Incoterms Import

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INCOTERMS 2010

© ITS Training 2005-2013

Import

coastAbout INCOTERMS 2010

• ‘INCOTERMS’ stands for International Contract of Terms

• There are 11 terms on total, which are internationally-recognized contract

terms.

• Updated every 10 years, INCOTERMS 2010 came into force on 1 January

2011, replacing INCOTERMS 2000.


2011, replacing INCOTERMS 2000.

• They define responsibilities for the seller (shipper) and buyer (consignee)

for these purposes:

• Costs – who pays which charges.

• Risk – where does the risk transfer from the seller to the buyer?

(The definition of risk can be found on the next slide.)

• INCOTERMS are an important part of the contract between seller and

buyer, and should there be any disputes, they will be relied upon in a court

of law.

coastTransfer of Risk …the definition

Throughout this lecture we shall be referring to the transfer of risk. This slide will

explain the main points to consider.

International Trade (all forms of transport) contain a limited liability, which

effectively means the carrier may only be responsible for a small percentage of the

value of the goods lost or damaged.


value of the goods lost or damaged.

The INCOTERM decides which party takes the risk and from which point.

There are however two INCOTERMS that require mandatory insurance, these are

CIF & CIP.

On all other INCOTERMS, it is advisable to

obtain marine insurance cover.

If you do not arrange marine insurance on your

goods, and they become damaged or lost court

action becomes necessary to resolve a dispute.

coastQuotation

Where terms are stated in a quotation,

they are known as ‘express terms’.

Format and content of quotations

differ between organizations.

High Quality Supplies, we Boulevard Place, New York 1923-0072

Freight Quotation

Date: 2nd January 201X Reference: 0109

Quotation to: ABC Imports

101 High Street

Birmingham B6 2LG


differ between organizations.

Some parts of the quotation’s contents

are obvious, others are less so.

Where terms are clearly stated in a

quotation, you are likely to avoid

disputes at a later date.

Birmingham B6 2LG

Re: 5000 Plastic Bottles – Cat No. B9662

We are pleased to submit the following price based upon

DAP Birmingham

Subject to INCOTERMS 2010

Product $25295

Freight $ 2500

Subject to our terms and conditions

coastStructure

INCOTERMS follow a particular structure

• Sea terms

• FAS

• Any Mode

• Ex Works

• Any Mode

• DAT


• FOB

• CFR

• CIF

• FCA

• CPT

• CIP

• DAP

• DDP

coastOverseas Country Regulations

• It is always the responsibility of the

seller for packing & marking.

• The seller therefore has to take into

consideration overseas country

Australia

You must not use any wood or straw as

packing material, unless treated to

Australian standards

Example 1


consideration overseas country

regulations.

• Here are two examples of packing and

marking regulations.USA

You must ensure that the country of

origin is shown in English on all four

sides of the boxes, this may be in

addition to any other language.

Example 2

coastEx Works (Named Place)

The Seller’s Responsibilities Are...

• Provide the goods, pack and mark in accordance with the

contract, taking into consideration overseas country regulations.

Buyer’s Risk

• Risk transfers when the goods are made available to the

driver (prior to loading) at the collection point.


The Buyer’s Responsibilities Are...

• Arrange both export and import licence and customs

formalities.

• Arrange to pay freight charges from the seller’s

warehouse to the final destination.

• Recommend Marine Insurance.

Summary

• Charges from loading to

discharge are for buyer’s

account.

• Buyer responsible for

export customs and

formalities.

• Buyer appear on the bill

of lading as Shipper.

Suitable for any mode of

transport

Cost by Buyer Costs by Shipper Insurance Risk

coastFCA - Free Carrier, e.g. FCL (Named Place)




• The seller is responsible for loading the goods onto the vehicle.

• Obtain export licences and deal with export customs formalities.

Buyer’s Risk

Risk transfers when the goods are loaded on board the vehicle



• Obtain any Import licence and deal with

import customs formalities.

• Arrange to pay freight charges from the

agreed collection point to the final

destination.


Buyer’s Risk

• Risk transfers when the goods are loaded on board the vehicle

at the point of collection.Suitable for any mode of

transport

This example is for direct collections only.


transport


coastFCA - Free Carrier e.g. LCL (Named Place)




• Obtain export licences and deal with export customs formalities.

Buyer’s Risk

Risk transfers when the vehicle arrives at the


Buyer’s Risk

• Risk transfers when the vehicle arrives at the

consolidation point (prior to unloading).Suitable for any mode of

transport

This example is consolidated goods only.



