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Shipping 101: Incoterms

THE SHIPPING NEWS: A BUYER'S GUIDE TO INCOTERMS WHAT ARE INCOTERMS? Terms and conditions created and published by the International Chamber of Commerce (ICC) to assist traders in buying, selling and transporting goods. ID HOW ARE THEY USED? Agreeing on and incorporating the rules into sales contracts allows sellers and buyers a precise understanding of what each party is obliged to do, and where responsibility lies in event of loss, damage or other mishap. WHAT DO INCOTERMS SPECIFY? 1. RISK TRANSFER POINT FROM SELLER TO BUYER. LEGEND WHEN RISK TRANSFERS FROM SELLER TO BUYER Mode of Transportation: ALL Ocean & inland waterways only Risk Seller Buyer EXW Ex Works RISK TRANSFERS TO BUYER: When conveyance arrives at SELLER's premises where goods are ready for transport. FCA Free Carrier RISK TRANSFERS TO BUYER: When vehicle arrives at named place, ready for unloading. СРТ Carriage Paid To RISK TRANSFERS TO BUYER: When goods are taken in charge by carrier. CIP Carriage & Insurance Paid To RISK TRANSFERS TO BUYER: When goods are taken in charge by carrier. DAT Delivered at Terminal RISK TRANSFERS TO BUYER: When goods have been delivered & unloaded at a specified place inside the destination terminal. DAP Delivered at Place RISK TRANSFERS TO BUYER: When goods arrive at destination. BUYER is responsible for unloading. DDP Delivered Duty Paid RISK TRANSFERS TO BUYER: When goods arrive at destination. BUYER is responsible for unloading. OCEAN & INLAND WATERWAYS ONLY. In most cases, use only for bulk cargos (e.g. oil, coal etc.) & non-containerised goods where the exporter loads goods directly onto the vessel. Point of Risk transfer from seller to buyer is different between OCEAN & INLAND WATERWAYS ONLY & ALL MODES OF TRANSPORTATION. Example: FOB (Free on Board) risk transfers when goods have been loaded on board the Vessel. FCA (Free Carrier) risk transfers when the goods have been taken in charge by the carrier. FAS Free Alongside Ship RISK TRANSFERS TO BUYER: When the goods arrive alongside the ship. BUYER is responsible for loading goods. FOB Free On Board RISK TRANSFERS TO BUYER: When the goods have been loaded into the ship. CFR Cost & Freight RISK TRANSFERS TO BUYER: When the goods have been loaded into the ship. CIF Cost Insurance & Freight RISK TRANSFERS TO BUYER: When the goods have been loaded into the ship. LEGEND WHEN RISK TRANSFERS FROM SELLER TO BUYER Mode of Transportation: ALL Ocean & inland waterways only Risk Seller Buyer 2. RESPONSIBILITIES FOR COST OF BUYERS & SELLERS FOR SERVICES. Mode of Ocean & inland LEGEND Transportation: ALL waterways only Buyer Pays EXW FCA CPT CIP DAT DAP DDP FAS FOB CFR CIF || | | ||| Seller Pays Origin Warehouse Loading Goods Export Customs/Duty/Tax Inland Freight Terminal Charges Load on Vessel Ocean/Air Freight Insurance Dest/Port Charges Duties, Taxes & Custom Clearance Delivery to Destination DELIVERY & DESTINATION DELIVERY vs. DESTINATION Incoterms may be different on where risk transfer point is and where SELLER responsibility for cost & insurance ends. PLACE OF LOADING • Sellers Premises • Warehouse III : PLACE OF DELIVERY Where SELLER delivers goods to carrier. OFTEN THE POINT OF RISK TRANSFER. If a place of delivery has not been agreed, and there is more than one carrier, then by default it is taken to be the point where the goods are taken in charge by the first carrier. • Container Yard • Carrier's Warehouse • Transfer Hub • Terminal • Inside the terminal PLACE OF DESTINATION • Port/Terminal • Carrier's Warehouse • BUYER's Premises THE US PERSPECTIVE Trade practitioners in the U.S. will be aware that the terms FOB, CIF and so on are defined within the United States Federal Uniform Commercial Code (UCC). Some UCC expressions have the same three-letter system; but their definitions are totally different. Notoriously, "FOB" can have a number of different meanings within UCC, most of which do not correspond with the ICC Incoterms FOB definition. reviations as those within the coterms Companies in the US are therefore faced with the prospect of mastering both the UCC for use with domestic transactions, plus ICC Incoterms rules for use with cross-border transactions. Buyers who understand Incoterms rules are not caught unaware of their cost, insurance and risk responsibilities. Keep this chart as a reference whenever making plans to have your goods shipped. QO.Berk Leaders in Packaging Solutions ::::: SELLER’S PREMISES NOT LOADED SELLER’S PREMISES ::::: NOT LOADED PRE-CARRIAGE TO NAMED PLACE PRE-CARRIAGE TO NAMED PLACE NOT UNLOADED NOT UNLOADED DELIVERED (UNLOADED) TO NAMED PLACE DELIVERED (UNLOADED) TO NAMED PLACE - LOADING AT NAMED PLACE OR PORT OF SHIPMENT wXXXXXXXX - LOADING AT NAMED PLACE OR PORT OF SHIPMENT LOADED ON LOADED ON BOARD VESSEL BOARD VESSEL NIVW CARRIAGE MAIN CARRIAGE ON BOARD VESSEL NOT UNLOADED ON BOARD VESSEL NOT UNLOADED UNLOADED AT NAMED PLACE _ UNLOADED AT NAMED PLACE OR PORT OF DESTINATION XXXXXXXXXXX DELIVERED TO NAMED PLACE OR TERMINAL (XXXXXXXXXX OR PORT OF DESTINATION DELIVERED TO NAMED PLACE OR TERMINAL ONWARD CARRIAGE TO NAMED_ PLACE NOT UNLOADED ONWARD CARRIAGE TO NAMED PLACE NOT UNLOADED ::::: BÜYER'S PREMISES BUYER'S PREMISES :::: UNLOADED UNLOADED

Shipping 101: Incoterms

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The Incoterms 2010 rules are standard sets of trading terms and conditions designed to assist traders when goods are sold and transported. This infographic will assist you with the risk transfer poin...

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