Background
Marc Gagnon is a new employee of Bolloré Logistics Canada, an international freight forwarder. He received three different calls from different clients, and his task was to analyze their cases to offer reasonable and appropriate recommendations. Marc should do his best to assess each situation from the seller’s and buyer’s perspectives and suggest a balanced decision. That is why the expert is expected to consider and compare various Incoterm groups and specific terms to select the best option. Thus, the current assignment presents data-driven analyses for three cases and comments on the most appropriate Incoterms that should be used in each situation.
Atlas Mining–Amiko Mine Deal
The situation of interest occurred between Atlas Mining, the seller from Trois-Rivières, and Amiko Mine, the buyer from New Caledonia. For the seller, the buyer, and the destination are new, which justifies a 100% payment prior to shipping. Furthermore, Atlas Mining wants to protect itself from losses because of the long distance, additional costs, and time zone differences.
Simultaneously, Amiko Mine is unable to attend the seaport in Trois-Rivières to coordinate the positioning of the container. Since the seller deals with higher risks, it would benefit from the Ex Work (EXW) Incoterm. This rule stipulates that goods are ready for shipment in the seller’s premises while the buyer bears all the transportation risks and costs (Davis & Vogt, 2022).
However, this approach is not appropriate for buyers who would like to use Cost Insurance and Freight (CIF) Incoterm. This condition implies that the seller pays for the transportation of the goods to the destination point (Aceris Law, 2020). Thus, it seems that the F Incoterm group is the most appropriate because it helps the seller avoid risks and considers the buyer’s interests.
For the selected case, the Free on Board (FOB) Incoterm is appropriate. Under this term, the seller is responsible for loading the goods onto the vessel, while all the other costs and risks are borne by the buyer (Aceris Law, 2020). This Incoterm is additionally suitable because it can be used with all means of transport (Durdağ & Delipinar, 2020). It seems that this suggestion will help satisfy the buyers’ and sellers’ requirements.
ProLab+ and Clinica Alana
ProLab+ is a manufacturer of pharmaceutical products that should be delivered in temperature-controlled containers. If something goes wrong with these containers, all the products will become defective. Furthermore, products can be stolen en route, while delays are additionally possible. Clinica Alana, the buyer, understands these potential issues and wants to protect itself from them. Since the payment was split into two parts, it is reasonable to introduce a fair Incoterm.
Under these conditions, the C Incoterm group seems appropriate and justified. The CIF Incoterm implies that the seller is responsible for loading the products on the vessel and paying insurance (Aceris Law, 2020). This approach protects the goods during transportation, while the buyer is responsible for unloading the products and all the associated customs duties or taxes. The FOB Incoterm is not appropriate because it does not include any protection for the buyer.
Cirque Hémisphère
The seller is Cirque Hémisphère, a Montreal business that produces and sells circus shows. The Athens Theatre is the buyer that wants to organize such a show in Greece. Since the industry is highly competitive, the seller is ready to accept the risk of being responsible for the products up to their arrival in Greece. That is why the D Incoterm group is appropriate here, as they denote that the seller bears all the costs and risks until the delivery reaches the delivery point (Hajdukiewicz & Pera, 2021).
For the buyer, the Delivered Duty Paid (DDP) Incoterm would be desirable because it means that Cirque Hémisphère would bear all costs and risks except those associated with unloading the products at the destination. However, the seller would prefer the Delivered at Place (DAP) Incoterm, which would make Cirque Hémisphère responsible for the costs and risks that exist until the goods reach the destination port (Aceris Law, 2020). From then onward, the Athens theatre bears responsibility for the goods.
References
Aceris Law. (2020). Incoterms in international trade. Web.
Davis, J., & Vogt, J. (2022). Incoterms® 2020 and the missed opportunities for the next version. International Journal of Logistics Research and Applications, 25(9), 1263-1286. Web.
Durdağ, C., & Delipinar, G. E. (2020). The past, today, and future of Incoterms in international delivery: A review on the innovations in logistics. Journal of Economics Library, 7(4), 201-207. Web.
Hajdukiewicz, A., & Pera, B. (2021). Factors affecting the choice of Incoterms: The case of companies operating in Poland. International Entrepreneurship Review, 7(4), 35-50. Web.