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INCO
Terms
Are
Terms of Sale and are standardized trade
definitions.
Most commonly used in international contracts, thus
reflected on the sales invoice.
Ensure buyers and sellers understand each other’s
expectations and responsibilities.
Were created by the ICC (International Chamber of
Commerce, and are protected by ICC copyright.
Are reviewed every 10 years and regularly updated to
keep pace with the ever-changing world of
international trade.
Latest edition is the Incoterms 2000.
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Applicable for sea transport only |
Applicable for all modes of transport
(including water) |
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Departure term |
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EXW (Ex Works) |
Shipment term,
main carriage unpaid |
FAS (Free Alongside Ship)
FOB (Free On Board) |
FCA (Free Carrier) |
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Shipment term, main carriage paid |
CFR (Cost and Freight)
CIF (Cost, Insurance and Freight) |
CPT (Carriage Paid To)
CIP (Carriage and Insurance Paid to) |
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Delivery term |
DES (Delivered Ex Ship)
DEQ (Delivered Ex Quay) |
DAF (Delivered At Frontier)
DDU (Delivered Duty Unpaid)
DDP (Delivered Duty Paid) |
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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.
-
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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.
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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.
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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).
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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. |
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bmiinc1@bellsouth.net