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RISK PERCEPTION OF TURKISH EXPORTERS IN
TRANSPORTATION: AN EXAMPLE OF AEGEAN REGION
Aykan Candemir
Ege University, Turkey
Ali Erhan Zalluhoglu
Ege University, Turkey
Erdal Demiralay
HRM (Human Resources Management), Turkey
ABSTRACT
In international trade, various methods of payment, delivery and different currencies take place. To
understand the various rights and responsibilities of the parties in international trade it is necessary to
understand when title to goods passes under a contract of sale and in particular when risk in the goods
passes. Rules for the interpretation of international commercial terms were developed with regard to the
transportation of goods to describe rights and liabilities by the International Chamber of Commerce (ICC).
The study aims to find out the risk perceptions of the Turkish exporters in the Aegean Region within the
context of transportation function of logistic through incoterms. Also, scope of this study is to find out the
utilization of risk minimization methods via insurance.
Key Words: Exports, INCOTERMS, Transportation, Risk.
INTRODUCTION
The global economy has given businesses broader access than ever before to markets all over the world.
Goods are sold in more countries, in larger quantities and greater variety. But as the volume and complexity
of international sales increase, so do the possibilities for misunderstanding and costly dispute when sales
contracts are not adequately defined.
Globalization of markets through the developments in communication, technology and transportation forces
international companies to change the ways they operate. Humphreys et al. (1998) stated that manufacturers
are influenced to implement international sourcing decision mainly due to their desire to establish a presence
in a foreign market, the introduction of competition to the domestic supply base, their needs to satisfy offset
requirements and to increase the number of available sources, and their reactions to local and foreign
competitiors. Although there are advantages of global manufacturing and trade, there will be a huge flow of
goods, therefore the successes of processes mainly necessitate implementing effective flow of goods which
leads to the need of a well-functioning transportation and delivery system.
In international business transactions, different methods of payment, delivery and different currencies take
place than in domestic transactions. In addition, while the terms of sale in international business often sound
similar to those commonly used in domestic contracts, they often have different meanings in global
transactions. Confusion over these terms can result in a lost sale or a financial loss on a sale. Thus, it is
essential to comprehend what terms are agreed to before finalizing the contract.
To understand the various rights and responsibilities of the parties in international trade it is necessary to
understand when title to goods passes under a contract of sale and in particular when risk in the goods passes.
The law of sale is complex and to give a full explanation requires infinite detail besides necessitating a return
to the basic rules of contract. The principal question that must be answered is: ―At what moment does risk in
the goods pass from the seller to the buyer or from the shipper to the consignee?‖ In other words, one is much
more concerned with transfer of risk than transfer of title in respect to loss or damage to goods under a
contract of carriage.
LOGISTICS, SUPPLY CHAIN MANAGEMENTAND RISK
Logistics is defined by Davies (1987) and Gary and Davies (1991) as composed of materials management,
physical distribution management, credit rating, insurance and delivery promises. According to Houlihan
(1987), the concept of international logistics can be expanded into international supply chain management by
including purchasing, product distribution and sales.
Supply chain can be described as an integration of key business processes that are involved through upstream and
downstream linkages in the key business processes from end user through original suppliers that sourcing raw
materials and parts manufacturing and assembly warehousing and inventory tracking, order entry and order
management, distribution across all channels, delivery to the customer, and the information systems necessary to
monitor all of these activities that add value for customers and other stakeholders (Lambert and et al.,1998,
Christopher, 1998; Lummes and Vokurka, 1999). Considering the globalization and the increasing volume of
international trade, establishing a well-functioning system for international trade becomes inevitable.
Risk, in the context of supply chain management, is a multi-dimensional construct (Zsidisin et al., 2003).
