Incoterms (international delivery terms): what does it say?Incoterms describe the roles of the buyer and the seller in an international trade agreement. Who should do what and when? In the contract between both parties, the following is laid down:
The obligations of the buyer and the seller with regard to transport
Who arranges the insurances, licences, authorisations and all other formalities?
Who arranges the transport to where and is responsible for it?
When do the costs and risks go from the seller to the buyer?
As of 1 January 2011, buyers and sellers can choose from the following Incoterms:
For any form of (multimodal) transport:
EXW / Ex Works
Similar to ex-factory delivery. The seller produces and places the goods at the disposal of the buyer in his expedition space on time. Almost all obligations are here with the buyer: they export (or import) and run the risk. This Incoterm is suitable for all transport modalities and also provides for the possibility to sell goods without changing places.
CPT / Carriage Paid To
CPT is a condition that can be used for all modes of transport. The vendor arranges the export license, contracts the transport to the (air) port of destination, including unloading, and runs the risk until the moment that he delivers the goods ‘under the consent of the (first) carrier’.
CIP / Carriage and Insurance Paid To
This condition is equal to CPT, but includes compulsory insurance for the seller up to the port or terminal of destination. CIP is a condition that can be used for all forms of transport.
FCA / Free Carrier
This is a non-maritime condition, which means that it is suitable for all modalities. The initiative lies here with the buyer. The seller produces and delivers to a transporter or forwarding agent designated and contracted by the buyer. The seller runs the risk until the goods are loaded on board the means of transport. The risk distribution runs parallel to the transport obligation. In the business world, FCA is increasingly being used, especially in the place of EXW. Advice: use in transport in containers preferably FCA instead of FOB.
DAT / Delivered At Terminal
At DAT (Delivered At Terminal) delivery takes place in a predetermined terminal by making the goods available to the buyer, unloaded from the arriving means of transport. The seller makes the goods available from the means of transport and therefore does not need to unload himself. This is also the moment at which the risk passes from the seller to the buyer. The buyer has the obligation to offer the goods to the customs with the necessary import documents and to pay any import duties and formalities.
DAP / Delivered At Place
At DAP (Delivered At Place), delivery also takes place by making goods available to the buyer, ready to be unloaded. The seller shall bear all costs and risks related to the transport of the goods to the agreed place of destination. The buyer has the obligation to offer the goods to the customs with the necessary import documents and to pay any import duties and formalities.
DDP / Delivered Duty Paid
Seller delivers and runs risk to final destination, exports and imports. This Incoterm is the counterpart of EXW. This Incoterm is suitable for all modalities.
In 2020 there will be a new set of Incoterms: the Incoterms 2020. Soon more information about the changes on this page!
Only for transport by sea and inland waterways:
FAS / Free Alongside Ship
FAS is a maritime condition, so for transport by ship. Seller delivers on the quay along the ship. Buyer contracts transport, and arranges import and export license. The seller provides the pre-transport and the export formalities.
FOB / Free On Board
This Incoterm is only used for transport by ship (maritime condition). Identical as FAS, only the delivery obligation and the risk ends on board of the ship. The seller takes care of the pre-transport and the loading of the goods as well as the export license. FOB is a very frequently used condition.
CFR / Cost and Freight
This Incoterm is only used for transport by ship and is known as C & F, C and F and C + F. The seller contracts the transport to the port of destination (excluding unloading), and arranges an export permit. The risk runs until the ship’s rail at the port of departure. CFR is a frequently used condition.
CIF / Cost, Insurance and Freight
CIF is a maritime condition. The same as CFR, only including insurance obligation for the seller to the port of destination. The transport lift is in the hands of the seller. In addition, the seller also bears the transportation risk. It is a very frequently used condition.
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