Click on the image to enlargeIncoterms 2000, or International Commercial Terms is international set of rules and agreement of transferring goods and risk from seller to buyer. It is important when negotiating purchase of goods both parties need to pay as much attention of terms and responsibilities related with transfer of goods as well. For that reason international agreement Incoterms 2000 has been adopted that defines the exact responsibilities between shipper and consignee while cargo is in transit.
- EXW - Ex-Works, seller is not responsible for international transportation. EXW places maximum responsibility on the buyer and minimum on to the seller. In this transaction the merchandise is made available at seller facility and the buyer is responsible for all the shipping arrangements – pre carriage, loading on vessel, insurance, ocean freight, unloading at destination, inland transportation and customs clearance.
- FCA - Free Carrier arrange warehouse loading and inland transportation to port of loading is seller’s responsibilities, but he is acting at the risk and the expense of the buyer. The Buyer is responsible for the insurance.
- FAS - Free Alongside Ship is popular way of transportation for non containerized ocean shipments. Shipper is responsible for export clearance of the merchandise and transfer is accomplished when the goods are turned over to buyer for transportation and insurance.
- FOB - Free On Board: Seller turns over to the buyer responsibility when cargo pass ship’s rail. Buyer is liable for all the risk and damages of the goods after the cargo has been loaded on the vessel. Free on board also known as freight on board is one of the most common terms of transportation.
- CFR - Cost and Freight, This is term defines shipper responsibility for ocean transportation of the goods to port of destination. Buyer covers insurance from the port of origin to port of destination.
- CIF - Cost, Insurance and Freight shipping arrangement is very similar to CFR, but seller is the one insuring the goods to the port of destination. Transfer of responsibility is accomplished at port of destination. Buyer covers all related charges with import custom clearance.
- CPT - Carriage Paid To: seller assumes the delivery risk and transportation to named place. Buyer assumes the cargo insurance, custom clearance. CPT arrangement is really common in air and containerized ocean shipments.
- CIP - Carriage and Insurance Paid To assumes the risk for delivery of goods and providing the insurance to named place destination. Buyer is responsible for custom duties and taxes. CIP term arrange usually multimodal transportation.
- DAF - Delivered At Frontier, by land, not unloaded. Seller is responsible for cargo delivery to a border cross frontier and buyer assumes responsibility to arrange transportation across the border, import customs clearance and taxes payment.
- DES - Delivered Ex-Ship involves goods delivery on ocean vessel at designated port of destination, not unloading at seller’s expense. Buyer pays for vessel unloading fee, insurance and customs clearance and taxes. Any expenses after ship arrival are buyer’s responsibility.
- DEQ - Delivered Ex-Quay involves ocean delivery of merchandise to named port of destination at shipper’s expenses. Shipper assumes responsibility for vessel unloading charges, but no further inland transportation. Buyer is responsible for customs clearance.
- DDU - Delivered Duty Unpaid involves seller responsibility for cargo delivery to final destination but not unloaded and not cleared. Buyer is responsible for custom duties and taxes. The s may decide not to insure the goods at his own risk.
- DDP - Delivered Duty Paid arrange shipper responsibilities for most of the expenses. It is common term for courier or intermodal type of transportation. The shipper is responsible for freight delivery at seller facility and customs clearance. The shipper may decide not to insure the freight at his own risk.
|Incoterms 2000||Warehouse Loading||Export Customs Duty||Transport to port of loading||Unload from truck at port of origin||Landing on vessel at origin's port||Air, Ocean Freight||Unload from vessel at destination||Load onto truck from the importers' port||Transport to destination||Insurance||Entry - Customs clearance||Customs Duties and Taxes at entry|