Incoterms Power Point Presentation

INCOTERMS 2000*

*(Based on Information Collected from Various Sources)

Incoterms -Understanding 

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Published by the International Chambers of Commerce A set of rules for the interpretation of the commonly used international commercial terms (INCOTERMS) First published by the ICC in 1936, since then updated in 1953, 1967, 1976,1980, 1990 and latest revision in 2000 Rules framed to ensure uniformity in understanding of various shipping terms used in international trade by different countries

Incoterms – Purpose and Scope In pricing terms, shipping terms, sales terms  Define the rights and obligation of the parties to the contract of sale with respect to the delivery of goods sold.  Clarify how functions, costs and risks are split between buyer & seller for delivery of goods as per requirement of sales contract 

Incoterms - Classification in Groups Thirteen Incoterms are split into four distinct groups:  Group E - where the goods are made available to the buyer at the seller's premises;  Group F - where the seller must deliver the goods to a carrier appointed by the buyer;  Group C - where the seller must contract for the carriage of the goods without assuming risk of loss of, or damage to the goods or additional costs due to events occurring after shipment;  Group D - where the seller has to bear all costs and risks required to bring the goods to the place of destination.

Incoterms – The Controls Less Control Seller

1) “E” group 2) “F” group 3) “C” group

More Control

4) “D” group

More Control Buye r Less Control

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Group ‘E’ Departure 

Only one incoterm - EXW

EXW EX WORKS (…named place) 

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Term may be used for any mode of transport. Seller delivers when goods placed at disposal of buyer or another named place Not cleared for export and not loaded on any collecting vehicle The only term that requires the buyer to clear the goods for export (including obtaining any export license necessary) is EXW

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Incoterm Group ‘F’ Main Carriage Unpaid The “F” terms require the seller to deliver goods for carriage as instructed by the buyer.  FCA  FAS  FOB 

FCA FREE CARRIER (named place) Term may be used for any mode of transport  Seller delivers when goods, cleared for export, to the carrier nominated by the buyer at a named place.  Seller not obliged to unload goods from his vehicle. 

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FAS -FREE ALONGSIDE SHIP (…named port of shipment) Term used for Maritime & inland waterway transport only  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. 

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FOB – FREE ON BOARD …named port of shipment) 

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

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. 

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Incoterms Group ‘C’ Main Carriage Paid 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) Term can be used for maritime or inland waterway transport.  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. 

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CIF – COST, INSURANCE AND FREIGHT (…named port of destination)   

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Term can be used for maritime or inland waterway transport. 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.

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CPT – CARRIAGE PAID TO (… named place of destination) Term may be used for any mode of transport.  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. 

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CIP – CARRIAGE AND INSURANCE PAID TO (…named place of destination)  

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Term may be used for any of mode of transport. Seller delivers the goods, cleared for export, to 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.

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Incoterms Group ‘D’ Arrival 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 

DAF – DELIVERED AT FRONTIER (…named place) Term may be used for any mode of transport when goods are delivered at a land frontier.  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.  If delivery is to take place in the port of destination, DES or DEQ should be used. 

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DES – DELIVERED EX SHIP (… named port of destination)  

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Maritime and inland waterway transport only 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. If the seller is to bear the costs of discharging the goods, DEQ should be used.

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DEQ – DELIVERED EX QUAY (… named port of destination) Maritime and inland waterway transport only  Seller delivers goods, not cleared for import, at disposal of the 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. 

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DDU – DELIVERED DUTY UNPAID (…named place of destination) Term may be used for any mode of transport.  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. 

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DDP – DELIVERED DUTY PAID (… named place of destination)  

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Term may be used for any of mode of transport 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. If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should be used. The only term that requires the seller to clear the goods for import (including obtaining any import license necessary) is DDP.

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Incoterm - Any Mode of Transport EXW  FCA  CPT  CIP  DAF  DDU  DDP 

Incoterm – Maritime and Inland Waterway Transport Only FAS  FOB  CFR  CIF  DES  DEQ 

The Precautions needed Must name a place after the INCOTERM  Clearly mention Incoterm edition  INCOTERMS should appear on all commercial documents  Avoidance of risky incoterms 

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DEQ,DDP,DDU,DES more risky for exporters EXW,FAS,FCA may be risky for the importers

Understand rules & regulations of importer’s country

Thank You