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coast
INCOTERMS 2010
ITS Training 2005-2013
Export
coastINCOTERMS 2010
INCOTERMS are internationally-recognised contract terms.
They define responsibilities for the seller (shipper) and buyer (consignee) for
these purposes:
ITS Training 2005-2013
1. Costs who pays which charges.
2. Risk where does the risk transfer from the seller to the buyer?
(The definition of risk can be found on the next slide.)
INCOTERMS are an important part of the contract between seller and buyer,
and should there be any disputes, they will be relied upon in a court of law.
coastTransfer of Risk the definition
Throughout this lecture we shall be referring to the transfer of risk.. This slide will
explain the main points to consider.
International Trade (all forms of transport) contain a limited liability, which
effectively means the carrier may only be responsible for a small percentage of the
value of the goods lost or damaged.
ITS Training 2005-2013
value of the goods lost or damaged.
The INCOTERM decides which party takes the risk and from which point.
There are however two INCOTERMS that require mandatory insurance, these are
CIF & CIP.
On all other INCOTERMS, it is advisable to
obtain marine insurance cover.
If you do not arrange marine insurance on your
goods, and they become damaged or lost court
action becomes necessary to resolve a dispute.
coastQuotation
Always enter the INCOTERM onto
the quotation.
ABC Exporters, 101 High Street, Birmingham, B6 2LG
Freight Quotation
Date: 2nd January 201X Reference: 0109
Quotation to: High Quality Supplies
23 Boulevard Place
New York
ITS Training 2005-2013
INCOTERMS are updated every 10
years.
Enter the following into your
quotation.
This will avoid any disputes.
New York
1923-0772
Re: 5000 Plastic Bottles Cat No. B9662
We are pleased to submit the following price based upon
DAP Pittsburgh
Subject to INCOTERMS 2010
Product 27,795.00
Subject to our terms and conditions
coastStructure
INCOTERMS follow a particular structure
Sea terms
FAS
Any Mode
Ex Works
Any Mode
DAT
ITS Training 2005-2013
FOB
CFR
CIF
FCA
CPT
CIP
DAP
DDP
coastPacking & Marking Regulations
There are a total of 11 INCOTERMS.
It is always the responsibility of the
seller for packing & marking.
The seller therefore has to take into
Exporting to Australia
You must not use any wood or straw as
packing material, unless treated to
Australian standards
Example 1
ITS Training 2005-2013
The seller therefore has to take into
consideration overseas country
regulations.
Here are two examples of packing and
marking regulations.
Exporting from USA
You must ensure that the country of
origin is shown in English on all four
sides of the boxes, this may be in
addition to any other language.
Example 2
coastEx Works(Named Place)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the
contract, taking into consideration overseas country regulations.
Buyers Risk
Risk transfers when the goods are made
available to the driver (prior to loading)
at the collection point.
ITS Training 2005-2013
at the collection point.
Considerations
Buyer responsible for
export loading.
Buyer responsible for
export customs and
formalities.
Buyer appear on the bill
of lading as Shipper.
Cost by Buyer Costs by Shipper Insurance Risk
New YorkNew YorkPittsburghPittsburgh
Suitable for any mode of
transport
The Buyers Responsibilities Are...
Arrange both export and import
licence and customs formalities.
Arrange to pay freight charges
from the sellers warehouse to the
final destination.
Recommend Marine Insurance.
coastFCA - Free Carrier, e.g. FCL(Named Place)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the
contract, taking into consideration overseas country regulations.
Obtain export licences and deal with export customs formalities.
Buyers Risk
Risk transfers when the goods are
ITS Training 2005-2013
Risk transfers when the goods are
loaded on board the vehicle at the
point of collection.
This example is for direct collections only.
Cost by Buyer Costs by Shipper Insurance Risk
New YorkNew YorkPittsburghPittsburgh
The Buyers Responsibilities Are...
Obtain any import licence and deal with
import customs formalities.
Arrange to pay freight charges from the
agreed collection point to the final
destination.
Recommend Marine Insurance.
Suitable for any mode of
transport
coastFCA - Free Carrier e.g. LCL(Named Place)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the
contract, taking into consideration overseas country regulations.
Obtain export licences and deal with export customs formalities.
Arrange to deliver the good to the consolidation point.
Buyers Risk
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh
Buyers Risk
Risk transfers when the vehicle arrives at
the consolidation point (prior to unloading).
This example is consolidated goods only.
Cost by Buyer Costs by Shipper Insurance Risk
Suitable for any mode of
transport
The Buyers Responsibilities Are...
Obtain any import licence and deal with
import customs formalities.
Arrange to pay freight charges from the
agreed collection point to the final
destination.
Recommend Marine Insurance.
coastSea Terms for Break Bulk
The reasons why FAS/FOB/CFR/CIF are only suitable for conventional cargo.
Factory Birmingham.Safely on board in good
order and condition.
Step 1Step 1Step 4Step 4
ITS Training 2005-2013
Drums being transported to
the port.
When they arrive at the port
they can be checked for
condition/loss before loading
on to the vessel.
Goods arriving at the
port in a container
cannot be checked as
the insurance risk
transfer.
