Incoterms -
How’s Your Quotation?
Are you
still quoting FOB Ann Arbor,
Ypsilanti or Milan? You could
be costing yourself additional
international business for
your failure to comply with
the newly released Incoterms
2000.
Incoterms,
developed under the auspices
of the International Chamber
of Commerce (ICC), are a set
of international rules that
are used for the
interpretation of the most
common terms in foreign trade.
lncoterms
are recognized by the United
Nations Commission on
International Trade Law as the
global standard for such
interpretations.
lncoterms
define the responsibilities of
buyers and sellers for the
delivery of goods under sales
contracts. They are the
definitive text for
determining how costs and
risks are allocated to the
parties. Incoterms are
regularly incorporated into
sales contracts worldwide and
have become part of the daily
language of trade. The use of
Incoterms reduces
uncertainties that are
produced by varying
interpretations of foreign
trade terms.
lncoterms
are grouped into four
basically distinct categories.
The "E"
terms are used when the seller
will make the goods available
to the buyer on the seller's
own premises. The "F'
terms are used when the seller
will be required to deliver
the, goods to a carrier
appointed by the buyer. The "C"
terms are used when the seller
will be required to contract
tot carriage, but will not
assume the risk of loss or
damage to the goods, or of
additional costs that may
occur after shipment and
dispatch. Finally, the "D"
terms require the seller
to bear all costs and risks
needed to bring the goods to
the place of destination.
|
Group
E
|
Departure
|
|
EXW Ex Works
|
named place
|
|
Group
F
|
Main
Carriage Unpaid
|
|
FCA Free Carrier
|
named place
|
|
FAS Free Alongside
Ship
|
named port of
shipment
|
|
FOB Free on Board
|
named port of
shipment
|
|
Group
C
|
Main
Carriage Paid
|
|
CFR Cost and
Freight
|
named port of
destination
|
|
CIF Cost, Insurance
and Freight
|
named port of
destination
|
|
CPT Carriage Paid
To
|
named place of
destination
|
|
CIP Carriage and
Insurance Paid To
|
named place of
destination
|
|
Group
D
|
Arrival
|
|
DAF Delivered at
Frontier
|
named place
|
|
DES Delivered Ex
Ship
|
named port of
destination
|
|
DEQ Delivered Ex
Quay
|
named port of
destination
|
|
DDU Delivered Duty
Unpaid
|
named place of
classification
|
|
DDP Delivered Duty
Paid
|
named place of
destination
|
Since the
creation of lncoterms by the
ICC in 1936, this undisputed
worldwide contractual standard
has been regularly updated to
keep pace with the development
of international trade.
Intoterms 2000 take into
account the recent spread of
customs free zones, the
increased use of electronic
communications in business
transactions and changes in
transport practices. lncoterms
2000 offer a simpler and
clearer presentation of the 13
definitions, all of which have
been revised.
The
following new interpretations
in lncoterrns 2000 are
especially noteworthy:
- When using Free
Alongside Ship (FAS)
terms, the seller must
arrange for export
clearance.
- Under delivered Ex Quay
(DEQ) terms, the buyer
must arrange for import
clearance including
payment of any
formalities, duties, taxes
and other charges upon
import. These changes
logically impose
responsibility on the
seller when the seller has
more control over the
goods than the buyer and
vice versa.
- Under FAS, the goods
will be still physically
within the seller's
country.
- Under DEQ the goods will
have been placed on the
pier in the buyer's
country.
These changes
eliminated the awkward
situation of a buyer
attempting to deal with
regulations imposed by a
seller's government, such as
export control regulations,
and the seller trying to deal
with import clearance in the
buyer's country.
Loading and
unloading obligations have
been shifted to the seller
under Free Carrier Seller's
Place terms. Like the changes
noted above, the logic behind
loading and unloading responds
m the simple questions:
"Which party is best
equipped to handle the
task?" Clearly, when the
shipment is being unloaded at
the seller's place, the seller
will have the personnel and
equipment available to load.
Conversely, under Free
Carrier, at any place other
than the seller's, the seller
delivers by merely bringing
the goods to the terminal
without having to unload. This
makes sense because, in this
scenario, it is logical to
assume that a buyer-appointed
carrier would have the
personnel and equipment needed
to unload a seller-dispatched
vehicle when the place is its
own terminal.
To purchase
a complete list of lncoterms
2000, contact the
International Chamber of
Commerce at ICC Publishing,
156 Fifth Avenue, New York,
NY, 10010, URL: http://www.iccbooks.com,
and reference either ICC No.
560 or ISBN: 92-842-1199-9.
Another good resource for
understanding lncoterms 2000
is Intoterms for Americans
(ISBN: 1-886457-06-09 from
International Projects, Inc.,
PO Box 352650, Toledo, OH,
43635-2650), a workbook
written by Frank Reynolds,
U.5. delegate to the lncoterms
2000 Revision Committees and a
nationally recognized
authority on the subject. Mr.
Reynolds can be contacted at
Tel: (419) 865-6201; Fax:
(419) 865-0954; or Email: fjr24@aol.com.
Additional
information can be found
below:
| Incoterms
2000 - ICC worldwide
Click for national
committees &
groups Business topics
Incoterms 2000 ICC's
standard commercial
terms, Incoterms, are
in constant daily use
in international sales
contracts throughout
the world. |
http://www.iccwbo.org/ |
| Incoterms
200 - Canadian Council
for International
Business Incoterms
2000 ANNOUNCING
INCOTERMS 2000 The
first revision of
ICC's standard
definitions of trade
terms in ten years
comes into force on
January 1, 2000. |
http://www.ccib.org/incoterm.htm |
| CCIB
Home Page - Among
Canadian business
organizations, the
Canadian Council for
International Business
leads in influencing
international policy
development as
Canada's business
channel to two key
world bodies, the ICC
and BIAC. The
International Chamber
of Commerce (ICC)
promotes global trade,
investment, open
markets and free
capital flows. |
http://www.ccib.org/. |
| Incoterms
- Brought to you by
the World Cargo
Alliance, you can
click on any of the
links below to find
out about Incoterms. |
http://www.worldcargoalliance.com/ |
| Transport
Industry Reference
Desk - The Freight
Detective
Transportation Virtual
Reference Desk,
lncoterms, Incotems,
transportation
references, transport
terminology, trade
terminology, transport
terminology, transport
jokes, aviation
reference, ocean cargo
reference, freight
forwarder references,
transport handbook,
trade handbook,
nautical charts,
marine terminology,
transport. |
http://www.cargolaw.com/ |
For additional information
and assistance, please contact
the nearest office of the US
Commercial Service which can
be found at: http://www.export.gov/eac/index.asp.
Date Updated: March 27, 2007
|