According to Lambert and Cooper (2000) and Mentzer et al. (2001), supply chain management (SCM) is
sharing both risks and rewards between the members of the supply chain. This is often mentioned, but not
further elaborated on, in traditional SCM literature. The focus of supply chain risk management (SCRM) is to
understand, and try to avoid, the devastating ripple effects that disasters or even minor business disruptions can
have in a supply chain (Norrman and Jansson, 2004). Supply chain disruptions can result in a variety of
problems such as long lead-times, stock-outs, inability to meet customer demand, and increases in costs (Levy,
1995; Svensson, 2000; Chopra and Sodhi, 2004). Risk management is a continual process that involves long-
term dedication of all members. Ongoing risk assessment involves gathering, communication, and evaluation of
information that helps in developing appropriate risk management strategies (Zsidisin et al., 2000).
A categorization for identifying risks and uncertainties in supply chains is shown as the five sub-
chains/networks to every supply chain (Cavinato,2004; Spekman and Davis,2004; Norrman and Jansson,
2004; Barry,2004).
Physical – the actual movements and flows within and between firms, transportation, service
mobilization, delivery movement, storage, and inventories.
Financial – the flows of cash between organizations, incurrence of expenses, and use of investments
for the entire chain/network, settlements, Accounts Receivable (A/R) and Accounts Payable (A/P)
processes and systems.
Informational – the processes and electronic systems, data movement triggers, access to key
information, capture and use of data, enabling processes, market intelligence.
Relational – the appropriate linkage between a supplier, the organization and its customers for
maximum benefit; includes internal supply matter relationships throughout the organization.
Innovational – the processes and linkages across the firm, its customers, suppliers, and resource parties
for the purpose of discovering and bringing to market product, service, and process opportunities.
Market requirements also force firms to reconfigure their logistics activities. The increased pressure on time-to-
market and order-to-delivery requires firms to be in close proximity to their customers, not necessarily in terms of
physical distance, but in terms of time (Lemoine and Skoett-larsen, 2004). Logistics involves the movement of
products (raw materials, parts,supplies, and finished goods) from point-of-origin to point-of-consumption.A
product produced at one point has very little value to the prospective customer unless it is moved to the point
where it will be consumed. Transportation achieves this movement. between facilities using vehicles and
equipment such as trucks, tractors, trailers, crews, pallets, containers, cars and trains (Stock and Lambert, 2001;
Ghiani et al,2004). This function of transportation articulate its importance in international trade.
RISK WITHIN THE CONTEXT OF INTERNATIONAL
TRANSPORTATION AND DELIVERY TERMS-INCOTERMS
By the 1920s, commercial traders had developed a set of trade terms to describe their rights and liabilities with
regard to the transportation of goods. These trade terms consisted of short abbreviations for lengthy contract
provisions, and therefore they were commonly used for convenience. Unfortunately, there was no uniform
interpretation of them in all countries, and therefore misunderstandings often arose in cross-border transactions.
Gradually, two similar sets of terms and their definitions were developed— the American Standard Foreign
Trade Definitions and the International Commercial Terms, better known as Incoterms (Weiss, 2008).
To improve this aspect of international trade, the International Chamber of Commerce (ICC) developed rules
for the interpretation of international commercial terms. First published in 1936, these rules have been
periodically revised to account for changing modes of transport and document delivery, and they have
become popularly known as Incoterms (Shippey, 2008). Although the International Chamber of Commerce is
not a governmental body, the terms are recognized worldwide as legally binding upon the parties to an
international transaction (Wood et. al., 2002). They are periodically reviewed and updated by delegates
selected from many countries in order to reflect current practice and changing technologies. The last revision
was in the year 2000, and the publication is referred to as Incoterms 2000.
INCOTERMS 2000 clearly defines for the seller and the buyer (Petersen, 2004);
When RISK Transfers?
Who pays which COSTS?
Who is RESPONSIBLE for forwarder & carrier selection?
Who prepares the DOCUMENTS?
The terms do not regulate in particular (Zurich Global Corporate, 2005);
Transfer of ownership,
The payment process,
Applicable law,
The jurisdiction.
