ABSTRACT

The topic of this research is the effective use of International Commercial Terms (Incoterms) in companies in Cameroon as case study we have Timrey Travels and General Trading which is a traveling, trading and General Trading Company in Cameroon. The purpose of this research is to identify the most effective Incoterms use by Timrey Travels and General Trading and to simplify the company’s use of Incoterms through the use of recommendation charts and a country-specific approach. The research was implemented during my three months professional internship carried out at Timrey Travels and General Trading. Timrey Travels and General Trading required a closer view of its Incoterms and an analysis of how they could be used more effectively. One area of focus was the development of the company understands of the Incoterms’ advantages and disadvantages. Essentially, the company’s knowledge of its Incoterms needed to be updated. This research used qualitative research to achieve its stated aims. The empirical part of the research was created using multiple sources, while the research part was conducted using five theme interviews. Each of these theme interviews included five main questions that formed the basis of the interview. Two of the interviews were conducted with logistics professionals, while the remaining three were conducted with sales professionals. The results of this research proved useful for companies in Cameroon, as the results demonstrated that the Timrey Travels and General Trading was already using Incoterms effectively but could further develop its use of Incoterms in a few key areas. The recommendation charts presented in this research, which prevent the misuse of Incoterms and lead to their effective use, were found to be helpful and easy to apply.   

CHAPTER ONE: GENERAL INTRODUCTION

Incoterms 2020 formally refers to the delivery point is transaction where “the risk of loss or damage to the goods passes from the seller to the buyer”. Incoterms are very useful in international trade to prevent confusion in foreign trade by clearly outlining the obligations of the buyers and sellers. In Cameroon and internationally some companies applied Incoterms in their trading transactions for instance in Cameroon we have DHL (Dalsey Hillblom Lynn) and Timrey Travels and General Trading. Incoterms are the official commercial trade terms created by the International Chamber of Commerce which provides a set of rules and guidelines that help facilitate trade. It therefore highlights the responsibility of the buyer and seller in a commercial transaction. The objectives of Incoterms are to establish rules guiding the distribution of cost, the transfer of risk when the seller fulfills his obligation to deliver the goods and the procurement of documents. International commercial terms also known as Incoterms, contains eleven Incoterms in other words eleven delivery clauses, which are grouped into four. Trade term is one part of a commercial contract, between seller and buyer. Correctly used trade terms enhance logistic, decreases the risks and bring cost savings for company. The research focuses on the different types of Incoterms and clarifies the effective Incoterms use in Timrey Travels and General Trading. The newest edition of incoterms rules will help prepare business for the next century of global trade especially within the Timrey Travels and General Trading in Cameroon and elsewhere.

1.1.Background of Study

Evolution of the Incoterms

Frequently, the party to a contract is unaware of the different trading practices in different countries, thereby giving rise to misunderstanding, costly disputes and legislations with all the waste of money and time.  It was in this guise to solve these problems that the international chamber of commerce published Incoterms in 1936 and since then they have been amended in 1953, 1963, 1976, 1980, 1990, 2000, 2010 and 2020.  All these amendments are intended to bring the rules in line with most current international trade practices. It was lastly amended in 2020. Incoterms are not laws but are applied in the contract of sales.  The present Incoterm is Incoterm 2020.  Incoterms 2020 are the modifications of Incoterms 2010.

1.2.Statement of Problem

One of the major indicators of international trade performance is the performance of a country’s export. In this study, emphasis is placed on export aspect of international trade. This is because export represents an injection to the exporting country and it is a source for foreign exchange earnings. Thus, an improvement in the exporting ability of a country can transform to a better international trade performance. The measure issue is which Incoterms should a country choose and base on what critters. Another contextual issue is that while most developing countries in other regions especially Asia experienced trade diversification, exports from many African countries concentrated on primary products. For instance, the share of manufacturing products in total merchandise exports of developing countries increased from 35.1% in 1985 to 65.8% in 2004 and manufactured export in terms of world export increased from 14.5% in 1985 to 30.3% in 2005. The improvement in international trade outcomes of developing countries resulted from their diversified export markets. On the contrary, Africa’s share of manufactured export in terms of total export decreased from 4.3% to 2.9% of total export during the same period. One of the factors attributed to this development was Africa’s failure to integrate into the world trade with appropriate institutional framework (Bacchatta, 2007).

1.3. Research Questions

1.3.1. Main research question

Do incoterms 2020 facilitate international trade?

1.3.2. Specific research question

The research questions explored in this research are as follows:

1. What aspects affect Incoterm use?
2. How do Incoterms affect trading?
3. What Incoterms are effective and reasonable for use by Timrey Travel & General Trading?

Purpose and objectives of this research

1.4.1. Main objective

This research aims to identify the most beneficial and cost-effective Incoterms for use by Timrey Travel & General Trading.

1.4.2. Specific objective

The specific objective of this study is to;

• Find suitable, easy and cost-effective Incoterms for every objective.
• Investigating how incoterm affect trading
• Determining the factors that affect incoterm