POLC Inco Curriculum

Lake Charles Harbor and Lake Charles Harbor and Terminal DistrictTerminal District

150 Marine St. 150 Marine St.

Lake Charles, LA 70602Lake Charles, LA 70602

(337) 439-3661(337) 439-3661

IncotermsIncoterms• International Commerce Terms are a International Commerce Terms are a

series of international sales terms.series of international sales terms.• Incoterms are maintained and defined Incoterms are maintained and defined

by the International Chamber of by the International Chamber of Commerce (ICC).Commerce (ICC).

• Incoterms are used to define Incoterms are used to define responsibilities between the buyers responsibilities between the buyers and sellers.and sellers.

• Incoterms are used to clarify when Incoterms are used to clarify when actual ownership of merchandise actual ownership of merchandise takes place. takes place.

IncotermsIncoterms• Incoterms are used to answer three main Incoterms are used to answer three main

questions.questions.

1.1. Who will arrange and pay for the carriage of Who will arrange and pay for the carriage of the good(s) from one point (the supplier) to the good(s) from one point (the supplier) to another point (the end user)?another point (the end user)?

2.2. Who will bear the risks if these options Who will bear the risks if these options cannot be carried out?cannot be carried out?

3.3. Who will bear the risk of loss or damage to Who will bear the risk of loss or damage to the good(s) in transit?the good(s) in transit?

IncotermsIncoterms

• EXW (Ex Works)EXW (Ex Works)• FCA (Free Carrier)FCA (Free Carrier)• FAS (Free Alongside FAS (Free Alongside

Ship)Ship)• FOB (Free on Board)FOB (Free on Board)• C&F (Cost & Freight)C&F (Cost & Freight)• CIF (Cost, Insurance, & CIF (Cost, Insurance, &

Freight)Freight)• CPT (Carriage Paid To)CPT (Carriage Paid To)

• CIP (Carriage & Insurance CIP (Carriage & Insurance Paid To)Paid To)

• DAF (Delivered at Frontier)DAF (Delivered at Frontier)• DES (Delivered Ex Ship)DES (Delivered Ex Ship)• DEQ (Delivered Ex Quay)DEQ (Delivered Ex Quay)• DDU (Delivered Duty DDU (Delivered Duty

Unpaid)Unpaid)• DDP (Delivered Duty)DDP (Delivered Duty)

EXW EXW (Ex Works)(Ex Works)

The seller has fulfilled his duty when he The seller has fulfilled his duty when he places the goods at the disposal of the places the goods at the disposal of the buyer on the seller’s premises or another buyer on the seller’s premises or another agreed upon location (factory, warehouse, agreed upon location (factory, warehouse, etc.). The good should not be cleared for etc.). The good should not be cleared for export and not loaded on any collecting export and not loaded on any collecting vehicle by the seller.vehicle by the seller.

Ex Works (EXW)Ex Works (EXW)• Diagram of where ownership of commodity Diagram of where ownership of commodity

transfers under the terms of Ex Works.transfers under the terms of Ex Works.

FCA FCA (Free Carrier)(Free Carrier)

The seller has fulfilled his obligation to deliver The seller has fulfilled his obligation to deliver when he has handed over the goods, cleared for when he has handed over the goods, cleared for export, into the charge of the first carrier export, into the charge of the first carrier designated by the buyer at an agreed upon designated by the buyer at an agreed upon location. location.

Free Carrier (FCA)Free Carrier (FCA)

• Diagram of where risk transfers under Free Diagram of where risk transfers under Free Carrier terms.Carrier terms.

FAS FAS (Free Alongside Ship)(Free Alongside Ship)

The seller has fulfilled his duty to deliver when The seller has fulfilled his duty to deliver when the goods have been placed the goods have been placed alongsidealongside an agreed an agreed upon carrier’s vessel (ship) on the dock or in upon carrier’s vessel (ship) on the dock or in barges at the agreed upon port of export.barges at the agreed upon port of export.

Free Alongside Ship (FAS)Free Alongside Ship (FAS)

• Diagram of where transfer of risk occurs Diagram of where transfer of risk occurs under terms of Free Alongside Ship.under terms of Free Alongside Ship.

