Incoterms Twelfth week

Incoterms is an international commercial term that provide a standard set of definitions for
trade terms. It facilitates international commerce by better understanding between a seller and
buyer.
Structure of the incoterms:

ANY TYPE OF TRANSPORT

EXW
ONL
WATERWAYS
ONLY
Y BY
BYEXW
WATERWAYS
FCA
TRANSPORT
CFR
CIF
CIP
CIF
CIP
FOB
CPT
FAS
DAP
DAT
DAT
DDP

Verification and inspection of the merchandise

It is responsibility of the seller, make and cover the costs of verification and inspection of the
goods in the 11 incoterms. Also the seller has to notify the buyer a written compliance of the
delivery for all incoterms except EXWORKS.
Application of cargo insurance
When it requires the seller to contract the insurance, It must cover the type of goods according
to the Institute of Cargo Clauses.
Logistics chain security
Parties have the duty to provide the necessary information on safety inspections documents for
the other. Each country require the kind of info necessary for the customs declaration DUA
Terminal handling charges- THC
The seller that hire the shipping must specify who pays the cost at the port of destination
Items not considered in the Incoterms
Criminal offences
Transport contracts
Governing law and jurisdiction
Customs tax
Exportation process
1. RUC
2. Analysis of the international market
- Define business opportunities
- Potential demand
- Analysis of macroeconomic, social and geographic variables
3. Product profile
- If it respond to the necessities
- It differs from the competitors
- Is exportable?
4. Product promotion
- Is it known
- Internet
5. Commercial contract
Necessary commercial documents in exports
Commercial invoice (facture commercial)
Packing list
Transport document
Origin certificate

Inspection certificate

INCOTERMS:
EXW (Ex works)
Seller responsibilities end giving the good in his factory, and then the responsibility is from the
buyer.
FCA (free carrier)
Seller responsibilities end giving the good in a place agreed before putting in the ship, in that
place it gives the responsibility to the buyer. The seller is responsible for the risk and expense of
loading. Seller has no obligation to insure the shipment
-Freight forwarder Company that organizes shipments for individuals to get goods from the
manufacture or producer to a final point of distribution
FAS (free alongside)
Seller is responsible for arranging transportation of the good to a named ocean port and places
them alongside. Seller has no obligation to insure the shipment, different from FOB as the seller
is not responsible for placing the goods on the vessel
FOB (free on board)
Seller is responsible for arranging transportation of goods to a vessel named by the buyer at a
named port, and for all costs of placing the goods on board the vessel.
-Wharfage A charge by shipping port when goods are moved through the location. Costs of
transport that distribution system used by a business to bring its good to market
-Stowage Placement in an aircraft or ship in a manner that provides optimum safety for the
vessel and the cargo
CPT (carriage paid to)
Seller is responsible for arranging transportation and paying the freight (flete) for goods to a
named point, typically in the destination country. Buyer assumes the risk of loss of the goods;
seller has no obligation to insure the shipment. CPT= FCA + freight
CFR (costs and freight)
Seller is responsible for arranging and paying for transportation of the goods (not shipping
insurance) through to a named ocean destination port. ONLY with ocean waterway
CIF (cost, insurance and freight)
Seller is responsible for arranging and paying for transportation of the goods and shipping
insurance through to a named ocean waterway port. Risks of loss in the vessel are to the buyer.
ONLY with ocean waterway
CIP (carriage and insurance paid to)
Seller is responsible for arranging and paying for both, the transportation of the goods and
shipping insurance. Its responsibility ends before putting the good in a car. CIP= FCA+ freight+
insurance
DAT (delivered at terminal)
Seller is responsible for delivering the goods to the carriers terminal at the named destination
location. Seller assumes the cost and risk of unloading at the named destination terminal.
DAP (delivered at place)
Seller is responsible for delivering the goods to a named destination place. The buyer assumes
the cost and risk of unloading at the named destination place and for customs clearance.
DDP (delivered duty paid)
Seller is responsible for arranging transportation of the goods through to the buyers door, pays
all costs required to accomplish this, including customs clearance, customs duty and importation
taxes.