3-4.

Overview

IINO san

Group C is a tricky one!

I often see Group C’s term in the client’s invoice, though!

Rookie

IINO san

Yeah, you know, but the terms for conventional ships and container ships are also getting mixed up like Group F.

Oh.. please provide me with the correct information.

Rookie

Learning Points

• Review of Incoterms
• Group C’s Terms and Conditions
• How to Prepare an Invoice

Review of Incoterms

As explained in the previous topic, Incoterms are broadly divided into four groups. The delivery point for Group C is the port of import.

IINO san

For Group C, the tricky aspect is that the point at which cost and risk transfer from the exporter to the importer is different for each.

Group C’s Characteristics

Group C has four trading terms as the following:

• CFR (Cost & Freight)
• CIF (Cost, Insurance & Freight)
• CPT (Carriage Paid To)
• CIP (Carriage & Insurance Paid To)

IINO san

Some people are unaware of the distinction between these.

Regarding the difference between conventional and container ships, we already covered that the other day, so it’s perfect.

Rookie

 Group C in Business Operations

Although the above is the official rule, Group C is used practically as follows:

KEY POINT

Official Rule:

・Terms set for conventional ship transport: CFR、CIF
・Terms set for container ship transport: CPT、CIPPractical Work:

・Terms set for conventional ship transport: CFR、CIF
・Terms set for container ship transport: CFR、CIF、CPT、CIP

IINO san

Both CFR (Cost and Freight) and CIF (Cost, Insurance, and Freight) are used incoterms for container shipments, too.

IINO san

As we mentioned before, Incoterms are rules, not laws, so as long as there is an agreement between the exporter and importer, it’s generally not a problem.

CFR, CIR, CPT, and CIP’s Delivery Point

Until now, we have been presenting Group C with the following image, intended to make it more generally understandable compared to the other groups (E, F, and D).

IINO san

We’re going to go into more detail this time, ready?

Cost Burden

In Group C (CFR, CIF, CPT, and CIP), the exporter bears the cost until the port of import. This is the same as the image mentioned earlier.

Risk Burden

Group C’s point at which the risk burden shifts is similar to that of Group F.

IINO san

I’m gonna explain it specifically.

CFR and CIF

In CFR and CIF terms, the shifting point of burden risks is when the goods are loaded on the designated vessel at the port of export.

CPT and CIP

In CPT and CIP terms, the shifting point of burden risks is when the goods are delivered to the carrier, which could be a warehouse or terminal at the port of export.

Difference between CFR, CIF, CPT, and CIP

Besides the explanations provided above, a significant difference is that CIF and CIP include insurance.

How to Prepare an Invoice

In the case of CIF, the details are stated as follows:

• Incoterms: CIF
• Unit Price: Goods’ cost (Including transportation costs to the port of import and insurance premium)

The red text is just for your reference and not necessary for practical work.

IINO san

Generally, all costs are included in the unit price.
Sometimes, we may separate the product unit price and transportation cost for customs purposes, though.

Summary

In Group C, it’s important to note the point at which cost and risk transfer from the exporter to the importer is different for each.

Additionally, in CIF and CIP terms, insurance is the exporter’s responsibility, whereas, in CFR and CPT, it becomes the importer’s responsibility.

IINO san

In the next topic, we will explain Group D.

Enhanced Learning with Videos

Test Yourself

Reinforce your understanding of this topic by working through the exercises. Attempting the exercises without referring to the material as much as possible is advisable.

IINO san

The act of “remembering” helps it sink in your memory.