1. 2015/8/21Prepared by Leng kimhok1 Contractual terms developed by the International Chamber of Commerce (ICC) in Paris A standard three-letter abbreviated terminology Translated into various languages Covers thirteen main options The purpose is to clearly describe the key obligations of sellers, buyers and carriers with regard to: Chapter 6: INCOTERMS Delivery of the Goods Transfer of Risks Transfer of Costs Incoterms

2. 2015/8/21Prepared by Leng kimhok2 Incoterms: There are 4 groups The E group: – The carriage is arranged by the buyer – Risks & costs are transferred to the buyer when the goods are made available The F group: – The carriage is arranged by the buyer – Risks & costs are transferred to the buyer as from just after export clearance The C group: – The carriage is arranged by the seller – Risks are transferred to the buyer just after export clearance but costs are on the seller up to import clearance at named destination The D group: – The carriage is arranged by the seller – Risks are transferred just before import clearance but costs are on the seller up to import clearance when duty is unpaid or including import clearance when duty is paid.

3. 3 Incoterms – Point of delivery of the goods and transfer of risk E EXW Ex works Upon delivery of goods at the seller’s premises (named place) FCA Free carrier Upon delivery of goods to the carrier (named place) FAS Free alongside ship Upon delivery of goods alongside ship (named port of shipment) F FOB Free on board When the goods pass the ship’s rail at the named port of shipment CFR Cost and freight When the goods pass the ship’s rail at the port of shipment CIF Cost, insurance and freight When the goods pass the ship’s rail at the port of shipment CPT Carriage paid to Upon delivery of goods to the carrier (named place) C CIP Carriage and insurance paid to Upon delivery of goods to the carrier (named place)

4. 2015/8/21Prepared by Leng kimhok4 DAF Delivered at frontier Upon delivery of goods at frontier (named place) - not unloaded DES Delivered ex ship When goods are placed at the disposal of the buyer on board the ship (named port of destination) DEQ Delivered ex quay When goods are placed at the disposal of the buyer at the quay (named port of destination) DDU Delivered duty unpaid Upon delivery of goods (at named place of destination) not cleared for import and not unloaded D DDP Delivered duty paid Upon delivery of goods cleared for import (at named place of destination), duty paid but not unloaded Incoterms – Point of delivery of the goods and transfer of risk

5. 2015/8/21Prepared by Leng kimhok5 Incoterm Loading on truck (carrier) Export- Customs declaratio n Carriage to port of export Unloadin g of truck in port of export Loading charges in port of export Carriage to port of import Unloadin g charges in port of import Loading on truck in port of import Carriage to place of destinatio n Insurance Import customs clearance Import taxes EXWBuyer N/A Buyer FCASeller Buyer N/A Buyer FASSeller Buyer N/A Buyer FOBSeller Buyer N/A Buyer CFRSeller Buyer N/A Buyer CIFSeller Buyer SellerBuyer DATSeller Buyer N/A Buyer DAPSeller N/A Buyer CPTSeller N/A Buyer CIPSeller Buyer DDPSeller N/A Seller Duties of buyer/seller according to Incoterms 2010

6. 2015/8/21Prepared by Leng kimhok6 EXW (+ name of place): –“Work” means factory, or the seller’s place of business. –The seller to make the goods available to the buyer at the seller’s place of business or some other named place, as specified after the “EXW”. –Ex: the contract may say “EXW Battambang,” which would mean the seller’s place of business in Battambang. It is good for seller, because: –The buyer is responsible for arranging transportation from the seller’s place of business or other named place, export and import clearance. –The buyer bears all the costs of transporting, and the ROL or damage to them following delivery.

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9. 2015/8/21Prepared by Leng kimhok9 DDP (+ named place of destination): Delivered Duty Paid –Ex: “DDP Shanghai,” which would mean that a foreign seller agreed to arrange for delivery of the goods to Shanghai, China. It is good for buyer, because: –The seller agrees to arrange for delivery of the goods to a named place in a foreign nation, which may be many kilometers inland, including arranging import clearance into the foreign country. –The seller bears all the costs of transporting the goods and the risk of loss or damage to the goods up until the time they are delivered to the named place in the foreign nation.

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12. 2015/8/21Prepared by Leng kimhok12 Most of the contracts for the international sale of goods use the terms beginning with “F” or “C” under which neither party has so many duties. Two of the most common and important terms used in international sales contracts are FOB and CIF. FOB (+ named port of shipment) = FOB (+ name of vessel) in U.S, Free on Board. It means: –The seller delivers when the goods pass the ship’s rail at the named port of shipment. –The buyer has to bear all costs and ROL or damage to the goods from that point. –The FOB term requires the seller to clear the goods for export. Ex: “Seller to supply 1,000 cartons of ping pong balls FOB Kompongsom (INCOTERMS 2000)@ US$ 1.50 per carton.”

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14. 2015/8/21Prepared by Leng kimhok14 CIF (+ named port of destination): Cost, Insurance and Freight –Ex: “ Seller to supply three bulldozers CIF Kompongsom (INCOTERMS 2000) It means: – The seller to pay for carriage and insurance from her place of business to the port of destination. –The seller must also obtain export clearance. –These costs into the total price of the goods under the contract. –The buyer is responsible for all costs after the goods have been transported to the named port of destination. –The ROL or damage to the goods passes from the seller to the buyer when the goods pass over the ship’s rail at the port of shipment

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16. 2015/8/21Prepared by Leng kimhok16 FCA (+ name of place): Free Carrier –The seller is responsible for delivering the goods, cleared for export, to a named carrier at the place specified after the FCA term in the K. –The buyer is then responsible for the cost of carriage, insurance, and any import clearances or import duties required to get the goods into the buyer’s nation. –The ROL passes from the seller to the buyer when the goods are delivered to the carrier.

