Assuming Revolving Wing (RW) has purchased a large order of MRO parts from its manufacturer in China of 2 containers to import them by vessel. Its Chinese manufacturer arranges the inland shipping to the port of Shenzhen from its manufacturers. RW will contact its agency to clear the goods for import into the U.S. at port of Long Beach and assume the risks of the shipment once loaded at the port of Shenzhen. Once delivered they will ship goods by truck to RW’s warehouse in San Diego. Explain what INCOTERM should be used and what responsibilities and risks should be taken in this case.

Passage:

As the Blade Turns

Revolving Wings (RW) is a Kalamazoo, Michigan manufacturer of equipment for the renewable energy sector. The company has a strong domestic market for their fiberglass composite wind turbine blades thanks to federal tax breaks offered to power companies. RW has some excess plant capacity thanks to a recent expansion and is investigating the opportunity to enter the export market. Demand for turbine blades is especially strong in India, where there is a strong commitment to renewable energy but a shortage of critical parts to meet the growing need for power generating capacity.

During its annual executive retreat, exporting is a major topic of discussion. After a presentation by the business development team and a similar evaluation by an industry analyst, RW’s CEO sees the light. He quickly becomes a strong proponent of selling wind turbine blades to a power company near Bangalore, India. “Now all we have to do is figure out how to get the blades there quickly and without damage,” says the CEO. “Darren, get your team on this one. I want some solid answers.”

Darren Helm, RW’s transportation director, knows this is a big opportunity for the company but it comes with tremendous challenges. Picking the right mode, finding ports that can handle the blades safely, and routing the freight are just a few of the issues that keep Helm awake the night after the CEO tagged him to lead the “export to India” project.

At his next staff meeting, Helm reminds his team: “These blades can be up to 148 ft long and weigh 12 tons. We have to first get them from the plant to the point of export.

That’s not easy, since we need to plan routes to avoid urban rush hours, sharp curves, narrow lanes, and weight-limited bridges.”

“On top of those usual challenges, we have to find a high-quality international carrier to get the blades to India,” Helm adds. “And don’t forget the port challenges and final delivery to Bangalore.”

 Turning to you, Helm says: “Get me some answers fast! We need a plan of action for the CEO by Friday.”

Answer rating: 100% (QA)

Based on the information provided the most appropriate INCOTERM to use in this case is FOB Free on B... View the full answer