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Incoterms: Rules for Moving a Medical Device

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Moving a medical imaging device can be a big undertaking, both logistically and in terms of paperwork and regulatory compliance. Fortunately, the International Chamber of Commerce (ICC) has provided some rules, known as Incoterms, to help. When used properly, Incoterms facilitate smooth transactions between trade partners. Below, we’ll share the Incoterms most relevant to imaging equipment transactions in more detail and discuss how they help buyers and sellers get equipment where it needs to go, safely.

What are Incoterms?

Incoterms (short for “International Commerce Terminology”) are a list of terms that indicate key logistical areas and instructions for both buyers and sellers. The list includes terms that aid in transacting domestically and internationally, and create a framework that outlines the obligations, costs, and risks for all involved.

Where did they come from? 

Based out of Paris, the ICC is a leading body in the business world that develops standards and guidelines with a focus on encouraging international trade. The ICC will revise the rules from time to time, and published their most recent version of INCOTERMS® 2010 in January of 2011.

How are they used? 

A specific Incoterm is identified by a set of three letters and should be followed by a particular place or port. Here’s an example: “EXW Block Imaging, 1845 Cedar Street, Holt, Michigan Incoterms® 2010”. In this example the EXW term would indicate to the parties involved that any mode of transport could be used and that the packaged goods would be delivered when Block Imaging makes the goods available to the buyer at the above address.

Any specific changes to the rules of the Incoterm, such as modifying the obligation for the seller to package and mark the goods for transport, should be well-defined within the purchase contract.

Common Medical Imaging Incoterms 

The Incoterms® 2010 comprise 11 terms, divided into two classes:

  1. Rules for any mode of transport (EXW, FCA, CPT, CIP, DAT, DAP, and DDP)
  2. Rules for sea and inland waterway transport (FAS, FOB, CFR, and CIF)

Below are the Incoterms most commonly-used when transporting medical imaging equipment. For more in-depth information, check out INCOTERMS Explained for Buyers and Sellers of Imaging Equipment.

EXW (Ex Works)

Any mode of transport. Best suited for domestic trade, the seller delivers once they have made the goods available at the named place.

FCA (Free Carrier)

Any mode of transport. Well-suited for international trade, the seller delivers to the carrier or another named place. When using this term, the seller is required to clear the goods for export but has no obligations on import or any import customs procedures.

CIP (Carriage and Insurance Paid To)

Any mode of transport. Commonly used in both domestic and international trade, the seller fulfills delivery at the named place of destination and must contract and pay for the transport along with a minimum insurance coverage of the goods being shipped.

CIF (Cost Insurance and Freight)

Used only for sea and inland waterway transport. Most commonly used in international trade, the seller delivers on board the vessel and contracts and pays for the goods to reach the named port of destination. When using this term, the seller is required to obtain insurance coverage to cover the buyer’s risk in the event of loss or damage of the goods, but on a minimum coverage. The seller is also required to clear the goods for export, but has no obligations to import or any import customs procedures.

The Takeaway 

Although Incoterms are frequently included within contracts and have become a common language used globally, it is essential to name a place or port as precisely as possible, so clear responsibilities are established between both parties.

Take time to fully understand the specific Incoterm being chosen and ensure the rules are appropriate for the goods and the way they will be transported. Within Incoterms® 2010, each term is given a guidance note that is helpful in making the choice. If there will be additional obligations from either party make sure to incorporate them into your contract.

If you have an upcoming imaging equipment relocation project, our team would love to help. We’ve moved thousands of systems over the last 22 years and we’re ready to put that experience to work for you.

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