This PPt is all about the Incoterms used in International Business. This is For PGDM 3rd semester students.

1. INCOTERMS® Presented By :
Anish Kumar

2. WHAT DOES INCOTERM STAND FOR ?
The word INCOTERM is an abbreviation for International
Commercial Terms which provide a common set of rules used for
defining the responsibilities of sellers and buyers in the delivery of
goods under sales contracts.
They are widely used in international commercial transactions.

3. A r e t h e y
i m p o r t a n t ?

4. W HY IS THAT ?
B e c a u s e t h ey :
Set international rules for commonly used terms in foreign trade
Define obligations of both parties involved in the transaction
Determine the distribution & transfer of risks regarding the goods
delivered from seller to buyer
State the clear sharing of expenses between the parties during
transport

5. W H E N A ND WHERE DID
THEY APPEAR ?
First conceived by International Chamber of Commerce (ICC) in 1921
and implemented starting from 1936, since they have been updated 6 times in
order to keep pace with the evolution of international trade.
In 1923, a Trade Terms Committee developed the first 6 rules : FOB, FAS,
FOT, FOR, Free Delivered CIF and C&F, as the precursor for what would
later be known as INCOTERM rules.

6. I N C O T E R M S 2010 - LA TEST REVISION
Entered into force 1st January 2011, containing the following amendments:
Reduction from 13 to 11 terms by replacing 4 delivery terms : DEQ, DAF, DES,
DDU with 2 new ones : DAT(Delivery at Terminal) and DAP(Delivery at Place)
Terms grouped in 2 categories, according to the means of transport used :
General alltypesof transport Specialsea& inland waterway
• EXW DAT FAS
• FCA DAP FOB
• CPT DDP CFR
• CIP CIF

7. H OW I N C O T E R M S EVOLVED
1936
EXW
FOR
FAS
FOB
CFR
CIF
EXQ
EXS
2000
EXW CIP
FCA DAF
FOB DES
CFR DEQ
CIF DDU
CPT DDP
2010
EXW CIP
FCA DAP
FAS DAT
FOB DDP
CFR
CIF
CPT

8. The Incoterms® Rules

9. RULES FOR ANY
MODES OF TRANSPORT

10. EX WORKS
EXW means Ex Works and is followed by a named place.
EXW means the seller's responsibility is to make the goods
available at the seller's premises. The seller is not responsible
for loading the goods on the vehicle provided by the buyer,
who then bears the full cost involved in bringing the goods
from there to the desired destination.

11. FREE CARRIER
FCA means Free Carrier and is followed by a named
place.
FCA means the seller fulfills its obligation to deliver
when it has handed over the goods, cleared for export,
into the charge of the carrier named by the buyer at the
named place.
The exporter has the obligation to deliver the goods into
the custody of the carrier or another person (e.g – a freight
forwarder) named by the buyer, or chosen by the seller in
accordance with the terms of the contract.

12. CARRIAGE PAID TO
CPT means Carriage Paid To and is followed by a named
place of destination.
CPT means that the seller must pay the freight for the
carriage of the goods to the named destination.
The risk of loss or damage to the goods and any cost
increases transfers from the seller to the buyer when the
goods have been delivered to the custody of the first
carrier, and not at the ship's rail.

13. CARRIAGE AND INSURANCE PAID TO
CIP - CIP means Carriage And Insurance Paid To and is
followed by a named place of destination. for example CIP
Boston. CIP has the same incoterm meaning as CPT, but in
addition the seller pays for the insurance against loss of
damage.
The exporter arranges
For export clearance and all export formalities.
Arranges and pays for all costs for the transportation
‘including insurance’ of the goods up to the agreed point in the
named port of destination.

14. DELIVERED AT TERMINAL
DAT – This replaced for sea transportation, the old DES
and DEQ. With DAT the seller bears the costs of transport
and the risks until the goods are left unloaded at the
terminal that the parties had agreed upon. ‘Terminal
includes any place, whether covered or not, such as a
quay, warehouse, container yard or road, rail or air cargo
terminal.’

15. DELIVERED AT PLACE
“Delivered at Place” means that the seller delivers
when the goods are placed at the disposal of the
buyer on the arriving means of transport ready for
unloading at the named place of destination. The
seller bears all risks involved in bringing the goods
to the named place.

16. DELIVERED DUTY PAID
DDP - means Delivered Duty Paid and is followed by a named
place of destination.
The seller has to pay the costs involved in shipping the goods as
well as the costs and risks of carrying out customs formalities.
The seller pays the duty and the buyer has to pay any additional
costs caused by its failure to clear the goods for import in time.
DDP should not be used if the seller is unable to obtain an import
license.

17. Specialsea
&
inlandwaterway

18. FREE ON BOARD
FOB - FOB means Free On Board and is followed by the named port of
shipment.
With FOB the goods are placed on board the ship by the seller at a port of
shipment named in the sales agreement.
The risk of loss of or damage to the goods is transferred to the buyer when the
goods pass the ship's rail, i.e. off the dock and placed on the ship. The seller
pays the cost of loading the goods.

19. COST AND FREIGHT
CFR means Cost and Freight and is followed by a named port of
destination.
CFR requires the seller to pay the costs and freight necessary to
bring the goods to the named destination, but the risk of loss or
damage to the goods, as well as any cost increases, are transferred
from the seller to the buyer when the goods pass the ship's rail in
the port of shipment. Insurance is the buyer's responsibility.

20. COST, INSURANCE AND FREIGHT
CIF means Cost, Insurance and Freight and is
followed by a named port of destination.
It is exactly the same as CFR except that the seller
must in addition procure and pay for the buyer’s
insurance. This is applicable only to maritime
transport.

21. FREE ALONGSIDE SHIP
FAS means Free Alongside Ship and is followed by a
named port of shipment.
FAS means the seller is responsible for the cost of
transporting and delivering goods alongside a vessel in a
port in his country.
This means that the buyer has to bear all costs and risks of
loss of or damage to the goods from that moment. This
term is only applicable for sea or inland waterway
transport.