INCOTERMS are a set of international commercial terms published by the International Chamber of Commerce that define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. First published in 1936, INCOTERMS have been updated several times, most recently in 2020. They provide clarity on issues such as the transfer of risks and costs during international commercial transactions. While INCOTERMS define obligations for delivery, they do not determine other aspects of contracts such as payment terms, remedies for breach, or dispute resolution procedures.
Basic Shipping Documentation.
- An induction on the container transport, and its driving forces.
- Outlines of the parties and sectors who involve in the business.
- Outlines of the operation, and
- Introduction of the various key documents associated with each sector of the business, and their significance.
What documents are produced in facilitating the shipment cycle:
- Apart from the physical transportation of the goods from the buyer to the seller, there are various kinds of documents involved.
- This presentation aims at providing a basic knowledge on the key documents.
- For details on the documents, you may need to refer to the relevant text.
Basic Shipping Documentation.
- An induction on the container transport, and its driving forces.
- Outlines of the parties and sectors who involve in the business.
- Outlines of the operation, and
- Introduction of the various key documents associated with each sector of the business, and their significance.
What documents are produced in facilitating the shipment cycle:
- Apart from the physical transportation of the goods from the buyer to the seller, there are various kinds of documents involved.
- This presentation aims at providing a basic knowledge on the key documents.
- For details on the documents, you may need to refer to the relevant text.
An in-depth presentation about International Commercial Terms that helps you understand this trade standard with the aid of intuitive pictures, charts and graphical interpretations.
INCOTERMS are a set of three-letter standard trade terms used worldwide in international and domestic contracts for the sale of goods. Learn their definitions and how they are used. AFC International can help you import your goods bound for the U.S. quick and easy. Visit http://www.afcinternationalllc.com/ to get started.
The Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms® rules are there to guide you. The Incoterms® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.
The Incoterms rules explain a set of 11 of trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods.
INTERNATIONAL SHIPPING TERMS , INCOTERMSAman Dwivedi
INTERNATIONAL SHIPPING TERMS (INCOTERMS)
1. EXW – Ex Works (named place of delivery)
2. FCA – Free Carrier (named place of delivery)
3. CPT – Carriage Paid To (named place of destination)
4. CIP – Carriage and Insurance Paid to (named place of destination)
5. DAT – Delivered At Terminal (named terminal at port or place of destination)
6. DAP – Delivered At Place (named place of destination)
7. DDP – Delivered Duty Paid (named place of destination)
8. FAS – Free Alongside Ship (named port of shipment)
9. FOB – Free on Board (named port of shipment)
10. CFR – Cost and Freight (named port of destination)
11. CIF – Cost, Insurance & Freight (named port of destination)
An in-depth presentation about International Commercial Terms that helps you understand this trade standard with the aid of intuitive pictures, charts and graphical interpretations.
INCOTERMS are a set of three-letter standard trade terms used worldwide in international and domestic contracts for the sale of goods. Learn their definitions and how they are used. AFC International can help you import your goods bound for the U.S. quick and easy. Visit http://www.afcinternationalllc.com/ to get started.
The Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms® rules are there to guide you. The Incoterms® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.
The Incoterms rules explain a set of 11 of trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods.
INTERNATIONAL SHIPPING TERMS , INCOTERMSAman Dwivedi
INTERNATIONAL SHIPPING TERMS (INCOTERMS)
1. EXW – Ex Works (named place of delivery)
2. FCA – Free Carrier (named place of delivery)
3. CPT – Carriage Paid To (named place of destination)
4. CIP – Carriage and Insurance Paid to (named place of destination)
5. DAT – Delivered At Terminal (named terminal at port or place of destination)
6. DAP – Delivered At Place (named place of destination)
7. DDP – Delivered Duty Paid (named place of destination)
8. FAS – Free Alongside Ship (named port of shipment)
9. FOB – Free on Board (named port of shipment)
10. CFR – Cost and Freight (named port of destination)
11. CIF – Cost, Insurance & Freight (named port of destination)
The knowledge of INCO terms is very essential for those who are in export import business on the other hand it is also useful for the students of commerce and management.
2. What does INCOTERM stand for?
• Def: 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 transaction
3. When & Where did they appear?
• First conceived by International Chamber of Commerce (ICC) in 1921
and implemented starting from 1936, since they have been updated
9 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.
4. Why is that?
• Because they:
• 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. INCOTERMS HAS FIXED FIVE POINTS
5 POINTS WHERE RISK OF DAMAGE GETS SHIFTED FROM SELLER TO BUYER
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6. Transportation Definitions
• Pre-carriage: inland transportation on the seller’s side
• Domestic: from the place where the shipment starts to any subsequent
transportation carriage
• International: from the place where the shipment starts to the departure
point on the seller’s side
• Main Carriage:
• Domestic: Subsequent transportation beyond pre-carriage
• International: Transportation from the point of departure on the arrival point
on the buyer’s side
• On-carriage:
• Domestic: Subsequent transportation beyond main carriage
• International: transportation from the arrival point on the buyer’s side
7.
8. Transportation Definitions
• Transhipment
• Transhipments is the shipment of goods or containers to an intermediate destination, then
to yet another destination
• Door-To-Door
• Contract of carriage that includes pre-carriage, main carriage and on-carriage by the same
carrier
• Door-To-(Air) Port
• Contract of carriage including pre-carriage and main carriage to airport or ocean port or
truck terminal port or rail port
• (Air) Port-To-(Air) Port
• Contract of carriage of main carriage only
• (Air) Port-To-Door
• Contract of carriage including main carriage and on-carriage
10. What Incoterms 2020 do…
• Rules are not designed for a specific type of trade or commodity
• It can be used for any type of trade
• It describes:
• Obligations between buyer and seller.
