International terms
Incoterms is a compound word that is made up of the combination of three English words International Commercial Terms and is widely used. These terms are used to separate costs and responsibilities between the seller and the buyer.
Incoterms was prepared and compiled by the International Chamber of Commerce.
In simple words, it should be said that it is a set of rules and regulations that are your reference and guide for importing and exporting in international trade. But there is no requirement to use these rules. The latest version of Incoterms was published on January 1, 2020 for the use of traders.
Incoterms are divided into four groups D-C-F-E with terms associated with each group, which is very good.
Group E- The meaning of the term Ex Works is delivery of goods at the point of departure at the origin
Definition: delivery of goods at the point of departure at the origin (workplace). In this method, the seller delivers the goods to the buyer at the place of production or warehouse, and all costs, including loading, transportation, insurance, customs, and the risk of product damage, are the responsibility of the buyer.
Group F - Delivery of goods to the buyer without paying the freight at the origin
This group includes the terms by which the seller delivers the goods to the place designated by the buyer.
The word FAS stands for Free Alongside Ship
Delivery of goods next to the ship at the origin. The place of termination of the seller’s risk is at the side of the ship in the port. The cost of shipping and insurance is with the buyer. Signing a contract of transportation, insurance and inspection with the buyer.
The word FOB stands for Free On Board
Delivery of goods on the ship’s deck at the origin. The seller has terminated his risk when the goods pass over the ship’s rail. The cost of shipping and insurance is with the buyer. The contract of carriage from the port of delivery and insurance and inspection is concluded with the buyer.
The word FCA stands for Free Carrier
The word FCA stands for Free Carrier
Delivery of goods to the carrier at the origin (delivery of goods in trucks, rails and airplanes). Considering that the place of delivery is the seller’s country, loading is with the buyer and the point of risk is the place of loading. The cost of shipping and insurance is with the buyer. Signing a transport and insurance contract with the buyer (not necessarily).
Group C - delivery of goods at the origin to the buyer with payment of freight
This group includes terms by which the seller must pay the fare to the destination, but the risk of loss or damage and additional costs are borne by the buyer. In this method, a kind of division of responsibility has been applied between the buyer and the seller.
The word CFR stands for Cost and Freight
This term is the same as C&F, but it is used in sea transportation. The responsibility of the seller ends when the goods are loaded on the ship. The cost of insurance is with the buyer. The shipping cost is with the seller. Signing an insurance contract with the buyer is signing a shipping contract with the seller
The word CIP stands for Carriage and Insurance Paid to
Delivery with payment of freight and insurance to the destination. The shipping method is composite. The seller’s risk and responsibility ends when he delivers the goods to the agreed point. The cost of insurance and shipping is with the seller. The contract of insurance and transportation is concluded with the seller. An inspection contract is concluded with the buyer.
The word CIF stands for Insurance and Freight
Cost, insurance and freight to the destination. It is for sea transportation. The seller’s responsibility ends when the goods are loaded over the ship’s rail. The cost of shipping and insurance is with the seller. Signing a transport and insurance contract with the seller.
The word CPT stands for Carriage Paid To
Delivery by paying the freight to the destination. Composite transportation is mostly used for land or air routes. The seller’s risk and responsibility ends when the goods are delivered to the first carrier. Shipping cost with the seller to the specified point according to the contract. Buyer’s insurance fee. An inspection contract is concluded with the buyer.
Group D delivery of goods at the destination:
It includes terms whereby the seller is responsible for delivering the goods to the agreed point or location at the destination and the seller assumes all risks and costs.
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