Incoterms® 2010
A Special Presentation by
The Louisiana District Export Council and
the U. S. Export Assistance Center of New
Orleans
1
Incoterms® 2010
Presented by:
Bill Cummins
Executive Director
Global Trade Services
J. P. Morgan Chase
2
Who publishes and
copyrights Incoterms®?
1. The World Trade Organization
2. The Interstate Commerce Commission
3. The International Chamber of Commerce
86%
14%
0%
1
2
3
3
Incoterms® address the legal
transfer of title for goods.
1.
2.
True
False
57%
43%
1
2
4
Incoterms can be used for the
transfer of both goods and
services?
70%
1.
2.
True.
False.
30%
5
How excited are you to be learning
about Incoterms 2010?
33%
1.
2.
3.
4.
33%
Very Excited!
Somewhat excited.
Just glad to be out of the
office.
My boss made me do it.
22%
11%
1
2
3
64
Incoterms® 2010
In today’s presentation, we will address -The International Chamber of Commerce and
its role in international trade.
 The significance of the new shipping terms.
 What the new Incoterm rules are, why some
were changed and what Incoterms are not.
 What’s the likely future impact of the new
Incoterms on business practices.

7
Incoterms® 2010
DISCLAIMER:
I am Not an Incoterm Expert, A Practitioner Only
 I am Not an Attorney (no legal advice given!)
 I am Not a CPA


AND I AM NOT FRANK REYNOLDS!
8
Incoterms® 2010
Who is FRANK J. REYNOLDS?





See page 122 of Incoterms® 2010 (the book)
Frank is a long-time international marketer, industry
consultant and (prolific) author on int’l trade
Associated with the USCIB and the U. S. rep to the ICC on
Incoterms (2000 and 2010); the only non-lawyer on the ICC
committee for shipping terms.
He is the USA “guru” on International Commercial Terms!
His seminars are largely sold-out, one day programs (and
expensive); but highly recommended!
9
Incoterms® 2010
Who is FRANK J. REYNOLDS?






President, Int’l Projects, Inc.
Tel: 419 865 6201
Email: FJR424@aol.com
Based in Toledo, Ohio
Does freelance consulting
For a listing of his seminars, go to
www.iccincoterms2010.org
10
Incoterms® 2010
Other Resources on Incoterms®

Buy Frank’s book, a great resource -Incoterms® For Americans®

Also, coming out in early 2011 will be The Guide to Incoterms®
by the ICC (very basic, pictorial guide; excellent desk reference book
with lots of pictures!), authored by Jan Ramberg

The ICC Wall Chart for those who need a handy cheat sheet (and see
copy at end of this presentation)

The latter two items are ICC publications and available from
www.iccbooksusa.com
11
Incoterms® 2010
What is the International Chamber of Commerce (ICC)?








Founded in 1919 (in Paris)
Representatives from over 120 countries
Represents the views of the Private Sector on the practical elements of
conducting international trade and investment.
Very highly regarded and viewed as having legitimacy and authority in
most countries; a knowledgeable and reliable resource on int’l trade.
Key services include Int’l Court of Arbitration, ICC Chamber of
Commerce Network.
Works closely with the WTO and the U.N., and G20
Has a large framework of working committees that address key sectors
and makes available rules and guidelines in areas as Finance, IT,
Transportation and more . . . .
See page 126 of your book
12
Incoterms® 2010
What are Incoterms® ?





International Commercial Terms (Incoterms)
First formulated by the ICC in 1936
A set of standardized guidelines that parties in different countries (and
different legal environments) use for structuring the logistical elements
of selling and buying goods.
The emphasis is on delineating (in a sales transaction of tangible goods)
the risks and costs between the seller and the buyer via determining a
specific place and time for delivery of the goods.
For decades, the ICC just revised Incoterms as needed (as in early 80’s
replacing C& F with CFR ) but has been on a 10 year cycle since 1990,
then 2000, and now the 2010 revision.
13
Incoterms® 2010
What are Incoterms® ?

