2. INCOTERMS
These are internationally accepted commercial
terms defining the respective roles and
responsibilities (including costs) of the buyer and
seller in the arrangement of transportation and other
obligations
3. The Origin and History
First published by the International Chamber
of Commerce (ICC) in 1936 & since updated in
1953, 1967, 1976, 1980, 1990, 2000 and then
the current revision in 2010.
Incoterms® reflect world-wide trade practices,
as practices change, Incoterms® are revised
4. Purpose
To clarify how functions, costs and risks are split between
the buyer and the seller in connection with delivery of goods
as required in sales contract
Each term clearly specifies the responsibilities of the seller
and the buyer
Delivery, risks and costs are the critical points
5. Importance
Reduce the uncertainty caused by trade practices in
different countries.
Simplify the negotiations involved in international
commerce.
Ensure common understanding of obligations
6. Group Term Complete Name Transport Mode
E DEPARTURE EXW Ex Works Any
F MAIN CARRIAGE UNPAID FCA Free Carrier Any
FAS Free Alongside Ship Sea
FOB Free on Board Sea
C MAIN CARRIAGE PAID CFR Cost and Freight Sea
CIF Cost Insurance and Freight Sea
CPT Carriage Paid To Any
CIP Carriage and Insurance Paid to Any
D ARRIVAL DAT Delivered At Terminal Any
DAP Delivered At Place Any
DDP Delivered Duty Paid Any
Incoterms 2010
7. Changes in Incoterms from 2000 to 2010
New Terms Added
1. DAT – Delivered at Terminal (named terminal/port of Delivery)
2. DAP – Delivered at Place ( named Place of delivery)
Terms Eliminated
1.DAF – Delivered at Frontier (named place of delivery)
2.DES – Delivered Ex Ship (named port of delivery)
3.DEQ – Delivered Ex Quay (named port of delivery)
4.DDU – Delivered Duty Unpaid (named place of destination)
8. The Steps of Global Logistics
4
Main
International
Transportation
Handling
Customs Inbound
Clearance
Duties
Final
Unloading Transportation
Packing
Loading
Preliminary
Transportation
Customs Clearance
for Export
Handling
Outbound
Insurance
1
2 3
5
6
7
11 10 9 8
9. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Imports
Taxes
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
10. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of
export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Imports
Taxes
FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer
11. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of
export
Unloading of
truck in port
of export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to
port of import
Insurance
Loading on
truck in port
of import
Carriage to
place of
destination
Import
customs
clearance,
Imports
taxes
FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer
12. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to
port of
import
Insurance
Loading on
truck in port
of import
Carriage to
place of
destination
Import
customs
clearance,
Imports
Taxes
FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer
13. Incoter
m 2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
CFR Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer
14. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer
15. Incoter
m 2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading
on truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
CPT Seller Seller Seller Seller Seller Buyer Seller Buyer Buyer
16. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
CIP Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
17. Incoter
m 2010
Export-
Customs
declaration
Carriage to port
of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to port
of import
Insurance
Terminal
Charges
Carriage to
place of
destinatio
n
Import
customs
clearance,
Import
Taxes
DAT Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer
18. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to
port of
import
Insurance
Loading
on truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
DAP Seller Seller Seller Seller Seller Seller Seller Seller Buyer
19. Incoterm
2010
Export-
Customs
declaration
Carriage to
port of export
Unloading
of truck in
port of
export
Loading
charges in
port of
export
Carriage (Sea
Freight/Air
Freight) to
port of
import
Insurance
Loading on
truck in
port of
import
Carriage to
place of
destination
Import
customs
clearance,
Import
Taxes
DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller
Editor's Notes
Set of international rules for the interpretation of the most commonly used foreign trade terms.
The seller makes the goods available at his/her premises (works, factory, warehouse, plant) ready for collection.
The buyer is responsible for uploading. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination.
This term places the maximum obligation on the buyer and minimum obligations on the seller.
The seller must deliver the goods, cleared for export, to the carrier nominated by the buyer at the named place.
Costs for transportation and risk of loss transfer to the buyer after delivery to the carrier.
The word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, road, air, sea, inland waterway or by a combination of such modes.
The seller must place the goods alongside the ship at the named port.
The seller must clear the goods for export.
Suitable only for maritime transport but NOT for multimodal sea transport in containers.
This term is typically used for heavy-lift or bulk cargo
The seller must load the goods on board of the vessel by the buyer. Cost and risk are divided when the goods are actually on board of the vessel.
The seller must clear the goods for export.
The seller pays for transportation of goods to the port of shipment, loading cost.
The buyer pays cost of marine freight transportation, insurance, uploading and transportation cost from the arrival port to destination.
Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel.
The CFR term requires the seller to clear the goods for export.
Insurance for the goods is NOT included.
This term is formerly known as CNF (C&F, or C+F).
This term can only be used for sea and inland waterway transport.
The seller has the same obligations as under CFR but with the addition that he has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is only required to obtain insurance on minimum coverage. The CIF term requires the seller to clear the goods for export. This term can only be used for sea and inland waterway transport.
The seller pays the freight for the carriage of the goods to the named destination.
Risk transfers to buyer upon handling goods over to the first carrier at place of shipment in the country of export.
The CPT term requires the seller to clear the goods for export. This term may be used for any mode of transport including multimodal transport.
The obligations are the same as under CPT with the addition that the seller must procure insurance against the buyer's risk of loss of, or damage to the goods during carriage.
The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
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.
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.
The seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for importation. This term may be used irrespective of the mode of transport. This term should not be used if the seller is unable directly or indirectly lo obtain the import licence.
Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.