COMMERCIAL TERMS
2010
And
indirectly
Banks
Insurers
Carriers/Forwarding Agents
Use by Banks
Most
This
Use by Insurers
If
Use by Carriers/Forwarding
agents
To determine
Definitions..
Key Definitions
What is Delivery?
It is not always:
When the goods arrive in your customers hands or
When the goods leave your dock
Defined the same in all countries
Transportation Definitions
Main Carriage:
Domestic: subsequent transportation beyond pre-carriage
International: transportation from the point of departure on the
sellers side to the arrival pint on the buyers side
On-carriage:
Domestic: subsequent transportation beyond main carriage
International: transportation from the arrival pint on the buyers side
Transportation Definitions
Door to Door
Contract of carriage that includes pre-carriage, main-carriage
and on-carriage by the same carrier
Type of Transportation?
Company A
Company
Type of Transportation?
Company A
Packaging Definitions
Contd.
Address
Contd.
Address
Incoterms
2000
vs.
EXW Ex Works
2010
EXW Ex Works
F-Group Terms
Are
Buyer
Contracts for Main Carriage
In charge of Carrier (and
usually forwarder) selection
Control over Freight Costs
Control of Documentation
C-Group Terms
Seller
Contracts for Main Carriage
In charge of carrier (and
usually forwarder) selection
Handles pre-carriage
Has control over freight
costs
In control of documentation
Passes risk of loss
(delivers) to Buyer prior
main carriage
Handles export clearance
Buyer
Named Place is on Buyers
side
Has risk of loss while goods
are in transit with carrier
selected and paid for by
seller
Must rely heavily on Seller
for data elements required
for ocean shipments such
as Importers General
manifest
If informed, should not
consider C terms due to
downside described
D-Group Terms
Are
Buyer
Named Place on Buyers
side
Must rely heavily on Seller
for data elements required
for ocean shipments such
as Importers General
manifest
Undertakes less risk than in
C terms
If inexperienced, or does
not have good relationship
with carriers, is served will
by D terms
Omni-Modal Incoterms
2010
Delivery Seller delivers goods when placed at buyers disposal at the name
place of delivery
Seller Risks Minimum obligation for seller; once packaged there is a loss of
control over transportation movement, where package is finally received, how
export or import documentation is presented to relevant governments
Buyer Risks Buyer bears all costs and risks involved in taking the goods
from the named place
Carriage: Buyer responsibility to arrange for pre-carriage, main carriage, oncarriage
Insurance: Neither party required to insure goods
Export/Import Clearance: Buyer must handle all requirements, pay all
associated duties and fees
Note: Should NOT be used when the buyer cannot carry out
export requirements directly or indirectly
Place is generally:
FCA
Free Carrier(named place)
SELLER
Seller/
Export
Exporter Documents
Premises Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ships
Ships
Rail
Rail
BUYER
Discharging
Delivery at
Import
Port of
named place of Documents
Arrival
destination:
Formalities
Frontier/
Terminal/Quay
Buyer/
Importer
Premises
Sellers Risks
Buyers
Risks
Sellers Cost
Buyers Cost
DAT
Delivered at Terminal +Named Place
(Buyers Side)
DAP
Delivered at Place + Named Place
(Buyers Side)
DDP Caveats
Should
NOT
DDP
Risks:
FAS
Free Alongside(named place)
SELLER
Seller/
Export
Exporter Documents
Premises Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ships
Ships
Rail
Rail
BUYER
Discharging
Delivery at
Import
Port of
named place of Documents
Arrival
destination:
Formalities
Frontier/
Terminal/Quay
Buyer/
Importer
Premises
Sellers Risks
Buyers
Risks
Sellers Cost
Buyers Cost
Ships Rail is no longer part of Incoterms 2010. If using Marine Terms, Contract or PO must
exactly state what on board the vessel means for the transaction where on the vessel is the
container, item to be placed
FOB
Free On Board(named port of shipment)
SELLER
Seller/
Export
Exporter Documents
Premises Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ships
Ships
Rail
Rail
BUYER
Discharging
Delivery at
Import
Port of
named place of Documents
Arrival
destination:
Formalities
Frontier/
Terminal/Quay
Buyer/
Importer
Premises
Sellers Risks
Buyers
Risks
Sellers Cost
Buyers Cost
Even though risk passes from Seller to Buyer on Sellers side (once
loaded per contract), Seller contracts for and pays freight necessary
to bring goods to the named port on the Buyers side
CFR
Cost and Freight (named port of destination)
SELLER
Seller/
Export
Exporter Documents
Premises Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ships
Ships
Rail
Rail
Discharging
Delivery at
Port of
named place of
Arrival
destination:
Frontier/
Terminal/Quay
Sellers Risks
Buyers Risks
Sellers Cost
Buyers Cost
BUYER
Import
Documents
Formalities
Buyer/
Importer
Premises
Even though risk passes from Seller to Buyer on Sellers side (once loaded
per contract), Seller contracts for and pays freight necessary to bring
goods to the named port on the Buyers side
Same as CPT + Insurance coverage
CIF
Cost, Insurance and Freight (named port of destination)
SELLER
Seller/
Export
Exporter Documents
Premises Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ships
Ships
Rail
Rail
Discharging
Delivery at
Port of
named place of
Arrival
destination:
Frontier/
Terminal/Quay
Sellers
Risks
Buyers Risks
Sellers
Costs
Buyers Cost
BUYER
Import
Documents
Formalities
Buyer/
Importer
Premises
Price Considerations
with Incoterms 2010
When negotiating a contract, keep in mind the following:
Basic Rule of Thumb: The more responsibility the Seller
takes on, the more they must charge the Buyer.
Example: What is the price the Seller should quote for 10
units to be shipped from Hilltown to Seattle?