INCOTERMS 2000

First published by the ICC in 1936 ICC (International Chamber of Commerce) Official Rules for the Interpretation of Trade terms. Purpose is to provide a set of international rules for the interpretation of the most commonly used trade terms. 10 categories describing where risks lie between seller and buyer International Commercial Terms (INCOTERMS)

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Incoterms Purpose and Scope

Pricing terms, shipping terms, sales terms Apply to international trade Define the rights and obligation of the parties to the contract of sale with respect to the delivery of goods sold.

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Four Groups of Incoterms

Less Control Seller More Control 1) E group 2) F group 3) C group 4) D group More Control Buye r Less Control

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EXW EX WORKS (named place)

The E-term is the term in which the sellers obligation is at its minimum. Seller delivers when goods placed at disposal of buyer

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EXW
E x W orks (nam ed place)
SE L L E R BUYER

S eller/ E xp ort D elivered L oad in g O n b oard D isch argin g D elivery at Im p ort B u yer/ E xp orter D ocu m en ts at n am ed P ort of S h ip P ort of n am ed p lace ofD ocu m en ts Im p orter P rem ises F orm alities p lace of: S h ip m en t R ail A rrival d estin ation : F orm alities P rem ises F ron tier/ P lan e F ron tier/ T erm in al/ S h ip s S h ip s T erm in al/Q u ay Q u ay R ail R ail S ellers B u yers R isk s R isk s

S ellers C ost

B u yers C ost

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Incoterms 2000
The F terms require the seller to deliver goods for carriage as instructed by the buyer. FCA FAS FOB

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FCA FREE CARRIER (named place)

Seller delivers when goods, cleared for export, to the carrier nominated by the buyer at a named place. Term may be used irrespective of the mode of transport. Seller obligated to load goods on arriving vehicle if it arrives at the sellers premises. Seller not obliged to unload goods from his vehicle.

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FCA
F re e C a r rier (n a m ed p la ce )
SELLER BUYER

S eller/ E x p ort D elivered L o a d in g O n b oa rd D isch arg in g D elivery at Im p o rt B u y er/ E x p o rter D o cu m en ts at n a m ed P o rt o f S h ip P o rt o f n am ed p lace o f ocu m en ts Im p or ter D P rem ises F orm alities p lace of: S h ip m en t R ail A rriva l d estin atio n : F o rm alities P r em ises F ro n tier/ P la n e F ro n tier/ T erm in al/ S h ip s S h ip s T erm in a l/Q u ay Q u ay R ail R a il S ellers R isk s B u y ers R isk s S ellers ost C Bu y ers C o st

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FAS -FREE ALONGSIDE SHIP (named port of shipment)

Seller delivers when goods, cleared for export, are placed alongside the vessel Seller obliged to clear goods for export. The buyer bears all costs and risks of loss or damage to the goods from that moment. Terms can be used for sea or inland waterway transport only.

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FAS
F ree A lo n gsid e (n a m ed p la ce)
SELLE R BUYER

S eller/ E x p o rt D eliv ered L o ad in g O n b oa rd D isch a rg in g D eliv ery at Im p o rt B u y er/ E x p o rter D o cu m en ts a t n a m ed P o rt o f S h ip P o rt o f n a m ed p la ce of o cu m en ts Im p o rter D P re m ises F o rm a lities p la ce o f: S h ip m en t R a il A rriv a l d estin a tio n : F o rm a lities P rem ises F ron tier/ P la n e F ro n tier/ T erm in a l/ S h ip s S h ip s T er m in a l/Q u ay Q uay R a il R a il S ellers R isk s B u y ers R isk s S ellers ost C B u y ers C o st

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FOB FREE ON BOARD (named port of shipment)

Seller delivers when goods, cleared for export, pass the ships rail at the named port of shipment. The buyer bears all costs and risks of loss or damage to the goods from that point. Term can be used for sea or inland waterway transport only. If intent is not to deliver goods across the ships rail, use FCA

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FOB
F ree O n B o a r d (n a m e d p o rt o f sh ip m en t)
SELLER BUYER

S eller/ E x p ort D elivered L o a d in g O n b oa rd D isch arg in g D elivery at Im p o rt B u y er/ E x p o rter D o cu m en ts at n a m ed P o rt o f S h ip P o rt o f n am ed p lace o f ocu m en ts Im p or ter D P rem ises F orm alities p lace of: S h ip m en t R ail A rriva l d estin atio n : F o rm alities P r em ises F ro n tier/ P la n e F ro n tier/ T erm in al/ S h ip s S h ip s T erm in a l/Q u ay Q u ay R ail R a il S ellers R isk s B u y ers R isk s S ellers ost C B u y ers C o st

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Incoterms 2000
The C terms require the seller to contract for carriage at his expense to a specified point. CFR CIF CPT CIP

