Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Great, let's get started. Just going to go over a couple of housekeeping things before I hand it over to our host. So this webinar is going to be recorded, and there will be some reference material available to you after the webinar is complete. We will also be sending out a post-webinar survey. So we'd appreciate if you fill that out, any of your feedback. It also helps us determine kind of what events and webinars to host for you in the future. This is going to be about we're going give it around 50 minutes -- about a 10-minute Q&A at the end. So you can put all of your questions in the Q&A chat box and our hosts will answer them as needed. Okay. Great. I think that's about it. So I'm going to pass it over to Petia to introduce herself so we'll get going.

Good morning, everyone. Thank you very much for joining us. My name is Petia Iordanova, I'm the Compliance Manager for the South-Central region for Expeditors. I will be presenting on Incoterms today with a couple of people helping me out, so my great colleagues here in Dallas and Houston, Sarah and Lorri, if you guys want to introduce yourself?

Hello. My name is Sarah Smith. I'm the Trade Compliance and Customs Compliance Manager for our Houston office, been with the company just over 10 years, 6 of those in this role. So happy to be here and excited to get to talk with you all.

I'm Lorri Singleton. I am the Branch Compliance Manager for the Dallas office. I've been with the company now for 24 years, with about 12 of that actually in compliance. So happy to see you all join.

