incoterms

[Former Member]

HI,

Can sombody explain meaning of different types of INCOTERMS what each stands for & its relevance in business.

EX. FOB/EXW (exworks) etc.

[Lakshmipathi · Accepted solution]

Dear rohith

Go through the link and click on the respective inco terms so that it will give you the description / explanation

[Preambles to Incoterms 2000|http://www.iccwbo.org/incoterms/id3040/index.html]

thanks

G. Lakshmipathi

[Former Member]

Incoterms relevance in business:

Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC).

Use

Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed.

Example

If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example.

[Former Member]

Hi,

The incoterms are determined by the freight condition types KF00 and HD00. You to use them in your pricing procedure and maintain condition records for the same.

The incoterms are given in the billing tab under sales area data under the customer master.

And the values are picked up from the condition records if the values are maintained.

Different type of incoterms:

CFR

Cost and Freight

CIF

Cost, Insurance and Freight

CIP

Carriage and Insurance Paid to

CPT

Carriage Paid to

DAF

Delivered at Frontier

DDP

Delivered Duty Paid

DDU

Delivered Duty Unpaid

DEQ

Delivered Ex Quay (duty paid)

DES

Delivered Ex Ship

EXW

Ex Works

FAS

Free Alongside Ship

FCA

Free Carrier

FH

Carriage paid (to customer’s address)

FOB

Free on board

UN

Not paid

regards,

Siddharth.

Edited by: SD on Apr 11, 2008 7:28 AM

[Former Member]

Hi thx for replyin

But i want to know wat's the meaning of each of these.

say EXW- exworks means wat like that

Can you plz explain

[Former Member]

Hi

EXW (Exworks) means that the customer comes to collect the goods to your plant or warehouse and pays the transport. So you sell on your production plant without freight costs.

Regards.

Mikel

[Former Member]

hi

Departure of goods by international transport with the risks and dangers to the Seller (Exporter) and Buyers (Importers)

"EXW"- Ex Works

Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door. Used for any mode of transportation.

Seller : In EXW shipment terms the Seller (Exporter) provides the goods for collection by the Buyer (Importer) on the seller or exporter's promise. Responsibility for the seller is to put the goods, in a good package which is adaptable and disposable by the transport.

Buyer : The buyer or Importer arranges insurance for damage transit goods. The Buyer or importer has to bear all costs and risks involved in shipment transactions.

(However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. )

"FCA"- Free Carrier named point

"FCA"- Free Carrier named point: Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer's collecting vehicle; it is the Buyer's obligation to receive the Seller's arriving vehicle unloaded.

Seller : The Seller’s responsibility is to deliver the goods into the custody of the transporters at defined points. It is important for the chosen place of delivery to have an impact on the obligations of loading and unloading the goods.

Buyer : The Buyer nominates the means of transport or shipping mode and pays the shipment charges.

The seller and the buyer agree upon the place for delivery of goods. If the buyer nominates a person other than a carrier or transporter to receive the goods, the seller is deemed to fulfill his obligation to deliver the goods when they are delivered to that person.

"FAS"- Free Alongside Ship

FAS- Free Alongside ship: Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller.

In FAS has price includes all the costs incurred in delivering the goods alongside the vessel at the port or nominated place of the buyer but there is not applicable charges to the seller for loading the goods on board of vessel and no ocean freight charges and marine insurance.

Seller: The responsibility of the seller are fulfilled when the goods are placed cleared along the ship.

Buyer: Buyer or Importer bear all the expenses and risks of loss or damage of transit goods which are delivered along the ship.

"FOB" - Free On Board

The FOB (Free on Board) price is inclusive of Ex-Works price, packing charges, transportation charges upto the place of shipment., Seller also responsible for o clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording "Shipped on Board' it must bear with signature of transporter or carrier or his authorized representative with the date on which goods were "Boarded".

Seller :Seller responsible for clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording "Shipped on Board' it must bear with signature of transporter or carrier or his authorized representative with the date on which goods were "Boarded".