International Commercial Terms (Incoterms)

With the 2010 version, the word “Incoterms” becomes a registered
trademark of the International Chamber of Commerce in Paris.
(And I understand they intend to aggressively protect this mark!)

And for the first time these terms are now referred to as RULES

Will be in some 36 (or more) languages
14
Incoterms® 2010
What are Incoterms® ?

Abbreviated in a three letter format, and the abbreviations are always in
English.

Typically quoted with a specific geographic location of delivery, as Ex
Works Seller’s Plant (500 Annunciation Street, New Orleans, LA USA)
or can be as simple as FOB Any USA Port (but usually best to be specific
as you can).
15
Incoterms® 2010
Why revise Incoterms beginning 2011?
THE TOP TEN REASONS TO REVISE INCOTERMS!
10.Desire by the ICC to have a universal set of shipping terms that could be
used for domestic and well as international shipments.
16
Incoterms® 2010
Why revise Incoterms beginning 2011?
THE TOP TEN REASONS TO REVISE INCOTERMS!
10. Desire by the ICC to have a universal set of shipping terms that could be used for
domestic and well as international shipments.
9. In the USA, the national council that oversees the Uniform Commercial Code
recommended the deletion of the section addressing shipping terms (the so-called
FOB terms), Article 2.319 through 2.324 (as a part of an overall review of the
UCC in 2004). Slowly, states are adopting this change (and some may adopt
Incoterms, most have so far done nothing). WHAT HAS LOUISIANA DONE?
17
Incoterms® 2010
Why revise Incoterms beginning 2011?
THE TOP TEN REASONS TO REVISE INCOTERMS!
10. Desire by the ICC to have a universal set of shipping terms that could be used for domestic
and well as international shipments.
9. In the USA, the national council that oversees the Uniform Commercial Code
recommended the deletion of the section addressing shipping terms (the so-called FOB
terms), Article 2.319 through 2.324 (as a part of an overall review of the UCC in 2004).
Slowly, states are adopting this change (and some may adopt Incoterms, most have so far
done nothing). WHAT HAS ALABAMA DONE?
8. Also in the USA, the adoption of Sarbanes-Oxley requiring greater verification (and
liability to senior managers/board of directors) that financial reporting is accurate and in
regulatory compliance -- AND INCOTERMS CAN IMPACT REVENUE AND
PAYABLES RECOGNITION (WHY?)
18
Incoterms® 2010
Why revise Incoterms beginning 2011?
7.
Desire by the Europeans to modify -- and simplify -- shipping terms reflecting
greater trade volumes within the EU.
19
Incoterms® 2010
Why revise Incoterms beginning 2011?
7.
Desire by the Europeans to modify -- and simplify -- shipping terms reflecting
greater trade volumes within the EU.
6.
The advent of the Chinese as a major player in world trade, their admission to
the WTO and their desire to have input into the ICC overall and, in
particular, input into the shaping of shipping terms (although the ICC is still
very “euro centric” and the Incoterms® oversight committee members are
largely lawyers).
20
Incoterms® 2010
Why revise Incoterms beginning 2011?
7.
Desire by the Europeans to modify -- and simplify -- shipping terms reflecting
greater trade volumes within the EU.
6.
The advent of the Chinese as a major player in world trade, their admission to
the WTO and their desire to have input into the ICC overall and, in
particular, input into the shaping of shipping terms (although the ICC is still
very “euro centric” and the Incoterms® oversight committee members are
largely lawyers).
5.
Increased inter-modalism in international trade and the need for
a broader scope of shipping terms to address land/ocean/air movements.
21
Incoterms® 2010
Why revise Incoterms® beginning 2011?
4. Advent of International Financial Reporting Standards (IFRS) by European public
companies (and many larger private ones) with a corresponding push for a universal
standard on revenue and expense recognition primarily tied to point/time of delivery.
22
Incoterms® 2010
Why revise Incoterms® beginning 2011?
4. Advent of International Financial Reporting Standards (IFRS) by European public
companies (and many larger private ones) with a corresponding push for a universal
standard on revenue and expense recognition primarily tied to point/time of delivery.
3. GAAP in the USA is under int’l pressure to be in parallel with the Int’l Financial
Reporting Standards (IFRS) -- not in our life times!
23
Incoterms® 2010
Why revise Incoterms® beginning 2011?
4. Advent of International Financial Reporting Standards (IFRS) by European public
companies (and many larger private ones) with a corresponding push for a universal
standard on revenue and expense recognition primarily tied to point/time of delivery.
3. GAAP in the USA is under int’l pressure to be in parallel with the Int’l Financial
Reporting Standards (IFRS) -- not in our life times!
2. Significant desire by many Fortune 500 companies in the USA to have a standardized,
universal set of shipping terms for use within the USA (as well as internationally) that is
consistent with current business practices and modes of transport.
24
Incoterms® 2010
Why revise Incoterms® beginning 2011?
THE NUMBER ONE REASON TO REVISE INCOTERMS!
1. To assist the Obama Administration -- and Don van de Werken -- in its Export
Initiative to DOUBLE exports in five years (State of the Union Address,
February 2010) !
25
Incoterms® 2010
Why are Incoterms relevant (and for whom)?
 Determining
exactly when and where
delivery occurs is important, why?
26
Incoterms® 2010
Why are Incoterms relevant (and for whom)?

