A time in which the merchandise is being transported from the seller to the buyer is called
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The 9th version of the Incoterms - Incoterms 2020 has been officially released on September 2019 (the centenary year of the ICC) and will come into effect from the 1st of January 2020. We thought you’d like to know. Below you’ll find a rundown of Incoterms 2020. The Incoterms® (abbreviation of International commercial terms) rules developed by the International Chamber of Commerce were created as an industry standard to facilitate international trade and to interpret the trade terms that the parties to a contract of sale could agree on to apply. The Eight have been 8 revisions to the set of Incoterms rules first introduced in 1936. As global trade developed and evolved, the Incoterms® rules were revised in 1957, 1967, 1976, 1980, 1990, 2000, and 2010 to accommodate changes in global trade. These rules form an essential part of the day-to-day international trade as well as domestic trades and they form an integral part of many sales contracts worldwide. It is important to remember that “Incoterms” is not a generic name for international trade terms but is a trademark used to designate the rules devised by ICC. Incoterms ExplainedOver the years, Incoterms® rules have provided guidance to importers, exporters, lawyers, transporters, insurers, and others involved in international trade. They are published by the International Chamber of Commerce (ICC). The core functions of Incoterms® used in international trade:
What are the changes from Incoterms 2010 to 2020?In the last version of Incoterms 2010, there were 11 Incoterm rules. They were divided into two classes: 1. Rules For Any Mode Of TransportEXW (EX WORKS) FCA (FREE CARRIER) CPT (CARRIAGE PAID TO) CIP (CARRIAGE AND INSURANCE PAID TO) DAT (DELIVERED AT TERMINAL) DAP (DELIVERED AT PLACE) DDP (DELIVERED DUTY PAID) 2. Rules For Sea And Inland Waterway TransportFAS (FREE ALONGSIDE SHIP) FOB (FREE ON BOARD) CFR (COST AND FREIGHT) CIF (COST INSURANCE AND FREIGHT) In the new revision Incoterms 2020, the number of terms still stays at 11, but the name of the rule DAT has been changed to DPU (Delivered at Place Unloaded). 1. Rules For Any Mode Of TransportEXW (EX-WORKS) 2. Rules For Sea And Inland Waterway TransportFAS (FREE ALONGSIDE SHIP) The other main differences between the 8th revision (2010 rules) and the 9th revision (2020 rules) are that.
In this version, the rules have been presented in a simpler and clearer way, and also the articles have reordered to better reflect the logic of a sale transaction including a ‘horizontal’ presentation, grouping all like articles together and allowing users to clearly see the differences. EXW – Ex Works↑ Back to chapter index Definition of Incoterm EXW“Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable. This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed. EXW is mostly suitable for domestic trade. Explanation of the termIn simple terms, if you are the buyer and you are buying the goods from the seller on EXW terms, you will need to send your truck to the seller’s premises and collect the cargo from there and take care of all the other shipping requirements to get it to your destination. Officially the shipper is NOT obliged to do anything other than provide you access to the cargo. Of course, based on your relationship with the seller, there may be an unofficial option wherein the shipper may assist with the loading of the goods onto your vehicle, etc. There is also an official option wherein you can include the words “LOADED” to the term EXW so that the seller may extend his service to assist with the loading operations. However, if there is any damage to the cargo during that loading process, that risk and cost may still be yours as the buyer. It is vital, therefore, that this point is clarified with the shipper beforehand at the time of the signing of the sales contract. In the case of EXW, it is safe to say that the seller has minimal obligations, risks & costs whereas the buyer has all the risks and obligations. Pro AdviceAs the EXW term places all the responsibility on you as the buyer and there is no obligation on the part of the seller to do anything other than provide the cargo. It may be prudent for you as the buyer to have a reliable freight forwarder at the origin port to take care of your best interests. FCA – Free Carrier↑ Back to chapter index Definition of the term“Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed. Explanation of Incoterms FCAIn an FCA transaction, the seller could be involved in the actual movement of the cargo up to a certain point. This point could be the warehouse of the carrier, the warehouse of the buyer’s agent, the port or a terminal in the port or any other location agreed between the buyer and seller. In an FCA transaction, the seller must take care of
The buyer, on the other hand, must take care of
In the case of FCA the seller’s obligations, risks and costs are till the agreed point of delivery, and the buyer’s obligations, risks and costs start from that agreed point of delivery. FCA terms could end at
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