Page 52 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 2: Methods of Payment and Incoterms

Notes

Case Study Timber Exporter

n exporter of timber products sells an average of 500.000 tons a year. His buyers
(about 100 in number) are primarily located in four countries—A, B, C and D. The
Aexporter’s mill is inland—about 200 miles from his country’s main seaport. His
products may be moved without difficulty by rail to alongside ship in the port of loading.

The exporter’s country has domestic ships that are suited to carry the products to the four
countries, and it is in need of foreign currency. Also, the insurance risks can be covered by
domestic cargo insurance companies. The political situation is stable, and tonnage is
easily available.
The buyers’ factories are located at inland points some 200 to 300 miles from the respective
ports of discharge.
The following conditions have been noted in the different countries:
Country A

A has a well-organized port of discharge and efficient inland transportation by rail and
truck but is known for labour disturbances.
Country B

B is known for congestion at its port of discharge: the waiting time of ships varies from 10
to 90 days. Inland transportation however is excellent.
Country C

C has no difficulties of the kind experienced by A and B but the buyers here are not
entirely reliable because of difficult economic conditions.
Country ID

D has all the advantages and none of the disadvantages of the other three countries in
question.
Question:

What delivery term would you suggest for the exporter’s sales contracts with buyers in
each of the four countries?

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