Inco Terms

international-freight-process

  • EXW – Ex Works (named place)
    The seller makes the goods available at its 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 goods, he does so at buyer’s risk and cost. If both parties wish the 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.

  • FCA – Free Carrier (named place)
    The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier.

  • DDP – Delivered Duty Paid (named place of destination): The 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.

  • FOB – Free On Board (named port or place of shipment)
    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 term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This Term has been greatly misused over the last three decades, ever since Incoterms 1980 explained that FCA should be used for container shipments.

  • CFR – Cost and Freight (named port of destination)
    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!). Maritime transport only and Insurance for the goods is NOT included. This term was formerly known as CNF (C&F).

  • CIF – Cost, Insurance and Freight (named port of destination)
    Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only.


International Chamber of Commerce : http://www.iccwbo.org/incoterms/id3043/index.html


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