Inglese Rainey modulo 3 shipping and transport a) Ports The first question is: what is a port?

? We have some definition of port: 1) Its a place where ships call; 2) Its a market for port related services; 3) Its a fundamental source of Countrys/regions GDP (=PIL). The first definition is a physical, geographical, natural definition; the second identifies the fact that it is an access of different services around the port itself; the third means that a port is a gateway: goods leaving a region or a country and goods coming in. The efficiency of port is important for a region. Famous world port is for example Rotterdam, Marseille, Singapore, Hong Kong. Ports are fundamental economic centers. There are different type of ships. Ships differ according to what they carry. We have passengers ships and/or goods ships. There are different type of goods. One distinction in types of goods is between bulk ad containerized goods. Goods which you cannot put into a container and goods that you can. There are also two types of bulk: dry bulk (=rinfuse secche: metals, grain, coal) and liquid bulk (petrol, oil, crude oil). Then there are three type of ships: passenger ships, cargo ships and container ships. Ports differs according to what they handle, not all ports are the same. b) Shipping the goods Some contracts related to port. Contract of sale (sale=compravendita). A contract of sale has a definition: it is an agreement between two parties. One part the seller, and another the buyer. One part, the seller, transfers or agrees (=simpegna) to transfer the property in the goods to another part, the buyer, against the payment of a money consideration called price. One part pay and another receive money. The buyer is the part who buys, the seller is the part who sells. If the transfer of property does not foresee the payment of money consideration is donation; in case of exchange of goods (=permuta), this can be a contract. The transfer of property in goods. The buyer and the seller have responsibilities and rights. The contract should protect these rights. Fundamental rights are property rights (=diritti di propriet), you cannot sell something which is not yours. One way I can sell your property: if you appoint me as your agent. This contract is a private law; a contract including typical information: -the object of sale, what is being sold (quantity, quality, characteristic of the goods) -the price -where and when the payment will be made -the definition of where and when the goods will be delivered (the most important point). Seller and buyer have conflicting interests. These interests are increased if you increases the physical distances between the parts. For example, if I are a buyer and my seller lives here, I have some advantages: a reduction in transport costs, we are regulated by the same law and we dont have problem of

communication. If the distances between the buyer and the seller increases, some of these advantages disappear. If the transaction includes different countries, there are additional problems: -physical distances between the seller and the buyer -language -the price (=inteso come moneta che si usa per pagare) -law (which law will govern the transaction? Sellers law or buyers law?) The interest of the buyer is pay as little as possible, as late as possible, and receive as much as possible; the interest of the seller is obviously the opposite (want to paid as much as possible, as soon as possible, and want to send, transfer, deliver, give as less as possible). Another fundamental condition is that contract specifies where and when good will be delivered. In English law, the delivery of the goods coincides with the transfer of property. Payment is not related to the transfer of property. The buyer can pay: -before the delivery -on delivery -after the delivery (better condition for the buyer). Typical risks of the buyer is not to get the goods on time, late delivery, dramatic scenario for the buyer is not delivery of the goods in time; another risks is the damage of the goods. The problem here is: did the exporter/the seller send the goods already in damaged conditions, or were the goods damaged in transit. And if they were damaged in transit, who is responsible? The sellers risks fundamentally is one, non payment, credit risk, exposure to payment, the seller doesnt get paid, the seller get paid late, problem of liquidity, problem of bank, etc. The seller probably would like to pay in his country, to reduce his costs. The buyer prefers to pay in his country through his bank, in his currency where by eliminating exchange risk and exchange costs. These risks must be limited through the contract of sale, which specifies in as much detailed as possible, the responsibility and obligations of both parties. The time and place and methods of the payment depend on the relationship between the exporter and importer. There are 4 possible delivery points, depending on the relationship between the buyer and seller. Exporter and importer have some choices: -exporters premises: costly and big responsibility for the importer; big advantage for the seller who has no additional costs/risks. The price includes only the goods, packing and warehousing (=magazzinaggio). All the other costs are at buyers expense; -importers premises: costly and big responsibility for the exporter; the exporter delivers the goods directly at his customers premises, often it refers door to door; -terminal exit; -terminal entrance. The latest two point are two compromises. Because the majority of goods in the world is transported by sea, we will focus on sea transport. The relationship between people needs laws. We introduced a set of internationally accepted Conventions which try and make the export transaction easier and clearer for all the parties involved. Conventional terms which are accepted all over the world. They are simply terms, codes, to helps the parties understand what is included into the contract, when and where risks and obligations are transferred from on party to another.