Delivery is when responsibility (but not necessarily legal title) for the
goods transfers from the seller to buyer, and with that event there are
material implications for the seller and for buyers regarding the transfer
of risk and cost.
27
Incoterms® 2010
Why are Incoterms relevant (and for whom)?
In a typical ocean shipment, such questions are inherent in putting together a sale -







Who shoulders the responsibility (costs & risk) from the seller’s
warehouse to the port?
Who handles . . . export clearance & U. S. gov’t compliance requirements (who is the
exporter of record)?
Then, who handles the transport from the dock to on board the vessel?
As the vessel crosses the ocean to the destination port?
Unloading at the destination?
Customs clearance at the destination (who is the importer of record)?
Who pays any import duties (and in what currency)?
Inland transportation to the buyer?
28
Incoterms® 2010
Why are Incoterms relevant (and for whom)?

Determining exactly when and where delivery occurs is important, why?
Impact on legal contracts -Level One: Sales Contract / Purchase Order
Sublevel of Impacted by Incoterms:
Transport Contract(s)
Insurance Policies (Cargo, Liability)
Letter of Credit
Finance Contracts
Other ?
29
Incoterms® 2010
Why are Incoterms relevant (and for whom)?

Provides a clear, universal set of standards for multilingual, multi-cultural, “multi-legal” usage -- very practical
and based on business practices (not legal principles and
abstract ideas)

Specifies which party -- either the seller or the buyer -- has
the obligation (to arrange and cover any costs) for
(transport) carriage, (cargo) insurance, and (trade)
compliance.
30
Incoterms® 2010
Why are Incoterms relevant (and for whom)?
 AND
NOW . . . a set of rules that are
designed for both domestic and international
transactions!
31
Incoterms® 2010
For Whom are Incoterms Now
Relevant?
NO LONGER relevant for just the
import/export logistics department!
32
Incoterms® 2010
For Whom are Incoterms Relevant -- NOT just the import/export logistics
department, right?
 Salespersons
and Sales Support Staff (Domestic
& International)
 Logistics Staff (Domestic & International)
 Legal Dept/Outside Counsel
 Finance Managers
 Accountants/CPAs
 Bankers
 Freight Forwarders
 Customs House Brokers
33
 Other (as Purely Domestic Freight Companies)?
Incoterms® 2010
What Incoterm Rules Don’t Do :

As we addressed earlier . . . by themselves, Incoterms do
NOT address transfer of legal title of the goods.

Rather, title passage is usually addressed in the
sales/purchase contract or, if not, by default it is addressed
by sovereign (local) law.

