Incoterms Survey Linq

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law.

They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts, international lawyers and surveyors.

A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the global or international transportation and delivery of goods. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer, but they do not themselves conclude a contract, determine the price payable, currency or credit terms, govern contract law or define where title to goods transfers.

This Incoterm can be used for any transport mode, or in case there is more than one transport mode

This rule places minimum responsibility on the seller, who only has to take care that the goods are suitably packed and the goods are made available at the specified place, usually the seller’s factory or depot.

The buyer is responsible for loading of the goods onto a vehicle (even though the seller may be better placed to do this); for all export procedures; for onward transport and for all costs arising after collection of the goods.

In many cross-border transactions, this rule may result in practical difficulties.

For example, the exporter may still need to be involved in export reporting and clearance processes, which cannot realistically been left to the buyer. Maybe consider to apply the rule FCA / Free Carrier (seller’s premises) instead.

Another thing to take into consideration. Although the seller is not obliged to load the goods, if the seller does so, this is at the buyer’s risk!

This rule can be applied for any transport mode, or where there is more than one transport mode.
As this rule can be applied for all situations where the buyer arranges the main carriage, this is a very flexible rule.

For example:

  • The seller arranges pre-carriage from seller’s depot to the named place, which can be a transport hub, terminal, forwarder’s warehouse or other specified location Delivery and transfer of risk takes place when the truck or other vehicle arrives at this place, ready for unloading – in other words, the carrier is responsible for unloading the goods. (If there is more than one carrier, then risk transfers on delivery to the first carrier.)

  • An important difference between Ex Works EXW and Free Carrier is that where the named place is the seller’s premises, then the seller is responsible for loading the goods onto the truck or other mode of transport.

In all cases, the seller is responsible for export clearance and the buyer is responsible for all risks and costs after the goods have been delivered at the named place.

FCA is the rule of choice for containerized goods where the buyer arranges for the main carriage.

This rule can be applied by any transport mode, or where there is more than one transport mode.

The seller is responsible for arranging carriage to the named place, but is not responsible for insuring the goods to the named place. Delivery of the goods takes place and risk transfers from seller to buyer, at the point where the goods are taken in charge by a carrier.

When applying this rule, the following needs to be kept in mind.

Terminal Handling Charges (THC) may, or may not be included by the carrier in their freight rates – the buyer should inform whether the CPT price includes THC,in order to avoid surprises.

The buyer may wish to arrange insurance cover for the main carriage, starting from the point where the goods are taken in charge by the carrier. This will not be the place referred to in the Incoterms rule, but will be specified elsewhere within the commercial agreement

This rule can be applied for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage to the named place, and also for insuring the goods.

Same as with CPT, delivery of the goods takes place, and risk transfers from seller to buyer, at the point where the goods are taken in charge by a carrier.

Whilst applying this Incoterm the following needs to be taken into account. Terminal Handling Charges may or may not be included by the carrier in their freight rates, the buyer should inform whether the CPT price includes THC, this in order to avoid surprises.

Although the seller is obliged to arrange for insurance for the journey, the rule only requires a minimum level of cover, which may be commercially insufficient. In is advisable to address the level of cover elsewhere in the commercial agreement.

This rule can be applied for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage and delivery of the goods, unloaded from the arriving conveyance and at the named place.

The risk transfers from seller to buyer when the goods have been unloaded.

Terminal’ can be any place – a quay, container yard, warehouse or transport hub.

The buyer is responsible for import clearance and any applicable local taxes or import duties.

Whilst applying this rule the following needs to be taken into account.

The place for delivery should be specified as precisely as possible, as many ports and transport hubs are very large.

This is a useful rule, well suited for container operations where the seller is responsible for the main carriage.

This rule can be used for any transport mode, or in case there is more than one transport mode.

The seller is responsible for arranging carriage and for delivery of the goods, ready for unloading from the arriving conveyance, at the named place.  The important difference between DAP/Delivered at Place and DAT/ Delivered at Terminal is the fact that the seller is responsible for unloading.

The risk transfers from seller to buyer when the goods are available for unloading; so unloading is at the buyer’s risk.

The buyer is responsible for import clearance and any applicable local taxes or import duties.

