INCOTERMS

The Incoterms® rules are published by the International Chamber of Commerce incorporated in contracts for the sale of goods worldwide and provide rules and guidance to importers, exporters, lawyers, transporters, insurers, and students of international trade.

There are seven Incoterms® 2020 rules for any mode of Transport:

1. Ex works – The shipper’s goods are placed at the disposal of the buyer within the shipper’s premises or any other place.  The shipper’s responsibility is minimum, and the buyer is responsible for loading and for all the other export-related formalities.

2. FCA – FCA stands for Free Carrier – The shipper’s responsibility includes completing all export clearance formalities and making the goods available to the carrier.

3. DAP – Delivered at Place – The shipper has to assume all the risks involved up to unloading of goods

4. DDP – Delivered Duty Paid – as the name of the term suggests the shipper is responsible for all the expenses and risks involved in making the goods available at the final destination. The duty and taxes has to be borne by the shipper.

5. DPU – Delivered at Placed Unloaded – means that the shipper has to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.

6. CIP – Carriage and Insurance Paid – means that the shipper is responsible for arranging and paying the carriage charges and insurance. Carriage charges are paid up to the named place.

7. CPT – Carriage Paid To – as the name suggests only the carriage charges are borne by the shipper and the shipper does not have to cover insurance.

The four Incoterms® 2020 rules for Ocean Transport

1. FAS – Free Alongside Ship – Shipper has direct access to the vessel for loading. This is usually for bulk cargo vessels.

2.  FCA – Free Carrier – Shipper has to bear transportation costs and assume all risks until carrier receives the goods. After which the buyer has to bear all responsibility.

3.  FOB – Free On Board – Shipper delivers the goods aboard the vessel nominated by the consignee. Shipper responsible for all costs up to that point.

4 . CFR – Cost and Freight – Shipper responsible for the Cost, Freight, and delivery of the goods to the port specified by consignee.

5 . CIF – Cost Insurance and Freight – Same as above except the shipper also has to bear the insurance as well.