Incoterms

 11-07-2019

Incoterms are a collection of international delivery conditions which are widely recommended for trade transactions around the world. Taking into account the type of transport, Incoterms divide the costs and liability between the seller and the purchaser and governs the liability of each party to the trade transaction.

Detailed provisions of the trade agreements take precedence over INCOTERMS formulas. However, it is the latter that determine the moment of risk transition from the seller to the purchaser.

INCOTERMS 2010 – distribution of costs between the Seller and the Buyer

1. EXW, FCA, FAS, FOB – the buyer’s transport gesture
2. CPT, CIP, CFR, CIF, DAT, DAP, DDP – transport gesture of the seller

EXW – Ex Works (from the plant – marked place)

  • The seller is obliged to place the goods at the disposal of the buyer on his / her land / ramp, without bearing any risks, additional transport costs.
  • Loading on the side and at the expense of the Buyer.
  • The costs of transporting the main measure and the risk of loss are borne by the importer.

FCA – Free Carrier (Franco Carrier – marked place of loading into the means of transport)

  • The seller is obliged to load the goods on the means of transport substituted by the buyer.
  • The seller bears only the costs of loading and customs clearance.
  • The costs associated with transporting the main measure and the risk are borne by the Buyer.
  • The seller is obliged to load the goods on the means of transport substituted by the buyer.
  • The seller bears only the costs of loading and customs clearance.

FAS – Free Alongside Ship (Franco along the ship’s side – marked port of loading)

  • The seller is obliged to deliver the goods to the agreed port and pay the cost of unloading from the means of land transport to the quay.
  • The contract for carriage by sea is provided by the Buyer.
  • After unloading the goods to the wharf, the risk and delivery costs to the destination pass to the Buyer.

FOB – Free On Board (Franco ship – marked port of loading)

  • The seller is obliged to deliver the goods to the maritime carrier designated by the buyer – the sea transport haulage, therefore includes the buyer.
  • After the goods are delivered to the maritime carrier (loading on the side of the ship), the risk and costs of delivery to the destination pass to the Buyer.

CFR – Cost and Freight – designated destination port)

  • At its own expense, the seller delivers the goods to the port of loading and concludes a contract for sea transport to the agreed destination port.
  • The seller arranges export customs clearance.
  • The costs of transhipment at the port of destination, import customs clearance and delivery to the final place of delivery shall be borne by the Buyer.
  • The risk related to the loss of goods passes from the Seller to the Buyer at the time of loading the goods on the ship in the port of loading.

CIF – Cost, Insurance and Freight (cost, insurance and freight – designated destination port)

  • Same distribution of costs and risks between the Seller and the Buyer as in the CFR formula.
  • The seller is also obliged to conclude an insurance contract for the good for the buyer.

Land transport

CIF, CFR, CIP, CPT – The costs of transporting the main means of transport are borne by the Seller, but the risk after loading on the main means passes to the Buyer.

CPT – Carriage Paid To (freight paid to – marked destination)

CIP – Carriage and Insurance Paid To (transportable and insurance paid to – marked destination)

  • The seller must arrange transport here (conclude the contract of carriage) and incur the related costs, but without taking the risk of losing, (damaging) the goods or additional costs related to cases occurring after loading and shipping.
  • After the vehicle arrives at the agreed destination, the buyer must make possible customs clearance and arrange (pay for) unloading.

The seller is also obliged to conclude an insurance contract for the good for the buyer.

DAT – Delivered At Terminal (delivered to the terminal)

  • The seller performs his obligation by delivering the goods and putting them at the disposal of the buyer, unloaded from the means of transport, at a specified terminal in the designated port or destination. It carries the risk of damage or loss of goods and transport costs to this place.
  • The seller’s obligations include unloading goods from the means of transport at the terminal. The term terminal includes both a wharf, a warehouse, a container yard, as well as a road, rail and air cargo terminal.

DAP – Delivered At Place (delivered in place)

  • The Seller performs his obligation by delivering the goods and putting them at the disposal of the Buyer, on the means of transport, ready for unloading at a specified destination. He organizes transport to this place, bears its costs and risks.
  • The buyer’s obligations include unloading from the means of transport and import customs clearance.

DDP – Delivered Delivered Duty Paid (delivered, duty paid – marked destination)

  • The seller is obliged to bear all costs and risks associated with the goods until they are delivered to their destination, including the costs of import customs clearance in the country of destination!
  • The obligations of the Buyer include only the organization and cost of unloading.