All right. So they will be helping the moderate the chat and address any questions and if there are some that we don't address during the seminar, we will address them as we go along. So let's dive right in. So again, this is a very basic -- it's about Incoterms. So after we're finished today, you'll hopefully be able to list the components to their applicable -- to a typical international shipment. You would know what Incoterms 2020 are and you would know where the carriage, the risk and costs are transferred from the seller to the buyer according to the rules. So before we go into the Incoterms, I felt it's very -- it's nice to go through kind of what the typical shipment looks like, logistics 101, most shipments go that way. You normally have either manufacturer, sellers, some sort of a shipping location that has the freight when it's sold, once it's sold, there is usually what we call pre-carriage or you probably refer to this as pickup. That normally happens within the same country. The freight is taken either to a forwarder or some other third-party warehouse. In some cases, it's taken to the carrier warehouse directly. There is usually a forwarder who arranges all of that, customs broker or the forwarder, the export customs clearance must be performed by someone. We can -- there is export regulations and that we won't really touch on much into it, we'll only mention it. Most of the carriers we usually have handling agents very few of them actually do their own, in the minimum, they are terminal handlers, ramp handlers or port operators and so on, then you have the actual main carriage is what we call. Once the freight arrives at whatever international port it's meant for, there is a handling agent as well. The other side, import customs broker, who performs the customs clearance, sometimes there is a different forwarder or an agent for that -- for the first forwarder. And then what we call -- what is called on-carriage in Incoterms line or in a day-to-day line is what we call delivery. In Incoterms, delivery means something slightly different, but in our day-to-day lives, delivery usual means, the final leg of the shipment. And at the very end, is of course, the buyer or consignee, whatever is the designated party who will receive the print at the end. So this is what most shipments look like. Sometimes there are multiple legs on the main carriage [ to when ] they go through a third country, third port, but this is what most of them look like? With each and every one of them, there are a number of charges that are associated with every step, whether it's the pre-carriage, the handling, the actual freight, the on-carriage, brokerage, import expert brokerage and so on. So if we were to extrapolate them over the diagram, here is what it would look like. So again, every step of the way has at least one charge associated with it. Many of them have more -- way more than that overarching over the holding is cargo insurance. Which way you decide to insure your cargo, this is totally up to you, you can be self-insured, you can use a insurance broker and so on and so forth, but it is highly recommended that you at least think of that, assure that you have insurance. As we mentioned before -- this is being recorded. You will get the slides so don't worry about taking any screenshots or anything like that. So now that we know what a typical shipment looks like and that there are many charges associated with it. This is basically the reason why we're here. A long time ago, there were -- the international commercial terms were put into place to make it easy for the sellers and the buyers to figure out who pays for what and where the risk transfers and who arranges what. So the Incoterms were first put into place in 1936 by the International Chamber of Commerce. At first, they were kind of changing them randomly as needed, but for the past 5 decades or so, they've been changing them every 10 years. So right now, we are on the Incoterms 2020 iteration. So unless something major happens, we can expect the next update to happen in 2030. So they don't change very often. Now Incoterms define the transport obligations, basically who arranges the carriage whether it's on-carriage, main-carriage, pre-carriage and so on, who pays for which costs and where the risk transfers. Those are not always the same. So as we'll see later on, in some cases, the point when these things transfer from the seller to the buyer are actually different. So we'll go into that in more detail. Now before we go into what Incoterms are, it is very important to understand what they are not. We get many questions, of course, and people can go down a rabbit hole because of that. So it's important to remember that Incoterms are not law. They're basically internationally kind of agreed upon commercial terms, but they are not the law, so the law always -- the Incoterms. Now, they're not all inclusive, so they don't address things such as customary operations like ports, trades, government regulations. So there is a lot of government regulations that you would need to take into account. So Incoterms are strictly for who pays for what and where does the risk transfer and who arranges what. They do not address the passage of title. It's a very common question that we get, that -- we have it red there and they do not address the revenue recognition. Sometimes revenue recognition is linked to Incoterms, but again, there is no mention of revenue recognition in the Incoterms rules, and in most of the current accounting regulations, I don't think they account for Incoterms either. If you happen to sell a shipment in transit, obviously, there is no Incoterm that addresses that, they do not address container loading and they do not address payment terms so -- for the actual goods. So again, Incoterms are only for the charges that we saw on that chart earlier. Anything that is related to the transportation, pre-actual transportation and post-transportation that has to do with moving the consignment from point A to point B. So, again, what is important to keep in mind from all of these things that we mentioned there, the Incoterms are limited in scope, they're not all-inclusive. Again, something else might come up. If you have a contract and Incoterms, the contract -- it always takes precedence over Incoterms. There is no way that they don't. The Incoterms definitely matter. They are a great starting point, but we -- a lot of customers who start with an Incoterm and then decide to tweak it, and that's perfectly fine. As long as it's clearly outlining your contract, you're free to do that. Again, Incoterms, they're not laws or you can use them whichever way you like. Again, if it's -- if something is not clear or you want to specifically address something that's not recorded in the contract. And always be very specific, so the biggest thing behind Incoterms is, there is always a named place, so very important, and that named place should be as specific as possible, ideally address. So don't to say CPT Shanghai, for example, because that means that means -- that may mean a lot. So as we go into the Incoterms, we'll mention a little more, but please do remember that whatever Incoterms you pick, there is always -- should be a named place, some named location. So the Incoterms are divided into 2 groups. Rules for any mode and rules for sea and inland waterway. There are U.S. terms, the UCC terms, which we are not going to cover in this. This is specifically about Incoterms, UCC