Buyer : The buyer indicates the ship and pays freight, transfer expenses and risks is done when the goods passes or forwarding to the buyers warehouse by rail or ship.

"CFR"- Cost And Freight

In this term the exporter bears the cost of carriage or transport to the selected destination port, in this term the risk transferable to the buyers at the port of shipment.

Seller: The chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding. On the other hand, the transfer of risks is the same one as in FOB.

Buyer: The buyers supports all the risk of transport, when the goods are delivered aboard by ship at the loading port, buyer receives it from the carrier and takes delivery of the goods from nominated destination port.

"CIF"- Cost, Insurance And Freight

CIF- Cost, Insurance and Freight: Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.

This Term involves insurance with FOB price and ocean freight. The marine insurance is obtained by the exporter at his cost against the risk of loss or damage to the goods during the carriage.

Seller: The CFR extends additional obligation to the seller for providing a maritime So insurance against the risk of loss or damage to the goods. The seller pays the insurance premium.

Buyer: He supports the risk of transportation, when the goods have been delivered aboard the ship at the loading port. He takes delivery of the goods from the carrier to the appointed port or destination.

"CPT"- Carriage Paid To

CPT- Carriage Paid To: Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation.

This term uses land transport by rail, road and inland waterways. The seller and exporter are responsible for the carriage of goods to the nominated destination and have to pay freight up the first carrier.

Seller: The seller or exporter controls the supply chain after paying customs clearance for export. Seller or Exporter select the carrier and pay the expenses up to the destination.

Buyer: The risks of goods damages or loss are supported by the buyer as goods are given by the first carrier. The buyer or importer has to pay importation customs clearance and the unloading costs.

"CIP"- Carriage And Insurance Paid To

CIP- Carriage and Insurance Paid To: Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.

This term is similar to Carriage Paid To but the seller has to arrange and pay for the insurance against the risk or loss or damage of the goods during the shipment.

Seller: The seller or buyer has to provide insurance and seller pays the freight and insurance premium.

Buyer: The buyer or importer supports the risks of damages or loss, as goods are given to the first carrier. The buyer has to pay customs clearance and unloading charges.

"DAF"- Delivered At Frontier

DAF- Delivered At Frontier: Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller. Used for any mode of transportation.

This term is used when the goods are to be carried by rail or road.

Seller : The seller is responsible to make the goods available to the buyer by the carrier till the customs border as defined in sales contract.

Buyer : The buyer takes delivery of the goods at the contract agreed point border and he is responsible for bearing all customs formalities.

DES"- Delivered Ex-Ship

DES- Delivered Ex-Ship: Title, risk, responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port. Used for sea or inland waterway transportation.

Seller: The seller is responsible to make the goods available to the buyer up to the named quay or after crossing the customs border.

Buyer: The buyer takes delivery of the goods from ship at destination port and pays the expenses of unloading.

DEQ"- Delivered Ex-Quay

DEQ- Delivered Ex-Quay: Title and risk pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point cleared for import. Used for sea or inland waterway transportation.

"DDU"- Delivered Duty Unpaid

DDU- Delivered Duty Unpaid: Seller fulfills his obligation when goods have been made available at the named place in the country of importation.

Seller: The seller is responsible for all transportation cost and accept the customs duty and taxes as per defined in customs procedures.

Buyer: The buyer is responsible of the importation customs formalities.

"DDP"- Delivered Duty Paid

DDP- Delivered Duty Paid: Title and risk pass to buyer when seller delivers goods to the named destination point cleared for import. Used for any mode of transportation.

Seller: The seller is responsible to make the goods available to the buyer at his risk and cost as promised by the buyer. All the Taxes and duty on importation is promised by the buyer to the seller.

Buyer: The buyer is responsible to take delivery at a nominated place and pays the expenses for unloading of goods.

Check Link

http://www.iccwbo.org/incoterms/wallchart/wallchart.pdf

hope this will give you complete Idea

Reward if helpful

Edited by: WISH on Apr 11, 2008 1:11 PM