Incoterms

Incoterms are a set of international regulations, collected by the International Chamber of Commerce, which determine the range of commercial clauses included in the contract of the global marketplace.

Incoterms also are also dominated by price clauses, as each term allows one to determine the price payable. The selection of the Incoterm therefore influences the cost of the contract.

The purpose of Incoterms is to provide a group of international regulations for the interpretation of the terms most used within international trade. Therefore, you can identify their meaning and use them during the conversation with our sales specialists.

Incoterms determine:

  • The price range
  • In which moment and where the transfer of risks are produced on the goods between the supplier and buyer.
  • The delivery location of the goods
  • Who contracts and pays for the transportation
  • Who contracts and pays for the insurance
  • Which documents do each party process and their cost

Types of Incoterms:

EXW – Ex Works (named place)

It means that the seller has delivered when they place or deliver suitably packaged goods at the disposal of the buyer at an agreed-upon place (i.e. the works, factory, warehouse, etc.).

This term therefore represents the least obligation to the seller, and the buyer must assume all the costs and risks.

Seller’s Obligations

  • Delivers the goods and necessary documents
  • Packing and packaging

Buyer’s Obligations

  • Payment of the goods
  • Internal freight (from warehouse to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • International freight (from the place of export to the place of import)
  • Insurance
  • Import costs (handling, storage, agents)
  • Transport and Insurance (place of import to the plant)

FCA – Free Carrier (named place)

It means that the seller delivers the goods for export to the courier proposed by the buyer in the agreed location.

The named place of delivery influences the obligations of loading and unloading of the parties. If the delivery takes place on the seller’s premises it is them that is responsible for loading. If the delivery occurs in any other place, the seller is not responsible for the loading.

This term can be employed for any means of shipping including multi-modal transport.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)

Buyer’s Obligations

  • Payment of the goods
  • Freight (from the place of export to the place of import)
  • Insurance
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

FAS – Free Alongside Ship (named loading port)

It means that the responsibility of the sellers ends once the goods are placed on the dockside of the agreed port of shipment. That is to say that the buyer assumes all the costs and risks of loss or damage of the goods from that moment.

The term FAS requires the seller to clear goods for export.

Seller’s Obligations

  • Goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)

Buyer’s Obligations

  • Payment of the goods
  • Freight and Insurance (from place of export to place of import)
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

FOB – Free on Board (named loading port)

The responsibility of the seller ends when the goods pass the ship’s rail in the agreed port of shipment.

The buyer must bear all the costs and risks of loss and damage for the goods from that point.

The term FOB requires the seller to clear goods for export. This term can be used only for transport by sea or by inland waterways.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)

Buyer’s Obligations

  • Payment of the goods
  • Freight and Insurance (from place of export to place of import)
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

CFR – Cost and Freight (named port of destination)

For the seller the terms are the same as the FOB price with the unique difference that the company must contract the ship’s hold and pay for the freight up to its destination.

The risk of loss and damage of the goods, as well as the additional cost of events occurring after the time of arrival, is transferred from the seller to the buyer.

The term CFR requires the seller to clear goods for export. This term can be used only for transport by sea or by inland waterways.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight (from place of export to place of import)

Buyer’s Obligations

  • Payment of the goods
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

CIF – Cost Insurance and Freight (named port of destination)

It means that the seller delivers the goods when they pass the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to drive the goods to the agreed port destination. In CIF conditions the seller must also contract the insurance and pay the corresponding premium, in order to cover the risks of loss and damage that the goods could undergo during transport.

The buyer must note that the seller is required to only contract insurance with minimal coverage. If the buyer wishes maximum coverage the company will need to expressly agree it with the seller or even arrange its own additional insurance.

The term CIF requires the seller to clear goods for export. This term can be used only for transport by sea or by inland waterways.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight and Insurance (from place of export to place of import)

Buyer’s Obligations

  • Payment of the goods
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

DAF – Delivered at Frontier (named place)

It means that the seller has met its obligation to deliver when the goods are placed at the Customs for export in the named point and place at the frontier, but before the customs border of the adjoining buyer’s country.

