incoterms export

coast

INCOTERMS 2010

ITS Training 2005-2013

Export

coastINCOTERMS 2010

INCOTERMS are internationally-recognised contract terms.

They define responsibilities for the seller (shipper) and buyer (consignee) for

these purposes:


1. Costs who pays which charges.

2. Risk where does the risk transfer from the seller to the buyer?

(The definition of risk can be found on the next slide.)

INCOTERMS are an important part of the contract between seller and buyer,

and should there be any disputes, they will be relied upon in a court of law.

coastTransfer of Risk the definition

Throughout this lecture we shall be referring to the transfer of risk.. This slide will

explain the main points to consider.

International Trade (all forms of transport) contain a limited liability, which

effectively means the carrier may only be responsible for a small percentage of the

value of the goods lost or damaged.


value of the goods lost or damaged.

The INCOTERM decides which party takes the risk and from which point.

There are however two INCOTERMS that require mandatory insurance, these are

CIF & CIP.

On all other INCOTERMS, it is advisable to

obtain marine insurance cover.

If you do not arrange marine insurance on your

goods, and they become damaged or lost court

action becomes necessary to resolve a dispute.

coastQuotation

Always enter the INCOTERM onto

the quotation.

ABC Exporters, 101 High Street, Birmingham, B6 2LG

Freight Quotation

Date: 2nd January 201X Reference: 0109

Quotation to: High Quality Supplies

23 Boulevard Place

New York


INCOTERMS are updated every 10

years.

Enter the following into your

quotation.

This will avoid any disputes.

New York

1923-0772

Re: 5000 Plastic Bottles Cat No. B9662

We are pleased to submit the following price based upon

DAP Pittsburgh

Subject to INCOTERMS 2010

Product 27,795.00

Subject to our terms and conditions

coastStructure

INCOTERMS follow a particular structure

Sea terms

FAS

Any Mode

Ex Works

Any Mode

DAT


FOB

CFR

CIF

FCA

CPT

CIP

DAP

DDP

coastPacking & Marking Regulations

There are a total of 11 INCOTERMS.

It is always the responsibility of the

seller for packing & marking.

The seller therefore has to take into

Exporting to Australia

You must not use any wood or straw as

packing material, unless treated to

Australian standards

Example 1


The seller therefore has to take into

consideration overseas country

regulations.

Here are two examples of packing and

marking regulations.

Exporting from USA

You must ensure that the country of

origin is shown in English on all four

sides of the boxes, this may be in

addition to any other language.

Example 2

coastEx Works(Named Place)

The Sellerss Responsibilities Are...

Provide the goods, pack and mark in accordance with the

contract, taking into consideration overseas country regulations.

Buyers Risk

Risk transfers when the goods are made

available to the driver (prior to loading)

at the collection point.


at the collection point.

Considerations

Buyer responsible for

export loading.

Buyer responsible for

export customs and

formalities.

Buyer appear on the bill

of lading as Shipper.

Cost by Buyer Costs by Shipper Insurance Risk

New YorkNew YorkPittsburghPittsburgh

Suitable for any mode of

transport

The Buyers Responsibilities Are...

Arrange both export and import

licence and customs formalities.

Arrange to pay freight charges

from the sellers warehouse to the

final destination.

Recommend Marine Insurance.

coastFCA - Free Carrier, e.g. FCL(Named Place)




Obtain export licences and deal with export customs formalities.

Buyers Risk

Risk transfers when the goods are


Risk transfers when the goods are

loaded on board the vehicle at the

point of collection.

This example is for direct collections only.




Obtain any import licence and deal with

import customs formalities.

Arrange to pay freight charges from the

agreed collection point to the final

destination.



transport

coastFCA - Free Carrier e.g. LCL(Named Place)




Obtain export licences and deal with export customs formalities.

Arrange to deliver the good to the consolidation point.

Buyers Risk



Buyers Risk

Risk transfers when the vehicle arrives at

the consolidation point (prior to unloading).

This example is consolidated goods only.



transport


Obtain any import licence and deal with



agreed collection point to the final

destination.


coastSea Terms for Break Bulk

The reasons why FAS/FOB/CFR/CIF are only suitable for conventional cargo.

Factory Birmingham.Safely on board in good

order and condition.

