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Incoterms
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The Incoterms are terms, each made up of three letters, reflecting the voluntary acceptance rules by the parties in an international freight purchase agreement regarding the delivery terms and conditions of the freight.123. They are used to clarify the costs of international business transactions, defining responsibilities between buyer and seller and reflect current practice in international freight transport..
Changes to Incoterms 2020
The changes to Incoterms 2020 compared to Incoterms 2010 are:
- Incoterm DAT (Delivered At Terminal) is replaced by DPU (Delivered at Place Unloaded). The most important aspect of this modification is the change of name, as the responsibilities and obligations are the same, but the new DPU term allows the delivery to be established anywhere, and not specifically at the terminal, even though that can be agreed in the contract if the parties so desire.
- New terms and conditions are set when taking out insurance for CIF and CIP Incoterms.
- In the FCA Incoterm is supplied using maritime transport, the purchaser can now ask the shipping company or its agent to accept the BL (Bill of Lading) with the "on board" comment for the seller.
Incoterms Clasification
| “E” Departure | “F” Main Carriage Unpaid | “C” Main Carriage Paid | “D” Arrival | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Servicio | EXW Ex-Works (Place) |
FCA Free Carrier (Place) |
FAS Free Alongside Ship (Port) |
FOB Free On Board (Port) |
CFR Cost & Freight (Port) |
CIF Cost Insurance & Freig |
CPT Carriage Paid To (Place) |
CIP Carriage & Insurance Paid To (Place) |
DPU Delivered at Place Unloaded (Place) |
DAP Delivered at Place (Place) |
DDP Delivered Duty Paid (Place) |
| Obligation and Charges | |||||||||||
| Warehousing Services | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Export Packing | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading at Point of Origin | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Inland Freight | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Port Origin Charges | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Export Clearance | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Ocean/Air Freight | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Port Charges Destination | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Seller | Seller |
| Customs Clearance | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Custom Duties | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Unloading Charges | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Buyer | Buyer |
| Delivery Charges to Final Destinatio | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer/Seller | Buyer/Seller | Seller |
| Mode | Term | |
| Any Mode of Transport including Multimodal | EXW | Ex Works (...Named Place of Delivery) |
| FCA | Free Carrier (...Named Place of Delivery) | |
| CPT | Carriage Paid To (...Named Place of Destination) | |
| CIP | Carriage & Insurance Paid To (...Named Place of Destination) | |
| DPU | Delivered at Place Unloaded (...Named Place) | |
| DAP | Delivered at Place (...Named Place of Destination) | |
| DDP | Delivered Duty Paid (...Named Place of Destination) | |
| Ocean | FAS | Free Alongside Ship (...Named Port of Shipment) |
| FOB | Free Alongside Ship (...Named Port of Shipment) | |
| CFR | Cost and Freight (...Named Port of Destination) | |
| CIF | Cost, Insurance and Freight (...Named Port of Destination) | |
Incoterms Rules and Standards
- Incoterms only relate to trade terms in the contract of sale between the buyer and seller and do not deal with the contract for carriage, or convey title.
- The roles and responsibilities listed on the front of this document can be altered / changed as long as there is an agreement between the buyer and seller.
- Incoterms do not identify where the transfer of ownership or title occur. A separate statement regarding ownership / transfer of title should be included on the purchase order, contract, quote, proforma invoice and or commercial invoice.
- Incoterms are not all inclusive and cannot address issues such as customary operations of carriers, ports, trade government regulations etc.
- Incoterms are written to reflect rather than dictate trade practices.
- Only two incoterms express when insurance is to be bought and issued – CIP and CIF
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