Incoterms Power Point Presentation

INCOTERMS 2000*

*(Based on Information Collected from Various Sources)

Incoterms -Understanding

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 GroupsThirteen 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

LessControl

MoreControl1) “E” group

2) “F” group

3) “C” group

4) “D” group

Seller Buyer

MoreControl

LessControl

5

Group ‘E’ Departure Only one incoterm - EXW

EXW EX WORKS (…named place)

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

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

8

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

FCAFREE 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.

FCA Free Carrier…(named place)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks

Seller’s Cost Buyer’s Cost

11

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.

FAS Free Alongside…(named place)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks Buyer’s Risks


13

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.

FOB Free On Board…(named port of shipment)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


15

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.

CFR Cost and Freight …(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay





18

CIF – COST, INSURANCE 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.

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

CIF Cost, Insurance and Freight …(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks

Seller’s Costs

Buyer’s Cost

20

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.

CPT Carriage Paid To …(named port of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay




Seller’s Cost Buyer’s Costs

22

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

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

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay





24

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.

DAF Delivered At Frontier…(named place)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


27

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

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


29

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.

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


31

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.

DDU Delivered Duty Unpaid…(named place of destination)

SELLER BUYER




Quay

Loading Port of

Shipment

Onboard Ship Rail





Terminal/Quay



Seller’s Risks

Buyer’s Risks


33

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

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


35

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

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