Tetra Pak Group

TERMS OF DELIVERY GUIDELINES

Policy Owner: Sam Strömerstén

Valid from: 2014.10.01
Contact person for Queries: Azhar Ali Syed or Robert Ingvarsson

Scope

Tetra Pak recognises the benefits of a common standard for delivery related to our sales and
purchasing activities. This standard is based on Incoterms 2010, valid as from January 2011, and its
correct use will support Tetra Pak in performing delivery activities that are globally accepted.

This guideline complements the Purchasing and Supplier Management Policy and is designed to
support the business when negotiating delivery conditions with Customers and Suppliers.

What are Incoterms?

Incoterms are issued by the International Chamber of Commerce and are recognized as indispensable
evidence of Buyers’ and Sellers’ responsibilities for delivery under a sales contract. It provides the rules
for proper interpretation of commonly used domestic and international trade terms. By using Incoterms,
differences in interpretations between Seller and Buyer can be eliminated or considerably reduced.
Incoterms regulate the responsibility between the Seller and the Buyer for;
 Packing the goods
 Loading and offloading the goods
 Arranging and paying for transportation and transportation insurance
 Issuing documentation related to transportation
 Arranging for export and/or import licences
 Passing of risk (incl. claiming from insurers in case of transport damage or loss)

Incoterms does not deal with other important matters such as the consequences of contract breaches,
limitations of liability, title to goods (transfer of ownership) and payment terms. If the parties wish to
have some additional text to the chosen Incoterm, e.g. how costs and/or risks could be allocated
amongst them, then it must be explicitly stated in the sales contract and on the invoice since the
Incoterms rules do not deal with such amendments.

There are 11 different terms;

Applicable for any mode of transport:
EXW Ex Works (…named place)
FCA Free Carrier (…named place)
CPT Carriage Paid To (…named place of destination)
CIP Carriage and Insurance Paid To (…named place of destination)
DAT Delivered At Terminal (…named terminal at port or place of destination)
DAP Delivered At Place (…named place of destination)
DDP Delivered Duty Paid (…named place of destination)

Tetra Pak Group –Terms of Delivery Guidelines -1(4)- Tetra Pak Internal

Internal
 Applicable for sea freight only:
FAS Free Alongside Ship (…named port of shipment)
FOB Free On Board (…named port of shipment)
CFR Cost and Freight (…named port of destination)
CIF Cost, Insurance and Freight (…named port of destination)

According to Incoterms, the word delivery is the specific term used to indicate the point where the risk
of loss of or damage to the goods passes from the Seller to the Buyer. Dispatch is the time/date when
the goods leave the Seller’s production unit or warehouse.

Tetra Pak preferred terms for purchasing from external suppliers

The recommended term is “FCA (named place) – Incoterms 2010”

Tetra Pak supplier management functions follow the principles of Incoterms. The functions negotiate
delivery terms best suited to the specific flows of goods. By using FCA Tetra Pak is responsible for
arranging and paying for freight and insurance. Time of delivery is when the goods are loaded by the
Supplier on the transport carrier which has been ordered by Tetra Pak (or by the Supplier on behalf of
Tetra Pak if so agreed). The named place should be the most suitable or appropriate place for risk
passing, for instance a terminal. Through FCA-purchasing Tetra Pak manages;
 Transport cost/spend
 Lead time
 Transporter’s performance
 Insurance cover and claims procedures
 Environmental impact

We use FCA whenever our logistics solutions are more beneficial than what can be obtained from the
Supplier. Whenever there are benefits from having a Supplier arranging the transportation, then DAP or
DDP terms should be used.

Exceptions to the preferred term are specified in section “Tetra Pak non-preferred terms and
exceptions”.

