INCOTERMS
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Incoterms are standard trade definitions published by the International Chamber of Commerce that define basic terms in international sales contracts regarding the allocation of costs and risks between the buyer and seller. There are 11 Incoterms that define responsibilities for transportation, insurance, customs clearance, and delivery. The latest edition is Incoterms 2020, which provides rules for international trade for any mode of transportation.
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INCOTERMS
- 1. INCO TERMS
- 2. Definition •Inco terms are standard trade definitions most commonly used in international sales contracts which are devised and published by the International Chamber of Commerce. •ICC introduced the first version of Incoterms - short for "International Commercial Terms" - in 1936 •Most contracts made after 1 January 2000 will refer to the latest edition of Incoterms, which came into force on that date. The correct reference is to "Incoterms 2000". •Unless the parties decide otherwise, earlier versions of Incoterms - like Incoterms 1990 - are still binding if incorporated in contracts that are unfulfilled and date from before 1 January 2000.
- 3. Origin Terms EXW • Ex-Works, named place where shipment is available to the buyer, not loaded. • The seller will not contract for any transportation. • This term thus represents the minimum obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises. International Carriage NOT Paid by Seller FCA • Free Carrier, unloaded at the seller's dock OR a named place where shipment is available to the international carrier or agent, not loaded. This term can be used for any mode of transport.
- 4. FAS • Free Alongside Ship, named ocean port of shipment. The seller delivers when the goods are placed alongside the vessel at the named port of shipment. • The FAS term requires the seller to clear the goods for export. FOB • Free On Board vessel, named ocean port of shipment. The seller delivers when the goods pass the ship’s rail at the named port of shipment. •This term is used for ocean shipments only where it is important that the goods pass the ship's rail.
- 5. International Carriage Paid by the Seller CFR • Cost and Freight, named ocean port of destination. • 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 risk of loss of or any 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. CIF • Cost, Insurance and Freight, named ocean port of destination. • 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 risk of loss or damage to the goods, as well as any additional costs due to the events occurring after the time of delivery, are transferred from the seller to the buyer.
- 6. • Seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage. •Under the CIF term the seller is required to obtain insurance only on minimum cover. • Buyer to make his own extra insurance arrangements. • This term is used for ocean shipments. CPT • Carriage Paid To, named place or port of destination. This term is used for air or ocean consignments. •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.
- 7. CIP • Carriage and Insurance Paid To, named place or port of destination. • 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. • The buyer bears all risks and any additional costs occurring after the goods have been so delivered. • The seller also has to procure insurance against the buyer’s risk of loss of or damage to the goods during carriage. • This term is used for air or ocean consignments.
- 8. Arrival At Stated Destination DAF • Delivered At Frontier, named place of destination, by land, not unloaded. • The seller delivers when the goods are placed at the disposal of the buyer on the 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. • This term is used for any mode of transportation but delivered by land.
- 9. DES • Delivered Ex-Ship, named port of destination, not unloaded. • 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 named port of destination before discharging. • This term is used for ocean shipments only. DEQ • Delivered Ex-Quay, named port of destination, unloaded, not cleared. • 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. • This term is used for ocean shipments only.
- 10. DDU • Delivered Duty Unpaid, named place of destination, not unloaded, not cleared. • Duty has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time. • This term is used for any mode of transportation. DDP - Delivered Duty Paid, named place of destination, not unloaded, cleared. This term is used for any mode of transportation.
- 11. EXW FCA FAS FOB Ex Works Free Carrier Free Alongside Ship Free Onboard Vessel Warehouse Storage Seller Seller Seller Seller Warehouse Labor Seller Seller Seller Seller Export Packing Seller Seller Seller Seller Loading Charges Buyer Seller Seller Seller SERVICES Buyer/ Inland Freight Buyer Seller* Seller Seller Terminal Charges Buyer Buyer Seller Seller Forwarder's Fees Buyer Buyer Buyer Buyer Loading On Vessel Buyer Buyer Buyer Seller Ocean/Air Freight Buyer Buyer Buyer Buyer Charges On Arrival At Destination Buyer Buyer Buyer Buyer Duty, Taxes & Customs Clearance Buyer Buyer Buyer Buyer Delivery To Destination Buyer Buyer Buyer Buyer
- 12. CFR CIF CPT CIP Cost & Freight Cost Insurance & Freight Carriage Paid To Carriage Insurance Paid To Warehouse Storage Seller Seller Seller Seller Warehouse Labor Seller Seller Seller Seller Export Packing Seller Seller Seller Seller Loading Charges Seller Seller Seller Seller Inland Freight Seller Seller Seller Seller Terminal Charges Seller Seller Seller Seller Forwarder's Fees Seller Seller Seller Seller Loading On Vessel Seller Seller Seller Seller Ocean/Air Freight Seller Seller Seller Seller Charges On Arrival At Destination Buyer Buyer Seller Seller Duty, Taxes & Customs Clearance Buyer Buyer Buyer Buyer Delivery To Destination Buyer Buyer Buyer Buyer SERVICES
- 13. DAF DES DEQ DDU DDP Delivered At Frontier Delivered Ex Ship Delivered Ex Quay Duty Unpaid Delivered Duty Unpaid Delivered Duty Paid Warehouse Storage Seller Seller Seller Seller Seller Warehouse Labor Seller Seller Seller Seller Seller Export Packing Seller Seller Seller Seller Seller Loading Charges Seller Seller Seller Seller Seller Inland Freight Seller Seller Seller Seller Seller Terminal Charges Seller Seller Seller Seller Seller Forwarder's Fees Seller Seller Seller Seller Seller Loading On Vessel Seller Seller Seller Seller Seller Ocean/Air Freight Seller Seller Seller Seller Seller Charges On Arrival At Destination Buyer Buyer Seller Seller Seller Duty, Taxes & Customs Clearance Buyer Buyer Buyer Buyer Seller Delivery To Destination Buyer Buyer Buyer Seller Seller SERVICES
- 15. Thanking You Open for Discussion…