terms can get very confusing because they're used differently. So they're terms when you have a domestic shipment, but Incoterms are for international shipments only. So the terms that are applicable to any mode of transport, so there is 7 of them, I'm going to go into each individual one. They basically go from seller to buyer. That's kind of how they start. Cherokee is going to drop an attachment in the chat right now. This is ours to keep, of course, we will send that as a follow-up to the seminar. So you'll have it direct, keep it, I had my laminated because I use it a lot. I like to refer to it. I opened it as an attachment, but it's good to have a kind of handy one to look at whenever needed. Okay. So the first one, the first Incoterm we're going to look at this is Ex Works represented by the letter EXW, in parenthesis there it says factory, it doesn't mean that Ex Works is always factory, it is just kind of a most commonly seen named place. So again, it's always named place and under Ex Works, the seller has the least amount of responsibility, the buyer takes care of pretty much everything. The only thing that the seller is responsible for is to make sure that the goods are packaged and ready for transport. They don't even have to load the vehicle that comes to collect them or like we said earlier, the container loading that's not addressed in Incoterms. So again, if you have a pallet of goods, you have to make sure that the pallet is okay for transport, you don't even have to load the vehicle that comes to collect it. Now in reality, does it happen that way? Do people actually allow the driver to load the trucks? Sometimes they do, sometimes they don't, so this is totally up to you, and this is something which should be addressed in the contract. The risk and the costs, can the buyer -- buyer pays for everything. Now I do want to make one note here kind of open for entities about U.S. export compliance. So the U.S. Export Regulations do not recognize Incoterms and they do not recognize the fact that it says that under Ex Works, the buyer pays everything. They may pay everything, but as a seller, for exports out of U.S., you still have responsibilities. You're responsible to provide the export clearance data elements. So please keep that in mind. You can just say, "oh, Ex Works, not my problem." It's probably up to them. According to U.S. Regulations, it actually is your problem because when you're an international seller, you have responsibilities. So I can definitely talk some more, we had a export seminar a couple of weeks ago. We're happy to arrange another one if the need arises. But yes, definitely to keep that in mind. Next one, so kind of move the needle a little bit, Free Carrier, FCA. This one is very broad. So it's always -- so again, it's even more important to put an actual named place. In reality, what we see, FCA usually means the forwarder warehouse or some other third-party warehouse. Usually, it's the forwarder warehouse but again, be as specific as possible, it's in your best interest, whether you're a seller or a buyer. As a seller, you're responsible for in -- under FCA you are responsible for the export customs clearance, actual packaging of the goods and the pre-carriage basically, you would deliver the goods to the forwarder, the forwarder would come and collect them from you and then the loading of the vehicle, obviously, it's a on you. The buyer, they're responsible for everything else. Once the freight reaches that named place. This is -- that's when they arrange everything or the carriage, the risk transfer there and the cost is transferred there. So everything else they pay for. In reality, do we see FCA terms where they're considered routed transaction and the buyer is actually responsible for the export clearance? Yes that happens. So definitely, if you have that, be very specific and make sure that you understand if you're a U.S. seller exporting, what is your responsibility as far as export clearance because Incoterms you can -- they do not address that, they just say that you're responsible for the clearance, but you may just pay for it, but someone else may actually perform it. So there are many different options when it comes to U.S. export clearance. Now if you're a U.S. buyer buying from another place and importing into U.S., this is also not a bad term to use because it means that you don't have to worry about pre-carriage in a country that you don't have representation, that forwarder is not familiar with or that you're not familiar with the export regulations. Excuse me. Allergy season in Texas. So again, FCA, named place, be very specific. Usually FCA terms means the sell -- the forwarder's location. And again, these are the terms that are for any mode of transport. So air, ocean, rail or truck, whatever it might be in moving freight. Next, so we move the needle a little more, just because there is red arrow there it doesn't mean that that's necessarily where the named placed is, but it does usually mean it's a named place, a destination. So carriage made to again, named place or destination, meaning a place that is after the main carriage happens. So after this main transport happens, usually then in place will be at that destination country. So as a seller, you're responsible for all of it. If you're a seller out of U.S., I think it's a very good term to use because it means you control the freight charges, so if you're a large company, have contract rates with your forwarder, you have to make sure that the export clearance is done correctly and all of that, then yes, CPT terms is great. And the there's very few surprises when you use CPT term because if you put CPT let's say, going by air, and you put CPT Pudong Airport in Shanghai. That means the moment the plane lands, your responsibility ends as far as paying and arranging stuff. The risk actually, so you transfer the risk as soon as the freight is picked up from your location. So the buyer is responsible for having insurance, for the pre-carriage and the main carriage and so on, but you're still paying for it. So again, this one is not as clear-cut as some of the others. Again, the risk transfers at first carrier, basically what we call it. So you can have multiple carriers in origin, multiple carriers for the main transport and so on, but the risk is transferred at the first carrier. Next one, Carriage and Insurance Paid To, very similar to CPT, pretty much the same, except there is insurance. Now that one is a bit of a mind twister because the seller pays for the insurance, but they buy it in the name of the buyer. So they buy it on the buyers' behalf. So you would pay for insurance, but the buyer is listed as the beneficiary and if something happens, buyer is going to work with the insurance company on filing claims and getting paid and all that. As a seller under CIP, you just have to procure the insurance. There are rules exactly what it must be. At the minimum, the insurance must cover 110% of the freight's value, the extra 10% is meant to cover the main carriage, pre-carriage and whatever other changes there might be. Now since this is a very short seminar, if we're just going to show you that if you ever need more information, you're welcome to contact one of us or you can buy one of these books. So you have the Incoterms 2020 book. I bought it on Amazon, $60 and it goes into a lot of detail. So very handy thing to have here and now Sarah, I see that you turned on your on camera. Is there a question?

