Incoterms

Incoterms, promulgated by the International Chamber of Commerce, are an acronym for "International Business Terms" and provide a set of standard definitions for commercial terms (also known as terms of delivery and terms of sale) for use in international trade. The eleventh terms (starting with Incoterms 2010, January 2007) are: EXW, FCA, FAS, FOB, CPT, CFR, CIF, CIP, DAT, DAP and DDP.

Incoterms facilitates international trade by promoting a common and accurate understanding between the seller and the buyer of their respective operational obligations, costs and the risk of loss of cargo or damage under the specified delivery modalities.
Using a certain Incoterm term in a sales contract will also help transport intermediaries, banks and service providers involved in shipping or asset financing to better perform their functions. Incoterms are also designed to reduces the likelihood of litigation between a seller and a buyer on their respective responsibilities and costs.
Incoterms first edition was published in 1936, in English and French. Since then there have been five revisions at intervals of about 10 years, with transactions in most of the commercial languages ​​used. The 1990 review first addressed the use of electronic messages (EDI) used instead of traditional transport documents. The 2000 revision made substantial changes to the clearance and payment of customs duties in accordance with the FAS and DEQ terms and the FCA loading and unloading obligations. Incoterms 2010 removed the terms DAF, DES, DEQ and DDU, replacing the terms with the new DAT or DAP terms.
 
 
Note: Incoterms are distinct and differ significantly from the US commercial definitions incorporated in the Uniform Commerce Code (UCC), which are still used by some companies in US domestic trade, but have been recommended for deletion from the UCC.

History of  INCOTERMS® Rules

1923 First ICC Survey of Commercial Transaction Terms
1928 Improved clarifications
1936 Global Guidelines for Traders
1953 Increased transport by rail
1967 Correct misinterpretations
1974 Air travel development
1980 Proliferation of container traffic
1990 A complete review
2000 Amended Customs Clearance Obligations
2010 Reflections on the Contemporary Commercial Landscape
2020 Looking ahead. To keep up with the evolving development of world trade, the latest update of trading terms is currently underway and is due to be released in 2020.
Incoterms

Incoterms briefly

  • EXW - Ex Works
     
    The buyer assumes almost all the costs and
    risks during the transport process
     
    The sole responsibility of the seller is to ensure that the acquirer can access the goods.
     
    Once the buyer has access to the goods, everything depends on it (including uploading).
     
    Risks transfer from seller to buyer:
    At the warehouse, office or anywhere the goods are collected.
  • FCA - Free carrier

    It is the vendor's responsibility to transport the goods to the buyer's carrier at the established location.

    Also, the seller has to ensure the customs export formalities for goods

    Risks transfer from seller to buyer:
    When the buyer's carrier receives the goods.

  • CPT - Carriage Paid To

    Same seller's responsibilities as Free carrier, with one difference: the seller covers delivery costs.

    As with Free carrier, it is the vendor's responsibility to ensure the customs export formalities for goods.

    Risks transfer from seller to buyer:
    When the buyer's carrier receives the goods.

  • CIP - Carriage and Inssurance Paid To

    Same responsibilities of the seller as in the case of paid shipping cost, with one difference: the seller also pays for the insurance of goods

    The seller is obliged to buy only the minimum possible insurance

    If the buyer wants more comprehensive insurance, he has to deal with this problem himself

    Risks transfer from seller to buyer:
    When the buyer's carrier receives the goods.

     

  • DAT - Delivery to the terminal

    The seller is responsible for the costs and risks of delivering the goods to an established terminal.

    The terminal could be an airport, a warehouse, a road space or for containers.
     
    The seller deals with customs declarations and downloads the goods to the terminal.
     
    The buyer deals with customs import formalities and any obligations related thereto.
     
    Risks transfer from seller to buyer:
    At the terminal.
  • DAP - Delivered at Place

    The seller covers the costs and risks of transporting the goods to an established address

    Goods are considered delivered when they arrive at the address and are ready to be downloaded

    Export and import responsibilities are the same as for Delivery to the terminal

    Risks transfer from seller to buyer:
    When goods are ready for download at the specified address

  • DDP - Taxes paid for delivery

    The seller has almost all the responsibilities during the transport process

    It covers all costs and risks of transporting goods at the specified address

    The vendor also ensures that the goods are ready for unloading, performs export and import formalities and pay all taxes

    Risks transfer from seller to buyer:
    When goods are ready for download at the specified address.

  • FAS - Free Alongside Ship

    The seller assumes all costs and risks until the goods have been delivered to the ship

    The buyer takes on the risks and deals with customs export and import formalities

    Risks transfer from seller to buyer:
    When the goods were delivered by the ship.

     

  • FOB - Free on Board

    The seller assumes all the costs and risks until the goods have been delivered aboard the ship

    It also deals with customs export formalities

    The buyer assumes all responsibility as soon as the goods are loaded

    Risks transfer from seller to buyer:
    When the goods were delivered to the ship.

  • CFR - Cost and Freight

    The seller has the same responsibilities as free shipping, but he has to pay the cost of bringing the goods to port

    As with Free Loading, the buyer assumes all responsibility as soon as the goods arrive on board

    Risks transfer from seller to buyer:
    When the goods are aboard the ship.

  • CIF - Cost, Insurance and Freight

    The seller has the same obligations as the Cost and Freight, but must also cover the insurance costs

    As with Free Loading, you only need to purchase a minimum coverage

    If the buyer requires more comprehensive insurance, the payment will be his responsibility

    Risks transfer from seller to buyer:
    When the goods are aboard the ship.

Incoterms briefly

Need assistance?

STP Import Export 2017 SRL is particularly positioned to provide intermediation, advice, and guidance to all companies around the world to find the best solutions and meet the most demanding requirements.
We believe in constantly improving service to better serve our customers.
So, call us or write us an email and join a growing number of satisfied customers.
Safe Trade, Good Friends!
Need assistance?

©2018 STP Import Export 2017 SRL  |  designed by Stark Design

Cookies make it easier for us to provide you with our services. With the usage of our services you permit us to use cookies.