An Overview of

Presented by:

Andrew Docherty
Customs and Global Trade Consultant
On Behalf Of - IIFA,
Davenport Hotel

Thursday 21st October 2010

 The main issue people have with Incoterms =

They are not applied correctly

Whether it is a first time Importer / Exporter or a
established multinational company. Terms are
often misinterpreted or not fully followed through.
Nine out of ten time this is not an issue as the
transaction runs smoothly one party wants the
goods the other want paid.
THEN.................................................

............Something goes
wrong.
Was the Correct Term
Used?
Had Risk Passed?
Who is responsible for
Insurance?
What do you mean
Insurance clause C?
What was the named
place after the
INCOTERM?

For example:
Seller contracts with Buyer to sell goods FOB (Dublin)
Incoterms 2010
Payment by Letter of Credit
Letter of Credit requires presentation of onboard bill of
lading

In reality:
Seller arranges for goods to be delivered
By truck by container
To Dublin port
Hands over custody of container at ports container
terminal on unloading
Receives a delivery receipt from the carrier

Problems:

The seller cannot get paid

No onboard bill of lading

Mismatch in risk transfer:

Under FOB risk passes on loading onto ship
But seller lost control on unloading from truck

Terminal handling charges

Handling and loading charges

Buyer can recharge seller

To sellers surprise

Solution:

Use FCA

Check you can obtain the documents called for in

the Letter of Credit

FOB may not be appropriate where goods are

handed over to the carrier before they are on
board the vessel, for example goods in containers,
which are typically delivered at a terminal. In such
situations, the FCA rule should be used

From 13 in 2000 to 11 in Incoterms 2010.

Take special note of the FAS FOB CFR CIF these are Sea and Inland Waterway
Transport ONLY Terms

Overview of former Incoterms rules

Equivalent
Incoterms 2000 rule

Equivalent
Incoterms 2010 rule

EXW

EXW

FCA

FCA

CFR

CFR

CAF

CIF

CIF

Freight or Carriage Paid to (FCP)

CPT

CPT

Freight or Carriage and Insurance Paid to

CIP

CIP

ex factory, ex mill, ex plantation, ex warehouse, ex

store, etc.
Free Carrier (FRC)
FOR (Free On Rail) - FOT (Free On Truck) - Franco
Wagon
FOB Airport (FOA)
FOQ (Free on Quay)
FOW (Free on Wheels)
C.And F.
C&F
C+F
CF

DAF
Ex Ship (EXS)

DES

DAP

DDU
Ex Quay (EXQ)

DEQ

DAT

Maritime Incoterms rules have been made

secondary.

Consolidation of the D Rules

Any Mode of Transport
More Container Friendly

Ships rail is abolished makes FOB more flexible.

Less specific Documents (e.g. CPT)

DAF (Named
place)

DAP
(Named place of
destination)

DES...............
named port of
destination)

DAP
(Named place of
destination)

DEQ (.......
named port of
destination)

DAT (Named terminal

at port or at place of
destination)

DDU (Named
place)

DAP (Named place

of destination)

DAT (Named
terminal at port or
at place of
destination)

Structure of the Incoterms

rules: 10 articles
A THE SELLERS OBLIGATIONS

General obligations of the seller

Licences, authorizations, security
clearances and other formalities
Contracts of carriage and insurance
Delivery
Transfer of risks
Division of costs
Notice to the buyer
Delivery document
Checking packaging marking
Assistance with information and
related costs

B THE BUYERS OBLIGATIONS

General obligations of the buyer

Licences, authorizations, security
clearances and other formalities
Contracts of carriage and
insurance
Taking delivery
Transfer of risks
Division of costs
Notice to the seller
Proof of delivery
Inspection of goods
Assistance with information and
related costs

Thank you for your time..........Any Questions?