sure we'll mention this before the end of this, but a lot of times there's notices in the end of the sellers and obligations. Pardon me, the sellers and buyers' obligations. There's notes at the end that explain some of these detailed scenarios, so we might have to research that. I want to get back to you as well.
Yes.
Just in the interest of everyone's time.
Okay. Another FCA question. For Ex Works versus FCA, if the loading place is the seller's plant, the scenario is that they have never seen the seller file the export paperwork. Export and import paperwork is filed as a whole by the buyer's forwarder. Can you explain why some companies are told that FCA is a better choice versus Ex Works?
Sure. Yeah, no. Well,
I can too. Go ahead, Jamie.
No.
Yeah, I'll chime in.
No, for Ex Works, so the responsibility falls on the buyer for the loading and the export paperwork. If there isn't, say, if damage occurs while in, that risk falls on the buyer. However, the buyer typically is not involved in the loading of the goods. Same with the export paperwork. It is the responsibility of the buyer, and if the forwarder is working with them, but, again, that responsibility is on the buyer to making sure that that is set up for export, it's export-ready, documents and all. Dave, do you have to add to that?
I was going to say, with Ex Works, if the buyer has no con— I'll back up. In any country where whoever the exporter of record is going to be responsible for the export paperwork, right? Under Ex Works, yes, the contract says that, and the Incoterm says all the risk, the cares, the cost, all of it transfers once it's off their dock. However, if that seller is the exporter of record, they're definitely going to be responsible for submitting export information through whichever carrier is taking the export declaration for that country. The seller, the exporter, going to be responsible for that, no matter what the Incoterms are. I just wanted to add that in.
Okay. We have a question that was submitted regarding a specific scenario. If there's an individual in Dallas, Texas, and they are selling to Mexico, the responsibility is to pay for freight until Laredo, Texas. Would FCA to Laredo, Texas be the best Incoterm to use, or do you think that this is a more specific question that should be—
Yeah.
—discussed?
Yeah, no, generally, that would be the best choice. If your responsibility is going to end when the goods are delivered to a carrier facility in Laredo, yeah, that's going to transfer the risk and responsibility. Generally, that would be the best choice.
Thanks, Jamie. We have another question regarding FOB terms. For prepaid collect and on the UCC slide that was presented, it was noted that FCA should be identified with multiple touch points and FOB for non-multiple touch points. Can you explain that scenario a little bit more in depth—
Yeah.
—again, Jamie?
Yeah, definitely. One thing that we also like to call out here is that, again, Incoterms are not law, and they can be interpreted many ways. For FOB, there is a clause, and I don't have my Incoterms book. Shame on me. But there is a clause under FOB specifically for mode of transport. For FOB, that's an ocean-only Incoterm. It is not a multimodal term. So when you have goods that are even going by air, FCA would be recommended. Or using multiple carriers in trucking from your location to the port, and then from the port to the consolidator, or consolidator to port.
FCA is going to be recommended versus FOB. FOB is really for containers that are loaded directly on board the vessel. They're not going by rail, they're not going by truck to get to that vessel, but loading directly on board the vessel. Again, you're loading bulk grain into a container that is already on board the vessel. That's where FOB is the best choice. FCA is the best choice for when we're seeing multiple touch points to getting on board the vessel. Dave, you have anything to add there?
I'm trying to find the clause that you were—
Oh.
—describing. No, I don't at this point.
It's on page one. I'm just kidding. I'm going to memorize that page now going forward. But no, we can send a follow-up with that information as well to call out that clause. It explains it very well and for all ocean-only terms, that would apply as well.
Okay. Jamie or Dave, under FCA with a FPPI routed shipment, is there a way to hold the shipment at origin until the customer has the AES filing document? They have experienced difficulty in obtaining this. Or they have also asked, would they be able to just offer the packing slip until the export information is received?
I think this digs a little more into compliance, so we will probably have to take this one offline and we will reach out to you directly.
Okay.
I will just add a little color on that one.
Yeah.
I think if the freight forwarder that is being worked with at origin has good practices in place, it should be delayed, it should be held before the export clearance even takes place. That is one where I would maybe just look into, what is the process or what are the stop gaps of whichever provider is being used on the export side to make sure that it does not start moving until it is export cleared. That would be my short answer to that one.
