INCO Terms

The International Chamber of Commerce (ICC) has made revisions to INCOTERMS 2000, which are now called INCOTERMS 2010 and have taken effect on January 1, 2011. The revised rules contain a series of changes such as eliminating DAF, DES, DEQ, and DDU; while adding two new terms, DAT and DAP. The  new terms in INCOTERMS 2010 have taken better account of defining the roles in cargo security and electronic data interchange that are now playing a role in international trade. Why are INCOTERMS used in  international trade? To  assist in the stipulations of sales between buyer and seller. The INCOTERMS are standardized trade definitions mostly used in international contracts, which informs the sellers and buyers what their obligations are in the delivery of goods; thus are reflected on the sales invoice. However, INCOTERMS by themselves do not constitute a contract, supersede the law of governing the contract, define where the title transfers,  address the price payable, currency, or credit terms. INCOterms PDF – Click Here
BMI, Inc. – Shipping Worldwide
 
Any Mode or Modes of Transport
Sea and Waterway Transport
INCOTERMS EXW FCA CPT CIP DAT DAP DDP FAS FOB CFR CIF
2010 Ex: Works Free
Carrier
Carriage
Paid To
Carriage
& Ins
Paid To
Delivered
At Terminal
Delivered
At Place
Delivered
Duty Paid
Free
Alongside
Ship
Free On
Board
Cost &
Freight
Cost Insurance
& Freight
Services Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays Who Pays
Export Packing Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Marking / Labeling Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Block & Brace A A A A A A A A A A A
Export Documents
AES
Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Export Documents
Freight Forwarder
Buyer Buyer Seller Seller Seller Seller Seller Buyer Buyer Seller Seller
Inland Freight to
Carrier
Buyer B Seller Seller Seller Seller Seller Seller Seller Seller Seller
Origin Terminal
Charges
Buyer Buyer Seller Seller Seller Seller Seller Buyer Seller Seller Seller
Vessel Loading Buyer Buyer Seller Seller Seller Seller Seller Buyer Seller Seller Seller
Ocean Freight / Air Freight Buyer Buyer Seller Seller Seller Seller Seller Buyer Buyer Seller Seller
Nominate
Forwarder
Buyer Buyer Seller Seller Seller Seller Seller Buyer Buyer Seller Seller
Marine Insurance Buyer C C Seller C C C C C C Seller
Unload Carrier Buyer Buyer D D Seller Seller Seller Buyer Buyer D D
Destination
Terminal Charges
Buyer Buyer D D D Seller Seller Buyer Buyer D D
Nominate On
Carrier
Buyer Buyer E E E E Seller Buyer Buyer Buyer Buyer
Security Information Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
Customs Broker Fees Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer
Duties, Customs
Fees, Taxes
Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer
Delivery to Buyer
Destination
Buyer Buyer E E E E Seller Buyer Buyer Buyer Buyer
Delivery Unloading Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

A) Per Agreement in Contract
B) Seller arranges and loads pre-carrier and pays inland Freight to “F” Delivery
C) No obligation
D) Charges paid by either Buyer or Seller depending upon Contract of Carriage
E) Charges paid by Seller if Through BL or Door/Door to Buyer’s Destination

 

INCOTERMS 2000

EXW {+ the named place}
Ex Works

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.

In practice, it is not uncommon that the seller loads the goods on truck or container at the seller’s premises without charging loading fee.

In the quotation, indicate the named place (seller’s premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works.


FCA {+ the named point of departure}
Free Carrier

The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller’s premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller’s expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.

In the air shipment, technically speaking, goods placed in the custody of an air carrier is considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment.

The term FCA is also used in the RO/RO (roll on/roll off) services.

In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.

Some manufacturers may use the former terms FOT (Free On Truck) and FOR (Free On Rail) in selling to export-traders.


FAS {+ the named port of origin}
Free Alongside Ship

Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller’s expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.

In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen.

The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels.


FOB {+ the named port of origin}
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.

In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in practice, many importers and exporters still use the term FOB in the air freight.

In North America, the term FOB has other applications. Many buyers and sellers in Canada and the U.S.A. dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB Destination.

FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer’s premises, which may include the import customs clearance and payment of import customs duties and taxes at the buyer’s country, depending on the agreement between the buyer and seller.

In international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part of the INCOTERMS (International Commercial Terms).


CFR {+ the named port of destination}
Cost and Freight

The delivery of goods to the named port of destination (discharge) at the seller’s expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F.

In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example CFR Karachi and CFR Alexandria.

Under the rules of the INCOTERMS 1990, the term Cost and Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used in the air freight.


CIF {+ the named port of destination}
Cost, Insurance and Freight

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.

In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example CIF Pusan and CIF Singapore.

Under the rules of the INCOTERMS 1990, the term CIF is used for ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air freight.


CPT {+ the named place of destination}
Carriage Paid To

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

In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP {+ the named place of destination}
Carriage and Insurance Paid To

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.

In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.


DAF {+ the named point at frontier}
Delivered At Frontier

The delivery of goods to the specified point at the frontier at seller’s expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.

In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland.


DES {+ the named port of destination}
Delivered Ex Ship

The delivery of goods on board the vessel at the named port of destination (discharge), at seller’s expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm.


DEQ {+ the named port of destination}
Delivered Ex Quay

The delivery of goods to the quay (the port) at destination at seller’s expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer’s end. Buyer assumes the cargo insurance and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Buenos Aires and DEQ Maputo.


DDU {+ the named point of destination}
Delivered Duty Unpaid

The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer’s premises, at seller’s expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.

In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU San Pedro Sula and DDU Ndjamena.


DDP {+ the named point of destination}
Delivered Duty Paid

The seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer’s end, and the delivery of goods to the final point at destination, which is often the project site or buyer’s premises. The seller may opt not to insure the goods at his/her own risks.

In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Panama City and DDP Mbabane.

Information provided by EXPORT911.