Holding Online Seminar on Cost Reduction Strategies for Shipping in Martial Arts and Export Companies
Advice on Switching from Incoterms 2020 F-Terms Including Freight to C-Terms
[Asia Economy Reporter Kim Heung-soon] The Korea International Trade Association (KITA) held an online seminar on the 15th titled "Incoterms 2020 Utilization for Logistics Cost Reduction."
Incoterms are international rules that govern the obligations, costs, and risks between exporters and importers in trade transactions. Depending on the trade terms, the transportation responsibilities and logistics costs between exporters and importers vary. Since the outbreak of COVID-19 caused disruptions in export-import transportation, the trade industry's self-response capabilities have become increasingly important.
At the seminar, Jeong Il-hwan, CEO of Youngwon NCS Consulting, introduced the key points of Incoterms 2020 and self-assessment items for logistics cost reduction by transportation type. CEO Jeong stated, "When exporting, switching from 'F' terms such as Free On Board (FOB), which do not include freight, to 'C' terms such as Cost and Freight (CFR), which include freight, can reduce shipping costs. Additionally, manufacturing, purchasing, and payment schedules can be adjusted to align with the exporter's shipping schedule, which is an advantage."
Lee Jun-bong, Head of the Logistics Services Division at KITA, said, "Due to the unprecedented surge in ocean freight rates caused by the recent COVID-19 impact, exporters' capacity to bear logistics costs is reaching its limit. Changing Incoterms alone can somewhat reduce logistics costs, so it is worth our companies actively utilizing this."
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KITA plans to support the revitalization of industry logistics by extending the operation period of the Export-Import Logistics Comprehensive Response Center, which was initially scheduled to operate temporarily until February, through June.
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