Step 2Step 2
Step 3Step 3
coastFAS - Free Alongside Ship(Named Port of Loading)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Deliver the goods to the named port.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburghThe Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Arrange to pay freight charges from the
named port of export (i.e. Felixstowe) to
their final destination.
Recommend Marine Insurance.
Buyers Risk
Risk transfers when the goods have
been delivered to the port of export.
Not suitable for containerised cargo.
Suitable for sea
transport only
Cost by Buyer Costs by Shipper Insurance Risk
coastFOB - Free on Board(Named Port of Loading)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all charges to the agreed vessel.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburghThe Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Arrange to pay freight charges once the
goods are on-board the export vessel.
Recommend Marine Insurance.
Buyers Risk
Risk transfers when the goods are on
the vessel at the port of export, and
from the agreed date.
Suitable for sea
transport only
Not suitable for containerised cargo.
Cost by Buyer Costs by Shipper Insurance Risk
coastTransfer of Risk
Under a FOB contract, the Transfer of Risk can happen in two ways.
Risk will transfer from seller to buyer when the goods are on board the vessel at the
port of export and from the agreed date, therefore giving the buyer the greater risk.
If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the
ITS Training 2005-2013
If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the
vessel.
The buyer must supply the seller, with sufficient notice, of the vessel name, loading
port and required delivery time.
If the buyer fails to advise these details to the seller, then risk will transfer on expiry of
the agreed delivery period (delivery to the named port)
and therefore the risk will transfer prior to the goods being loaded onto the vessel
coastCFR - Cost and Freight(Named Port of Destination)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all freight charges to the port of destination.
The seller may also be responsible for on-carriage if agreed.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh The Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Pay haulage cost from the named port to
final destination.
Recommend Marine Insurance.
Buyers Risk
Risk transfers when the goods are on the
vessel at the port of export.Suitable for sea
transport only
Not suitable for containerised cargo.
Cost by Buyer Costs by Shipper Insurance Risk
coastCIF - Cost, Insurance & Freight(Named Port of Destination)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all freight charges to the port of destination.
The seller may also be responsible for on-carriage if agreed.
Arrange Marine Insurance on behalf of the buyer
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh
Buyers Risk
Risk transfers when the goods are on the
vessel at the port of export.
Not suitable for containerised cargo.
The Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Pay haulage cost from the named port to
final destination.
Suitable for sea
transport only
Cost by Buyer Costs by Shipper Insurance Risk
coastCPT - Carriage Paid To(Named Place of Destination)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all charges to the agreed destination (including unloading at
destination).
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh
Buyers Risk
Risk transfers when the goods have delivered
to the carrier (on-board the vehicle).
The Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Pay any duties, taxes and clearance costs
in the importing (buying) country.
Recommend Marine Insurance.
Suitable for any mode of
transport
Cost by Buyer Costs by Shipper Insurance Risk
coastCIP Carriage, Insurance Paid To(Named Place of Destination)
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the
contract, taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export
licences).
Pay all charges to the agreed destination (including unloading at
destination).
Seller arranges marine insurance on behalf of the buyer.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburghThe Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Pay any duties, taxes and clearance costs
in the importing (buying) country.
Seller arranges marine insurance on behalf of the buyer.
Buyers Risk
Risk transfers when the goods have delivered
to the carrier (once on-board the vehicle).
Suitable for any mode of
transport
Cost by Buyer Costs by Shipper Insurance Risk
coastDAT Delivered at Terminal
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all charges to the agreed terminal.
Recommend Marine Insurance.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh
The Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Arrange to unload the goods upon arrival at
the terminal.
Pay any duties, taxes and clearance costs in
the importing (buying) country.
Buyers Risk
Risk transfers when the goods have delivered
to the agreed terminal.Suitable for any mode of
transport
Cost by Buyer Costs by Shipper Insurance Risk
coastDAP Delivered at Place
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export clearance and formalities (including export licences).
Pay all charges to the agreed destination.
Recommend Marine Insurance.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburgh
The Buyers Responsibilities Are...
Arrange for import licence and deal with
import customs formalities.
Arrange to unload the goods upon arrival at
the buyers warehouse.
Pay any duties, taxes and clearance costs in
the importing (buying) country.
Buyers Risk
Risk transfers when the goods have delivered
to the agreed destination. Suitable for any mode of transport
Cost by Buyer Costs by Shipper Insurance Risk
coastDDP Delivered Duty Paid
The Sellerss Responsibilities Are...
Provide the goods, pack and mark in accordance with the contract,
taking into consideration overseas country regulations.
Arrange export and import clearance and deal with other formalities
(including licences).
Arrange Customs Clearance on import.
Pay any duties/taxes (and if agreed local taxes) in the buying country.
ITS Training 2005-2013
New YorkNew YorkPittsburghPittsburghThe Buyers Responsibilities Are...
Pay any local import sales taxes.
e.g. VAT, this should however be confirmed
prior to agreeing this INCOTERM
Pay any duties/taxes (and if agreed local taxes) in the buying country.
Recommend Marine Insurance.
Buyers Risk
Risk transfers when the goods have delivered
to the agreed destination.
Suitable for any mode of
transport
Cost by Buyer Costs by Shipper Insurance Risk