Tools: Incoterms
Incoterms are used to make international trade easier by helping traders in different countries understand one another. They are practical and economical tools used worldwide to facilitate international trade procedures.Many trade practices vary from country to country. By using the International Chamber of Commerce’s (ICC) Incoterms, which have defined and specific meanings, a vendor and a purchaser can specify their respective responsibilities and obligations in a contract.
Incoterms 2000 is broken down into 4 major groups:
Group E: Departure
EXW: Ex Works: All freight arrangements are made by the buyer.
Group F: Main Carriage Unpaid
FCA: Free Carrier: the seller delivers the goods to the buyer’s carrier
FAS: Free Alongside Ship: The seller delivers the buyer’s goods along-side on the quay
FOB: Free On Board: The seller places his goods on board the ship at the point of departure
Group C: Main Carriage Paid
CFR: Cost and Freight: The cost of goods plus cost of freight from the origin point to the port of unloading.
CIF: Cost, Insurance and Freight: The same as CFR except the seller also provides the marine insurance
CPT: Carriage Paid To: seller delivers goods to carrier but must also pay the cost of carriage necessary to bring the goods to the destination named by the buyer.
CIP: Carriage and Insurance Paid: same as CPT, but in CIP the seller also has to procure insurance against the buyer's risk of loss of or damage to the goods during the carriage
Group D: Arrival
DAF: Delivered At Frontier: the seller makes his goods available at the frontier, but before the customer’s border at the country named
DES: Delivered Ex Ship: the seller pays all ship costs from the point of origin to onboard the ship and transportation to the point of unloading.
DEQ: Delivered Ex Quay: the seller makes the goods available to the quay (or wharf)
DDU: Delivered Duty Unpaid all costs are to be paid by the seller to the buyer’s premises, excluding payment of duty
DDP: Delivered Duty Paid: all costs are to be paid by the seller to the buyer’s premises, including payment of duty.