Put simply, Incoterms® are the selling terms that the buyer and seller of goods both agrees to. The Incoterm® clearly states which tasks, costs and risks are associated with the buyer and the seller. The Incoterm® is agreed between the buyer and seller and states when the seller’s costs and risks are then transferred onto the buyer. Incoterms® are also referred to as International Commercial Terms, which are published by the International Chamber of Commerce (ICC), which relate to International Commercial Law.
INCO TERMS
They are accepted by governments and legal authorities around the world. The ICC published new Incoterms® 2020 that have come into effect from the 1st of January 2020. The ICC originally published Incoterms® in 1936 and have continually published updates to reflect the changes to the Global Trade environment. It’s important that all parties involved in trade clearly understand the changes and how they apply to global supply chains. The IncoDocs chart displays Incoterms® 2020 in an easy to understand format. Our chart states each Incoterm® and explains the obligations and charges that are accepted by the seller and the buyer. This is general information for guidance purposes only. For a full and complete description, refer to the full version of Incoterms® 2020 by the International Chamber of Commerce at the ICC website. Feel free to download the latest Inco Terms guide below.
Below is a list of incoterms and a brief description explaining each one.
EXW (Ex-Works)
The Seller is responsible for having the cargo ready at their loading area. After that, it is the Buyer’s responsibility to complete the shipment. The Buyer arranges loading of the cargo at the origin, including local THC and Freight etc. Once the cargo arrives at the POD, the buyer clears the cargo and takes the delivery.
FCA (Free Carrier)
The Seller hands over the cargo to the carrier or to a Buyer’s nominated person/company at the Sellers premises or another agreed place.
FAS (Free Alongside Ship)
The Seller delivers the cargo next to/close to the vessel nominated by the Buyer at the nominated port.
FOB (Free On Board)
The Seller clears the cargo from customs and delivers the goods to the vessel at the Port. All the charges until this point are for the account of the Seller. The Buyer books the container, insures the cargo and receives the cargo at port of discharge. Ocean freight, handling charges at POD, import clearance & any necessary duties/taxes are for the account of the consignee/Buyer.
CFR (Cost & Freight)
The Seller clears the cargo, delivers container to the vessel, books containers and pays the ocean freight cost. The Buyer takes on responsibility once the container arrives at Port of Discharge including handling charges, customs clearance, delivery and any necessary duties/taxes in the UK.
CIF (Cost, Insurance & Freight)
The Seller clears the cargo, delivers container at the vessel, books containers and pays the ocean freight and insurance for the cargo. After that, it is the Buyers responsibility to handle the cargo at destination port, import clearance charges and any necessary Duties/Taxes.
CPT (Carriage Paid To)
The Seller hands over the goods to Carrier or a person/company nominated by the Seller at a mutually agreed place.
CIP (Carriage & Insurance Paid)
The Seller hands over the goods to a carrier or a person/company nominated by the Seller at a mutually agreed place along with insurance. This is similar to CIF but CIP is for all modes of transport whereas CIF is for sea only.
DAP (Delivered At Place)
The Seller delivers the goods at the Buyer’s place, ready for unloading. The Seller takes all responsibilities until the cargo reaches the Buyers place. Unloading is the Buyers responsibility.
DPU (Delivered At Place Unloaded)
A new Incoterm introduced in 2020. The Seller delivers the cargo at the Buyer’s place, unloaded. The Seller takes all responsibilities until the goods are unloaded at the Buyer’s place.
DDP (Delivered Duty Paid)
The Seller delivers the goods at the Buyer’s place or an agreed place. Everything is the Sellers responsibility, including customs clearance at the destination and import duty/taxes.
Additional Information
If you would like anymore information about incoterms, feel free to contact us and we will get back to you as soon as possible.
