Incoterms are a set of international rules for the interpretation
of the most commonly used trade terms. They are recognized
globally by courts and other authorities. P&O Nedlloyd
has provided a page that includes Incoterms for buyers and
sellers of goods.
This firm provides a succinct overview of the Incoterms 2000.
Useful and easy to follow, although not that indepth.
Delivered Duty Paid - Delivery takes place on the
premises of the buyer where the arriving vehicle cargos
are discharged from the vehicle. If delivery takes place
elsewhere, delivery is completed by loading the cargo onto
the vehicle sent by the buyer to collect the goods.
Delivered Duty Unpaid - Delivery takes place on the premises
of the buyer, still loaded on the arriving vehicle. If
delivery takes place elsewhere, delivery is completed by
loading the cargo onto the vehicle sent by the buyer to
collect the goods.
Delivered Ex Quay - The obligation
for customs clearance and payment of of import duties will
change from the seller/exporter to the buyer/importer at
the named port of destination.
Ex Works - The responsibility
for loading cargo onto a collecting vehicle at the sellers/exporters
premises is no longer the obligation of the seller/exporter.
The buyer is now responsible. If there is more than one
loading area at the sellers premises the seller has the
option to designate any one of them for loading.
Alongside Ship - The obligation of customs entry and obtaining
an export license will change from the buyer/importer to
the seller/exporter at the named port of sailing.
Carrier - This defines two possibilities.
1. Delivery to
the carrier at the premises of the seller, when the latter
is under the obligation to load the cargo onto the vehicle
of the carrier.
2. Delivery to the carrier at any other
point such as a terminal, quay...etc, where the carrier
on behalf of the buyer is responsible for discharging the
shipment from the vehicle sent by the seller.
The Thirteen Incoterms:
Cost and Freight*
As for CIF except that the cost
of insurance is covered by the buyer.
Cost of goods plus insurance and freight,
duty unpaid, to a named port of destination. Sea or inland
waterway transport only.
Carriage and Insurance Paid To
Costs of carriage and insurance of the goods, duty unpaid
to the named destination. Applies to all modes of transport.
Carriage Paid To
As for CIP, except the cost of insurance
is carried by the buyer.
Delivered At Frontier
of delivery, duty unpaid at the named point and place at
the frontier. Applies to all modes of transport.
Costs of delivery, including duty, paid up to
a named place in the country of importation. Applies to
all modes of transport.
Delivered Duty Unpaid
DDP, except that the buyer pays the import duty.
Costs of delivery, duty paid, to the named port
of destination. Sea or inland waterway transport only.
Delivered Ex Ship*
Costs of delivery on board the vessel,
duty unpaid, at the named port of destination. Sea or inland
waterway transport only.
The goods are made
available to the buyer at the exporter's premises, suitably
packed unless otherwise arranged for a known means of transport.
Cost of delivery, cleared for export,
into the charge of the carrier named by the buyer at the
named place or point. Allied mostly to air and rail transport
but could be used for all modes.
Free Alongside Ship*
All cost up to delivery on quay or in lighters (barges)
at the named port of shipment. Sea or inland waterway transport
Free On Board*
All costs up to delivery over
the ships rail at the named port of shipment. Sea or inland
waterway transport only.
* These terms are for maritime transport only.
The other terms apply to all transport modes.
Guidelines to Using Incoterms
Always specify which terms are applicable ie FAS in
Incoterms 2000 as opposed to Incoterms 1990.
When completing documents ensure that you are using
the correct format of a term. The term CFR is persistently
misused/replaced with C&F or C+F.
C+F has never existed. C&F did exist but was replaced
with CFR in 1980. If C&F is used by mistake a court of
law will use the pre 1980 meaning of the term which is very
different from the current meaning of CFR as in Incoterms
1990 and Incoterms 2000.
Urge your trading partners to confirm their acceptance
of the specified term in writing
Draw up a check list of your duties and rights under
the selected term and check that every intended or completed
transaction conforms to this list, and that nothing is omitted
Request your trading partner to do the same, and exchange
this information with them
Change or add nothing, but in any event as little
as possible to the selected term
In case of any inevitable change or addition, inform
your trading partner and request them to accept it in writing.
Such an addition could be 'stowed and trimmed' to FOB
Compare your duties and rights under the selected
Incoterm(s) with your company's standard terms of sales (or
purchase), to make sure that there are no conflicts. If your
business is run under standard conditions established by
a trade body or similar association, request that this association
amend its terms on behalf of all the membership.
In the event of such conflict(s), amend your standard
conditions, rather than the Incoterm(s), in order to remedy
the problem. If the standard conditions are those of an association,
act similarly through this association.
Never instruct the carriers or any third party to
do or omit anything on the basis of the Incoterms which do
not apply to them at all.
Inform your bank and insurance company which Incoterm(s)
have been selected for your business, so that they can determine
exactly what your duties and rights are with regard to a
transaction in which they may have a role to play.