GROUP MEMBERS

RASHID ASHRAF

NADEEM ASGHAR

SALEEM TAHIR

INCO TERMS

AN OVERVIEW

International Commercial Terms (‘Incoterms’) are

internationally recognized standard trade terms used in

sales contracts. They’re used to make sure buyer and

seller know:-

Who is responsible for the cost of transporting the

goods, including insurance, taxes and duties

Where the goods should be picked up from and

transported to

Who is responsible for the goods at each step during

transportation

What are they ?

Set of international rules for the interpretation of the

most commonly used foreign trade terms.

Why are they Important?

Reduce the uncertainty caused by trade practices

in different countries.

Simplify the negotiations involved in international

commerce.

Ensure common understanding of obligations

The Categories

Group Term Status

E EXW Ex Work

F

FCA Free Carrier At

FAS Free Alongside Ship

FOB Free on Board

C

CFR Cost and Freight

CIF Cost Insurance and Freight

CPT Carriage Paid to

CIP Carriage and Insurance Paid to

D

DAF Delivered at Frontier

DES Delivered Ex Ship

DEQ Delivered Ex Quay

DDU Delivered Duty Unpaid

DDP Delivered Duty Paid

The Steps of Global Logistics

EXW (‘Ex Works’ )

The seller makes the goods available to be collected at their premisesand the buyer is responsible for all other risks, transportation costs, taxes and duties from that point onwards. This term is commonly used

when quoting a price

NADEEM ASGHAR

FCA - Free Carrier

The seller gives the goods, cleared for export, to the buyer’s carrier

at a specified place.The buyer is then responsible for getting

transported to the specified place of final delivery. This term is

commonly used for containers travelling by more than one mode of

transport.

FAS Free Alongside Ship

The seller puts the goods alongside the ship at the specified port

they’re going to be shipped from. The seller must get the goods ready

for export, but the buyer is responsible for the cost and risk involved

in loading them.

This term is commonly used for heavy-lift or bulk cargo (e.g.

generators, boats), but not for goods transported in containers by more

than one mode of transport (FCA is usually used for this).

FOB Free On Board

The seller must get the goods ready for export and load them onto

the specified ship. The buyer and seller share the costs and risks

when the goods are on board. This term is not used for goods

transported in containers by more than one mode of transport

(FCA is usually used for this).

C-MAIN CARRIAGE PAID

CFR - COST AND FREIGHT

CIF - COST, INSURANCE AND FREIGHT

CPT - CARRIAGE PAID TO

CIP - CARRIAGE AND INSURANCE PAID TO

CFR Cost and Freight

The seller must pay the costs of bringing the goods to the

specified port. The buyer is responsible for risks when the

goods are loaded onto the ship.

SALEEM TAHIR

CIF – COST INSURANCE AND FREIGHT

Cost, Insurance and Freight" means that the seller delivers

when the goods pass the ship's rail in the port of shipment.

The seller must pay the costs and freight necessary to

bring the goods to the named port of destination but the

risk of loss or damage to the goods, as well as any

additional costs due to events occurring after the time of

delivery, are transferred from the seller to the buyer.

CPT – CARRIAGE PAID TO

The seller is responsible for arranging carriage to the named

place, but not for insuring the goods to the named

place. However delivery of the goods takes place, and risk

transfers from seller to buyer, at the point where the goods

are taken in charge by a carrier

CIP – CARRIAGE AND INSURANCE PAID TO

Seller Bears the same costs and obligations as in case of CPT

and additional obligation of hiring insurance to cover the

buyer’s risk during international transport.

Buyer Beneficiary of the insurance paid by the seller and

must take into account that the buyer is obliged only to a minimum coverage insurance. He needs to agree with the seller to hire additional insurance if he wants a larger coverage

D- ARRIVAL

DAF - DELIVERED AT FRONTIER

DES - DELIVERED EX SHIP

DEQ - DELIVERED EX QUAY

DDU - DELIVERED DUTY UNPAID

DDP - DELIVERED DUTY PAID

DAF- DELIVERED AT FRONTIER

This term can be used when the goods are transported by railand road. The seller pays for transportation to the named placeof delivery at the frontier. The buyer arranges for customsclearance and pays for transportation from the frontier to hisfactory. The passing of risk occurs at the frontier.

DES- DELIVERED EX SHIP

Where goods are delivered ex ship, the passing of risk does not occur until theship has arrived at the named port of destination and the goods made availablefor unloading to the buyer. The seller pays the same freight and insurance costsas he would under a CIF arrangement. Unlike CFR and CIF terms, the seller hasagreed to bear not just cost, but also Risk and Title up to the arrival of the vesselat the named port. Costs for unloading the goods and any duties, taxes, etc. arefor the Buyer. A commonly used term in shipping bulk commodities, such as coal,grain, dry chemicals; and where the seller either owns or has chartered, theirown vessel.

DEQ- DELIVERED EX QUAY

This is similar to DES, but the passing of risk does not occur until thegoods have been unloaded at the port of discharge.Buyer assumes the cargo insurance and other costs and risks

DDU- DELIVERED DUTY UNPAID

This term means that the seller delivers the goods to the buyer tothe named place of destination in the contract of sale. Atransaction in international trade where the seller is responsible formaking a safe delivery of goods to a named destination, paying alltransportation expenses but not the duty. The seller bears the risksand costs associated with supplying the goods to the deliverylocation, where the buyer becomes responsible for paying the dutyand other customs clearing expenses.

DDU

DDP- DELIVERED DUTY PAID

The term “DDP.” is generally followed by words indicating the

buyer’s premises. It notes that the seller bears all risks and all

costs until the goods are delivered. This term can be used

irrespective of the mode of transport. If the parties wish to make

clear that the seller is not responsible for certain costs,

additional word should be added (for example, “delivered duty

paid exclusive of VAT and/or taxes”).

OBLIGATIONS DIAGRAM

BUYER VS SELLER

SO WE CAN SAY

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