Thanks, Dave. We had another question come through, asking for some clarification about DDP terms. Would one of you be able to just briefly go through DDP?
Yeah.
Yeah, I can— Oh.
Okay. You go ahead, Dave.
We're fighting over
You go.
We love helping our customers. What can we say? Under DDP, the cost risk and the carriage all transfer. So it's seller from point A to point B, everything included. DDP includes duty. So it's delivered duty paid. Seller delivers the goods to the agreed place at destination. So you have DDP and then a named place at destination. So the Incoterms might read DDP, Brussels, Belgium, or maybe it's the specific location of the factory in Brussels, Belgium. Whatever it is, right? The seller assumes all the cost import formalities.
So, the export clearance, the carriage on the water or in the air, every single touch, every single point of carriage is all on the seller. Okay? Risk is also all on the seller until the goods are ready for unloading, duty is paid on it. Now, the thing you want to keep in mind here on this one is that you have certain countries, like in Latin America, also in the Middle East, just giving generic regions, but this is one where you want to do your research because DDP is not permitted in every country. So, I just want to point that out. Jamie, anything you'd add there?
No, I think you covered it. Mm-hmm.
Actually, let me go back. One other consideration with DDP, if tariffs are going to be doing a roller coaster all over the place, you would want to keep that in mind as well if you are selling or purchasing DDP because the duties are included in the Incoterms.
Thanks, Dave. We have a scenario where an attendee on the webinar call is shipping to an intermediate consignee for destination Mexico, and the seller is selecting the carrier option to the intermediate. Would this scenario be considered FCA or DAP Laredo, for example?
Intermediate. Seller is selecting carrier option to the intermediate. This can be an FCA or a DAP Laredo, for example. The seller is selecting the carrier option to the intermediate. If they are responsible for the cost, the risk, and obligation to Laredo, that would be DAP Laredo, and the seller would handle selecting the carrier and handle those costs.
Thanks, Jamie. Do either of you have any advice on if there's a more favorable Incoterm for the country-specific level at origin?
I would say it depends on the complexity of the country. I know I keep saying this over and over, but it's a lot of research involved to figure out how complex is it to export from whichever country you are trying to export from. Or vice versa, how complicated is it to import into whatever country that you are working with?
A lot of times, what you will find is that the expertise in those countries is you're going to have better on the ground, boots on the ground knowledge, whether that be your freight forwarding partner or your customs broker, or whether that be the seller and the buyer themselves, probably going to have the best command of that export and import clearance and the complexities of that. So, it is a big question and a complicated one to answer directly.
Yeah. Every country has their specific rules and regulations. So again, to Dave's point, it's really important to do the research on that side to understand what you're potentially signing up for when working with those countries.
The next question that has come in is parcel carriers don't offer real insurance. They use declared value as a liability cap, and this specific instance had a buyer insist that they cover the insurance under CIP terms. Does this situation require that we use our own insurance since, in this case, the carrier does not offer insurance under the cargo clause?
Yes. Carriers limit their liability, Expeditors included. We follow the standards in the industry of, for domestic, it's $0.50/ lb . For ocean, it can be up to $500 per customary shipping unit. For air, it's about 26 SDR, and that's a Special Drawing Rights, so a combination of currencies, which equates to about $35/kg on the air side. So again, they're limiting their liability. They're not going to charge based on the value of the goods.
They're going to charge based on the space and the weight that it takes up on board the vessel, the airplane. So yes, to answer that question, you'd have to use your insurance or work with your freight forwarder, see if they have insurance that you can purchase. But yes, definitely insurance would be required there because the carriers are going to limit their liability.
Thanks, Jamie. What if the buyer pays freight from China, but the seller is a U.S. entity responsible for customs clearance and port fees? Can you explain the Incoterm for this scenario?
Buyer pays freight from China, but the seller—
Jamie's probably going to beat me to this one, but I'm going to take a look. Buyer's paying from China, then we're looking at buyer's paying from China, but the clearance is port fees.
Yeah, this is an interesting.
Can you guys see that we don't have this memorized? We use charts all day, and we would encourage you to do the same. We can get everybody here an Incoterms chart.