This rule can often be used to replace the Incoterms 2000 rules DAF / Delivered at Frontier, DES / Delivered Ex Ship and DDU / Delivered Duty Unpaid

This rule can be applied for any transport mode, or in case there is more than one transport mode.

The seller is responsible for arranging carriage and delivering the goods at the named place, cleared for import and all applicable taxes and duties paid, e.g. BTW, VAT, GST etc.

The risk transfers from seller to buyer at the moment the goods are made available to the buyer, ready for unloading from the arriving conveyance

This rule places the maximum obligation on the seller and is the only rule that requires the seller to take the responsibility for import clearance and payment of taxes and/or import duty.

These requirements can be problematic for the seller, as in some countries, import clearance procedures are complex and bureaucratic. It is advisable to leave these arrangements to the buyer who has local knowledge.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be used for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use “FCA/Free Carrier” instead.

The seller delivers the goods, cleared for export, alongside the vessel at a named port, at which point the risk transfers to the buyer.

The buyer is responsible for loading the goods and all costs thereafter.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use “FCA Free Carrier” instead.

The seller delivers goods, cleared for export, loaded on board the vessel at the named port.

Once the goods have been loaded on board, the risk transfers to the buyer, who is responsible for all costs thereafter.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use ‘CPT / Carriage Paid To’ instead.

The seller arranges and is financially responsible for transport to named port. The seller delivers the goods, cleared for export still loaded on board the vessel.

However, the risk transfers from seller to buyer once the goods have been loaded on board, e.g. before the main carriage takes place.

With other words, the seller is not responsible for insuring the goods for the main carriage.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice this rule is applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to consider ‘CIP / Carriage and Insurance Paid’ instead.

The seller arranges and is financially responsible for transport to named port. The seller delivers the goods, cleared for export and loaded on board the vessel.

However, the risk transfers from the seller to the buyer once the goods have been loaded on board, e.g. before the main carriage takes place.

The seller also arranges and pays for insurance for the goods for carriage to the named port.

However as with “Carriage and Insurance Paid To”, the rule only requires a minimum level of cover, which may be commercially undesirable. Therefore, it is advisable to address the level of cover elsewhere in the commercial agreement.

This Incoterm can be used for any transport mode, or in case there is more than one transport mode

This rule places minimum responsibility on the seller, who only has to take care that the goods are suitably packed and the goods are made available at the specified place, usually the seller’s factory or depot.

The buyer is responsible for loading of the goods onto a vehicle (even though the seller may be better placed to do this); for all export procedures; for onward transport and for all costs arising after collection of the goods.

In many cross-border transactions, this rule may result in practical difficulties.

For example, the exporter may still need to be involved in export reporting and clearance processes, which cannot realistically been left to the buyer. Maybe consider to apply the rule FCA / Free Carrier (seller’s premises) instead.

Another thing to take into consideration. Although the seller is not obliged to load the goods, if the seller does so, this is at the buyer’s risk!

This rule can be applied for any transport mode, or where there is more than one transport mode.
As this rule can be applied for all situations where the buyer arranges the main carriage, this is a very flexible rule.

For example:

  • The seller arranges pre-carriage from seller’s depot to the named place, which can be a transport hub, terminal, forwarder’s warehouse or other specified location Delivery and transfer of risk takes place when the truck or other vehicle arrives at this place, ready for unloading – in other words, the carrier is responsible for unloading the goods. (If there is more than one carrier, then risk transfers on delivery to the first carrier.)

  • An important difference between Ex Works EXW and Free Carrier is that where the named place is the seller’s premises, then the seller is responsible for loading the goods onto the truck or other mode of transport.

In all cases, the seller is responsible for export clearance and the buyer is responsible for all risks and costs after the goods have been delivered at the named place.

FCA is the rule of choice for containerized goods where the buyer arranges for the main carriage.

This rule can be applied by any transport mode, or where there is more than one transport mode.

The seller is responsible for arranging carriage to the named place, but is not responsible for insuring the goods to the named place. Delivery of the goods takes place and risk transfers from seller to buyer, at the point where the goods are taken in charge by a carrier.

When applying this rule, the following needs to be kept in mind.