Yes. So we had a couple of folks that say they can't hear you very well with your mic. I didn't know -- I don't know what you could do to adjust that or like hold it or if -- you headset but...

Not a problem. Thank you very much. Thank you for letting me know, I'm going to hold it here. I try not to have the big headset, but yes, I'll probably have that next time. So thank you. So back to CIP. So again, the same as CPT as a seller, you're paying for the pre-carriage, the main transport, sometimes the on-carriages or part of the on-carriage to that named place and you're buying the insurance, but the insurance is in the name of the buyer, they are the beneficiary. I think it's -- again, these bars at the bottom, I think are very helpful and they make it very clear. And in that attachment that we put in the chat, it basically shows the same thing. So very, very helpful information to have there. The next one, then we get to the D terms, the door terms and we three of them, not very much difference, but anyway, they decided to have 2 different terms for door terms. So the first one is Delivered at Place. Again, that place usually is a place at the destination country. Most of the time, it's actually the buyer's location or whatever other designated place basically they want this to deliver to. As a seller, you're paying for everything. So the origin charges, the main transport, usually the on-carriage, the delivery, terminal charges and so on. The buyer is responsible for import clearance and unloading. So it doesn't sound like a bad deal until you get into a situation where there might be some sort of delay because of clearance, customs clearance or something else in which case under the DAP, unless you specified in the contract under DAP, you will be responsible for storage, demurrage, detention and so on. So if you're going to use one of the door terms, I strongly recommended that you put it in the contract if you don't want to pay for those charges or just change it to CPT in which case you don't even have to put it in the contract, CPT named place basically means the buyer pays for everything else that happens at destination. And you as a seller, under CPT you don't have to worry about our import regulations or anything like that. So -- but again, DAP is Delivered at Place but not unloaded. So the unloading and the import customs is up to the buyer and the risk transfers exactly there. Next one for some reason, they felt the need to have a separate term for that one, Delivered at Place Unloaded. The only difference is the unloading. Again, this is applicable to any mode of transport. So I guess that's why it seems for a certain mode, maybe there are high charges associated with the unloading, so again DPU named place, always specify a named place, save yourself a lot of headache on the back end. In that case, again, the buyer is responsible for import custom formalities, but if something happens and the import clearance is delayed and there are storage charges as the seller you would be responsible for these so make sure to address those in the contract if you do not want to pay for them. And we'll come to the last one. So we moved from left to right, so we're in the very right now. So Delivered Duty Paid, basically everything. The only thing that the buyer is responsible for that Incoterms is the unloading and that's where the risk transfers, that's what they pay -- that's what they pay for. Everything else is for you. When it comes to DDP, be very mindful that -- so if you're exporting out of U.S., a lot of countries do not allow DDP terms. In Brazil, for example, I know for a fact that they do not allow DDP terms because foreign companies are not allowed to pay duty in customs clearance, into Brazil. So the most you can do in Brazil is DPU. I think there are a couple of other countries where again, it's actually unlawful to have DDP. Many countries do not allow for foreign importer of record, U.S. and Canada do, but many other countries don't. Also, if you're sending someone DDP to EU country, you can do that. The only problem is that if the goods are going to be resold, you will not get the VAT, the value-added tax. You will not get that back, whereas if the actual party in Europe act as the importer of record and they pay that VAT. Once they resell it, they can actually get that VAT back. Now there are options to have representation in Europe. Some of our branches there do offer that. So if you ever have a shipment with us, that is DDP, we can definitely talk about it, but just as a general statement, again keep in mind that DDP to Europe means that you will be paying -- the VAT actually varies by country. So you'll be paying anywhere from like 16% and 17% to as high as 22%, 23% in some countries on the value of the goods, that's money that you will never get back. When is it the idea to send something DDP, if you're sending samples or trying to get new business, the importer doesn't have -- is not an approved importer, if it's an intercompany transfer then you can do that, but in any other case, DDP -- it comes with a lot of risk as shown here. So if you're a seller selling DDP, definitely do your research around VAT charges there will be, when you try to anticipate those and write them in the contract to avoid any sort of headache. Now this basically concludes all of the terms that apply to any mode of transport. Before I move on to the waterway and in-land, are questions that we can address? I guess, or in person for everyone's benefit.