INCOTERMS are informally separated into four different groups (E, F, C and D), which increasingly shift the
level of responsibility for transportation from the buyer to the seller. Under Group E, the seller is required to
make the goods available at its own facilities to the buyer. Once the seller has done this, the buyer is then
responsible for the shipment. The Group F terms require the seller to deliver the merchandise to the next carrier
at the named facility, airport or port, where the buyer assumes responsibility for ―main‖ or transnational
carriage. Group C places the responsibility for main carriage on the seller, while under Group D the seller is
responsible for transporting the goods to the country of importation and incurring risk to destination. These
relative responsibilities divide the costs of arranging transportation, and in some cases insurance between the
parties. It also divides the risk of loss between them. INCOTERMS are not shipping terms, instead they are part
of the sales contract and help the seller and buyer define the roles and the costs that each will have in the
transaction. Group E, F and C refers delivering at shipment at the place of loading country. The Risk caused
from transportation period on the behalf of buyer. Group D refers delivering at unloading at the destination. The
Risk caused from transportation period on the behalf of seller (ICC, 1999). Risk allocation of Incoterms are
given below according to classified 4 groups as summarized and later detailed;
Delivery Terms: Ex-Works
―Ex Works (... named port of shipment)‖ means that the seller delivers when he places the goods at the
disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not
cleared for export and not loaded on any collecting vehicle. This term thus represents the minimum
obligation for the seller, and the buyer has to bear all costs and risk involved in taking the goods from the
seller’s premises (ICC, 1999). However, if the parties wish the seller to be responsible for the loading of the
goods on departure and to bear the risk and all the costs of such loading, this should be made clear by adding
explicit wording to this effect in the contract of sale. This term should not be used when the buyer cannot
carry out the export formalities directly or indirectly (ICC, 1999).
Delivery Terms: FCA
―Free Carrier (... named port of shipment)‖ means that the seller delivers the goods, cleared for export, to the
carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an
impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s
premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible
for unloading. This term may be used irrespective of the mode of transport, including multimodal transport.
(ICC, 1999). The seller must deliver the goods to the carrier or another person nominated by the buyer, or
chosen by the seller, at the named place on the date or within the period agreed for delivery. Exporter is
responsible of all risks until delivering the goods to truck including loading expenses and risks (ICC, 1999).
Delivery Terms: FAS
―Free Alongside Ship (... named port of shipment)‖ means that the seller delivers when the goods are placed
alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and Risks
of loss of or damage to the goods from that moment. The FAS term requires the seller to clear the goods for
export (ICC, 1999). Exporter carries all risks until delivering the goods alongside the ship nominated by
buyer at the loading place named by the buyer at the named port of shipment on the date or within the agreed
period and in the manner customary at the port risk crossing point. The risk starts at sellers’
factory/warehouses and ends until delivering at port at the alongside the ship (ICC, 1999).
Delivery Terms: FOB
Free on board (... named port of shipment) ―Free on Board‖ means that the seller delivers when the goods
pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of
loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for
export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver
the goods across the ship’s rail, the FCA term should be used (ICC, 1999).
Delivery Terms: CFR
Cost and freight (... named port of destination) ―Cost and Freight‖ means that the seller delivers when the goods
pass the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to
the named port of destination, but the risks of loss of or damage to the goods, as well as any additional costs due to
events occurring after the time of delivery, are transferred from the seller to the buyer. The CFR term requires the
seller to clear the goods for export. This term can be used only for sea and inland waterway transport. If the parties
do not intend to deliver the goods across the ship’s rail, the CPT term should be used (ICC, 1999). The risk starts at
sellers’ factory/warehouses and ends after passing the ship’s rail at the named port of shipment.
