Incoterms

  |   Incoterms

INCOTERMS

Incoterms clearly define the responsibilities of the seller and the buyer in international transactions.

As an in-house IATA accredited company, KDM Logistics offers comprehensive air freight services including door-to-door services from India. Expanded domestic airline payment benefits, RBI approval for overseas connections, secure storage facilities near the airport, online tracking of cargo in taxis, domestic customs clearance and self-lifts for cargo pickup. This constructive structure...

EXW - EX WORKS

Seller's Minimum / Minimum Obligation in Ex Works Incoterms. The seller agrees to deliver the goods to the buyer at the seller's place (called place). The EXW seller is not responsible for loading the goods in the vehicle provided by the buyer, unless agreed in advance. The buyer assumes all costs and risks associated with delivery from the EXW location to the final destination. N.B. "Work" can mean "factory" or "warehouse" or "factory" - almost everywhere the seller specifies, EXW should be "at name of place". It is the seller's responsibility to accurately identify the location named in the initial negotiation.

FCA - FREE CARRIER

This term refers to ships, planes, barges, etc. designed to meet the needs of multimodal transportation. It is best to appoint an operator to control your shipment PRIOR. Based on the principle of FOB (see below), the seller fulfils his obligations when the goods have been delivered to the "carrier" or "vehicle" (usually named). "Carrier" means anyone who has a contract of transport (road, rail, air, sea, barge, ferry or any of these modes - so "multimodal") is included. Transport intermediaries can also include "forwarder, nvocc, consolidator, distributor". In FCA, the seller has fulfilled his obligations after delivery to one of the above. The usual tools to prove that this has been done are bills of lading, waybills, waybills and FCRs (Consignor's Certificates), but completion can be proven by any means acceptable to the buyer and seller (e.g., electronic notification from the carrier/broker to the buy) ...).

FAS - FREE ALONGSIDE SHIP

According to FAS provisions, the seller must deliver the goods with the actual vessel at the dock. In that respect, the buyer assumes all costs and risks. The main difference between FAS and FOB (see below) is that under FAS terms, the buyer (not the seller) clears the goods for export and claims the cost of loading the goods...

FOB - FREE ON BOARD

Goods shipped on FOB terms are sold at the designated port of shipment specified by the seller in the sales contract/purchase order/contract. All costs and risks pass to the buyer from the point where the cargo "passes the rail" (i.e., loaded from the dock to the ship). (By its nature, this term should not be used for aerial warfare - the FCA should be used.)

CFR - COST AND FREIGHT [Formerly C & F]

The CFR is sometimes a confusing "double standard". In CFR, as in FOB terms, the title and risk of the ship by changing the rail, but the allocation of costs is different. For goods shipped CFR, the seller pays all costs to deliver the goods to the designated port (in the case of FOB, the above buyer is responsible for these costs). So, in simple terms:

  • TermFOB
    CFR
  • Costs to Destn.Buyer
    Seller
  • Risks/TitleBuyer
    Buyer

CIF - COST, INSURANCE AND FREIGHT

In its simplest form, CIF is CFR + insurance. The seller must obtain transport insurance (to the extent agreed in the sales contract) against the risk of loss or damage to the goods. The seller contracts with the insurance carrier or agent and pays the insurance premium - but provides a form of insurance that allows the buyer to apply directly to the insurance carrier or the operator's agent...

CPT - CARRIAGE PAID TO

Just as CIF is considered additional insurance CFR, CPT can be considered additional transport FCA. The risk/title will change hands upon delivery by the carrier or agent, but the seller will pay additional transportation costs. This term is intended to be used in place of FOB when handling intermodal modes of transport or when dealing with cargo entrusted to a carrier for forwarding or consular.

CIP - CARRIAGE AND INSURANCE PAID TO

See also CIF above. This is CPT supplemental insurance. As with CIF, all terms are at your own risk. Another difference is that "on board" or "ship rail" is not included in the requirement.

DAF - DELIVERED AT FRONTIER

DAF means that the seller is obliged to transfer the goods to the designated place at the border (cross the border). This is mainly the term rail / truck. The seller assumes all costs / risks up to this point, but is not responsible for customs clearance, duties or taxes.

DES - DELIVERED EX SHIP

The use of DES requires the seller to make the goods available to the buyer "on board in the place specified in the contract of sale". Unlike CFR and CIF terms, the seller agrees not only to pay the cost, but also to bear the risk and title until the vessel reaches the named port. Shipping costs and any duties, taxes, etc. for the buyer. A term often used for the transportation of bulk commodities, such as coal, grain, and dry chemicals, where the seller owns or charters his own vessel.

DEQ - DELIVERED EX QUAY

It costs DES and downloads. The tax/tax will remain on the buyer's account, but the seller has agreed to pay extra for freight to be exempted (decreased). Like DES, this is basically a term for many things.

DDU - DELIVERED DUTY UNPAID

The term DDU requires the seller to deliver the goods to the buyer at the point or location specified in the seller's contract. Seller assumes all costs and risks up to this point/location.

DDP - DELIVERED DUTY PAID

Just as EXW represents the seller's minimum commitment in international transactions, DDP will represent the seller's MAXIMUM commitment... / point. Buyers and sellers sometimes agree that taxes (such as value-added tax or excise or luxury tax) are not included. In such cases, additional words such as "Payment to any city, any country, exclusive of surcharges and/or other taxes" should be added.

This distinction is very important. DDP does not refer to "tax" in the literal sense, but the international equivalent of prepaid shipping to the buyer's door (i.e., no charge to the buyer's account). The seller may initially consider this, but may not include "tax included" in the transaction price and may end up paying more than expected. To avoid confusion, it's best to list what someone will or won't pay for

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