Introduction to Incoterms 2010 May 17, 2012
Incoterms 2010 Background Purpose General Notes Important changes for 2010 What Incoterms don t do What Incoterms aren t Recommended Usage Incoterm Groupings Closing Notes
Incoterms History & Background INternational COmmercial TERMS Published by the International Chamber of Commerce (ICC), located in France ICC issued first Incoterms in 1936 11 terms of shipment and delivery in Incoterms 2010 (13 terms in Incoterms 2000) Effective 1/1/2011 ICC publication #715 Revisions are approximately every decade in recent history (1980, 1990, 2000, 2010)
Purpose: Provide Common Ground in International Trade Provide an internationally accepted definition of: The responsibilities of the & The allocation of delivery costs The assumption of delivery risks Created to adapt to the most contemporary commercial practices Should be referred to as Rules Translated into different languages Endorsed by the ICC & respective ICC national organizations
General Notes Incoterms divide Costs, Risks, and Responsibilities between the and Written to reflect rather than dictate trade practice Terms of sale must be negotiated in conjunction with the terms of payment Incoterms focus on the s delivery obligations Incoterms can be modified as long as the and agree and it is documented Effective date of January 1 st, 2011 does not invalidate older versions; they can still be used as long as the and agree on the version used
Important Changes for 2010 Incoterms 2010 contains 11 terms of delivery DAF, DES, DDU and DEQ have been removed DAP and DAT are new and have been added Container arrival costs (i.e., THC and other destination charges) are not expressed Exact cost transfer points need to be addressed elsewhere in the contract DAT is the only term that specifically tasks the seller with unloading FOB changed to on board vessel (ship s rail reference removed)
Incoterms do not... Dictate the terms & conditions of carriage Convey title to/point of sale of goods Address revenue recognition Include all of the duties of the / in a transaction Automatically apply (you must specify) Deal with a breach in contracts Speak about payment disputes between the /
Incoterms are not... Law - Incoterms must be specified in sales contracts in order to apply. This is normally done by citing the current Incoterms version in sales quotations and purchase orders. All-inclusive - Detailed situations beyond the scope of Incoterms must be covered elsewhere in the sales contracts.
Recommended Usage Any Mode: EXW FCA CPT CIP DAP Maritime Only: FAS FOB CFR CIF DAT DDP
E Group-EXW EX WORKS named place of delivery (usually s premises) Transport mode: All Recommendation: the use of EXW is questionable, except as a starting point for a more appropriate Incoterm. s cost and risk end when places goods at the disposal of the, at s premises or named place.
Group E EXW EX Works All Modes Door Pre-Carriage Carrier Port Customs Delivery Costs Risk
F Group-FCA FREE CARRIER named place of delivery (usually s premises or a appointed carrier terminal on the s side) Transport Mode: All s cost & risk end when goods are delivered to s carrier at the s premises or another named place.
F Group-FAS FREE ALONGSIDE SHIP named port of shipment Transport Mode: Vessel Recommendation: Consider FOB which at least provides a definitive delivery document s cost and risk end when goods are placed alongside the vessel nominated by the at the named port of shipment.
F Group-FOB FREE ON BOARD named port of shipment Transport Mode: Vessel Recommendation: For containerized shipments, consider FCA, showing the carrier s terminal at the port as designated place. s cost and risk end when the goods are delivered on board the vessel nominated by the.
Group F Door Pre-Carriage Carrier Port Customs Delivery FCA Free Carrier All Modes Costs Risk FAS Free Alongside Ship Maritime Only Costs Risk FOB Free On Board Maritime Only Costs Risk
C Group-CFR COST AND FREIGHT named port of destination Transport Mode: Vessel Recommendation: for containerized shipments, consider CPT, showing the destination port or an inland location on the s side s risks for loss and damage ends when the goods are on board the vessel. must contract and pay the costs and freight necessary to bring the goods to the named port of destination.
C Group-CIF COST INSURANCE AND FREIGHT named port of destination Transport Mode: Vessel Recommendation: for containerized shipments, consider CIP, showing the destination port or an inland location on the s side s risks of damage or loss ends when goods are on board the vessel must contract for and pay the costs and freight necessary to bring the goods to the named port of destination
C Group-CPT CARRIAGE PAID TO named place of destination Transport mode: All Recommendation: ideal for containerized shipments s risk ends when goods are delivered to the carrier or another person nominated by the at an agreed place must contract for the costs of carriage necessary to bring the goods at the named place of destination s: for delivery at inland locations on the s side, use this only with door, port, or airport to door transportation. s: if the shipment is not on door-to terms, insist that the remain responsible for the condition of the goods until they are handed over to the first main carrier.
C Group-CIP CARRIAGE AND INSURANCE PAID TO named place of destination Transport Mode: All Recommendation: the best Incoterm available for sellers making containerized shipments s risk ends when goods are delivered to the carrier, or another person nominated by the at an agreed place must contract for the costs of carriage necessary to bring the goods at the named place of destination must provide with Insurance Policy
Group C CFR Cost and Freight Maritime Only CIF Cost, Ins. and Freight Maritime Only CPT Carriage Paid To All Modes CIP Carriage and Ins. Paid All Modes Door Pre-Carriage Carrier Port Customs Delivery Costs Risk Costs Risk Costs Risk Costs Risk
D Group-DAT DELIVERED AT TERMINAL named terminal at port or place of destination. Transport mode: All Recommendation: when using DAT, specify as clearly as possible the terminal at the agreed port or place of destination, as the risks to that point are for the account of the. s risks ends once goods are unloaded from the arriving means of transport, and placed at the disposal of the, at a named terminal at port or place of destination. must contract for the costs of carriage to the named terminal, at the agreed port or place of destination.
D Group-DAP DELIVERED AT PLACE named place of destination. Transport mode: All s risks ends when goods are placed at the disposal of the on the arriving means of transport, ready for unloading Recommendation: when using this term, make clear which party is responsible for unloading, and any type of oncarriage bears the costs for the carriage of the goods to the named place of destination, or the agreed place
D Group-DDP DELIVER DUTY PAID named place of destination Transport mode: All bears all costs and risks involved in bringing the goods to the place of destination, and has an obligation to clear the goods not only for export, but also for import, to pay any duty for both export and import and to carry out all customs formalities
Group D Door Pre-Carriage Carrier Port Customs Delivery DAT Delivered At Terminal All Modes Costs Risk DAP Delivered At Place All Modes Costs Risk DDP Delivered Duty Paid All Modes Costs Risk
Closing Notes Contract vs. Incoterms Incoterms are a guide, the contract is a legally enforceable document. Changes and modifications are allowed Don t over complicate, and document properly Sales makes the deals, supply chain/logistics executes Make sure your sales personnel know their Incoterms and the resulting obligations
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