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 port’s 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 seller’s 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 Equivalent
Incoterms® 2000 rule Incoterms® 2010 rule
ex factory, ex mill, ex plantation, ex warehouse, ex EXW EXW
store, etc.
Free Carrier (FRC)
FOR (Free On Rail) - FOT (Free On Truck) - Franco
Wagon FCA FCA
FOB Airport (FOA)
FOQ (Free on Quay)
FOW (Free on Wheels)
C.And F.
C&F CFR CFR
C+F
CF
CAF CIF CIF
Freight or Carriage Paid to (FCP) CPT CPT
Freight or Carriage and Insurance Paid to CIP CIP
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 DAP
place) (Named place of
destination)
DES...............
DAP
named port of
(Named place of
destination)
destination)
DAT (Named terminal
DEQ (…....... at port or at place of
named port of destination)
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 SELLER’S OBLIGATIONS B THE BUYER’S OBLIGATIONS
General obligations of the seller General obligations of the buyer
Licences, authorizations, security Licences, authorizations, security
clearances and other formalities clearances and other formalities
Contracts of carriage and insurance Contracts of carriage and
Delivery insurance
Transfer of risks Taking delivery
Division of costs Transfer of risks
Notice to the buyer Division of costs
Delivery document Notice to the seller
Checking – packaging – marking Proof of delivery
Assistance with information and Inspection of goods
related costs Assistance with information and
related costs
Thank you for your time..........Any Questions?
