Incoterms 2010

The Internatonal Commercial Terms were created by the Internatonal Chamber of Commerce and
regulate the rights and obligatons between buyers and sellers focusing meanly in four areas: tasks,
costs, risks involved in transportaton and delivery of goods. Being approved worldwide, the
incoterms lead in commercial agreements requestng for internatonal trade.
Each incoterm is related to three-leter trade terms.
The newest editon of incoterms was published in 2010. In this editon, 11 rules were established
and presented in two distnct classes.
Let me give you a basic idea of each kind of incoterms 2010:
Rules for any Mode or Modes of Transport (Multmodal)
EXW (Ex Works)
The seller is in charge of place the goods for disposal at its premises and stll bear fnancial risk untl
full payment has been made. The buyer is in charge of bear transportaton costs and risks. This term
places much more obligatons to the buyer and less to the seller.
FCA (Free Carrier)
The buyer defnes a frst carrier to receive the disposal of goods from the seller at the named place
of delivery. Risks are transferred from the seller to the buyer when the goods have been delivered
to the carrier at the named place of delivery, then the buyer pays for carriage.
CPT (Carriage paid to)
The seller pays for carriage. Risk transfers from the seller to the buyer when the goods have been
delivered to the carrier. Costs are transferred from the seller to the buyer at the named place of
destnaton.
CIP (Carriage and Insurance paid to)
The seller arranges cost for carriage of the goods and insurance to the named place of destnaton.
Risk transfers from the seller to the buyer when the good have been delivered to the carrier.
DAT (Delivered at Terminal)
Seller covers the cost for carriage to the terminal, except costs related to import clearance and takes
risk untl the goods have been delivered at the named terminal at port or place of destnaton
unloaded.
DAP (Delivered at Place)
Seller covers the cost for carriage to the named place, except for costs related to import clearance
and takes all risks untl the goods have made available, ready for unloading at the named place of
destnaton.
DOP (Delivered Duty paid)

The seller covers the cost for carriage to the named place, including dutes and taxes. Risk transfers
form the seller to the buyer when the good have made available, ready for unloading at the named
place of destnaton. This term places much more obligatons on the seller and less obligatons to
the buyer.
Rules for Sea and Inland Waterway Transport
FAS (Free alongside Ship)
Pre-carriage of the goods is arranged by the seller while main carriage is arranged by the buyer. Risk
and costs are transferred from the seller to the buyer when the goods have made been placed
alongside the ship at the named port of shipment.
FOB (Free on Board)
The seller loads the goods on board the vessel defned by the buyer. Risk and costs are transferred
from the seller to the buyer when the goods are loaded on board the ship at the named port of
shipment.
CFR (Cost and Freight)
Seller pays the costs and freight to bring the goods at the named port of destnaton. Risk is
transferred from the seller to the buyer when the goods are loaded on board the ship at the named
port of shipment. Insurance for the goods is not included.
CIP (Cost, Insurance, Freight)
The seller pays the cost for insurance and carriage for goods. Risk is transferred from the seller to
the buyer when the goods are loaded on board the ship at the named port of shipment.
A real life example of using the rules of incoterms could be the following situaton: leading FAS
incoterm, a delivery is arranged at Ensenada, Mexico between 1
st
and 15
th
of April. If the goods are
placed on March 27
th
and in the next day the goods are damaged, all risks are transferred to the
seller. Instead of, if the goods are damaged on April 2
nd
, risks are transferred to the buyer even
though the ship which has been contracted by the buyer hasnt arrived at the port of Ensenada.
In Logistcs side, it is very important to know which terms of delivery of goods have been placed.
This terms defne the way that we will choose the right transport and the planning tme of delivery.
In order to reduce risk, costs and taxes, integrated system is thought to be efcient and clearly tor
both seller, intermediary and buyer parts.
In personal point of view, incoterms make more clearly the way that commercial agreements are
made. It is compulsory to have a solid idea of how we can take advantage of the existng resources
and make the best contract even though we would assume some trade-ofs.