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CFR COST AND FREIGHT (named port of destination)

Seller delivers when goods, cleared for export, pass the ships rail at the named port of shipment. The seller pays the costs and freight necessary to bring goods to port of destination, but the buyer bears the risk of loss and additional costs occurring after delivery. Term can be used for sea or inland waterway transport. If intent is not to deliver goods across the ships rail, use CPT
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C FR
Cost and Freight (nam ed port of destination)
SEL LE R BUYER

Seller/ Export D elivered Loading Exporter D ocum ents at nam ed Port of Premises Form alities place of: Shipm ent Frontier/ Term inal/ Q uay Sellers Risks

O nboard Discharging Delivery at Import Ship Port of named place of Documents Rail Arrival destination: Form alities Plane Frontier/ Ships Ships Terminal/Q uay R ail Rail B uyers R isks

Buyer/ Importer Premises

Sellers Cost

Buyers C ost

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CIF COST, INSURANCE AND FREIGHT (named port of destination)

Seller delivers when goods, cleared for export, pass the ships rail at the named port of shipment. The seller pays the costs and freight necessary to bring goods to port of destination, but the buyer bears the risk of loss and additional costs occurring after delivery. The seller procures marine insurance, against buyers risk of loss. Seller is required to obtain insurance only on minimum cover. Term can be used for sea or inland waterway transport. If intent is not to deliver goods across the ships rail, use CIP.
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C IF
C ost, Insurance and Freight (nam ed port of destination)
SEL LE R BUYER

Seller/ E xport D elivered L oading E xporter D ocum ents at nam ed Port o f Prem ises Form alities place of: Shipm ent Frontier/ T erm inal/ Q uay Sellers R isks

O nboard D ischarging D elivery at Im port Ship Port of nam ed place of D ocum ents R ail A rrival destination: Form alities Plane Frontier/ Ships Ships T erm inal/Q uay R ail R ail B uyers R isks

B uyer/ Im porter Prem ises

Sellers C osts

B uyers C ost

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CPT CARRIAGE PAID TO ( named place of destination)

Seller delivers the goods, cleared for export, to the carrier. The seller pays the costs of carriage necessary to bring goods to named destination, but the buyer bears the risk of loss and additional costs occurring after delivery. Term may be used irrespective of mode of transport.

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C PT
C arriage Paid T o (nam ed port of destination)
S ELLER B UY ER

Seller/ Export D elivered L oading E xporter D ocum ents at nam ed Port of Prem ises Form alities place of: Ship m ent Frontier/ T erm in al/ Q uay Sellers R is ks

O nboar d D ischarging D elivery at Im port Ship Port of nam ed place of D ocum ents R ail Arrival destination : Form alities Plane Frontier/ Ships S hips T erm in al/Q uay R ail R ail Buyers R isks

Buyer/ Im porter Prem ises

Sellers C ost

Buyers C osts

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CIP CARRIAGE AND INSURANCE PAID TO (named place of destination)

Seller delivers the goods, cleared for export, the the carrier. The seller pays the costs of carriage to named destination, but the buyer bears the risk of loss and additional costs occurring after delivery. The seller procures insurance against buyers risk of loss. Seller is required to obtain insurance only on a minimum cover. Term may be used irrespective of mode of transport.

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CIP
Carriage and Insurance Paid To (named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Exporter Documents at named Port of Premises Formalities place of: Shipment Frontier/ Terminal/ Quay Selle rs Risks

Onboard Discharging Delivery at Import Ship Port of named place of Documents Rail Arrival destination: Formalities Plane Frontier/ Ships Ships Terminal/Q uay Rail Rail Buyers Risks

Buyer/ Importer Premises

Sellers Cost

Buyers Cost

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Incoterms 2000
The D terms require the seller to take the goods all the way to destination at the border or within the country of import. DAF DES DEQ DDU DDP

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DDU DELIVERED DUTY UNPAID ( named place of destination)

Seller delivers goods to the buyer, not cleared for import, and not unloaded, at the named place of destination. Seller bears all costs and risks (except duty) to bring goods to the named place of destination. Term may be used irrespective of mode of transport. If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should be used.

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DDU
D eliv er ed D u ty U n p a id (n a m ed p la c e o f d estin a tio n )
SELLER BUYER

S eller/ E x p o rt D eliv ered L o a d in g O n b o a rd D isch a rg in g D eliv ery a t Im p o r t E x p o rter D o cu m en ts a t n a m ed P o rt o f S h ip Port of n a m ed p la ce o D o cu m en ts f P re m ises F o rm a lities p la ce o f: S h ip m en t R a il A rriv a l d estin a tio n : F o r m a lities F ro n tier/ P lan e F ro n tier/ T erm in a l/ S h ip s S h ip s T erm in a l/Q u a y Q uay R a il R a il S ellers R isk s

B u y er/ Im p o r ter P r e m ises

B u y er s R isk s

S ellers o st C

B u y ers C o st

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DDP DELIVERED DUTY PAID ( named place of destination)

Seller delivers goods to the buyer, cleared for import, and not unloaded, at the named place of destination. Seller bears all costs and risks, including import duty, to bring goods to the named place of destination. Term may be used irrespective of mode of transport. If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should be used.