Step 1Step 1Step 4Step 4


Drums being transported to

the port.

When they arrive at the port

they can be checked for

condition/loss before loading

on to the vessel.

Goods arriving at the

port in a container

cannot be checked as

the insurance risk

transfer.

Step 2Step 2

Step 3Step 3

coastFAS - Free Alongside Ship(Named Port of Loading)


Provide the goods, pack and mark in accordance with the contract,

taking into consideration overseas country regulations.

Arrange export clearance and formalities (including export licences).

Deliver the goods to the named port.


New YorkNew YorkPittsburghPittsburghThe Buyers Responsibilities Are...

Arrange for import licence and deal with



named port of export (i.e. Felixstowe) to

their final destination.


Buyers Risk

Risk transfers when the goods have

been delivered to the port of export.

Not suitable for containerised cargo.

Suitable for sea

transport only


coastFOB - Free on Board(Named Port of Loading)





Pay all charges to the agreed vessel.





Arrange to pay freight charges once the

goods are on-board the export vessel.


Buyers Risk

Risk transfers when the goods are on

the vessel at the port of export, and

from the agreed date.

Suitable for sea

transport only



coastTransfer of Risk

Under a FOB contract, the Transfer of Risk can happen in two ways.

Risk will transfer from seller to buyer when the goods are on board the vessel at the

port of export and from the agreed date, therefore giving the buyer the greater risk.

If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the


If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the

vessel.

The buyer must supply the seller, with sufficient notice, of the vessel name, loading

port and required delivery time.

If the buyer fails to advise these details to the seller, then risk will transfer on expiry of

the agreed delivery period (delivery to the named port)

and therefore the risk will transfer prior to the goods being loaded onto the vessel

coastCFR - Cost and Freight(Named Port of Destination)





Pay all freight charges to the port of destination.

The seller may also be responsible for on-carriage if agreed.


New YorkNew YorkPittsburghPittsburgh The Buyers Responsibilities Are...



Pay haulage cost from the named port to

final destination.


Buyers Risk

Risk transfers when the goods are on the

vessel at the port of export.Suitable for sea

transport only



coastCIF - Cost, Insurance & Freight(Named Port of Destination)





Pay all freight charges to the port of destination.

The seller may also be responsible for on-carriage if agreed.

Arrange Marine Insurance on behalf of the buyer



Buyers Risk

Risk transfers when the goods are on the

vessel at the port of export.





Pay haulage cost from the named port to

final destination.

Suitable for sea

transport only


coastCPT - Carriage Paid To(Named Place of Destination)





Pay all charges to the agreed destination (including unloading at

destination).



Buyers Risk

Risk transfers when the goods have delivered

to the carrier (on-board the vehicle).




Pay any duties, taxes and clearance costs

in the importing (buying) country.



transport


coastCIP Carriage, Insurance Paid To(Named Place of Destination)




Arrange export clearance and formalities (including export

licences).

Pay all charges to the agreed destination (including unloading at

destination).

Seller arranges marine insurance on behalf of the buyer.





Pay any duties, taxes and clearance costs

in the importing (buying) country.

Seller arranges marine insurance on behalf of the buyer.

Buyers Risk


to the carrier (once on-board the vehicle).


transport


coastDAT Delivered at Terminal





Pay all charges to the agreed terminal.







Arrange to unload the goods upon arrival at

the terminal.

Pay any duties, taxes and clearance costs in

the importing (buying) country.

Buyers Risk


to the agreed terminal.Suitable for any mode of

transport


coastDAP Delivered at Place





Pay all charges to the agreed destination.







Arrange to unload the goods upon arrival at

the buyers warehouse.

Pay any duties, taxes and clearance costs in

the importing (buying) country.

Buyers Risk


to the agreed destination. Suitable for any mode of transport


coastDDP Delivered Duty Paid




Arrange export and import clearance and deal with other formalities

(including licences).

Arrange Customs Clearance on import.

Pay any duties/taxes (and if agreed local taxes) in the buying country.



Pay any local import sales taxes.

e.g. VAT, this should however be confirmed

prior to agreeing this INCOTERM

Pay any duties/taxes (and if agreed local taxes) in the buying country.


Buyers Risk


to the agreed destination.


transport


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