Incoterms
According to the recent amendment in Inco terms 2010, the 13 Inco terms have been modified to 11 classifying them into 2 groups i.e. for all modes of transport and for Inland or Sea transport. Also eliminating 4 terms i.e. DAF (Delivered at Frontier), DES (Delivered Ex-Ship), DEQ (Delivered Ex-Quay) and DDU (Delivered Duty Unpaid). The seven rules defined by Inco terms 2010 for any mode(s) of transportation are:
EXW – Ex Works
The seller makes the goods available at his premises. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn't load the goods on collecting vehicles and doesn't clear them for export. If the seller does load the good, he does so at buyer's risk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale
CPT - Carriage Paid To
The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.
CIP – Carriage and Insurance Paid
Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier. (For containerized transport/multimodal mode)
DAT – Delivered at Terminal
Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.
DAP - Delivered at Place
Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.
DDP – Delivered Duty Paid
Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.
Rules for Sea and Inland Waterway Transport
The four rules defined by Inco terms 2010 for international trade where transportation is entirely conducted by water are:
FAS – free alongside Ship
The seller must place the goods alongside the ship at the named port and must clear the goods for export. This term is typically used for heavy-lift or bulk cargo.
FOB – Free on Board
The seller must load the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new). The seller must clear the goods for export. The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever since Inco terms 1980 explained that FCA should be used for container shipments.
CFR – Cost and Freight
Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel (this rule is new). Insurance for the goods is NOT included. This term is formerly known as CNF (C&F).
CIF – Cost, Insurance and Freight
Exactly the same as CFR except that the seller must in addition procure and pay for the insurance.
CHARTS
