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Terms of Trade or Incoterms. INternational Chamber Of COmmerce TERMS Export packing costs Inland transportation to port Export clearance International.

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Presentation on theme: "Terms of Trade or Incoterms. INternational Chamber Of COmmerce TERMS Export packing costs Inland transportation to port Export clearance International."— Presentation transcript:

1 Terms of Trade or Incoterms

2 INternational Chamber Of COmmerce TERMS Export packing costs Inland transportation to port Export clearance International carrier loading Main transportation costs Cargo insurance Customs duties Risk in transit Click on “Page Down” to continue.

3 Incoterm Definition International Commerce Term A formalized international Term of Trade regulated by the International Chamber of Commerce Specifies the responsibilities of the exporter and the responsibilities of the importer in an international transaction –Which tasks will be performed by the exporter –Which tasks will be performed by the importer –Which activities will be paid by the exporter –Which activities will be paid by the importer –When the transfer of responsibility for the goods will take place First codified by the International Chamber of Commerce in The latest revision is dated 2000 Click on “Page Down” to continue.

4 INCOTERMS EXW CFR FCA FOB FAS CPT DAF DES CPT DEQ CIF CFR CIP DDU DDP Ex Works Free Carrier Free Alongside Ship Free On Board Cost and Freight Carriage Paid To Cost, Insurance, FreightDelivered Ex Ship Delivered Duty Unpaid Carriage and Insurance Paid To Delivered at Frontier Delivered Ex Quay Delivered Duty Paid Cost, Insurance, Freight Delivered Ex Ship CPT Carriage Paid To Free Carrier Carriage and Insurance Paid To DDU Delivered Ex Quay CFR Ex Works Carriage and Insurance Paid To DEQ Carriage Paid To Delivered Duty Unpaid Delivered Ex Ship Free Alongside Ship CIF DDU CPT CFR Cost, Insurance, Freight Delivered Duty Unpaid Delivered Ex Ship Delivered Duty Unpaid EXW DDU DDUv Carriage and Insurance Paid To Free Alongside Ship Carriage Paid To CIF Delivered Duty Paid ????

5 INCOTERMS “E” Terms. “F” Terms. “C” Terms. “D” Terms.

6 INCOTERMS “E” Terms.

7 INCOTERMS “E” Terms.

8 INCOTERMS “E” Term. –“Ex Works.” –Buyer pays everything.

9 INCOTERMS “F” Terms. –Seller pays for product to be delivered, cleared for export, to carrier buyer selects. “C” Terms. –Seller pays for main carriage and/or cargo insurance. “D” Terms. –Seller pays all costs of delivery.

10 INCOTERMS “E” Terms. –“Ex Works.” –Buyer pays everything.

11 Incoterms: EXW Used with any merchandise or form of transportation. Easiest Incoterm for exporter, most difficult for importer. Basically, exporter says: “Here is product. Come get it.”

12 Seller Prepare order Mfg. Pick items Pack items Buyer Buyer pays: Export packing costs Inland transportation to port Export clearance International carrier loading Main transportation costs Cargo insurance Customs duties Risk in transit

13 Incoterms: FCA “Free Carrier.” For goods shipped multi-modal without handling. Oriented toward containerization. Exporter delivers goods to carrier that importer selects. Responsibility shifts from exporter when goods are delivered to carrier’s vehicle, either at exporter’s plant or carrier’s premises.

14 Land Incoterm: DAF “Delivered at Frontier.” For any merchandise, but specifically refers to land transportation. Transfer of responsibility from exporter to importer is at city named in Incoterm. Usually goods remain on vehicle to final destination.

15 Ocean Incoterms FAS: “Free Along Ship.” –Exporter brings goods to port. –At port, importer takes responsibility for goods. FOB: “Free on Board” Port of Departure. –Exporter responsible for goods until they are on the ship, then importer is responsible. –Dividing point is ship’s rail.

16 Ocean and Corresponding Non-Ocean Incoterms OCEAN TERM: –CFR “Cost and Freight” Exporter responsible for goods until on ship. –CIF “Cost, Insurance and Freight” Same as CFR except exporter pays marine insurance. NON-OCEAN TERM: –CPT “Carriage Paid To” Exporter responsible for goods until on carrier. –CIP “Carriage and Insurance Paid to” Same as CIF except it’s a non-ocean shipment. Click on “Page Down” to continue.

17 Ocean and Corresponding Non-Ocean Incoterms OCEAN TERM: –DES “Delivered ex Ship” Exporter responsible or goods (usually bulk commodities) until importer gets them at port of destination. –DEQ “Delivered ex Quay” Usually bulk commodities for which exporter pays for ship unloading. NON-OCEAN TERM: –DDU “Delivered Duty Unpaid” Exporter performs most tasks in shipment except unloading costs. –DDP “Delivered Duty Paid” Exporter pays for everything in the shipment. Click on “Page Down” to continue.

18 Incoterms by Transport Mode ModeEXWEXW FCAFCA FASFAS FOBFOB CFRCFR CIFCIF CPTCPT CIPCIP DESDES DEQDEQ DAFDAF DDUDDU DDPDDP Break-bulk ocean cargo XXXXXXXXX Bulk ocean cargoXXXXXXXXX ROROXXXXXXX Multimodal FCLXXXXXXX Multimodal LCLXXXXXXX RailXXXXXXX RoadXXXXXXX AirXXXXXXX Click on “Page Down” to continue.

19 Incoterm STRATEGY Incoterm determined by exporter’s strategy and… –Type of product. –Method of shipment. –Ability of both parties to perform tasks in shipment. –Trust parties have toward one another. Exporter always chooses Incoterm.

20 End of Program


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