Notesale: Turn your study into money

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The use of Incoterms 2000
Agreement to abide by a set of internationally applicable
rules in the arrangement & operation of international
transportation
A standard three-letter abbreviated terminology
Translated into various languages
Covers thirteen main options
The rules associated with each term clearly describe the
key obligations of sellers, buyers and carriers with regard
to:
Incoterms

Delivery of the Goods
Transfer of Risks
Transfer of Costs

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The difference between transfer of
ownership, title, delivery and risk
Transfer of Ownership:
Determined by clauses in the contract can happen at any time, even after
delivery
Transfer of Documents of Title:
Specified in Incoterms - linked directly
to the transfer of risk & delivery of the
goods
Note:
The title-holder bears the risks of loss or damage
Delivery = handing over the goods from one party to another
Transfer of title = Taking delivery & transfer of risk
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When and where the seller provides the goods to the buyer &
when & where the buyer is obliged to pay the contracted price
2
...

3
...
Conditions for delivery by the seller & acceptance by the buyer
5
...
Allocation of costs associated with movement of the goods
7
...
Proof of delivery, transport documents or electronic messages
9
...
Obligations of mutual assistance, information & documentation
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Incoterms– Point of delivery of the goods and transfer of risk
E

F

C

ITC

EXW Ex works

Upon delivery of goods at the seller’s premises
(named place)

FCA

Free carrier

FAS

Free alongside
ship

Upon delivery of goods alongside ship (named
port of shipment)

FOB

Free on board

When the goods pass the ship’s rail at the named
port of shipment

CFR

Cost and freight

When the goods pass the ship’s rail at the port of
shipment

CIF

Cost, insurance and
freight

CPT

Carriage
paid to

Upon delivery of goods to the carrier
(named place)

CIP

Carriage and
insurance
paid to

Upon delivery of goods to the carrier
(named place)

Upon delivery of goods to the carrier
(named place)

When the goods pass the ship’s rail at the port of
shipment

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DELIVERY and TRANSFER OF RISK can take place at many
points between the seller’s premises and the buyer’s premises

Customs

Customs

Seller

Buyer
EXW FCA
CPT
CIP

FAS FOB
CFR
CIF

DES

DEQ

DDU
DDP

Waterborne transport only

Transport
by land

Customs

Customs

DAF

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Point of delivery & transfer of risk
for maritime “F” and “C” terms
Over the ship’s rail: FOB, CFR & CIF

PORT OF ORIGIN

Customs
Douane

Alongside the ship: FAS
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DAF terms are commonly used
for land transport
COUNTRY OF EXPORT

COUNTRY OF IMPORT

Customs
Douane

Customs

DAF

Douane

Delivered at
frontier, export
customs cleared
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INCOTERMS in action
For any two products that your enterprise imports, or
would like to import, identify the most appropriate
Incoterm to use and indicate why this term is the most
appropriate for your company
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Action Point

A
...
5-2

The role of the Incoterm used
and custom & practice of the trade
in establishing the contract of carriage
INCOTERM used in
the Sales Contract
Seller

Contract of
carriage

Buyer

Transport Operator(s)

Custom & practice
of trade
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6-3

Custom and Practice of Trade
Which are the traditional “customs and trade
practices” that you find in your enterprise’s business
sector?

How do these affect the way in which transport is
organised and carried out?

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