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)

February 8, 2006
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.

February 8, 2006
 Four Groups of Incoterms

Less More
Control 1) “E” group Control

2) “F” group
Seller Buyer
3) “C” group
More Less
4) “D” group Control
Control

February 8, 2006 3
 EXW
EX WORKS (…named place)
• The “E”-term is the term in which the
seller’s obligation is at its minimum.
• Seller delivers when goods placed at
disposal of buyer

February 8, 2006
 EXW
Ex Works …(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Buyer’s Risks
Risks

Seller’s Buyer’s Cost

Cost

February 8, 2006 5
 Incoterms 2000
• The “F” –terms require the seller to deliver
goods for carriage as instructed by the buyer.
• FCA
• FAS
• FOB

February 8, 2006
 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 seller’s premises.
• Seller not obliged to unload goods from his
vehicle.

February 8, 2006
 FCA
Free Carrier… (named place)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at nam ed Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 8
 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.

February 8, 2006
 FAS
Free Alongside… (nam ed place)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Im port Buyer/

Exporter Docum ents at nam ed Port of Ship Port of nam ed place of D ocum ents Im porter
Premises Form alities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail R ail
Seller’s Risks Buyer’s
R isks

Seller’s C ost Buyer’s Cost

February 8, 2006 10
 FOB – FREE ON BOARD
(…named port of shipment)
• Seller delivers when goods, cleared for export,
pass the ship’s 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 ship’s
rail, use FCA

February 8, 2006
 FOB
Free On Board… (named port of shipment)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at nam ed Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 12
 Incoterms 2000
• The “C” –terms require the seller to
contract for carriage at his expense – to a
specified point.
• CFR
• CIF
• CPT
• CIP

February 8, 2006
 CFR – COST AND FREIGHT
(…named port of destination)
• Seller delivers when goods, cleared for export,
pass the ship’s 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 ship’s
rail, use CPT
February 8, 2006
 CFR
C ost and F reigh t … (n am ed p ort of d estin ation )
SELLER BUYER

S eller/ E xp ort D elivered L o ad in g O n b oard D isch argin g D elivery at Im p ort B u yer/

E xporter D ocu m en ts at nam ed P ort of S h ip P ort of n am ed p lace o f D ocu m en ts Im po rter
P rem ises F orm alities p lace of: S h ip m en t R ail A rrival d estination : F orm alities P rem ises
Fron tier/ Plan e F ron tier/
T erm in al/ S h ip ’s Sh ip ’s T erm in al/Q u ay
Q u ay R ail R a il
S eller’s R isk s B u yer’s R isk s

S eller’s C ost B u yer’s C ost

February 8, 2006 15
 CIF – COST, INSURANCE AND
FREIGHT (…named port of destination)
• Seller delivers when goods, cleared for export, pass the
ship’s 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
buyer’s 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 ship’s rail, use
CIP.

February 8, 2006
 C IF
C ost, In su ran ce an d F reigh t … (nam ed p ort of d estination)
SELLER BUYER

S eller/ E xp ort D elivered L o ad in g O n b oard D isch argin g D elivery at Im p ort B u yer/

E xporter D ocu m en ts at nam ed P ort of S h ip P ort of n am ed p lace o f D ocu m en ts Im po rter
P rem ises F orm alities p lace of: S h ip m en t R ail A rrival d estination : F orm alities P rem ises
Fron tier/ Plan e F ron tier/
T erm in al/ S h ip ’s Sh ip ’s T erm in al/Q u ay
Q u ay R ail R a il
S eller’s B u yer’s R isk s
R isk s

S eller’s B u yer’s C ost

C osts

February 8, 2006 17
 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.

February 8, 2006
 CPT
Carriage Paid To …(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s

Costs

February 8, 2006 19
 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 buyer’s risk of
loss. Seller is required to obtain insurance only on a
minimum cover.
• Term may be used irrespective of mode of transport.

February 8, 2006
 CIP
Carriage and Insurance Paid To …(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 21
 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

February 8, 2006
 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.

February 8, 2006
 DDU
Delivered Duty Unpaid… (named place of destination)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at named Port of Ship Port of named place of Documents Importer
Premises Form alities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 24
 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.

February 8, 2006
 DDP
Delivered Duty Paid…(named place of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 26
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.

February 8, 2006
 DAF
Delivered At Frontier…(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 28
 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.

February 8, 2006
 DES
Delivered exShip…(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 30
 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.

February 8, 2006
 DEQ
Delivered Ex Quay…(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

February 8, 2006 32
 Mode of Transport and Appropriate
Incoterm - Any Mode of Transport
• EXW
• FCA
• CPT
• CIP
• DAF
• DDU
• DDP

February 8, 2006
 Mode of Transport and Appropriate
Incoterm – Maritime and Inland
Waterway Transport Only
• FAS
• FOB
• CFR
• CIF
• DES
• DEQ

February 8, 2006
 In Summary

• Buyer’s 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

February 8, 2006 35