Scam raises questions about 'correct' Incoterm

The FTW article of August 5
(“The mystery of the vanishing
aluminium”) has the hallmark
of many of the internet scams
perpetrated from SA that
come their way, according to
Pat Corbin, director of the
International Chamber of
Commerce (ICC) in SA.
“Regarding the applied
Incoterm, ICC-SA
recommends traders use
the well-known portto-
port ‘rules for sea
transport’
free on board
(FOB), cost
and freight
(CFR) and cost, insurance
and freight (CIF) for
containerised shipments.
“The many disputes
referred to us all arise
when the ‘rules for any mode
of transport’ are applied
and which need detailed
clarification in the sales
contract.
“It is equitable that in
international trade obligations
change hands at the Customs
border. Both parties are
advised not to assume any
costs or obligations (outside
of their control) in a foreign
country.
“In this instance we consider
CIF was the correct term,
particularly as the risk only
passed to the importer after
shipment.”
FTW put this before
Andrew Robinson, director
of legal firm Norton Rose
Fulbright in SA, who stated
in the original story
about the aluminium
scrap that turned into
bricks that
carriage and
insurance
paid to (CIP)
terms were the best
choice.
He disputed Corbin’s
statement about ICC-SA
recommending CIF and
referred FTW to the original
ICC documentation.
“I can do no better,” he
said, “than refer to the ICC
Incoterms guru, Jan Ramberg,
and to his foreword to the
rules.”
In the actual extracts he
sent to FTW, Ramberg clearly
stated for those whom he called
“old traders who won’t mend
their ways” that the terms
FOB, C&F, CIF when trading
in goods that are containerised
were utterly inappropriate.
Ramberg also pointed
out: “Since the late 60s,
particular difficulties have
arisen in maritime trade where
containerisation (which occurs
when goods are prepared and
stowed in containers before the
arrival of the ship) has made
the traditional FOB point
wholly inappropriate. It bears
repeating that FOB, CFR and
CIF are only appropriate when
there is delivery to the carrier
by handing over the goods to
the ship – which simply does
not take place when the goods
are containerised.”
For these, and other
reasons that Ramberg
expressed, Robinson said:
“I therefore repeat that CIP
terms are preferable in these
circumstances.
“The real problems arise
when people simply trade
on documents and have no
proper agreement in place
dealing with the issues that the
Incoterms do not deal with.”