This term can be used any mode of transport when the goods are delivered to a land frontier.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight (from place of export to place of import) (partial)
  • Insurance (partial)

Buyer’s Obligations

  • Payment of the goods
  • Freight (from place of export to place of import) (partial)
  • Insurance (partial)
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

DDP – Delivered Duty Paid (named place of destination)

It means that the sellers delivers the goods to the buyer, clears for import, and does not unload from the means of transport used at the named place or arrival. The seller must bear all costs and risks deriving from sending the goods to such place, including customs procedures, and payment of all customs duties, taxes and other import charges of the destination country.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Haulage (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight (from place of export to place of import) (partial)
  • Insurance (partial)
  • Import costs (handling, storage, agents)
  • Haulage and Insurance (place of import to plant)
  • Delays

Buyer’s Obligations

  • Payment of the goods

DDU – Delivered Duty Unpaid (named place of destination)

It means that the sellers delivers the goods to the buyer, clears for import, and does not unload from the means of transport used at the named place or arrival. The seller must bear all costs and risks deriving from sending the goods to such place, including customs procedures, and payment of all customs duties, taxes and other import charges of the destination country.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight and Insurance (from place of export to place of import)

Buyer’s Obligations

  • Payment of the goods
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Delays

DEQ – delivered Ex-Quay (named port of destination)

It means that the seller delivers the goods when they are placed in the disposal of the buyer, without clearing for import, in the quay (wharf) of the named port of destination. The seller must bear the costs and risks deriving from driving the goods to the named port and unloading the goods in the quay (wharf). The term DEQ required the buyer to clear the goods for import and pay all customs, duties, taxes and other import charges.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight and Insurance (from place of export to place of import)

Buyer’s Obligations

  • Payment of the goods
  • Import costs (handling, storage, agents)
  • Freight and Insurance (place of import to plant)
  • Customs (documents, permits, requirements, taxes)
  • Delays

This term can be used only for transport by sea or inland waterways or multimodal transport.

DES – Delivered Ex Ship (named port of destination)

It means that the seller delivers when the goods are placed in the disposal of the buyer on board the ship, not cleared for import, in the named port of destination.

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight and Insurance (from place of export to place of import)

Buyer’s Obligations

  • Payment of the goods
  • Import costs (handling, storage, agents)
  • Customs (documents, permits, requirements, taxes)
  • Haulage and Insurance (place of import to plant)
  • Delays

CPT – Carriage Paid To (named place of destination)

The seller delivers the goods to the courier nominated by him/her, but also has to pay the cost of carriage necessary to bring the goods to the named destination.

The buyer bears all the risks and any other costs incurred after the goods have been delivered.

The CPT required the seller to clear the goods for export. This term can be used with any mode of transport (including multimodal).

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight (from place of export to place of import)
  • Import costs (handling, storage, agents) (partial)

Buyer’s Obligations

  • Payment of the goods
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Import costs (handling, storage, agents) (partial)
  • Delays

CIP - Carriage and Insurance Paid To (named place of destination)

The seller delivery the goods to the courier nominated by him/her, but also has to pay the cost of carriage necessary to bring the goods to the named destination. The seller also has to obtain insurance against risk, which the buyer support, for loss or damage of the goods during transport.

The buyer bears all the risks and any other cost incurred after the goods have been delivered.

The CIP requires the seller to clear goods for export. This term can be used with any mode of transport (including multimodal).

Seller’s Obligations

  • To deliver the goods and necessary documents
  • Packing and packaging
  • Freight (from factory to place of export)
  • Customs (documents, permits, requirements, taxes)
  • Export costs (handling, storage, agents)
  • Freight and Insurance (from place of export to place of import)
  • Import costs (handling, storage, agents) (partial)

Buyer’s Obligations

  • Payment of the goods
  • Customs (documents, permits, requirements, taxes)
  • Freight and Insurance (place of import to plant)
  • Import costs (handling, storage, agents) (partial)
  • Delays
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