International Commercial (INCO) Terms used in International Trade

I don't see what terms we have with us again .

The new exporter Nikko whom DJ F T is trying to assist in establishing her trade .

Nico is now stuck with the problem .

Nico has found a buyer for her goods in the Middle East .

The shipment of her export item from a Varos to her buyer in the Middle East would involve various steps including packaging , loading , domestic inland transport terminal charges at the port , loading on the ship or flight insurance charges , flight charges , arrival charges at destination port duties and taxes delivery to the buyer while the buyer would pay her for the export item .

Nico was confused who would pay for the additional costs in the transportation and who would pay for the insurance of goods violent transit .

Well , this is determined by the inc war terms agreed between Nikko and her buyer in the Middle East .

What are I and sea water turns to facilitate exporters and importers across the world .

The international chambers of commerce has developed some standard international commercial terms called iron C war terms .

These terms establish buyer and seller responsibilities at each stage of the shipment to avoid misunderstanding Nico must agree to a particular inc war term with her buyer while generating the export invoice itself .

The inc O term also becomes a part of the agreement between the buyer and the seller and is mentioned clearly on all documents involved in the transaction .

How does it help each inc O term clearly details the breakup of the cost involved and the buyer seller responsibilities .

For example , if the inc word term is E X W Xbox NIU only pays till packaging and delivery right outside the factory gate .

The remaining responsibilities to pick it up and get it delivered to the place of choice rests with the buyer .

Similarly , if the agreed inc term is F O B that is free on board , the seller's responsibility would involve transporting the goods from sellers premises up to the departing ship or the flight .

What are the different types of inc terms ?

There are four categories .

E terms most popular is X works as already explained .

If the agreed ion zero term is X works or E X W , the seller makes the good available at her premises for the buyer to collect .

This term carries the minimum obligation for the seller .

F to seller must deliver to the carrier rail flight or ship of choice of the buyer .

Seller would deliver the goods to the carrier and buyer is responsible for carriage .

From that point onwards .

Three types of F inc word terms are F O B that is free on board F C A that is free carrier FA S that is free alongside ship F C A can be used for any mode of transport .

While F C A or F O B are used only for sea or waterways .

See Toms seller must also contract and pay for the carriage that is freight or carrying cost of the choice of the buyer .

However , the risk of damage or loss during transit on carriage rests with the seller .

The four C inc returns are C I F that is cost insurance and freight .

C F R that is cost and freight .

C P T that is carriage pay two C IP that is carriage and insurance pay two C I F or C F R can only be used for transporting on sea or waterways .

D terms under D A seller bears the risk till unloading and clearance at the destination terminal or placed as per the specific term .

The 3d terms are D A T that is delivered at terminal D A P that is delivered at place D D P that is delivered duty paid .

The following matrix should make the distribution of responsibilities clearer as you move from left to right .

That is from E terms to D terms , the responsibility of the seller increases .

You may refer to this chart when in doubt which inc what term should Nico use ?

The inc or term may be decided by the terms offered by the buyer .

For example , the buyer might ask for price of the export item at their destination port .

This would usually mean C I F further in choosing the Iron Sea water .

One must also look at the mode of transport to be used and who is willing to bear the risk and cost of delivery .

For example , Nikko tries to bargain for X works to start with and finally agrees for F O B .

This means that she is responsible to deliver the goods up to the ship departing from India .

Once the ship leaves with the goods , her responsibility is over .

Please note to be clear on the risk .

It is important to include the character I and sea terms in the agreement and the invoice .

One should also refer to the latest version of iron see terms being used .

This is only a summary .

Each inc term contains a set of rules and clauses and you may read them in detail to get a thorough understanding of the same .

For more details .

You may write or speak to the neat Banu officer at the nearest D G F T office .