Delivery Terms: CIF
Cost, insurance and freight (... named port of destination) ―Cost, Insurance and Freight‖ means that the seller
delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight
necessary to bring the goods to the named port of destination but the risks of loss of or damage to the goods, as
well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the
buyer. However, in CIF the seller also has to procure marine insurance against the buyer’s risks of loss of or
damage to the goods during the carriage. Consequently, the seller contracts for insurance and pays the insurance
premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on
minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as
much expressly with the seller or to make his own extra insurance arrangements. (ICC, 1999).
Delivery Terms: CPT
Carriage paid to (... named place of destination) ―Carriage Paid to...‖ means that the seller delivers the goods
to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the
goods to the named destination. This means that the buyer bears all risks and any other costs occurring after
the goods have been so delivered. If subsequent carriers are used for the carriage to the agreed destination,
the risks passes when the goods have been delivered to the first carrier. The CPT term requires the seller to
clear the goods for export. This term may be used irrespective of the mode of transport including multimodal
transport (ICC, 1999). Exporter carries all risks until risk crossing point. Risk Crossing Point is delivering the
goods to carrier nominated by seller. The main risks are: Any damage or losses until loading to main carrier
such as: accident, theft, natural disasters (earthquake, torrent etc.), breaking etc.
Delivery Terms: CIP
Carriage and insurance paid to (... named place of destination) ―Carriage and Insurance Paid to...‖ means that the
seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage
necessary to bring the goods to the named destination. This means that the buyer bears all risks and any additional
costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance
against the buyer’s risks of loss of or damage to the goods during the carriage. Consequently, the seller contracts
for insurance and pays the insurance premium. The buyer should note that under the CIP term the seller is required
to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he
would either need to agree as much expressly with the seller or to make his own extra insurance arrangements. If
subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been
delivered to the first carrier. The CIP term requires the seller to clear the goods for export. This term may be used
irrespective of the mode of transport including multimodal transport. (ICC, 1999)
Delivery Terms: DAF
Delivered at frontier (... named place) ―Delivered at Frontier‖ means that the seller delivers when the goods
are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but
not cleared for import at the named point and place at the frontier, but before the customs border of the
adjoining country. The term ―frontier‖ may be used for any frontier including that of the country of export.
Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the
point and place in the term. However, if the parties wish the seller to be responsible for the unloading of the
goods from the arriving means of transport and to bear the risks and costs of unloading, this should be made
clear by adding explicit wording to this effect in the contract of sale. This term may be used irrespective of
the mode of transport when goods are to be delivered at a land frontier (ICC, 1999).
Delivery Terms: DES
Delivered ex ship (… named port of destination) ―Delivered Ex Ship‖ means that the seller delivers
when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the
named port of destination. The seller has to bear all the costs and risks involved in bringing the goods to
the the seller to bear the costs and risks of discharging the goods, then the DEQ term should be used.
This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal
transport on a vessel in the port of destination (ICC, 1999).
Delivery Terms: DEQ
Delivered ex quay (... named port of destination) ―Delivered Ex Quay‖ means that the seller delivers when the
goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of
destination. The seller has to bear costs and risks involved in bringing the goods to the named port of destination
and discharging the goods on the quay (wharf). The DEQ term requires the buyer to clear the goods for import and
to pay for all formalities, duties, taxes and other charges upon import (Incoterms, 1999).
Delivery Terms: DDU
Delivered duty unpaid (... named place of destination) ―Delivered Duty Unpaid‖ means that the seller
delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport
at the named place of destination. The seller has to bear the costs and risks involved in bringing the goods
thereto, other than, where applicable, any ―duty‖ (which term includes the responsibility for and the risk of
the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other
charges) for import in the country of destination. Such ―duty‖ has to be borne by the buyer as well as any
costs and Risk caused by his failure to clear the goods for import in time (ICC,1999).