Yes. We had a couple of questions come through some of the other terms that you discussed.

So the first one, it says if the seller in the foreign country is using the receiver's shipping account to ship via FedEx for example. What is the recommended Incoterm? The shipper is still packing and scheduling pickup with their freight forwarder.

This sounds like Ex Works because -- yes, if it's -- so it's the buyer's account, right? No, it is the seller's account?

It's the receiver shipping account so it's the buyer's account -- from the question that's what I understand.

Okay. Yes. To me, that sounds like Ex Works because you're packaging the freight, you're getting it ready for transport. And then when FedEx comes in to pick it up, everything else is the responsibility of the receiver, the buyer. So yes, so to me, that sounds like Ex Works. Again, if you're doing that out of U.S., please do remember that you're still responsible for -- either for the full export clearance or at a minimum provide the necessary data elements to file the EEI, the Electronic Export Information.

And then the next one says -- is CIP, the term to be used for the destination country airport only. So I'm not sure if we can go back to CIP.

So again, the main place could be any place usually, it's -- again, it's a place that's after the main carriage. Usually, it's at the destination country. So let's say, we're selling something -- we used China earlier, so something going to Shanghai and it's going by air, so CIP Pudong Airport, what it means that we're responsible for getting the shipment to the Pudong Airport. As soon as the plane lands and is unloaded that's when the risk ends, that's when -- that's the last thing that you would pay for. The unloading of the airplane, the terminal charges and whatever else happens, that would be for the account of the buyer. CIP could also be some other, let's say, there is like a designated -- some other designated location, which -- in which case, you can kind of interchangeably use CIP or DAP. If you use CIP as a seller, you have to buy the insurance that's basically the only difference between CIP and DAP or DPU. So under CIP as a seller, you're buying the issuance, so you're paying for it and the buyer is the beneficiary. Under DAP, you're buying the insurance, you're the beneficiary because your risk actually transfers in that same place. So if we were to look at DAP, for example, really the insurance is the main difference here. And then, yes, named place, very important. Hopefully, that answered the questions.

I think so. And then it looks like we just had another comment on the FedEx scenario, somebody said instead of Ex Works, perhaps they can also use FCA. And again, that's kind of the beauty of Incoterms, right, is they're not necessarily always pigeonholed into one.

Exactly, exactly. Yes. So again, in practice, what we see in the courier scenario. If you're going to give the -- that freight to the courier at your location like FedEX, they come and pick up at your location, that's usually Ex Works. Again, the U.S. export clearance, that's not addressed in the Incoterms, this was just one of our cautionary note that they like to always make because many people don't actually understand, especially new exporters. They're thinking, well let's have Ex Works. It says they're responsible for everything. Well, again, Incoterms are not the law, the U.S. regulations are. So if according to the U.S. regulations, you as the international seller are responsible for the EEI, for providing the EEI data elements that -- you have to do it. whether it's Ex Works or FCA. FCA, again, usually implies that you as the seller would move the goods to some other locations, again, either a forwarder warehouse or if you were to deliver them to the FedEx warehouse, to the DHL warehouse or some drop off box somewhere, then that would -- that's usually FCA.

