Need info on Incoterms

[mohd_uzairhussain]

Hi SAPiens,

Wish u a Very Good Morning.

I know a little about Incoterms (commercial term used in international trade -in exports and imports)

but I want to know more about<b> incoterms</b> and role they play in MM and SD transactions.Can anybody share his/her knowledge with me?

Thanks and Regards,

Uzair Hussain.

[mohd_uzairhussain]

Replies were haelpful to me.

Thanks to all members.

[Former Member]

Incoterms

Incoterms are worldwide accepted commercial terms that defines the respective roles of the buyer as well as of the seller in arrangement of the transportation and other responsibilities and it also clarifies when the ownership of the merchandise takes place. These incoterms are used in conjunction with a sales contract or other method of transacting the deal.

The following are the Incoterms 2000 which are generally used:

Origin Terms

EXW (Ex-Works) - The title and risk passes on to the buyer including the payment of all transportation and insurance cost from the seller's point. It can be used for any mode of transport.

International Carriage Not Paid by Seller

FCA (Free Carrier) - The title and risk passes on to the buyer including the transportation and insurance cost if the seller delivers the goods cleared for export to the carrier. In this case the seller is obligated to load the goods on the buyer's collecting vehicle but it is the buyer's obligation to receive the seller's arriving vehicle unloaded.

FAS (Free Alongside Ship) - The title and risk passes on to the buyer, included the transportation and insurance payment, once the goods delivered alongside ship by the seller. It is only used for the sea or inland waterway transportation and the export clearance obligation rests with the seller.

FOB (Free On Board) - In FOB the risk passes to buyer, included the transportation and insurance payment, once delivered on board the ship by the seller. It is only used for sea or inland waterway transportation.

International Carriage Paid by the Seller

CFR (Cost and Freight) - The title, risk and the insurance cost passes on to the buyer if delivered on board the ship by seller who paid the transportation cost to the destination point. It is only used for sea or inland waterway transportation.

CIF (Cost, Insurance and Freight) - The title and risk passes on to the buyer if delivered on board the ship by the seller who paid the transportation and insurance cost to the destination port. It is used for sea or inland waterway transportation.

CPT (Carriage Paid To) - The title, risk and insurance cost passes to the buyer if the goods delivered to carrier by the seller who pays transportation cost to the destination. It can be used for any mode of transportation.

CIP (Carriage and Insurance Paid To) - The title and risk passes to the buyer if the goods are delivered to carrier by the seller and he pays transportation and insurance cost to destination. It can be used for any mode of transportation.

Arrival At Stated Destination

DAF (Delivered at Frontier) - The title, risk and responsibility for the import clearance passes on to the buyer if the goods are delivered to named border point by the seller. It can be used for any mood of transportation.

DES (Delivered Ex Ship) - The title, risk, responsibility for the vessel discharge and the import clearance passes on to the buyer when the seller delivers it on board the ship to destination port. It is used for sea or inland waterway transportation.

DEQ (Delivered Ex Quay - Duty Paid) - The title and risk passes to the buyer if the goods are delivered on board the ship at the destination point by the seller who on his part delivers the goods on dock at the destination point cleared for import. It is used for sea or inland waterway transportation.

DDU (Delivered Duty Unpaid) - The title, risk and responsibility of the import clearance passes on to the buyer if the seller delivers the goods to named destination point. It can be used for any mode of transportation. Here the buyer is obligated for import clearance.

DDP (Delivered Duty Paid) - The title and risk passes on to the buyer when the seller delivers the goods to the named destination point cleared for the import. It is also used for any mode of transportation.

Note :- EXW, CPT, CIP, DAF, DDU and DDP are used for any mode of transportation whereas the incoterms FAS, FOB, CFR, CIF, DES, and DEQ are used for sea and inland waterway.

Regards,

Pankaj

[Former Member]

Hi,

The inco terms play important role in the landed price of PO. Depending upon INCO terms, your delivery & insurance charges are added to the landed price.

Following are some INCO terms -

1) EXW - Our Works - Vendor gives material at orderer's premises without extra charges for transport / insurance.

2) EXW - Your works - Order has to pay transport & insurance charges.

3)CIF - Cost Insurance & Freight - The PO price includes material cost, insurance & freight. Mostly used for import PO

4)FOB - Free on Board - Vendor bears cost of insurance & transport upto placing material on board. Mostly used for Import PO.

Hope your quert is fulfilled,

Regards

Prashant Kolhatkar

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