Delivery Terms: DDP
Delivered duty paid (... named place of destination) ―Delivered Duty Paid‖ means that the seller delivers the
goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named
place of destination. The seller has to bear all the costs and risks involved in bringing the goods there
including, where applicable, any ―duty‖ (which term includes the responsibility for and the Risk of the
carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges)
for import in the country of destination. While the Ex-Works term represents the minimum obligation for the
seller, DDP represents the maximum obligation. This term should not be used if the seller is unable directly
or indirectly to obtain the import licence. However, if the parties wish to exclude from the seller’s obligations
some of the costs payable upon import of the goods (such as value-added tax: VAT), this should be made
clear by adding explicit wording to this effect in the contract of sale. If the parties wish the buyer to bear all
Risk and costs of the import, the DDU term should be used. (ICC, 1999)
Under the Institute Cargo Clauses drafted by the Institute of London Underwriters, insurance is
available in ―minimum cover‖ under Clause C, ―medium cover‖ under Clause B and ―most extended
cover‖ under Clause A (ICC, 1999 ).
a) Minimum Cover : This insurance named Institute Cargo Clauses (FPA) on Institute Cargo
Clauses (C) for sea transport, Truck Clauses for road transport, Railway Clauses for railway transport. This
clause cover risk of loss of or damages to goods: physical occurrences such as hitting, bumbing, burning, to
be capsized, to go off the road, and natural disaster such as earthquake, torrent and maritime average,
damages sustained by a ship or its cargo and unloading from ship.
b) Maximum Cover: This insurance named as Institute Cargo Clauses (All Risk) on Institute
Cargo Clauses (A). This clause cover risk of loss of or damages to goods during carriage, loading and
unloading excluding any defect comes from goods nature, main cause of being lateness. Other uncovered
Risk are mentioned below.
c) War, riots, civil commotion, strikes and other labor disturbances: Below mentioned A
and C clauses does not cover these risk. The side who is responsible to arrange the insurance, if wishes to
cover these risk, additionally must inform the insurance company to cover these risk.
When Institute Cargo Clauses (All Risk) mentioned as maximum coverage the nine types of risks
are excluded from this clause. These risk are:
1- Any loss of or damages to goods comes from insured side’s deliberated activities
2- Any loss of or damages to goods comes from goods nature, Corrosion, to get worn-out,
Normal flow, weight and volume loss
3- Any loss of or damages to goods comes from being lateness
4- Inappropriate and Lack of packaging
5- Financial problems comes from carrier
6- Carriage vehicles’ inappropriate to carry the goods
7- Atom and Nucleer pollution
8- War
9- Riots, Civil commotions, strikes and other labor disturbances
These clauses may be extended for several activities including loading and unloading of cargo.
METHODOLOGY AND FINDINGS
In this research, the risk perceptions of the Turkish exporters in the Aegean Region within the context of
transportation function of logistic through incoterms are examined. Also, scope of this study is to find out the
utilization of risk minimization methods via insurance. The factors affecting the risk perception such as
sector, size, foundation year, export experience etc. are analyzed. An e-mail survey was conducted to
generate data to test the hypotheses. With its organized industrial zones and free zones, Aegean region is one
of the important centers for manufacturing and trade of the Turkish economy. In Aegean region, The total
number of exporters is 3775, but only 2889 firms registered their e-mail addresses as contact information was
selected from the Aegean Exporter’s Union and other governmental institutions database system. The sample
included businesses from a wide range of industrial sectors. A web based questionnaire were prepared and e-
mailed as attached document to the firms and expected to be answered by the top managers, export managers
and export specialists. Two weeks after sending the e-mails, a follow-up e-mail was sent for non-responses.
In total, out of 224 firms 19 were deemed ineligible (e.g. not properly filled) and 205 firms were taken for
analysis. Company policies restricting the giving of information to external parties; and time constraints
forms the main reasons for non-participation and non-response.
The questionnaire included three sections; The first section aimed to define Aegean exporters characteristics.
Other sections include questions regarding exporters’ preferences of delivery terms for international
transportation and how risky they perceive various types of delivery terms and the last section for the
measure of which minimizing method of delivery risk mostly used.
