With the updates made in 2010, the 13 records of the “International Commercial Terms (Incoterms)” international transport has been reduced to 11 records. Located in group D and set as the default standard in 2000, DAF, DES, DEQ and DDU incoterms changed these records are reestablished them as DAT and DAP records.
Incoterms, in the strict sense of ownership over the goods, the determination of contractual deliveries outside of a parties responsibilities, are not be considered as records for the determination of compensation. Herein, the Incoterms records are not be considered as agreements between the parties relating to the moment of delivery, transportation, or of damages-interests. All other issues should be included as further details in the sales contract.
These records assessing the United Nations Convention Treaty Related to the International Sale of Goods (especially considering the exemption referred to in Article 2 of the Convention) to be useful to consider. Due to the foreign elements in international trade, it is important to determine the form of law applicable to the case.
These records, used as abbreviations by sellers and buyers are the rules that determine the content of some requirements which will be defined briefly below.
RECORDS USED IN ALL TRANSPORTATION:
- EXW; EX WORKS → Hand-over from factory.
Here, the supplier uses their own factory or other places of production of goods, not having the obligation to have the goods ready for delivery, and is the minimum level of responsibility for the producer. The buyer takes delivery of the goods at the seller’s place.
- FCA; FREE CARRIER → Delivery next to Transport Vehicles
States that the freight charges be paid by the receiver, the transportation of the goods and the customs procedure is completed by the seller and the indicated receiver is responsible for receiving on behalf of the buyer.
- CPT; CARRIAGE PAID TO → Freight Paid
The seller pays the shipping fees and, after delivery of the goods, the forms and documents related to transport are provided to the buyer. This delivery method is used towards sea transport CFR in the same scope.
- CIP; CARRIAGE AND INSURANCE PAID TO → Freight and Insurance Paid
Seller pays for transport of goods and insurance costs. Buyers pay for the port customs fees, pay discharge costs, and other charges. CIP is used in maritime transport in the same nature as CIF.
- DAT; DELIVERED AT TERMINAL → delivery at terminal
The seller assumes all damages and liability as well as responsibility of the transportation to the port, terminal, or warehouse. The seller must deliver goods to the receiver at the designated place and date.
- DAP; DELIVERED AT PLACE → at the specified point
The seller assumes responsibility for the transport to the place of delivery, provided that they assume responsibility for damages. The seller pays the costs for the necessary export taxes and the export.
- DDP; DELIVERED DUTY PAID → Customs Duties Paid
Customs duties for goods to be received have been paid. Customs clearance and goods unloaded from the transport vehicle from the specified place of destination for imports means that the seller has delivered to the buyer. Import taxes and costs are assumed by the seller for maximum responsibility.
RECORDS FOR MARITIME TRANSPORT AND SHORT-SEA TRANSPORT
1 FAS; Free Alongside Ship → delivery alongside vessel
The seller places the goods in the port/ alongside carrier designated by the recipient on the date also designated by the receiver, the recipient of the goods is then responsible for the insurance and liability of the goods for the rest of the transportation process.
- FOB; FREE ON BOARD → delivery via loading on ship
Where the sellers goods are brought to the specified (harbor) on the designated date and it is recorded as the recipient’s responsibility, the undertaking of the loading process. Once the goods have passed through the vessels main deck, all liability for the goods belongs to the receiver.
- CFR; COST AND FREIGHT → cost and freight paid
The seller’s goods are brought to the specified place (port) and at the specified date on the vessel that will receive the goods has already been determined by the receiver, and that the damages-benefits discovered whilst performing ship loading and handling charges are assumed by the seller.
- CIF; COST INSURANCE AND FREIGHT → Cost, Insurance, and Freight Paid
Where the sellers goods are delivered to the specified (harbor) and at the specified date, to the vessel predetermined by the recipient at which time the receiver is responsible for damages-benefits. The cost of insurance and transport fees and expenses are assumed by the seller.