The document discusses INCOTERMS, which are international commercial terms used in international trade. It provides information on the 13 terms in INCOTERMS 2000 and the reduction to 11 terms in INCOTERMS 2010. The document outlines some of the major INCOTERMS including EXW, FCA, CPT, CIP, DAT, DAP, DDP, FAS, FOB, CFR, and CIF; describing aspects like costs, control, and liability under each term. It also provides examples of how some INCOTERMS are used, such as CIF Tokyo and FOB Long Beach.
3. INCOTERMS
• International Commercial TERMS
• First created in 1936 by the International Chamber of Commerce
• INCOTERMS are uniform, internationally recognized foreign trade terms
• That refer to the type of agreement for the purchase and shipping of goods
internationally
• There are 13 different terms, each of which helps users deal with different
situations involving the movement of goods
4. INCOTERMS 2000 and 2010
• The difference between the 2000 and the 2010 version is the number of
INCOTERMS has been reduced from 13 to 11
• Four INCOTERMS (DAF, DES, DEQ, DDU) have been replaced by two new
INCOTERMS (DAT, DAP)
• The replaced INCOTERMS were not used much in day to day trading
• Major areas in INCOTERMS
• Costs : Expenses
• Control : Owns
• Liability : Damage
5. Major Areas
• Costs: Who is responsible for the expenses involved in a
shipment at a given point in the shipment's journey?
• Control: Who owns the goods at a given point in the journey?
• Liability: Who is responsible for paying damage to goods at a given
point in a shipment's transit?
6. INCOTERMS dealing with
1. Loading to truck
2. Export Customs declaration
3. Carriage to port of export
4. Unloading the truck in port of export
5. Loading Charges in port of export
6. Freight to port of import
7. Unloading charge in port of import
8. Loading on truck in port of import
9. Carriage to place of destination
10. Insurance
11. Import customs charges
12. Import taxes
7.
8. Rules for any modes of transportation Rules for inland and sea transportation
EXW FCA CPT CIP DAT DAP DDP FAS FOB CFR CIF
Ex works
(WH)
Free
Carrier
Carriage
paid to
Carriage and
Insurance paid to
Delivered at
Terminal
Delivered at
Place
Delivered
duty paid
Free Alongside
ship
Free on
Board
Cost and
Freight
Cost, Insurance
and Freight
The Seller The Buyer
EXW
FCA
CPT
CIP
Transport Paid
Transport and Insurance Paid
Customs Unpaid
Loading Port Destination Port
FOB
DAT
CFR
CIF
FAS
Transport & Insurance Paid
Cost and Freight (Transport Paid)
Customs Unpaid
DDP
DAP
9.
10. EXW - ExWorks (2000 and 2010)
• This term represents the seller's minimum obligation
• He only has to place the goods at the disposal of the buyer
• The buyer must carry out all tasks of export & import clearance
• Carriage & insurance is to be arranged by the buyer
FCA - Free Carrier (2000 and 2010)
• This term means that the seller delivers the goods
• Cleared for export, to the carrier nominated by the buyer at the named place
• Seller pays for carriage to the named place
11. FAS - Free Alongside Ship (2000 and 2010)
• This term means that the seller delivers when the goods are placed
alongside the vessel at the named port of shipment
• The seller is required to clear the goods for export
• The buyer has to bear all costs & risks of loss or damage to the
goods from that moment
• This term can be used for ocean transport only
12. FOB - Free On Board (2000 and 2010)
• This term can only be used for ocean transport
• Seller delivers when the goods pass the ship's rail at the named port of
shipment
• This means the buyer has to bear all costs & risks to the goods from
that point
• The seller must clear the goods for export
• If the parties do not intend to deliver the goods across the ship's rail,
the FCA term should be used
13. CFR - Cost and Freight (2000 and 2010)
• This term can only be used for ocean transport
• Seller delivers when the goods pass the ship's rail in the port of shipment
• Seller must pay the costs & freight necessary to bring the goods to the
named port of destination
• BUT the risk of loss or damage, as well as any additional costs due to
events occurring after the time of delivery are transferred from seller to
buyer
• Seller must clear goods for export
14. CIF - Cost, Insurance, Freight (2000 and 2010)
• The seller delivers when the goods pass the ship's rail in the port
of shipment
• Seller must pay the cost & freight necessary to bring goods to
named port of destination
• Risk of loss & damage same as CFR
• Seller also has to procure marine insurance against buyer's risk of
loss/damage during the carriage
• Seller must clear the goods for export
• This term can only be used for ocean transport
15. CIP - Carriage and Insurance Paid (2000 and 2010)
• This term is the same as CPT
• With the exception that the seller also has to procure insurance against
the buyer's risk of loss or damage to the goods during the carriage