• Risks – when the risk is transferred from seller to buyer
• Costs – for whose account at which stage
11. What INCOTERMS Rules do…
• Obligations:
• Who does what – between buyer and seller
• Delivery of goods
• Come and take the goods from my place
• Will deliver the goods at your place
• Organizing carriage
• Insurance to cover the transit risk
• Obtaining shipping documents
• Export / import clearance
12. What INCOTERMS Rules do…
• Risks
• Where and when seller delivers the goods
• Where risk transfers from seller to buyer
• Costs
• Party responsible for which costs
• Packing / Checking / loading and unloading / Security related costs
13. Who has to take care and pay for the
transport of the goods
Who has to take care and pay for the
insurance of the goods
Who has to take care and pay for other costs
like, e.g. customs, handling…
Define the place where the seller has to
deliver to the buyer
Define clearly the place and time when the
risk is transferred from one party to another
INCOTERMS What do they define?
14. What Incoterm Rules do not do
• Rules are not substitute to ‘contract of sale’ though it is a part of
‘contract’
• Do not deal with:
• Specification of goods
• Payment terms – when, where, how much to be paid and in which currency
to be settled
• Remedies for breach of contract
• Method, venue or law of dispute resolution in case of such breach of
contract
• Consequences of delay in delivery
• Effect of sanctions
• Imposition of tariffs
• Imposition of prohibitions for entry of goods.
• Force majeure or hardships or
• Intellectual Property Rights
15. INCOTERMS do not ……
• They do not:
• Apply to contracts for services.
• Define contractual rights and obligations other than for delivery.
• Specify details of the transfer, transport, and delivery of the goods.
• Determine how title to the goods will be transferred.
16. INCOTERMS do not ……
• Protect a party from his / her own risk of loss.
• Define the remedies for breach of contract.
17. What Incoterm Rules DO NOT DO
• Most important :
• These Rules DO NOT deal with:
• Transfer of property
• Transfer of title
• Transfer of ownership of the goods sold
• To be more specific:
• Incoterms Rules are not themselves a contract of sale
• Becomes part of an existing contract when incorporated
18. INCOTERMS and Insurance:
• INCOTERMS deal only with the seller’s obligation to take out
insurance to the benefit of the buyer under CIF and CIP.
• Under all other terms, it is for the parties themselves to arrange
insurance as they see fit.
20. INCOTERMS
Delivery to named port/place
Deliver goods into custody of freight agent,
carrier or owner
Transport methods:
Rail
Road
Sea
Air
Inland waterway
Multi-modal (combination)
21. EXW – Ex Works
FCA – Free Carrier
FAS – Free alongside Ship
FOB – Free on Board
CFR – Cost & Freight
CIF – Cost Insurance & Freight
CPT – Carriage Paid to
CIP – Carriage Insurance Paid
DAF – Delivered at Frontier
DES – Delivered Ex Ship
DEQ – Delivered Ex Quay
DDU – Delivered Duty Unpaid
DDP – Delivered Duty Paid
INCOTERMS 2000
22. INCOTERMS 2000
Origin Term (EXW) : {Departure}
Seller only makes goods available at the seller’s
own premises
F – Terms ( FCA,FAS,FOB)
{Main Carriage Unpaid}
Seller is called upon to deliver the goods to a carrier
appointed by the purchaser. Seller will be responsible
only for handing over the goods to the purchaser’s
international carrier in the country of export
23. INCOTERMS 2000
C – Terms (CFR,CIF,CPT,CIP)
{Main Carriage Paid}
Seller will be responsible for handing over the goods
to the purchaser’s international carrier in the country of
export duly paid for freight and/or insurance till port of
entry/destination in the importer’s country
D – Terms (DAF,DES,DEQ,DDU,DDP)
{Arrival}
Seller will be responsible for handing over the goods to
the purchaser in the purchaser’s country at the port of
entry/final destination duty cleared/ uncleared
24. Supplier Inland freight Export customs
Import customs
Inland freight
Buyer
EXW
FOB
FCA
FAS
DES
DAF
DEQ
DDU
CIF
CFR
CIP
CPT
DDP
DAT
DAP
INTERNATIONAL FREIGHT FLOWS
INCOTERMS 2000
INTERNATIONAL FREIGHT FLOWS
INCOTERMS 2010
29. Division of Incoterms 2020
INCOTERMS are now classified according to risk and responsibilities
30. INCOTERMS 2020® Structure
RULES FOR ANY MODE OR MODES OF TRANSPORT
RULES FOR SEA AND INLAND WATERWAY
TRANSPORT
EXW FAS
FCA FOB
CPT CFR
CIP CIF
DPU
DAP
DDP
31.
32. Using INCOTERMS correctly by…
• Following the three letters of the appropriate chose term with the
exact destination place to which the delivery of goods is to be made,
and afterwards the expression ‘INCOTERMS 2020’
• Such as:
FCA Port of New Orleans, USA, Incoterms 2020
Or
CIP Tianjin airport, China, Incoterms 2020
Will certainly benefit…
33. Using INCOTERMS correctly by…
All the parties involved
as
• INCOTERMS have become an essential framework in daily language
of trade, providing clear rules and guidance to importers, exporters,
lawyers, forwarders, insurers, carriers and mainly everybody taking
part in international trade transactions.
Leading to:
34. HOWEVER IF USED CORRECTLY
• Your contract may be ambiguous, lacking some important details or
even impossible to perform, causing lots of misunderstanding and
prejudices
Which can turn into…
And eventually cause…