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Intercoterms

INTERCOTERMS

The Incoterms rules are globally recognized standards used worldwide in both domestic and international contracts for the sale of goods. With the help of these, traders can easily clarify the tasks, costs as well as associated risks in the delivery of goods from sellers to buyers. Thus, they can avoid costly misunderstandings.

EXW – Ex Works – This is applicable for any transport mode, or where there are multiple transport modes involved. In other words, the seller makes the commodities available at his/her place. The seller does not need to load the commodities on any receiving transport. Neither do they need to clear the commodities for export, where such clearance is relevant.

FCA – Free Carrier –Applicable for any transport mode, or especially where it involves more than one transport mode. It means that the seller delivers the commodities to the carrier or any other person designated by the buyer at the place of the seller or any other named place. The point to note is that the selected place of delivery will impact the obligations of loading and unloading the commodities at that place.

FAS – Free Alongside Ship –This is specifically used for commodities transported by sea or inland waterway. Seller supplies the commodities cleared for export, along with the vessel at a named port. And at that point, the risk gets on to the buyer. Thereafter, the buyer will be responsible for loading the commodities and all involved costs.

FOB – Free on Board –This rule is for commodities transported by sea or inland waterway. In other words, the seller supplies the commodities on board on the vessel chosen by the buyer at the named port of shipment or procures. The seller needs to advance government tax in the country of origin as of obligation to load the goods on board nominated by the buyer. Once the commodities are loaded on board, risk comes on to the buyer. The buyer will have to bear all the involved costs thereafter.

CFR – Cost and Freight –This rule has a restricted use on commodities transported by sea or inland waterway. The seller should pay the costs and freight to get the commodities to the destination port. However, risk comes on to the buyer after the commodities are loaded on the vessel. At this point, no insurance for the commodities is included.

CIF – Cost Insurance and Freight –Its use is restricted to the commodities transported by sea or inland waterway. Here, the seller organizes and pays for transport to the selected port. Seller supplies the commodities cleared for export by loading them on board. Thereafter, the risk goes on to the buyer from the seller after the commodities are loaded on board, before the main carriage. Seller also organizes and pays for insurance for the commodities on transport to the selected port.

DAT – Delivered at Terminal –It is applicable for any transport mode, or where multiple transport modes are involved. The seller will have to arrange the carriage to deliver the commodities, unloaded from the received transportation to the selected place. Thereafter, risk transfers from the seller to the buyer after the commodities are unloaded. The destination can be any place. The buyer will have to deal with the import clearance as well as any applicable local taxes or import duties.
DAP – Delivered at Place –Applicable for any transport mode, or where it involves multiple transport modes. The seller will be responsible for organizing transport and delivering the goods ready to be unloaded from the arriving transportation, at the selected place. The associated risk goes on to the buyer from the seller when the commodities are available for unloading. Therefore, unloading is totally at the buyer’s risk. The buyer will be responsible for import clearance as well as any other applicable local taxes or import duties.

CPT – Carriage Paid To –Applicable for any transport mode, or where there is more than one transport mode. The seller will be responsible for organizing transport to the selected place, but not for protecting the goods to the selected place. Once the goods are delivered, the risk goes on to the buyer from the seller.

CIP – Carriage and Insurance Paid To –Applicable for any transport mode, or where there are multiple transport modes involved. The seller will be responsible for organizing transport to the selected place, and also, they will insure the commodities.