Incoterms

8.1 Incoterms®
Incoterms® are standard international trade terms developed by the International
Chamber of Commerce and are recognised by abbreviations such as “FOB” and
“CIF”. These terms are essential elements of a properly drafted international contract
of sale, as they notify the buyer what is “included” in the sales price. Incoterms®
allocate the following key contract elements between the seller and buyer:
• transport cost
• risk of loss or damage to the goods
• export and import customs clearance and payment of duties
• insurance responsibilities
• responsibilities between seller and buyer
Incoterms are divided into two distinct classes: those for all modes of transport
(road, air, rail, sea) and those for sea and inland waterway.

8.2 International Transport Modes
Freight options for the exporter of processed fruit, vegetables and nuts are road freight,
airfreight, sea or rail or a combination of these methods. This is obviously dependent on
various factors such as:
• Nature of the product (for example frozen vegetables need to be shipped in a
temperature regulated container whereas this is not a requirement for groundnuts).
• Place of destination (does the destination port/airport/depot etc., have the
necessary equipment to handle and off-load the cargo).
• The time-frame within which the buyer wants the goods vs. the transit time and
route for a selected transport mode.
• The frequency with which the transport service is offered to a destination as well as
the reliability of such service.
• The most cost-effective transport method, taking the quantity ordered and the
infrastructure at the place of destination into account.
• Security issues, both on the transport route and in the country of destination.

8.2.1 Containers
There are various types of ISO containers available to accommodate the international
shipment of products. For example, most products are exported in a general purpose
container (GP) whereas products that require a regulated temperature for shipment
would make use of a reefer container. When making use of a reefer container (example
the shipment of deep frozen vegetables) PPECB needs to be contacted in order to
manage and regulate the correct temperature setting for product, for shipment.

8.2.2 Sea Freight
The majority of products relating to processed vegetables, fruit and nuts will be shipped
in containers via sea. Making use of seafreight leaves the exporter with two options:
• Full Container Load (FCL): Full Container Load (FCL) refers to when the exporter has
sufficient cargo to utilise a whole container.
• Less Container Load (LCL): With a LCL shipment the exporter delivers the goods to a
container depot (or a groupage operator’s warehouse), where the goods are packed
together with other consignments in order to fill up a container.

8.2.3 Air Freight
Airfreight allows for fast delivery of goods but is expensive and will substantially
increase the price of the product in the foreign market. Exporters must
also take into consideration limitations such as weight, volume and cargo
restrictions.

8.2.4 Road Freight
Road transport is often the most effective mode of transport for freight in
Southern African countries, especially when exporting to land-locked
countries such as Zambia, Zimbabwe and Malawi. Other countries that are
also serviced by road are Namibia, Angola, Democratic Republic of the Congo
(DRC), Botswana, Lesotho, some parts of Mozambique and Tanzania.

8.2.5 Rail
For South Africa, Transnet’s Freight Rail division offers rail services and
maintains an extensive rail network across South Africa that connects with
other rail networks in the sub-Saharan region.
For services offered visit website: www.spoornet.co.za.