And then let's see when we use FCA, is the shipper still responsible to give the export filing information. So if it's a U.S. shipper, then yes. The USPPI, right?

Yes. So the Incoterms do address it regardless of where it is, under [ Ex Works ] Incoterms you as the seller are responsible for the export customs clearance. Yes. And then yes, here in U.S., it would mean -- it would usually mean that yes you would file the EEI. Now again, if the FPPI has an agent who is going to file the EEI it is -- which is basically a typical rounded transaction. It is perfectly fine for them to do that, just again, please make sure to put it in the contract. According to U.S. Export Regulations, this is routed transaction, seller is only responsible to provide the necessary data elements for the FPPI's agent to find the EEI, something to that effect. If you're not actually filing the EEI, as a seller under a routed transaction, there is actually very little risk, so once you provide the necessary data elements, I know that many sellers in U.S., they're very concerned about that a forwarder that don't have any relationship is going to file an EEI on their behalf and -- but has nothing to do with Incoterms. I know that we're going into export compliance, but again, it's a very common scenario. I think it's worth spending the time especially given that we're actually doing very, very well on time. So in a routed transaction, the regulation states that the USPPI, the seller basically in a routed transaction, you're only responsible to provide the 12 data elements for EEI. You're not responsible for whether or not the EEI is accurately filed by the FPPI or their agent. You're only responsible to provide the data so if you're on record of providing the data elements, it's really that -- your risk basically ends there. So you don't have to worry about that. If anything, it may be more complicated if you decide to file the -- let someone else move the freight because customs really likes to look at whether or not what you filed the EEI [indiscernible], did the shipment really leave on that carrier, on that day, out of that port and so on. And there's -- they've been issuing a lot of penalties for having incorrect flight information or port of export, data of export, carrier and so on. So in a routed transaction, you can spare yourself the headache and not actually file the [indiscernible] so I'm getting [indiscernible].

No, you're good. And then the follow-up question, and I'm going to ask the participant that's maybe dropping these questions in to definitely reach out to us after via the survey and things like that because they're great questions, but it looks like you're also just asking in regards to the buyer being in the U.S. and it being a foreign shipper. And if that's the case, you're asking questions about that foreign country's export regulations, we just don't necessarily have that information readily available right now. We are speaking mainly in terms of exporting from the U.S. and those export regulations.

Yes. Thank you, Sarah. Yes. So we are -- yes, we're based here in Texas. We understand U.S. export regulations. We do have our counterparts in pretty much every country. So every country where we have an office, we have resources that we can reach out to, but yes, I wouldn't even try to speculate on export regulations for other countries.

So I think here, we should be good for you to continue, I believe. And if not, we will circle back to anything at the end.