Terminal Handling Charges (THC) may, or may not be included by the carrier in their freight rates – the buyer should inform whether the CPT price includes THC,in order to avoid surprises.

The buyer may wish to arrange insurance cover for the main carriage, starting from the point where the goods are taken in charge by the carrier. This will not be the place referred to in the Incoterms rule, but will be specified elsewhere within the commercial agreement

This rule can be applied for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage to the named place, and also for insuring the goods.

Same as with CPT, delivery of the goods takes place, and risk transfers from seller to buyer, at the point where the goods are taken in charge by a carrier.

Whilst applying this Incoterm the following needs to be taken into account. Terminal Handling Charges may or may not be included by the carrier in their freight rates, the buyer should inform whether the CPT price includes THC, this in order to avoid surprises.

Although the seller is obliged to arrange for insurance for the journey, the rule only requires a minimum level of cover, which may be commercially insufficient. In is advisable to address the level of cover elsewhere in the commercial agreement.

This rule can be applied for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage and delivery of the goods, unloaded from the arriving conveyance and at the named place.

The risk transfers from seller to buyer when the goods have been unloaded.

Terminal’ can be any place – a quay, container yard, warehouse or transport hub.

The buyer is responsible for import clearance and any applicable local taxes or import duties.

Whilst applying this rule the following needs to be taken into account.

The place for delivery should be specified as precisely as possible, as many ports and transport hubs are very large.

This is a useful rule, well suited for container operations where the seller is responsible for the main carriage.

This rule can be used for any transport mode, or in case there is more than one transport mode.

The seller is responsible for arranging carriage and for delivery of the goods, ready for unloading from the arriving conveyance, at the named place.  The important difference between DAP/Delivered at Place and DAT/ Delivered at Terminal is the fact that the seller is responsible for unloading.

The risk transfers from seller to buyer when the goods are available for unloading; so unloading is at the buyer’s risk.

The buyer is responsible for import clearance and any applicable local taxes or import duties.

This rule can often be used to replace the Incoterms 2000 rules DAF / Delivered at Frontier, DES / Delivered Ex Ship and DDU / Delivered Duty Unpaid

This rule can be applied for any transport mode, or in case there is more than one transport mode.

The seller is responsible for arranging carriage and delivering the goods at the named place, cleared for import and all applicable taxes and duties paid, e.g. BTW, VAT, GST etc.

The risk transfers from seller to buyer at the moment the goods are made available to the buyer, ready for unloading from the arriving conveyance

This rule places the maximum obligation on the seller and is the only rule that requires the seller to take the responsibility for import clearance and payment of taxes and/or import duty.

These requirements can be problematic for the seller, as in some countries, import clearance procedures are complex and bureaucratic. It is advisable to leave these arrangements to the buyer who has local knowledge.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be used for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use “FCA/Free Carrier” instead.

The seller delivers the goods, cleared for export, alongside the vessel at a named port, at which point the risk transfers to the buyer.

The buyer is responsible for loading the goods and all costs thereafter.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use “FCA Free Carrier” instead.

The seller delivers goods, cleared for export, loaded on board the vessel at the named port.

Once the goods have been loaded on board, the risk transfers to the buyer, who is responsible for all costs thereafter.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice it should be applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to use ‘CPT / Carriage Paid To’ instead.

The seller arranges and is financially responsible for transport to named port. The seller delivers the goods, cleared for export still loaded on board the vessel.

However, the risk transfers from seller to buyer once the goods have been loaded on board, e.g. before the main carriage takes place.

With other words, the seller is not responsible for insuring the goods for the main carriage.

The application of this rule is restricted to goods transported by sea or inland waterway.

In practice this rule is applied for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerized goods.

For containerized goods, it is advisable to consider ‘CIP / Carriage and Insurance Paid’ instead.

The seller arranges and is financially responsible for transport to named port. The seller delivers the goods, cleared for export and loaded on board the vessel.

However, the risk transfers from the seller to the buyer once the goods have been loaded on board, e.g. before the main carriage takes place.

The seller also arranges and pays for insurance for the goods for carriage to the named port.

However as with “Carriage and Insurance Paid To”, the rule only requires a minimum level of cover, which may be commercially undesirable. Therefore, it is advisable to address the level of cover elsewhere in the commercial agreement.