What are incoterms?

0
1619

Incoterms are terms of sale that define who arranges for the payment and handling of the goods during shipping, from the moment the goods leave the seller’s (the manufacturer’s) door up until their arrival at the buyer’s (your) final destination.

Differences between Incoterms 2000 and 2010

Incoterms 2000 Incoterms 2010
EX Ex-Works EXW Ex-Works
FA Free Alongside Ship FAS Free Alongside Ship
FC Free Carrier FCA Free Carrier
FO Free On Board FOB Free On Board
CP Carriage Paid To CPT Carriage Paid To
CF Cost and Freight CFR Cost and Freight
CIP Carriage Insurance CIP Carriage Insurance
CIF Cost Insurance CIF Cost Insurance
DE Delivery Ex Quay DAT Delivery at Terminal
DA Delivery at Land DAP Delivery at Place
DE Delivered Ex-Ship
DD Delivery Duty
DD Delivery Duty DDP Delivery Duty Paid

 

EXW – ExWorks (2000 and 2010)

This term represents the seller’s minimum obligation since 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.

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 sea transport only.

FOB – Free On Board (2000 and 2010)

This term means that the 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. This term can only be used for sea transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

CFR – Cost and Freight (2000 and 2010)

This term means the seller delivers when the goods pass the ship’s rail in the port of shipment. The 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. The seller must clear goods for export. This term can only be used for sea transport.

CIF – Cost, Insurance, Freight (2000 and 2010)

The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the cost & freight necessary to bring goods to the named port of destination. Risk of loss & damage same as CFR. The seller also has to procure marine insurance against buyer’s risk of loss/damage during the carriage. The seller must clear the goods for export. This term can only be used for sea transport.

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.

CPT – Carriage Paid To (2000 and 2010)

This term means that 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 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).

Best Incoterm for Exporters

LEAVE A REPLY

Please enter your comment!
Please enter your name here