One of this convention is a convention which regulate delivery. This convention is called INCOTERMS, International Trade Convention Terms. Incoterms are synthetic terms used to clarify what is included in the sellers price. Incoterms clarify in a synthetic form, which is understandable for everybody, where and when responsibilities and risks of ownership pass from the seller to the buyer, when the seller delivers the goods. Delivery coincides not only with the physical delivery of the goods, but also with the legal transfer of property. Incoterms are international set of terms which summarize which costs are included in the sellers price. Incoterms are international delivery terms updates generally every 10 years. The latest Incoterms in force are Incoterms 2010, that came into force on 1st January 2010 replacing Incoterms 2000. Incoterms 2010 dont represent a radical change in Incoterms 2000 but there are some significant changes. Incoterms 2000 made the distinction we see above: the identify 4 delivery places, two in the exporters country and two the importers country. Incoterms 2000 identify a set of additional costs in addition to the costs of the goods themselves. If we look at a table of Incoterms 2000 we probably see the benefits and costs to decrease to one party and increase to the other. These 4 places were given categories which we can identify with a letter. The letter stands for the first word of Incoterms. These category are still in force today: 1) Incoterm called E-terms; 2) Incoterm called F terms (delivery at port of loading, at terminal exit); 3) Incoterm called C terms (delivery at the port, airport, railway of destination); 4) Incoterm called D terms (door to door, delivery at the importers/buyers premises). These terms tell me exactly where and when the goods are delivered. The transport of goods from one country to another generally involves multimodal transport. What does the contract of sale specify? Where and when the goods are delivered, the place of delivery or consignment. With the delivery of the goods, the contract to sale specify where risks and charges are transferred from the seller to the buyer. The transfer of title and ownerships coincide with the transfer or risks and charges. Incoterms E: EX WORKS: if I deliver ex works I know exactly what is included in the price, only the price of the goods. Perhaps the price of packing, perhaps the price of storage, but zero transport (like Ikea or Unieuro for example). Incoterms F: F stands for Franco, that means free (=libero). Incoterms C: C stands for cost. Incoterms D: D stands for delivery in the importers premises. They have been some changes in Incoterms 2010. One is the partial maintenance of this framework, but the addition of another aspect. Incoterm 2000 concentrated exclusively in a question: where does delivery take place? This question remains in 2010, but there is another question: how does delivery take place? What form of transport is used. There are 4 modes of transport: by sea (sea transport, maritime transport, the oldest, the first form for long distances), by rail, by road, by air. Sea transport is without doubt cost effective transport for bulks, heavy goods over length. Incoterm 2010 introduce a second question: how these transport take place? We have an extra category which completes, not replace the distinct categories of E-C-D.

The big innovation was 1) the categorization of sea transport specific Incoterms, 2) the elimination of some previous Incoterm, particularly belonging to the category D. Incoterms 2010 extracted 4 terms to be used exclusively for sea transport: two F terms (FAS and FOB), delivery at the port of origin (loading), and two C terms (CFR and CIF), delivery at the port of destination. Summary of Incoterms: -Incoterm EX WORKS: when delivery takes place in exporters port. All costs are paid by the buyer exclusive the package. -Incoterm F: when delivery takes place in port of origin, there are 3 options: FAS: free alongside ship, which the seller must pay all costs to transport the cargo until the quayside (=banchina) FOB+named port of shipment: free on board (=franco a bordo), which the seller must pay all costs of transport until the cargo is into the ship. Costs and risks are transferred from seller to buyer when the seller load the cargo into the ship. -Incoterm C: when the delivery takes place in port of destination there are 4 options: CFR: cost and freight, where the costs of sea transport are paid by the seller CIF: cost, insurance and freight, where the costs of the transports and the insurance are paid by the seller (only incoterm where the risk and cost are in different places). When the delivery takes place in importers premises all cost are paid by the seller. The cost is transferred in the port of origin CPT: carriage paid to, the costs are arranged (=disposti) by the exporter until the port of destination, included the customs exportation and the documentation. The importer arranged all other cost to the discharge and internal transport. CIP: carriage and insurance paid to, cost of insurance is paid by the seller. MANCA INCOTERM D