Terms of Trade or INCOTERMS

Delivered Duty Paid (DDP)

-Used for any type of good -Any mode of transportation -DDP[Address in the City of *Destination* where the goods are *delivered*]

Free Carrier (FCA)

-Used for any type of good -Any mode of transportation -FCA [Address in the City of *Departure* where goods are *delivered* to carrier]

Delivered at Terminal (DAT)

-Used for any type of goods (designed for containerized cargo) -Any mode of transportation -DAT[Address of the *Terminal* where goods are *delivered*]

Cost and Freight (CFR)

-Used for any type of product (prefer, non-containerized cargo) -Only for ocean transportation -CFR[Address of the dock in the *Port of Destination* where the goods are *delivered*]

Who created INCOTERMS?

International Chamber of Commerce

Main Carriage

International transportation between exporting and importing country

Responsibility Shift: CIP

When the exporter *delivers* the goods to the first carrier in the exporting country

Responsibility Shift:CPT

When the exporter *delivers* the goods to the first carrier in the exporting country

Responsibility Shift: CFR

When the exporter delivers the goods onboard the ship in the port of departure

Responsibility Shift: FOB

When the exporter delivers the goods onboard the ship in the port of departure

Responsibility Shift: CIF

When the exporter delivers the goods onboard the shop in the port of departure

Responsibility Shift: DDP

When the exporter delivers the goods to the delivery location, still loaded onto the mode of transportation

Responsibility Shift: DAP

When the exporter delivers the goods to the place of delivery, still loaded on the mode of transportation

Responsibility Shift: FAS

When the exporter delivers the goods to the port of departure, unloaded from the mode of transportation

Responsibility Shift: DAT

When the exporter delivers the goods, unloaded from the mode of transportation, to the terminal

Responsibility Shift: EXW

When the exporter makes the good *available* to the importer

Responsibility Shift: FCA

When the goods are *delivered* to the carrier, loaded on the truck

Delivered at Place (DAP)

-Used for any type of good -Any mode of transportation -DAP[Address in the City of *Destination* where goods are *delivered*]

Two groups of INCOTERMS:

-7 that can be used for any means of transportation (ocean, road, air, train) -4 that can only be used for ocean transportation (oldest terms of trade)

Ex-Works (EXW)

-Customer does everything -Used for any type of good (prefer small packages that are picked up by FedEx or DHL) -Any mode of transportation -EXW [Address in the City of *Departure* where goods are *made available*]

INCOTERMS used for any mode of transportation:

-EXW -FCA -CPT -CIP -DAT -DAP -DDP

INCOTERMS only used for ocean transportation:

-FAS -FOB -CFR -CIF

Why do we needs INCOTERMS?

-Liability -Responsibilities of each party -"Terminology" across languages

Exporter or importer responsible for:

-Pre-carriage -Main carriage -On-carriage -Risks involved in international transportation -Customs clearance in the importing country

Each INCOTERMS rule has:

-Scope -Modality -Syntax

How to determine which INCOTERMS rule to use:

-Type of product being sold -Method of shipment -Ability and willingness of importer/exporter to perform tasks involved -Amount of trust placed by either of the parties in the other party

Carriage and Insurance Paid To (CIP)

-Used for any type of good -Any mode of transportation -CIP[Address in the City of *Destination* where goods are *delivered*]

Carriage Paid To (CPT)

-Used for any type of good -Any mode of transportation -CPT [ Address in the City of *Destination* where goods are *delivered*]

Cost, Insurance, and Freight (CIF)

-Used for any type of product (prefer, non-containerized cargo) -Only for ocean transportation -CIF[Address of the dock in the *Port of Destination* where the goods are *delivered*]

Free Alongside Ship (FAS)

-Used for any type of product (prefer, non-containerized cargo) -Only for ocean transportation -FAS[Address of the dock in the *Port of Departure* where the goods are *delivered*]

Free on Board (FOB)

-Used for any type of product (prefer, non-containerized cargo) -Only for ocean transportation -FOB[Dock (or ship) in the *Port of Departure* where the goods are *delivered*]

INCOTERMS formally define the following aspects of an international sale:

-Which tasks will be performed by the exporter/importer -Which activities will be paid by the exporter/importer -The exact point at which the responsibility for the goods transfers from the exporter to the importer

How many different INCOTERMS are there?

11

Latest version of INCOTERMS rules is dated _____, and was implemented in _____.

2010, 2011

"C" stands for:

CARRIAGE

"D" stands for:

DELIVERED

Pre-Carriage

Domestic transportation in exporting country

On-Carriage

Domestic transportation in importing country

"F" stands for:

FREE

Modality

The mode of transport for which it can be used

Scope

The type of products for which it can be used

Syntax

The way it has to be stated on invoices and paperwork