INCOTERM 2020
ICC INCOTERM TERMINOLOGIES
INCOTERMS 2020 rules as obligations of seller ands buyer to each other
classified into:
1. General obligation
2. Delivery/ Taking delivery
3. Transfer of risk
4. Carriage
5. Insurance
6. Delivery/transport document
7. Export/import clearance
8. Checking/packaging/marking
9. Allocation of costs
10. Notice
Incoterms, transaction between who?
Seller- Merchant/shipper/exporter
In charge for the delivery of goods
Risk originates
Buyer-Purchaser/ Importer
In charge for taking the delivery of goods
Risk is transferred
Incoterm serves as agreed terms of purchase and delivery
MAIN CARRIAGE
refers to freight cost, by air or sea, charged by the carrier
(airlines/shipping lines) or amount paid by the shipper to carrier for the
transport of goods from country of origin to country of destination.
(Grp. “C” &“D”)
PRE-CARRIAGE
refers to the cost of transport for hauling goods from seller’s premises
to a designated point at country of origin. Also known as “Origin Inland
Freight”. (Grp. “F”, “C” & “D”)
ON-CARRIAGE
refers to the cost of transport for hauling goods from the port of
discharge to buyer’s warehouse or designated place at destination. Also
known as “Destination Inland freight”. (Grp. “D” only)
FREIGHT COLLECT
means the main carriage was paid by the buyer upon arrival of
imported goods at country of destination and not included in seller’s
invoice price. (Grp. “E” & “F”)
FREIGHT PRE-PAID
means the main carriage for the exported goods was paid by seller
prior to departure from country of origin and therefore included in
seller’s invoice price. (Grp. “E”, “C” & “D” only)
MULTIMODAL TRANSPORT
refers to inter-continental transit of goods involving main carriage that
can be carried out both by air or by sea.
(EXW, FCA, CPT, CIP, DPU, DAP & DDP)
PORT TO PORT INSURANCE
generic name for cargo insurance. It refers to the insurance premium
paid in the international transport of goods by air/sea. This is
procured by the buyer or seller to cover risks against loss or damage to
the cargo during pendency of the voyage from country of origin to
destination. (CIF & CIP only)
ORIGIN/DESTINATION LCL CHARGES
refers to cost of handling and moving loose or breakbulk cargoes within
a seaport at country of origin or destination.
(ORIGIN – Grp “F”, “C”, & “D”) (DESTINATION – Grp “D”)
ORIGIN/DESTINATION TERMINAL HANDLING CHARGES (THC)
refers to cost of handling and moving containerized cargoes within the
terminal facilities of a seaport at country of origin or destination.
(ORIGIN – Grp “F”, “C”, & “D”) (DESTINATION – Grp “D”)
OTHER CHARGES (O/C)
refers to incidental expenses (except main carriage and port to port
insurance) incurred by the seller/exporter in relation to fulfilling his
contractual obligation to deliver the goods for each of the 11
incoterms. (e. g. pre-carriage/on-carriage, export
documentation/clearance fees, forwarder’s fees, THC/LCL charges,
export/import duties & taxes, etc.) (Grp. “F”, “C” & “D”)
CARRIER
refers to airlines, shipping lines or their agents (NVOCC/IFF)
DELIVERY
refers to bringing of goods to a specific place or to a carrier/forwarder
at country of origin or destination and used as reference point when
liability against risk for loss of or damage to the goods passes on from
seller to buyer
I. OTHER CHARGES (ORIGIN)
• - Origin Inland Freight / Pre-carriage
• - Origin LCL/THC
• - Internal Insurance
• - Export Documentation/Clearance
• Expenses
• - Export Duties/Taxes
• - Export Forwarder’s Fees
• - Export Packaging/Handling
• - Pre-shipments Inspection Fees
• - Cert. of Origin, Phytosanitary Cert.,
• MSDS, MIII Certificate, etc.
II. OTHER CHARGES (DESTINATION)
- Destination Inland Freight/On-carriage
(DAP, DPU, DDP)
- Destination LCL/THC (DAP, DPU & DDP)
- Import Duties/Taxes (DDP only)
- Unloading expenses at buyer’s
warehouse or designated place (DPU
only)
- Storage Charges (DDP only)
DUTIABLE CHARGES would mean all origin other charges, together
with the main carriage and the main insurance.
NON DUTIABLE CHARGES would mean all destination other charges
which are reflected in the invoice.
III. MAIN CARRIAGE
- ocean/air freight charges from port of origin to port of destination
a) Frt Pre-paid – main carriage paid be seller (included in invoice price)
prior to departure at Port of Origin.
(EXW, CPT, CIP, CFR, CIF, DAP, DPU, & DDP)
b) Frt. Collect – main carriage paid by buyer upon arrival at Port of
Destination not included in seller’s invoice price.
(EXW, FCA, FAS & FOB)
IV. PORT TO PORT INSURANCE
- Coverage against risk for loss/damage to the goods while in transit
from port of Origin to Port of Destinations (by sea – Marine Insurance)
& applies only to CIF & CIP.
Internal Insurance – coverage against risk for loss/damage to the goods
while in transit from seller’s warehouse to any point at Country of
Origin (FCA, FAS, FOB, CPT, CFR, DAP, DPU & DDP)
THE 4 CATEGORIES OF INCOTERMS 2020
I. CATEGORY E (DEPARTURE)
EXW (Ex Works)...named place of delivery
Note: FREIGHT PRE-PAID/COLLECT (BUYER’S OPTION)
MULTI-MODAL MODE OF TRANSPORT
II. CATEGORY F (SHIPMENT)
1) FCA (Free Carrier)...named place of delivery
2) FAS (Free Alongside Ship)...named port of shipment
3) FOB (Free on Board)...named port of shipment
COMMONALITY: MAIN CARRIAGE (FRT COLLECT) & PORT TO PORT
INSURANCE NOT INCLUDED IN SELLER’S INVOICE PRICE.
III. CATEGORY C (SHIPMENT)
1) CFR (Cost & Freight)...named port of destination
2) CIF (Cost, Insurance & Freight)...named port of destination
3) CPT (Carriage Paid to)...named destination
4) CIP (Carriage & Insurance Paid to)...named destination
COMMONALITY: MAIN CARRIAGE (FRT PRE – PAID) PAID BY SELLER
PRIOR TO DEPARTURE AT ORIGIN AND INCLUDED IN INVOICE PRICE.
IV. CATEGORY D (ARRIVAL)
1) DPU (Delivered at Place Unloaded)...named place of destination
2) DAP (Delivered at Place)...named place of destination
3) DDP (Delivered Duty Paid)...named place of destination
COMMONALITY: ARRIVAL, MAIN CARRIAGE (FRT PRE – PAID) PAID BY
SELLER PRIOR TO DEPARTURE AT ORIGIN AND INCLUDED IN INVOICE
PRICE EXCEPT PORT-TO-PORT INSURANCE.