8 - Unit-V - Incoterms Notes

UNIT V: INTERNATIONAL
COMERCIAL TERMS
• define key responsibilities
of sellers and buyers in the
sale of goods
INCOTERMS :
• Issued by ICC (International
INternational Chamber of Commerce)
COmmercial
TERMS • clarifying the tasks, costs
and risks involved in the
delivery of goods from
sellers to buyers.
The Steps of
Global
Logistics
4 categories:
1.The “E” term: (EXW) – The only term where the seller/ exporter makes the
good available at his own premises to the buyer/ importer.
2.The “F” terms: (FCA, FAS and FOB) – Terms where the seller/ exporter is
responsible to deliver the goods to a carrier/ship named by the buyer.
3.The “C” terms: (CFR, CIF, CPT and CIP) – Terms where the seller/
exporter/ manufacturer is responsible for contracting and paying for
carriage of the goods, but not responsible for additional costs or risk of
loss or damage to the goods once they have been shipped.
4.The “D” terms: (DAP, DPU and DDP) – Terms where the
seller/exporter/manufacturer is responsible for all costs and risks
associated with bringing the goods to the named place of
destination.
1. Export packaging - the outermost layer of packaging and is
designed to protect your goods during transit. Examples of
export packaging include wooden crates or boxes, metal
drums and plastic shrink-wrapping.
2. Loading charges - Any costs for loading goods at the pickup

point
3. Delivery to the port of origin - Costs for transporting goods to

the port for shipping
4. Export Duty, Taxes & Customs Clearances - Any export costs

associated with duties, tarrifs, and documentation
5. Terminal charges - There may be charges at the origin and

arrival (destination) terminal
6. Loading on carriage: Costs for loading goods on the
shipping method
7. Freight charges: Any shipping costs for moving goods

between ports
8. Insurance: Insurance that generally protects

shipments from loss, damage, or theft while in transit. If
needed or desired
8. Delivery to Destination : The costs for delivering goods
from the arrival port to the final destination
9. Unloading: Cost to unload goods, such as labor and

equipment.
10. Import Duty, Taxes & Custom Clearances - Any import

costs associated with duties, tariffs, and documentation
E Terms: EX WORKS
Departure • EXW (place of delivery)
• The seller fulfills his obligation to deliver when he has

made the goods available usually at his premises
• buyer is responsible for picking up until delivery to
final destination
Free Carrier
FCA (place of
delivery)
• Sellers delivers to goods to a named place

(shipping dock/ airline terminal)
• Risk passes to the buyer at shipping point
Free Alongside Ship
FAS + port of loading
•The seller delivers when the goods are placed alongside the vessel
(dock) nominated by the buyer at the named port of shipment.
•The risk of loss of or damage to the goods passes when the products are
alongside the ship. The buyer bears all costs from that moment onwards.
Free On Board
FOB (…named port of
shipment)
• The seller delivers the goods on board the vessel nominated by
the buyer at the named port of shipment or procures the goods
already so delivered.
• The risk of loss of or damage to the goods passes when the
products are on board the vessel. The buyer bears all costs
from that moment onwards.
Cost and Freight
CFR (port of destination)
•The seller delivers the goods on board the vessel or procures the
goods already so delivered.
•The risk of loss of or damage to the goods passes when the

products are on board the vessel.
•The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of destination.
Cost Insurance and Freight
CIF (…named port of
destination)
•The seller delivers the goods on board the vessel
•The risk of loss of or damage to the goods passes when
the products are on the ship.
•The seller must pay the costs and freight necessary to
bring the goods to the named port of destination.
•The seller also contracts for insurance cover against the
buyer’s risk of loss of or damage to the goods during the
carriage.
Carriage Paid To
CPT (place of destination)
•The seller delivers the goods to the carrier and pays
all costs until destination point
• Risk will be transferred to buyer at the carrier
Carriage and Insurance Paid
CIP (…named port of destination)
• Similar to CPT plus
• Seller pays Insurance while intransit
Delivered at Place
DAP + place of destination
• Seller arranges and pays for cargo to the
foreign destination
• Once delivered the goods transfers to the
buyer
• Buyer handles unloading and import
clearance and in-country transport
Delivered at Place Unloaded
DPU + place of destination
• The seller must deliver and unload the cargo to the
foreign destination.
• Once the shipment is successfully unloaded at the
buyer’s warehouse, the responsibility transfers to the
buyer. The buyer is responsible for import duty, taxes,
and customs clearance.
Delivered Duty paid
DDP + place of destination
• The seller bears all the costs and risks involved in
bringing the goods to the place of destination.
• They must clear the products not only for export
but also for import.
• www.wto.org retrieved July 2022
• www.icc.org retrieved July 2022
• UNCTAD at United Nations retrieved July
2022
• Local Chambers of Commerce retrieved
July 2022
REFERENCES • International Chamber of Commerce -
New York City Office retrieve July 2022
• https://www.incotermsexplained.com/th
e-incoterms-rules/the-eleven-rules-in-
brief/free-carrier/
• https://guidedimports.com/blog/what-
are-incoterms-chart/
END OF
LESSON V
THANK YOU!

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UNIT V: INTERNATIONAL

2. Loading charges - Any costs for loading goods at the pickup

3. Delivery to the port of origin - Costs for transporting goods to

4. Export Duty, Taxes & Customs Clearances - Any export costs

5. Terminal charges - There may be charges at the origin and

7. Freight charges: Any shipping costs for moving goods

8. Insurance: Insurance that generally protects

9. Unloading: Cost to unload goods, such as labor and

10. Import Duty, Taxes & Custom Clearances - Any import

• The seller fulfills his obligation to deliver when he has

• Sellers delivers to goods to a named place

•The risk of loss of or damage to the goods passes when the

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