What are Incoterms

Incoterms – a.k.a. Trade Terms are key elements of international contracts of sale. They tell the parties what to do with respect to carriage of the goods from buyer to seller, and export & import clearance. They also explain the division of costs and risks between the parties.

The difference between the 2000 and the 2010 version  is the number of Incoterms has been reduced from 13 to 11. Four Incoterms  (DAF, DES, DEQ, DDU) have been replaced by two new Incoterms  (DAT , DAP). The replaced Incoterms DAF, DES and DEQ were not used much in day to day trading.

At Wim Bosman we support both the Incoterms 2000 as the newly introduced Incoterms 2010. Please see below an overview of Incoterms and their version.

EXW – ExWorks (2000 and 2010)

This term represents the seller’s minimum obligation, since he only has to place the goods at the disposal of the buyer. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer.

FCA – Free Carrier (2000 and 2010)

This term means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. Seller pays for carriage to the named place.

FAS – Free Alongside Ship (2000 and 2010)

This term means that the seller delivers when the goods are placed alongside the vessel at the named port of shipment. The seller is required to clear the goods for export. The buyer has to bear all costs & risks of loss or damage to the goods from that moment. This term can be used for sea transport only.
FOB – Free On Board (2000 and 2010)

This term means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means the buyer has to bear all costs & risks to the goods from that point. The seller must clear the goods for export. This term can only be used for sea transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

CFR – Cost and Freight (2000 and 2010)

This term means the seller delivers when the goods pass the ship’s rail in the port of shipment. Seller must pay the costs & freight necessary to bring the goods to the named port of destination, BUT the risk of loss or damage, as well as any additional costs due to events occurring after the time of delivery are transferred from seller to buyer. Seller must clear goods for export. This term can only be used for sea transport.
CIF – Cost, Insurance, Freight (2000 and 2010)

The seller delivers when the goods pass the ship’s rail in the port of shipment. Seller must pay the cost & freight necessary to bring goods to named port of destination. Risk of loss & damage same as CFR. Seller also has to procure marine insurance against buyer’s risk of loss/damage during the carriage. Seller must clear the goods for export. This term can only be used for sea transport.