INCOTERMS 2000

INCOTERMS 2000 First published by the ICC in 1936 ICC (International Chamber of Commerce)

Official Rules for the Interpretation of Trade terms.

Purpose is to provide a set of international rules for the interpretation of the most commonly used trade terms.

10 categories describing where risks lie between seller and buyer

International Commercial Terms (INCOTERMS)

INCOTERMS – PURPOSE AND SCOPE Pricing terms, shipping terms, sales

terms Apply to international trade Define the rights and obligation of the

parties to the contract of sale with respect to the delivery of goods sold.

EXW

Incoterms 2000

SELLER

BUYER

FCAFASFOB CFR

CIFCPTCIPDESDEQ

DDUDDP

DAF

FCA

CPTCIP

THE STEPS OF GLOBAL LOGISTICS

MainInternational Transportatio

n

4

Handling Inbound

CustomsClearance

Duties

FinalTransportation

Unloading

Packing

Loading PreliminaryTransportation

Customs Clearancefor Export

HandlingOutbound

Insurance

1

2 3

5

6

7

891011

Four Groups of Incoterms

LessControl

MoreControl1) “E” group

2) “F” group

3) “C” group

4) “D” group

Seller Buyer

MoreControl

LessControl

7

EXW EX WORKS (…NAMED PLACE) The “E”-term is the term in which the seller’s

obligation is at its minimum. Seller delivers when goods placed at disposal of

buyer

EXW Ex Works …(named place)

SELLER BUYER

Seller/ Exporter Premises

Export Documents Formalities

Delivered at named place of: Frontier/ Terminal/

Quay

Loading Port of

Shipment

Onboard Ship Rail

Plane Ship’s Ship’s Rail Rail

Discharging Port of Arrival

Delivery at named place of

destination: Frontier/

Terminal/Quay

Import Documents Formalities

Buyer/ Importer Premises

Seller’s Risks

Buyer’s Risks

Seller’s Cost

Buyer’s Cost

9

E TERMS: DEPARTURE

EXW (named place)Under E-terms, the seller minimizes his risk by only making the goods

available at his own premises.

Goods

Seller’s RiskSeller’s Cost

PRE -CARRIAGE MAIN CARRIAGE ON-CARRIAGE

SELLER BUYERExport Clearance Import

Clearance

EXW = Ex Works

The seller fulfills his obligation to deliver when he has made the goods available at his premises to the buyer.

The seller is not responsible for loading the goods on the vehicle provided by the buyer

The seller is not responsible for clearing the goods for export, unless agreed.

The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination.

INCOTERMS 2000 The “F” –terms require the seller to

deliver goods for carriage as instructed by the buyer.

FCA FAS FOB

FCAFREE CARRIER (NAMED PLACE) Seller delivers when goods, cleared for

export, to the carrier nominated by the buyer at a named place.

Term may be used irrespective of the mode of transport.

Seller obligated to load goods on arriving vehicle if it arrives at the seller’s premises.

Seller not obliged to unload goods from his vehicle.

February 8, 2006

FC A Free C arrier… (nam ed place)

SELLE R B U Y E R

Seller/ E xporter Prem ises

E xport D ocum ents Form alities

D elivered at nam ed place of: Frontier/ T erm inal/

Q uay

L oading Port of

Shipm ent

O nboard Ship R ail

Plane Ship’s Ship’s R ail Rail

D ischarging Port of A rrival

D elivery at nam ed place of


T erm in al/Q uay

Im port D ocum ents Form alities

B uyer/ Im porter Prem ises

Seller’s R isks

B uyer’s R isks

Seller’s C ost B uyer’s C ost

14

FAS -FREE ALONGSIDE SHIP(…NAMED PORT OF SHIPMENT) Seller delivers when goods, cleared for

export, are placed alongside the vessel Seller obliged to clear goods for export. The buyer bears all costs and risks of loss

or damage to the goods from that moment. Terms can be used for sea or inland

waterway transport only.

F A S Free A longside… (nam ed place)

SE LLE R B U Y E R

Seller/ E xp orter Prem ises

E xport D ocu m ents Form alities

D elivered at nam ed p lace of: Frontier/ T erm inal/

Q u ay

L oadin g Port of

Sh ip m en t

O nboard Sh ip R ail

Plan e S h ip ’s Sh ip’s R ail R ail


D elivery at nam ed p lace of

destin ation: Fron tier/

T erm inal/Q u ay

Im p ort D ocu m ents Form alities


Seller’s R isks B u yer’s R isks

Seller’s C ost B u yer’s C ost

16

FOB – FREE ON BOARD(…NAMED PORT OF SHIPMENT) Seller delivers when goods, cleared for

export, pass the ship’s rail at the named port of shipment.

