Introduction to Incoterms® August 2020

Introduction to Incoterms ® August 2020. Insert presentation title via Header & Footer.

[Audio] By the end of this session, you will: be able to explain why Incoterms have been created, and their recognition in international trade; know how the Incoterms are categorised, named, and defined; be able to articulate the points of cost & risk transfer from Seller to Buyer for each term.

.. Background of Incoterms Incoterms Overview The Four Categories of Incoterms Group E Group F Group C Group D Incoterms in Detail: Obligations of Buyer & Seller.

[Audio] Background of Incoterms. .. Background of Incoterms Incoterms Overview The Four Categories of Incoterms Group E Group F Group C Group D Incoterms in Detail: Obligations of Buyer & Seller.

[Audio] 1) Among the challenges in conducting export sales is agreeing on the details for transporting goods across borders. 2) A typical export will move through four storage facilities; the domestic carrier's facility, the export terminal, the import terminal and the buyer's receiving dock… 3) …and change hands at least five times; the shipper, the domestic ground carrier, the international carrier, the ground carrier in the import nation and finally the buyer. 4) Either the seller or the buyer needs to make arrangements for transport and import customs clearance. The two parties must also agree on which has responsibility for the goods in case the shipment is damaged, lost or stolen.For centuries these issues were handled by tradition and standard practice, which often varied from nation to nation. Disputes would arise when ever there were differences in the understanding of the obligations. The International Chamber of Commerce ( ICC) has addressed the difficulty by establishing a common set of rules that apply to all international sales. The first set of rules, called " Incoterms 1936" short for international commercial terms, was published in 1936. The standard has been updated eight times since then, the current standard is called Incoterms 2020. The United Nations Commission on International Trade Law recognises Incoterms 2020. This makes the it a worldwide standard and legally binding in contracts for parties conducting international trade..

Background of Incoterms ®. .. Terms of Sale?. Among the challenges in conducting export sales is agreeing on the details for transporting goods across borders..

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[Audio] Incoterms Overview. Contents. .. Background of Incoterms Incoterms Overview The Four Categories of Incoterms Group E Group F Group C Group D Incoterms in Detail: Obligations of Buyer & Seller.

[Audio] What are Incoterms®?A set of 11 trade terms used in contracts for the sale and purchase of goods; Incoterms® are not law, yet the commercial contract in which they are used can be legally binding; They describe the obligations, costs, and transfer of risk; General rules of thumb: The party responsible for arranging transportation, and payment of transportation charges is in control of the cargo; The more responsibility the party has, the more control they have, and the more risks they bear ( customs, licencing, freight, other formalities)..

[Audio] Incoterms® do not…Automatically apply. They must be specified; Determine ownership, transfer of title or ownership of goods; Determine payment terms between seller and buyer; Protect parties from their own risk or loss, nor cover the goods before or after delivery. This is what insurance is for..

[Audio] What's changed since Incoterms® 2010? The Incoterm DAT (Delivered at Terminal) is replaced by DPU (Delivered at Place Unloaded). Although this may appear to be merely a name change as the obligations and responsibilities remain the same, the new DPU term covers delivery to any agreed place including, but not limited to, delivery at terminal. There are new insurance requirements under Incoterms CIF and CIP. In shipping, under the Incoterm FCA the buyer can ask the shipping company or their agent to issue a Bill of Lading to the seller with the notation "on board"..

[Audio] Incoterms® OverviewResponsibility Matrix – Obligations of Importer ( Buyer) and Exporter ( Seller).

[Audio] The Four Categories of Incoterms Group E Group F Group C Group D.

[Audio] Incoterms® - The Four CategoriesThe groups are arranged in order by which party has the most obligations for the goods being moved..

[Audio] Starting with the single term in Group E, referred to as EXW for Exit Works, the seller is only responsible for preparing the goods for international shipment & making the correct paperwork, and goods available for pick up for export by the buyer..

[Audio] There are three terms in Group F that adds the additional obligation of ground transport to the export terminal to the seller's responsibilities. Once delivered to the export terminal (typically a port or an airport) obligations shifts to the buyer..