• Obtain any Import licence and deal with



agreed collection point to the final

destination.


coastSea Terms for Break Bulk

The reasons why FAS/FOB/CFR/CIF are only suitable for conventional cargo.

Factory Japan.Safely on board in good

order and condition.

Step 1Step 1Step 4Step 4


Drums being transported to

the port.

When they arrive at the port

they can be checked for

condition before loading on

to the vessel.

Goods arriving at the

port in a container

cannot be checked as

the insurance risk

transfer.

Step 2Step 2

Step 3Step 3

coastFAS - Free Alongside Ship (Named Port of Loading)


• Provide the goods, pack and mark in accordance with the contract,

taking into consideration overseas country regulations.

• Arrange export clearance and formalities (including export licences).

• Deliver the goods to the named port.



• Arrange for import licence and deal with



named port of export (i.e. Felixstowe) to

their final destination.


Buyer’s Risk

• Risk transfers when the goods have

been delivered to the port of export.

Not suitable for containerized cargo.

Suitable for sea

transport only


coastFOB - Free on Board (Named Port of Loading)





• Pay all charges to the agreed vessel.





• Arrange to pay freight charges once the

goods are on-board the export vessel.


Buyer’s Risk

• Risk transfers when the goods are on

the vessel at the port of export, and

from the agreed date.

Suitable for sea

transport only



coastTransfer of Risk

Under a FOB contract, the ‘Transfer of Risk’ can happen in two ways.

Risk will transfer from seller to buyer when the goods are on board the vessel at the

port of export and from the agreed date, therefore giving the buyer the greater risk.

If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the


If the vessel is delayed, risk will transfer at the agreed date prior to loading onto the

vessel.

The buyer must supply the seller, with sufficient notice, of the vessel name, loading

port and required delivery time.

If the buyer fails to advise these details to the seller, then risk will transfer on expiry of

the agreed delivery period (delivery to the named port)

…and therefore the risk will transfer prior to the goods being loaded onto the vessel

coastCFR - Cost and Freight (Named Port of Destination)





• Pay all freight charges to the port of destination.

• The seller may also be responsible for on-carriage if agreed.





• Pay haulage cost from the named port to

final destination.


Buyer’s Risk

• Risk transfers when the goods are on the

vessel at the port of export. Suitable for sea

transport only



coastCIF - Cost, Insurance & Freight (Named Port of Destination)

The Sellers’s Responsibilities Are...




• Pay all freight charges to the port of destination.

• The seller may also be responsible for on-carriage if agreed.

• Insurance cover against the buyer’s risk of loss during carriage.


Buyer’s Risk

• Risk transfers when the goods are on the

vessel at the port of export.





• Pay haulage cost from the named port to

final destination.

Suitable for sea

transport only


coastCPT - Carriage Paid To (Named Place of Destination)





• Pay all charges to the agreed destination (including unloading at

destination).


Buyer’s Risk

• Risk transfers when the goods have delivered

to the carrier (on-board the vehicle).




• Pay any duties, taxes and clearance costs

in the importing (buying) country.



transport


coastCIP – Carriage, Insurance Paid To (Named Place of Destination)




• Arrange export clearance and formalities (including export

licences).

• Pay all charges to the agreed destination (including unloading at

destination).

Seller arranges marine insurance on behalf of the buyer.





• Pay any duties, taxes and clearance costs

in the importing (buying) country.

• Seller arranges marine insurance on behalf of the buyer.

Buyer’s Risk


to the carrier (on-board the vehicle).


transport


coastDAT – Delivered at Terminal





• Pay all charges to the agreed terminal.






• Arrange to unload the goods upon arrival at

the terminal.

• Pay any duties, taxes and clearance costs in

the importing (buying) country.

Buyer’s Risk


to the agreed terminal.Suitable for any mode of

transport


coastDAP – Delivered at Place





• Pay all charges to the agreed destination.






• Arrange to unload the goods upon arrival at

the buyer’s warehouse.

• Pay any duties, taxes and clearance costs in

the importing (buying) country.

Buyer’s Risk


to the agreed destination. Suitable for any mode of

transport


coastDDP – Delivered Duty Paid




• Arrange export and import clearance and deal with other

formalities (including licences).

• Arrange Customs Clearance on import.

• Pay any duties/taxes (and if agreed local taxes) in the buying country.



• Pay any local import sales taxes.

e.g. VAT, this should however be confirmed

prior to agreeing this INCOTERM

• Pay any duties/taxes (and if agreed local taxes) in the buying country.


Buyer’s Risk


to the agreed destination.


transport


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Conclusion

Incoterms Import

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Transcript of Incoterms Import