What are Incoterms?
Incoterms is an abbreviation of the term “International Business Terms”, created by the International Chamber of Commerce (ICC, www.iccwbo.org) and regulates as responsibilities associated with transportation and shipping processes. Bottom line, they define how the market of buyers and sellers in a sale that can be national or international.
EXW (EX Works)
Ex-Works: The supplier of the goods places the goods at the disposal of the buyer in his own premises (factory, warehouse or other type of premises) on the stipulated date, being the transport, risks and associated costs of the total responsibility of the one who buys the products.
FCA (Free Carrier)
FCA -Free Carrier, or free on the conveyor. That is, the seller will make available the merchandise in question, in a previously agreed place, still in the country of origin, where the carrier of the buyer will receive the goods and will become responsible for it.
CPT (Carriage Paid To)
This condition stipulates that the exporter must pay the shipping costs of the merchandise and its international freight to the designated place of destination. In this way, the risk of loss or damage to property, as well as any cost increases, is transferred from the exporter to the importer when the goods are delivered to the custody of the carrier.
CIP (Carriage & Insurance Paid)
Carriage and Insurance Paid to…: Adopts similar principle to the CPT. The exporter, in addition to paying the costs of embarking the goods and the freight to the place of destination, also bears the expenses of insurance of transport of the merchandise to the place of destination indicated. The CIP can be used with any mode of transportation, including multimodal.
DAT (Delivered at Terminal)
In the case of international commercialization, where, by mutual agreement, the INCOTERM DAT – Delivered at Terminal is chosen, the seller must clear the merchandise for export in his country, make the international transport, unload the merchandise and make it available in the cargo terminal Referred to in the contract.
DAP (Delivered at Place)
DAP – Delivered at Place, The seller must untangle the goods for export in their country, make the international transportation and transport the merchandise to the awake place. The import authorization at the place of destination, as well as the discharge of the merchandise, shall be charged with the buyer.
DDP (Delivered Duty Paid)
The exporter assumes the undertaking to deliver the goods, untangled for imports, at the place designated by the importer, paying all expenses, including taxes and other import charges. It is not the responsibility of the exporter, however, the landing of the merchandise.
FAS (Free Alongside Ship)
Free Along Ship: The exporter’s obligations are terminated by placing the merchandise, already detangled for export, on the wharf, free from the shore of the ship. From that moment on, the importer assumes all risks, and should even pay the costs of placing the merchandise within the vessel.
FOB (Free on Board)
FOB – Free on Board: The exporter shall deliver the goods, untangled, aboard the vessel indicated by the importer at the port of embarkation. This modality is valid for the inland waterway transport or roads. All expenses, until the time when the product is placed aboard the carrier, is the responsibility of the exporter.
CFR (Cost & Freight)
CFR – Cost and Freight: The exporter must deliver the goods to the port of destination chosen by the importer. The transport costs are therefore borne by the exporter. The use of this term obliges the exporter to clear the merchandise for export and to use only the maritime transport or interior waterway.
CIF (Cost Insurance & Freight)
CIF – Cost, Insurance and Freight: The mode equivalent to the CFR, with the difference that the insurance costs are responsible for the exporter. The exporter shall deliver the merchandise aboard the ship at the port of embarkation, with freight and insurance paid. The exporter’s liability ceases at the time when the product crosses the vessel’s rail in the port of destination. This mode can only be used for maritime or intertransiting transport
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