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DDP
D eliv ered D u ty P a id (n a m ed p la ce of d estin a tio n )
SELLER BUYER

S eller/ E x p o rt D eliv ered L o a d in g O n b o a rd D isch arg in g D eliv ery at Im p ort B u y er/ E xp orter D o cu m e n ts at n a m ed P o rt o f S h ip P o rt of n a m ed p la ce ofD o cu m en ts Im p or ter P r em ises F o r m a lities p lace o f: S h ip m en t R a il A rriva l d estin a tio n : F o rm a lities P rem ises F ron tier/ P lan e F r on tier/ T er m in al/ S h ip s Sh ip s T er m in a l/Q u a y Q uay R ail R a il S elle rs R isk s B u y ers R isk s Sellers o st C B u y ers C o st

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DAF DELIVERED AT FRONTIER (named place)

Seller delivers goods, cleared for export, at disposal of buyer on arriving means of transport. Not unloaded, not cleared for import at point at frontier before customs border of adjoining country. Term may be used irrespective of the mode of transport when goods are delivered at a land frontier. If delivery is to take place in the port of destination, DES or DEQ should be used.

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DAF
D elivered A t F rontier (nam ed place )
SELLER BUYER

S eller/ E xp ort D eliv ered L oa d ing O n b o ard D isch argin g D elivery at Im p ort B u yer/ E xp orter D ocu m en ts a t n am ed P o rt of S hip Po rt o f n am ed p lace o fD ocu m en ts Im po rter Prem ises F orm alities p lace of: S h ip m en t R a il A rriva l d estin a tio n: F orm alities Prem ises Fro n tier/ Pla n e F ron tier/ T erm in al/ S h ip s Sh ip s T erm in a l/Q u ay Q uay R ail R a il S ellers R isk s B u yers R isk s S ellers ost C B u y ers C o st

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DES DELIVERED EX SHIP ( named port of destination)

Seller delivers goods at disposal of buyer on board the ship. Not cleared for import at the named port of destination. Seller bears all costs and risks to bring goods to the named port before discharging. Term used only for delivery by sea. If the seller is to bear the costs of discharging the goods, DEQ should be used.

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DES
D eliv ered exS h ip (n am edof o rt ation ) p d estin
SELLER BUYER

S eller/ E x p ort D elivered L o a d in g O n b oa rd D isch a rg in g D elivery a t Im p o rt B u y er/ E xp orter D o cu m en ts at n a m ed P ort of S h ip P or t o f n am ed p lace o fD o cu m en ts Im p o rter P re m ises F o rm a lities p la ce of: S h ip m en t R a il A rriv a l d estin ation : F or m alities P r em ises F ron tier/ P la n e F ron tier/ T erm in a l/ S h ip s Sh ip s T erm in a l/Q u a y Q uay R a il R ail S ellers R isk s B u yers R isk s S elle s C ost r B u y ers C o st

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DEQ DELIVERED EX QUAY ( named port of destination)

Seller delivers goods, not cleared for import, at disposal of buyer on the quay at the named port of destination. Seller bears all costs and risks to bring goods to the named port of destination and discharging the goods on the quay. Term used only for delivery by sea.

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DEQ
D eliv ered E x Q uay (n am ed fpoestination ) o d rt
SELLE R BUYER

S eller/ E xp ort D eliv ered L oa d in g O n b o ard D isch argin g D elivery at Im p ort B u yer/ E xp orter D ocu m en ts a t n am ed P o rt of S h ip P ort o f n am ed p lace ofD o cu m en ts Im p or ter P re m ises F or m alities p lace of: S h ip m en t R a il A rriva l d estin a tio n : F orm alities P r em ises F ron tier/ P la n e F ron tier/ T erm in a l/ S h ip s S h ip s T erm in al/Q u ay Q uay R ail R a il S ellers R isk s B u yers R isk s S ell rsC ost e B u y ers C ost

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Mode of Transport and Appropriate Incoterm - Any Mode of Transport

EXW FCA CPT CIP DAF DDU DDP

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Mode of Transport and Appropriate Incoterm Maritime and Inland Waterway Transport Only
FAS FOB CFR CIF DES DEQ

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In Summary
Buyers Objective: maximize control of supply chain, use FOB, FCA, or FAS Must name a place after the INCOTERM INCOTERMS are negotiable! INCOTERMS should appear on all commercial documents Establish a close relationship with a forwarder

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