INCOTERMS 2020

 Internationally accepted terms defining the responsibilities of exporters and importers

 The world's essential terms of trade for the sale of goods.
 Provide specific guidance to individuals participating in the import and export of global trade on
a daily basis.
 Incoterms serves as agreed terms of purchase and delivery.
 Launched by International Chamber of Commerce (ICC).

ICC INCOTERMS TERMINOLOGIES

MAIN CARRIAGE

 refers to freight cost, by air or sea, charged by-the carrier (airlines/shipping lines) or amount paid
by the shipper to carrier for the transport of goods from country of origin to country of
destination.

PRE-CARRIAGE

 refers to the cost of transport for hauling goods from seller's premises to a designated point at
country of origin. Also known as "Origin Inland Freight".

ON-CARRIAGE

 refers to the cost of transport for hauling goods from the port of discharge to buyer's warehouse
or designated place at destination. Also known as "Destination Inland freight".

FREIGHT PRE-PAID

 means the main carriage for the exported goods was paid by seller prior to departure from
country of origin and therefore included in seller's invoice price.

FREIGHT COLLECT

 means the main carriage was paid by the buyer upon arrival of imported goods at country of
destination and not included in seller's invoice price.

MULTIMODAL TRANSPORT

 refers to inter-continental transit of goods involving main carriage that can be carried out both by
air or by sea.

PORT TO PORT INSURANCE

 generic name for cargo insurance. It refers to the insurance premium paid in the international
transport of goods by air/sea. This is procured by the buyer or seller to cover risks against loss or
damage to the cargo during pendency of the voyage from country of origin to destination.

INTERNAL INSURANCE

 Insurance coverage taken up by seller to cover risks against loss or damage to the goods while
in transit from his premises to a delivery point at origin.

ORIGIN/ DESTINATION LCL CHARGES

 refers to cost of handling and moving loose or breakbulk cargoes within a seaport at country of
origin or destination.
ORIGIN/DESTINATION TERMINAL HANDLING CHARGES (THC)

 refers to cost of handling and moving containerized cargoes within the terminal facilities of a
seaport at country of origin or destination.

OTHER CHARGES (0/C)

 refers to incidental expenses (except main carriage and port to port insurance) incurred by the
seller/exporter in relation to fulfilling his contractual obligation to deliver the goods for each of
the 11 incoterms. (e. pre-carriage/on-carriage, export documentation/clearance fees, forwarder's
fees, THC/LL charges, export/import duties & taxes, etc.)

CARRIER

 refers to airlines, shipping lines or their agents (NVOCC/IFF)

DELIVERY

 refers to bringing of goods to a specific place or to a carrier/forwarder at country of origin or

destination and used as reference point when liability against risk for loss of or damage to the
goods passes on from seller to buyer

* INCOTERMS 2020 rules as obligations of seller and buyer to each other classified into:

1. General Obligations

2. Delivery/Taking Delivery

3. Transfer of risk

4. Carriage

5. Insurance

6. Delivery/transport document

7. Export/Import clearance

8. Checking/packaging/marking

9. Allocation of costs

10. Notice

* INCOTERMS, TRANSACTION ARE BETWEEN:

SELLER - (MERCHANT/SHIPPER/EXPORTER)

-INCHARGE FOR THE DELIVERY OF GOODS

-RISK ORIGINATES

BUYER - (PURCHASER/IMPORTER)

- INCHARGE FOR TAKING THE DELIVERY OF GOODS

- RISK IS TRANSFERRED
* SIGNIFICANCE OF DELIVERY IN INCOTERMS

1. Risk is transferred from the seller to the buyer

a. Loss, damage, deterioration

2. Buyer assumes all expenses to bring goods to final place of destination depending on contract price
which is expressed in ICOTERMS 2020.

a. Most basic Ex Works: ready for pickup by the buyer.

b. Most complete DDP: delivery is made by the seller to the named place of destination ready for
unloading at buyer's expense and risk

3. Except "C" Terms: Point of transfer of risk different from starting point buyer assumes costs

Incoterms has four groups, namely:

• E GROUP ( EXW)

