Incoterms, documents, working capital and delivery performance

The last handover is the one the customer sees. It combines a commercial rule (the Incoterm), a set of documents, an acceptance procedure and a financing cost. This lesson ties the chain together with the portal's trade and economics articles and ends with the limits of the course.

Incoterms 2020 in timber trade

The ICC describes eleven Incoterms rules in use since 1936 and updated in 2020. Changes include a revised FCA, under which for goods sold for carriage by sea the buyer can instruct the carrier to issue a bill of lading with an on-board notation after loading; a consolidated cost clause (A9/B9); CIF's default insurance at Institute Cargo Clauses (C) while CIP requires (A) or similar; DAT becoming DPU, under which the seller unloads; and CIF reserved for maritime trade. The page does not say which rules suit containers.

The portal's interpretation of practice: FCA is often cleaner for containerised sawn timber, because risk passes at a named place when goods are handed to the carrier. FOB, CFR and CIF fit sea carriage and are common for break-bulk or bulk cargoes. EXW leaves loading and export clearance to the buyer and often causes disputes about who loads and lashes. DAP and DPU put transit risk on the seller. Name the edition and place, for example "FCA [sawmill, town] Incoterms 2020". An Incoterm does not transfer title, set payment terms, or decide who provides plant health, origin or EUDR documents; list those in the contract.

Documents must agree

The article's document table lists the commercial invoice (with the Incoterm), packing list, certificate of origin, EUR.1 or an origin statement, phytosanitary certificate and transport document (bill of lading, CMR or rail note). Typical failures: a description that does not match the other documents, a volume that differs between invoice and bill of lading, a consignee mismatch, or a certificate lead time that was not planned. Imported logs can complicate origin; keep an origin calculation on file.

Claims

There is no single global procedure; the contract decides. The article's practice summary: require written notice within a short period of arrival and before processing, keep goods and packs identifiable, use an independent surveyor agreed in advance, define remedies (replacement, price reduction, credit) and who pays the surveyor, and separate grading defects, transit damage and documentation failures, because evidence and responsibility differ for each.

Stock is money: a worked example (invented numbers)

The numbers below come from the portal's invented mill: 50,000 m3 sawn a year, a stock value of 250 euro per m3, 6% financing, a sawn price of 260 euro per m3, outbound logistics and packaging of 8 euro per m3 and total variable cost of 229 euro per m3. Fixed cost is 53 euro per m3 (2.65 million euro a year).

• Stock: 60 days of finished stock is 50,000 x 250 x 60 / 365 = 2.05 million euro; at 6% it costs about 123,000 euro a year. Each 10 days is about 342,000 euro of capital and 20,500 euro a year. That is more than the base profit of 100,000 euro (50,000 x 2).
• Logistics: if outbound logistics rise from 8 to 12 euro per m3, contribution falls from 55 to 51 euro. Break-even rises from 2.65 million / 55, about 48,200 m3, to 2.65 million / 51, about 52,000 m3, which is above the planned 50,000 m3. The result is 50,000 x (51 - 53) = a loss of 100,000 euro.

A pre-dispatch checklist

1. Contract line confirmed: product, quantity and tolerance, price and Incoterm with edition, delivery period, packaging, documents, acceptance and claims.
2. Moisture and dimensions checked against the reference stated in the contract.
3. Packs built, photographed, wrapped; pallets marked.
4. Documents consistent in names, volumes, numbers and certification claims.
5. Destination-specific items checked (ACID number, KD mark, phytosanitary conditions).
6. Lot identifiers linked from log to pack.

Limits of this course

This course was drafted by an AI from the portal's fact-checked articles and no other source. It contains no regulatory payload limits, axle loads, freight rates, container or wrapping specifications because the articles do not contain them; the 26 tonne payload and all mill economics numbers are invented illustrations. Sticker and yard rules are US sources; storage times come from Bavarian, Swiss and German leaflets; European measurement rules are national and voluntary; EN grading standards are paywalled and not quoted. EUDR dates, ISPM 15 versions and destination rules change; check the primary source and your contract. This is not legal, customs or tax advice.

Key points

• Choose the Incoterm with place and edition; it does not decide documents, title or payment.
• FCA often suits containers; DAP and DPU put transit risk on the seller.
• Documents must agree on names, volumes and numbers; separate grading, transit and paper claims.
• In the invented example, 60 days of stock cost about 123,000 euro a year, more than the base profit.
• A 4 euro rise in outbound logistics turns the 100,000 euro profit into a 100,000 euro loss.
• Treat the course as a starting point and verify figures against standards and contracts.