INCOTERMS
Incoterms are rules developed by the International Chamber of Commerce, which are used in international sales contracts. Its name comes from international commercial terms (international terms of trade).
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1
EXW / In factory
It is an EXW purchase term, it is also known as a factory where the seller (the shipper) only has the obligation to deliver the merchandise to the warehouse or office of the seller.
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The consignee (client) assumes the risk and responsibility of loading the merchandise, including transportation costs, insurance, and customs procedures for export until it reaches the client´s warehouses.
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2
FOB (Free on board)
It is a FOB purchase term, it is used by means of maritime and fluvial transport, where the seller (the shipper) delivers the merchandise in the country of origin.
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After it sets sail at the port, the client is responsible for the costs of transportation, insurance, and customs procedures for the cargo of merchandise when it is at the place of destination.
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3
FCA (Free Carrier)
It is an FCA purchase term, can also be used in factory or terminal (port, airport, etc.).
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The factory FCA can be used for full loads, the seller (the shipper) has to load the merchandise in the warehouse or office transport, from that moment, the merchandise becomes the responsibility of the client.
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The terminal FCA can be used only for fractional loads, where the seller only delivers the merchandise to the designated place, however, the customer is responsible for transportation costs and customs procedures.
4
FAS (Free Alongside Ship)
It is a FAS purchase term, it is when the seller (the shipper) delivers the merchandise in the country of origin.
In that place, the responsibility for damage or loss of the merchandise ends for the seller.
The client (the consignee) assumes responsibility for transportation costs and customs procedures and the risk that may occur on the way.
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5
CFR (Cost, Insurance and Freight)
It is a CFR purchase term, it is when the seller (the shipper) must hire the international transport and pay the freight but the risk that occurs in the journey is the Consignee.
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The consignee assumes responsibility for the insurance of the merchandise.
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6
CIF Cost, Insurance and Freight / Cost, insurance and freight
It is a CIF term, it is when the seller (the shipper) has the responsibility to pay for transportation and insurance. The delivery of the merchandise is made on board the ship.
The seller (the shipper) is obliged to cover an insurance with a coverage of 100% of the total cost of the operation.
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7
CFR (Cost, Insurance and Freight)
It is a CFR purchase term, it is when the shipper must hire the international transport and pay the freight but the risk that occurs in the journey is the consignee.
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The consignee assumes responsibility for the insurance of the merchandise.
8
CPT (Carriage Paid To)
It is a CPT term, it is when the shipper assumes the responsibility of paying the freight until reaching the port of destination, but this risk in the journey belongs to the consignee.
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9
CIP (Carriage and Insurance Paid)
It is a CIP term, it is when the shipper assumes the responsibility of paying the transport and insurance of the merchandise.
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Like the CPT term, it is given when it is delivered to the first carrier at the point of destination by the shipper, however, the consignee has no control of the merchandise.
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10
DAP Delivered At Place / Delivered at a point
It is a DAP purchase term, it is when the delivery is made anywhere in the country of destination,
The shipper is responsible for covering this journey.
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We do not recommend this INCOTERM in developing countries, where there is the possibility of suffering any setback and expenses are very difficult to control.
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11
DPU (Delivered at place Unloaded)
It is a DPU term, it is when the shipper is responsible for unloading at the destination, without import clearance.
This incoterm is designed for companies that want to control the logistics chain from origin to destination.
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As with DAP, the shipper has the same responsibility and journey to cover. We do not recommend these INCOTERMS in countries with poorly developed transport and telecommunications infrastructure, where there is a possibility of incurring unnecessary expenses.
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12
DDP (Delivered Duty Paid)
It is a DPU term, it is when the shipper is responsible for unloading at destination, without import clearance.
This incoterm is designed for companies that want to control the logistics chain from origin to destination.
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As with DAP, the shipper has the same responsibility and journey to cover. We do not recommend these INCOTERMS in countries with poorly developed transport and telecommunications infrastructure, where there is a possibility of incurring unnecessary expenses.
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