[Audio] The four terms in the C Group requires the seller to add international carriage to the list of obligations. So the seller must now arrange and pay for transport by ship, plane or ground transport across borders. In addition, two of the C Group terms also obligate the seller to arrange insurance on behalf of the buyer..

[Audio] The D Group of terms requires the seller to take on most of the transport obligations. These three different terms vary from simply paying to land the goods in the receiving terminal abroad, to taking care of all cost and obligations of getting the goods to the buyer's receiving dock overseas (including paying for customs)..

[Audio] Incoterms in Detail: Obligations of Buyer & Seller.

[Audio] The Incoterm Ex-Works ( EXW) means the seller minimises their risk by making the goods available at their own premises. The buyer loads the goods then arranges and pays for transport, customs clearance and insurance. OBLIGATIONS OF THE BUYER The buyer must arrange and pay for the transport having taken delivery of the goods. The buyer is responsible for the goods, and anything that happens to them having taken delivery of them. EXW means that the buyer carries all the risk and bears the entire cost for the movement of the goods once they are made available at the seller's premises. OBLIGATIONS OF THE SELLER Under this Incoterm, if you are selling goods, you are responsible for making the goods available to your buyer from your premises or an appointed place (such as a factory or depot). Once you have made the goods available you are no longer responsible for them..

[Audio] All three Incoterms beginning with " F" - Free Carrier ( FCA), Free Alongside Ship ( FAS) and Free On Board ( FOB) - mean that the seller is responsible for arranging and paying for delivering the goods to a carrier. The buyer pays for the main carriage onward from that point. OBLIGATIONS OF THE SELLER The seller delivers the goods to an agreed place and bears the costs & risks up to the point of delivery at the agreed place, including the cost of export clearance. The seller is responsible for inland transport and export customs clearance unless the designated place is the seller's premises ( FCA warehouse), in which case the goods are delivered there and loaded onto the means of transport arranged by the buyer at the buyer's expense. OBLIGATIONS OF THE BUYER The buyer must arrange and pay for the transport having taken delivery of the goods. The buyer is responsible for the goods, and anything that happens to them having taken delivery of them. " Delivery" is accomplished at the predetermined port or destination point and the buyer is responsible for insurance..

[Audio] Like Free Carrier ( FCA), the Incoterm Free Alongside Ship ( FAS) means that the seller is responsible for arranging and paying for delivering goods to a carrier. The seller must get the goods ready for export, but the buyer is responsible for the cost, and risk in loading them. OBLIGATIONS OF THE SELLER Under the FAS Incoterm, as the seller you must complete all export documentation, arrange and be responsible for the carriage of goods to bring them alongside a ship at a named port of shipment. The seller is also responsible for clearing goods for export. OBLIGATIONS OF THE BUYER As the buyer, you are responsible for loading on board, stowage, freight and other costs up to delivery at destination, including import clearance and insurance, if taken out as it is not mandatory. The buyer also bears the risk once the goods are in the loading dock prior to being loaded onto the ship..

[Audio] Free On Board ( FOB) means that the seller is responsible for arranging and paying for delivering goods to a carrier. The seller's risk ends when the goods are delivered to the main carrier. OBLIGATIONS OF THE SELLER Under the FOB Incoterm, as the seller you are responsible for delivering the goods to a carrier chosen by the buyer. This means that you are responsible for the goods until they pass the rail of the ship at a named port of shipment, after which the buyer assumes costs and risks. The seller arranges all export documentation and has to bring the goods right up to the point of passing over a ship's rail at a named port of shipment. OBLIGATIONS OF THE BUYER As the buyer, the costs and risks associated with the goods become your responsibility when the goods pass across a ship's rail, and you bear all costs from that moment onwards..

[Audio] Cost and Freight ( CFR) means that the seller is responsible for arranging and paying for the main carriage, but the risk of damage or extra costs stays with the buyer. OBLIGATIONS OF THE SELLER As the seller, you arrange the carriage. You are then responsible for the goods only until they pass a ship's rail in the port of export shipment but must pay the costs for bringing the goods to the port of destination, ie the full journey by water. OBLIGATIONS OF THE BUYER Under CFR, the buyer becomes responsible for the goods and all associated extra costs and risks once they have been delivered over a ship's rail at the outgoing port..

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