INCOTERMS

Incoterms or International commercial terms are a series of international sales terms widely used throughout the world. It has been stipulated by International Chamber of Commerce. They are used to divide transaction costs, compensation costs and responsibilities  between buyer and seller, which they are different countries, language, culture and trade system to   awareness about the term of delivering products. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods.

Incoterms are reviewed and amended every decade. Incoterms 2000 is the current version of the trade terms, it has 13 models which seperate into 4 groups as follow,

Group E: Departure: 

EXW  [ExWorks] The seller makes the goods available at his premises.

Group F: Main Carriage Unpaid:

FCA  [Free Carrier] the seller hands over the goods, cleared for export, into the custody of the first carrier at the named place.

FAS [Free Alongside Ship] The seller must place the goods alongside the ship at the named port. 

FOB [Free On Board] The seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail.

Group C: Main Carriage Paid:

CFR or CNF [Cost and Freight] The seller must pay the costs and freight to bring the goods to the port of destination. 

CIF [Cost Insurance and Freight]  As same as CFR but the seller must in addition procure and pay for insurance for the buyer.

CPT [Carriage Paid To] The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier.

CIP [Carriage and Insurance Paid to] The seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

Group D: Arrival:

DAF [Delivered At Frontier] The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.

DES [Delivered Ex Ship] Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs.

DEQ [Delivered Ex Quay] It means the same as DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.

DDU [Delivered Duty Unpaid] the seller delivers the goods to the buyer to the named place of destination in the contract of sale.

DDP [Delivered Duty Paid] It means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty.