The term Incoterm or Incoterms + add years (Incoterms 2010, Incoterms 2020,…) is used quite commonly in the import-export and international trade industry. Thanks to Incoterms, the responsibilities of buyers and sellers are resolved more clearly and satisfactorily when there is a dispute . So what is Incoterms? How has the Incoterms 2010 clause changed?
기사의 목차
I. What Is Incoterms? (Incoterms 2010)
Incoterms is an abbreviation of the phrase “International Commerce Terms” in English.
Incoterms are defined by the International Chamber of Commerce – ICC as rules related to prices and responsibilities of the parties (seller and buyer) in an international trade activity.
II. 11 Incoterms 2010 Terms In Import And Export
Incoterm 2010 version will have 11 delivery conditions divided into 4 main groups E; F; C; D. In addition, they are also divided into 2 types according to the method of transportation including: water and sea transportation & multimodal transportation.
Each Incoterms term refers to a specific situation in the transportation of goods and defines the responsibilities and costs of the seller and the buyer. Below is a glossary and points to note to help you best approach the Incoterms terms.
| Grouping | Incoterms 2010 Terms | Main Content | Risk Transfer Point |
|---|---|---|---|
| Group E: Ex-Works Delivery | 1) EXW: Ex-factory price | – The buyer bears almost all costs and risks during the entire shipping process . – The seller is only responsible for ensuring that the buyer receives the goods. |
– At the seller’s warehouse, office or any other pick-up location |
| Group F: Unpaid Shipping Costs | 2) FAS: Free of liability along side of ship | – The seller bears all costs and risks until the goods are delivered alongside the ship. – The buyer assumes the risk and is responsible for customs clearance procedures for export and import of goods. |
– When the goods are delivered alongside the ship |
| 3) FCA: Free Carrier | – The seller delivers the goods to the buyer’s shipping company at a pre-agreed location. – The seller also needs to do export clearance procedures for the goods. |
– When the buyer’s shipping company receives the goods | |
| 4) FOB: Free on Board | – The seller bears all costs and risks until the goods are delivered on board. – The seller also does export clearance procedures. – The buyer is responsible for all the goods as soon as they are delivered on board. |
– When the goods have been delivered on board | |
| Group C: Main Mile Shipping Charges | 5) CFR: Cost plus freight | – Seller’s responsibility is the same as FOB but must pay the cost of shipping the goods to the port – Like FOB , the buyer takes full responsibility as soon as the goods are delivered on board the ship. |
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| 6) CIF: Cost, Insurance, Freight | – Seller has the same responsibility as CFR but must pay insurance – Like CIP , the seller only needs to purchase the minimum insurance level. |
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| 7) CIP: Carriage and Insurance Paid to Place | – Seller’s responsibility is the same as CPT but the seller must pay for cargo insurance – The seller is only obliged to purchase insurance with minimum coverage. |
– When the buyer’s shipping company receives the goods | |
| 8) CPT: Carriage Paid to Destination | – Seller’s liability is the same as FCA , but seller pays delivery costs – Seller’s liability is the same as FCA |
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| Group D: Delivery Destination | 9) DAP: Delivered at Place | – The seller bears the costs and risks of transporting the goods to a pre-agreed location. – Goods are deemed delivered when they are delivered to that location and ready for loading. – Import and export responsibilities are the same as DAT |
– When the goods are ready for loading at the pre-agreed location |
| 10) DDP: Delivered Duty Paid | – The seller is almost entirely responsible for the entire shipping process. – The seller bears all costs and risks of transporting the goods to a pre-agreed location. – The seller also ensures that the goods are ready for loading and unloading, completes import and export obligations and pays taxes, if any. |
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| 11) DAT: Delivery at Terminal (This term is replaced by DPU in Incoterms 2022) |
– The seller bears the costs and risks of delivering the goods to a pre-agreed destination. – The seller carries out customs clearance and unloading at the port. – The buyer carries out import procedures and related customs regulations. |
– At the terminal (terminal here can be an airport, warehouse, road or container yard) |
III. Some Things To Note When Using Incoterms 2010
– Currently, very few companies or businesses use the Incoterms 2010 version (you can still use other versions of Incoterms). Most commercial contracts using the 2010 version are contracts signed before January 1, 2020 (the launch of Incoterms 2020).
– In Incoterms 2020, DAT is replaced by DPU , so if you want to use DAT, you can only use Incoterms 2010.
– Some costs in Incoterms 2010 are not clearly stated (mainly insurance fees), so there will be disputes when goods are lost or damaged.
– If you need advice on shipping services and using Incoterms, please contact us for advice.
* You can download Incoterms 2010 here