FOB FOB (Free on Board)(Free on Board)

The seller has fulfilled his duty when The seller has fulfilled his duty when the good is the good is loaded over the ship’s railloaded over the ship’s rail at the specified port of export. at the specified port of export.

Free on Board (FOB)Free on Board (FOB)

• Diagram of where transfer of risk occurs Diagram of where transfer of risk occurs under terms of Free on Board.under terms of Free on Board.

CFR CFR (Cost and Freight)(Cost and Freight)

The seller has delivered when the The seller has delivered when the goods pass the ship’s rail in the port goods pass the ship’s rail in the port of shipment. The seller is obligated of shipment. The seller is obligated to pay the cost and freight to bring to pay the cost and freight to bring the good from their premises to the the good from their premises to the port of shipment and have it loaded port of shipment and have it loaded over the ship’s rail. over the ship’s rail.

Cost and Freight (CFR)Cost and Freight (CFR)

• Diagram of where transfer of risk occurs Diagram of where transfer of risk occurs under terms of Cost and Freight.under terms of Cost and Freight.

CIF CIF (Cost, Insurance, & Freight)(Cost, Insurance, & Freight)

The seller pays the costs and freight to The seller pays the costs and freight to transport the goods from their property to transport the goods from their property to the agreed upon port of export up until the the agreed upon port of export up until the good is passed over the carrier’s ship rail. good is passed over the carrier’s ship rail. The seller is also required to purchase the The seller is also required to purchase the minimum marine cargo insurance to cover minimum marine cargo insurance to cover the goods and all costs should something the goods and all costs should something happen to the goods while in transit. Once happen to the goods while in transit. Once the goods are transferred onto the ship, the the goods are transferred onto the ship, the buyer assumes responsibility of the risk for buyer assumes responsibility of the risk for lost or damaged cargo. lost or damaged cargo.

Cost, Insurance, and Freight Cost, Insurance, and Freight (CIF)(CIF)

• Diagram of the transfer of risk under the Diagram of the transfer of risk under the terms of Cost, Insurance, and Freightterms of Cost, Insurance, and Freight

CPT CPT (Carriage Paid To)(Carriage Paid To)

The seller must have the good delivered to The seller must have the good delivered to his chosen carrier to be transported to the his chosen carrier to be transported to the buyer. The seller is obligated to pay for the buyer. The seller is obligated to pay for the carrier’s carriage fees for the good to be carrier’s carriage fees for the good to be transported to the destination agreed transported to the destination agreed upon by buyer and seller. The buyer upon by buyer and seller. The buyer assumes risk and additional costs after the assumes risk and additional costs after the goods have been delivered to the first goods have been delivered to the first destination. If more than one carrier is destination. If more than one carrier is used, the risk is assumed by the buyer used, the risk is assumed by the buyer after the good has been delivered to the after the good has been delivered to the first agreed upon destination.first agreed upon destination.

Carriage Paid To (CPT)Carriage Paid To (CPT)

• Diagram of where risk transfers under the Diagram of where risk transfers under the terms of Carriage Paid To.terms of Carriage Paid To.

CIP CIP (Carriage & Insurance Paid (Carriage & Insurance Paid

To)To)

Is the same as CPT, except for the seller must Is the same as CPT, except for the seller must purchase marine cargo insurance for the cargo to purchase marine cargo insurance for the cargo to counter the buyer’s risk of loss or damage to the counter the buyer’s risk of loss or damage to the good during carriage.good during carriage.

Carriage & Insurance Paid Carriage & Insurance Paid (CIP)(CIP)

• Diagram of where risk transfers under the Diagram of where risk transfers under the terms of Carriage and Insurance Paid.terms of Carriage and Insurance Paid.

DAF DAF (Delivered at Frontier)(Delivered at Frontier)

The seller’s obligation is fulfilled when The seller’s obligation is fulfilled when the good is placed at the disposal of the good is placed at the disposal of the buyer on the arriving means of the buyer on the arriving means of transport, but not unloaded nor transport, but not unloaded nor cleared for import. The term “frontier” cleared for import. The term “frontier” is used to define any frontier, including is used to define any frontier, including the country of export. It must be the country of export. It must be defined precisely in the agreement defined precisely in the agreement between the buyer and seller.between the buyer and seller.

