incoterms

[Former Member]

what are standard incoterms and what is the use of those incoterms?

my customer is not paying any amount for fright, at that time what incoterms we should assign for that customer?

[Former Member]

hi,

and just to add incoterms not just talk about the payment of freights but also tell about the responsibility of the goods interms of transport,insurance for which the standard terms are defined which have the same meaning internationally to facilitate trade.

regards

sadhu kishore

[Lakshmipathi]

Dear srinivas

First thing is that you should see what the contract is between the buyer and your company. Customer is paying or not it is secondary.

For information, following are the terms normally used in sales.

1) EXW - Ex Works

This means, once you make ready of goods at your plant, it is the responsibility of the buyer to arrange for transportation for picking up the cargo and the transportation cost to that extent will be his responsibility.

2) FOB - Free On Board

In exports, this terms will be used. That is once the exporter produces the material and ready for export, he will organize a vehicle for transporting the goods to delivery to sea / airport. Till the cargo unloaded at the respective port, it is the responsibility of the exporter to take care of the cargo. Once it is unloaded at the port, then the responsibility will be passed on to buyer for which, the necessary shipment information has to be given to the buyer

3) CIF - Cost, Insurance & Freight

When the exporter exports his material, till the buyers port, it is the responsibility of the buyer and whatever charges incurred till that destination will have to be incurred by the exporter, including Insurance for the cargo

4) CNF - Cost and Freight

This is similar to sl.no.3 but the insurance part will be taken care of by the buyer

5) DDU - Deliver Duty Unpaid

The exporter has to deliver the goods at buyers' warehouse and till that place whatever expenses he incurred, will have to borne by the exporter excepting the duty payable at importer's customs.

Thanks

G. Lakshmipathi

[JL23]

http://www.if-insurance.com/web/marine.nsf/noframes/FB69E3AE3F8D26A7C1256DC500392435

[Former Member]

Dear Srinivas,

Incoterms are short for International Commercial Terms which are defined by the International Chamber of commerce so that those who deal with each other in international trade understand that they are talking about the same thing. These define the responsibility and the cost to be borne by the parties concerned in the contract.

For instance Ex-factory means the responsibility and cost of the product is defined as outside the gates of the factory. The customer will have to take responsibility outside the gates of the factory.

Similarly F.O.B means freight on board ( Free on board ) means that the seller will take responsibility to transport the goods upto the port and ensure that the Bill of lading is cut and then hand over to the shipper.

CIF means carriage Insurance and Frieght paid upto the destination. This means all transportation charges including Insurance is the scope of the seller.

Naturally when sales people quote they give different prices for Exfactory, FOB and CIF because of the cost and the responsibility involved.

When I say responsibility it means upto the said point the buyer is not liable to pay for any damages also which may occur. Hence the seller in cse of internal transport takes out a transit insurance to cover his road/rail risks

Hope this is helpful.

regards

Jude

[Former Member]

Hi!

YOu will have to use FOB, free on board.

regards,

Abhishek