Incoterms 2020
Date published:
Incoterms (International Commercial Terms) are a set of 11 commercial terms that define the costs, risks and obligations between the buyer and seller in International Trade. The terms are reviewed every 10 years by the International Chambers of Commerce (ICC), and we currently trade on Incoterms 2020.
Key Incoterms-
ExWorks
In Exworks, the buyer takes responsibility for the costs and risks, including customs, in the movement of the goods. The seller makes the goods available at a specified location for the buyer to collect and transport.
FCA (Free Carrier)
A flexible rule for when the buyer is organising the main transport. Risk can transfer from seller to buyer in one of two ways. When the ‘named place’ is the seller’s premises and they are loaded on the transport arranged by the buyer.
Or, When the ‘named place’ is another place, the goods are delivered when loaded on the seller’s means of transport or they reach the named place and are ready for unloading from the seller’s means of transport and at the disposal of the carrier or another person nominated by the buyer.
The seller is always responsible for export clearance, but the buyer assumes all risks and costs after the goods have been delivered at the named place.
CIF (Cost Insurance Freight)
With CIF, the seller delivers and clears the goods export at the port of shipment, pays for the transport of the goods to the port of destination, and also pays for minimum insurance coverage on the goods to the named point of destination.
CFR (Cost and Freight)
Under CFR terms the seller is required to clear goods for export, deliver and board them at the port of departure, and pay for transport to the named port of destination. The risk passes from seller to buyer when the seller delivers the goods onboard.
DAP (Delivered At Place)
Under DAP, the seller arranges the means and transport of the goods to the named place. The buyer is responsible for unloading, import clearance and relevant import duties or taxes.
DDP (Delivered Duty Paid)
With DDP, the seller is responsible for transport to the named place, export & import clearance and any relevant import duties or taxes. This places most responsibility on the seller, and may require establishment in the country of destination.
For more on Incoterms, see the ICC Website: https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-2020/