It is time to talk again about some interesting facts and today we will take a look at what Incoterms is and how this concept relates to your business!
The Incoterms or International Commercial Terms are a series of pre-defined international rules for the interpretation of most commonly used terms in international trade.
A series of trade terms are intended primarily to clearly unify the contractual sales practices at the international level. These terms explain the process of sharing responsibilities, costs and risks between parties concluding a contract: the seller and the buyer.
The first edition is known as "Incoterms-1936" - for the first time was published by the International Chamber of Commerce (ICC) in 1936. The Incoterms rules were amended and adjusted in 1953, 1967, 1976, 1980, 1990, 2000 and 2010. Currently used Incoterms 2010 came into force on January 1, 2011.
Trade terms used in Incoterms:
A popular term that that could be simply defined, as "self-delivery ". The seller makes the goods available for the buyer at his premises - in a warehouse, at an enterprise or in another agreed place. The seller does not load the goods on collecting vehicles and does not clear them for export.
The seller delivers the goods to a carrier or to another party nominated by the buyer. The delivery occurs at the seller's own premises or at the other previously named places. At the delivery point, all the risks are under the buyer`s responsibility.
Carriage Paidto - "Carriage Paid To"
he seller pays for the of the goods up to the named place of destination.
The seller transfers the goods to the carrier or other person nominated by the seller. The carriage occurs at the place agreed by the parties. The seller draws up a contract of carriage and he covers all the costs of transport to the named place of destination.
Carriageand Insurance Paidto - "Carriage and Insurance Paid To"
The responsibility from the seller passes to the buyer in the terminal of arrival, thus the seller pays for the freight transportation. In addition, the seller is liable for the cargo insurance, all customs formalities and export costs. However, the seller is not required to perform customs formalities for importation, pay the import duties or perform other customs formalities upon importation.
Delivered at Terminal - "Delivery on the terminal"
It is beneficial to the buyer to use this term for the transactions if his warehouses are next to the import terminal. This term requires that the seller is obliged to deliver the goods only after they are unloaded at the named terminal and provided to the buyers at the named port terminal agreed by the parties. The terminal means any place: air, railway or motor vehicle terminal, container yard, warehouse or mooring. The risks of loss and damage to the goods are removed from the seller`s account after the delivery and unloading of the goods at the agreed destination. The buyer in turn carries out customs formalities for the import of goods and covers the necessary taxes and duties.
Delivere dat Place - "Delivered at destination"
Under DAP terms, the seller delivers when the goods are placed at the disposal of the buyer at the named place of destination. The seller bears the transportation risks.
Delivered Duty Paid - "Delivered with payment of duties"
The term means that the delivery that sellers carry out when the goods are cleared from the customs duties for importation are given to the customers at the named place. The seller is not responsible for the transportation risks and costs. They must comply with the customs formalities arising during the export and import of goods, and pay the necessary fees.
Rules for sea and inland waterway transport:
Free Alongside Ship - "Free Alongside Ship"
Under the FAS term the seller fulfills his obligations related to the delivery when the goods are placed alongside the buyer's vessel (ie on a barge or berth) at the named port of shipment. At the same time, there is a transfer of risks from the seller to the buyer.
Freeon Board - "Free on board"
The seller delivers goods on board a vessel nominated by the buyer at a pre-agreed port of shipment, or ensures the delivery of the goods in this way. When the goods are on board the vessel, there is a transfer of risks for damage or loss of the goods from the seller to the buyer. The risks are transferred to the buyer since the time of full loading on board the vessel.
Cost and Freight - "Cost and Freight"
The seller agrees to deliver the goods on board the ship or to provide the goods in this way. The risk for damage or loss of the goods transfers to the buyer when the goods have been loaded on board the ship.
The seller pays for the freight costs and carriage of the goods up to the named port of destination.
Cost Insurance and Freight - "Cost, Insurance and Freight"
Under this term the seller undertakes to deliver the goods on board the vessel. When the goods are loaded onto the ship, the buyer is transferred to the risks of damage or loss of the goods. The seller who concluded the contract pays for the freight costs and carriage of the goods up to the named port of destination. In addition, the seller is required to obtain insurance for the goods while in transit to the named port of destination, which will cover all possible risks for damage to the goods during transportation.
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