Incoterms

Terms that apply to any mode of transport

  • Buyer assumes almost all costs and risk throughout the shipping process
  • Seller’s only job is making sure goods are accessible to buyer, suitably packaged, at a specified place (usually sellers warehouse or depot). Although not obliged to load goods, if they do so, it is still at the risk of the buyer.
  • Once the buyer has access, they are responsible for loading goods onto transport vehicles (even though seller may be in better position to do so), for all export procedures, for onward transport, and for all cost associated with collection of goods.

Risk transfers from seller to buyer:

At the seller’s warehouse, depot or wherever the goods are to be being collected by the buyer.

  • It’s the seller’s job to get the goods to the buyer’s carrier at an agreed location
  • Buyers and sellers can agree that the buyer instructs their carrier to issue the seller with an on-board bill of lading after loading the goods.
  • At the same time, the seller is obliged to hand over this on-board bill of lading to the buyer.
  • Goods may be moved by using it’s the seller’s own means of transportation, without engaging a third-party carrier.
  • Seller is also required to clear goods for export.

Risk transfers from seller to buyer:

When the buyer’s carrier receives the good

  • Same seller responsibilities as FCA with one difference: the seller must in addition pay the cost of carriage necessary to bring the goods to the agreed location.
  • Requires the seller to clear the goods for export (as with FCA)

Risk transfers from seller to buyer:

When the buyer’s carrier receives the goods.

  • Seller has same responsibilities as with CPT with one difference: the seller also pays for insuring the goods
  • Seller is only obliged to purchase the minimum level insurance that shall cover the price provided in the contract plus ten per cent (i.e. 110 %) and shall be provided in the currency of the contract.
  • If the buyer wants more comprehensive insurance, they have to organise it themselves.
  • Different levels of cover may be included in the commercial agreement.

Risk transfers from seller to buyer:

At the point where the goods are taken in charge by a carrier.

  • Seller covers the costs and risk of arranging carriage and for delivering the goods ready for unloading at a named address.
  • Goods are classed as delivered when they’re at the address and ready to be unloaded.
  • Export and import responsibilities are with the buyer.

Risk transfers from seller to buyer:

When the goods are available for unloading; so unloading is at the buyer’s risk.

  • Replaces – DAT (Delivered at Terminal)
  • Used for any transport mode, or where there is more than one transport mode. The buyer and seller should specify and agree upon a named place of destination.
  • Requires the seller to deliver the goods at the disposal of the buyer after they’ve been unloaded from the arriving means of transport.
  • Requires the seller to unload goods at the place of destination.
  • Requires the seller to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.

Risk transfers from seller to buyer:

When goods have been unloaded.

  • Seller takes almost all responsibility for arranging carriage and delivering the goods at the named place, cleared for import and all applicable taxes and duties paid.
  • They cover all costs and risk of transporting goods to the agreed address.
  • Seller takes responsibility for clearance of the goods for export and import, carries out all customs requirements, pays all costs (duties) and accepts the risk involved in transporting the goods to their destination.
  • As local import clearance requirements and can be complex the requirements of DDP can be problematic for the seller so it is best left to the local buyer (with local knowledge and understanding) to manage this process.

Risk transfers from seller to buyer:

When goods are ready for unloading at the agreed address.

Incoterms that apply to sea and inland waterway transport only

  • Seller assumes all costs and risk until goods have been delivered next to the ship at the named port of shipment.
  • From this point Buyer then takes over risk of loss or damage, and takes care of export and import clearance.
  • FAS is only applicable to sea or inland waterway transport.

Risk transfers from seller to buyer:

When goods have been delivered next to the ship.

  • The Seller assumes all costs and risk and clears goods for export.
  • If the ship has roll-ob/roll-off or container traffic where there isn’t a ships rail to pas over then FCA should be used.
  • FOB is only applicable to sea or inland waterway transport.
  • Buyer assumes all responsibilities as soon as the goods are on board

Risk transfers from seller to buyer:

When goods have been delivered on over the ships rail at the named port of shipment.

  • Seller has the same responsibilities as FOB but must also pay the cost of bringing the goods to the port.
  • As with FOB, the buyer assumes all responsibilities as soon as the goods are on board.

Risk transfers from seller to buyer:

When goods are on the ship.

  • Seller has the same obligations as CFR but is also obliged to cover insurance costs.
  • As with CIP, they’re only required to purchase the minimum cover which is 110% of invoice value.
  • If the buyer requires more comprehensive insurance, they have to pay for additional coverage themselves.

Risk transfers from seller to buyer:

When the goods are on the ship.

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