Tetra Pak preferred terms for sales

The recommended terms for Customer sales are:

“DAP (named place of destination) – Incoterms 2010”
“DDP (named place of destination) – Incoterms 2010”

The actual sales price is FCA and includes export packing and loading on the transport carrier.
However, the actual delivery term must be agreed upon between Tetra Pak and the Customer. Freight
and insurance charges should be either on-charged without any mark-up or as in EPL as of January
2015 it should be charged as a standard freight percentage surcharge (see EPL pricing document for
details). In DAP/DDP Tetra Pak is responsible to deliver the goods to the Customer at the named place
of destination. The named place of destination should - whenever possible - be the site of the
Customer, i.e. Tetra Pak’s ambition is to deliver from door-to-door. Through DAP/DDP-sales Tetra Pak
manages;
 Transport cost/spend
 Lead time
 Transporter’s performance
 Insurance cover and claims procedures
 Environmental impact

Tetra Pak Group –Terms of Delivery Guidelines -2(4)- Tetra Pak Internal

Internal
DDP has the same conditions as DAP but in DDP Tetra Pak has also the responsibility to arrange and
pay for import customs clearance, import duties and taxes (e.g, VAT). DDP should only be used if both
below statements are fulfilled:
 The Customer is located in a country without challenging customs procedures
 Tetra Pak is fully aware and capable of the obligations under this term
If the two statements above are not fulfilled, then use DAP. If we are unable to negotiate responsibility
for transportation and risk then use FCA considering the limitations of using FCA cross border within
and out of EU.

Exceptions to the preferred terms are specified in section “Tetra Pak non-preferred terms and
exceptions”.

Service agreement for sales

Due to the fact that several internal functions and entities normally are involved in a delivery to
Customer a service agreement between Tetra Pak companies must be in place to cover:
transportation, insurance, risk, claim procedure for external insurance (including contact with surveyors
and transport companies), import customs clearance, payment of import duties and taxes.

Tetra Pak non-preferred terms and exceptions

The following Incoterms are not recommended and should not be used;
EXW Does not include loading onto the means of transport and reduces
control of export clearance
DAT Offloading to be done by the Seller
CPT & CIP Early point of risk transfer
FAS, FOB, CFR & CIF Can only be used for ocean transportation

Exceptions;
 CPT to be used to countries with restricted insurance legislation
 CIP to be used when Letter of Credit is involved
 Specific term required due to local import regulations

General
 The wording "Terms of Delivery Incoterms 2010" should be printed on all relevant documents
such as quotations, proforma invoices, commercial invoices, agreements, contracts, orders
and order confirmations.
 Regardless of which Incoterms are used, it is recommended to be as exact as possible in
stating the “named place/destination/terminal”. Address of Supplier/Customer, name of airport
or seaport terminal are examples of exact denomination.
 For a more detailed information about Incoterms, please refer to Tetra Laval Group Transport
& Travel: http://markets.tetrapak.com/tlgtt

Tetra Pak Group –Terms of Delivery Guidelines -3(4)- Tetra Pak Internal

Internal
Supply chain specific

Packaging Material and Additional Materials

EXW will be blocked in the system as from Oct 1st 2014

Sales from Converting Factories to TPI, use FCA Converting Factory
Sales from TPI to MC, use DAP or DDP
Sales from MC to Customers, use DAP or DDP
FCA for cross border deliveries within and out from Europe will not be allowed for Sales to customer
FCA Port is not an allowed Incoterm for Sales, use FOB instead

Capital Equipment Packaging

EXW will be blocked in the system as from Oct 1st 2014

Sales from Product Company to TPI, use FCA
MC Purchase from TPI, use DAP or DDP
Sales from TPI to MC, use DAP or DDP
MC Purchase from Product Company, use DAP or DDP
Sales from Product Company to MC, use DAP or DDP
Sales from MC to Customers, use DAP or DDP
FCA for cross border deliveries within and out from Europe will not be allowed for Sales to customer
FCA Port is not an allowed Incoterm for Sales, use FOB instead

Tetra Pak Group –Terms of Delivery Guidelines -4(4)- Tetra Pak Internal

Internal