INCOTERMS

INCOTERMS

 

Shipping terms and responsibilities are more complex in international sourcing than in domestic transportation.  The International Chamber of Commerce (ICC) has created incoterms (International Commercial Terms) as a uniform set of rules to clarify the costs, risks, and obligations of buyers and sellers in an international commercial transaction.  Incoterms provide globally accepted definitions that avoid disputes over what the terms mean.  There were thirteen incoterms, but now there are eleven.  All thirteen will be covered here

 

  • E Terms – Departure
    • Ex Works (EXW) – Seller/exporter makes goods available at premises and the buyer assumes all costs and risks from the seller’s named place of business.
  • F Terms – Main Carriage Unpaid
    • Free Carrier (FCA) – Seller clears goods for export and delivers them to the carrier specified by the buyer at the named place.  Buyer then takes possession and title.
    • Free Alongside Ship (FAS) – Seller clears the goods for export and places the alongside the vessel for loading.  Buyer takes possession at the dock or port.
    • Free on Board (FOB) – Seller clears the goods for export and is responsible for the costs and risks of delivering the goods past the rail at the name port of export.  Title passes to the buyer once the goods are passed over the ship’s rail.
  • C Terms – Main Carriage Paid by the Seller
    • Cost and Freight (CFR) – Seller is responsible for clearing goods for export, delivering goods past the ship’s rail at the port of shipment, and pays the costs to transport the goods to the port of destination.  Buyer assumes responsibility for risk of loss or damage and additional transport costs once the goods pass the ship’s rail at the port of shipment.
    • Cost, Insurance and Freight (CIF) – Sellers clears goods for export, responsible for delivering goods past ship’s rail at the port of shipment, pays transport costs to the port of destination, and pays for marine insurance in the buyer’s name for the shipment.  The buyer assumes takes possession and title of the goods once they pass over the ship’s rail at the port of shipment, and assumes responsibility for risk of loss or damage one the goods pass over the ship’s rail at the port of shipment.
    • Carriage Paid To (CPT) –
    • Carriage and Insurance Paid To (CIP)
  • D Terms – Arrival
    • Delivered at Frontier (DAF)
    • Delivered ES Ship (DES)
    • Delivered Ex Quay (DEQ)
    • Delivered Duty Unpaid (DDU)
    • Delivered Duty Paid (DDP)
    • Delivered at Terminal (DAT)