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Incoterms® 2010

Incoterms® 2010 are a set of rules used to describe the tasks, costs and risks for buyers and sellers when transporting goods. The most common three letter trading terms are listed below:

Rules for any mode or modes of transport:

EXW Ex Works

•Seller has no obligation to load the goods

•Seller is not bound to organise export clearance

•Buyer has limited obligation to provide details of the export to the Seller (as may be required for taxation etc).

FCA Free Carrier

•Seller delivers the goods to the carrier or another person nominated by the buyer at the named place

•Seller is required to clear the goods for export

CPT Carriage Paid To

•Seller delivers the goods to the carrier or another person nominated by the buyer at the named place and the seller must contract and pay for the cost of carriage to bring the goods to that place of destination

•Risk transfers when the goods are handed over to the carrier, not when they reach their destination, therefore it is important that the parties identify as precisely as possible in the contract both the place of delivery and the named place of destination.

CIP Carriage and Insurance Paid To

•Same as CPT but seller is required to obtain insurance at the minimum cover. Additional cover should be specified by the buyer.

•** CIP and CIF are the only terms which require the supplier to arrange Insurance

DAT Delivered at Terminal

•Seller fulfils their obligation by delivering the goods unloaded from the arriving means of transport at the named terminal at the named port or destination.

•Risk does not pass from the Seller to the Buyer until the goods have been delivered

•Seller is not required to arrange Insurance

DAP Delivered at Place

•Seller fulfils their obligation by delivering the goods ready for unloading from the arriving means of transport at the named place of destination

•Seller is not responsible for import Customs Clearance or import duties and taxes

•Buyer must arrange to receive the goods from the arriving transport at the named place

•Risk does not pass from the Seller to the Buyer until the goods have been delivered

•Seller is not required to arrange Insurance

DDP Delivered Duty Paid

•Maximum obligation for the seller

•Seller delivers the goods when they are placed at the disposal of the buyer, Customs Cleared for import, ready for unloading on the arriving means of transport at the named place

•Seller is not required to arrange Insurance

 

Rules for sea and inland waterway transport:

FAS Free Alongside Ship

•Seller delivers the goods when they are placed alongside a ship at the named port of shipment. Risk of loss or damage passes to the buyer once the goods are alongside the ship and the buyer bears all costs from that point on

•Seller is required to clear the goods for export

•For containerised traffic FCA should be used

FOB Free on Board

•Seller delivers the goods when they are placed on board a ship nominated by the buyer at the named port of shipment

•Risk of loss or damage passes to the buyer once the goods are on board the ship and the buyer bears all costs from that point on Change to previous Incoterms re “ships rail”

•Seller is required to clear the goods for export

•For containerised traffic FCA should be used

CFR Cost and Freight

•Seller delivers the goods when they are placed on board a ship at the port of shipment

•Risk of loss or damage passes to the buyer once the goods are on board the ship. The seller must procure and pay the costs and freight necessary to bring the goods to the named port of destination

•If the port of loading is of interest to the buyer than this must be specified, otherwise it is the decision of the seller

•Seller is required to clear the goods for export

•For containerised traffic CPT should be used

CIF Cost Insurance and Freight

•Same as CFR but seller is required to obtain insurance at the minimum cover. Additional cover should be specified by the buyer