Very good Okay. So we're done with the Incoterms that are applicable for any mode transport so again down where the DDP so Ex Works to DDP. Now the next set of Incoterms are 4 listed here. So they are for sea and inland waterway only. Now, one of the biggest revelations for shippers, customers, sellers, buyers is that the sea waterway terms, they're not applicable to containerized cargo. So they're knocked out, mind blown. Okay, these are for non-containerized cargo. As we go into the details, you kind of understand why. Although the Free on Board, I think it will be very convenient if it was applicable to containerized cargo, but if you have an ocean shipment that is containerized, really the correct term to use would be FCA and that's free on port so. So anyway, let's kind of dive in to those and see what are those 4 terms. The first one we look at is the Free Alongside Ship, FAS. Again, we still have to specify the place, I'd just say the name of the vessel or something to specify which part that is. Basically, in the real world, what would that mean? You have some very large machines and very large piece of equipment that wouldn't fit into a container, you have to deliver it to the port directly and unload it with a crane. So under FAS as a seller, you would be responsible for the export packing, export clearance, the movement of the shipment from your location to that terminal and to actually staging the shipment alongside that ship, again, not containerized shipment. Why is it that it's not containerized because the International Chamber of Commerce understands that in reality, very few people are allowed within the terminal. Normally, when you have a container, you just drop it off there and then the terminal operator takes care of everything else, only from great bulk and big stuff, you would be allowed access into the port and be able to unload alongside the ship. So this one is very similar to FCA basically. So if you say FCA -- if it's for any mode of transport that would be FCA. FAS is for waterway, on ocean, vessel shipments. I think that's okay. That pretty much covers FAS. Now again, the most -- the most widely misused Incoterm, FOB. Again, since Incoterms are not a law, you can use whichever way you want to, just make sure to have a specified named place. But per the International Chamber of Commerce, Incoterms rules, FOB is [ meant ] for non-containerized cargo. The only difference between FAS and FOB is that if you're the seller, you would be paying for actual loading of your cargo onto the vessel. That's where the risk transfers, that's what you pay for, that's what you arrange. So if there was additional crane needed to load your cargo onto the vessel. So one for unloading, one for loading, you have to pay for both, really that is the only difference. And again, the risk transfers on board the vessel. Next one, we move the needle to the other side. So the first 2 were a origin, these -- the next 2 are a destination, Cost and Freight, so CFR, this is basically the equivalent of CPT but when used for waterway only, non-containerized cargo, it's called CFR. So if you're the seller, you're responsible to paying and arrange everything from the movement from your location to the arrival at the port -- the destination port and the buyer would be responsible for the unloading of the vessel, on-carriage, import custom and so on and so forth. Now the risk actually transfers as soon as the cargo is loaded, so onboard the vessel. So if you're the buyer in that scenario, you would have to make sure that you have insurance for the main transport -- the main carriage. And then the next one, again, CIF, very similar to CIP, except that CIF is again waterway only, non-containerized cargo. The only difference again is the insurance. So as the seller, you're responsible for procuring the insurance on the buyer's behalf. The risk still transfers onboard the vessel and as a buyer you are responsible for everything after the ship reaches the port. So again, not much of a difference there. There is some kind of fine points as far as type of insurance. Again, if you have the book, you can read there, but in both cases, you have to make sure that the insurance covers the value of the goods, right? You can just buy 1/10 or something like that. So the minimum type that's where the insurance should come. So that pretty much concludes all of the waterway-specific terms. So if you ever have a non-containerized shipment that you want to use DDP for, you're absolutely free to do. These are just the waterway-specific ones and just to kind of wrap it up to -- again, if there are any questions, I can address them in just a second, but for now, I can just -- something to remember, so the Incoterms are delivery conditions and not payment terms. They only address the transportation related charges, so not the actual payment for the goods, they do not address the title. They're not the law. In the presence of a contract, the contract takes precedence over Incoterms. The local laws and regulations also take precedence. If there is a letter of credit that also takes precedence. So again, those are kind of suggestions. Now if there is no contract, and all you have is the Incoterms, then that's all you have to go by. In which case, you have to make sure to use them as correctly as possible in accordance with the Incoterm rules and very important to be specific on the named place, be very specific. If you're shipping to a company that has multiple locations, for example, specify an address or just say the company name if you're shipping to a big port. If you're moving something to Los Angeles, you will specify which ports or which address in Los Angeles it's going to and I think that's it. That pretty much covers all of the caution areas. Side notes I wanted to make, I think I'll need those. So is there any other questions?

We do have some more questions. A couple of them are a little -- not lengthy in a bad way, but I need to read a little bit to get to the plot.

So if the seller provides correct information on the SLI but the customer's freight forwarder files incorrect information with customs, say, incorrect HTS code, can the seller get in trouble or be penalized by customs for that issue or just the forwarder who filed the incorrect information. So this is definitely more of an EEI question than an Incoterm question.

