Incoterms

Incoterms are a series of sales terms published by the International Chamber of Commerce (ICC) for use in international commercial transactions.

The first edition was published in 1936 – Incoterms are reviewed approximately every ten years to ensure they reflect current world trade practices.  Goods move across international borders as a result of a sale involving a buyer and a seller. The contract of sale should define the responsibilities of both parties in respect of both the physical nature of the goods and the movement of the consignment. The buyers and sellers have various options open to them.

Categories

The number of categories has been reduced from 4 to 2 to assist Incoterm users to identify the correct terms for their particular requirements.

The two categories cover:-

Terms for any Mode or Modes of Transport

or:-

Terms for Sea and Inland Waterway Transport

Number of Incoterm

The current number of 13 Incoterms reduces to 11

The following 4 Incoterms are dropped

DAF
DES
DEQ
DDU

Two new Incoterms are introduced

DAT
DAP

Terms for any Mode or Mode of Transport

CIP – Carriage and insurance paid to
CPT – Carriage paid to
DAP – Delivered at place
DAT – Delivered at terminal
DDP – Delivery duty paid
EXW – Ex works
FCA – Free carrier

These terms all need to specify the port or destination

Terms for Sea and Inland Waterways

CFR – Cost and Freight to
CIF – Cost, Insurance and Freight to

These above 2 terms are to the named port of destination

FAS – Free alongside ship
FOB – Free on Board

These above 2 terms are to a named port of shipment

ICC explains Incoterms 2010 Rules

Appropriate Incoterm 2010 descriptions

The appropriate Incoterm 2010 descriptions are listed below,

All Modes of Transport

EXW: (Ex Works)
Freight: Seller’s premises
Risk: Seller’s premises
Seller is only responsible for making goods available at the Seller’s premises.
The Buyer bears the full risk and freight costs from Seller’s premises to destination.

FCA: (Free Carrier)
Freight: Seller must deliver to the first carrier.
Risk: Seller bears risk until delivery to the first carrier.
Seller is responsible for costs of handing over the goods to the first agreed carrier and loading.
The Buyer bears the risk and freight costs from delivery to the first carrier to destination.

CPT: (Carriage paid to)
Freight: Seller must pay for freight costs to destination.
Risk: Seller bears risk until delivery to the first carrier.
Seller is responsible for costs of carriage to destination and unloading of goods at destination.
The Buyer bears the risk from delivery to the first carrier and for freight costs onwards from destination.
Please note that transfer of the freight costs obligation and transfer of risk do not occur at the same time.

CIP: (Carriage and insurance paid to)
Freight: Seller must pay for freight costs to destination.
Risk: Seller bears risk until delivery to the first carrier.
Seller is responsible for costs of carriage to destination, unloading goods at destination and insurance of the goods during transit.
The Buyer bears the risk from delivery to the first carrier and for freight costs onwards from destination.
Please note that transfer of freight costs obligation and transfer of risk do not occur at the same time.

DAT: (Delivered at terminal)
Freight: Seller must pay for freight costs to named terminal or destination.
Risk: Seller bears risk until delivery to named terminal or destination.
Seller is responsible for freight costs of carriage to named terminal or destination.
The Seller bears the risk until delivery to named terminal or destination.

DAP: (Delivered at place)
Freight: Seller must pay for freight costs to named place or destination.
Risk: Seller bears risk until delivery to named place or destination and costs of unloading the goods at place and destination.
Seller is responsible for freight costs of carriage to named terminal or destination.
The seller bears the risk to the goods until delivery to named terminal or destination.

DDP: (Delivery duty paid )
Freight: Seller must pay for freight costs to named terminal, place or destination.
Risk: Seller bears risk until delivery to named terminal, place or destination, costs of unloading the goods at terminal, place and destination and import duties, import VAT and other applicable taxes.
Seller is responsible for freight costs of carriage to named terminal, place or destination.
The Seller bears the risk to the goods until delivery to named terminal, place or destination.
Transport by Sea

FAS: (Free alongside ship)
Freight: Seller must pay for freight costs of the goods to the side of a ship.
Risk: Seller bears risk until delivery of the goods to the side of a ship.
Seller is responsible for costs of carriage to the side of a ship.
The Buyer bears the risk and freight costs from delivery of the goods to the side of the ship.

FOB: (Free on Board)
Freight: Seller must pay for freight costs to deliver the goods on board of a ship.
Risk: Seller bears risk until delivery of the goods on board of a ship.
Seller is responsible for costs of carriage until delivery of the goods on board of a ship.
The Buyer bears the risk and freight costs from delivery of the goods on board of a ship.

CFR: (Cost and freight to )
Freight: Seller must pay for freight costs to deliver the goods to destination.
Risk: Seller bears risk until delivery of the goods on board of a ship.
Seller is responsible for costs of carriage to destination and unloading goods at destination.
The Buyer bears the risk from delivery of the goods on board of a ship and freight costs onwards from the destination.
Please note that transfer of the freight costs obligation and transfer of risk do not occur at the same time.

CIF: (Cost, Insurance and Freight to)
Freight: Seller must pay for freight costs to deliver the goods to destination.
Risk: Seller bears risk until delivery of the goods on board of a ship.
Seller is responsible for costs of carriage to destination, unloading goods at destination and insurance of the goods during transit.
The buyer bears the risk from delivery of the goods on board of a ship and freight costs onwards from the destination.
Please note that transfer of the freight costs obligation and transfer of risk do not occur at the same time.

If you do not already have your own copy you should be able to purchase Incoterms 2010 from the International Chamber of Commerce bookshop www.iccbookshop.com/index.php or an online book seller.EW Turner staff understand these terms and will ensure that your consignments are processed in line with the appropriate Incoterm and assist in the handling of claims should they arise.  If you require any further assistance, in the first instance please contact your usual Forwarding department contact.

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