INCO TERMS

INCO terms

• 4 General Groups of Terms“E” term: seller’s obligation and control of shipment is at its minimum“F” terms: require the buyer to arrange for main carriage,seller has nominal responsibility“C” terms: require the seller to arrange for main carriage and book the goods“D” terms: seller’s obligation and control is at its maximum

Sellers obligation:

• Transport or carriage• Load unload• Insurance

Responsibility or contract of carriage at three stages

• Pre-Carriage: the transportation segment from the seller’s location to the point where the cargo would leave from the seller’s side.

• Main Carriage: the transportation segment from the seller’s side to the buyer’s side.

• On-Carriage: the transportation segment from the point of arrival on the buyer’s side to the designated ultimate receiver.

Different incoterms

• Ex Works (EXW)Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks.

FOB vs FCA(free carrier)

• Free On Board

The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.

• Who chooses the carrier?

• FOB - transferral of risk: When the goods have been loaded on board the vessel at the named port. FCA (Free carrier)– The seller will deliver the goods to the named carrier at a named placeWhen the seller has delivered the goods to the carrier nominated by the buyer at the named place.

• C incoterms. Terms from this group have one thing in common, they are all terms used when the seller can arrange to pay all the fees up to delivery at a foreign port.

• But responsible for only delivery at the named destination

• CPT-Carriage Paid to "Carriage paid to..." means that the seller pays the freight for the carriage of the goods to the named destination. Seller will clear the export

• Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.

• It can be multimodal

• Cost, Insurance and Freight(CIF)

The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks from the port.

• Carriage and Insurance Paid To (CIP)

The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.

• It is multimodal

DAT /DAP/DDP

• “Delivered at Terminal” DAT means that the seller delivers when the goods, having been unloaded from the arriving means of transport, are placed at the buyer’s disposal at a named terminal at the named port .It is different from CIF

• The import clearance is the buyers responsibility

DAP - Delivered at Place

• Definition: This term means that the seller pays all the costs of transportation (export fees, carriage, insurance, and destination port charges) up to and including the delivery of the goods to the final destination(not only port or terminal)

• The buyer is responsible to pay only the import duty /taxes/customs costs. The buyer also is responsible to unload the goods from the vehicle at the final destination

• DDP-Delivered Duty Paid "Delivered duty paid" means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation.

• The seller has to bear the risks and costs, including duties, taxes including export and import , and other charges of delivering the goods thereto, cleared for importation