Yes. In routed transaction, as a seller, you will not be in trouble. Again, your responsibility is to provide the data elements. But yes, again, only in a routed transaction, basically. So yes, if you're the seller in a routed transaction, you just have to -- either if it's SLI or an e-mail, it doesn't even have to be SLI, SLI -- very often because it's an easy way to communicate those data elements but it doesn't even have to be an SLI. So as long as you have proof that you provided the correct information to the FPPI or their agent, their forwarder then you would not be penalized.

And then let's see. This one is asking for FAS terms. So the documents, who is responsible for the export documents, the seller or the buyer?

The export documents, yes, the seller, definitely. So the customs export clearance is done by the seller. Now when you say export documents, I'm not sure if like the person is implying that they're export and import documents, they should be the same. Yes, you should never have different export and import documents if you have a buyer that wants to use an invoice that has like lower value then what you're exporting for then the actual commercial value that's a red flag that you need to address.

Yes. I think they're just more of definitely confirming that the documentation for export is the seller, particularly for FAS terms. And then a follow-up to that is, so under those terms, the buyer is not responsible for getting the BL.

The bill of lading. Well, I would say they are because, again, the buyer is arranging the carriage and paying for the carriage.

Yes, I think we need to split out the documents for whoever is asking this question, right? Like the commercial documents versus the transportation.

Yes, exactly. Yes. So in an FAS, so the seller would create a bill of lading, which would show that the shipment is moving to alongside that ship and then the buyer or their agent will generate a bill of lading showing that the shipment is moving from that port to its final destination.

Yes. Okay. Hopefully, that clarified that. This next one, so they're asking for which Incoterms should be used when the USA shipper ships FOB Shipping Point Freight Collect or FOB Shipping Point Freight prepay and add, okay or FOB destination to a buyer in Canada when it's on a truck, not a boat. This is a fun one whoever put this one in there -- writing this out -- the further example is an LTL pallet of freight from for Laredo to Calgary.

Yes. So those sound like UCC terms, the universal commercial -- goodness don't quote me on it because I haven't actually studied or done any presentations on UCC terms. But again, they're applicable to domestic shipments usually. So yes, so under those terms, I do believe, again, don't quote me on that, but I do believe that under those terms, FOB destination actually is valid, not under Incoterms, but under the UCC terms, I believe this, but again, I'm not so sure. But what you described there is basically, I guess, you sell your product FOB meaning the origin charges are included in the price. And then you pay for the carriage like the main carriage and delivery and all of that and then you issue an additional bill to the buyer. At least that's the way I understand it, that I don't know, again, I'm only speculating here. So please don't quote me on this, but that's what it sounds to me like, FOB prepay and add would be. The buyer is still paying for it ultimately but only after the seller has already paid for [indiscernible] I think.

Yes. Hopefully, that helps. That was a little lengthy of a question, a valid question, but maybe definitely reach out to the resources afterwards and maybe we can get things a little more clear.

Yes. I'm only happy to do some more research on UCC terms, again, we don't really see those very often or at all. So that's why I haven't really done reading or any studying on UCC terms, but happy to learn.

But that is all the remaining questions in the Q&A section. So we're good on time.

Thank you, everyone.

Yes. Thank you, everyone, for attending. We do -- yes, we do have communication channels so that you can learn more about what's going on in the industry and if you'd like to join any of our future in person or virtual events, you can scan this QR code on the right. We do have some Tradewin seminars coming up, one in Dallas and one in Houston. So reach out to your local Expeditors contact for that. That will be at the beginning of May for both of those. And I know there were a lot of questions. I did pause the recording just in case of any sensitive information that may come up with these questions, but I'm going to get with Petia and the other hosts and see if we can kind of get like a general Q&A form to kind of like answer those questions generally, and we will be sending that out as well just because, again, that was a really great conversation, and I know that you all want to refer back to that as the time comes. So again, thanks for the interaction, for the engagement, and we hope to see you on some future webinars.

Thanks, Cherokee. Thank you very much for joining everyone. It was wonderful.