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The Atlas Group

Incoterms

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Incoterms - International Commercial Terms

The International Chamber of Commerce introduced the latest version of Incoterms® in 2020, which became effective on January 1, 2020. Since their initial publication in 1936, the ICC has periodically revised Incoterms® to align with the evolving global trade landscape. It is crucial for all stakeholders in international trade to have a clear understanding of these changes and their implications for global supply chains.

Incoterms® play a pivotal role in the realm of global trade. While Incoterms® 2010 and Incoterms® 2020 may appear complex, it is essential for both buyers and sellers to comprehend their functioning and respective responsibilities throughout the supply chain. In this article, we will elucidate the updates made to Incoterms® 2020 and provide straightforward explanations. Additionally, we will include an Incoterms® infographic to facilitate a better understanding of the subject.

Please note that the content of this article and the accompanying chart serves solely for general informational purposes and should not be construed as customized legal or professional advice.

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What are Incoterms?

Incoterms® are globally accepted rules that define buyer and seller responsibilities in international trade. They specify when costs and risks shift from the seller to the buyer. Not all rules apply universally; some apply to all transport modes, while others are specific to sea and inland waterway transport.

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Why are Incoterms® vital in International Trade?

Incoterms® are crucial in global trade as they offer internationally recognized rules for interpreting commercial terms in sales contracts. These terms determine which party bears costs and risks, and they must be clearly indicated on shipping documents for all international transactions.

Freight Collect Terms
Freight Prepaid Terms
Groups
Any mode or modes of Transport
Sea and Inland Waterways Transport
Any mode or modes of Transport
Incoterm (Intern-ational Com-mercial Terms)
EXW
FCA
FAS
FOB
CFR
CIF
CPT
CIP
DAP
DPU
DDP
Ex Works (Place)
Free Carrier (Place)
Free Along-side Ship (Port)
Free on Board (Port)
Cost and Freight (Port)
Cost Insur-ance & Freight (Port)
Carriage paid To (Place)
Carriage and Insur-ance Paid to (Place)
Deliv-ered at Place
Delive-red at Place Unl-oaded (Place)
Deliv-ered Duty paid (Place)
Transfer of Risk
At Buyer’s Disp-osal
On Buyer’s trans-port
Alongside Ship
On Board vessel
On Board vessel
On Board vessel
At carrier
At carrier
At Named Place
At Named Place Unlo-aded
At Named Place
Obligation and Charges
Export Packaging
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Loading Charges
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Delivery to port / Place
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Export Duty, Taxes & Custom clearance
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Origin Terminal Charges
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Loading on carriage
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Carriage charges
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Insurance
Nego-tiable
Nego-tiable
Nego-tiable
Nego-tiable
Nego-tiable
Seller
Nego-tiable
Seller
Nego-tiable
Nego-tiable
Nego-tiable
Desti-nation terminal charges
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Delivery to Desti-nation
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Unlo-ading at Destin-ation
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Buyer
Import Duty, Taxes and Custom clearance
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
  • The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
  • The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
  • The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
  • The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
  • The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
  • The seller bears all risks involved in bringing the goods to the named place.

DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.

The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.

The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

  • Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).
  • The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.
  • The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
  • The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.
  • The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
  • The risk of loss of or damage to the goods passes when the products are alongside the ship. The buyer bears all costs from that moment onwards.
  • The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
  • The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.
  • The seller delivers the goods on board the vessel or procures the goods already so delivered.
  • The risk of loss of or damage to the goods passes when the products are on board the vessel.
  • The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
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