Rules for Any Mode(s) of Transport
The seven rules defined by Incoterms 2010 for any mode(s) of transportation
are:
EXW – Ex Works (named place of delivery) The seller makes
the goods available at its premises. This term places the maximum obligation on
the buyer and minimum obligations on the seller. The Ex Works term is often used
when making an initial quotation for the sale of goods without any costs included.
EXW means that a seller has the goods ready for collection at his premises (works,
factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation
costs and also bears the risks for bringing the goods to their final destination.
The seller doesn't loaded the goods on collecting vehicles and doesn't clear them
for export. If the seller does load the good, he does so at buyer's risk and cost.
If parties wish seller to be responsible for the loading of the goods on departure
and to bear the risk and all costs of such loading, this must be made clear by adding
explicit wording to this effect in the contract of sale.
FCA – Free Carrier (named place of delivery) The seller hands
over the goods, cleared for export, into the disposal of the first carrier (named
by the buyer) at the named place. The seller pays for carriage to the named point
of delivery, and risk passes when the goods are handed over to the first carrier.
CPT – Carriage Paid To (named place of destination) The seller
pays for carriage. Risk transfers to buyer upon handing goods over to the first
carrier.
CIP – Carriage and Insurance Paid to (named place of destination)
The containerized transport/multimodal equivalent of CIF. Seller pays for carriage
and insurance to the named destination point, but risk passes when the goods are
handed over to the first carrier.
DAT – Delivered at Terminal (named terminal at port
or place of destination) Seller pays for carriage to the terminal, except for costs
related to import clearance, and assumes all risks up to the point that the goods
are unloaded at the terminal.
DAP – Delivered at Place (named place of destination) Seller
pays for carriage to the named place, except for costs related to import clearance,
and assumes all risks prior to the point that the goods are ready for unloading
by the buyer.
DDP – Delivered Duty Paid (named place of destination) Seller
is responsible for delivering the goods to the named place in the country of the
buyer, and pays all costs in bringing the goods to the destination including import
duties and taxes. This term places the maximum obligations on the seller and minimum
obligations on the buyer.
Rules for Sea and Inland Waterway Transport
The four rules defined by Incoterms 2010 for international trade where transportation
is entirely conducted by water are:
FAS – Free Alongside Ship (named port of shipment) The seller
must place the goods alongside the ship at the named port. The seller must clear
the goods for export. Suitable only for maritime transport but NOT for multimodal
sea transport in containers (see Incoterms 2010, ICC publication 715). This term
is typically used for heavy-lift or bulk cargo.
FOB – Free on Board (named port of shipment) The seller must
load themselves the goods on board the vessel nominated by the buyer. Cost and risk
are divided when the goods are actually on board of the vessel (this rule is new!).
The seller must clear the goods for export. The term is applicable for maritime
and inland waterway transport only but NOT for multimodal sea transport in containers
(see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the
details of the vessel and the port where the goods are to be loaded, and there is
no reference to, or provision for, the use of a carrier or forwarder. This term
has been greatly misused over the last three decades ever since Incoterms 1980 explained
that FCA should be used for container shipments.
CFR – Cost and Freight (named port of destination) Seller
must pay the costs and freight to bring the goods to the port of destination. However,
risk is transferred to the buyer once the goods are loaded on the vessel (this rule
is new!). Maritime transport only and Insurance for the goods is NOT included.
CIF – Cost, Insurance and Freight (named port of destination)
Exactly the same as CFR except that the seller must in addition procure and pay
for the insurance. Maritime transport only.
Previous terms eliminated in Incoterms 2010
DAF – Delivered At Frontier (named place of delivery) This
term can be used when the goods are transported by rail and road. The seller pays
for transportation to the named place of delivery at the frontier. The buyer arranges
for customs clearance and pays for transportation from the frontier to his factory.
The passing of risk occurs at the frontier.
DES – Delivered Ex Ship (named port of delivery) Where goods
are delivered ex ship, the passing of risk does not occur until the ship has arrived
at the named port of destination and the goods made available for unloading to the
buyer. The seller pays the same freight and insurance costs as he would under a
CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just
cost, but also Risk and Title up to the arrival of the vessel at the named port.
Costs for unloading the goods and any duties, taxes, etc… are for the Buyer.
A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals
- - - and where the seller either owns or has chartered, their own vessel.
DEQ – Delivered Ex Quay (named port of delivery) This is
similar to DES, but the passing of risk does not occur until the goods have been
unloaded at the port of destination.
DDU – Delivered Duty Unpaid (named place of destination)
This term means that the seller delivers the goods to the buyer to the named place
of destination in the contract of sale. The goods are not cleared for import or
unloaded from any form of transport at the place of destination. The buyer is responsible
for the costs and risks for the unloading, duty and any subsequent delivery beyond
the place of destination. However, if the buyer wishes the seller to bear cost and
risks associated with the import clearance, duty, unloading and subsequent delivery
beyond the place of destination, then this all needs to be explicitly agreed upon
in the contract of sale.
Notes
Carriage for EXW: The buyer has no obligation to contract for carriage but must
pay the cost if it does.
Carriage for DAT: The seller pays the costs and is responsible for the goods until
they are delivered at the named terminal at port or place of destination. Starting
from that point the buyer is responsible for goods and liable for the costs.
Insurance for EXW, FCA, CPT, DAT, DAP, DDP, FAS, FOB, CFR: The buyer has no obligation
to contract for insurance but must pay the cost if it does.
Inspection for FCA, CPT, CIP, DAT, DAP, FAS, FOB, CFR, CIF: The seller pays
only if the inspection is mandatory by local authorities.
Loading for FCA: The seller is responsible for loading if named place of delivery
is on its premises.