Logistically Speaking: Using Delivery Terms to Allocate Supply Chain Risks


95th ISM Annual International Supply Management Conference, April 2010

Abstract: Commercial contracts involving transportation customarily contain abbreviated delivery terms, or trader’s shorthand, that seek to allocate among buyer and seller any multitude of risks within an applicable supply chain. Specifically, these abbreviations, which may be only three letters in length, can conclusively define when, where, and how a buyer takes delivery; who arranges for, and the actual manner of, transportation; price and place of payment; time when risk of loss shifts from seller to buyer; who bears costs associated with freight and insurance; and who is ultimately responsible for export and/or import compliance. Failure to understand the applicable delivery term governing any shipment may expose your company to undue risk and unanticipated expense. This paper seeks to avoid such by discussing the current and changing landscape regarding delivery terms, and then offering some practical advice on usages of such terms in connection with your particular supply chain.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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