Podcast
Questions and Answers
Which Incoterm requires the seller to deliver goods that are not yet cleared for export?
Which Incoterm requires the seller to deliver goods that are not yet cleared for export?
- FOB
- EXW (correct)
- CIF
- FCA
Which Incoterm requires the seller to provide insurance for the goods during transport?
Which Incoterm requires the seller to provide insurance for the goods during transport?
- CFR
- CIP (correct)
- CPT
- DAP
In which classification of INCOTERMS is 'DAP' categorized?
In which classification of INCOTERMS is 'DAP' categorized?
- D-Terms (correct)
- E-Terms
- C-Terms
- F-Terms
Which Incoterm indicates that the seller has to pay for both freight and insurance?
Which Incoterm indicates that the seller has to pay for both freight and insurance?
What is the main difference between CFR and CIF?
What is the main difference between CFR and CIF?
Which Incoterm places the risk of unloading and delivery at the buyer's responsibility?
Which Incoterm places the risk of unloading and delivery at the buyer's responsibility?
How should a company assess its logistics capabilities before selecting an Incoterm?
How should a company assess its logistics capabilities before selecting an Incoterm?
Which of the following is NOT one of the classifications of INCOTERMS?
Which of the following is NOT one of the classifications of INCOTERMS?
Which Incoterm is recommended for shipping rare artifacts to a museum?
Which Incoterm is recommended for shipping rare artifacts to a museum?
What should be done to ensure all parties understand their responsibilities regarding an Incoterm?
What should be done to ensure all parties understand their responsibilities regarding an Incoterm?
Why is FOB (Free on Board) recommended for importing bulk raw materials?
Why is FOB (Free on Board) recommended for importing bulk raw materials?
Which Incoterm allows a seller to minimize risks by being responsible for goods only at their premises?
Which Incoterm allows a seller to minimize risks by being responsible for goods only at their premises?
In which scenario would DAP (Delivered at Place) be the most suitable Incoterm?
In which scenario would DAP (Delivered at Place) be the most suitable Incoterm?
What is the primary responsibility of the seller under CIF (Cost, Insurance, and Freight)?
What is the primary responsibility of the seller under CIF (Cost, Insurance, and Freight)?
What is a key reason to document the chosen Incoterm in a sales contract?
What is a key reason to document the chosen Incoterm in a sales contract?
Which Incoterm is most appropriate for a collector shipping a valuable painting to an overseas buyer?
Which Incoterm is most appropriate for a collector shipping a valuable painting to an overseas buyer?
Flashcards
DAP (Delivered at Place)
DAP (Delivered at Place)
The seller delivers goods at the named place, ready for unloading. The seller bears all costs and risks until the goods are placed at the buyer's disposal, ready for unloading.
FCA (Free Carrier)
FCA (Free Carrier)
The seller delivers the goods to the carrier nominated by the buyer, cleared for export, at the named place. Costs and risks transfer to the buyer when goods are handed over to the carrier.
FOB (Free On Board)
FOB (Free On Board)
The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The seller pays the cost of loading the goods.
DDP (Delivered Duty Paid)
DDP (Delivered Duty Paid)
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FAS (Free Alongside Ship)
FAS (Free Alongside Ship)
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CFR (Cost and Freight)
CFR (Cost and Freight)
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EXW (Ex Works)
EXW (Ex Works)
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DAP (Delivered at Place)
DAP (Delivered at Place)
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CIF (Cost, Insurance, and Freight)
CIF (Cost, Insurance, and Freight)
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DPU (Delivered at Place Unloaded)
DPU (Delivered at Place Unloaded)
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CPT (Carriage Paid To)
CPT (Carriage Paid To)
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Study Notes
Incoterms 2020 Cheat Sheet
- Incoterms (International Commercial Terms): International rules for defining the responsibilities of buyers and sellers during the sale of goods traded internationally.
List of Incoterms
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EXW (Ex Works): Seller's responsibility ends when goods are ready for pickup at their premises. Buyer handles loading, transport, and import/export procedures.
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FCA (Free Carrier): Seller delivers goods, cleared for export, to the carrier nominated by the buyer at a named location.
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FAS (Free Alongside Ship): Seller delivers goods alongside the vessel at the named port of shipment.
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FOB (Free On Board): Seller delivers goods on board the vessel nominated by the buyer at the named port of shipment.
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CFR (Cost and Freight): Seller pays for transport to the named port of destination. Risk transfers to the buyer once goods are on board.
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CIF (Cost, Insurance, and Freight): Seller fulfills the same obligations as in CFR, but also includes insurance until the goods reach the named destination port.
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CPT (Carriage Paid To): Seller pays cost of carriage to a specified destination. Risk transfers to the buyer when goods have passed to the carrier.
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CIP (Carriage and Insurance Paid To): Same as CPT but with added insurance coverage.
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DAP (Delivered At Place): Seller delivers goods to a named place of destination, ready for unload. Buyer takes charge of unloading.
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DPU (Delivered At Place Unloaded): Seller delivers and unloads products at a named place.
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DDP (Delivered Duty Paid): Seller delivers goods, cleared for import, and pays all duties at the named destination place. Seller assumes full risk until placed at named destination.
Sea and Inland Waterway Terms
- FAS: Seller delivers goods alongside vessel at named loading port, cleared for export.
- FOB: Seller delivers goods on board vessel at named loading port.
- CFR/CIF: Cost and/or cost, insurance, and freight paid up to a named destination port.
Classification of Incoterms
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E-terms (Departure): Seller delivers goods to the carrier.
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F-terms (Main Carriage Unpaid): Seller delivers to the carrier at a stated location.
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C-terms (Main Carriage Paid): Seller pays for the main carriage of goods.
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D-terms (Arrival): Seller delivers goods to the buyer at the destination.
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Terms:
- Seller obligations
- Buyer obligations
- Risk Transfer
Tips and Best Practices
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Know your strengths: Assess company logistics for matched Incoterm selection.
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Evaluate goods: Consider types, values, and needed transport methods.
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Check regulations: Understand export/import rules.
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Assess risk tolerance: Choose terms that fit your strategy.
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Consult experts: Seek professional advice.
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Educate parties: Ensure all parties understand their responsibilities.
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Review regularly: Monitor and adapt as needed.
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Document everything: Maintain clarity and legal certainty.
Commonly Used Incoterms
- EXW, DDP, FOB, CIF are frequently used for clarity and cost efficiency.
Significant Changes from Incoterms 2010 to Incoterms 2020
- DPU (Delivered at Place Unloaded): Replaced DAT.
- Insurance Coverage in CIF/CIP: CIP improved insurance coverage.
- Enhanced Transportation Security: Regulations to accommodate contemporary shipping safety.
- Buyer's Own Transport: Added provision for buyers using their transport under FCA.
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