General Setup for Landed Costs

General setup includes configuring the following:

• Incoterm
• Incoterm Profile
• Transport Mode
• Transport Mode Profile

Incoterm

Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC). They are widely used in international commercial transactions or procurement processes. A series of three-letter trade terms related to common contractual sales practices, the Incoterms are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods.

The Incoterms are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.

In some jurisdictions, the duty costs of the goods may be calculated against a specific Incoterm (for example, in India duty is calculated against the CIF value of the goods, and in South Africa the duty is calculated against the FOB value of the goods). Because of this, it is common for contracts to export to these countries to use these Incoterms, even when they are not suitable for the chosen mode of transport. Care must be exercised to ensure that the liability issues are addressed by negotiation with the customer.

Identification of the Incoterm in a trade transaction is necessary in order to arrive at the customs duty base amount as well as other taxes base amounts to calculate the estimated landed cost.

Incoterm Profile

You can group Incoterms into Incoterm profiles and use this profile or group as a parameter in a compliance rule. For example, you can group Incoterms FOB and CIF under an Incoterm Profile called INFOTERM-PROFILE-CIF-F0B and use this profile in compliance rules.

Transport Mode

You can define new modes of transportation or use the public transportation modes. A transport mode can also be assigned to Transport Mode Profiles which are used to check compatibility of goods imported or exported by a group of transport modes. For example, when you import goods by TL or LTL modes, same set of value qualifiers applies. You can create a transport mode profile as a group of TL and LTL modes and then screen the transport mode of the imported goods against this mode profile.

Transport Mode Profile

You can group transport modes and use this group as a parameter in a compliance rule. For example, you can group VESSEL-CH, VESSEL-CO, VESSEL-NO under a Transport Mode Profile called OCEAN-PROFILE and use this profile in compliance rules.