FYI . . . in most transactions, passage of legal ownership
from the seller to the buyer usually requires two events:
Delivery + Payment = Title Transfer
34
Incoterms® 2010
What Incoterm Rules Don’t Do (Continued) :

By themselves, Incoterms are not law and do NOT
automatically apply to every sales transaction of tangible
goods.

The parties must specify that their transaction is subject to
Incoterms® 2010.

If silent, the default in the USA is the UCC for domestic
transactions (Yipes!).

Or, for cross border transactions, the (USA) default may be
the UCC or, in some instances, the UN Convention on the
Sale of Goods (CISG) to which the USA is a party (similar
to treaty status).
35
Incoterms® 2010
What Incoterm Rules Don’t Do (Continued) :
 By
themselves, Incoterms do not determine revenue
or expense recognition in financial statements.
36
Incoterms® 2010
 By
themselves, Incoterms do not determine revenue
or expense recognition in financial statements . . .
GAAP in the USA, the Int’l Financial Reporting
Standards (IFRS) and other national accounting
standards address this issue -- - however, when and
where delivery occurs is often an integral part of
determining revenue/expense recognition in the sale
of tangible goods (other elements which may affect
revenue recognition include control over the goods,
who has ultimate risk for the goods, seller buy-back
provisions and such).
37
Incoterms® 2010
What Incoterm Rules Don’t Do :
 By
themselves, Incoterms do not specify how
goods are to be packed for shipment or how
the goods are to be loaded and stowed onto
transport equipment (as in a container, on a
truck, rail car, aircraft, ocean vessel, etc.).
38
Incoterms® 2010
What Incoterm Rules Don’t Do :
 Incoterms
are not Payment Terms (although
payment timing is commonly tied to the event of
delivery).
 Payment
Terms + Incoterms = Terms of Sale
39
Revising Incoterms - the
process (don’t look!)
 Decision
to undertake the revision by the
ICC Incoterms oversight committee in
November 2007 in Stockholm (too much
wine served at dinner?)
 Met 11 more times (no alcohol allowed!)
 130 countries submitted input with over
2000 individual comments/requests for
changes.
40
Revising Incoterms (a camel
made by a committee?)
 Private
sector input, mainly lawyers;
government representatives were excluded.
 The ICC committee developed a working
draft, went through 4 revisions, formal
adoption by the full ICC was September
2010
(see pages 119 - 123 for mug shots and bios)
41
Revising Incoterms, the 2010
revision . . .
Result:
-- Reduced number from 13 to 11
-- Domestic and Int’l Usage
-- Clarified some ambiguities (e.g.
the ship’s rail?)
-- A simpler, more user-friendly
set of (voluntary) rules.
42
Revising Incoterms, the 2010
revision . . .
Result: Added some specific definitions for clarity -1.
2.
3.
4.
5.
6.
Carrier
Shipper
Delivery
Pre-carriage
Main Carriage
On-carriage
See Page 10 of your book . . . .
43
Incoterms® and Sales
Contracts -- Key Elements !
-- Full (legal) name and address of parties
-- Good, practical description of the goods that can be
used to verify the customs classification
-- Shipping Instructions (and packing) & Insurance
-- Payment terms and currency
-- Incoterms®
-- Passing of title (e.g., after delivery and payment)
-- Timing for events (latest shipment, etc.)
-- Applicable law and dispute resolution (as the ICC)
-- Duly signed by authorized parties
44
Incoterms 2010 – What’s New?

