DRC Good Arrival Guidelines and INCOTERMS

In May 2017, DRC’s Solutions Blog included an article identifying the differences between North American Trade Terms and International Commercial Terms (INCOTERMS). In this edition, we will review how DRC Good Arrival Guidelines (Good Arrival) and INCOTERMS are connected.

Good Arrival is a combination of PACA 5 Day FOB Good Delivery Guidelines, CFIA Canadian Destination Tolerances and Suitable Shipping Condition Guidelines which establish the maximum percentage of defects allowed at destination for FOB shipping point transactions. Good Arrival assumes sales are FOB shipping point with regard to risk, regardless of how freight is billed.

Section 20, Trade Terms of the DRC Trading Standards states that INCOTERMS such as CPT, CIP, CFR, and CIF are all deemed to be the same as FOB except that the seller assumes the costs associated with the named INCOTERM. However, the risk of transit remains with the buyer.

Therefore, unless there is an agreement for a specific and defined grade standard, such as US #1, Canada #1, or Class I (also known as CAT I in the Spanish and French versions of the CODEX Standards), all transactions between DRC members will default to FOB No Grade Good Arrival. This means that the third or fourth column of DRC Good Arrival Guidelines containing the maximum percentage of defects per commodity will apply.