NUTS classification used in the analyses was created by the European Office for Statistics (Eurostat) as a
single hierarchical classification of spatial units used for statistical production across the European Union is
used to determine for compare perceived risks of each terms between subregions. Sub sectors consisting the
exporters were gathered into three main sectors i.e. agriculture, industry and mining in accordance with the
classification of Undersecretariat of Foreign Trade of The Republic of Turkey.
Table 1: Frequency Table
Valid
Frequency
Valid
Percent (%)
Valid
Frequency
Valid Percent
(%)
Sector
Size of the Firm (classification according to number of
employees)
Agriculture
64
31,2
Small (1-49)
73
36
Industry
113
55,1
Medium (50-249)
87
42,8
Mining
28
13,7
Big (250 and over)
43
21,2
Total
205
100
Total
203
100
Type of Activity
Export Experience
Producer and Exporter
166
81
Export Experience
Between 1-9 Years
63
30,7
Only Exporter (No
production)
39
19
Export Experience
Between 10-19 Years
51
24,9
Total
205
100
Export Experience
Between 20-29 Years
45
22
Year of Establishment
Export Experience 30
Years and More
46
22,4
1985 and before
65
31,7
Total
205
100
1986 – 1993
35
17,1
Capital Structure
1994 – 2001
53
25,9
%100 Turkish
175
85,4
2002 and later
52
25,4
Foreign invested company
(%1- %100)
30
14,6
Total
205
100
Total
205
100
Market orientation (Foundation of the Firm)
Location for NUTS
Founded primarily for
domestic market
90
43,9
TR31 Izmir and subregion
149
72,7
Founded primarily for
export markets
63
30,7
TR32 Aydin and
subregion
29
14,1
Founded both for
domestic and foreign
markets
52
25,4
TR33 Manisa and
subregion
27
13,2
Total
205
100
Total
205
100
No. of Employed in Export Department
Export Sales /Total sales
1
32
15,6
%0-%25
56
27,3
2
62
30,2
%26-%50
41
20
3
34
16,6
%51-%75
23
11,2
4 and over
61
29,8
%76-%100
85
41,5
Nobody work about
export
16
7,8
Total
205
100
Total
205
100
Perceived risk score of exporters was calculated by addition of all given points (Table 2). But to get more accurate
solution the average risk point is calculated to compare the perceived risk of delivery terms. ―Delivery duty paid‖
and also ―Delivery ex quay‖ terms are found out to be the most risky options perceived by the exporters in Aegean
Region. Therefore due to this calculation perception of ―Ex-work‖ and ―Free carrier (FCA)‖ are the teast risky
ones. That is based on for the responsibility time of goods for the seller is for a short time.
Table 2. Perceived Risk Score of Delivery Terms
N
Total Point
Mean
N
Total Point
Mean
Ex-Works
125
30
0,24
CIF
126
151
1,19
FCA
78
51
0,65
DAF
50
74
1,48
FAS
61
42
0,68
DDU
74
112
1,51
FOB
138
106
0,76
DES
48
73
1,52
CFR
87
95
1,09
DEQ
47
76
1,61
CPT
63
70
1,11
DDP
68
118
1,73
CIP
62
74
1,19
As it seen from Table 3 that the most preferable delivery terms for the exporters are FOB (Free on board) and
CIF (Cost, Freight and Insurance) in international trade. Perception of both FOB and CIF are average risky
delivery terms. FOB is the most preferable term because of easy to use for exporters.
Table 3. Most Used Delivery Terms
Frequency
Frequency
FOB
163
CPT
19
CIF
131
CIP
15
Ex-Works
94
DDP
8
CFR
52
FAS
6
FCA
41
DAF
5
DDU
35
DES or DEQ
-
As it seen in Table 4, each given points is between 1-3 (frequently used) and were added and then divided to
total answer to find the average usage point of each risk minimization methods of delivery terms. As a result,
exporters firstly prefer ―Maximum Cover (A Clauses) Insurance‖ and secondly ―loading clauses‖ to assess
their delivery risk.
