1. The ‘s of Incoterms Finance & Contract Administration Council Meeting
2/26/2019 5:39 PM
The
‘s of Incoterms
Finance & Contract
Administration Council Meeting
May 17-18, 2017
Chicago, Illinois
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2. Founded in 1948 by Adrienne Coppersmith
Founded in 1948 by Adrienne Coppersmith. Current leadership Jeff and Bud Coppersmith are third generation in the family business.
Coppersmith Global Logistics is a licensed Customs Broker, International Freight Forwarder and NVOCC.
Validated member of the C-TPAT program and a certified ACE participant.
Coppersmith handles over 100,000 shipments every year from large companies like Panasonic, Kia Motors , and Sunkist. No matter the volume you have the quality of our service will be consistent.
Coppersmith Delivers a World of Confidence

3. Today’s Objectives To define the Incoterm options.
To enhance your understanding of the forwarding process and the part that Incoterms play in smooth transactions.
How Incoterms relate to contracts.
To help you determine which Incoterm is best for your logistics circumstance.

4. What Does Incoterm Mean?
INternational
COmmercial
TERMS
What Are Incoterms?
“INCOTERMS define the mutual obligations of seller and buyer arising from the movement of goods under an international contract from the standpoint of risks, costs and documents.”
-United Nations Conference on Trade and Development , 1990
Simply- A set of international rules for the interpretation of the most commonly used foreign trade terms.

5. The Terms in Incoterms Terms covered by Incoterms Warehousing
Packing and loading
Inland freight
Terminal charges
Freight forwarder’s fees
Ocean/air freight
Duty, taxes, & customs clearance
Delivery
Security Clearances

6. The Ever Changing Evolution of Incoterms
Before
1921
1812: Creation of the first FOB term.
1895: CIF term was created.
1919: The EUA (European Union Emission Trading Scheme) created its own terms
1921: Incoterms first conceived by International Chamber of Commerce (ICC).
1923: The first six rules were developed- FOB,FAS, FOT, FOR, Free Delivered CIF and C&F.
1936: Incoterms first implemented.
1956: The ICC created the next version of Incoterms.
1976: The ICC created new Incoterms, which included air transportation.
1980: The ICC adopted three new Incoterms applicable to all modes of transportation. At this time Incoterms numbered at fourteen.
1990: New Incoterms were created to suit intermodal transport.  
2000: The ICC made a simplification in the allocation of loading and unloading costs.
At this point there were thirteen Incoterms.
2010-Now
2010: The number of Incoterms decreased to eleven.
2011: These incoterms were put into effect January 1, 2011. 

7. The Importance of Incoterms
Because they-
Set international rules for commonly used terms in foreign trade.
Define obligations of both parties involved in the transaction.
Determine the distribution and transfer of risks regarding goods delivered from seller to buyer.
State the clear sharing of expenses between the parties during transport.
The Necessity of Updates
The rapid expansion of world trade and new trends in global transportation means that the same rules cannot be applied effectively in any circumstance without considering the new factors and influences.

8. International Transportation
Customs Clearance
for Export
Preliminary
Transportation
Loading
Packing 2 3 4 1
Global Logistics Forwarding Process
Handling
Outbound 5 6
Insurance
Customs
Clearance
Duties
Final
Transportation
Handling Inbound 7 10 11 9 8
Unloading
International Transportation

9. INCOTERM Groups CFR- Cost and Freight CIF- Cost, Insurance and Freight
CPT- Carriage Paid To
CIP- Carriage and Insurance Paid To
Contract for carriage without assuming risk of loss during shipment
Bear all costs and risks needed to bring goods to place of destination
DAT- Delivered at Terminal
DAP- Delivered at Place
DDP- Delivered Duty Paid
Make goods available at own premises
EXW- Ex Works
Deliver goods to a carrier appointed by buyer
FCA- Free Carrier
FAS- Free Alongside Ship
FOB- Free on Board

10. Any Mode of transport including Multimodal
Incoterm Categories
Acronym reflect the mode and where lines are drawn.
Service
EXW- Ex Works (…Named Place of Delivery)
FCA- Free Carrier (…Named Place of Delivery)
Any Mode of transport including Multimodal
CPT- Carriage Paid To (…Named Place of Destination)
CIP- Carriage & Insurance Paid To (…Named Place of Destination)
DAT- Delivered at Terminal (Named Place/Port of Delivery)
DAP- Delivered at Place (…Named Place of Destination)
DDP- Delivered Duty Paid (…Named Place of Destination)
Ocean
FAS- Free Alongside Ship (…Named Port of Shipment)
FOB- Free On Board (…Named Port of Shipment)
CFR- Cost and Freight (…Named Port of Destination)
CIF- Cost, Insurance and Freight (…Named Port of Destination)

11. Usage of Incoterms
Use the phrase “Incoterms 2010” after the rule and named place.
Clarifies that 2000 version does not apply.
Ensure you are naming the right location.
EXW, FCA, FAS, FOB, DAT, DAP =place of delivery.
CPT, CIP, CFR, CIF=place of destination.
Use contract of sale or terms and conditions.
Modifying Incoterms Rules
Not advised.
If you do modify rules ensure contract clarifies what you are modifying and what you are not.

12. - Group Incoterms CFR- Cost and Freight Notes
Seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes 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.
Notes
Seller pays for unloading if the contract of carriage covers unloading
Seller clears goods for export but not import.
Seller has no obligation to obtain insurance.
Place of delivery of goods
Seller’s delivery obligation is fulfilled when goods are on board the vessel.
Risk of loss passes when the goods are on board the vessel.
Port of destination
Seller pays for carriage to port of destination.