* F GROUP ( FCA, FAS, FOB)

* C GROUP ( CFR, CIF, CPT, CIP)

* D GROUP ( DAP, DU, DDP)

I. CATEGORY E (DEPARTURE)

EXW (Ex Works)...named place of delivery

Note: FREIGHT PRE-PAID/COLLFCT (BUYER'S OPTION)

II. CATEGORY F (SHIPMENT)

1) FCA (Free Carrier)... named place of delivery

2) FAS (Free Alongside Ship)... named port of shipment

3) FOB (Free on Board).. named port of shipment

NOTE: MAIN CARRIAGE UNPAID BY SELLER. (FREIGHT PAID BY BUYER UPON ARRIVAL OF GOODS AT
DESTINATION).

III. CATEGORY C (SHIPMENT)

1) CFR (Cost & Freight)... named port of destination

2) CIF (Cost, Insurance & Freight)... named port of destination

3) CPT (Carriage Paid to)... named destination

4) CIP (Carriage & Insurance Paid to)... named destination.

NOTE: MAIN CARRIAGE INCLUDED BY SELLER. (FREIGHT PREPAID BY SELLER PRIOR TO DEPARTURE AT
ORIGIN)
IV. CATEGORY D (ARRIVAL)

1) DPU (Delivered at Place Unloaded)... named place of destination

2) DAP (Delivered at Place)... named place of destination

3) DDP (Delivered Duty Paid)... named place of destination

EXW: EX WORKS (insert named place of delivery)

EXWorks" means that the seller's delivers when it places the goods at the disposal of the buyer at the
seller's premises or at another named place (e.i. works, factory, warehouse, etc.) The seller does not need
to load the goods on any collecting vehicle (if he does so, it will be at the buyer's risk and expenses). Seller
is not bound to organize the export clearance.EXW represents the minimum obligation for the seller and
may be used for multimodal mode of transport. It is also suitable for domestic use, while FCA is more
appropriate for international trade. The seller has no obligation to the buyer to make a contract of
insurance. Seller quoted EXWORKS at his factory. Buyer provided collecting vehicle to pick up the goods.

FCA: FREE CARRIER (insert named place of delivery)

"Free Carrier" means that the seller delivers the goods to the carrier or another person nominated by
the buver at the seller's premises or another named place. The risks passes on to the buyer at the delivery
point. FCA requires the seller to clear the goods for export but has no obligation to contract for carriage
sor to ciear the goods fe, import, pay any import duty-or carry out any import customs formalities. The
seller has no obligation te the buyer to make contract of insurance.:

CPT: CARRIAGE PAID TO (insert named place of destination)

"Carriage Paid To" means that the seller deliver the goods to the carrier or another person nominated
by the seller at an agreed place and that the seller must contract for and pay the costs of main carriage
necessary to.. bring the goods to the named place of destination. Under CPT, the seller fulfills his
obligation to deliver when it hands the goods over to the carrier and not when the goods reach the place
of destination. CPT requires the seller to clear the goods for export but has no obligation to clear the
goods for import, pay any import duty or carry out any import customs formalities. The seller has no
obligation to the buyer to make a contract of insurance.

CIP: CARRIAGE AND INSURANCE PAID TO (insert named place of destination)

"Carriage Insurance Paid To" means that the seller delivers the goods to the carrier or another person
nominated by the seller at an agreed place and that the seller must contract for and pay the costs for
carriage necessary to bring the goods to the named place of destination. The seller also contracts for
insurance cover against the buyer's risk of loss or damage to the goods during the carriage. Seller is
required to obtain insurance only on minimum cover.

Under CIP, seller fulfills its obligation to deliver when it hands the goods over to the carrier and not when
the goods reach the place of destination. CIP requires the seller to clear the goods for export but has no
obligation to clear the goods for import, pay any import duty or carry cut any import customs formalities.

FAS: FREE ALONGSIDE SHIP (insert named port of shipment)

"Free Alongside Ship" means that the seller delivers when the goods are placed alongside the vessel (e.
g., on a quay/dock or a barge/lighter) nominated by the buyer at the named port of shipment.

