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INCOTERMS
What are INCOTERMS?
INCOTERMS refer to “International Commercial Terms”.
Generally speaking, these are standardized rules that regulate different aspects of international trade. These are rules that determine who pays the freight for the merchandise, its delivery point and who must take out the insurance, among other things.
Roles
Define the transfer of expenses.
The seller must know when and where he will have to bear the costs in respect of his sales contract and include this amount in the price offered. This process allows the buyer to know exactly what he is spending and thus include it in the final value of the product.
Define the transmission of risks
The buyer must know when and where the risks of the goods in transition, are up to you. For this reason, INCOTERMS define the time and place at which the seller's responsibility ends and the buyer's begins.
They define the place from which the merchandise will leave.
INCOTERMS indicate the exact place where the seller must deposit the goods and, thus, the place where the buyer will pick it up.
EXW - Ex Works
In the origin
The seller makes the goods available to the buyer at the established point and place (without a named point, it is up to the seller to choose).
FCA - Free Carrier
Free On Carrier
The seller delivers the goods to the transporter or to whom the buyer indicates at the designated location (general warehouse, etc.), in addition to loading it onto the transport vehicle.
FAS - Free Alongside Ship
Free next to the ship
INCOTERMS FAS , the seller fulfills its delivery obligation when the cargo is placed next to the vessel designated by the buyer, at the indicated port of shipment.
FOB - Free On Board
Free on board
In this incoterm, the seller delivers the goods on board the ship indicated by the buyer, at the point of shipment indicated by the buyer. The cost of the shipment is the seller.
CPT - Carriage Paid To - Carriage Paid To
In this term, it is up to the seller to deliver the cargo to the carrier, at the agreed location in his country, and with transportation contracted and paid by him to take the goods to the designated destination abroad.
CIP - Carriage And Insurance Paid To
Transport And Insurance Paid Up To
At CIP, the seller delivers the goods to the carrier, at the agreed location in their country.
CFR - Cost And Freight
Cost and freight
In CFR it means that the seller delivers the goods to the carrier on board the ship indicated by the buyer. The seller must contract and pay the costs and freight necessary to take the cargo to the designated port of destination.
CIF - Cost Insurance And Freight
Cost, Insurance and Shipping
the seller delivers the cargo to the carrier on board the ship indicated by the buyer. The seller must contract and pay the necessary costs, freight and insurance, from the point of delivery to the point at the designated port of destination.
DAP - Delivered At Place
Delivered On Site
In DAP, the seller delivers the cargo placing it at the buyer's disposal, at the designated destination, ready to be unloaded. Seller assumes all risks and costs for this delivery.
DPU - Delivered At Place Unloaded
Delivered To Landed Location
The seller delivers the cargo making it available to the buyer, delivered to the unloaded location. The seller must assume all risks and costs involved in doing so.
DDP - Delivered Duty Paid
Delivered Royalty Paid
In INCOTERM DDP, the seller assumes above all all responsibilities and risks of transport, from the origin to the destination address stipulated by the buyer