Delivered at Frontier (DAF)Delivered at Frontier (DAF)

• Diagram of the transfer of risk under the Diagram of the transfer of risk under the terms of Delivered at Frontier.terms of Delivered at Frontier.

DES DES (Delivered Ex Ship)(Delivered Ex Ship)

The seller has fulfilled his obligation The seller has fulfilled his obligation when the goods are delivered to the when the goods are delivered to the buyer on board the ship but not buyer on board the ship but not unloaded nor cleared for import. The unloaded nor cleared for import. The seller bears all costs and risk involved seller bears all costs and risk involved in transporting the goods to the in transporting the goods to the named port of destination before named port of destination before unloading. unloading.

Delivered Ex Ship (DES)Delivered Ex Ship (DES)

• Diagram of transfer of risk under the terms Diagram of transfer of risk under the terms of Delivered Ex Ship.of Delivered Ex Ship.

DEQ DEQ (Delivered Ex Quay)(Delivered Ex Quay)

The seller has performed his duty when The seller has performed his duty when the goods are placed at the disposal of the goods are placed at the disposal of the buyer, not cleared for import, on the buyer, not cleared for import, on the wharf (quay) at the agreed upon the wharf (quay) at the agreed upon port of discharge. The seller bears all port of discharge. The seller bears all costs and risks involved in delivery of costs and risks involved in delivery of the good to the port of destination and the good to the port of destination and unloading from the vessel onto the unloading from the vessel onto the wharf. The buyer must clear the goods wharf. The buyer must clear the goods for import, pay all duties, taxes, or any for import, pay all duties, taxes, or any other charges upon import.other charges upon import.

Delivered Ex Quay (DEQ)Delivered Ex Quay (DEQ)

• Diagram of transfer of risk under the terms Diagram of transfer of risk under the terms of Delivered Ex Quay.of Delivered Ex Quay.

DDU DDU (Delivered Duty Unpaid)(Delivered Duty Unpaid)

The seller has delivered the good to the The seller has delivered the good to the buyer, not cleared for import nor unloaded buyer, not cleared for import nor unloaded from the mean of transport (ship, barge, from the mean of transport (ship, barge, truck etc.), when the goods arrive at the truck etc.), when the goods arrive at the agreed upon destination. The seller bears agreed upon destination. The seller bears costs and risks of transport, unloading costs and risks of transport, unloading from the mean of transport, and relocation from the mean of transport, and relocation of good to another location (warehouse, of good to another location (warehouse, terminal, etc.), but does not bear the costs terminal, etc.), but does not bear the costs and risks of any “duty” (customs charges, and risks of any “duty” (customs charges, import taxes, etc.) applicable. The buyer import taxes, etc.) applicable. The buyer must bear the costs and risks for import must bear the costs and risks for import into the country. into the country.

Delivered Duty Unpaid Delivered Duty Unpaid (DDU)(DDU)

• Diagram of the transfer of risk under the Diagram of the transfer of risk under the terms of Delivered Duty Unpaid.terms of Delivered Duty Unpaid.

DDP DDP (Delivered Duty Paid)(Delivered Duty Paid)

The seller has delivered the goods to The seller has delivered the goods to the buyer, not cleared for import nor the buyer, not cleared for import nor unloaded from the mean of transport unloaded from the mean of transport (ship, barge, truck etc.), when the (ship, barge, truck etc.), when the good arrives at the agreed upon good arrives at the agreed upon destination. The seller must also bear destination. The seller must also bear the costs and risks of any “duty” the costs and risks of any “duty” applicable to the import of the good applicable to the import of the good into the country of destination. into the country of destination.

Delivered Duty Paid (DDP)Delivered Duty Paid (DDP)

• Diagram of the transfer of risk under the Diagram of the transfer of risk under the terms of Delivered Duty Paid.terms of Delivered Duty Paid.

IncotermsIncoterms

To avoid any confusion, an INCO Term To avoid any confusion, an INCO Term must be accompanied by a named place must be accompanied by a named place such as “FOB Montreal” or “EXW such as “FOB Montreal” or “EXW Birmingham.”Birmingham.”