A Checklist of Considerations

 

These questions below can be raised during the procurement planning stage with a view to getthe goods safely through to the final destination:

 

1. Which method of transport will be best?
»» Air, sea, road, rail, own wheels, containerized (FCL, LCL)
»» When are the goods needed?

2. Who will be responsible for arranging transportation and insurance?
»» How should I ensure the goods?

3. Have you requested the appropriate Incoterm for the method of shipment involved?
»» FOB (named seaport) – for crated or bulky goods, but not for containerized shipments
»» For FCA shipments, consider FCA (named place) vs. FCA (named place, containerized).
»» CFR/CIF for delivery to seaport or inland waterway (but not for containerized shipments,use instead CPT/CIP
»» CPT/CIP for delivery to an inland destination or containerized shipments
»» DDP (named place) – most risks are outsourced to the seller.

4. Ensure all staff involved in purchasing are aware of the buyers/sellers’ obligations embodied in Incoterms 2010.
»» EXW the buyer must arrange export clearance and loading at the sellers premises is at thecost and risk of the buyer
»» FOB and FCA the buyer arranges freight and insurance
»» The buyer is responsible for import customs clearance for all commonly used Incoterms:
FOB, FCA, CFR/CIF, CPT/CIP, DDP
»» For CFR/CIF, CPT/CIP deliveries the seller can invoice the buyer from the “FOB or FCAdelivery point”
»» The buyer most offloads the goods from the arriving vehicle at the buyer’s cost and risk
»» FOB, FCA, CFR and CPT buyer is responsible for arranging insurance

5. Have precise packing instructions been given to your supplier?
»» Give detailed packing instructions for sea vs. air transport. Less packaging is generally requiredfor air and containerized transport. Strong crates are required when containers areopened before the end-destination, in rough terrain, and when trucking. Consider exposureto weather and handling, and facilities for unloading at the final destination.

6. Under a CIF/CIP contract, have you requested the appropriate insurance coverage?
»» CIF/CIP the supplier is buying insurance on the behalf of the buyer, however, unlessstated in the bidding documents and contract, the seller is permitted to offer the cheapest insurance Cargo Clauses C or B.
»» Cargo Clauses B and C generally do not offer adequate coverage, and for example, theft isnot covered.
»» Cargo Clauses A is generally the recommended insurance coverage for UN shipments.

7. Are there any restrictions by the country of importation?
»» Requirements for pre-shipment inspection of cargo
»» Restrictions on invoices with breakdown of costs and packing list
»» Requirements for Tracking Notes (or Waivers)

8. Who is responsible for documentation?
»» What documentation and notifications should be prepared and sent and by whom?

9. Who is responsible for payment of unforeseen charges and costs?
»» Demurrage charges at the port
»» Terminal handling charges (THC)

10. Quality control:
»» At what point(s) in the delivery should the goods be inspected for compliance with specifications?
»» At the origin/factory, sea/airport or upon arrival at the final destination?
»» Who has the capabilities do undertake inspection and what standards of inspectionshould be used?

11. Who will assist with receiving the goods and customs clearance?

12. What will I do if the goods are damaged or missing?
»» Who is responsible for insurance claims and how are they done?