Quick Guide: Incoterms in International Logistics

Within International Logistics there are several tools that facilitate the exchange of products, The Incoterms are one of the most important since they serve us for the interpretation of commercial terms in a buy/sell contract and that in addition avoid misunderstandings between the parties involved. Incoterms rules are published and updated at least every 10 years by the International Chamber of Commerce.

Incoterms provide for the expenses that may be incurred, risks and documentation, and help us to determine the place and time of delivery (where the risk is transferred), who contravenes and pays the insurance, customs expenses, freight, storage etc.

 

Incoterms 2010

EXW: In factory (indicating agreed place)

The seller undertakes to deliver the goods at an agreed point within the country of origin. It takes care of the costs until the goods are located at that agreed point. It can be used with any type of transport: air, rail, land and/or maritime.

FCA: Carrier franc (indicating agreed place)

The seller undertakes to deliver the goods at an agreed point within the country of origin. It can be used with any type of transport: air, rail, land and/or maritime.

FAS: Franc on the side of the ship (agreed cargo port)

The seller delivers the goods to the side of the ship at the dock of the agreed cargo port. It is typical of bulk cargo or bulky cargo goods because they were deposited in specialized port terminals. The seller is responsible for the procedures and costs of the customs export.

FOB: On-board franc (agreed cargo port)

The seller delivers the goods on board the ship, contracts the transport, but the cost of transport is assumed by the buyer. It is used exclusively for maritime transport.

CFR: Cost and freight (agreed destination port)

The seller bears all costs, including main transport, to the port of destination, however, the risk is transferred to the buyer at the time the goods are loaded onto the ship, in the country of origin. The transport to be used is only maritime.

CIF: Cost, insurance and freight (agreed port of destination)

The seller takes care of all costs, main transportation and insurance to the port of destination. Although the insurance has been contracted by the seller, the benefit of the insurance is the buyer and the risk is transferred to the buyer at the time the goods are loaded on the ship, in the country of origin. It is used exclusively for maritime transport.

CPT: Transportation paid to (agreed place of destination)

The seller takes care of all costs, including main transportation, until the goods reach the agreed point in the destination country. However, the risk is transferred to the buyer at the time the delivery of the goods to the carrier within the country of origin. Any type of transport including multimodal transport can be used.

CIP: Transportation and insurance paid up to (agreed place of destination)

The seller takes care of all costs, including main transportation and insurance, until the goods reach the agreed point in the destination country. The risk is transferred to the purchaser at the time of delivery of the goods to the carrier within the country of origin. Although the insurance has been contracted by the seller, the beneficiary of the insurance is the buyer. It can be used with any mode of transport including multimodal transport.

DAT: Delivered in terminal (agreed destination terminal)

The seller takes care of all costs, including main transportation and insurance (the latter being optional) until the goods are placed in terminal. It also takes the risks up to that point. The customs payment is by the buyer.

DAP: Delivered at one point (agreed destination)

The seller takes care of all costs, including main transportation and insurance (optional) and all risks until the goods are made available to the buyer in a vehicle ready to be unloaded.

DDP: Delivered duties paid (agreed place of destination)

The seller pays all costs until the goods are left at the agreed point in the destination country. Buyer does not perform any kind of formality. Import customs charges are borne by the seller. It can be used with any type of transport: air, rail, land and/or maritime.

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