Rules for any mode or modes of transport
EXW – Ex Works (named place of delivery)
It is often used in making quotations for the sale of goods where no cost is needed yet. It means that the seller is making the goods available at their premises or other named places like the works, factory, or warehouse, and the seller doesn’t need to load the goods onto any shipping vehicles, nor does he need to clear the goods for export.
FCA – Free Carrier (named place of delivery)
FCS occurs when the seller is in charge of delivering the items to the customer at his premises or to a carrier the buyer designates. Here, the seller's obligation is limited to getting the goods ready for unloading. Not the actual unloading, and after delivery, ownership of the products passes from the vendor to the customer.
CPT – Carriage Paid To (named place of destination)
Under CPT, the seller covers the cost of transportation up to the specified location of the destination. (CIP) - Carriage and Insurance Program paid for (named place of destination) Similar to CPT, but with the seller being obligated to secure minimal insurance for the items while they are in transit.
DAP – Delivered at Place (named place of destination) It means that the goods are considered delivered by the seller when the products are put at the buyer's disposal on the arriving means of transportation and prepared for offloading at the designated location. By DAP agreements, the seller is responsible for taking care of all shipping-related hazards.
DPU – Delivered at Place Unloaded (named place of destination)
According to this Incoterm, the seller must deliver the products to the designated location unloaded. The seller accepts all risks up until arrival at the destination and pays all transportation expenses (export fees, carriage, unloading from the main carrier at the destination port, and destination port taxes).
DDP – Delivered Duty Paid (named place of destination)
The products must be delivered to the specified location in the buyer's country, and the seller is responsible for covering all transportation charges, including import duties and taxes. Unloading is not the seller's responsibility.
Rules for sea and inland waterway transport
FAS (free alongside ship)
The seller must place the goods alongside the vessel at the
named port. The goods are then considered to be shipped. And that
responsibility at that point passes to the buyer. This means that
the buyer takes the risk of any loss or damage happening to the
goods from that moment onwards.
FOB (free on board)
The seller must place the goods onboard the vessel at the
named port. The goods are then considered to be shipped. And that
responsibility at that point passes to the buyer. This means that
the buyer takes the risk of any loss or damage happening to the
goods from that moment onwards.
CFR (Coast and
Freight)
The seller must place the goods onboard the vessel at the
named port. The goods are then considered to be shipped. And that
responsibility at that point passes to the buyer. This means that
the buyer takes the risk of any loss or damage happening to the
goods from that moment onwards. However, the seller is contracted to pay
for the costs and freight necessary to bring the goods to the
destination.
CIF (Cost, Insurance,
and Freight)
The seller must place the goods onboard the vessel at the
named port. The goods are then considered to be shipped. And that
responsibility at that point passes to the buyer. This means that
the buyer takes the risk of any loss or damage happening to the
goods from that moment onwards. But the seller is contracted to pay
for the costs and freight necessary to bring the goods to the
destination plus procuring and paying for the insurance.
Differences between Incoterms® 2010 and 2020
The free carrier (FCA) Incoterms® now provides an extra option before loading the goods on the vessel for making an onboard
notation for the bill-of-lading.
Now the cost appears centralized in A9/B9 of every single
Incoterms® rule.
Now at least insurance with the minimum coverage of the
Institute Cargo Clause (A) is required by the CIP. With all risks
and is subject to itemized exclusions.
Now at least insurance with the minimum coverage of the
Institute Cargo Clause (C) is required by the CIF, with the number
of listed risks and being subject to itemized exclusions.
Now the free carrier (FCA) Incoterms® Delivered at Place (DAP),
Delivered at Place Unloaded and (DPU), and Delivered Duty Paid (DDP) take into account that the goods may be carried without the help of
any third-party carrier using their transportation.
(DAT) The Incoterms® rule Delivered at Terminal has been
changed to (DPU) Delivered at Place Unloaded. And that’s to clarify
that the place of destination shouldn’t only be a terminal. It could
be any other place.
Now Incoterms® 2020 has shifted the security-related
responsibility plus the ancillary costs to the seller.
Important information
The Incoterms® does form a contract of sale, it becomes a part of it. The structure of its application should be like the following:
(The desired Incoterm® rule) (Port name, place, or point) Incoterms® 2020
e.g: (CIF Shanghai Incoterms® 2020) or (DAP 10 Downing Street, London, Great Britain Incoterms® 2020)
If the year is not stated in the Incoterms® then:
Until the date of December 31st, 2019, the Incoterms® 2010 apply.
From the date of January 1st, 2021, the Incoterms® 2020 apply.
If an earlier year is stated like Incoterms® 1980, in this case, respective terms apply.
If you need any more details, you can visit the ICC official website: https://iccwbo.org.