INCOTERMS 2000*

*(Based on Information Collected from Various Sources)

 Incoterms -Understanding
 Published by the International Chambers of
Commerce
 A set of rules for the interpretation of the commonly
used international commercial terms (INCOTERMS)
 First published by the ICC in 1936, since then
updated in 1953, 1967, 1976,1980, 1990 and latest
revision in 2000
 Rules framed to ensure uniformity in understanding
of various shipping terms used in international trade
by different countries
 Incoterms – Purpose and
Scope
 In pricing terms, shipping terms, sales
terms
 Define the rights and obligation of the
parties to the contract of sale with respect
to the delivery of goods sold.
 Clarify how functions, costs and risks are
split between buyer & seller for delivery of
goods as per requirement of sales contract
Incoterms - Classification in
Groups
Thirteen Incoterms are split into four distinct
groups:
 Group E - where the goods are made available to
the buyer at the seller's premises;
 Group F - where the seller must deliver the
goods to a carrier appointed by the buyer;
 Group C - where the seller must contract for the
carriage of the goods without assuming risk of
loss of, or damage to the goods or additional
costs due to events occurring after shipment;
 Group D - where the seller has to bear all costs
and risks required to bring the goods to the place
of destination.
 Incoterms – The Controls

Less More
Control 1) “E” group Control

2) “F” group
Seller Buye
r
3) “C” group
More Less
4) “D” group Control
Control

5
Group ‘E’ Departure
 Only one incoterm - EXW
EXW
EX WORKS (…named place)
 Term may be used for any mode of transport.
Seller delivers when goods placed at disposal of
buyer or another named place
 Not cleared for export and not loaded on any
collecting vehicle
 The only term that requires the buyer to clear the
goods for export (including obtaining any export
license necessary) is EXW
8
Incoterm Group ‘F’ Main
Carriage Unpaid
 The “F” terms require the seller to deliver
goods for carriage as instructed by the
buyer.
 FCA
 FAS
 FOB
FCA
FREE CARRIER (named place)
 Term may be used for any mode of
transport
 Seller delivers when goods, cleared for
export, to the carrier nominated by the
buyer at a named place.
 Seller not obliged to unload goods from his
vehicle.
11
FAS -FREE ALONGSIDE SHIP
(…named port of shipment)
 Term used for Maritime & inland waterway
transport only
 Seller delivers when goods, cleared for
export, are placed alongside the vessel
 Seller obliged to clear goods for export.
 The buyer bears all costs and risks of loss
or damage to the goods from that
moment.
13
FOB – FREE ON BOARD
…named port of shipment)

 Term can be used for sea or inland

waterway transport only.

 Seller delivers when goods, cleared for

export, pass the ship’s rail at the named
port of shipment.
 The buyer bears all costs and risks of loss
or damage to the goods from that point.
15
Incoterms Group ‘C’ Main
Carriage Paid
 The ‘C’ terms require the seller to contract
for carriage at his expense – to a specified
point.
 CFR
 CIF
 CPT
 CIP
CFR – COST AND FREIGHT
(…named port of destination)
 Term can be used for maritime or inland
waterway transport.
 Seller delivers when goods, cleared for
export, pass the ship’s rail at the named
port of shipment.
 The seller pays the costs and freight
necessary to bring goods to port of
destination, but the buyer bears the risk of
loss and additional costs occurring after
delivery.
18
CIF – COST, INSURANCE AND
FREIGHT (…named port of destination)
 Term can be used for maritime or inland waterway
transport.
 Seller delivers when goods, cleared for export,
pass the ship’s rail at the named port of shipment.
 The seller pays the costs and freight necessary to
bring goods to port of destination, but the buyer
bears the risk of loss and additional costs
occurring after delivery.
 The seller procures marine insurance, against
buyer’s risk of loss. Seller is required to obtain
insurance only on minimum cover.
20
CPT – CARRIAGE PAID TO (…
named place of destination)
 Term may be used for any mode of
transport.
 Seller delivers the goods, cleared for
export, to the carrier.
 The seller pays the costs of carriage
necessary to bring goods to named
destination, but the buyer bears the risk of
loss and additional costs occurring after
delivery.
22
CIP – CARRIAGE AND INSURANCE PAID
TO (…named place of destination)
 Term may be used for any of mode of transport.
 Seller delivers the goods, cleared for export, to
the carrier.
 The seller pays the costs of carriage to named
destination, but the buyer bears the risk of loss
and additional costs occurring after delivery.
 The seller procures insurance against buyer’s risk
of loss. Seller is required to obtain insurance
only on a minimum cover.
24
Incoterms Group ‘D’ Arrival
 The ‘D’ terms require the seller to take the
goods all the way to destination at the
border or within the country of import.
 DAF
 DES
 DEQ
 DDU
 DDP
DAF – DELIVERED AT FRONTIER
(…named place)
 Term may be used for any mode of transport
when goods are delivered at a land frontier.
 Seller delivers goods, cleared for export, at
disposal of buyer on arriving means of
transport.
 Not unloaded, not cleared for import at point at
frontier before customs border of adjoining
country.
 If delivery is to take place in the port of
destination, DES or DEQ should be used.
27
DES – DELIVERED EX SHIP (…
named port of destination)
 Maritime and inland waterway transport only
 Seller delivers goods at disposal of buyer on
board the ship.
 Not cleared for import at the named port of
destination.
 Seller bears all costs and risks to bring goods to
the named port before discharging.
 If the seller is to bear the costs of discharging the
goods, DEQ should be used.
29
DEQ – DELIVERED EX QUAY (…
named port of destination)
 Maritime and inland waterway transport
only
 Seller delivers goods, not cleared for
import, at disposal of the buyer on the
quay at the named port of destination.
 Seller bears all costs and risks to bring
goods to the named port of destination
and discharging the goods on the quay.
31
DDU – DELIVERED DUTY UNPAID
(…named place of destination)
 Term may be used for any mode of transport.
 Seller delivers goods to the buyer, not cleared for
import, and not unloaded, at the named place of
destination.
 Seller bears all costs and risks (except duty) to bring
goods to the named place of destination.
 If delivery is to take place at the port, quay or on
board a vessel, DES or DEQ should be used.
33
DDP – DELIVERED DUTY PAID (…
named place of destination)
 Term may be used for any of mode of transport
 Seller delivers goods to the buyer, cleared for import, and
not unloaded, at the named place of destination.
 Seller bears all costs and risks, including import duty, to
bring goods to the named place of destination.
 If delivery is to take place at the port, quay or on board a
vessel, DES or DEQ should be used.
 The only term that requires the seller to clear the goods
for import (including obtaining any import license
necessary) is DDP.
35
Incoterm - Any Mode of
Transport
 EXW
 FCA
 CPT
 CIP
 DAF
 DDU
 DDP
Incoterm – Maritime and Inland
Waterway Transport Only

 FAS
 FOB
 CFR
 CIF
 DES
 DEQ
 The Precautions needed
 Must name a place after the INCOTERM
 Clearly mention Incoterm edition
 INCOTERMS should appear on all commercial
documents
 Avoidance of risky incoterms
 DEQ,DDP,DDU,DES more risky for exporters
 EXW,FAS,FCA may be risky for the importers
 Understand rules & regulations of importer’s
country
Thank You