At first glance, it would look like FCA. If the buyer is paying for the freight from China, or yeah, I would say FCA. It might be a case where this needs to be explicitly spelled out in the contract, because two terms fall into play here. But, yeah, for this case, I would say that you'd have to lay it out in the PO, the SO, the contract, so that it's clear who's responsible for the movement of the freight versus, because I could kind of see where FCA falls into this, but I can also see where DDP falls in because the seller's handling the customs clearance. We can follow up on this one, but I would highly recommend this would be something to lay out in the contract. I don't know, Dave, thoughts on that?
Was going to say the same. Yeah, it could be the sales contract and the Incoterms need to work in concert with each other. Yep. Certain things can be detailed in a sales contract that you don't want it to be contradictory to what the Incoterms are, but that can take out certain parts of it and say, "This needs to be handled by this or the other party."
Someone asked about an Incoterm website. I would send you to the ICC website and/or use the book. I know the book is old school. There are also some sites, if you search reputable, like trade attorneys have written up explanations of Incoterms. A lot of the times when we get these detailed questions, we research that way as well. Because some of the questions we get, we've never heard before, so we try to do our best to answer.
Yeah, every supply chain is so unique in how it's managed that definitely no question is the same when you talk to everybody. So it's definitely we're constantly learning and sharing what we learn as well. We'll also be sending, I think, a follow-up to this, and Sarah, correct me if I'm wrong, but we will be sharing the Incoterms chart that we have, which comes with a two-pager.
It's got the Incoterms on one chart, and then the second page is going to share who exactly is responsible for what cost, and it breaks it down by the buyer and the seller. So we find it to be very helpful as a reference sheet when these questions get asked to the team on a daily basis from your buyers. So, we will be sending that out as well.
Thank you. We are coming up on time, so we'll just do a couple more questions. Then for anyone who submitted a question in the Q&A, we will be reaching out to you shortly after the webinar concludes, to get you connected to either Jamie or Dave, or your specific account rep to schedule a meeting, and get these questions clarified and answered for you. So, a couple of the last ones. Can DAP be used in the origin country, or is DAP only an Incoterm that can be used in the destination country?
It's a named place at destination. DAP means the seller is delivering the goods to an agreed place at the destination. The Incoterm would be DAP, and then followed by a named place at destination. The seller is assuming all costs, risk, and obligation until that named place. The difference there is that DAP would not include duties and customs clearance, just the delivery to the place. At that point, the buyer would then become responsible for the customs clearance and the duties under DAP.
For service-related shipments, when the seller is repairing a finished good, what would you say would be the best Incoterm to use for an item that falls under warranty?
Again, that depends on the contract you have between the buyer and the seller, and who's responsible for the cost, the risk, and obligation. Really, it would depend on that contract between the buyer and seller.
Dave, I was going to ask one last question, but I see you're typing an answer to it. I am going to just ask the question to you both, in case anyone else on the webinar has the same question. Earlier, when you were answering a question about a scenario regarding what Incoterms would be the best, then you mentioned researching to decide on the best Incoterm. What would your advice be on how customers can do that research?
I would suggest country-specific websites of the actual customs authority in that country. In the United States, U.S. CBP, Customs and Border Protection, is the example I would give. There's going to be an equivalent of that in every single country worldwide. Every country has its own customs formalities that have to be followed. Every country wants to collect their money through duties, tariffs, whatever that may be, VAT tax, various different things that, as a shipper or as an importer, it's We work with customers of all different familiarity in this area.
A lot of times we will hear from our customers, "Hey, we hired you. Don't you know how to do all this stuff?" To that, I would just say, "Yes, we know a lot about it, and a shipper or an importer is ultimately the one that is on record with the government for whichever customs activities are being conducted.
All right. Thank you, Dave. Thank you, Jamie. We do have quite a few more questions in the chat, so for those of you who did submit a question, don't worry, we will be following up with you shortly. Thank you for joining today's webinar. Dave and Jamie, are there any concluding thoughts that you'd like to share with the group?
No, I think this is great. We appreciate all the questions and feedback that we are getting, and we are glad that you were able to join. If there's any questions, please don't hesitate to reach out to us. We're here for you