Understanding INCOTERMS 2010: Roles and Responsibilities

INCOTERMS Concept

Internationally accepted set of roles for standard commercial terms in distinct types of transportation around the world, used between buyers and sellers. The terms indicate who pays the cost of each transportation segment, who is responsible for loading and unloading goods, and who bears the risk of loss at any given point during an international shipment.

INCOTERMS 2010

For all Incoterms:

• The seller is responsible for packaging.
• Both parties collaborate to obtain and provide customs documents.
• The party responsible for customs clearance provides documents, pays taxes, and fulfills other customs requirements.
• The parties agree on the delivery date and place.
• The seller notifies the buyer when items are delivered.

EXW - Ex Works

• The seller delivers when goods are at the buyer's disposal at the seller's premises (e.g., works, factory, warehouse).
• The buyer loads items onto transport.
• The buyer bears all costs and risks of transport thereafter.
• EXW represents the seller's minimum obligation.
• Agree on the pickup place.
• Proof of delivery: Delivery note.

FCA - Free Carrier

• The seller delivers goods to the carrier or another person nominated by the buyer at the seller's premises or another named place.
• FCA requires the seller to clear goods for export.
• If delivery is at the seller's factory or warehouse, the seller loads the goods.
• If delivery is at a different place, the buyer loads the goods.
• Proof of delivery: Transport document.

FAS - Free Alongside Ship

• The seller delivers when goods are placed alongside the vessel (on a dock) nominated by the buyer at the port of shipment.
• The obligation is fulfilled if a crane in the port moves goods from the delivery point to the vessel.
• For liquids, the obligation is fulfilled if a pump suctions it from the delivery place to the vessel.
• Proof of delivery: Dock Receipt.

FOB - Free On Board

• The seller delivers goods on board the vessel nominated by the buyer at the agreed port of shipment.
• The risk of loss or damage passes from the seller to the buyer when goods are on board.
• F.O.B. variants exist.
• Proof of delivery: B/L.

CFR - Cost and Freight

• The seller delivers goods on board the vessel; risk of loss or damage passes to the buyer at that moment.
• The seller pays all costs of carriage by sea vessel to the named port of destination.
• The seller is not obligated to provide insurance.
• The buyer pays for insurance.
• Proof of Delivery: B/L Freight Pre Paid.

CIF - Cost Insurance and Freight

• The seller delivers goods on board the vessel at the port of origin.
• The risk of loss or damage passes from the seller to the buyer when goods are on board.
• The seller pays costs and freight to bring goods to the named port of destination.
• The seller procures and pays for insurance during the voyage, covering 110% of the value.
• Proof of delivery: Transport document.
• The port of destination is indicated next to the incoterm (e.g., C.I.F. [Port]).

CPT - Carriage Paid To

• The seller delivers goods to the carrier or another person nominated by the seller at an agreed place in the destination country.
• The seller pays carriage costs to bring goods to the destination.
• The seller is not obligated to provide insurance.
• Once goods are delivered to the main transport, the buyer assumes risk. The seller informs the buyer when done.
• Proof of delivery: Transport document.

CIP - Carriage and Insurance Paid To

• Obligations for buyer and seller are the same as for CPT.
• The seller pays for main transport insurance, covering 110% of the cost.
• Even with seller-paid insurance, the buyer assumes risk once goods are delivered to the main transport. The seller informs the buyer when done.