Import Export resource information from Boca Comm RPG for business involved in international trade.
The Incoterms were drafted for the first time in 1936 by the International
Chamber of Commerce (CCI / ICC) in order to homogenise / standardise the
vocabulary in the trade and exchange and thus avoid the legal disputes
between sellers and buyers. The latest revision of Incoterms dates back
to the end of 1999.
According to the choice of Incoterm, it is well defined
who does what while transporting the merchandise, who pays for transport,
who is responsible for and insures the merchandise —
and at exactly which geographical point.
There are 13 Incoterms selected by the CCI/ ICC. These can be
classified in different ways. The first classification can be done
according to the mode of transport selected.
- 1 exclusively territorial Incoterm DAF
- 6 exclusively maritime Incoterms FAS FOB CFR CIF DES DEQ
- 6 Incoterms valid for any means of transport EXW FCA CPT CIP DDU DDP
Another classification that is frequently found is based on the transfer
of responsibility from the seller to the buyer while starting from the
seller's minimum obligation (EXW) up to the maximum (DDP).
It is very important to give geographical details which help avoid
serious misunderstandings between the buyer and the seller: for
instance, "ex-factory" : in this case from one factory in
Australia or from a factory established abroad by a Australian firm.
The Incoterms define the specific place of transfer of
responsibility between the seller and the buyer.
EXW
Ex Works — At The Factory Gate
The single responsibility of the seller is to hand over the merchandise to the buyer. The revision 2000 of Incoterms recognizes a very widespread practice : the seller takes in his charge and is responsible for loading of merchandise on to the vehicle of the buyer ( on condition of indicating EXW loaded ). The buyer incurs all the expenses inherent in transport right from departure from the factory until arrival at the destination
Group of " F " = Free
FCA
Free Carrier
The buyer selects the mode of transport as well as the transporter and also pays for the main transport. The transfer of expenses and risks is effected at the time when the transporter takes charge of the merchandise. In the case of truck, wagon, and full container it is the seller who does the loading. The passage of export through custom is the responsibility of the seller. The FCA premises of the seller were officialised by the revision of Incoterms 2000.
FAS
Free Alongside Ship
The obligations of the seller are fulfilled when the merchandise is taken out of the customs and place along side the ship on the quay or on the barges. From this point onwards, the buyer incurs all the expenses and risks. The buyer also indicates the ship and pays the freight.
FOB
Free On Board
The merchandise is placed on board the ship by the seller . The buyer indicates the ship and pays the freight. Transfer of expenses and risks is effected at the time when the merchandise passes from the slings of the ship. The export formalities are the responsibility of the seller.
Group of "C" = Cost and Carry
CFR
Cost and Freight
The seller selects the ship and pays the freight upto the agreed port. Loading on board the ship is the responsibility of the seller along with shipping formalities. The transfer of risks is the same as in the case of FOB.
CIF
Cost, Insurance and Freight
The terms are identical to those of CFR with an additional obligation of the seller to supply maritime insurance policy against risk of loss or damages to the merchandise. It is the FAP insurance policy ( free of any special damage ) for 110 % of the value. The seller pays the insurance premium, and the merchandise travels at the risk and peril of the buyer.
This is the Incoterm which is most used, it tends to divide the expenses and risks in a fair manner.
The buyers appreciate this Incoterm, as they are freed from logistical formalities.
CPT
Carriage Paid To
The seller selects the transport and pays the freight up to the place indicated. The risks of damage or loss as well as escalation of eventual costs are at the cost of the buyer starting from the moment when the merchandise is handed over to the first transporter.
CIP
Carriage and Insurance Paid to
CIP is identical to CPT, but the seller must supply additionally transport insurance. The seller signs the transport contract, and pays the freight and insurance premium.
Group of " D " = DELIVERED
DAF
Delivered At Frontier
The seller pays the freight and undergoes risks up to the frontier which must be defined. The seller assumes responsibility for custom formalities for export and the buyer for import. The two parties must agree who will arrange and assume the costs insurance policy covering the entire route of shipment. According to the 2000 revision, the buyer is responsible for the expenses of unloading from the means of transport near the frontier except when otherwise specified.
DES
Delivered Ex Ship
The seller selects the ship, pays freight and accepts transport risks. Transfer of expenses and risks is effected on board the ship at the time of unloading at the port of arrival.
DEQ
Delivered Ex Quay
The seller places the merchandise at the disposal of the buyer, and is responsible for the merchandise to the point of offload from transport on to the quay at an agreed port. The passage through customs of the import is from the quay then the responsibility of the buyer.
DDU
Delivered Duty Unpaid
The seller puts the merchandise at the disposal of the buyer, at an agreed place in the country of import, including the unloading. The buyer is responsible for custom formalities, duties and charges. The novel feature of 2000 revision consists of a condition relating to unloading from the vehicle used for transport up to the destination which is hence forward charged to the buyer. DDU is a new Incoterm which is very much offered in trade and strengthens the position of the seller, for, the merchandise is transported at the risk and expense of the seller up to the premises of the buyer.
DDP
Delivered Duty Paid
The seller has in this case maximum obligation, transfer of expenses and risks being done at the point of delivery on the buyers premises and the unloading remains entirely the seller's responsibility (except when stated to the contrary).
Note for dealing with USA:
The American FOBs are interpreted in a different manner : one must obligatorily state the conditions of delivery when your correspondent is American. The present trend in international trade takes shape by the fact that the buyer is discharged of all the pre occupations with logistics. This strengthens the positions of the exporters. It is necessary to properly negotiate the terms and conditions of the contract during the first shipment and especially in the case of countries having risk where a credoc ( credit document ) as a means of payment will be advised.
|
|
 |
|
|
|
|
| Services for Manufacturers and Exporters |
|
Services for Importers and Buyers |
|
Collaboration Services for Traders |
|
|
|
|
|
|
|
Companies who produce products turn to us to quickly build and manage their worldwide sales and marketing network.
|
|
| |
|
|
|
|
|
|
|
|
Companies who import and distribute products, or companies who are searching for new suppliers, turn to us for our global network of agents already on the ground in most countries worldwide.
|
|
|
|
|
|
|
|
|
|
|
Boca Comm is an active partner for import/export trading firms worldwide, and continually evaluates new partnerships in new sectors in all regions of the globe.
|
|
|
|
| |
More  |
|
|
|
| |
More |
|
|
|
| |
More |
|
|
|
