Understanding Incoterms

What are the terms of Incoterms? Incoterms are international trade terms and are essentially a global set of universal trade terms that have been developed to create a happy intermediary between exporter and importer.

Where did they come from? International Business was developed by the International Chamber of Commerce (ICC) in Paris, France. It was first published in 1936 and was published in 2000.Image result for Understanding Incoterms

Why do we need them? Without international trade treaties, the buyer and seller would be in constant negotiation, and international trade would simply not be effective.

The set of general standards is of great value and can be considered as a cost-saving measure.

Once a commercial term is agreed upon, the parties can continue without worrying about the charge of shipping, insurance or any other related costs in the future.

How many of these things exist? There are 13 international terms, yes, it seems difficult at first, but if we divide them into categories, they will be better understood. A simple breakdown and explanation of each term …

Departure terms (below are products, a request by yourself!)

EXW – Ex Works – The buyer assumes control over the goods at the supplier’s factory door, all the supplier must do is to make the shipment available at the designated location. Any charge in this regard is entirely located on the buyer

Unpaid terms of the main carriage ( handballed attached to your carrier!)

FCA – Free shipping company/Free Carrier – Basically, the seller will send the shipment for export and leave it in the hands of selected buyers in the selected place. This term can be used for all modes of transport.

FAS – Free along with the FCA-style boat, but specific for shipping. The seller will send the shipment for export and leave it effectively in the selected port, without incurring any port service charges.

FOB: Free on-board FAS-style, although the seller will arrange to load the shipment on board the vessel specified by the buyer. Port shipping rates are divided between each segment.

Paid main cart (fell on your door!)

CFR – Cost and Shipping The seller shall bear the transportation costs and all costs related to the destination port of the buyer. Insurance is the responsibility of buyers once the goods are loaded onboard the ship.

CIF: Cost, Insurance and Shipping As described above, the seller must cover the cost of insurance at the destination port.

CPT: Carriage paid to CFR, except that the insurance risk begins for the buyer as soon as the truck (or the first carrier) is loaded into the port.

CIP – Transport and Insurance Paid Cargo Container / Parallel Multi-Media CPT.

Access conditions (still confused!)

DAF: Delivered At Frontier is designed for road and rail transport. The buyer will arrange customs clearance and transport to the border; the adjacent country/destination chosen. Insurance varies on the border.

DES – Delivery of the previous ship (designated port) Similar to the CIF / CIP, the seller will cover the port of destination insurance.

This term is usually used for bulk transport, for example. Metal or agriculture, where the seller must make the product available on the ship itself.

DEQ – EXQ (EX) port is issued equivalent to DES, except that the insurance covers the goods until they are unloaded at the destination port.

DDU: The unpaid delivery service (designated destination location) chooses the destination buyer; from this moment, the buyer is responsible for any shipping charges or insurance coverage.

All of the above is the responsibility of the seller. The cost of entering local customs clearance or any customs tax can be negotiated in the contract.

DDP: Paid Paid Service (Specific Place of Destination) In contrast to Ex Exks, the seller pays all transportation, insurance, customs clearance, and taxes. From the original to the buyer’s warehouse.

If you find my list useful, visit the website on my website.

https://ed.ted.com/on/eOcVUFFT