The risk of loss or damage to the goods passes to the buyer when the goods are alongside the ship and he
bears all costs from that moment onwards.
FAS requires the seller to clear the goods for export but has no obligation to contract for carriage nor to
clear goods for import, pay any import duty, carry out any customs formalities and to make a contract of
insurance.

FOB: FREE ON BOARD (insert named port of shipment)

"Free on Board" means that the seller delivers the goods on beard the vessel nominated by the buyer at
the named port of shipment. The risk of loss or damage to the goods passes on to the buyer when goods
are on board the vessel, and the buyer bears all costs from that moment onwards.

FOB is not appropriate for containerized cargoes since they are first handed over to the carrier and
delivered at a container terminal before they are placed on board the vessel. In such situations, FCA
should be used. FOB requires the seller to clear the goods for export but has no obligation to contract for
carriage nor to clear goods for import, pay duty, carry out any import customs formalities and to make a
contract of insurance.

CFR: COST AND FREIGHT (insert named port of destination)

Cost and Freight" means that the seller delivers the goods on board the vessel nominated by him. The risk
of loss of or damage to the goods passes on to the buyer when the goods are on board the vessel. The
seller must contract for and pay the costs and freight necessary to bring the goods to the named port of
destination.

Under CFR, the seller fulfill his obligation to deliver when it hands the goods over to the carrier and not
when the goods reach the place of destination. CFR may not be appropriate for containerized cargoes
where they are first handed over to the carrier and delivered at a terminal before being loaded on board
the vessel. In such circumstances, the CPT term should be used. CFR requires the seller to clear the goods
for export but has no obligation to clear the goods for import, pay any import duty, carry out any import
customs formalities and to procure any contract of insurance.

CIF: COST. INSURANCE AND FREIGHT (insert named port of destination)

"Cost, Insurance and Freight" means that the seller delivers the goods on board the vessel. The risk of loss
or damage to the goods passes on to the buyer when goods are on board the vessel. The seller must
contract and pay the costs and freight necessary to bring the goods to the named port of destination.

The seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods
during the carriage. Seller is required to obtain insurance only on minimum cover. Under CIF, the seller
fulfils his obligation to deliver when it hands the goods over to the carrier and not when the goods reach
the place of destination. CIF may not be appropriate for containerized cargoes where they are first handed
over to the carrier and delivered to a terminal before they are placed on board the vessel. In such
circumstances, the CIP term should be used. CIF requires the seller to clear the goods for export and has
no obligation to clear the goods for import, pay any import duty or carry out any import customs
formalities.

DPU: DELIVERED AT PLACE UNLOADED (insert named place of destination)

"Delivered at Place Unloaded" means that the seller delivers when the goods, are unloaded from the
arriving means of transport at buyer's warehouse or designated place, and placed at the disposal of the
buyer. The seller bears all risks involved in bringing the goods to and unloading them at the named place
of destination.

DPU requires the seller to clear the goods for export and procure a contract of carriage but has no
obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.

The seller has no obligation to the buyer to make a contract of insurance.

DAP: DELIVERED AT PLACE (insert named place of destination)

"Delivered at Place" means that the seller delivers when the goods are placed at the disposal of the
buyer on the arriving means of transport ready for unloading at the named place of destination (beyond
the terminal). The seller bear all risks involved in bringing the goods to the named place. DAP requires
the seller to clear the goods for export and to procure a contract of carriage but has no obligation to clear
the goods for import, pay any import duty or carry out any import customs formalities.

The seller has no obligation to the buyer to make a contract of insurance.

DDP: DELIVERED DUTY PAID (insert named place of destination)

"Delivered Duty Paid" means that the seller delivers the goods when the goods are placed at the disposal
of the buyer, cleared not only for export but also for import on arriving means of transport ready for
unloading at the named place of destination.

Seller has to pay any duty for both export and import and to carry out all customs formalities at origin
and at destination. Any VAT or any taxes payable upon import are for the seller's account unless expressly
agreed otherwise in the sales contract.

DDP represent the maximum obligation for the seller but he has no obligation to the buyer to make a
contract of insurance.