Table 4: Most frequently Used Risk Minimization Methods of Delivery Terms
N
Total point
Mean
Maximum Cover (A Clauses) Insurance
146
332,00
2,27
Loading Clauses
115
210,00
1,82
Unloading Clauses
115
197,00
1,75
Additional Clauses (Strike, lockout, war and civil commotions)
115
187,00
1,62
Minimum Cover (C Clauses) Insurance
112
186,00
1,61
In order to be able to determine which criterias which is stated in Table 1 affects to exporters decision when
evaluating perceived risks of exporters to the delivery terms, several Independent t-tests and one-way
ANOVA tests were conducted.
Ho= There is no difference among the sectors for perceived risks of exporters to the delivery terms.
There is a difference within the groups of sector. Considering the CIP (Carriage, insurance paid to), the mean
for agriculture sector was 2,39 and for the industry sector’s mean was 2,06. Perishability of agriculture
products may be the reason of why exporters of agricultural products tend to perceive higher risk.
Within 90% confidence interval, there are some differences between the groups. For the DEQ (Delivery Ex
Quay) and DDP (Delivery duty paid) mining sector is different from the agriculture and industry sector. One
way ANOVA test was applied to the groups of sector for the DEQ and the values of F=3,499, df=2 ve
p=0,039 also when we analyze DDP again for the sector perception we get the values of F=2,903, df=2 ve
p=0,062. Within these statistics, null hypothesis are rejected. The reason may be that the mining sector is
based on natural resources and there is low risk for damage of goods and commodities. Perception of mining
goods are less risky by exporters than both agricultural and industry products. Also when any exporter
applying DDP and DEQ than the delivery cost will be higher with the taxes.
Ho= There is no difference among the export experience for perceived risks of exporters to the
delivery terms.
Within 95% confidence interval, one way ANOVA test was conducted to the groups of export experience
and for the values F=5,079, df=3 ve p=0,002, null hypothesis is rejected. For the CIF (Cost, insurance and
freight), the differences between the groups early 1994 and after 1994. Perception of firms which export
before 1994 are less risky than the firms started to export after 1994.
Ho= There is no difference between export experience and perceived risks of exporters to the
delivery terms.
On the contrary to expectations the hypothesis could not be rejected so there is not enough evidence to
conclude that there is a perception of risk difference.
Ho= There is no correlation between export sales/total sales of a firm and perceived risks of
exporters to the delivery terms.
The hypothesis could not be rejected, therefore there is no statistical relationship between export sales/total
sales and perceived risks of exporters to the delivery terms.
Ho= There is no difference among the exporters which have/have not export department for
perceived risks of exporters to the delivery terms.
According to independent sample t-test, differences were found in perception of DDP (Delivery duty paid)
which have export department and have not (t=-3,466, df=58, sig=0,001). From the analysis, it can be seen
that the perception mean of exporters which have no export department is (3,00) and the exporters which
have export departments is 2,69. The exporters which do not have export department perceive that the DDP
is more risky. The reason may be that the DDP requires more bureaucracy.
Moreover when risk minimization methods are analyzed within the context of insurance;
Ho= There is no difference among the sectors for most used risk minimizing tools of exporters in
delivery terms.
According to one way ANOVA test within 95% confidence interval, the values of F=4,624, df=2 ve
p=0,012. There is a difference between groups, and null hypothesis is rejected. Considering the
minimum cover insurance, the mean of agriculture sector perception 1,35, and the mean of industry
sector perception is 1.79. In industry sector, usage frequency of minimum cover insurance is more than
agriculture sector. Due to the perishability for agricultural goods, mostly ―Maximum Cover (A Clauses)
Insurance‖ is the first preference in this sector.
Ho= There is no difference among year of establishment for most used risk minimizing tools of
exporters in delivery terms.