• This term may be used for any mode of transportation
16. CPT - Carriage Paid To (2000 and 2010)
• Seller delivers the goods to the carrier nominated by him
• The seller must in addition pay the cost of carriage necessary to bring the
goods to the named destination
• The buyer bears all costs occurring after the goods have been so delivered
• The seller must clear the goods for export
• This term may be used irrespective of the mode of transport (including
multimodal)
17. DAF - Delivered At Frontier (2000)
• 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 & place at the frontier
• But before the customs border of the adjoining country
• To be used when delivering to a land frontier
18. DES - Delivered Ex Ship (2000)
• Seller delivers when 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 bears all costs & risks in bringing the goods to the named port
before discharging
• This term can only be used when the goods are to be delivered by
ocean
19. DEQ - Delivered Ex Quay (2000)
• This terms is the same as DES
• With the exception that the seller is responsible to place the goods at
the disposal of the buyer, not cleared for import, on the quay at the
named port of destination
• Seller bears all costs & risks as in DES plus discharging the goods on the
quay
• This term can only be used in ocean transport
20. DDU - Delivered Duty Unpaid (2000)
• Seller delivers the goods to the buyer, not cleared for import, and not
unloaded from arriving means of transport at the named place of
destination
• The seller bears all costs & risks involved in bringing the goods to the
named place other than "duty" (which includes the responsibility for
customs formalities & payment of those formalities, duties & taxes) for
import into the country of destination
• Buyer is responsible for payment of all customs & duties & taxes
21. DDP - Delivered Duty Paid (2000 and 2010)
• This term represents maximum obligation to the seller
• This term should not be used if the seller is unable to directly or indirectly
to obtain the import license
• The terms means the same as the DDU term with the exception that the
seller also will bear all costs & risks of carrying out customs formalities
including the payment of duties, taxes & customs fees
22. DAT – Delivered at Terminal (terminal at port or place of destination) (2010)
• Seller pays for carriage to the terminal, except for costs related to import
clearance, and assumes all risks up to the point that the goods are
unloaded at the terminal
DAP - Delivered At Place (named place of destination) (2010)
• Seller pays for carriage to the named place, except for costs related to
import clearance, and assumes all risks prior to the point that the goods
are ready for unloading by the buyer
23.
24. Cost, Insurance and Freight (Named port of destination) (CIF)
• For example: "CIF Tokyo”
• A shipping term included in contract of sale, CIF indicates that the seller agrees to
take full responsibility for delivering the goods to the port of loading, clear the
goods for export, and arrange and pay for transportation and marine insurance over
the goods to the named port of discharge, such costs being included in the price of
the goods
• Nonetheless, all risk of loss of or damage to the goods, as well as any additional
costs due to events occurring after the time the goods have been delivered on
board the vessel, is transferred from the seller to the buyer when the goods pass
the ship's rail at the port of loading
• It is up to the buyer to arrange transportation from the port of discharge
25. Free on board (Named port of shipment) (FOB)
• For example: "FOB Long Beach”. Or "FOB [Airport]
• A shipping term included in a contract of sale, FOB indicates that the
seller fulfils his obligation to deliver when the goods have passed
over the ship's rail at the named port of shipment, all costs of inland
transportation and loading being included in the price of the goods
• The buyer has to bear all costs and risks of loss of or damage to the
goods from that point
26. Carriage and Insurance Paid - C.I.P
• Can be used for any transport mode, or where there is more than one transport mode.
• The seller is responsible for arranging carriage to the named place, and also for insuring the
goods
• “Carriage and Insurance Paid to” means that the seller delivers the goods to the carrier or
another person nominated by the seller at an agreed place (if any such place is agreed
between parties) and that the seller must contract for and pay the costs of carriage
necessary to bring the goods to the named place of destination
• ‘The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to
the goods during the carriage. The buyer should note that under CIP the seller is required to
obtain insurance only on minimum cover. Should the buyer wish to have more insurance
protection, it will need either to agree as much expressly with the seller or to make its own
extra insurance arrangements”