New Layout – Divided into two distinct sections
– Any Mode Terms: DDP, DAP, DAT, CIP, CPT, FCA, EXW
– Waterway/Maritime Terms: FOB, FAS, CFR, CIF
– As opposed to 2000 version that began with EXW and progressed
to DDP – Least to most risk
Includes explanation of terms used in the book
 11 Terms (Down from 13)

– DAF, DES, DDU, & DEQ have been removed and replaced by
DAP & DAT respectively

Graphics added to illustrate risk and obligation
45
What happened to
DAF, DES and DDU?
 These
three terms have been replaced by
one term DAP (Delivered at Place)
– DAF (Delivered at Frontier) – Rarely used and limited to ground
transport
– DES (Delivered Ex-Ship) – Limited to water shipments only
– DDU (Delivered Duty Unpaid) – Not appropriate for domestic
shipments since duty was implied
 DAP
can be used with any mode of
transport – domestic or international
46
What happened to DEQ?
 DEQ
(Delivered Ex-Quay) replaced by
DAT (Delivered at Terminal)
– DEQ required the seller (shipper) to unload at the quay
– DEQ was limited to water transport
 DAT
– Requires the seller to unload at the quay, terminal, or
warehouse
– Can be used with any mode of transport
47
F Terms – General Considerations
 Main
Carriage contracted by buyer
 Less work for seller, but less control over
documents
– For documentary payment terms
– For US Exporters, EEI (Electronic Export Information) filings are
typically done by forwarder
– Compliance – Documentation required
 For
US Importers, F Terms facilitate ISF
(Importer Security Filing – 10+2) reporting
48
C Terms – General Considerations
 Most
advantageous for seller
 Main Carriage contracted by seller
– Most control over documents
– More work for exporter than F Terms
Under C Rules, buyers are responsible for the
goods during the main carriage even though the
seller has made the arrangements for main
carriage
 US Importers must rely on their supplier’s
forwarder to submit 10+2 documentation and US
49
Importers at risk during main carriage

D Terms – General Considerations
 “Arrival”
Terms
 Main Carriage contracted by seller
 Seller responsible for goods until delivered
(“arrived”) to specified location on the
buyer’s side
– Not particularly advantageous if you’re looking
for early revenue recognition
50
D Terms
– General Considerations Continued
US Exporter – more work than the F
Terms and greater risk than the C Terms
 For
– Seller agrees to deliver or make arrive at named location on the
buyer’s side
– Potential for demurrage charges
 For
US Importers, again, the 10+2 filings
are handled by the vendor’s forwarder
 Not the best term to use for L/C
transactions, since the BL or AWB do not
show actual arrival
51
Any Mode Terms
 EXW
 FCA
 CIP
and CPT
 DAP, DAT and DDP
52
EXW (Ex-Works)
 Any
mode term
 Least work for exporters/sellers
– Popular among new exporters
 Seller
makes goods available for pickup
(including agreed packaging)
– Is the packaging suitable for international
shipments?
53
EXW (Ex-Works) Continued
 Buyer
responsible for loading goods at
EXW place
– How often does this actually happen?
– If the seller is loading, who takes responsibility if damage occurs?
– What document evidences of delivery? (No standard)
 Buyer
responsible for export and
compliance documentation
– Seller must provide company info to buyer’s forwarder and how
does seller feel about that
 All
of this makes EXW less desirable
54
EXW and Letters of Credit

What happens if the buyer decides to instruct their
forwarder not to pick up the goods?
– How irrevocable is your L/C?
– What about custom made goods?

Who’s managing the documentation and
presentation process?
– Do you want your customer’s forwarder preparing
documents you need to draw on your L/C?
– What is the L/C’s confirmed?

