Conditions particular to the U.S. can drive Incoterms selection, sometimes in opposing directions.
Importer Security Filing concerns add compliance value to purchases under F-Group terms by buyers with equal or better freight costs than their suppliers offer. Getting correct and timely reportable information from buyer-appointed forwarders enhances supply chain management, which is particularly important for C-TPAT participants.
By contrast, the new DAT Incoterm has sellers delivering goods unloaded at terminals located on the buyer’s sides of main carriage. Continued pressure to reduce inventory cost makes transloading full containers at arrival ports an attractive alternative to full containerload door-to-door transportation. Contents of seller-loaded full containers can be mixed and matched to fill truckloads for each distribution center with a variety of items from different suppliers. As a bonus, for many kinds of goods, two 53-foot trailers can accommodate nearly three 40-foot containerloads. Transloading also keeps the containers near ports, which ocean carriers favor.
U.S. sellers and buyers must also consider GAAP accounting regulations. Revenue recognition (when a sale becomes an account receivable) generally requires at a minimum that ownership pass from the seller and that the seller’s risk for the condition of the contract goods ends. This is particularly important for publicly traded U.S. corporations seeking to recognize revenue at the earliest possible moment.
Although Incoterms do not indicate ownership transfer, they do define “delivery.” Some sales-purchase contracts couple ownership with risk transfer, either expressly or silently for those covered by the contract law of most U.S. states (UCC Section 2-401). On the flip side, accounting rules also exist for expense and inventory recognition.
Although Incoterms are designed merely to allocate risk, cost and responsibility between sellers and buyers, factors extraneous to their intent often influence their selection.