13. - Group Incoterms CIF- Cost Insurance and Freight Notes
Seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of damage to the goods passes 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.
Notes
Like CFR but with additional obligation to procure insurance to port of destination.
Insurance requirement is minimum cover (institute cargo clause c) in the amount of contract price plus 10% from point of delivery to point of destination.
Seller clears goods for export but not import.

14. - Group Incoterms CIP- Carriage and Insurance Paid to Notes
Seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties); seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
Notes
Like CPT but with the additional requirement that seller pay for insurance to the named destination
Insurance requirement is minimum cover (institute cargo clause c) in the amount of contract price plus 10% from point of delivery to point of destination
Buyer may pay for additional coverage. Seller must provide the information necessary to allow buyer to do so.

15. - Group Incoterms CPT- Carriage Paid To Notes
Seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any place is agreed between the parties) and the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
Notes
Seller clears goods for export and pays for transport through any country necessary to delivery
Seller has no obligation to pay for insurance but must provide buyer information to buy insurance at buyer’s risk and expense
Buyer obtains import licenses and carries out customs formalities
Seller pays for both loading and unloading if covered by contract of carriage

16. - Group Incoterms DAP- Delivered at Place Notes
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.
The seller bears all risks involved in bringing the good to the named place.
Notes
Much like DAT, but with additional obligation by seller into country of delivery
Goods are placed at buyer’s disposal at named location ready for unloading; risk passes at that point
Seller clears goods for export but not import (use DDP if intent is to require seller to clear goods for import also).
No obligation on seller to purchase insurance

17. - Group Incoterms DAT- Delivered at Terminal Notes
Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination.
“Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.
The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.
Notes
Seller’s obligation is fulfilled and risk of loss passes at same time: when the goods are unloaded at the arriving terminal and placed at buyer’s disposal.
Can specify a point within the terminal at which time the obligation is complete.
Seller clears goods for export but not for import.
No requirement of insurance.
If the intention is to carry seller’s obligation further into buyer’s country, use DAP or DDP.

18. - Group Incoterms DDP- Delivered Duty Paid Notes
Seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
Notes
Like DAP, but including seller’s obligation to clear goods for import—pay for any necessary licenses.
Maximum obligation for seller.
If seller is not well-suited to clear goods for import, DAP should be used
No obligation to pay for insurance.

19. - Group Incoterms Ex Works Notes
Seller delivers when it places the goods at the disposal of buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.).
Seller does not need to load the goods on any collecting vehicle or clear the goods for export, where such clearance is applicable.
Fewest up front requirements for seller
Notes
Seller has no obligation to load goods, even if better-suited to do so
If seller does load goods, it does so at buyer’s expense and risk
Better-suited to domestic transport (no obligation that seller clear goods for export—only provide assistance if necessary at buyer’s expense and risk)
Buyer bears all risk of loss from time seller places goods at buyer’s disposal.

20. - Group Incoterms FAS- Free Alongside Ship Notes
Seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
The risk of loss of or damage to the goods passes when the goods are alongside the ship, the buyer bears all costs from the moment onwards.
Notes
Can be used in a string sale where seller procures goods already delivered for shipment.
Seller is obligated to clear goods for export but not import.
Seller has no obligation to pay for contracts of carriage or insurance but may contract for carriage and must assist buyer by providing necessary information for insurance.
Not appropriate when goods in container and delivered to carrier at terminal; use FCA

21. - Group Incoterms FCA- Free Carrier Notes
Seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.
Notes
Seller does clear goods for export; import formalities are buyer’s responsibility
Seller may contract for carriage at buyer’s expense and risk

22. - Group Incoterms FOB- Free On Board Notes
Seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
Notes
Notice change in 2010: “free on board” no longer means across the ship’s rail; now means on board the vessel.
Another change in 2010: if requested by buyer or if it is commercial practice and buyer does not instruct otherwise, seller may contract for carriage at buyer’s risk and expense; seller may decline but must notify buyer promptly
Like FAS but goods must be placed on board.

24. C Committed! Connected! Complete!
Coppersmith has nine offices across the United States at all the key ports of entry. Every office has at least one licensed customs broker and a trained staff well versed in various imports. C
Seattle
3100 S 176th St. Suite 120
Seattle, WA 98188
Phone: (206) • Fax: (206)
New York
One Cross Island Plaza, Suite 227A
Rosedale, NY 11422
Phone: (718) • Fax: (718)
Portland
6135 NE 80th Avenue Suite A4
Portland, OR 97218
Phone: (503) • Fax: (503)
San Francisco
434 Rozzi Place
South San Francisco, CA 94080
Phone: (650) • Fax: (650)
Chicago
760 Bonnie Lane
Elk Grove, IL 60007
Phone: (847) • Fax: (847)
Atlanta
114 Southfield Parkway Suite 170
Forest Park, GA 30297
Phone: (404) • Fax: (404)
Los Angeles - Corporate
525 S. Douglas Street
El Segundo, CA 90245
Phone: (310) • Fax: (310)
Dallas
1200 Minters Chapel Road. Suite 100
Grapevine, TX 76051
Phone: (817) • Fax: (817)
Houston
15904 International Plaza Drive
Houston, TX 77032
Phone: (281) • Fax: (281)
Committed! Connected! Complete!

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