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18. 2015/8/21Prepared by Leng kimhok18 FAS (+ named port of shipment): Free Alongside Ship Under an FAS contract: –The seller is obliged to deliver the goods alongside a ship at the named port of shipment (the goods are delivered to the dock, or to a warehouse at the dock). –The seller is responsible for export clearance of the goods. –The buyer is responsible for the cost of transport of the goods from alongside the ship at the port of shipment to the final destination of the goods.

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20. 2015/8/21Prepared by Leng kimhok20 CFR (+ named port of destination): Cost and Freight –It is similar to the CIF term discussed above, but it differs in that: The seller is not obliged to insure the goods being carried. –As with a CIF contract: the seller must clear the goods for export & pay for the cost of the transportation to the named port of destination. –ROL or damage to the goods passes from the seller to the buyer when the goods cross the ship’s rail at the port of shipment.

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22. 2015/8/21Prepared by Leng kimhok22 CPT (+ named place of destination): Carriage Paid To –It is similar to the CIF and CFR terms. –The main difference is that the ROL or damage to the goods passes when the seller delivers the goods to the first carrier. This first carrier could be a trucking company in the seller’s nation that takes the goods from the seller at his place of business. Then the containers are transported to ports, where they are loaded or driven onto ships. After the sea journey, the containers are unloaded & often transported to a freight depot inland in the buyer’s nation. Although delivery occurs when the goods are delivered to the first carrier, the seller must still pay the cost of carriage to the named place of destination, which may be inland in the buyer’s nation. The seller must obtain export clearance from her nation. DELIVERY

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24. 2015/8/21Prepared by Leng kimhok24 CIP (+ named place of destination): Carriage and Insurance Paid –The same as the CPT term, except that the seller must pay for the cost of carriage and insurance to the named place of destination. The insurance for the time after delivery is made out in favor of the buyer. The seller need not pay for insurance past the point where she delivers the goods to the first carrier. DELIVERY

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26. 2015/8/21Prepared by Leng kimhok26 DAF (+ named place): Delivered At Frontier –Contracts involving cross-border road or rail transport. –The seller must pay the transport costs to the named frontier, which may be at the border of the seller’s own nation. – Delivery occurs when the goods are placed at the buyer’s disposal at the frontier. –The seller must clear the goods for export from the nation in which delivery occurs. –The ROL passes at delivery, and the buyer is then responsible for the cost of onward transportation of the goods, and for any import clearances that are required.

27. 2015/8/21Prepared by Leng kimhok27 DES (+ named port of destination): Delivered Ex-Ship –The seller is responsible for transport costs to the named port of destination. –The seller bears the ROL or damage to the goods until the goods are placed at the buyer’s disposal on board the ship at this port, at which point delivery occurs. Therefore, the seller should insure the goods to this point. –The buyer is then responsible for the costs of removing the goods from the ship and transporting them elsewhere, and for obtaining import clearance.

28. 2015/8/21Prepared by Leng kimhok28 DEQ (+ named port of destination): Delivered Ex-Quay –The seller must pay for the transport costs to the wharf at this port, including the costs of unloading the goods from the ship onto the quay. Delivery occurs when the goods are placed at the buyer’s disposal on the quay, –So the seller bears the ROL or damage to the goods up to that point and should insure the goods up to that point. –The DEQ term is similar to DES, except that with DEQ delivery occurs on the wharf (rather than on the ship) at the port of destination. –The buyer must obtain import clearance.

29. DAT - DELIVERED AT TERMINAL (... named terminal at port or place of destination) The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer's disposal at a named terminal at the named port or place of destination. DAP - DELIVERED AT PLACE (... named place of destination) The Seller delivers when the goods are placed at the Buyer's disposal on the arriving means of transport ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place.

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32. 2015/8/21Prepared by Leng kimhok32 DDU (+ named place of destination): Delivered Duty Unpaid to the named final point of destination. (This might be the buyer’s place of business, a freight depot in the buyer’s nation, or some other place specified in the sales contract. ) –The seller is responsible for the cost of carriage of the goods to the named point, bears the ROL until the goods are delivered to that place. –The buyer is responsible for import clearance. –The DDU term is very similar to the DDP term discussed above, except that with DDP the seller must obtain import clearance.

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35. 2015/8/21Prepared by Leng kimhok35 Customs Douane Over the ship’s rail: FOB, CFR & CIF Point of delivery & transfer of risk for maritime “F” and “C” terms Alongside the ship: FAS PORT OF ORIGIN

36. 2015/8/21Prepared by Leng kimhok36 Point of delivery & transfer of risk for “D” terms (except DAF) Customs Douane On board the ship: DES Unloaded from the ship: DEQ (*) Delivered at destination point: DDU (*) & DDP (*) Pending customs clearance PORT OF DESTINATION

37. 2015/8/2137 DELIVERY and TRANSFER OF RISK can take place at many points between the seller’s premises and the buyer’s premises BuyerSeller EXWFCA CPT CIP FOB CFR CIF FASDESDEQ DDU DDP Waterborne transport only DAF Transport by land Cus- toms Cus- toms Cus- toms Cus- toms

38. 38 TRANSFER OF COSTS takes place at points that are sometimes different BuyerSeller EXWFCA CPT CIP FOBFASDESDEQ DDU DDP Waterborne transport only DAF CFR CIF Import clearance costs on account of the buyer Export clearance costs on account of the seller Transport insurance costs on account of the seller Unloading costs on account of the seller only if in its contract of carriage Transport by land Cus- toms Cus- toms Cus- toms Cus- toms * * *