The buyer bears all costs and risks of loss or damage to the goods from that point.

Term can be used for sea or inland waterway transport only.

If intent is not to deliver goods across the ship’s rail, use FCA

FO B Free O n B oard… (nam ed port of shipm ent)

SELLE R B U Y E R

Seller/ E xporter Prem ises

Export D ocum ents Form alities

D elivered at nam ed place of: Frontier/ T erm inal/

Q uay

Loading Port of

Shipm ent

O nboard Ship R ail

Plane Ship’s Ship’s R ail Rail




Term inal/Q uay

Im port D ocu m ents Form alities


Seller’s R isks

B uyer’s R isks

Seller’s C ost B uyer’s C ost

18

INCOTERMS 2000 The “C” –terms require the seller to contract

for carriage at his expense – to a specified point.

CFR CIF CPT CIP

CFR – COST AND FREIGHT(…NAMED PORT OF DESTINATION) Seller delivers when goods, cleared for

export, pass the ship’s rail at the named port of shipment.

The seller pays the costs and freight necessary to bring goods to port of destination, but the buyer bears the risk of loss and additional costs occurring after delivery.

Term can be used for sea or inland waterway transport.

If intent is not to deliver goods across the ship’s rail, use CPT

C F R C o st a n d F re ig h t … (n a m e d p o r t o f d e stin a tio n )

S E L L E R B U Y E R

S e ller / E x p o r ter P r em ises

E x p o r t D o cu m en ts F o r m a litie s

D e liv ered a t n a m ed p la ce o f: F ro n tier /

T erm in a l/ Q u a y

L o a d in g P o r t o f

S h ip m en t

O n b o a rd S h ip R a il

P la n e S h ip ’s S h ip ’s R a il R a il

D isch a rg in g P o r t o f A rr iv a l

D e liv ery a t n a m ed p la c e o f

d estin a tio n : F r o n tier /

T er m in a l/Q u a y

Im p o r t D o cu m en ts F o r m a lities

B u y er / Im p o r ter P r e m ises

S e lle r ’s R isk s B u y er ’s R isk s

S e lle r ’s C o st B u y er ’s C o st

21

CIF – COST, INSURANCE AND FREIGHT (…NAMED PORT OF DESTINATION) Seller delivers when goods, cleared for export, pass

the ship’s rail at the named port of shipment. The seller pays the costs and freight necessary to

bring goods to port of destination, but the buyer bears the risk of loss and additional costs occurring after delivery.

The seller procures marine insurance, against buyer’s risk of loss. Seller is required to obtain insurance only on minimum cover.

Term can be used for sea or inland waterway transport.

If intent is not to deliver goods across the ship’s rail, use CIP.

C IF C o st, In su ra n ce a n d F re ig h t … (n a m ed p o r t o f d estin a tio n )

S E L L E R B U Y E R

S eller / E x p o r ter P r em ises

E x p o r t D o cu m en ts F o r m a litie s

D e liv ere d a t n a m ed p la ce o f: F r o n tier /

T er m in a l/ Q u a y

L o a d in g P o r t o f

S h ip m en t

O n b o a rd S h ip R a il

P la n e S h ip ’s S h ip ’s R a il R a il

D isch a rg in g P o r t o f A rr iv a l

D eliv e ry a t n a m ed p la ce o f

d estin a tio n : F r o n tier /

T er m in a l/Q u a y

Im p o r t D o cu m en ts F o r m a litie s

B u y er / Im p o r ter P r em ises

S e lle r ’s R isk s

B u y er ’s R isk s

S e lle r’s C o sts

B u y er’s C o st

23

CIF (…named port of destination)

Goods

Seller’s Risk

PRE-CARRIAGE MAIN CARRIAGE ON-CARRIAGE

SELLER BUYERExport Clearance ImportClearance

Seller’s Cost + Insurance

CPT – CARRIAGE PAID TO (…NAMED PLACE OF DESTINATION) Seller delivers the goods, cleared for

export, to the carrier. The seller pays the costs of carriage

necessary to bring goods to named destination, but the buyer bears the risk of loss and additional costs occurring after delivery.

