Incoterms

define incoterms

standard international trade terms which enable exporters to quote prices that allocate the costs and risks of international transport between buyer and seller

when does the Incoterm start?

when goods are ready to leave the factory- however the incoterm must be agreed upon BEFORE the order is agreed and placed

FCA

Free Carrier (named place)

what do incoterms stand for

International Commercial Terms

what does POD stand for?

PORT (PLACE) of DESTINATION

what does POL stand for?

PORT (PLACE) of LOADING

notes about CIP

seller purchases insurance risks and costs transferred at different places

when are C terms "free"

sellers are free at POD (port/place of delivery) at exporting country

when are F terms "free"

sellers are free at POL (port or place of loading)

when are D terms "free"

sellers are free at delivered place in importing country

what does CIP stand for?

CARRIAGE AND INSURANCE PAID TO (named place of destination)

what does CPT stand for?

CARRIAGE PAID TO (named place of destination)

musical notes of C's

CFR, CIF, CIP, CPT- seller is paying portion of transportation costs, but not all, and no import duties "C" stands for COST unique because cost and responsibility change in different places

what terms require seller to obtain insurance coverage?

CIF and CIP

what terms are arrival contracts?

DAT, DAP, DDP

two extreme terms of incoterms

DDP (seller has ALL risks and costs) EXW (buyer has ALL risk and costs)

musical notes of D's

DDP, DPU, DAP- implies seller has accepted BOTH cost and responsibility until the delivered place "D" stands for DELIVERED

what does DAP stand for?

DELIVERED AT PLACE (named place of destination)

what terms are considered shipment contracts?

EXW, FAS, FOB, FCA, CFR, CIF, CPT, CIP

incoterms appropriate for all modes of transport

EXW, FCA, CPT, CIP, DAT, DAP, DDP

most commonly used incoterms

EXW, FOB, CIF, DDP

musical note of E

EXW- goods responsibility transfers to buyer at factory

EXW

Ex Works

what modes are for sea/inland water transportation only?

FAS, FOB, CFR, CIF

musical notes of F's

FAS, FOB, FCA- seller is FREE of responsibility and cost at that point "F" stands for FREE

what is the most common incoterm

FOB (responsible until port of landing; both costs and risks)

note about CPT

buyer purchases insurance risk/responsibilities passed and costs transferred at DIFFERENT places

key words of incoterms

costs and risks, roles and responsibility, international transport

what does the named place in the incoterm do?

denotes the point of transfer of ownership between seller and buyer

what are incoterms NOT?

not payment terms, but are definite costs associated with the selected Incoterm no association with the goods themselves, only the transport of finished product

what is the only difference between FOB and FAS

responsibility of loading goods onto sea vessel FOB: SELLER responsible for loading goods FAS: BUYER responsible for loading goods

what are means of transportation?

sea, air, rail, truck, or any combination of the above

what is special about FCA

seller and buyer can decide if they want to transfer goods at warehouse or port (the costs/risks then vary)

shipment contracts

seller fulfills its delivery obligation at the point of SHIPPING

note about EXW

seller is required to provide correct documents for export clearance but clearance itself is arranged by buyer or buyer's forwarder

arrival contracts

seller is responsible for the goods until they arrive in the COUNTRY OF DESTINATION