Incoterms 2020 Cheat Sheet PDF

# INCOTERMS CHEAT SHEET ## INCOTERMS 2020 - **EXW (Ex Works)** - Seller delivers when goods are placed at the disposal of the buyer, not cleared for export and not loaded on any collecting vehicle. - **FCA (Free Carrier)** - Seller delivers the goods, cleared for export, to the carrier nominated by...

# INCOTERMS CHEAT SHEET ## INCOTERMS 2020 - **EXW (Ex Works)** - Seller delivers when goods are placed at the disposal of the buyer, not cleared for export and not loaded on any collecting vehicle. - **FCA (Free Carrier)** - Seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. - **FAS (Free Alongside Ship)** - Seller delivers when the goods are placed alongside the vessel at the named port of shipment. - **FOB (Free on Board)** - Seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. - **CFR (Cost and Freight)** - Seller delivers the goods on board the vessel and pays the cost of freight to the named destination port. - **CIF (Cost, Insurance, and Freight)** - Similar to CFR, but the seller also pays for insurance to the named destination port. - **CPT (Carriage Paid To)** - Seller pays freight for the carriage of goods to the named destination. - **CIP (Carriage and Insurance Paid to)** - Similar to CPT, but the seller also pays for insurance. - **DPU (Delivered at Place Unloaded)** - Seller delivers and unloads the goods at the named place of destination. - **DAP (Delivered at Place)** - Seller delivers the goods, ready for unloading, at the named place of destination. - **DDP (Delivered Duty Paid)** - Seller delivers the goods, cleared for import, and pays all duties at the named place of destination. ## Classification of INCOTERMS - **E-Terms (Departure)** - **F-Terms (Main Carriage Unpaid)** - **C-Terms (Main Carriage Paid)** - **D-Terms (Arrival)** ## Sea & Inland Waterway Terms - **FAS - Free Alongside Ship** (insert name of port of loading) - **FOB - Free on Board** (insert named port of loading) - **CFR - Cost and Freight** (insert named port of destination) - **CIF - Cost Insurance and Freight** (insert named port of destination) ## Tips and Best Practices - **Know Your Strengths** - Assess your company's logistics capabilities. Choose Incoterms that match your strengths. - **Evaluate Goods** - Consider the type and value of goods. Select Incoterms that ensure safe and timely delivery. - **Consider Transport Modes** - Choose Incoterms compatible with your preferred transportation method. - **Check Regulations** - Understand import and export rules in both origin and destination countries. Ensure Incoterm compliance. - **Assess Risk Tolerance** - Determine your risk tolerance. Choose Incoterms that align with your risk management strategy. - **Consult Experts** - Seek advice from logistics or legal experts for informed Incoterm selection. - **Educate Parties** - Ensure all parties understand the chosen Incoterm and their responsibilities. - **Review Regularly** - Review and adjust your Incoterm choice based on changing circumstances or regulations. - **Document Everything** - Document the chosen Incoterm and all details in the sales contract for clarity and legal certainty. ## Sample Scenarios and Suggested Terms | Scenario | Recommended Incoterm | Reason | |---|---|---| | Shipping rare artifacts to a museum | DDP | Seller should manage all risks, including import duties, to ensure safe arrival. | | Importing bulk raw materials for manufacturing | FOB | Buyer has better local knowledge and can get better shipping rates. | | Sending designer clothes to a high-profile fashion show | DAP | Seller covers most costs but buyer manages import and final delivery to venue. | | A tech startup exporting its first batch of products | EXW | Startup minimizes risks and costs by only being responsible for goods at their premises. | | Distributing perishable goods like seafood | CIP | Seller provides shipping and insurance to ensure goods are handled properly en route. | | A collector shipping a valuable painting to an overseas buyer | CIF | Seller ensures minimum insurance and freight but risk transfers once on board. | | Supplying machine parts to a factory in a remote location | DPU | Seller ensures that goods are unloaded and available for the factory to pick up. | | Trading companies with a long-term partnership | FCA | Both parties have clear roles, and risk is transferred at a mutually convenient point. | | An online marketplace that facilitates international trade | FAS | Sellers clear the items for export, but buyers have control and responsibility after. | | Importing energy drinks for a major sporting event | CPT | Seller takes care of initial freight; buyer manages the rest to ensure timely arrival. | ## Commonly Used INCOTERMS - **EXW (Ex Works)** and **DDP (Delivered Duty Paid)** are often used for their simplicity; the former minimizes the seller's obligations, while the latter does so for the buyer. - **FOB (Free on Board)** and **CIF (Cost, Insurance, and Freight)** are traditionally popular in maritime transport due to their clear division of costs and risks. ## Significant Changes from INCOTERMS 2010 to INCOTERMS 2020 - **Introduction of DPU:** The term DAT (Delivered at Terminal) has been changed to DPU (Delivered at Place Unloaded) to clarify that delivery can occur at any place, not just a terminal. - **Levelling of Insurance Coverage in CIF and CIP:** While CIF retains the same insurance requirements, CIP has increased the level of insurance coverage, providing better protection to the buyer. - **Transportation Security:** Enhanced provisions regarding security requirements during transport, reflecting the growing emphasis on security in the transportation sector. - **Own Transport in FCA:** Under FCA (Free Carrier), there's a new provision allowing the buyer to instruct the carrier to issue a transport document to the seller without the onboard notation, provided they have their own means of transportation. ## KEY TAKEAWAYS www.stilfresh.co.uk