Diversion issues – where will the goods end up?
55
FCA (Free Carrier)
 Recommended
as substitute for EXW
 Can be used with any mode of transport
 Seller must deliver the goods to the carrier
provided by the buyer at a named point on
the seller’s side
– If no point is named the seller can choose a point best suited for
them - the named point can be the seller’s facility
 Seller
is responsible for:
– Packaging, Loading, Pre-carriage (if any – none if at seller’s dock),
Export Clearance, and Compliance Documentation
56
FCA (Free Carrier) Continued
 Seller
not responsible for unloading on
buyer’s side
 Buyer responsible for everything else after
loading
 Insurance not specified
 Freight Collect – Buyer pays
57
CPT (Carriage Paid To)
 Can
be used with any mode of transport
 Well suited for multimodal transport
 Seller must clear goods for export including
export compliance documentation
 Seller delivers goods, packaged for
shipment, to carrier for transport to a named
destination place on the buyer’s side
58
CPT (Carriage Paid To)
Continued
 Seller
pays all transportation costs to
specified delivery destination – main
carriage
– Risk passes to buyer when goods are delivered to carrier
 Buyer
typically responsible for unloading at
place of destination
 Insurance not specified
 Freight Prepaid – Seller pays – Need to
incorporate freight charges into invoice to buyer
59
CIP
(Carriage & Insurance Paid to)
 Same
as CPT except Insurance
 Can be used with any mode of transport
 Well suited for multimodal transport
 Seller must clear goods for export including
export compliance documentation
 Seller delivers goods, packaged for
shipment, to carrier for transport to a named
destination place on the buyer’s side
60
CIP (Carriage & Insurance Paid to)
Continued

Seller pays all transportation costs to specified
delivery destination – main carriage
– Risk passes to buyer when goods are delivered to carrier
 Buyer
typically responsible for unloading at place
of destination
 Insurance is seller’s obligation (minimum
coverage)

Freight Prepaid – Seller pays – Need to incorporate
freight and insurance charges into invoice to buyer
61
DAT (Delivered at Terminal)
mode (arrival) term – replaces DEQ
 Seller obtains export clearance and handles
export compliance documentation
 Seller packages goods for transport and
pays for all transportation costs to a named
destination terminal
 Seller pays for unloading at the named
destination (dock, warehouse, etc.) terminal
62
on buyer’s side
 Any
DAP (Delivered at Place)
 Any
mode (arrival) term
 Seller obtains export clearance and handles
export compliance documentation
 Seller packages goods for transport and
pays for all transportation costs to a named
destination place on the buyer’s side
 Buyer responsible for unloading goods at
the named place – this is the main
63
difference b/t DAP and DAT
DAP (Delivered at Place)
Continued
 Buyer
responsible for import clearance and
on carriage (if any)
 No insurance specified
 Freight Prepaid – Seller pays – Need to
incorporate freight charges into invoice to buyer
 Seller
must provide appropriate
documentation for release of goods on
buyer side
– This is important if on a L/C – flow of documents
64
DDP (Delivered Duty Paid)
 Any
Mode (arrival) term
 Not suitable for domestic shipments
 Seller arranges to pay for:
– Transportation, Foreign duties, Export and Import Licenses, Export
Compliance Documentation
 Seller
clears goods through Customs in
foreign country for delivery to a named
place on the buyer’s side
– May be foreign exchange risk
65
DDP (Delivered Duty Paid)
Continued
Risky for exporter – dealing with foreign customs
 Buyer typically responsible for unloading at the
point of delivery
 Insurance not specified


Freight Prepaid – Seller pays – Need to incorporate
freight and insurance charges into invoice to buyer

An importer under DDP is not necessarily the
importer of record since they are not clearing
goods through Customs – this may affect Duty
Drawback
66
Sea and Inland Waterway
Transport Terms
 FAS
 FOB
 CFR
 CIF
67
FAS (Free Alongside Ship)
 Sea
and Waterway Term
 Usually used for charter party transactions
(not liner containerized shipments)
 Seller delivers the goods, commodity, or
product, packaged or prepared for export
alongside a vessel designated by the buyer
at a named place/port on the seller’s side
 Seller responsible for export clearance and
export compliance requirements
68
FAS (Free Alongside Ship)
Continued
 Buyer
responsible for:
– Loading the vessel, Main carriage, Clearance
through Customs, On-carriage
 Insurance
not specified
 Freight Collect – Buyer pays
69
FOB (Free on Board)

Sea and Waterway Term (not to be confused with
UCC term FOB)
– Incoterms 2010 will be used for both domestic and
international transactions
Seller delivers the goods packaged and prepared
for export, loaded on-board a vessel chosen by the
buyer, at a port on the seller’s side
 Seller is responsible for:

