Incoterms

conceptsmachine · Oct 1, 2019

Hello Fellas,

Would you maybe be able to give me some guidance on Incoterms?
I recently had a customer of mine that got bought out and in the change, I am going to make some parts for a company in Malaysia. They are asking for incoterms. All I know is I want them to pay full shipping and I don't want to be liable after parts are dropped off at transporter. Basically, after they are dropped off, I'd like full payment for the parts, regardless of what happens to them in transport.
What would I put into the incoterms? This is all new to me. Normally I just ship the parts with a packing list in the US.
Thanks for any guidance on this.

Jim

g-coder05 · Oct 1, 2019

Your best bet for this if you are trying to have legal leg to stand on is to ask the ICC to help you create a contract. Actually, I'm quite sure they will have a general blanket they can email you and you just fill in the names of the parties involved.

That being said, Don't think these Asian countries/businesses will adhere to any contract if something goes wrong and doesn't benefit them. It would have to be some high dollar parts to make it worthwhile for an international legal argument. I took a $22,000 hit on a tool I made for a client in Malaysia all because they said after the parts where shot they were not to spec (They supplied the tool design). All I was left with was a $5k deposit. I reached out to a couple of attorneys and none would touch it.

As it stands now, I get 100% up front no matter who its going to. I don't even take Alipay in escrow anymore because all the customer has to do is say the part is bad and your out.

Charles Peguy · Oct 1, 2019

conceptsmachine said:
Hello Fellas,

Would you maybe be able to give me some guidance on Incoterms?
I recently had a customer of mine that got bought out and in the change, I am going to make some parts for a company in Malaysia. They are asking for incoterms. All I know is I want them to pay full shipping and I don't want to be liable after parts are dropped off at transporter. Basically, after they are dropped off, I'd like full payment for the parts, regardless of what happens to them in transport.
What would I put into the incoterms? This is all new to me. Normally I just ship the parts with a packing list in the US.
Thanks for any guidance on this.

Jim

The ICC is a great place to start as the previous poster said. Even Wikipedia has a lot of good information.

The really important thing is insure that you will be paid. For my part, I like international Letters of Credit issued by a major bank. Let the buyer arrange for inspection. Sell FOB origin freight collect. Then, collect your docs and get paid. As long as you do your part, the buyer's bank must pay you.

If you haven't asked for an LC, you might want to do that and tell them your responsibility will end at your dock.

Cheers,

C. Peguy

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Charles Peguy · Oct 1, 2019

I assumed in my post that you will be using ocean freight. If not, FOB won't do. EXW will put the minimum responsibility on you.

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EmGo · Oct 2, 2019

Letter of credit is good and doesn't cost very much. They are a bank-to-bank transaction that doesn't even involve the buyer or seller : whatever terms you put in the l/c is what decides if you get paid.

Beyond that, at least at first you should go through a freight forwarder that knows what they are doing. There's so many gotchas internationally that wading in by yourself can easily lead to disaster.

Finding an honest freight forwarder, that's a different problem

As the gcode guy said, if you wanted to go to court, it has to be a federal case and the feds won't take anything below $70,000. Even then, any time you go to court, both sides stand an 80% chance of losing. (Note that word has ONE 'o', jeeze.) Then if you did get a judgement, how are you going to collect it ? Until you are a big shot, there is no law in international trade. So cover your ass.

Peter from Holland · Oct 2, 2019

CIP port of destination
Better as CIF

CIP (or Carriage and Insurance Paid To) is an Incoterm® where the seller is responsible for the delivery of goods to an agreed destination in the buyers country, and must pay for the cost of this carriage. The sellers risk however, ends once they have placed the goods on the ship, at the origin destination.

I always like to arrange transport myself because then you are in charge of things
And deliver till port of destination
EW (Ex works ) sounds tempting but often is a PITA for the buyer to arrange and you have no controle over things like BL EXA and such

Peter

DanielG · Oct 2, 2019

Charles Peguy said:
I assumed in my post that you will be using ocean freight. If not, FOB won't do. EXW will put the minimum responsibility on you.

You don't want to do Incoterms FOB, even on ocean freight. Risk and cost transfer when the cargo is actually loaded. The best options for you are EXW or FCA. My export training recommended FCA, as you are legally responsible to the feds for the export paperwork either way, but under EXW you are trusting the buyer to do it.

I'd recommend getting a good export guy and just tell him what you want to do. That's what I do for overseas shipments.

john.k · Oct 2, 2019

We used to sell earthmoving machines to SE Asia,the buyers would try any kind of trick to get our machine without paying full price.......FOB,FOT,all expose us to some risk,especially when staff members stuff up ,and dont get documents completed properly.....a lot of Asian buyers are actually middlemen,and went to a scam school.....We used to get buyers to come over ,we pay one way airfare and accomodation,and get them to transfer the money into our account from our office,or their bank.......Funny thing is,when they are paying the shipping,they can always organize it more cheaply,despite claiming they know nothing about shipping..................here s a thought....in Islam,its a religious crime to deal fairly with an infidel.

EmGo · Oct 2, 2019

john.k said:
....a lot of Asian buyers are actually middlemen,and went to a scam school.....

As opposed to the US, where a lot of sellers don't own the equipment and teach scam school. Dishonest shitheads, for sure

Let's provide a few names, just for fun :

MMI, Paul Golec. Slimeball par excellence.

Amy Pugh-Parris, thief and crook, freight forwarder.

If you need more, I can make a list ... those were just the most egregious.

john.k · Oct 3, 2019

Old saying...if you want to sell machinery...buy a polaroid camera,book some ad space,....and wear white shoes and mirrored sunnies.......Even easier now with smartphones and internet......we once sold a Laotian "businessman" a Cat 140 G grader ,with a busted tooth on the bevel gear......used to click each time it went round......Chinese bosses never touch machinery,or get their hands dirty ,and never travel with those who do.(mechanics)......hence we caught him on the grader,and about a week after it landed there ,he was sending faxes demanding a new gearset,and thousands to fit it....Old Vern Palm used to say $1500 spent on paint beats $15,000 spent on mechanical repairs.......so we never did any.

EmGo · Oct 3, 2019

john.k said:
Old saying...if you want to sell machinery...buy a polaroid camera,book some ad space,....and wear white shoes and mirrored sunnies.......Even easier now with smartphones and internet......we once sold a Laotian "businessman" a Cat 140 G grader ,with a busted tooth on the bevel gear......used to click each time it went round......Chinese bosses never touch machinery,or get their hands dirty ,and never travel with those who do.(mechanics)......hence we caught him on the grader,and about a week after it landed there ,he was sending faxes demanding a new gearset,and thousands to fit it....Old Vern Palm used to say $1500 spent on paint beats $15,000 spent on mechanical repairs.......so we never did any.

And you're complaining about dishonest Asians ?

john.k · Oct 3, 2019

In much of SE Asia,import of used earthmoving machines is banned,because so much dud stuff was unloaded on Asian buyers........these guys were always trying to play both ends against the middle,always hands out for bribes,ship via my brother,he is shipping agent,and then there were the guys were actually buying to transfer currency out of these countries,"you gimme invoice for $100,000" ,and you could get involved with triads.The Viet who was next to my yard got in a pickle,and had two 40 ft containers of some crap refused entry in Haiphong and shipped back to brisbane on his dime.........he has the distinction of being made bankrupt in Vietnam and Australia.....Then there was the container load of Mangoes where the frig motor broke down.......

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