QUESTION/ANSWER FORUM INCOTERMS © 2010

THE SCARBROUGH GROUP

Est. 1984 International Freight / U.S. Customs

Est. 1988 Own Trucking Fleet

Est. 2003 NVOCC Operations

Est. 2014 NAFTA Truck Brokerage

Est. 2015 Freight Forwarder / Mexican Customs

www.scarbrough-intl.com

ABOUT THE SPEAKERS

Alyson SchroerCorporate Operations ManagerScarbrough International, Ltd.

[email protected]: 816.584.2421


Kim TaylorMarketing Director

Scarbrough International, [email protected]

T: 816.584.2408

Patrick ColliganExport Operations Director


T: 630.787.4502

mailto:[email protected]



WHAT IS THE ICC?

• The International Chamber of Commerce is the largest business organization in the world

• Created to promote global trade and investment

• Keeps The United Nations & The World Trade Organization in touch with views of international business


WHAT ARE INCOTERMS® 2010

• Incoterms® are NOT law• a GUIDANCE guide only • Represent different ways international shipments are bought and sold


RULES OF THUMB

• The party responsible for transport arrangement and payment of transportation charges is in control of the cargo

• The more responsibility the party has, the more control they have

WHAT ARE INCOTERMS®

• There is always a named point associated with every Incoterm.• This named point identifies who is responsible for insurance

coverage, transport arrangements, transportation charges, and origin and destination Customs declaration responsibilities.

EXAMPLES:

• FOB Shanghai • DAP Kansas City, MO 64153• CIF Hamburg• DDP Tirat Carmel, Israel 3903215


INCOTERMS® DO NOT…

• Determine ownership or transfer title to the goods, nor evoke payment terms.

• Apply to service contracts, nor define contractual rights or obligations (except for delivery) or breach of contract remedies.

• Protect parties from their own risk or loss, nor cover the goods before or after delivery.

• Specify details of the transfer, transport, and delivery of the goods. Container loading is NOT considered packaging, and must be addressed in the sales contract.

• Incoterms are not law and there is NO default Incoterm!



INCOTERMS: SELLER/BUYER RISKS, COSTS, & OBLIGATIONS TRANSFER

Image credit: www.searates.com/reference/incoterms

EXW – EX WORKS

• Any mode of transport

• The seller has NO obligation to or payment obligations for the arrangement of transport

• Buyer has all the control


FCA, FAS, FOB

FCA• Any transport mode

FAS, FOB• Ocean cargo / inland moves

• The seller can be involved to arrange and/or pay for some of the transport within their own country


CIF/CFR are the same except for one thing: CIF insurance is covered by seller.

CPT/CIP are the same except for one thing: CIP insurance is covered by seller.

CFR, CIF, CPT, CIP

• Ocean cargo / inland moves

• The seller is responsible for arrangements for transport and the charges associated with that transport for mostof the costs up to named place point in the country (Could be to a port, CY, CFS, or Airport)


DAT, DAP, DDP

• Any mode of transport

• The seller is responsible for the transport arrangements and their related charges to the end door destination

DAT – to terminal

DAP – to door

DDP – to door and duties & taxes paid by seller


INCOTERMS® USED MOST OFTEN


• EXW – Ex works • FOB – Free on Board

WHEN IMPORTING TO THE USA

Buyer pays for transport and takes responsibility from seller’s door

Buyer pays for transport and takes responsibility from named port, once

on board ship



• CIF – Cost, Insurance, Freight • CFR – Cost & FreightSeller pays for transport and takes

responsibility up until port of unloading*insurance is on the seller

Seller pays for transport and takes responsibility up until port of unloading

*insurance is undetermined

WHEN EXPORTING FROM THE USA



• DAP – Delivered at place• DDP – Delivered, duty paid

SMALLER SHIPMENTS, PROJECT, ONE-OFF, SAMPLES, ETC.

WHAT TO WATCH OUT FOR


• Alibaba or other trading houses• Negotiated per unit price reflection in shipping costs• Shipping costs built into price per unit = duties paid on

transportation, not just product• Do your homework. Don’t let your buyer or seller take advantage.

YOU suggest the incoterms.• Who is taking care of insurance? Get this in writing.• Selling DDP and not addressing VAT/GST• Still have liability when exporting on EXW term• Most shippers will have a profit in a D or C term

ABOUT THE SPEAKERS

Alyson SchroerCorporate Operations ManagerScarbrough International, Ltd.

[email protected]: 816.584.2421


Kim TaylorMarketing Director


T: 816.584.2408

Patrick ColliganExport Operations Director


T: 630.787.4502




QUESTION/ANSWER FORUM INCOTERMS © 2010

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