Although there is no difference between groups, there some some differences within the groups. Considering
the ―additional clauses‖, exporters which established between 1986-1993 are different from the other
exporters. Perception of the exporters which establish in this period mostly used additional clauses. The firms
established during this turbulent period of Turkish history (strikes, lockout, economic crises and civil
commotions) and the memories as well as the experiences of the past may be a force for additional clauses..
Ho= There is no difference among the exporters which have/have not export department for most
used risk minimizing tools of exporters in delivery terms.
According to independent sample t-test, (t=2,826, df=35,289, sig=0,008). We reject the null hypothesis,
therefore the firms which have export department use additional clauses more than the firms which have not.
CONCLUSION
Several factors affect the international trade activities of firms, and their perception and behaviour patterns.
These may be the country and the sector to which the exporting firm belongs, the characteristics of the firm,
its export level, size, organisational structure, human resources, international experience, export sales/total
sales rate and nature of the products to be traded. Some factors such may be considered more important than
commonly known factors such as export experience, age of the firms.
Today, risk is part of world environment and existing in obtaining these items, whether it is explicitly
acknowledged and managed, investigated in a cursory manner, or ignored altogether. So, businesses have
been always faced with various risks that emanate from the environment in which they operate (Zsidisin et
al., 2003; Giunipero and Eltantawy, 2003). Supply chain risk management taking both an academic’s and a
practioner’s growing interest in view of the growth of the logistic needs. This study presents research which
has investigated logistics risks from a transportation perspective in a framework of INCOTERMS.
SMEs constituting the 95% of the firms in Turkey, face several kinds of risks when considering the delivery
terms in international trade. According to the findings of the study, delivery terms are decided together by the
seller and the buyer. Ex-Works delivery term is perceived as the least risky by the firms. This may be due to
the size of the firms (being small and medium sized) and to the management culture which avoids risks. The
absence of an export department (%20 of the firms) leads to the preference of delivery terms requiring
minimum bureaucracy. However, no difference between the firms are found for risk minimization choices.
Only for industrial goods, for some type of goods minimum cover insurance are used.
The number of years in export experience of a firm is also found to have no relationship(s) with any risk
perception of delivery term(s) anyway from the export experience the firms which started export after 1994
perceive the delivery terms(s) which include insurance more risky in international trade. From the aspect of
export experience it can be said that delivery terms including the insurance is perceived as more risky when
the costs are considered. After 1994, the diversification of export marketing activities and the increaisng
number of countries for export may have increased the delivery terms with high costs. Experienced firms do
not perceive high cost delivery terms as risky regardless of the countries.
Differences in risk perceptions depending on the size of the firms and type of partnership couldn’t be found.
This may be due to the size of the firms (majority being SME) and the number of the firms with foreign
partners (majority is Turkish owned). Perception of risk for delivery terms and risk minimization methods by
the firms do not indicate significant results. It is found that the firms without export departments try to avoid
―additional clauses‖.
The increasing volume of trade, diversification, geographic expansion and the changes in logistics services
increases the importance of delivery terms. Besides these, the increasing utilization of risk minimization
methods for delivery terms seems a good improvement however preference for simple forms of delivery
terms for the exporters indicates the lack of information about the delivery terms and risk minimization
methods.This study notes remarks the importance of continuous information flow and the necessity of
awareness about the developments in foreign trade environment, domestic, international legislation and rules.
The study also aims to make contributions for the literature about export marketing and international trade.
Well-formulated and integrated strategies in international purchasing, inventory management and logistics
can provide fundamental mechanisms for managing the environmental uncertainty in global operations where
success depends on configuration, control and coordination. International purchasing, inventory management
and logistics strategies should go far beyond benefits derived solely from the difference in cost of production.
They should, in addition, and most importantly, also help achieve improvements in product quality, value,
customer satisfaction, responsiveness, flexibility and the competitive position of the firm.
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