inco terms
RULES FOR INTERNATIONAL TRADE BY ANY MODE OF TRANSPORT DEFINED BY INCOTERMS ® 2010
EXW – Ex Works ( named place )
The seller makes the goods available at its premises . This term places the maximum obligation on the buyer and minimum obligations on the seller . The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included . EXW means that a seller has the goods ready for collection at his premises ( works , factory , warehouse , plant ) on the date agreed upon . The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination . The seller doesn ’ t load the goods on collecting vehicles and doesn ’ t clear them for export . If the seller does load the goods , he does so at the buyer ’ s risk and cost . If parties wish the seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading , this must be made clear by adding explicit wording to this effect in the contract of sale .
FCA – Free Carrier ( named place )
The seller hands over the goods , cleared for export , into the disposal of the first carrier ( named by the buyer ) at the named place . The seller pays for carriage to the named point of delivery , and risk passes when the goods are handed over to the first carrier .
CPT – Carriage Paid To ( named place of destination )
The seller pays for carriage . Risk transfers to buyer upon handing goods over to the first carrier .
CIP – Carriage and Insurance Paid to ( named place of destination )
The containerized transport / multimodal equivalent of CIF . Seller pays for carriage and insurance to the named destination point , but risk passes when the goods are handed over to the first carrier .
DAT – Delivered at Terminal ( named terminal at port or place of destination )
Seller pays for carriage to the terminal , except for costs related to import clearance , and assumes all risks up to the point that the goods are unloaded at the terminal .
DAP – Delivered at Place ( named place of destination )
Seller pays for carriage to the named place , except for costs related to import clearance , and assumes all risks prior to the point that the goods are ready for unloading by the buyer .
DDP – Delivered Duty Paid ( named place of destination )
Seller is responsible for delivering the goods to the named place in the country of the buyer , and pays all costs in bringing the goods to the destination including import duties and taxes . This term places the maximum obligations on the seller and minimum obligations on the buyer .
RULES FOR INTERNATIONAL TRADE CONDUCTED ENTIRELY BY WATER DEFINED BY INCOTERMS ® 2010
FAS – Free Alongside Ship ( named port of shipment )
The seller must place the goods alongside the ship at the named port . The seller must clear the goods for export . Suitable only for maritime transport but NOT for multimodal sea transport in containers ( see Incoterms 2010 , ICC publication 715 ). This term is typically used for heavy-lift or bulk cargo .
FOB – Free On Board ( named port or place of shipment )
The seller must load the goods on board the vessel nominated by the buyer . Cost and risk are divided when the goods are actually on board of the vessel ( this rule is new !). The seller must clear the goods for export . The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers ( see Incoterms 2010 , ICC publication 715 ). This Term has been greatly misused over the last three decades , ever since Incoterms 1980 explained that FCA should be used for container shipments .
CFR – Cost and Freight ( named port of destination )
Seller must pay the costs and freight to bring the goods to the port of destination . However , risk is transferred to the buyer once the goods are loaded on the vessel ( this rule is new !). Maritime transport only and Insurance for the goods is NOT included . This term was formerly known as CNF ( C & F ).
CIF – Cost , Insurance and Freight ( named port of destination )
Exactly the same as CFR except that the seller must in addition procure and pay for the insurance . Maritime transport only .
Source : Skyways Management Services Ltd .
24 • SUPPLYCHAINCANADA . CA • SCMA