– Export compliance requirements, Export Clearance, and
Pre-Carriage
70
FOB (Free on Board)
Continued

“Over the ship’s rail” is no longer used as a point to define
transfer of risk from seller to buyer
– Buyer and seller should agree on what constitutes loaded on board
– Different products loaded differently
– Seller responsible for performance of carrier loading the ship even
though carrier is chosen by the buyer

Buyer responsible for:
– Main carriage, Import clearance, and On-Carriage



Freight Collect – Buyer Pays
Insurance not specified
Common Incoterm for L/C transactions
71
CFR (Cost and Freight)
 Sea
and Waterway Term
 Seller delivers goods, packaged for
shipment, to carrier for transportation to a
named destination port on the buyer’s side
– Risk passes to buyer when goods delivered to carrier
 Seller:
– Chooses vessel, Pays costs for main carriage, and
handles export clearance and compliance requirements
72
CFR (Cost and Freight)
Continued

“Over the ship’s rail” is no longer used as a point to define
transfer of risk from seller to buyer
– Buyer and seller should agree on what constitutes loaded on board

Buyer responsible for:
– Vessel unloading, Import clearance, and On-Carriage

Freight Prepaid – Seller pays – Need to incorporate freight charges
into invoice to buyer

Insurance not specified
73
CIF
(Cost Insurance and Freight)
 Sea
and Waterway Term
 Seller delivers goods, packaged for
shipment, to carrier for transportation to a
named destination port on the buyer’s side
– Risk passes to buyer when goods delivered to carrier
 Seller:
– Chooses vessel, Pays costs for main carriage, and
handles export clearance and compliance requirements
74
CIF
(Cost Insurance and Freight)
Continued

“Over the ship’s rail” is no longer used as a point to define
transfer of risk from seller to buyer
– Buyer and seller should agree on what constitutes loaded on board

Buyer responsible for:
– Vessel unloading, Import clearance, and On-Carriage

Freight Prepaid – Seller pays – Need to incorporate freight charges
into invoice to buyer

Insurance is seller’s obligation (minimum coverage)
75
Incoterms 2010 Chart
Any Mode Terms
Control of
Costs
Main Carriage
Cost
Risk of
Costs
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
CIP (Carriage & Insurance Paid To)
Seller
Seller
Buyer
CPT (Carriage Paid To)
Seller
Seller
Buyer
DAT (Delivered at Terminal)
Seller
Seller
Seller
DAP (Delivered at Place)
Seller
Seller
Seller
DDP (Delivered Duty Paid)
Seller
Seller
Seller
Departure, Freight Collect
EXW (Ex-Works)
Main Carriage Freight Collect
FCA (Free Carrier)
Main Carriage Freight Prepaid
Arrival, Freight Prepaid
76
Incoterms 2010 Chart
Sea, Inland Waterway
Transport Terms
Control of Main Carriage
Costs
Cost
Risk of
Costs
Main Carriage Freight Collect
FAS (Free Alongside Ship)
Buyer
Buyer
Buyer
FOB (Free on Board)
Buyer
Buyer
Buyer
CFR (Cost and Freight)
Seller
Seller
Buyer
CIF (Cost, Insurance, and Freight)
Seller
Seller
Buyer
Main Carriage Freight Prepaid
77
Which of the following are
Any Mode Terms?
1.
2.
3.
4.
5.
EXW
FCA
CIP
DDP
All of the Above
86%
14%
0%
1
0%
2
0%
3
4
78 5
Which of the following are only
Sea and Inland Waterway Terms?
1.
2.
3.
4.
FAS
FOB
CIF
All of the Above
89%
11%
0%
1
0%
2
3
4
79
Which Incoterm is recommended
as a substitute for EXW?
1.
2.
3.
4.
FOB
FCA
FAS
SOL
63%
25%
13%
0%
1
2
3
4
80
Incoterms are considered as Law
and are also used as Payment
Terms.
1.
2.
Very True.
Very False.
78%
22%
1
2
81