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  • International trade in Paraguay: know what the Incoterms are

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    If you import or export from Paraguay it is important to understand what are the incoterms , a set of rules applied in international trade contracts.

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    Incoterms are important for several reasons, but one of the main ones is that allows defining the responsibilities of buyers and sellers in terms of risk, cost and cargo insurance.

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    These rules are governed by the International Chamber of Commerce (ICC by its acronyms in English) and were created by consensus to define precisely the obligations that must include the purchase agreement used in the trade between individuals y companies from different countries.

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    These obligations relate to the following topics:

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    • Place where the cargo for the goods and the means of transport to be used is delivered.
    • Sharing expenses between the importer and the exporter.
    • Type of risk that must be assumed by both the exporter and the importer during the transport of the cargo. This includes liability for cargo insurance.
    • Documents that the exporter must deliver to the importer, as well as everything related to customs clearance .

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    What are the incoterms used in Paraguay?

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    Currently there are 13 incoterms in force , each one identified with 3 letters taken from the abbreviation of its respective name.

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    1. EXW: Ex-works (Afuera de almacén factory). This incoterm establishes that the seller has fulfilled his obligation to deliver to put the products out of his taller, factory the storage site for him to remove them from the buyer.

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    The seller is not responsible for placing the cargo on the buyer’s vehicle, as well as dispatching the customs for export, except as previously agreed with the seller.

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    In turn, the buyer assumes all expenses and risks arising from withdrawing from the merchant from the seller’s home up to the final destination.

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    1. FCA: Free Carrier (Transportista Libre). The seller complies with his obligation to dispatch the cargo for export and deliver it to a carrier designated by the buyer at the agreed place under the contract.

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    If the buyer has not stipulated a specific delivery place, the seller can choose one within the chosen area for the shipping agent to receive it. The incoterm FCA applies to any mode of transport , including multimodal.

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    1. FOB: Free on Board. The seller is obliged to load the merchandise on board the shipment port which has been stipulated in the contract with the buyer.

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    The seller must take care of the export procedures that the buyer must purchase and pay for the shipping cost . The transfer of risks and expenses of the seller to the buyer occurs once the merchant overflows the edge of the boat.

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    1. FAS: Free Alongside Ship (Libre al Costado del Buque). The seller delivers the goods to the side of the ship on the previously agreed cargo port.

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    From that very moment, the buyer fell in charge of whatever cost of damage the loss of merchandising. On the one hand, the seller is obliged to clear merchandise in customs for export.

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    1. CFR: Cost & amp; Freight (Costo y Flete) This incoterm establishes that the seller must pay transportation costs and any other costs to be able to take the goods to the agreed port.

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    However, any risk of damage or loss of merchant is transferred to the buyer once it is delivered on board the bouquet and has been transferred over the edge of the same.

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    This incoterm requires the seller to ship the export merchandise and the buyer who has the insurance cost.

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    1. CIF : Cost, Insurance & amp; Freight (Costo, Seguro y Flete) This seller has to assume the same obligations as the CFR item , but additionally hire a marine insurance that covers any amount loss of cargo during transportation.

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    Also, the seller must take care of the customs clearance for export.

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    1. CPT: Carriage Paid To (Paid Transportation Hasta) The seller assumes the contract and paid for the transportation of the cargo up to the destination agreed with the buyer.

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    However, all risk of loss of money is transferred to the buyer only the merchant has been delivered to the designated carrier by the seller, the first of which is more than one. The seller must also be responsible for everything related to customs clearance for export.

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    1. CIP: Carriage and Insurance Paid To. It establishes the same obligations for the seller who incurs CPT, but must also hire insurance and pay the respective premium to cover any loss of cargo during transportation.

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    On the other hand, this incoterm only forces the seller to choose insurance with minimum coverage .

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    1. DAF: Delivered at Frontier (Delivered in Frontera). It establishes that the seller has fulfilled his obligations once he delivers the cargo, it is dispatched in customs, at the agreed place on the border of the country of origin, but before he leaves the customs country of the country .

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    For this reason, it is important to define exactly the border item that will be used for the delivery of goods.

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    1. DES: Delivered Ex-Ship. This incoterm establishes that the seller must put the goods at the disposal of the buyer on board the bouquet and in the port of agreed destination, but without shipping previously in customs for import.

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    Also, the seller must assume the risks and costs related to the transport of the goods to the port of destination, but in the way of their unloading. DES is only used for maritime transport .

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    1. DEQ: Delivered Ex-Quay – Duty Paid. The seller complies with his obligation to unload the merchandise in a lot and put it at the disposal of the buyer in the destination port agreed by the parties.

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    In this case, the buyer who is obliged to process the customs clearance of the merchant for its importation. Like the previous incoterm, DEQ only is used in maritime transport of goods.

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    1. DDU: Delivered Duty Unpaid. The seller is obliged to make the cargo available to the buyer at the pre-agreed place within the importing country .

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    In this case, the seller must assume the risks and expenses related to the transport and delivery of the cargo to its final destination, but is not obliged to pay any charges, taxes or official charges .

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    1. DDP: Delivered Duty Paid. The seller has many obligations under the DDU , but also must pay the charges, official charges or taxes necessary to take the cargo to the agreed place within the country of importación.

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    Latest Incoterms updates

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    In the year 2020, an update of Incoterms was published, which contained some important changes.

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    However, Incoterms 2010 are still in force in many countries where legislation has not changed, a factor that must be taken into account when importing or exporting these destinations.

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    The latest changes introduced in these international trade terms are:

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    • The end of DAT (Delivery to Terminal) is supported by DPU (Delivery to the Dump Point).

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    • The incoterm FCA (Transportista Libre) allows time for shipping guides to be issued afterwards at the merchant cargo work .

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    • In terms of CIF (Cost, Insurance and Shipping) and CIP (Transport and Paid Insurance) charges, new standards are defined for cargo insurance, but the buyer and seller are free to negotiate the level of coverage safe.

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    • Also, if improves the way in which the distribution of costs between seller and buyer changes in the lists. Now an article changes the costs assumed by each part.

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    • On the other hand, the FCA, DAP, DPU and DDP (Delivery with Derechos Pagados) charges have taken into account that the seller and buyer can organize their own transportation scheme in place to use a third party.

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    • If more extensive and strict security obligations are required for all involved parts.

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    • In addition to CIP (Transport and Insurance Paid) the insurance coverage previously required under CIF remains, but requires now ICC A equivalent as defective insurance coverage , instead of type ICC C that was required in the incoterms of the year 2010.

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    • Finally, “Explanatory Notes for Users” are created for each incoterm of the 2020 edition, which are easier for users to understand than the previous “Orientation Notes” used in Incoterms 2010.

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    Consult with the best to export from Paraguay

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    If you are an importer or exporter, your cargo is your most valuable asset and you must put it in responsible hands so that it can reach its destination without any setbacks.

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    If you want to carry out a import project or export from Paraguay you can count on the support and advice of Alfa Trading S.A.

    We are a Paraguayan company with over 27 years of experience in the area of ​​international logistics.

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    Our experts have extensive knowledge of international shipping, customs procedures and everything related to importation and exportation , incoterms and logistics needed to take your goods from any place in the world.

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    In addition, we offer you global coverage because we have cargo agents in all ports and airports in the world, lists to assist you in all the logistical process.

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    For this reason, we are the ideal company to support you as an exporter and guide you through all the procedures and options available for your successful operation.

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