Term may be used irrespective of mode of transport.

CPT Carriage Paid To …(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks Buyer’s Risks

Seller’s Cost Buyer’s Costs

26

CIP – CARRIAGE AND INSURANCE PAID TO (…NAMED PLACE OF DESTINATION) Seller delivers the goods, cleared for export,

the the carrier. The seller pays the costs of carriage to

named destination, but the buyer bears the risk of loss and additional costs occurring after delivery.

The seller procures insurance against buyer’s risk of loss. Seller is required to obtain insurance only on a minimum cover.


February 8, 2006

CIP Carriage and Insurance Paid To …(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks Buyer’s Risks

Seller’s Cost Buyer’s Cost

28

INCOTERMS 2000 The “D” –terms require the seller to

take the goods all the way to destination at the border or within the country of import.

DAF DES DEQ DDU DDP

DDU – DELIVERED DUTY UNPAID (…NAMED PLACE OF DESTINATION) Seller delivers goods to the buyer, not

cleared for import, and not unloaded, at the named place of destination.

Seller bears all costs and risks (except duty) to bring goods to the named place of destination.


If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should be used.

February 8, 2006

D D U D elivered D uty U npaid… (nam ed place of destination)

SELLE R B U Y E R

Seller/ Exporter Prem ises

Export D ocum ents Form alities

D elivered at nam ed p lace of: Frontier/ T erm inal/

Q uay

Loading Port of

Shipm ent

O nboard Ship R ail

Plane Sh ip’s Ship’s R ail Rail




Term inal/Q uay

Im port D ocum ents Form alities

Buyer/ Im porter Prem ises

Seller’s R isks

B uyer’s R isks

Seller’s C ost Buyer’s C ost

31

DDP – DELIVERED DUTY PAID (…NAMED PLACE OF DESTINATION) Seller delivers goods to the buyer, cleared for

import, and not unloaded, at the named place of destination.

Seller bears all costs and risks, including import duty, to bring goods to the named place of destination.

Term may be used irrespective of mode of transport. If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should be used.

February 8, 2006

DDP Delivered Duty Paid…(named place of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


33

DAF – DELIVERED AT FRONTIER (…NAMED PLACE) Seller delivers goods, cleared for export, at

disposal of buyer on arriving means of transport. Not unloaded, not cleared for import at point at

frontier before customs border of adjoining country.

Term may be used irrespective of the mode of transport when goods are delivered at a land frontier.

If delivery is to take place in the port of destination, DES or DEQ should be used.

February 8, 2006

DAF Delivered At Frontier…(named place)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


35

DAF (…NAMED PLACE)

Goods

Seller’s Risk

Seller’s Cost

PRE-CARRIAGE MAIN CARRIAGE ON-CARRIAGE

SELLER BUYERExport Clearance

ImportClearance

DES – DELIVERED EX SHIP (…NAMED PORT OF DESTINATION) Seller delivers goods at disposal of buyer on

board the ship. Not cleared for import at the named port of

destination. Seller bears all costs and risks to bring goods

to the named port before discharging. Term used only for delivery by sea. If the seller is to bear the costs of discharging

the goods, DEQ should be used.

February 8, 2006

DES Delivered exShip…(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


38

DEQ – DELIVERED EX QUAY (…NAMED PORT OF DESTINATION) Seller delivers goods, not cleared for

import, at disposal of buyer on the quay at the named port of destination.

Seller bears all costs and risks to bring goods to the named port of destination and discharging the goods on the quay.

Term used only for delivery by sea.

DEQ Delivered Ex Quay…(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


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MODE OF TRANSPORT AND APPROPRIATE INCOTERM - ANY MODE OF TRANSPORT

EXW FCA CPT CIP DAF DDU DDP

MODE OF TRANSPORT AND APPROPRIATE INCOTERM – MARITIME AND INLAND WATERWAY TRANSPORT ONLY

FAS FOB CFR CIF DES DEQ

IN SUMMARY Buyer’s Objective: maximize control of

supply chain, use FOB, FCA, or FAS Must name a place after the

INCOTERM INCOTERMS are negotiable! INCOTERMS should appear on all

commercial documents Establish a close relationship with a

forwarder

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