International Marketing Practices

Cost, Insurance, and Freight (CIF).* CFR and CIF are identical, except that with CIF the supplier maintains all cost of transport to the destination port, including product insurance. Delivered at Place (DAP). The supplier is responsible for transportation, risks, and delivery to a defined location [157]. Delivered Duty Paid (DDP). The supplier retains responsibility until the product has arrived at the specified location, cleared customs, and duties have been paid. Delivered at Terminal (DAT). The seller is responsible for the transport and unloading of the product into a warehouse or other such terminal at a location defined by the buyer. Incoterms are instrumental in managing trade relationships between companies by eliminating unnecessary frustration and clearly defining the terms of trade. Suppliers and buyers decide which trade term to use depending upon the availability of insurance coverage, availability of information on costs, whether domestic or foreign carriers will be used, need for cash, governmental requirements, and currency conversion rates [20]. Transport Alternatives in International Trade Transportation represents a significant component of exporting costs and lead times. Accounting for bulk weight and crate dimensions, transportation can represent up to 30% of overall product sales price [18]. Forest products are typically transported by a combination of road, rail, or sea shipping; however, high-value products or expedited orders may be shipped by air (Figure 10). The relative cost of various modes of transportation, from most to least cost effective, are ocean, rail, truck, and air [21]. The preferred mode of transportation is sometimes determined by geography, for example, land transport from the U.S. to Canada or ocean freight from the U.S. to Europe. This section of the chapter explains the major characteristics of each form of transportation.

Figure 10. Loading lumber on to a ship (left) and truck (right). Photo credits: Robert Smith.

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